10-Q 1 c21217e10vq.htm QUARTERLY REPORT e10vq
 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2007
OR
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
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 þ      No o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in rule 12b-2 of the Securities and Exchange Act (Check one):
Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o
Indicate by check mark whether the Registrant is a Shell Company (as defined in Rule 12b-2 of the Securities and Exchange Act of 1934).
Yes o     Noþ
218,861,973 shares of Common Stock and 56,880,346 shares of Class B Common Stock were outstanding as of October 31, 2007.
 
 

 


 

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION — ITEM 1
PART I — FINANCIAL INFORMATION — ITEM 2
Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Item 4 — Controls and Procedures
PART II — OTHER INFORMATION
Item 1A — Risk Factors
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds
SIGNATURES
INDEX TO EXHIBITS
(Part II — Item 6)
PART I — FINANCIAL INFORMATION — ITEM 1
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF EARNINGS (CONDENSED)
(Unaudited)
(All amounts in thousands except for per share values)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
Net sales
  $ 1,333,052       1,178,667       3,964,878       3,459,608  
 
                               
Cost of sales
    620,001       547,116       1,856,201       1,624,286  
 
Restructuring charges
    567       6,388       13,202       24,151  
 
                       
 
                               
Gross profit
    712,484       625,163       2,095,475       1,811,171  
 
                               
Selling, general and administrative expense
    453,410       397,575       1,363,269       1,189,824  
 
                       
 
                               
Operating income
    259,074       227,588       732,206       621,347  
 
                               
Interest expense
    (17,185 )     (15,597 )     (50,910 )     (46,952 )
 
Investment income
    2,840       2,101       7,267       5,598  
 
Other income (expense), net
    (3,168 )     (702 )     14,956       4,754  
 
                       
 
                               
Earnings before income taxes
    241,561       213,390       703,519       584,747  
 
                               
Income taxes
    77,089       65,361       226,533       184,195  
 
                       
 
                               
Net earnings
  $ 164,472       148,029       476,986       400,552  
 
                       
 
                               
Net earnings per share of common stock (basic)
  $ 0.60       0.53       1.73       1.44  
 
                       
 
                               
Net earnings per share of common stock (diluted)
  $ 0.59       0.53       1.72       1.44  
 
                       
 
                               
Dividends declared per share of common stock
  $ 0.29       0.256       0.87       0.768  
 
                       
Notes to financial statements beginning on page 5 are an integral part of these statements.

2


 

WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONDENSED)

(Unaudited)
(All amounts in thousands)
                 
    Nine Months Ended  
    September 30,  
    2007     2006  
OPERATING ACTIVITIES
               
Net earnings
  $ 476,986       400,552  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    152,893       136,565  
Net (gain) loss on retirements of property, plant and equipment
    (13,686 )     2,162  
Non-cash share-based compensation
    41,430       35,135  
Deferred income taxes
    22,328       873  
(Increase) decrease in:
               
Accounts receivable
    (22,428 )     (47,144 )
Inventories
    26,500       (88,341 )
Other current assets
    (10,470 )     (43,553 )
Deferred charges and other assets
    (27,787 )     11,154  
Increase (decrease) in:
               
Accounts payable and accrued expenses
    2,446       (68,223 )
Income and other taxes payable
    10,261       12,571  
Other noncurrent liabilities
    24,952       19,731  
 
           
Net cash provided by operating activities
    683,425       371,482  
 
           
 
               
INVESTING ACTIVITIES
               
Additions to property, plant and equipment
    (156,496 )     (207,860 )
Proceeds from retirements of property, plant and equipment
    22,445       16,633  
Proceeds from sale of investments
    835        
Acquisition, net of cash acquired
    (293,590 )      
 
           
 
Net cash used in investing activities
    (426,806 )     (191,227 )
 
           
 
               
FINANCING ACTIVITIES
               
Dividends paid
    (229,906 )     (204,601 )
Common Stock purchased and issued, net
    (103,126 )     (77,271 )
Issuances of short-term debt, net
    89,477       61,500  
 
           
 
               
Net cash used in financing activities
    (243,555 )     (220,372 )
 
           
 
               
Effect of exchange rate changes on cash and cash equivalents
    4,573       7,994  
 
           
 
               
Net increase (decrease) in cash and cash equivalents
    17,637       (32,123 )
Cash and cash equivalents at beginning of period
    253,666       257,704  
 
           
 
               
Cash and cash equivalents at end of period
  $ 271,303       225,581  
 
           
 
               
SUPPLEMENTAL CASH FLOW INFORMATION
               
 
               
Income taxes paid
  $ 209,280       175,153  
 
           
Interest paid
  $ 57,146       52,773  
 
           
Notes to financial statements beginning on page 5 are an integral part of these statements.

3


 

WM. WRIGLEY JR. COMPANY
CONSOLIDATED BALANCE SHEET (CONDENSED)

(All amounts in thousands)
                 
    (Unaudited)        
    September 30, 2007     December 31, 2006  
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 271,303       253,666  
Short-term investments, at amortized cost
          1,100  
Accounts receivable
               
(less allowance for doubtful accounts:
9/30/07 — $7,442; 12/31/06 — $6,431)
    522,510       463,231  
Inventories:
               
Finished goods
    279,261       241,897  
Raw materials, work in process and supplies
    318,144       351,088  
 
           
 
    597,405       592,985  
Other current assets
    187,287       170,245  
 
           
Total current assets
    1,578,505       1,481,227  
 
Deferred charges and other assets
    220,965       194,382  
Goodwill
    1,351,481       1,147,603  
Other intangibles
    485,740       415,870  
 
               
Property, plant and equipment, at cost
    2,908,000       2,682,017  
Less accumulated depreciation
    (1,380,292 )     (1,259,501 )
 
           
Net property, plant and equipment
    1,527,708       1,422,516  
 
           
Total assets
  $ 5,164,399       4,661,598  
 
           
 
               
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Short-term debt
  $ 165,066       65,000  
Accounts payable and accrued expenses
    775,343       741,613  
Dividends payable
    79,545       71,106  
Income and other taxes payable
    169,116       149,410  
 
           
Total current liabilities
    1,189,070       1,027,129  
 
               
Other noncurrent liabilities
    307,878       246,377  
Long term debt
    1,000,000       1,000,000  
 
           
Total liabilities
    2,496,948       2,273,506  
 
               
Stockholders’ equity:
               
Preferred stock — no par value
               
Authorized — 20,000 shares; Issued — None
               
Common Stock — no par value
               
Authorized — 1,000,000 shares
               
Issued — 231,113 and 228,945 shares at 9/30/07 and 12/31/06, respectively
    14,071       14,018  
Class B Common Stock — convertible
               
Authorized — 300,000 shares
               
Issued — 59,438 and 61,606 shares at 9/30/07 and 12/31/06, respectively
    1,425       1,478  
Additional paid-in capital
    128,874       93,602  
Retained earnings
    3,189,475       2,949,705  
Common Stock and Class B Common Stock in treasury, at cost — 15,245 and 13,644 shares at 9/30/07 and 12/31/06, respectively
    (708,015 )     (606,045 )
Accumulated other comprehensive gain (loss)
    41,621       (64,666 )
 
           
Total stockholders’ equity
    2,667,451       2,388,092  
 
           
Total liabilities and stockholders’ equity
  $ 5,164,399       4,661,598  
 
           
Notes to financial statements beginning on page 5 are an integral part of these statements.

4


 

WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
(Unaudited)
(All amounts in thousands except for per share figures)
1.   Basis of Presentation
 
    The Consolidated Statement of Earnings (Condensed) for the three months and nine months ended September 30, 2007 and 2006, the Consolidated Statement of Cash Flows (Condensed) for the nine months ended September 30, 2007 and 2006 and the Consolidated Balance Sheet (Condensed) at September 30, 2007 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 2006 audited consolidated financial statements. These Consolidated Financial Statements (Condensed) should be read in conjunction with the 2006 audited consolidated financial statements and related notes which are an integral part thereof. Certain amounts recorded in 2006 have been reclassified to conform to the 2007 presentation.
 
    Conformity with accounting principles generally accepted in the United States 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.
 
2.   Recently Issued Accounting Pronouncements
 
    In July 2006, FIN 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” was issued. FIN 48 prescribes a recognition threshold and measurement attribute for tax positions. The Company adopted FIN 48 at the beginning of fiscal year 2007 with no material impact to the financial statements. See Note 6 for related disclosures.
 
    In February 2007, SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115” was issued. SFAS No. 159 provides entities with an option to report selected financial assets and liabilities at fair value. SFAS No. 159 is effective for the Company’s fiscal year beginning 2008. The Company does not expect a material impact to the financial statements upon adoption.
 
3.   Acquisition
 
    On January 31, 2007, the Company acquired an 80% interest in A. Korkunov, a privately held premium chocolate company in Russia. The acquisition provided an opportunity for the Company to enter the chocolate confectionery marketplace, a significant component of the broader confectionery market, with a well recognized brand in a growing region. The Company acquired the 80% interest in A. Korkunov for approximately $294,000 with the remaining 20% to be acquired over the next few years. The Company financed the acquisition through short-term debt and cash on hand. The purchase price allocation remains preliminary and the results of operations have been included since January 31, 2007.
 
4.   Restructuring
 
    During the second quarter of 2005, the Company announced plans to restructure its North America production network in order to maximize supply chain efficiencies. As a result, the Company closed its chewing gum plant in Chicago, Illinois and its L.A. Dreyfus gum base subsidiary in Edison, New Jersey transferring production to remaining facilities. The Company is in the process of marketing the New Jersey property and preparing the Illinois property for sale.
 
    The aggregate charges to net earnings to close and reconfigure facilities are expected to be approximately $99,000 on a pre-tax basis, of which $98,499 had been incurred at September 30, 2007 including $85,297 incurred in fiscal years 2006 and 2005. The restructuring costs relate primarily to enhanced early retirement programs, severance, facility closure and accelerated depreciation resulting from the decreased useful lives of certain assets, as well as start-up costs related to the transfer of production. Of the total restructuring costs, the Company expects to incur approximately $80,800 in the North America segment and $18,200 in the All Other segment.

5


 

4.   (continued)
                                         
    Employee     Accelerated     Closure     Other        
    Separation     Depreciation     Costs     Costs     Total  
 
Estimated restructuring charge
  $ 40,400       30,700       24,000       3,900       99,000  
 
Cumulative restructuring charge at December 31, 2006
  $ 38,017       29,330       14,662       3,288       85,297  
 
Accrued balance at December 31, 2006
  $ 9,958             151             10,109  
First quarter expense
    723       1,394       5,941       91       8,149  
Second quarter expense
    1,097             3,155       234       4,486  
Third quarter expense
    (500 )           903       164       567  
 
Year to date expense
    1,320       1,394       9,999       489       13,202  
 
Cash payments
    (7,285 )           (8,724 )     (489 )     (16,498 )
Noncash utilization
    (1,500 )     (1,394 )     (1,426 )           (4,320 )
 
Accrued balance at September 30, 2007
  $ 2,493                         2,493  
 
Cumulative restructuring charge at September 30, 2007
  $ 39,337       30,724       24,661       3,777       98,499  
 
    All expenses are recorded as restructuring charges in the Consolidated Statement of Earnings (Condensed). The Company has incurred a cumulative charge for all activities to date at September 30, 2007 of $98,499, including $80,677 in the North America segment with the remaining $17,822 in the All Other segment. The Company incurred a $567 charge for the third quarter of 2007, including $682 in the North America segment and a benefit of $115 in the All Other segment. The Company incurred a $6,388 charge for the third quarter of 2006, including $4,717 in the North America segment with the remaining $1,671 in the All Other segment. The Company incurred a $13,202 charge for the first nine months of 2007, including $9,471 in the North America segment with the remaining $3,731 in the All Other segment. The Company incurred a $24,151 charge for the first nine months of 2006, including $20,975 in the North America segment with the remaining $3,176 in the All Other segment.
 
    The Company expects to recognize a gain upon the sales of the properties; however, the amount will depend on certain factors, some of which are external and beyond the Company’s control. The restructuring charges discussed herein are exclusive of any potential gain on the sales of these properties.
 
5.   Debt
 
    On April 29, 2005, the Company entered into an Issuing and Paying Agency Agreement with JPMorgan Chase Bank pursuant to which the company may establish one or more unsecured commercial paper programs. The Company had $103,500 of commercial paper outstanding under its commercial paper program bearing an average interest rate of 5.17% at September 30, 2007.
 
    On July 14, 2005, the Company issued $1,000,000 of senior unsecured notes under the shelf registration filed on March 1, 2005. The senior note offering included $500,000 of five-year notes maturing on July 15, 2010, bearing a coupon interest rate of 4.30% and $500,000 of ten-year notes maturing on July 15, 2015, bearing a coupon interest rate of 4.65%. Interest is payable semi-annually on January 15th and July 15th.
 
    Also on July 14, 2005, the Company entered into an agreement for a $600,000 five-year credit facility maturing in July 2010. The Company intends to use this credit facility primarily to support its commercial paper program; however, the Company may also draw on the facility for general purposes. Under certain conditions, the Company may request an increase in aggregate commitment under this credit facility, not to exceed a total of $1,000,000. This credit facility requires maintenance of certain financial covenants with which, at September 30, 2007, the Company was compliant. The Company had no borrowings outstanding under the credit facility at September 30, 2007.
 
    On May 11, 2007, the Company entered into an agreement for a 100,000 (euro) term loan maturing on December 31, 2007. At September 30, 2007 40,000 remained outstanding and is scheduled for payment in December 2007. Additionally, the Company may prepay at its option. Based upon the September 30, 2007 exchange rate, the Company had $57,036 outstanding under this facility bearing an average interest rate of 4.40%.

6


 

6.   Income Tax Reserves
 
    The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” on January 1, 2007 with no material impact to the financial statements. The total amount of unrecognized tax benefits at January 1, 2007 was $37,100, approximately $26,400 of which would affect the annual effective tax rate, if recognized. Further, the Company is unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.
 
    The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense. The total amount of accrued interest and penalties at January 1, 2007 was $2,900.
 
    The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With certain exceptions, the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years prior to 2004.
 
7.   Earnings Per Share
 
    Basic earnings per share are computed based on the weighted-average number of common shares outstanding, excluding any dilutive effects of stock options, restricted stock and long-term stock grants. Diluted earnings per share are computed based on the weighted-average number of common shares outstanding including any dilutive effect of stock options, restricted stock and long-term stock grants. The dilutive effect of stock options, restricted stock and long-term stock grants is calculated under the treasury stock method. Earnings per share are calculated as follows:
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
Net earnings
  $ 164,472       148,029       476,986       400,552  
 
                               
Basic shares outstanding
    274,739       277,546       275,237       277,506  
Effect of dilutive securities — stock options, restricted stock and long-term stock grants
    2,411       452       1,831       767  
 
                       
Dilutive shares outstanding
    277,150       277,998       277,068       278,273  
 
                       
 
                               
Net earnings per share:
                               
Basic
  $ 0.60       0.53       1.73       1.44  
Diluted
  $ 0.59       0.53       1.72       1.44  
8.   Comprehensive Income
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
Net earnings
  $ 164,472       148,029       476,986       400,552  
 
                       
Changes in accumulated other comprehensive income (loss):
                               
Foreign currency translation adjustments, net of tax
    64,115       5,840       93,166       42,784  
All other changes, net of tax
    4,064       (1,731 )     13,121       (67 )
 
                       
 
                               
Comprehensive income
  $ 232,651       152,138       583,273       443,269  
 
                       

7


 

9.   Pension and Other Post-retirement Benefit Plans The following information provides the net periodic benefit costs for both the Company’s U.S. and non-U.S. pension and post-retirement 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 post-retirement plans.
 
    The components of net pension benefit cost are as follows:
                                 
    U.S. Plans     Non-U.S. Plans  
    Three Months Ended     Three Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
Service cost
  $ 4,000       4,000       4,500       3,300  
Interest cost
    7,100       7,200       4,100       3,300  
Expected return on plan assets
    (8,400 )     (9,000 )     (5,100 )     (4,100 )
Transition asset
                (100 )     (100 )
Prior service costs
    500       600       100       100  
Net actuarial loss
    900       1,500       400       600  
Other pension plans
                800       400  
 
                       
Net pension benefit cost
  $ 4,100       4,300       4,700       3,500  
 
                       
                                 
    U.S. Plans     Non-U.S. Plans  
    Nine Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
Service cost
  $ 13,200       11,300       11,800       10,200  
Interest cost
    20,500       20,500       11,800       9,500  
Expected return on plan assets
    (26,200 )     (25,500 )     (14,000 )     (11,800 )
Transition asset
                (300 )     (300 )
Prior service costs
    1,500       1,600       300       300  
Net actuarial loss
    1,500       4,300       2,000       1,800  
Other pension plans
                1,600       1,400  
 
                       
Net pension benefit cost
  $ 10,500       12,200       13,200       11,100  
 
                       
    The Company disclosed in its financial statements for the year ended December 31, 2006 that it expected to contribute approximately $500 to the U.S. pension plans in 2007. The Company continues to anticipate funding approximately $500 for the U.S. pension plans in 2007. The Company disclosed in its financial statements for the year ended December 31, 2006 that it expected to contribute approximately $5,100 to the non-U.S. plans in 2007. The Company currently anticipates funding approximately $13,800 to the non-U.S. plans in 2007. During the nine months ended September 30, 2007, the Company contributed $350 to the U.S. plans. During the nine months ended September 30, 2007, the Company contributed $9,300 to the non-U.S. plans.

8


 

9.      (continued)
 
      The components of net post-retirement benefit cost are as follows:
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
Service cost
  $ 500       700       2,300       1,700  
Interest cost
    900       1,300       3,000       3,300  
Expected return on plan assets
    (900 )     (900 )     (2,500 )     (2,300 )
Prior service costs
    (100 )     (100 )     (300 )     (300 )
Net actuarial loss
    200       500       700       1,300  
 
                       
Net post-retirement benefit cost
  $ 600       1,500       3,200       3,700  
 
                       
The Company previously disclosed in its financial statements for the year ended December 31, 2006 that it expected to contribute approximately $4,800 to the post-retirement plans in 2007. The Company continues to anticipate funding approximately $4,800 to the post-retirement plans in 2007. During the nine months ended September 30, 2007, the Company contributed $3,600 to the post-retirement plans.
 
10.   Segment Information
 
    Management organizes the Company’s chewing gum and other confectionery businesses principally along 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.
 
    Asia — These operations manufacture and market gum and other confectionery products in a number of Asian geographies including China, Taiwan and the Philippines.
 
    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.
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
Net Sales   2007     2006     2007     2006  
North America
  $ 435,859       444,354       1,301,956       1,285,408  
EMEAI
    674,897       542,328       1,912,055       1,535,346  
Asia
    153,976       130,939       559,732       469,844  
Other Geographic Regions
    52,312       45,308       146,008       123,473  
All Other
    16,008       15,738       45,127       45,537  
 
                       
 
Net sales
  $ 1,333,052       1,178,667       3,964,878       3,459,608  
 
                       
       All Other net sales consist primarily of sales of gum base.

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10.   (continued)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
Operating Income   2007     2006     2007     2006  
North America
  $ 98,582       101,472       270,216       257,733  
EMEAI
    195,820       168,493       524,873       427,208  
Asia
    32,979       24,929       148,828       129,152  
Other Geographic Regions
    10,431       6,513       24,567       13,749  
All Other
    (78,738 )     (73,819 )     (236,278 )     (206,495 )
 
                       
 
                               
Operating income
  $ 259,074       227,588       732,206       621,347  
 
                       
    All Other operating income includes corporate expenses such as costs related to research and development, information systems and certain administrative functions as well as operating results from the manufacture and sale of gum base.

10


 

PART I — FINANCIAL INFORMATION — ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(All amounts in thousands except for per share figures)
RESULTS OF OPERATIONS
Overview
The Wm. Wrigley Jr. Company (the “Company”) achieved 2% unit volume and 13% sales growth in the third quarter of 2007 compared to the third quarter of 2006. Diluted earnings per share increased 11% to $0.59 in the third quarter of 2007 compared to $0.53 in the third quarter of 2006. The increase was due to strength and growth in operating profits across EMEAI (principally Europe) and Asia partially offset by a slight decrease in North America, a $0.04 per share favorable impact from foreign exchange and a $0.02 per share favorable impact due to lower restructuring charges between periods.
The Company achieved 7% unit volume and 15% sales growth in the first nine months of 2007 compared to the first nine months of 2006. Diluted earnings per share increased 19% to $1.72 in the first nine months of 2007 compared to $1.44 in the first nine months of 2006. The increase was due to growth across all segments, a $0.12 per share favorable impact from foreign exchange, a $0.03 per share favorable impact due to lower restructuring charges between periods and a $0.03 per share gain related to the sale of certain corporate assets. The first nine months of 2007 and 2006 included restructuring expenses of $0.03 per share and $0.06 per share, respectively. Additionally, the Company’s effective tax rate increased to 32.2% in the first nine months of 2007 from 31.5% in the prior year period. The Company expects a moderately higher tax rate compared to 2006 to continue through 2007.
Volume for the third quarter of 2007 was slightly up from the prior year quarter as continued growth across EMEAI and Asia, including double digit growth in the U.K., Russia and China, was mostly offset by shortfalls in North America. Volume growth for the first nine months of 2007 was driven by solid performance across most segments, particularly the Asia and EMEAI segments. EMEAI experienced double digit growth in Russia, Germany and Poland, while double digit growth in China continued to drive Asia. North America volume was slightly down between the nine month periods. Other Geographic Regions (the Pacific and Latin America regions) also experienced solid volume growth in the nine month period mainly due to double digit growth in Australia.
Average foreign currency translation continued to favorably impact diluted earnings per share in the third quarter and first nine months of 2007 compared to the third quarter and first nine months of 2006, respectively. This benefit was primarily due to average translation rates of stronger EMEAI, Asia and Pacific region currencies, particularly the euro, British pound, Chinese renminbi and Australian dollar, to the weaker U.S. dollar. The Company maintains a strong global presence and expects that future exchange rate fluctuations will continue to impact results of operations.
On January 31, 2007, the Company acquired an 80% interest in A. Korkunov, a premium chocolate company in Russia for approximately $294,000, with the remaining 20% to be acquired over the next few years.
2007 vs. 2006 Third Quarter
Net Sales
Consolidated net sales for the third quarter of 2007 were $1,333,052, an increase of $154,385 or 13% from the third quarter of 2006. Volume growth across most segments, including the A. Korkunov® brand in EMEAI, increased net sales 2% while favorable price/mix increased net sales 6%. Average translation of stronger foreign currencies to the weaker U.S. dollar increased net sales approximately 5%.
North America net sales for the third quarter of 2007 were $435,859, a decrease of $8,495 or 2% from the third quarter of 2006. Lower volume decreased net sales 14% which was partially offset by a 12% increase in net sales due to favorable price/mix driven by broad pricing increases phased in across the product portfolio since late in the second quarter and the successful launch of the new premium brand, 5®. While there was some negative volume impact due to recent pricing changes, the larger portion of the decline stemmed from a reduction in trade inventory levels.
EMEAI net sales for the third quarter of 2007 were $674,897, an increase of $132,569 or 24% from the third quarter of 2006. Volume growth increased net sales 14%, primarily led by Russia where the A. Korkunov, Eclipse® and Juicy Fruit® brands drove growth and the U.K. and Germany where the Extra® brand generated growth. Favorable price/mix increased net sales 2%. Average translation of stronger European currencies, primarily the euro and the British pound, to the weaker U.S. dollar increased net sales approximately 8%.
Asia net sales for the third quarter of 2007 were $153,976, an increase of $23,037 or 18% from the third quarter of 2006. Volume growth increased net sales 11%, primarily led by China where the Extra and Doublemint® brands drove growth. Favorable

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price/mix increased net sales 1%. Average translation of a stronger Chinese renminbi to the weaker U.S. dollar increased net sales approximately 6%.
Other Geographic Regions net sales for the third quarter of 2007 were $52,312, an increase of $7,004 or 15% from the third quarter of 2006. Volume growth increased net sales 8% primarily due to Australia where the Extra and Eclipse brands led growth and unfavorable price/mix decreased net sales 5%. Average translation of a stronger Australian dollar to the weaker U.S. dollar increased net sales approximately 12%.
Operating Income
The following table presents components of operating income as a percentage of net sales. Other expense reported in merchandising and promotion includes brand research and royalty fees.
                 
    Three Months Ended
    September 30,
    2007   2006
 
Gross profit
    53.4 %     53.0 %
Selling, general and administrative
               
Advertising
    (10.7 )     (10.0 )
Merchandising and promotion/other
    (4.9 )     (4.9 )
Selling and other marketing
    (10.3 )     (10.6 )
General and administrative
    (8.1 )     (8.2 )
 
               
Total selling, general and administrative (SG&A)*
    (34.0 )     (33.7 )
 
               
Operating income*
    19.4 %     19.3 %
 
               
 
*   May not total due to rounding
Consolidated operating income for the third quarter of 2007 increased $31,486 or 14% compared to the third quarter of 2006. Average translation of stronger foreign currencies to the weaker U.S. dollar increased operating income approximately 8%. Gross profit increased $87,321 or 14% from 2006 due to increased net sales while gross profit as a percent of sales (“gross profit margin”) increased 0.4 percentage points primarily due to favorable price/mix and lower restructuring charges between quarters partially offset by higher cost. Average translation of stronger foreign currencies increased gross profit approximately 6%. SG&A expense increased $55,835 or 14% from 2006 as the Company begins to better leverage existing infrastructure and reinvest in advertising. Additionally, the increase included incremental expenses related to A. Korkunov. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 5%.
North America operating income for the third quarter of 2007 decreased $2,890 or 3% compared to the third quarter of 2006. Gross profit increased $6,913 or 3% from 2006 due to higher gross profit margin partially offset by lower net sales. Gross profit margin increased 2.5 percentage points compared to the third quarter of 2006 primarily due to lower restructuring charges and favorable price/mix slightly offset by higher cost. Restructuring charges decreased gross profit margin 0.2 percentage points in the third quarter of 2007 and 1.1 percentage points in the third quarter of 2006. SG&A expense increased $9,803 or 9% primarily due to brand support driven by timing and new product launches between periods particularly due to the support behind the new product launch of 5 in the third quarter of 2007.
EMEAI operating income for the third quarter of 2007 increased $27,327 or 16% compared to the third quarter of 2006. Average translation of foreign currencies to the U.S. dollar increased operating income approximately 8%. Gross profit increased $67,827 or 20% from 2006 primarily due to increased net sales partially offset by lower gross profit margin. Gross profit margin decreased 2.0 percentage points compared to the third quarter of 2006 primarily due to unfavorable mix and cost. Average translation of foreign currencies to the U.S. dollar increased gross profit approximately 9%. SG&A expense increased $40,500 or 24% primarily due to increased selling expense and brand support mainly in the U.K. in response to the competitive environment and incremental expenses related to A. Korkunov. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 9%.
Asia operating income for the third quarter of 2007 increased $8,050 or 32% compared to the third quarter of 2006. Average translation of a stronger Chinese renminbi to the U.S. dollar increased operating income approximately 7%. Gross profit increased $9,682 or 14% from 2006 primarily due to increased net sales partially offset by lower gross profit margin. Gross profit margin decreased 1.6 percentage points primarily due to unfavorable mix. Average translation of stronger Asian currencies increased gross profit approximately 6%. SG&A expense increased $1,632 or 4% primarily due to the impact of average foreign exchange.
Other Geographic Regions operating income for the third quarter of 2007 increased $3,918 or 60% compared to the third quarter of 2006. Average translation of a stronger Australian dollar to the weaker U.S. dollar increased operating income approximately 26%. Gross profit increased $6,638 or 34% from 2006 due to increased net sales and higher gross profit margin. Average translation of a stronger

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Australian dollar to the weaker U.S. dollar increased gross profit approximately 16%. SG&A expense increased $2,720 or 21% primarily due to increased brand support in Australia. The impact of average foreign exchange increased SG&A expense approximately 10%.
All Other operating expense for the third quarter of 2007 increased $4,919 or 7% compared to the third quarter of 2006. The increase was primarily due to higher general and administrative expenses including research and development expense.
Interest Expense
Interest expense for the third quarter of 2007 was $17,185, up $1,588 compared to the third quarter of 2006 primarily due to an increase in short-term debt related to the acquisition of A. Korkunov and an increase in average short-term interest rates during the current quarter.
Investment Income
Investment income for the third quarter of 2007 was $2,840, up $739 compared to the third quarter of 2006. The increase was primarily due to higher cash balances and investment yields.
Other Income (Expense), Net
Other expense, net for the third quarter of 2007 was $3,168, compared to $702 in the third quarter of 2006. The increase was primarily due to an allocation for earnings to minority interest related to A. Korkunov.
Income Taxes
Income taxes for the third quarter of 2007 were $77,089, up $11,728 or 18% from the third quarter of 2006. The increase was primarily due to the increase in pretax earnings of $28,171 or 13% and an increase in the effective tax rate. The consolidated effective tax rate increased to 31.9% in the third quarter of 2007 compared to 30.6% in the third quarter of 2006. The increase in the effective tax rate was due to a recent change in U.S. tax regulations regarding U.S. taxes applicable to certain foreign-sourced earnings. The Company expects a moderately higher tax rate through 2007 compared to 2006.
2007 vs. 2006 First Nine Months
Net Sales
Consolidated net sales for the first nine months of 2007 were $3,964,878, an increase of $505,270 or 15% from the first nine months of 2006. Volume growth across most segments increased net sales 7% and favorable price/mix increased net sales 3%. Average translation of stronger foreign currencies to the weaker U.S. dollar increased net sales approximately 5%.
North America net sales for the first nine months of 2007 were $1,301,956, an increase of $16,548 or 1% from the first nine months of 2006. A decline in volume, primarily in the U.S., decreased net sales 4% which was offset by favorable price/mix that increased net sales 5% driven in large part by broad pricing increases phased in across the product portfolio since late in the second quarter.
EMEAI net sales for the first nine months of 2007 were $1,912,055, an increase of $376,709 or 25% from the first nine months of 2006. Volume growth increased net sales 14%, primarily led by Russia where the A. Korkunov brand generated growth, Germany where the Extra brand led growth and Poland and Ukraine where the Orbit brand drove growth. Favorable price/mix increased net sales 3%. Average translation of stronger European currencies, primarily the euro and the British pound, to the weaker U.S. dollar increased net sales approximately 8%.
Asia net sales for the first nine months of 2007 were $559,732, an increase of $89,888 or 19% from the first nine months of 2006. Volume growth increased net sales 16%, primarily led by China where the Extra and Doublemint brands drove growth. Unfavorable price/mix decreased net sales 2%. Average translation of a stronger Chinese renminbi to the weaker U.S. dollar increased net sales approximately 5%.
Other Geographic Regions net sales for the first nine months of 2007 were $146,008, an increase of $22,535 or 18% from the first nine months of 2006. Volume growth increased net sales 9% primarily due to Australia, where the Eclipse brand led growth, and unfavorable price/mix decreased net sales 1%. Average translation of a stronger Australian dollar to the weaker U.S. dollar increased net sales approximately 10%.

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Operating Income
The following table presents components of operating income as a percentage of net sales. Other expense reported in merchandising and promotion includes brand research and royalty fees.
                 
    Nine Months Ended
    September 30,
    2007   2006
Gross profit
    52.9 %     52.4 %
Selling, general and administrative
               
Advertising
    (10.7 )     (10.7 )
Merchandising and promotion/other
    (5.1 )     (5.0 )
Selling and other marketing
    (10.3 )     (10.6 )
General and administrative
    (8.3 )     (8.0 )
 
               
Total selling, general and administrative (SG&A)*
    (34.4 )     (34.4 )
 
               
Operating income*
    18.5 %     18.0 %
 
               
 
*   May not total due to rounding
Consolidated operating income for the first nine months of 2007 increased $110,859 or 18% compared to the first nine months of 2006. Average translation of stronger foreign currencies to the weaker U.S. dollar increased operating income approximately 8%. Gross profit increased $284,304 or 16% from 2006 due to increased net sales while gross profit margin increased by 0.5 percentage points. Gross profit margin increased 0.4 percentage points due to slowing restructuring activity as the Company nears completion of the program. Average translation of stronger foreign currencies increased gross profit approximately 6%. SG&A expense increased $173,445 or 15% from 2006 primarily due to increased brand support, selling expenses and general administrative expenses including incremental expenses related to A. Korkunov. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 4%.
North America operating income for the first nine months of 2007 increased $12,483 or 5% compared to the first nine months of 2006. Gross profit increased $17,726 or 3% from 2006 primarily due to a slight increase in net sales and an improvement in gross profit margin. Gross profit margin increased by 0.8 percentage points primarily due to slowing restructuring activity. Restructuring charges decreased gross profit margin 0.7 percentage points in the first nine months of 2007 and 1.6 percentage points in the first nine months of 2006. SG&A expense slightly increased $5,243 or 2% primarily due to brand support and general and administrative expense.
EMEAI operating income for the first nine months of 2007 increased $97,665 or 23% compared to the first nine months of 2006. Average translation of foreign currencies to the U.S. dollar increased operating income approximately 9%. Gross profit increased $215,697 or 23% from 2006 due to increased net sales partially offset by slightly lower gross profit margin. Gross profit margin decreased 0.6 percentage points compared to the first nine months of 2006 primarily due to unfavorable mix. Average translation of foreign currencies to the U.S. dollar increased gross profit approximately 9%. SG&A expense increased $118,032 or 24% primarily due to increased selling expense and brand support mainly in the U.K. in response to the competitive environment and incremental expenses related to A. Korkunov. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 8%.
Asia operating income for the first nine months of 2007 increased $19,676 or 15% compared to the first nine months of 2006. Average translation of a stronger Chinese renminbi to the U.S. dollar increased operating income approximately 4%. Gross profit increased $36,360 or 14% from 2006 primarily due to increased net sales partially offset by lower gross profit margin. Gross profit as a percentage of net sales decreased 2.5 percentage points primarily due to unfavorable price/mix. Average translation of stronger Asian currencies increased gross profit approximately 4%. SG&A expense increased $16,684 or 12% primarily due to increased selling expense and brand support. The impact of average foreign exchange increased SG&A expense approximately 4%.
Other Geographic Regions operating income for the first nine months of 2007 increased $10,818 or 79% compared to the first nine months of 2006. Average translation of a stronger Australian dollar to the weaker U.S. dollar increased operating income approximately 27%. Gross profit increased $17,889 or 36% from 2006 due to increased net sales and higher gross profit margin. Average translation of a stronger Australian dollar to the weaker U.S. dollar increased gross profit approximately 14%. SG&A expense increased $7,071 or 15% primarily due to increased brand support in Australia. The impact of average foreign exchange increased SG&A expense approximately 9%.

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All Other operating expense for the first nine months of 2007 increased $29,783 or 14% compared to the first nine months of 2006. The increase was primarily due to higher general and administrative expenses including the development of global marketing and sales infrastructure and research and development expense.
Interest Expense
Interest expense for the first nine months of 2007 was $50,910, up $3,958 compared to the first nine months of 2006 primarily due to an increase in short-term debt related to the acquisition of A. Korkunov and an increase in average short-term interest rates.
Investment Income
Investment income for the first nine months of 2007 was $7,267, up $1,669 compared to the first nine months of 2006. The increase was primarily due to higher investment yields and cash balances.
Other Income (Expense), Net
Other income, net for the first nine months of 2007 was $14,956, compared to $4,754 in the first nine months of 2006. The increase was primarily due to a non-recurring gain on the sale of certain corporate assets.
Income Taxes
Income taxes for the first nine months of 2007 were $226,533, up $42,338 or 23% from the first nine months of 2006. The increase was primarily due to the increase in pretax earnings of $118,772 or 20% and an increase in the consolidated effective tax rate to 32.2% in 2007 from 31.5% in 2006. The increase in the effective tax rate was due to a recent change in U.S. tax regulations regarding U.S. taxes applicable to certain foreign-sourced earnings.
LIQUIDITY AND CAPITAL RESOURCES
Operating Cash Flow and Current Ratio
Net cash provided by operating activities for the first nine months of 2007 was $683,425 compared to $371,482 for the same period in 2006. The increase was primarily due to increased earnings and decreased working capital investment including timing of settlement of payables and accruals. The Company’s current ratio (current assets divided by current liabilities) was approximately 1.3 to 1 at September 30, 2007 which was similar to the approximately 1.4 to 1 at December 31, 2006.
Additions to Property, Plant, and Equipment
Capital expenditures for the first nine months of 2007 were $156,496 compared to $207,860 in the first nine months of 2006. The decrease was primarily due to a non-recurring purchase of real estate in 2006. For the full year 2007, capital expenditures are expected to decrease from 2006 and are planned to be funded from the Company’s cash flow from operations.
Borrowing Arrangements and External Capital Resources
At September 30, 2007, the Company had $103,500 of commercial paper outstanding bearing an average interest rate of 5.17% under its commercial paper program established pursuant to the April 29, 2005 Issuing and Paying Agency Agreement with JPMorgan Chase Bank.
Pursuant to the shelf registration prospectus (Form S-3) filed with the SEC by the Company on March 1, 2005, the Company may issue, from time to time, debt securities, preferred stock, common stock, warrants, stock purchase contracts or stock purchase units with a maximum aggregate initial offering price of all securities sold by the Company under the prospectus of $2,000,000. With the issuance on July 14, 2005 of $500,000 of five-year notes maturing on July 15, 2010, bearing a coupon interest rate of 4.30% and of $500,000 of ten-year notes maturing on July 15, 2015, bearing a coupon interest rate of 4.65%, the Company has $1,000,000 available under the shelf registration prospectus. Interest on the senior unsecured notes is payable semi-annually on January 15th and July 15th.
On July 14, 2005, the Company entered into an agreement for a $600,000 five-year credit facility maturing in July 2010 to support the commercial paper borrowings; however, the Company may also draw on the facility for general purposes. Under certain conditions, the Company may request an increase in aggregate commitment under this credit facility, not to exceed a total of $1,000,000. This credit facility requires maintenance of certain financial covenants, with which, at September 30, 2007, the Company was compliant. The Company had no borrowings outstanding under the credit facility at September 30, 2007.
On May 11, 2007, the Company entered into an agreement for a 100,000 (euro) term loan maturing on December 31, 2007. At September 30, 2007 40,000 remained outstanding and is scheduled for payment in December 2007. Additionally, the Company may prepay at its option. Based upon the September 30, 2007 exchange rate, the Company had $57,036 outstanding under this facility bearing an average interest rate of 4.40%.

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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 the Company, based on current beliefs of management as well as assumptions made by, and information currently available to, the Company. Forward-looking statements may 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 the Company believes 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. Significant factors that may cause actual results to differ materially from the forward-looking statements are included in the section entitled “Risk Factors” (refer to Part II, Item 1A) and those listed from time to time in the Company’s filings with the Securities and Exchange Commission and the risk factors or uncertainties listed herein or listed in any document incorporated by reference herein. The factors identified are believed to be significant factors, but not necessarily all of the significant 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 the Company. 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, the Company undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
Item 3 — Quantitative and Qualitative Disclosures About Market Risk
Market Risk
Inherent in the Company’s operations are certain market risks related to foreign currency exchange rates, interest rates, and the equity markets. The Company’s primary area of market risk is foreign currency exchange rate risk. The Company identifies this risk and mitigates its 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 interest rate risk on the Company’s long-term debt is mitigated because it carries a fixed coupon rate of interest. There have been no material changes to the Company’s exposure to market risks since December 31, 2006. The Company’s exposure to equity price risk would not have a significant impact on future earnings, fair value or cash flows.
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 September 30, 2007. 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 September 30, 2007.
(ii) Changes in Internal Control Over Financial Reporting
There was no change in the Company’s internal control over financial reporting during the period ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1A — Risk Factors
The Company’s operations and financial results are subject to a number of risks and uncertainties that could adversely affect the Company’s operations, performance, development or business. Significant factors that may cause actual results to differ materially include, without limitation:
    Availability or retention of retail space. In those countries where the Company maintains market leadership in the chewing gum segment, the Company’s ability to retain preferred retail space allocation will impact results. If the Company is not able to retain this allocation, the Company’s results could be negatively impacted.
 
    Availability of raw materials. The Company uses many raw materials to manufacture chewing gum and other confectionery products including sugar, corn syrup, flavoring oils, polyols and high intensity sweeteners. While these products are generally readily available on the open market, if the Company is unable to maintain the availability, pricing and sourcing of these raw materials, the Company’s results could be negatively impacted.
 
    Changes in demographics and consumer preferences. The Company operates in an increasingly competitive market. As such, the Company’s continued success is dependent upon its ability to continue to create and market products which appeal to diverse consumers. Failure to adequately anticipate and react to changing demographics and product preferences, the failure of new or existing products to be favorably received or the Company’s inability to otherwise adapt to changing market needs could have a material adverse effect on the Company’s operating results.
 
    Changes in foreign currency and market conditions. Manufacturing and sales of a significant portion of the Company’s products are outside the United States. The majority of countries in which the Company operates 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 the Company’s business in such countries could be negatively impacted. In addition, volatility in foreign currencies could have a material adverse effect on the Company’s results of operations.
 
    Increased competition, discounting and other competitive actions. The Company competes worldwide with other well-established manufacturers of confectionery products, including chewing gum. The Company’s results may be negatively impacted by ineffective advertising, or by failure to sufficiently counter aggressive competitive actions. In addition, discounting and other competitive actions may make it more difficult for the Company to maintain its operating margins.
 
    Underutilization of or inadequate manufacturing capacity. Unanticipated movements in consumer demands could result in inadequate manufacturing capacity or underutilization of the Company’s manufacturing capacity, which could negatively impact manufacturing efficiencies and costs.
 
    Government regulations. Government regulations with respect to import duties, tariffs, taxes and environmental controls, both in and outside the United States, could negatively impact the Company’s costs and ability to compete in domestic or foreign market places.
 
    Labor Stoppages. To the extent the Company experiences any material labor stoppages, such disputes or strikes could negatively affect shipments from suppliers or shipments of finished product.
 
    Outcome of integrating acquired businesses. The Company’s inability to successfully integrate any acquired businesses or assets could cause actual results to differ from anticipated results or expectations of the business.
Additional significant factors that may affect the Company’s operations, performance, development and business results include the risks and uncertainties described above, those listed from time to time in the Company’s filings with the Securities and Exchange Commission 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 significant factors, but not necessarily all of the significant factors, that could cause actual results to differ materially. Unpredictable or unknown factors could also have material effects on the Company.

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Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds
(c) Repurchases of Equity Securities
                                 
                    (c)   (d)
                    Total Number of   Approximate Dollar
    (a)           Shares Purchased as   Value of Shares that
    Total Number of   (b)   Part of Publicly   May Yet Be Purchased
    Shares Purchased   Average Price Paid   Announced Share   Under the Share
Period   (1)(2)   Per Share   Repurchase Plan   Repurchase Plan
July 1st — July 31st
    49,600     $ 55.01       49,600     $ 287,345,000  
August 1st — August 31st
    600     $ 57.96           $ 287,345,000  
September 1st — September30th
                    $ 287,345,000  
 
(1)   Includes actual number of shares under the Board of Directors authorized and publicly announced Share Repurchase Program resolutions of May 19, 2006 to purchase up to $500,000,000 of shares, in the open market. At September 30, 2007, $287,345,000 remained available for repurchase under the program. The program will expire when the authorized amount is completely utilized.
 
(2)   Includes actual number of 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 and the 2007 Management Incentive Plan. 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.
Item 5 — Other Information
(a)   The Company is reporting that it remains on track to reach its aspiration of $5 billion in net sales by the end of 2007. To mark this occasion the Company is planning a worldwide associate celebration in mid-December. The date of the celebration has been chosen to allow for the maximum number of associates to celebrate the achievement in this year and is not meant to coincide with the date on which the Company has or will exceed $5 billion in net sales for the year.
Item 6 — Exhibits
(a)   Exhibits reference is made to the Exhibit Index on page 20.

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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/ SHAUN MARA    
    Shaun Mara   
    Vice President and Controller
Authorized Signatory and Chief Accounting Officer
 
  Date  November 9, 2007    

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WM. WRIGLEY JR. COMPANY AND WHOLLY OWNED ASSOCIATED COMPANIES
INDEX TO EXHIBITS
(Part II — Item 6)
                     
Exhibit                    
Number           Description of Exhibit        
 
                   
3.       Articles of Incorporation
 
                   
 
      (a)(i)   Restated Certificate of Incorporation of Wm. Wrigley Jr. Company as amended by the        
 
                   
 
      (a)(ii)   Certificate of Amendment of the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated March 22, 2005, is incorporated by reference to Exhibit 3(i)(a) to the Company’s Form 10-Q filed for the fiscal quarter ended March 31, 2005. Certificate of Amendment of the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated March 22, 2005, is incorporated by reference to Exhibit 3(i)(b) to the Company’s Form 10-Q filed for the fiscal quarter ended March 31, 2005.        
 
                   
 
      (a)(iii)   Certificate of Amendment No. 2 of the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated April 4, 2006, is incorporated by reference to Exhibit 3(a) (ii) to the Company’s Form 10-Q filed for the fiscal quarter ending March 31, 2006.        
 
                   
 
      (a)(iv)   Restated Certificate of Incorporation of Wm. Wrigley Jr. Company, as amended by the Certificate of Amendment No. 2 of the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated April 4, 2006, is incorporated by reference to Exhibit 3(a) (iii) to the Company’s Form 10-Q filed for the fiscal quarter ending March 31, 2006.        
 
                   
 
      (a)(v)   Restated Certificate of Incorporation of Wm. Wrigley Jr. Company, as amended by the Certificate of Amendment No. 2 to the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated April 4, 2006, and as further amended by the Certificate of Amendment of Restated Certificate of Incorporation dated March 15, 2007, is incorporated by reference to Exhibit 3(a)(v) of the Company’s Quarterly Report on Form 10-Q filed for the fiscal quarter ended March 31, 2007.        
 
                   
 
      Bylaws            
 
                   
 
      (b)(i)   The Registrant’s Amended and Restated Bylaws, 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.        
 
                   
 
      (b)(ii)   The Registrant’s Amended and Restated Bylaws, effective March 5, 2002, as amended on October 20, 2006 is incorporated by reference to Exhibit 3(b) of the Company’s Quarterly Report on Form 10-Q filed for the fiscal quarter ended September 30, 2006.        
 
                   
 
      (b)(iii)   The Registrant’s Amended and Restated Bylaws, effective March 5, 2002, as amended on October 20, 2006 and February 6, 2007 is incorporated by reference to Exhibit 3(b)(ii) to the Company’s Form 10-K filed for the fiscal year ended December 31, 2006.        
 
                   
 
      (b)(iv)   The Registrant’s Amended and Restated Bylaws, effective March 5, 2002, as amended on October 20, 2006, February 6, 2007 and March 15, 2007 is incorporated by reference to Exhibit 3(b)(iv) of the Company’s Quarterly Report on Form 10-Q filed for the fiscal quarter ended March 31, 2007.        
 
                   
4.       Instruments defining the rights of security holders
 
                   
 
      (a)   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.        
 
                   
 
      (b)   Senior Indenture, dated as of July 14, 2005, by and between Wm. Wrigley Jr. Company and J.P. Morgan Trust Company, National Association as trustee, is incorporated by reference to Exhibit 99.2 to the Company’s Form 8-K filed on July 14, 2005.        
 
                   
 
      (c)   Officers’ Certificate of Wm. Wrigley Jr. Company establishing the terms of the 4.30% Senior Notes due 2010        

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Exhibit                    
Number           Description of Exhibit        
 
          is incorporated by reference to Exhibit 99.3 to the Company’s Form 8-K filed on July 14, 2005.        
 
                   
 
      (d)   Officers’ Certificate of Wm. Wrigley Jr. Company establishing the terms of the 4.65% Senior Notes due 2015 is incorporated by reference to Exhibit 99.4 to the Company’s Form 8-K filed on July 14, 2005.        
 
                   
 
      (e)   Form of Global Note representing the 4.30% Senior Notes due 2010 is incorporated by reference to Exhibit 99.5 to the Company’s Form 8-K filed on July 14, 2005.        
 
                   
 
      (f)   Form of Global Note representing the 4.65% Senior Notes due 2015 is incorporated by reference to Exhibit 99.6 to the Company’s Form 8-K filed on July 14, 2005.        
 
                   
31       Rule 13a-14(a)/15d-14(a) Certifications
 
                   
 
  *   (a)   Certification of Mr. William D. Perez, President and Chief Executive Officer        
 
                   
 
  *   (b)   Certification of Mr. Reuben Gamoran, Senior Vice President and Chief Financial Officer        
 
                   
32       Section 1350 Certifications
 
                   
 
  *   (a)   Certification of Mr. William D. Perez, President and Chief Executive Officer        
 
                   
 
  *   (b)   Certification of Mr. Reuben Gamoran, Senior Vice President and Chief Financial Officer        
 
*   Filed herewith.
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.

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