Item 1. Business
(a) General Development of Business.
(1) General information. From 1891 to 1903, the Company was operated as a partnership until its incorporation in Illinois as Wm. Wrigley, Jr. & Co. in December, 1903. In November, 1910, the Company was reincorporated under West Virginia law as Wm. Wrigley Jr. Company, and in October, 1927, was reincorporated under Delaware law.
Throughout its history, the Company has concentrated on one principal line of business: the manufacturing and marketing of quality chewing gum products.
(2) Not applicable.
(b) Financial Information About Industry Segments.
The Company's principal business of manufacturing and selling chewing gum constitutes more than 90% of its consolidated worldwide sales and revenues. All other businesses constitute less than 10% of its consolidated revenues, operating profit and identifiable assets.
(c) Narrative Description of Business.
(1) Business conducted. Following is a description of the business conducted and intended to be conducted by the Company and its wholly-owned associated companies (the Company):
(i) Principal products, markets and methods of distribution. The Company's principal business is the manufacture and sale of chewing gum, both in the United States and abroad.
The Company's brands manufactured and available in the United States are: WRIGLEY'S SPEARMINT, DOUBLEMINT, JUICY FRUIT and BIG RED, which account for a majority of the Company's sales volume; FREEDENT, available in three flavors, a specially formulated chewing gum which does not stick to most types of dental work; and EXTRA sugarfree chewing gum, containing NUTRASWEET* brand sweetener, available in four flavors and as bubble gum.
Except for BIG RED, which has limited availability overseas, these six Wrigley brands are also commonly available in many international markets in various flavors. Additional brands manufactured and marketed abroad are: ARROWMINT, COOL CRUNCH, DULCE 16, JUICY FRUIT and P.K, chewing gums in sugar coated pellet form, FREEDENT and ORBIT sugarfree gums and BIG BOY, HUBBA BUBBA and BIG G, all standard bubble gum products.
The Company's ten largest markets outside of the United States in 1993 were Australia, Canada, China, France, Germany, Mexico, Philippines, Russia, Taiwan and the United Kingdom.
*NUTRASWEET is a registered trademark of The NutraSweet Company for its brand of sweetening ingredient.
Finished chewing gum is manufactured in four factories in the United States and nine factories in other countries. Three domestic wholly owned associated companies manufacture products other than finished chewing gum. The Amurol Products Company manufactures and markets primarily children's bubble gum items including BIG LEAGUE CHEW, BUBBLE TAPE and other uniquely packaged confections. Amurol markets HUBBA BUBBA in the United States under a licensing agreement with the parent company. Various non-gum items, such as a line of suckers, dextrose candy, liquid gel candy and hard roll candies are an important part of Amurol's total business. REED'S individually wrapped hard roll candies, first introduced in 1893, was acquired by Amurol Products Company in 1989. Amurol is also more actively developing export markets, the largest being Canada, Mexico and Japan. The principal business of the L.A. Dreyfus Company is the production of chewing gum base, at one domestic and one overseas factory, for the parent and wholly owned associated companies, and for other manufacturers of chewing gum and specialty gum products in the United States and abroad. Northwestern Flavors, Inc. processes flavorings and rectifies mint oil for the parent and associated companies and, as a small portion of its business, also manufactures flavorings and other ingredients for food-related industries.
In 1979, the Company organized its domestic converting operations, under the name of Wrico Packaging Division, as a separate operating unit of the Company. This division was created to help further the Company's capability to produce improved packaging materials. Currently, Wrico produces about 35% of the Company's domestic printed and other wrapping supplies.
The Company markets chewing gum primarily through wholesalers, corporate chains and cooperative buying groups that distribute the product through retail outlets. Additional direct customers are vending distributors, concessionaires and other established customers purchasing in wholesale quantities. Customer orders are usually received by mail or telephone and are shipped by truck from factory warehouses or leased warehousing facilities. Consumer purchases at the retail level are generated primarily through the Company's advertisements on television and radio, and in newspapers and magazines.
(ii) New products. In 1993, EXTRA in chlorophyll and menthol flavors was introduced in France and was introduced in spearmint and peppermint flavors in Hong Kong. In Australia and New Zealand, currant-flavored HUBBA BUBBA was introduced.
(iii) Sources and availability of raw materials. Natural gums and rosins and synthetic raw materials blended to make chewing gum base are readily available from private contractors and in the open market. The Company has also developed high quality, totally synthetic bases, all the components of which are readily available in the open market.
Sugar, corn syrup, flavoring oils and aspartame are obtained in the open market, or under contracts, from suppliers in the United States. All other ingredients and necessary packaging materials are also purchased on the open market and are readily available.
(iv) Patents and trademarks. The Company holds numerous patents relating to packaging, manufacturing processes and product formulas. Approximately a dozen patents relating to product formula and sweetener encapsulation, primarily for sugarfree gum, are deemed of material significance to the Company. Most of these patents expire in the countries in which they are registered at various times through the year 2012.
Trademarks are of material importance to the Company and are registered and maintained for all brands of the Company's chewing gum on a worldwide basis.
(v) Seasonality. On a consolidated basis, sales normally are relatively consistent throughout the year, although the combined second and third quarters generally contribute more than half of the Company's sales.
(vi) Working capital items. Inventory requirements of the Company are not materially affected by seasonal or other factors. In general, the Company does not offer its customers extended payment terms. The Company believes these conditions are not materially different from those of its competitors.
(vii) Customers. The Company's products are distributed through over 5,000 customers throughout the United States alone. No single domestic or foreign customer accounts for as much as 10% of consolidated sales or revenues.
(viii) Orders. It is the general custom of the wholesale trade to purchase chewing gum requirements at intervals of approximately ten days to two weeks to assure fresh stocks and good turnover. Therefore, an order backlog is of no significance to the chewing gum business.
(ix) Government business. The Company has no material portion of its business which may be subject to renegotiation of profits or termination of contracts at the election of the Government.
(x) Competitive conditions. The chewing gum market is an intensely competitive one in the United States and in most international markets. Though detailed figures are not available, there are approximately 14 chewing gum manufacturers in the United States. Outside sources estimate that Wrigley brands account for approximately 49% of the total chewing gum product unit sales in the United States. The Company's principal competitors in the United States are the Warner-Lambert Company and RJR Nabisco.
Wrigley brands are sold in 121 countries and territories, although in some cases these markets are relatively small. In most international markets, there are two or three major competitors and generally a half dozen or more other companies competing for a share of the gum market in each instance.
In all markets in which the Company distributes its products, principal methods of competition are a combination of competitive profit margins to the trade, superior quality, brand recognition, product benefit and a fair consumer price.
(xi) Research and development. The Company has for many years maintained an active in-house program, and has also contracted outside services for developing and improving Wrigley products, machinery and operations. In relation to the Company's consolidated assets, revenues and aggregate operating expenses, amounts expended in these areas during the last three fiscal years have not been material.
(xii) Compliance with environmental laws. Compliance with Federal, state and local laws regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has no material effect on capital expenditures, earnings or the competitive position of the Company.
(xiii) Employees. During 1993, the Company employed approximately 6,700 persons worldwide.
(d) Financial Information About Foreign and Domestic Operations and Export Sales.
Information concerning the Company's operations in different geographic areas for the years ended December 31, 1993, 1992 and 1991 is hereby incorporated by reference from the 1993 Annual Report to Stockholders, on page 16, under the caption "Operations by Geographic Areas," and on page 21 under the caption "Results of Operations."
Item 2.
Item 2. Properties
The information below relates to the principal properties of the Company which are primarily devoted to chewing gum production or raw materials processing. The Company considers the properties listed below to be in good condition, well maintained and suitable to carry out the Company's business. All of the factories listed below operated at least one full shift throughout the year and most also operated a substantial second shift. All properties are owned in fee by the Company unless otherwise indicated. The figures given in the table are approximate.
Floor Area Property and Location (Square Feet)
FINISHED GUM FACTORIES
Chicago, Illinois.............................. 1,255,700 Santa Cruz, California......................... 385,500 Gainesville, Georgia........................... 461,000 Naperville, Illinois........................... 122,000 Asquith, N.S.W., Australia..................... 149,000 Salzburg, Austria.............................. 22,600 Don Mills, Ont., Canada........................ 138,800 Plymouth, England.............................. 302,000 Biesheim, France............................... 286,000 Nairobi, Kenya................................. 35,000 Guangzhou, China, P.R.C(a)..................... 69,800 Manila, Philippines(b)......................... 100,700 Taipei, Taiwan, R.O.C.......................... 62,300
RAW MATERIALS PROCESSING FACTORIES
Edison, New Jersey............................. 536,000 West Chicago, Illinois......................... 40,300 Biesheim, France............................... 76,000
OFFICE BUILDING
Wrigley Building, Chicago, Illinois(c)......... 451,600
(a) In China, the Company has a 50 year lease with the Guangzhou Economic Technological Development Zone for the land upon which the factory is located.
(b) In the Philippines, the Laurel-Langley Agreement expired on May 27, 1975 and, under the terms of the Philippine Constitution, foreign firms were required to divest themselves of their land sites (but not the structures or improvements thereon). Consequently, in December, 1975, Wrigley Philippines, Inc. donated its land site, but not the buildings thereon, by deed to the Philippine Rural Reconstruction Movement, a non-stock, non-profit organization with no government affiliation, on a lease-back arrangement for a 25-year term with an option to renew for an additional 25 years.
(c) This building is the Company's principal non-manufacturing property and houses the offices of the Company's corporate headquarters. In 1993, the Company's offices occupied approximately 118,000 of the 451,600 square feet of rentable space in the building.
In the case of each factory listed above, there are also included some offices and warehouse facilities. Also, the Company maintains branch sales offices and warehouse facilities in the United States and abroad, all of which are leased for varying numbers of years.
Item 3.
Item 3. Legal Proceedings
None.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
All elected officer positions are held for a one-year term. The positions and ages listed below are as of December 31, 1993. There were no arrangements or understandings between any of the officers and any other person(s) pursuant to which such officers were elected.
At the meeting of the Board of Directors immediately following the annual stockholders' meeting of March 8, 1994, all officers set forth in the schedule above were re-elected for a one-year term to their positions in the Company, except Donald E. Balster who was elected to the position of Vice President- Production.
(a) John F. Bard joined the Company in January 1991. He previously served as President and Chief Operating Officer and as a Director of Tambrands, Inc. of Lake Success, New York, having joined that company in 1985 as Executive Vice President.
PART II
Item 5.
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
At December 31, 1993, the Company had two classes of stock outstanding: Common Stock, listed on both the New York and Midwest Stock Exchanges, and Class B Common Stock, for which there is no trading market. Shares of the Class B Common Stock were issued by the Company on April 11, 1986 to stockholders of record on April 4, 1986. Class B Common Stock is entitled to ten votes per share, is subject to restrictions on transfer or other disposition and is at all times convertible, on a share-for-share basis, into shares of Common Stock.
As of February 18, 1994, there were 15,646 stockholders of record holding Common Stock and 5,132 stockholders of record holding Class B Common Stock. Regular quarterly dividends and any extra cash dividends as may be deemed appropriate, which are identical on both Common Stock and Class B Common Stock, are declared at scheduled meetings of the Board of Directors and announced immediately upon declaration. Information regarding the high and low quarterly sales prices for the Common Stock on the New York Stock Exchange, and dividends declared per share on a quarterly basis for both classes of stock, is hereby incorporated by reference from the Company's 1993 Annual Report to Stockholders, on page 20, under the captions "Market Prices" and "Dividends."
Item 6.
Item 6. Selected Financial Data
Five-year summaries of selected financial data for the Company and discussions of accounting changes which materially affect the comparability of the selected financial data are hereby incorporated by reference from the Company's 1993 Annual Report to Stockholders under the following captions and page numbers: "Operating Data" and "Other Financial Data", on page 19; "Income Taxes", on page 13; and "Postretirement Benefits", on page 17.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's discussion and analysis of results of operations and financial condition, including a discussion of liquidity and capital resources, is hereby incorporated by reference from the Company's 1993 Annual Report to Stockholders, on pages 21 and 22.
Item 8.
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company at December 31, 1993 and 1992 and for each of the three years in the period ended December 31, 1993, with the report of independent auditors, and selected unaudited quarterly data -- consolidated results for the years ended December 31, 1993 and 1992 are hereby incorporated by reference from the Company's 1993 Annual Report to Stockholders, on pages 6 through 18 and 20, respectively.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors and nominees for directorship is incorporated herein by reference from the Company's definitive Proxy Statement, dated February 8, 1994, for the Annual Meeting of Stockholders on March 8, 1994, on pages 2 through 4, under the caption "Election of Directors". For information concerning the Company's executive officers, see "Executive Officers of the Registrant " set forth in Part I hereof.
Information regarding disclosure of late filers pursuant to Item 405 of Regulation S-K is incorporated herein by reference from the Company's definitive Proxy Statement dated February 8, 1994, for the Annual Meeting of Stockholders on March 8, 1994, on pages 17 and 18 under the caption "Compliance with Section 16(a) of the Exchange Act."
Item 11.
Item 11. Executive Compensation
Information regarding the compensation of directors and executive officers is incorporated herein by reference from the Company's definitive Proxy Statement, dated February 8, 1994, for the Annual Meeting of Stockholders on March 8, 1994, on pages 7, 8 and 9 through 17 under the general captions "Compensation of Directors" and "Executive Compensation", respectively.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding security ownership of certain beneficial owners, of all directors and nominees, of the named executive officers, and of directors and executive officers as a group, is hereby incorporated by reference from the Company's definitive Proxy Statement, dated February 8, 1994, for the Annual Meeting of Stockholders on March 8, 1994, on pages 4 through 6 under the captions "Security Ownership of Directors and Executive Officers" and "Security Ownership of Certain Beneficial Owners."
Item 13.
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related transactions is hereby incorporated by reference from the Company's definitive Proxy Statement, dated February 8, 1994, for the Annual Meeting of Stockholders on March 8, 1994 under the following captions and page numbers: "Election of Directors", on page 4, regarding Mr. William Wrigley and Mr. William Wrigley, Jr.; "Security Ownership of Certain Beneficial Owners", on page 6, regarding Mrs. Edna Jean Offield, Mr. James S. Offield and Mr. Paxson H. Offield; "Compensation Committee Interlocks and Insider Participation", on page 17, regarding Mr. Joseph H. Flom and Mr. William Wrigley; and "Related Transactions", on page 17, regarding the Company's purchase of stock from the Offield Family Foundation.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1,2. Financial Statements and Financial Statement Schedules
The data listed in the accompanying Index to Financial Statements and Financial Statement Schedules, on page hereof, is filed as part of this Report.
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits, on page hereof, are filed as part of this Report or are incorporated by reference herein as indicated thereon.
(b) Not Applicable.
(c) See (a) 3 above.
(d) See (a) 1, 2 above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Form 10-K Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 29, 1994 WM. WRIGLEY JR. COMPANY (Registrant)
By: /s/ John F. Bard Senior Vice President (Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title
President, Chief William Wrigley Executive Officer, Director
Senior Vice President John F. Bard (Principal Financial Officer)
Corporate Controller Dennis J. Yarbrough (Principal Accounting Officer)
Director Charles F. Allison III
Director Lee Phillip Bell
Director Robert P. Billingsley
Director By /s/ R. Darrell Ewers Wm. M. Piet Attorney-in-Fact Director Gary E. Gardner Date: March 29, 1994 Director Penny Sue Pritzker
Director Richard K. Smucker
Director William Wrigley, Jr.
Exhibit 23.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form 10-K of Wm. Wrigley Jr. Company of our report dated January 31, 1994, included in the 1993 Annual Report to Stockholders of Wm. Wrigley Jr. Company.
Our audits also included the financial statement schedules of Wm. Wrigley Jr. Company listed in item 14(a). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 33-43738 and 33-22788) pertaining to the Special Investment and Savings Plan for Wrigley Employees and the Wm. Wrigley Jr. Company Management Incentive Plan, and in the related Prospectuses, of our report dated January 31, 1994, with respect to the consolidated financial statements and consolidated financial statement schedules of Wm. Wrigley Jr. Company included or incorporated by reference in this Annual Report on Form 10-K for the year ended December 31, 1993.
/s/ ERNST & YOUNG Ernst & Young
Chicago, Illinois March 25, 1994
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or accounting policies and notes thereto.
With the exception of the pages listed in the above index and the items referred to in Items, 1,5,6,7, and 8 of this Form 10-K Report, the 1993 Annual Report to Stockholders is not to be deemed filed as part of this report.
Notes:
(A) Depreciation is provided by the straight line and accelerated methods over the estimated useful lives of the respective assets (buildings and building equipment-12 to 50 years; machinery and equipment-3 to 20 years).
(B) Foreign currency translation adjustment.
Note:
(A) Foreign currency translation adjustment.
WM. WRIGLEY JR. COMPANY AND WHOLLY OWNED ASSOCIATED COMPANIES
INDEX TO EXHIBITS (Item 14(a))
Exhibit Number Description of Exhibit
Proxy Statement of the Registrant, dated February 8, 1994, for the March 8, 1994 Annual Meeting of Stockholders, is hereby incorporated by reference.
3(a). Restated Certificate of Incorporation of the Registrant, as amended. (Incorporated by reference to the Company's Form 10-K filed for the fiscal year ended December 31, 1992.)
3(b). By-laws of the Registrant, as amended. (Incorporated by reference to the Company's Form 10-K filed for the fiscal year ended December 31, 1992.)
10(a). Senior Executive Insurance Plan. (Incorporated by reference to the Company's Form 10-K filed for the fiscal year ended December 31, 1991.)
10(b). Deferred Compensation Plan for Non-Employee Directors, as amended.
10(c). Non-Employee Directors' Death Benefit Plan. (Incorporated by reference to the Company's Form 10-K filed for the fiscal year ended December 31, 1989.)
10(d). 1993 Executive Incentive Compensation Plan.
10(e). Supplemental Retirement Plan. (Incorporated by reference to the Company's Form 10-K filed for fiscal year ended December 31, 1990.)
10(f). Management Incentive Plan. (Incorporated by reference to the Company's Form 10-K filed for fiscal year ended December 31, 1990.)
10(g). Stock Retirement Plan for Non-Employee Directors. (Incorporated by reference to the Company's Form 10-K filed for fiscal year ended December 31, 1990.)
13. 1993 Annual Report to Stockholders of the Registrant.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors. (See page 11.)
24. Power of Attorney. - --------------------
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 $15.00 representing reproduction and handling costs.