form10q

10-Q 1 form10q.htm FOR PERIOD ENDING JUNE 30, 2001 form10q

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, 2001

[ ]	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 30,2001			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

182,678,726 shares of Common Stock and 43,126,868 shares of Class B Common Stock were outstanding as of July 31, 2001.

PART 1 - FINANCIAL INFORMATION - ITEM 1

WM. WRIGLEY JR. COMPANY

CONSOLIDATED STATEMENT OF EARNINGS (CONDENSED)

(Unaudited)

			Three Months Ended		Six Months Ended
			June 30,		June 30,
			2001	2000	2001	2000

Net sales		$	623,892	570,224	1,185,515	1,073,515

Cost of sales			251,096	235,495	479,491	450,461

Gross profit			372,796	334,729	706,024	623,054

Selling and general administrative			230,188	203,195	447,919	387,327

Operating income			142,608	131,534	258,105	235,727

Investment income			3,628	4,159	7,717	7,891

Other income / (expense)			(575)	(533)	(766)	472

Earnings before income taxes			145,661	135,160	265,056	244,090

Income taxes			45,628	43,057	83,493	77,382

Net earnings		$	100,033	92,103	181,563	166,708

Net earnings per average share
	of common stock (basic and diluted)	$	0.44	0.40	0.80	0.73

Dividends declared per share
	of common stock	$	0.19	0.175	0.38	0.35

Average number of shares
	outstanding for the period		225,605	227,528	225,577	228,007


All amounts in thousands except for per share values.

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

PART 1 - FINANCIAL INFORMATION - ITEM 1 (Cont'd)

WM. WRIGLEY JR. COMPANY

CONSOLIDATED STATEMENT OF EARNINGS (CONDENSED)

(Unaudited)

													Six Months Ended June 30,

													2001		2000
OPERATING ACTIVITIES
			Net earnings									$	181,563		166,708
			Adjustments to reconcile net earnings to net
					cash provided by operating activities:
					Depreciation								31,054		28,372
					Loss on sales of property, plant,
								and equipment					212		355
					(Increase) decrease in:
								Accounts receivable					(65,729)		(45,188)
								Inventories					(36,661)		(4,085)
								Other current assets					(11,705)		4,727
								Other assets and deferred charges					(3,917)		27,793
					Increase (decrease) in:
								Accounts payable					14,372		6,078
								Accrued expenses					48,289		48,915
								Income and other taxes payable					18,800		10,973
								Deferred taxes					(165)		1,460
								Other noncurrent liabilities					2,986		1,295

			Net cash provided by operating activities										179,099		247,403

INVESTING ACTIVITIES
			Additions to property, plant, and equipment										(57,649)		(61,357)
			Proceeds from property retirements										1,300		1,732
			Purchases of short-term investments										(14,482)		(84,844)
			Maturities of short-term investments										17,341		74,390

			Net cash used in investing activities										(53,490)		(70,079)

FINANCING ACTIVITIES
			Dividends paid										(82,336)		(79,933)
			Common stock purchased										(1,275)		(75,037)

			Net cash used in financing activities										(83,611)		(154,970)
Effect of exchange rate changes on cash and
	cash equivalents												(9,472)		(7,741)

Net increase in cash and cash equivalents													32,526		14,613
Cash and cash equivalents at beginning of period													300,599		288,386

Cash and cash equivalents at end of period												$	333,125		302,999

SUPPLEMENTAL CASH FLOW INFORMATION

Income taxes paid												$	68,637		67,446
Interest paid												$	373		380
Interest and dividends received												$	7,534		7,970

All amounts in thousands.
Notes to financial statements beginning on page 5 are an integral part of these statements.
PART 1 - FINANCIAL INFORMATION - ITEM 1 (Cont'd) WM. WRIGLEY JR. COMPANY CONSOLIDATED BALANCE SHEET (CONDENSED) (Unaudited)
											June 30,			December 31,
											2001			2000
Current assets:
		Cash and cash equivalents								$	333,125			300,599
		Short-term investments, at amortized cost									26,441			29,301
		Accounts receivable
				(less allowance for doubtful accounts;
				6/30/01 - $9,074; 12/31/00 - $8,186)							247,558			191,570
		Inventories -
				Finished goods							74,215			64,676
				Raw materials and supplies							209,900			188,615
											284,115			253,291

		Other current assets									51,694			39,728
		Deferred income taxes - current									13,141			14,226
				Total current assets							956,074			828,715

Marketable equity securities at fair value											26,800			28,535
Deferred charges and other assets											88,096			83,713
Deferred income taxes - noncurrent											27,799			26,743

Property, plant, and equipment, at cost											1,167,699			1,139,632
Less accumulated depreciation											547,137			532,598
		Net property, plant, and equipment									620,562			607,034
						Total assets				$	1,719,331			1,574,740

Current liabilities:
		Accounts payable								$	105,240			94,377
		Accrued expenses									137,338			92,531
		Dividends payable									42,867			39,467
		Income and other taxes payable									75,899			60,976
		Deferred income taxes - current									1,047			859
				Total current liabilities							362,391			288,210

Deferred income taxes - noncurrent											38,880			40,144
Other noncurrent liabilities											113,837			113,489

Temporary Equity											9,578			-
Stockholders' equity:
		Preferred stock (no par value)
				Authorized - 20,000 shares
				Issued - None
		Common stock (no par value)
				Authorized - 400,000 shares
				Issued -					189,063 shares at 6/30/01;
									188,368 shares at 12/31/00		12,597			12,558
		Class B common stock (convertible)
				Authorized - 80,000 shares
				Issued and outstanding -
						43,378 shares at 6/30/01;
						44,073 shares at 12/31/00					2,899			2,938
		Additional paid-in capital									1,105			346
		Retained earnings									1,578,796			1,492,547
		Common stock in treasury, at cost -
				(6/30/01; 6,824 shares; 12/31/00 - 6,917 shares)							(256,223)			(256,478)
		Accumulated other comprehensive income:
				Foreign currency translation adjustment							(161,924)			(136,365)
				Gain on derivative contracts							1,170			-
				Unrealized holding gains on marketable
						equity securities					16,225			17,351
				Total accumulated other comprehensive income							(144,529)			(119,014)
							Total stockholders' equity				1,204,223			1,132,897
							Total liabilities & stockholders' equity			$	1,719,331			1,574,740

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

FORM 10-Q

PART 1 - 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 and six month periods ended June 30, 2001 and 2000, respectively, the Consolidated Statement of Cash Flows (Condensed) for the six month periods ended June 30, 2001 and 2000, and the Consolidated Balance Sheet (Condensed) at June 30, 2001, 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 2000 audited consolidated financial statements. These condensed financial statements should be read in conjunction with the 2000 consolidated financial statements and related notes which are an integral part thereof. Certain amounts recorded in 2000 have been reclassified to conform to the 2001 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 May 2001, the Company's Board of Directors approved a Stockholder Rights Plan. Under the Rights Plan, each holder of Common Stock and Class B Common Stock at the close of business on June 6, 2001, automatically received a distribution of one Right for each share of Common Stock or Class B Common Stock held. Each Right entitles the holder to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock for $250. The Rights will trade along with, and not separately from, the shares of Common Stock and Class B Common Stock unless they become exercisable. The Rights become exercisable, and they will separate, become tradable, and entitle stockholders to buy common stock if any person or group ("Acquiring Person") becomes the beneficial owner of, or announces a tender or exchange offer for, 15% or more of the Company's Common Stock. In such event, all Rights, except for those held by the Acquiring Person, become Rights to purchase $500 worth of Common Stock for $250, unless redeemed by the Board of Directors. In case of a subsequent merger or other acquisition of the Company after the Rights become exercisable, holders of Rights other than the Acquiring Person may purchase shares of the acquiring entity at a 50% discount. The Rights will expire on June 6, 2011, unless redeemed earlier, or renewed by the Company's Board of Directors. On June 30, 2001, there were authorized 20 million shares of preferred stock with no par value, of which 1 million Series A Junior Participating Preferred shares were reserved for issuance upon exercise of the rights.

4.	During the second quarter of 2001, in connection with its stock repurchase program, the Company sold put options on 200,000 shares of its Common Stock to an independent third party. The options entitle the holder to sell shares of Company Common Stock to the Company on certain dates at specific prices. The Company has the option to settle in cash or shares of Common Stock. As of June 30, 2001, the Company's potential obligation of $9.6 million to buy back 200,000 shares at a strike price of $47.89 has been charged to retained earnings and reflected as temporary equity on the consolidated balance sheet. The put options expire between August 2001 and December 2001.

5.	On January 23, 2001, the Board of Directors approved a 2-for-1 stock split, effective as of February 28, 2001, for shareholders of record on February 6, 2001. The accompanying financial statements are presented on a post-split basis.

FORM 10-Q

PART 1 - FINANCIAL INFORMATION - ITEM 1 (Cont'd)

WM. WRIGLEY JR. COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)

(Unaudited)

6. An analysis of the cumulative foreign currency translation adjustment follows (in thousands of dollars).
				Decrease to
				Stockholders' Equity
	Second Quarter			2001	2000

	Balance at April 1		$	156,591	113,486
	Translation adjustment for
		the second quarter		5,333	12,286

	Balance at June 30		$	161,924	125,772

				Decrease to
				Stockholders' Equity
	Six Months			2001	2000

	Balance at January 1		$	136,365	100,270
	Translation adjustment for
		the first six months		25,559	25,502

	Balance at June 30		$	161,924	125,772

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


					Three Months Ended		Six Months Ended
					June 30,		June 30,
					2001	2000	2001	2000

	Net earnings			$	100,033	92,103	181,563	166,708
	Other comprehensive income,
		before tax:
		Foreign currency
			translation adjustments		(5,333)	(12,286)	(25,559)	(25,502)
		Unrealized holding gains (losses)
			on securities		(964)	(4,846)	(1,735)	(6,807)
		Gain (loss) on derivative contracts			(996)	0	1,708	0
	Other comprehensive loss,
		before tax			(7,293)	(17,132)	(25,586)	(32,309)
	Income tax benefit related to items
		of other comprehensive income			651	1,696	71	2,383
	Other comprehensive loss,
		net of tax			(6,642)	(15,436)	(25,515)	(29,926)

	Total comprehensive income			$	93,391	76,667	156,048	136,782

FORM 10-Q

PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)

WM. WRIGLEY JR. COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)

(Unaudited)

8.	Segment Information

	Management organizes the chewing-gum business based on geographic regions. Information by geographic region is as follows
	(in thousands of dollars):

	Net Sales		Three Months Ended		Six Months Ended
			June 30,		June 30,
			2001	2000	2001	2000

	Americas, principally U.S.	$	260,521	242,806	497,875	457,658
	Europe		261,896	241,589	480,631	443,393
	Asia		78,642	64,619	157,350	129,222
	Pacific		17,468	17,417	35,707	35,303
	All Other		5,365	3,793	13,952	7,939

	Net Sales	$	623,892	570,224	1,185,515	1,073,515

	"All Other" revenue consists primarily of sales for Wrigley Healthcare and sales of gum base to customers.

	Operating Income		Three Months Ended		Six Months Ended
			June 30,		June 30,
			2001	2000	2001	2000

	Americas, principally U.S.	$	74,442	61,896	128,559	111,654
	Europe		80,153	68,124	140,492	119,417
	Asia		21,075	19,089	45,135	37,325
	Pacific		4,837	5,164	10,867	10,354
	All Other		(37,899)	(22,739)	(66,948)	(43,023)

	Operating Income	$	142,608	131,534	258,105	235,727


	"All Other" operating income includes corporate expenses such as costs related to research and development, information systems, and certain administrative functions and operating losses for Wrigley Healthcare.

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 $623.9 million, up $53.7 million or 9% versus the second quarter of 2000. Higher worldwide shipments increased sales revenue by 8%. Additionally, selected selling price increases and favorable mix in all regions increased sales by approximately 5%. This was offset by translation of weaker foreign currencies to the U.S. dollar which reduced sales by approximately 4%.

Net sales for the first six months were $1,185.5 million, up $112.0 million or 10% versus the first six months of 2000. Higher worldwide shipments increased sales revenue by approximately 10%. 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 foreign currencies to the U.S. dollar which reduced sales by roughly 4%.

Costs of Sales and Gross Profit
Cost of sales for the second quarter was $251.1 million, up $15.6 million or 7% versus the second quarter of 2000. Higher shipments across all regions increased cost of sales by 7%. Additionally, unfavorable product mix increased cost of sales by 3%. Translation of weaker foreign currencies to the U.S. dollar reduced cost of sales by 3%.

Gross profit was $372.8 million, up $38.1 million or 11% from the same period last year. The gross profit percentage was 59.8%, up from 58.7% in the second quarter of 2000.

Cost of sales for the first six months was $479.5 million, up $29.0 million or 6% versus the first six months of 2000. Higher shipments across all regions increased cost of sales by 9%. In addition, unfavorable product mix increased cost of sales by approximately 1%. Translation of weaker foreign currencies to the U.S. dollar reduced cost of sales by 4%.

Gross profit was $706.0 million, up $83.0 million or 13% from the same period last year. The gross profit percentage was 59.6%, up from 58.0% in the first six months of 2000.

Selling and General Administrative Expenses

Consolidated selling and general administrative expenses for the second quarter were $230.2 million, up $27.0 million or 13% from the same period last year. The increase was mainly due to higher worldwide selling, other marketing and administrative expenses.

Consolidated selling and general administrative expenses for the first six months of 2001 were $447.9 million, up $60.6 million or 16% from the same period last year. The increase is mainly due to higher worldwide selling, other marketing and administrative expenses.

As a percentage of consolidated net sales, the expenses were as follows:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2001	2000	2001	2000

Advertising	13.5%	15.4%	14.8%	15.6%
Selling and Other Marketing	15.3%	13.0%	14.7%	13.0%
General and Administrative	8.1%	7.2%	8.3%	7.5%
	36.9%	35.6%	37.8%	36.1%

FORM 10-Q

PART I - FINANCIAL INFORMATION - ITEM 2 (Cont'd)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

FORM 10-Q

PART I - FINANCIAL INFORMATION - ITEM 2 (Cont'd)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

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 under utilization 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.

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.

FORM 10-Q

PART II - OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K

Exhibits reference is made to the Exhibit Index on page 12.

(b) On April 2, 2001, the Company filed a Form 8-K which presented quarterly unaudited consolidated statements of earnings for 2000. These quarterly statements included the change in presentation from a single-step to a multiple-step consolidated statement of net earnings and certain reclassifications which were adopted beginning with the 2000 Annual Report.

(c) On June 5, 2001, the Company filed a Form 8-K. The Company's Board of Directors adopted a Stockholder Rights Plan and pursuant to that Plan, declared a dividend distribution of one Right for each share of Common and Class B Common Stock of the Company outstanding as of June 6, 2001. Under the Plan, the Company entered a Stockholder Rights Agreement with EquiServe,L.L.P., as Rights Agent, dated as of June 1, 2001.

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
			Vice President and Controller
			Authorized Signatory and Chief Accounting Officer




Date	August 13, 2001

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. Stockholder Rights Agreement. The Stockholder Rights Agreement is incorporated by reference from 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. 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.

	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.