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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  March 31, 2005

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to  _____________

For Quarter Ended     March 31, 2005

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 Incorporation or organization)

 

(I.R.S. Employer 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   o

Indicate by check mark whether the Registrant is an accelerated filer (as defined under rule 12b-2 of the Securities and Exchange Act of 1934).

Yes   x

No   o

191,661,144 shares of Common Stock and 33,421,424 shares of Class B Common Stock were outstanding as of April 29, 2005.


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF EARNINGS (CONDENSED)
(Unaudited)

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

2005

 

2004

 

 

 

 

 

Net sales

 

$

950,390

 

 

812,151

 

Cost of sales

 

 

412,757

 

 

353,766

 

 

 

 

 

Gross profit

 

 

537,633

 

 

458,385

 

Selling, general and administrative expense

 

 

345,426

 

 

296,716

 

 

 

 

 

Operating income

 

 

192,207

 

 

161,669

 

Investment income

 

 

3,866

 

 

2,495

 

Other expense

 

 

(2,694

)

 

(954

)

 

 

 

 

Earnings before income taxes

 

 

193,379

 

 

163,210

 

Income taxes

 

 

62,365

 

 

52,227

 

 

 

 

 

Net earnings

 

$

131,014

 

 

110,983

 

 

 

 

 

Net earnings per average share of common stock (basic and diluted)

 

$

0.58

 

 

0.49

 

 

 

 

 

Dividends declared per share of common stock

 

$

.280

 

 

0.235

 

 

 

 

 

Average number of shares outstanding for the period

 

 

224,884

 

 

224,795

 

 

 

 

 

All amounts in thousands except for per share values.

Notes to financial statements beginning on page 5 are an integral part of these statements.

2


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONDENSED)
(Unaudited)

 

 

Three Months Ended
March 31,

 
   
 

 

 

2005

 

2004

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net earnings

 

$

131,014

 

 

110,983

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation

 

 

39,712

 

 

31,257

 

Loss on retirements of property, plant, and equipment

 

 

2,609

 

 

5,465

 

(Increase) decrease in:

 

 

 

 

 

 

 

Accounts receivable

 

 

(63,008

)

 

(10,202

)

Inventories

 

 

(47,074

)

 

(17,740

)

Other current assets

 

 

(31,136

)

 

(25,287

)

Deferred charges and other assets

 

 

5,438

 

 

129

 

Increase (decrease) in:

 

 

 

 

 

 

 

Accounts payable

 

 

19,853

 

 

(2,907

)

Accrued expenses

 

 

9,093

 

 

419

 

Income and other taxes payable

 

 

23,229

 

 

15,546

 

Deferred taxes

 

 

(3,363

)

 

(440

)

Other noncurrent liabilities

 

 

3,248

 

 

6,778

 

 

 

 

 

Net cash provided by operating activities

 

 

89,615

 

 

114,001

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

Additions to property, plant, and equipment

 

 

(38,595

)

 

(32,038

)

Proceeds from retirements of property, plant, and equipment

 

 

1,091

 

 

1,055

 

Acquisition, net of cash acquired

 

 

(1,526

)

 

—  

 

Purchases of short-term investments

 

 

(4,300

)

 

(10,012

)

Maturities of short-term investments

 

 

4,020

 

 

10,173

 

 

 

 

 

Net cash used in investing activities

 

 

(39,310

)

 

(30,822

)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

Dividends paid

 

 

(52,831

)

 

(49,473

)

Common Stock issued (purchased), net

 

 

8,406

 

 

(27,231

)

 

 

 

 

Net cash used in financing activities

 

 

(44,425

)

 

(76,704

)

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(11,049

)

 

2,537

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

(5,169

)

 

9,012

 

Cash and cash equivalents at beginning of period

 

 

628,553

 

 

505,217

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

623,384

 

 

514,229

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

 

 

Income taxes paid

 

$

52,582

 

 

42,072

 

 

 

 

 

Interest paid

 

$

1,205

 

 

493

 

 

 

 

 

Interest and dividends received

 

$

3,866

 

 

2,495

 

 

 

 

 

All amounts in thousands.
Notes to financial statements beginning on page 5 are an integral part of these statements.

3


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED BALANCE SHEET (CONDENSED)

 

 

March 31,
2005

 

December 31,
2004

 

 

 

 

 
   
(Unaudited)
        

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

623,384

 

 

628,553

 

Short term investments, at amortized cost

 

 

23,041

 

 

22,764

 

Accounts receivable
(less allowance for doubtful accounts;
3/31/05 - $11,444; 12/31/04 - $11,682)

 

 

411,741

 

 

356,389

 

Inventories -

 

 

 

 

 

 

 

Finished goods

 

 

147,602

 

 

135,527

 

Raw materials, work in process and supplies

 

 

292,674

 

 

262,580

 

 

 

 

 

 

 

 

440,276

 

 

398,107

 

Other current assets

 

 

101,031

 

 

65,336

 

Deferred income taxes - current

 

 

31,777

 

 

34,761

 

 

 

 

 

Total current assets

 

 

1,631,250

 

 

1,505,910

 

Marketable equity securities, at fair value

 

 

15,454

 

 

16,970

 

Deferred charges and other assets

 

 

249,237

 

 

250,158

 

Goodwill and other intangibles

 

 

260,534

 

 

210,806

 

Deferred income taxes - noncurrent

 

 

43,829

 

 

40,239

 

Property, plant, and equipment, at cost

 

 

2,027,251

 

 

2,073,487

 

Less accumulated depreciation

 

 

923,895

 

 

930,867

 

 

 

 

 

Net property, plant, and equipment

 

 

1,103,356

 

 

1,142,620

 

 

 

 

 

Total assets

 

$

3,303,660

 

 

3,166,703

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Line of credit

 

$

90,000

 

 

90,000

 

Accounts payable

 

 

232,918

 

 

216,764

 

Accrued expenses

 

 

307,577

 

 

271,236

 

Dividends payable

 

 

62,948

 

 

52,821

 

Income and other taxes payable

 

 

95,347

 

 

76,554

 

Deferred income taxes - current

 

 

10,248

 

 

10,595

 

 

 

 

 

Total current liabilities

 

 

799,038

 

 

717,970

 

Deferred income taxes - noncurrent

 

 

86,869

 

 

88,112

 

Other noncurrent liabilities

 

 

181,363

 

 

181,937

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock  (no par value)

 

 

 

 

 

 

 

Authorized - 20,000 shares

 

 

 

 

 

 

 

Issued - None

 

 

 

 

 

 

 

Common stock  (no par value)

 

 

 

 

 

 

 

Authorized – 1,000,000 and 400,000 shares
at 3/31/05 and 12/31/04, respectively

 

 

 

 

 

 

 

Issued - 199,012 shares at 3/31/05;
198,930 shares at 12/31/04

 

 

13,259

 

 

13,254

 

Class B common stock  (convertible)

 

 

 

 

 

 

 

Authorized – 300,000 and 80,000 shares
at 3/31/05 and 12/31/04, respectively

 

 

 

 

 

 

 

Issued and outstanding -
33,429 shares at 3/31/05;
33,511 shares at 12/31/04

 

 

2,237

 

 

2,242

 

Additional paid-in capital

 

 

21,991

 

 

17,764

 

Retained earnings

 

 

2,503,542

 

 

2,435,838

 

Common stock in treasury, at cost -
(3/31/05 – 7,398 shares; 12/31/04 - 7,670 shares)

 

 

(333,881

)

 

(346,087

)

Accumulated other comprehensive income:

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

20,801

 

 

44,936

 

Gain (loss) on derivative contracts

 

 

(553

)

 

758

 

Unrealized holding gains on marketable equity securities

 

 

8,994

 

 

9,979

 

 

 

 

 

Total accumulated other comprehensive income

 

 

29,242

 

 

55,673

 

 

 

 

 

Total stockholders’ equity

 

 

2,236,390

 

 

2,178,684

 

 

 

 

 

Total liabilities & stockholders’ equity

 

$

3,303,660

 

 

3,166,703

 

 

 

 

 

All amounts in thousands.
Notes to financial statements beginning on page 5 are an integral part of these statements.

4


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)

1.

The Consolidated Statement of Earnings (Condensed) for the three-month period ended March 31, 2005 and 2004, respectively, the Consolidated Statement of Cash Flows (Condensed) for the three-month period ended March 31, 2005 and 2004, and the Consolidated Balance Sheet (Condensed) at March 31, 2005, are unaudited.  In the Company’s opinion, the accompanying financial statements reflect all normal and recurring adjustments necessary to present fairly the results for the periods and have been prepared on a basis consistent with the 2004 audited consolidated financial statements.  These condensed financial statements should be read in conjunction with the 2004 consolidated financial statements and related notes which are an integral part thereof.  Certain amounts recorded in 2004 have been reclassified to conform to the 2005 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.

On April 1, 2004, the Company completed its transaction with Agrolimen, a privately-held Spanish conglomerate, to acquire certain confectionery businesses of the Joyco Group (Joyco).  Cash consideration, including direct acquisition costs, totaled $266 million, net of cash acquired.  The acquisition was funded by a $130 million draw on the $300 million line of credit the Company negotiated for purposes of this transaction with the remaining amount of $136 million funded from the Company’s available cash.  This transaction strengthens the Company’s operations in key geographies such as Spain, India and China through a broader confectionery brand portfolio, access to additional distribution channels and enhanced manufacturing capabilities.  These opportunities along with the synergies from combining the operations of the Company with those of Joyco were key factors associated with the determination of the purchase price and related goodwill. The results of operations for the businesses acquired have been included in the consolidated financial results of the Company since April 1, 2004.

 

 

 

The acquisition has been accounted for under Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations”, and accordingly the purchase method of accounting has been used.  The following table contains the final purchase price allocation, which summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition.
   
  At April 1, 2004 (amounts in thousands)

Cash

 

$

13,131

 

Accounts receivable

 

 

35,708

 

Inventory

 

 

30,939

 

Other current assets

 

 

4,183

 

 

 

 

Total current assets

 

 

83,961

 

Net property, plant, and equipment

 

 

52,803

 

Other non-current assets

 

 

37,874

 

 

 

 

Total assets acquired

 

 

174,638

 

 

 

 

Accounts payable

 

 

28,559

 

Accrued liabilities

 

 

43,411

 

Income and other taxes payable

 

 

10,379

 

Other current liabilities

 

 

1,416

 

 

 

 

Total current liabilities

 

 

83,765

 

Other non-current liabilities

 

 

3,466

 

 

 

 

Total liabilities assumed

 

 

87,231

 

 

 

 

Net assets acquired

 

$

87,407

 

 

 

 

5


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)

 

The Company engaged an independent appraiser to determine the current replacement cost of property, plant and equipment, the fair value of the intangible assets and the remaining useful lives of these assets.  The fair value of the intangible assets on the acquisition date was determined to be $30 million of which none is subject to amortization. The entire amount of intangible assets consists of brand names.  Goodwill of approximately $192 million was recognized in connection with the acquisition, with $152 million and $40 million included in the EMEAI and Asia segments, respectively.  Of that total amount, $145 million is expected to be deductible for tax purposes.

   
  The following table includes the unaudited pro forma combined net sales, earnings, and earnings per share for 2005 and 2004 first quarter as if the Company had acquired the confectionery businesses of Joyco as of January 1, 2004.  In determining the unaudited pro forma amounts, income taxes, interest expense, and depreciation and amortization of assets have been adjusted to the accounting base recognized for each in recording the combination. There were no extraordinary items or cumulative effect of accounting changes included in the pro forma results of operations. (all amounts in thousands except per share figures)

 

 

First Quarter
Three Months Ended

 

 

 

 

 

 

3/31/2005

 

3/31/2004

 

 

 

 

 

Net Sales

 

$

950,390

 

$

877,552

 

Net Earnings

 

 

131,014

 

 

111,493

 

Net Earnings Per Share

 

 

 

 

 

 

 

Basic

 

 

0.58

 

 

0.50

 

Diluted

 

 

0.58

 

 

0.49

 

  The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of 2004, nor are they necessarily indicative of future consolidated results.
   

4.

In connection with the Joyco acquisition, the Company entered into a $300 million unsecured line of credit under which $130 million was initially borrowed as of April 1, 2004.  As of March 31, 2005 the amount outstanding on the line of credit was $90 million.

 

 

 

The interest rate on the line of credit is variable and is indexed to the LIBOR rate.  The Company pays an annual facility fee and additional fees based on amounts drawn. The line of credit expires on March 19, 2007.

 

 

5.

On November 14, 2004, the Company agreed with Kraft Foods Global, Inc. to purchase certain of its confectionery assets.  Under terms of the agreement, the Company will pay approximately $1.48 billion, which will be funded from  approximately $1 billion of long-term debt, with the balance to be funded primarily with commercial paper backed by a credit facility.

 

 

 

The transaction includes the purchase of well-known brands such as LifeSavers, Creme Savers, and Altoids as well as other local and regional brands.  In addition, the transaction includes the purchase of certain production facilities in the United States and Europe.  The purchase will provide additional diversification in key categories of mints and hard and chewy candy, expand the portfolio to customers worldwide, add scale and brand depth to the innovation pipeline, and increase efficiency across the Company’s confectionery supply chain.

 

 

 

The proposed acquisition is subject to customary closing conditions, including regulatory clearances. The Company expects to complete the transaction mid-2005.

6


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)

6.

Basic earnings per share are computed based on the weighted-average number of common shares outstanding, excluding any dilutive effects of stock options.  Dilutive earnings per share are computed based on the weighted-average number of common shares outstanding plus the dilutive effect of stock options.  The dilutive effect of stock options is calculated under the treasury stock method using the average market price for the period. Earnings per share are calculated as follows (all amounts in thousands except per share figures):

 

 

First Quarter
Three Months Ended

 

 

 

 

 

 

3/31/2005

 

3/31/2004

 

 

 

 

 

Net Earnings

 

$

131,014

 

$

110,983

 

Basic Shares Outstanding

 

 

224,884

 

 

224,795

 

Effect of Dilutive Securities – Stock Options

 

 

1,106

 

 

602

 

Dilutive Common Stock

 

 

225,990

 

 

225,397

 

Net Earnings Per Share

 

 

 

 

 

 

 

Basic

 

 

0.58

 

 

0.49

 

Dilutive

 

 

0.58

 

 

0.49

 

7.

On October 22, 2004 the American Jobs Creation Act of 2004 was signed into law, which provides for a special one-time tax deduction of certain foreign earnings that are repatriated in 2005.  The Company has not yet completed its review of the repatriation provisions of this Act.  The Company is currently evaluating its repatriation strategy in regard to the Act and potentially may recognize between $150,000 to $250,000 under the provision of the special one-time tax deduction.  The estimated incremental income tax of these dividends may range from $1,000 to $6,000 net of U.S. deferred taxes previously provided on these foreign earnings.  The Company will complete its evaluation in the third quarter of 2005, subject to the issuance of additional IRS guidance.

 

 

8.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment”, (SFAS 123(R)). This Statement requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

 

 

 

On April 14, 2005 the U.S. Securities and Exchange Commission announced a deferral of the effective date of SFAS 123(R) for calendar year companies until the first quarter of 2006. The Company expects to adopt SFAS 123 (R) in the first quarter of 2006.

7


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)

9.

In the first quarter 2005, the Company continues to apply Accounting Principles Board Opinion (APB) No. 25 and related interpretations in accounting for stock-based compensation plans.  APB No. 25 requires the use of the intrinsic value method, which measures compensation cost as the excess of the quoted market price of the stock at the date of grant over that amount an employee must pay to acquire the stock.  As the exercise price equaled the fair market value on the date of grant, no compensation expense has been recognized for the Wrigley Stock Option program.  The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, to stock compensation plans (all amounts in thousands except per share figures).

 

 

First Quarter
Three Months Ended

 

 

 

 

 

 

3/31/2005

 

3/31/2004

 

 

 

 

 

Net earnings as reported

 

 

$131,014

 

 

110,983

 

Add:

Stock-based compensation expense included in net earnings, net of tax

 

 

5,569

 

 

3,067

 

Deduct:

Total stock-based compensation expense determined under fair value method all awards, net of tax

 

 

(8,716

)

 

(6,796

)

 

 

 

 

Pro forma net earnings

 

$

127,867

 

 

107,254

 

 

 

 

 

Basic and diluted earnings per share

 

 

 

 

 

 

 

As reported

 

$

0.58

 

 

0.49

 

Pro forma

 

$

0.57

 

 

0.48

 

10.

An analysis of the cumulative foreign currency translation adjustment follows (in thousands of dollars).

 

 

Increase/(Decrease) to
Stockholders’ Equity

 

 

 

 

First Quarter

 

2005

 

2004

 

 

 

 

Balance at January 1

 

$

44,936

 

 

(42,692

)

Translation adjustment for the first quarter

 

 

(24,135

)

 

(2,926

)

 

 

 

 

Balance at March 31

 

$

20,801

 

 

(45,618

)

 

 

 

 

8


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)

11.

An analysis of comprehensive income is provided below (in thousands of dollars).

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

2005

 

2004

 

 

 

 

 

Net earnings

 

$

131,014

 

 

110,983

 

 

 

 

 

Changes in other comprehensive income, before tax:

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(21,447

)

 

(2,839

)

Unrealized holding losses on securities

 

 

(1,516

)

 

(283

)

Loss on derivative contracts

 

 

(1,925

)

 

(511

)

 

 

 

 

Changes in other comprehensive income, before tax

 

 

(24,888

)

 

(3,633

)

Changes in income tax (expense) benefit related to items of other comprehensive income

 

 

(1,543

)

 

187

 

 

 

 

 

Changes in other comprehensive income, net of tax

 

 

(26,431

)

 

(3,446

)

 

 

 

 

Total comprehensive income

 

$

104,583

 

 

107,537

 

 

 

 

 

12.

The Company applies the provisions of SFAS 132 (revised) “Employers’ Disclosures about Pensions and Other Postretirement Benefits” in accounting for pension and postretirement plans.  The Statement requires more complete information in both annual and interim financial statements about pension and postretirement benefits as well as to increase the transparency of the financial reporting related to those plans and benefits.  The following information provides the first quarter net periodic costs for both the Company’s U.S. and Non-U.S. pension and postretirement plans, and an update on the total amount of contributions paid and expected to be paid during the current year for the Company’s U.S. and Non-U.S. pension and postretirement plans (in thousands of dollars).

 

 

 

The components of net pension costs are as follows:

 

 

U.S. Plans
Three Months Ended
March 31,

 

Non-U.S. Plans
Three Months Ended
March 31,

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

Service Cost

 

$

3,400

 

 

3,100

 

 

2,800

 

 

2,100

 

Interest Cost

 

 

6,000

 

 

5,600

 

 

3,000

 

 

2,500

 

Expected Return on Plan Assets

 

 

(7,000

)

 

(6,200

)

 

(3,000

)

 

(2,500

)

Amortization of Unrecognized Transition Assets

 

 

—  

 

 

—  

 

 

(100

)

 

(100

)

Prior Service Costs Recognized

 

 

500

 

 

100

 

 

100

 

 

100

 

Recognized Net Actuarial Loss

 

 

1,300

 

 

1,400

 

 

600

 

 

400

 

Other Pension Plans

 

 

—  

 

 

—  

 

 

400

 

 

400

 

 

 

 

 

 

 

Net Pension Cost

 

$

4,200

 

 

4,000

 

 

3,800

 

 

2,900

 

 

 

 

 

 

 

9


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)

 

 The Company previously disclosed in its financial statements for the year ended December 31, 2004, that it did not expect a need to fund the U.S. pension plan in 2005.    The Company continues to anticipate not having to fund the U.S. pension plan in 2005.  The Company previously disclosed in its notes to the financial statements for the year ended December 31, 2004, that it expected to contribute approximately $7,000 to the Non-U.S. plans during 2005.  The Company presently anticipates contributing an additional $2,200 to fund its Non-U.S. plans in 2005 for a total of $9,200.   As of March 31, 2005, no contributions have been made to the U.S. plan.  As of March 31, 2005, $900 of contributions have been made to the Non-U.S. plans.
   
  The components of net post-retirement benefit costs are as follows:

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

2005

 

2004

 

 

 

 

 

Service Cost

 

$

700

 

 

600

 

Interest Cost

 

 

800

 

 

700

 

Expected Return on Plan Assets

 

 

(500

)

 

(400

)

Recognized Net Actuarial Loss

 

 

300

 

 

300

 

 

 

 

 

Net Post-Retirement Benefit Cost

 

$

1,300

 

 

1,200

 

 

 

 

 

  The Company previously disclosed in its notes to the financial statements for the year ended December 31, 2004, that it expected to contribute $3,000 and $90 to the U.S. and Non-U.S. plans, respectively, during 2005.  The expected 2005 total year contribution for the U.S. plan has not changed.  The Company presently anticipates contributing an additional $410 to fund its Non-U.S. post-retirement plan in 2005 for a total of $500.   As of March 31, 2005, $800 of contributions have been made to the U.S. postretirement plan and no contributions have been made to the Non-U.S. postretirement plan.

10


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 1 (Cont’d)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)

13.

Segment Information

 

 

 

Management organizes the Company’s chewing gum and other confectionery business based principally on geographic regions.   Descriptions of the Company’s reportable segments are as follows:

 

 

•

North America – These operations manufacture and market gum and other confectionery products in the U.S. and Canada.

 

 

 

 

 

 

•

EMEAI –These operations manufacture and market gum and other confectionery products principally in Europe as well as in the Middle East, Africa, and India.  Also included are Joyco operations that manufacture and market gum and other confectionery products in this region.

 

 

 

 

 

 

•

Asia – These operations manufacture and market gum and other confectionery products in a number of Asia geographies including China, Taiwan, and the Philippines.  Also included are Joyco operations that manufacture and market gum and other confectionery products in this region.

 

 

 

 

 

 

•

Other Geographic Regions – These operations manufacture and market gum and other confectionery products in the Pacific and Latin American regions.

 

 

 

 

 

Information by segment is as follows (in thousands of dollars):

 

 

Three Months Ended
March 31,

 

 

 

 

Net Sales

 

2005

 

2004

 

 

 

 

North America

 

$

307,746

 

 

286,771

 

EMEAI

 

 

447,917

 

 

385,694

 

Asia

 

 

140,029

 

 

100,639

 

Other Geographic Regions

 

 

40,294

 

 

35,519

 

All Other

 

 

14,404

 

 

3,528

 

 

 

 

 

Net Sales

 

$

950,390

 

 

812,151

 

 

 

 

 

 

“All Other” net sales consist primarily of sales of gumbase, including Joyco gum base sales to third parties.

 

 

Three Months Ended
March 31,

 

 

 

 

Operating Income

 

2005

 

2004

 

 

 

 

North America

 

$

86,739

 

 

69,817

 

EMEAI

 

 

109,458

 

 

96,321

 

Asia

 

 

44,485

 

 

33,869

 

Other Geographic Regions

 

 

5,117

 

 

7,498

 

All Other

 

 

(53,592

)

 

(45,836

)

 

 

 

 

Operating Income

 

$

192,207

 

 

161,669

 

 

 

 

 

 

“All Other” operating income includes corporate expenses such as costs related to research and development, information systems, and certain administrative functions, and operating results from the manufacturing and sale of gumbase to third parties.  Also included are Joyco’s research and development expenses, operating results from Joyco’s manufacture and sale of gumbase to third parties and certain integration costs related to the acquisition.

11


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS

Overview
The Wm. Wrigley Jr. Company achieved double digit volume, sales and earnings growth in the first quarter of 2005 compared to 2004.  Earnings per share were up 18% on global sales growth of 17%. 

Sales increases were driven by worldwide shipment growth of 17%.  The increase in volume was driven by a solid performance of the Wrigley businesses across all regions and the acquisition of certain confectionery assets of the Joyco Group (Joyco), completed on April 1, 2004.  The North America region, primarily the U.S., experienced steady volume growth and positive product mix with the popularity of the premium priced Orbit and Orbit White products.  The EMEAI (principally Europe) region experienced strong volume growth due to the impact of the Joyco acquisition and the volume performances in the Eastern\Central Europe geographies of Russia and Ukraine.  The Asia region experienced strong volume growth in China and the impact of the Joyco acquisition contributed to the increase in net sales.   Other Geographic Regions (the Pacific and Latin America regions) also added to volume and sales growth due to increased shipments in Mexico and Australia.

In the first quarter 2005, currency continued to have a positive impact to net earnings and earnings per share.  On a per share basis, translation of stronger foreign currencies, across all regions, to a weaker U.S. dollar contributed $0.02 of the $0.09 increase to earnings per share. 

Net Sales
Consolidated net sales for the first quarter were $950.4 million, an increase of $138.2 million or 17% versus the first quarter of 2004.  Higher worldwide shipments, including the impact of the Joyco acquisition, increased net sales by 14%.  Translation of stronger foreign currencies, primarily in Europe, to the weaker U.S. dollar increased net sales by approximately 3%.

North America net sales in the first quarter of 2005 were $307.7 million, an increase of $21.0 million or 7% compared to the first quarter of 2004.  Higher shipment volume in the U.S. and Canada increased net sales by 5%.  In the U.S. the volume growth was driven by the Orbit and Extra brands and in Canada the volume increase was driven by the Excel and Extra brands.  Favorable product mix increased net sales by 1%.   North America net sales increased 1% as a result of translation of the stronger Canadian dollar to a weaker U.S. dollar.

EMEAI (principally Europe) net sales for the first quarter were $447.9 million, an increase of $62.2 million or 16% compared to the first quarter of 2004.  Overall shipments increased net sales by 10%, including 7% from the sales of Joyco products.  The remaining 3% increase in shipments was led by growth in the Eastern/Central European geographies of Russia, Ukraine, and Poland.  Lastly, translation of the stronger European currencies, primarily the Euro, British pound, and Polish zloty, to a weaker U.S. dollar increased net sales by 6%.

Asia net sales for the first quarter were $140.0 million, an increase of $39.3 million or 39% compared to the first quarter of 2004.  Higher overall shipments increased net sales by 35%, including 13% from the sales of  Joyco products.  The remaining 22% increase in shipments was mainly due to growth in China, Vietnam, and Taiwan.  Favorable product mix due to increased sales of Extra in China increased net sales by 3%.  Translation of a stronger New Taiwan dollar to a weaker U.S. dollar increased net sales by 1%.

Other Geographic Regions (the Pacific and Latin America regions) net sales were $40.3 million, an increase of $4.8 million or 13% versus the first quarter of 2004.  Higher volume in Mexico and Australia increased net sales by 15%.  Unfavorable product mix primarily in the Latin America region decreased net sales by 6%.  Translation of the stronger Australian dollar to a weaker U.S. dollar increased net sales by 4%.

12


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 2 (Cont’d)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Operating Income
The following table presents components of operating income as a percentage of sales.  “Other” expense reported in merchandising and promotion includes brand research spending and royalty fees paid to third parties.

 

 

Three Months Ended
March 31,

 

 

 

 

 

 

2005

 

2004

 

 

 

 

 

Gross Profit

 

 

56.6

%

 

56.4

%

Selling, General and Administrative

 

 

 

 

 

 

 

Advertising

 

 

(11.9

)%

 

(13.0

)%

Merchandising and Promotion/Other

 

 

(5.2

)%

 

(5.6

)%

Selling and Other Marketing

 

 

(10.4

)%

 

(9.6

)%

General and Administrative

 

 

(8.8

)%

 

(8.4

)%

 

 

 

 

Total Selling, General and Administrative

 

 

(36.3

)%

 

(36.5

)%

 

 

 

 

Operating Income*

 

 

20.2

%

 

19.9

%

 

 

 

 

*May not total due to rounding

Consolidated first quarter 2005 operating income increased $30.5 million or 19% compared to the 2004 first quarter.  Across all regions, translation of foreign currency to a weaker U.S. dollar increased operating income by $8.1 million or 5%.  Gross profit increased $79.2 million or 17% versus 2004 due to higher volume and the impact of exchange.  Gross margin as a percentage of net sales increased 0.2 percentage points, compared to the first quarter of 2004, due to favorable product costs, offset by the impact of the Joyco acquisition and its current margins.  Translation of stronger foreign currencies increased gross profit $20.2 million or 4%.  Selling, general and administrative (SG&A) expense increased $48.7 million or 16% from 2004 mainly due to the impact of Joyco operations, higher selling expense in the EMEAI region, increased brand support spending in Asia, and foreign exchange.  Translation of stronger foreign currencies to a weaker U.S. dollar increased SG&A by $12.1 million or 4%.

North America first quarter 2005 operating income increased $16.9 million or 24% versus the 2004 first quarter.  The translation of a stronger Canadian dollar to a weaker U.S. dollar increased operating income $0.8 million or 1%.  Gross profit increased $18.2 million or 12% from 2004 due to higher volume, improved gross margins, and the impact of exchange.  Gross margins as a percentage of sales increased 2.3 percentage points due to lower product costs.  Translation of a stronger Canadian dollar increased gross profit $1.7 million or 1%.   SG&A expense increased $1.3 million or 2% mainly due to the impact of  foreign exchange.  The impact of foreign exchange increased SG&A by $0.9 million or 1%.

EMEAI first quarter 2005 operating income increased $13.1 million or 14% versus the 2004 first quarter.  The translation of stronger European currencies to a weaker U.S. dollar increased operating income $5.8 million or 6%.  Gross profit increased $41.2 million or 18% from 2004 due to higher volume, impact of exchange, and improved gross margins.  Gross margins as a percentage of sales increased 0.9 percentage points due to improved margins in France, a result of beginning direct sales to retail customers thereby reducing distribution costs.  Translation of stronger European currencies increased gross profit $16.2 million or 7%.   SG&A expense increased $28.1 million or 21% mainly due to the impact of the Joyco operations and foreign exchange.  In addition, higher selling expense in France, in support of the new direct sales operations, contributed to the increase.  The impact of foreign exchange increased SG&A by $10.4 million or 8%.

13


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 2 (Cont’d)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Asia first quarter 2005 operating income increased $10.6 million or 31% versus the 2004 first quarter.  The translation of a stronger New Taiwan dollar to the U.S. dollar increased operating income $0.5 million or 1%.  Gross profit increased $19.2 million or 30% from 2004 due to higher volume and the impact of exchange, offset by lower gross margins.  Gross margins as a percentage of sales decreased 4.2 percentage points due to Joyco’s lower margin product portfolio.  Translation of a stronger New Taiwan dollar increased gross profit by $0.8 million or 1%.   SG&A expense increased $8.6 million or 29% mainly due to higher brand support in China and Taiwan and the impact of the Joyco operations.  The impact of foreign exchange increased SG&A by $0.3 million or 1%.

Other Geographic Regions first quarter 2005 operating income decreased $2.4 million or 32% versus the 2004 first quarter.  The translation of a stronger Australian and New Zealand dollar to the U.S. dollar increased operating income $0.5 million or 7%.  Gross profit decreased $0.7 million or 4% from 2004 due to lower gross margins offset by higher volume and the impact of exchange.  Gross margins as a percentage of sales decreased 7.6 percentage points due to unfavorable product mix in Mexico.  Translation of stronger Australian and New Zealand dollars to the U.S. dollar increased gross profit by $0.8 million or 5%.   SG&A expense increased $1.7 million or 17% mainly due increased brand support spending in Mexico and higher general administrative expense in Australia.  The impact of foreign exchange increased SG&A by $0.3 million or 3%.

All Other first quarter 2005 operating expense increased $7.8 million or 17% compared to the first quarter of 2004.  The increase is primarily due to costs associated with the shareholder approved increase in authorized shares and increased research and development expense.

Investment Income
Investment income for the first quarter of 2005 was $3.9 million compared to $2.5 million for the first quarter of last year.  The increase was due primarily to higher worldwide yields and cash balances.

Other Expense
Other expense for the first quarter of 2005 was $2.7 million, compared to other expense of $1.0 million for the first quarter of last year.  The increase was mainly due to interest expense on the use of the Company’s line of credit and market-driven portfolio losses in 2005, compared to gains in 2004, associated with the cash surrender value of company-owned life insurance.

Income Taxes
Income taxes for the first quarter were $62.4 million, up $10.1 million or 19% from the first quarter of 2004 due primarily to an increase in pretax earnings of $30.2 million or 18%.  The consolidated effective tax rate was 32.2% compared to 32.0% for 2004 first quarter.  

LIQUIDITY AND CAPITAL RESOURCES

Operating Cash Flow and Current Ratio
Net cash provided by operating activities for the first three months of 2005 was $89.6 million, compared to $114.0 million for the same period in 2004.  The decrease is primarily due to higher working capital requirements as a result of increased sales in 2005. The Company had a current ratio (current assets divided by current liabilities) in excess of 2.0 at March 31, 2005 and December 31, 2004.

Additions to Property, Plant, and Equipment
Capital expenditures for the first quarter were $38.6 million compared to $32.0 million in the first quarter last year.  The increase was due primarily to the Company’s investment in a new innovation facility, which is expected to open in the second quarter of 2005.  For the full year 2005, capital expenditures are expected to be somewhat above 2004 levels and are also planned to be funded from the Company’s cash flow from operations.

14


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 2 (Cont’d)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Line of Credit
In connection with the Joyco acquisition, the Company entered into a $300 million unsecured line of credit under which $130 million was initially borrowed as of April 1, 2004. As of March 31, 2005 the amount outstanding on the line of credit was $90 million.  The Company repaid the remaining outstanding portion on the line of credit, $90 million, on April 1, 2005.

The interest rate on the line of credit is variable and is indexed to the LIBOR rate.  The Company pays an annual facility fee and additional fees based on amounts drawn. The line of credit expires on March 19, 2007.

Additional External Capital Resources
On March 1, 2005 the Company filed a shelf registration prospectus (Form S-3) with the SEC that would allow the Company to issue, from time to time, debt securities, which may be senior debt securities or subordinated debt securities, preferred stock, common stock, warrants, stock purchase contracts or stock purchase units.  The aggregate initial offering price of all securities sold by the Wm. Wrigley Jr. Company, under the prospectus, will not exceed $2 billion.

15


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 2e

REPURCHASES OF EQUITY SECURITIES

Period

 

Total
Number
of Shares
Purchased
(a)(1)

 

Average
Price Paid
Per Share (b)

 

Total Number of
Shares Purchased
as Part of Publicly
Announced Share
Repurchase Plan(c)

 

Approximate Dollar Value of
Shares that May Yet Be
Purchased Under the Share
Repurchase Plan (d)(2)

 

 

 

 

 

 

January 1st – January 31st

 

 

5,320

 

 

68.67

 

 

—  

 

 

360,343,000

 

February 1st – February 28th

 

 

—  

 

 

—  

 

 

—  

 

 

360,343,000

 

March 1st – March 31st

 

 

—  

 

 

—  

 

 

—  

 

 

360,343,000

 

(1)

Total number includes shares purchased by the Company in the open market, to provide shares for the Company’s Stock Deferral Program for Non-employee Directors under the Company’s 1997 Management Incentive Plan, as amended.  The Stock Deferral Program for Non-employee Directors increases Non-employee Director’s beneficial ownership in the Company and more closely aligns their interest in the long-term growth and profitability of the Company with that of the stockholder.

 

 

(2)

Represents actual number of shares under the Board of Directors authorized and publicly announced Share Repurchase Program resolutions of January 28, 2004, to purchase up to $100,000,000 of shares and August 18, 2004 to purchase up to $300,000,000 of shares, in the open market.  At March 31, 2005, $360,343,000 remains available for repurchase under the Program.  The Program will expire when the authorized amount is completely utilized.

16


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 3 AND 4

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Market Risk
Inherent in the Company’s operations are certain risks related to foreign currency, interest rates, and the equity markets.  The Company’s primary areas of market risk are foreign currency exchange rate risk and interest rate risk. The Company identifies these risks and mitigates their financial impact through its corporate policies and hedging activities.  The Company’s hedging activities include the use of derivative financial instruments.  The Company uses derivatives only when the hedge is highly effective and does not use them for trading or speculative purposes.  The counterparties to the hedging activities are highly rated financial institutions. The Company believes that movements in market values of financial instruments used to mitigate identified risks are not expected to have a material near-term impact on future earnings, cash flows, or reported fair values.  The Company’s exposure to equity price risk would not have a significant impact on future earnings, fair value or cash flows.

Forward-Looking Statements
This report and any documents incorporated by reference may include forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21 E of the Exchange Act. Statements and financial disclosure that are not historical facts are forward looking statements within the meaning of such regulations, as well as the Private Securities Litigation Reform Act of 1995.  These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on current beliefs of management as well as assumptions made by, and information currently available to, us.  Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions.  Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate.

Forward-looking statements involve a number of risks and uncertainties that could cause actual results to vary.  Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation:

 

•

In those markets where we maintain market leadership, our ability to retain preferred retail space allocation will impact results, and if we are not able to retain this allocation, our results could be negatively impacted.

 

 

 

 

•

Failure to maintain the availability, pricing and sourcing of raw materials could negatively impact results.

 

 

 

 

•

We market our products to different segments of the population.  Failure to adequately anticipate and react to changing demographics and product preferences could negatively impact results.

 

 

 

 

•

Both manufacturing and sales of a significant portion of our products are outside the United States and could be negatively impacted by volatile foreign currencies and markets.

 

 

 

 

•

We compete worldwide with other well-established manufacturers of confectionery products, including chewing gum.  Our results may be negatively impacted by a failure of new or existing products to be favorably received, by ineffective advertising, or by failure to sufficiently counter aggressive competitive actions.

 

 

 

 

•

Underutilization of or inadequate manufacturing capacity due to unanticipated movements in consumer demands could materially affect manufacturing efficiencies and costs.

 

 

 

 

•

Discounting and other competitive actions may make it more difficult for us to maintain our operating margins.

17


FORM 10-Q
PART I – FINANCIAL INFORMATION – ITEM 3 AND 4

 

•

Governmental regulations with respect to import duties, tariffs and environmental controls, both in and outside the U.S., could negatively impact our costs and ability to compete in domestic or foreign markets.

 

 

 

 

•

To the extent we would experience any material labor stoppages, such disputes or strikes could negatively affect shipments from suppliers or shipments of finished product.

 

 

 

 

•

Our ability to successfully acquire and integrate certain confectionery assets of Kraft Foods Global, Inc. could cause actual results to differ from anticipated results or expectations.

 

 

 

 

•

While the countries in which we operate tend to be politically, socially and economically stable, to the extent there is political or social unrest, civil war, terrorism or significant economic instability, the results of our business in such countries could be negatively impacted.

Additional factors that may affect the operations, performance, development and results of our business include the risks and uncertainties described above, those listed from time to time in our filings with the SEC and the risk factors or uncertainties listed herein or listed in any document incorporated by reference herein.

The factors identified above are believed to be important factors, but not necessarily all of the important factors, that could cause actual results to differ materially from those expressed in any forward-looking statement.  Unpredictable or unknown factors could also have material effects on us.  All forward-looking statements included in this report and in the documents incorporated by reference herein are expressly qualified in their entirety by the foregoing cautionary statements.  Except as required by law, we undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

Item 4 - Controls and Procedures

(i)          Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2005.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2005. 

(ii)          Changes in Internal Control Over Financial Reporting
There was no change in the Company’s internal control over financial reporting during the first quarter ended March 31, 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

18


Form 10Q
PART II – OTHER INFORMATION

Item 4 – Submission of Matters to Vote of Security Holders

 

The Annual Meeting of Stockholders (“Annual Meeting”) of the Company was held on Tuesday, March 8, 2005 to consider the following proposals:

 

 

 

(1)

Election of three Class III Directors to serve on the Board until the Annual Meeting in 2008;

 

 

 

 

(2)

Approval of the amendment of Article FOURTH of the Company’s Restated Certificate of Incorporation to (i) increase the number of authorized shares of Common Stock from 400,000,000 to 1,000,000,000 shares and (ii) to increase the number of authorized shares of Class B Common Stock from 80,000,000 to 300,000,000 shares;

 

 

 

 

(3)

Ratification of the appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 2005; and

 

 

 

 

(4)

Consideration of a shareholder proposal to amend the proxy card with respect to the election of directors, by substituting “withhold” with “against”.

 

 

 

 

The results of the voting on each matter, as determined by the independent inspectors of election, are as follows:

 

 

 

Proposal 1. Election of Three Class III Directors. With each class of stock voting together, a total of 479,674,492 votes were submitted for the election of each nominee as Class III Directors to serve on the Board until the Annual Meeting in 2008 as follows:

Nominee

 

For

 

Withheld

 

 

 

 

John Rau

 

 

476,037,493

 

 

3,636,999

 

Richard K. Smucker

 

 

475,191,243

 

 

4,483,249

 

William Wrigley, Jr.

 

 

474,874,758

 

 

4,799,734

 

 

Proposal 2.  Approval of the Amendment of Article FOURTH of the Company’s Restated Certificate of Incorporation. With holders of each class of stock voting separately by class, a total of 170,737,362 votes and 308,937,130 votes were submitted by the holders of Common Stock and holders of Class B Common Stock, respectively, for the approval of the amendment of Article FOURTH of the Company’s Restated Certificate of Incorporation as follows:

 

 

For

 

Against

 

Abstain

 

 

 

 

 

 

Common Stock

 

 

105,524,230

 

 

63,676,080

 

 

1,537,052

 

Class B Common Stock

 

 

304,247,710

 

 

4,470,020

 

 

219,400

 

 

Proposal 3. Ratification of Appointment of Ernst & Young LLP as Independent Auditors. With each class of stock voting together, a total of 479,674,492 votes were submitted for the ratification of the appointment of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2005 as follows:

For

 

Against

 

Abstain

 

 

 

 

476,461,765

 

 

1,675,022

 

 

1,537,705

 

 

Proposal 4. Shareholder Proposal. With each class of stock voting together, a total of 479,674,492 votes were submitted for the shareholder proposal as follows:

Votes For

 

Votes Against

 

Votes Abstain

 

Non Votes

 

 

 

 

 

11,301,062

 

 

432,814,786

 

 

8,228,540

 

 

27,330,104

 

19


Form 10Q
PART II – OTHER INFORMATION

Item 6 – Exhibits

     (a)     Exhibits reference is made to the Index to Exhibits on page 22.

20


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/   DUANE PORTWOOD

 

 

 

 

Duane Portwood
Controller
Authorized Signatory and Chief Accounting Officer

Date     05/10/05

 

 

21


WM. WRIGLEY JR. COMPANY AND WHOLLY OWNED ASSOCIATED COMPANIES

INDEX TO EXHIBITS
(Item 6)

Exhibit
Number

 

Description of Exhibit

 

3.

 

Articles of Incorporation and By-laws.

 

 

 

(i).

 

Certificate of Incorporation of the Registrant.

 

 

 

 

 

 

(a)

Restated Certificate of Incorporation of Wm. Wrigley Jr. Company, as amended by the Certificate of Amendment of the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated March 22, 2005, is attached hereto as Exhibit 3(i)(a);

 

 

 

 

 

 

 

 

(b)

Certificate of Amendment of the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated March 22, 2005, is attached hereto as Exhibit 3(i)(b).

 

 

 

 

 

(ii).

 

By-laws of the Registrant.  The Registrant’s Amended and Restated By-laws effective March 5, 2002 is incorporated by reference to Exhibit 3(ii) of the Company’s Quarterly Report on Form 10-Q filed for the fiscal quarter ended March 31, 2002.

 

 

 

4.

 

Instruments defining the rights of security holders.  The Stockholder Rights Plan is incorporated by reference to Exhibit 4.1 of the Company’s Report on Form 8-K filed June 5, 2001.

 

 

 

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, 1995.

 

 

 

10(d).

 

Wm. Wrigley Jr. Company 1997 Management Incentive Plan.  The Registrant’s Amended Management Incentive Plan, effective as of March 9, 2004 (“MIP”), is incorporated by reference to Exhibit 10(d) to the Company’s Form 10-Q for the fiscal quarter ended March 31, 2004.

 

 

 

10(e).

 

Deferred Compensation Program for Non-Employee Directors under the MIP is incorporated by reference to Exhibit 10(e) to the Company’s Form 10-K filed for the fiscal year ended December 31, 2004.

 

 

 

10(f).

 

Stock Deferral Program For Non-Employee Directors under the MIP is incorporated by reference to Exhibit 10(f) to the Company’s Form 10-K filed for the fiscal year ended December 31, 2004.

 

 

 

10(g).

 

Stock Award Program under the MIP is incorporated by reference to Exhibit 10(g) to the Company’s Form 10-K filed for the fiscal year ended December 31, 2004.

 

 

 

10(h).

 

Stock Option Program under the MIP is incorporated by reference to Exhibit 10(h) to the Company’s Form 10-K filed for the fiscal year ended December 31, 2004.

 

 

 

10(i).

 

Executive Incentive Compensation Program under the MIP is incorporated by reference to Exhibit 10(i) to the Company’s Form 10-K filed for the fiscal year ended December 31, 2004.

 

 

 

10(j)

 

Executive Incentive Compensation Deferral Program under the MIP is incorporated by reference to Exhibit 10(j) to the Company’s Form 10-K filed for the fiscal year ended December 31, 2004.

22


WM. WRIGLEY JR. COMPANY AND WHOLLY OWNED ASSOCIATED COMPANIES

INDEX TO EXHIBITS
(Item 6)

Exhibit
Number

 

Description of Exhibit

 

10(k)

 

Long-term Stock Grant Program under the MIP is incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed on January 31, 2005.

 

 

 

10(l).

 

Forms of Change-in-Control Severance Agreement.  Incorporated by reference to Exhibits 10(h) and 10(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.

 

 

 

10(m)

 

Asset Purchase Agreement dated November 14, 2004, between Kraft Foods Global, Inc. and Wm. Wrigley Jr. Company is incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed on November 18, 2004.

 

 

 

10(n)

 

Restricted Stock Program under the MIP is incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed on February 22, 2005.

 

 

 

10(o)

 

 

(i)

Commercial Paper Dealer Agreement dated April 29, 2005 between Wm. Wrigley Jr. Company and Merrill Lynch Money Markets Inc. and Merrill Lynch Pierce, Fenner & Smith Incorporated is incorporated herein by reference to Exhibit 99.1(a) to the Company’s Form 8-K filed on May 4, 2005.

 

 

 

 

 

 

 

 

(ii)

Commercial Paper Dealer Agreement dated April 29, 2005 between Wm. Wrigley Jr. Company and Goldman Sachs & Co. incorporated herein by reference to Exhibit 99.1(b) to the Company’s Form 8-K filed on May 4, 2005.

 

 

 

 

 

 

 

 

(iii)

Commercial Paper Dealer Agreement dated April 29, 2005 between Wm. Wrigley Jr. Company and J.P. Morgan Securities Inc. is incorporated herein by reference to Exhibit 99.1(c) to the Company’s Form 8-K filed on May 4, 2005.

 

 

 

 

 

10(p)

 

Issuing and Paying Agency Agreement dated April 29, 2005, between Wm. Wrigley Jr. Company and JP Morgan Chase Bank, N.A. is incorporated herein by reference to Exhibit 99.2 to the Company’s Form 8-K filed on May 4, 2005.

 

 

 

14.

 

Code of Ethics – Code of Business Conduct is incorporated by reference to Exhibit 14 of the Company’s Annual Report on Form 10-K filed for the fiscal year ended December 2003.

 

 

 

31.

 

Rule 13a-14(a)/15d-14(a) Certification of:

 

 

 

 

 

 

(i)

Mr. William Wrigley, Jr., Chairman of the Board, President and Chief Executive Officer; and

 

 

 

 

 

 

 

 

(ii)

Mr. Reuben Gamoran, Vice President and Chief Financial Officer.

 

 

 

 

 

 

 

Attached hereto as Exhibits 31(i) and (ii) respectively.

 

 

 

32.

 

Section 1350 Certifications of:

 

 

 

 

 

 

(i)

Mr. William Wrigley, Jr., Chairman of the Board, President and Chief Executive Officer; and

 

 

 

 

 

 

 

 

(ii)

Mr. Reuben Gamoran, Vice President and Chief Financial Officer.

 

 

 

 

 

 

 

Attached hereto as Exhibits 32(i) and (ii) respectively

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.

23