Wm. Wrigley Jr. Company: Securities and Exchange Commission FORM 10-K

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sec.gov/Archives/edgar/data/108601/000120677406000260/wm112429.htm
10-K 1 wm112429.htm FORM 10-K
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM 10-K
x o ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-800
For the fiscal year ended December 31, 2005
WM. WRIGLEY JR. COMPANY

(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
36-1988190
(I.R.S. Employer Identification No.)
410 North Michigan Avenue Chicago, Illinois

(Address of principal executive offices)
60611
(Zip Code)
Registrants telephone number, including Area Code: Securities registered pursuant to Section 12(b) of the Act:
(312) 644-2121
Title of each class
Name of each ex change on which registered
Common Stock, no par value Securities registered pursuant to Section 12(g) of the Act:
Title of each class
New York Stock Exchange Chicago Stock Exchange
Class B Common Stock, no par value
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act. Yes o No x Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x 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 Exchange Act. (Check one): Large accelerated filer x 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 Exchange Act of 1934). Yes o No x As of June 30, 2005, there were outstanding 191,866,690 of Common Stock, no par value, and the aggregate market value of the Common Stock (based upon the closing price of the stock on the New York Stock Exchange on June 30, 2005) held by nonaffiliates was approximately $10,185,461,075. As of June 30, 2005, there were outstanding 33,370,274 shares of Class B Common Stock, no par value. Class B Common Stock carries 10 votes per share, is not traded on the exchanges, is restricted as to transfer or other disposition, and is convertible into Common Stock on a share-for-share basis. Upon such conversion, the resulting shares of Common Stock are freely transferable and publicly traded. Assuming all shares of outstanding Class B Common Stock were converted into Common Stock, the aggregate market value of Common Stock held by non-affiliates on June 30, 2005 (based upon the closing price of the stock on the New York Stock Exchange on such date) would have been approximately $10,755,525,252. Determination of stock ownership by non-affiliates was made solely for the purpose of this requirement, and the Registrant is not bound by these determinations for any other purpose. As of February 6, 2006 there were outstanding 188,657,249 shares of Common Stock, no par value, and the aggregate market value of the Common Stock (based upon the closing price of the stock on the New York Stock Exchange on February 6, 2006) held by non-affiliates was approximately $10,096,009,856. As of February 6, 2006, there were outstanding 33,165,293 shares of Class B Common Stock, no par value. Class B Common Stock carries ten votes, is not traded on the exchanges, is restricted as to transfer or other disposition, and is convertible into Common Stock on a share-for-share basis. Upon such conversion, the resulting shares of Common Stock are freely transferable and publicly traded. Assuming all shares of outstanding Class B Common Stock were converted into Common Stock, the aggregate market value of Common Stock held by non-affiliates on February 6, 2006 (based upon the closing price of the stock on the New York Stock Exchange on such date) would have been approximately $10,618,543,918. Determination of stock ownership by non-affiliates was made solely for the purpose of this requirement, and the Registrant is not bound by these determinations for any other purpose. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrants Notice of Annual Meeting and Proxy Statement, dated February 16, 2006, for the April 4, 2006
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Annual Meeting of Stockholders (the Companys Proxy Statement), and Annual Report to Stockholders for the fiscal year ended December 31, 2005 (the Companys 2005 Annual Report), are incorporated by reference into portions of Parts I, II, III and IV of this Report. 2
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PART I 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 (the Company), and in October 1927, was reincorporated under the same name under Delaware law. The Company has concentrated on one principal line of business: manufacturing and marketing quality confectionery products, primarily chewing gum. The Company recently diversified its business within the broader confectionery category. To this end, the Company, in 2004, acquired certain confectionery businesses of the Joyco Group from Agrolimen - a privately-held Spanish conglomerate. This acquisition is strengthening the Companys operations in key geographies including Spain, India and China through a broader confectionery brand portfolio, access to additional distribution channels and enhanced manufacturing capabilities. In 2005, the Company completed its acquisition of certain non-chocolate confectionery assets from Kraft Foods Global, Inc. Additional information relating to the acquisition of certain confectionery businesses of the Joyco Group, and certain nonchocolate confectionery assets from Kraft Foods Global, Inc., is set forth on pages 48 and 49 of the Companys 2005 Annual Report under the caption acquisitions and is incorporated herein by reference. In 2005, the Company issued senior unsecured notes and commercial paper in order to facilitate the acquisition of certain non-chocolate confectionery assets from Kraft Foods Global, Inc. Additional information regarding the Companys debt in this regard is set forth on page 46 of the Companys Annual Report under the caption Long-term Debt and is incorporated herein by reference. In 2005, the Company announced plans to restructure its North American production network in order to maximize supply chain efficiencies. As a result, the Company plans to close its chewing gum plant in Chicago, Illinois and its L.A. Dreyfus gum base subsidiary in Edison, New Jersey, transferring production to remaining facilities. Additional information regarding the Companys restructuring plans is set forth on page 50 of the Companys Annual Report under the caption restructuring and is incorporated herein by reference. (2) Not applicable. (b) Financial Information About Industry Segments. The Companys principal business is manufacturing and marketing chewing gum and other confectionery products worldwide. All other businesses constitute less than 10% of its consolidated revenues, operating profit and identifiable assets. Financial information on segments, as defined under U.S. generally accepted accounting principles, is set forth on pages 58 and 59 of the Companys 2005 Annual Report under the caption segment information, which information is incorporated herein by reference. (c) Narrative Description of Business. (1) Business conducted. The following is a description of the business conducted and intended to be conducted by the Company and its wholly-owned associated companies: (i) Principal products, markets and methods of distribution. The Companys principal business is manufacturing and selling chewing gum and other confectionery products, both in the United States and abroad. Information concerning the Companys current and new products for the year ended December 31, 2005 is hereby incorporated by reference from the inside back cover of the Companys 2005 Annual Report. In 2005, the Companys ten largest revenue producing countries outside of the United States were, in alphabetical order:
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Australia, Canada, China, France, Germany, Poland, Russia, Spain, Taiwan and the United Kingdom. Chewing gum and other confectionery products are manufactured in four factories in the United States and sixteen factories in other countries. Two domestic wholly-owned associated companies, L.A. Dreyfus Company and Northwestern Flavors, LLC, manufacture products, gum base and mint oil, respectively, other than chewing gum or confectionery products. In addition, four foreign facilities also manufacture gum base for the Companys international production facilities and for third party gum product manufacturers. 3
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The Company markets chewing gum and other confectionery products primarily through distributors, 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 electronically, by mail, telephone or telefax and are generally shipped by truck from factory warehouses or leased warehousing facilities. Consumer purchases at the retail level are generated primarily through the Companys advertisements on television as well as in newspapers and magazines. (ii) Sources and availability of raw materials. Raw materials blended to make chewing gum are readily available in the open market and they include sugar, corn syrup, flavoring oils, polyols and high intensity sweeteners. Other ingredients and necessary packaging materials are also available and purchased in the open market. (iii) Patents and trademarks. The Company holds numerous patents and patent applications relating to packaging, manufacturing processes and product formulas. Approximately sixty patents relating to packaging, chewing gum confection processing, product formula and sweetener encapsulation, primarily for sugar-free gum and continuous chewing gum manufacturing, are deemed of material importance to the Company. Most of these patents expire in the countries in which they are registered at various times through the year 2021. Trademarks are of material importance to the Company and are registered and maintained for all brands of the Companys chewing gum and confectionery products on a worldwide basis as appropriate. (iv) Seasonality. On a consolidated basis, sales are relatively consistent throughout the year. (v) 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. (vi) Customers. The Companys products are distributed through more than 1,600 direct customers throughout the United States alone. No single domestic or foreign customer accounts for as much as 10% of consolidated revenues. (vii) Orders. It is typical for the general customer of the wholesale trade to purchase chewing gum and other confectionery requirements at intervals of approximately ten days to two weeks to assure fresh stocks and good turnover. (viii) 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. (ix) Competitive conditions. The confectionery business is an intensely competitive one in the United States and in most international marketplaces as all of the Companys brands compete for retail shelf space with other advertised and branded products. The Company competes in over 180 countries and territories. In most marketplaces, there are two or three major competitors and generally half a dozen or more other companies competing for a share of the confectionery business. In the chewing gum category, the Company is a worldwide leader, accounting for approximately 63% of the total chewing gum product unit sales sold in the United States alone, according to outside sources (i.e., Nielsen, IRI). The Company competes primarily with Cadbury Adams (a division of Cadbury Schweppes) in the chewing gum category and with Cadbury Adams, Masterfoods and Hershey, in other nonchocolate categories, mainly hard and chewy candy including mints. The continued growth of alternative store formats, product and packaging innovations, technological advances, and new industry techniques have all added additional variables for companies in the confectionery industry to consider in order to remain competitive. In all areas in which the Company distributes its products, principal elements of competition are a combination of competitive profit margins to the trade, level of product quality, brand recognition, product benefit and a fair consumer price. Positive factors pertaining to the Companys competitive position include well-recognized brands, strong brand management, varied product offerings, product innovation, and a strong distribution network. (x) Research and development. The Company has for many years maintained an active in-house research and development program, and has also contracted outside services for developing and improving Wrigley products, machinery and operations.
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Information relating to the cost incurred by the Company for research and development in each of the last three fiscal years is set forth on page 43 of the Companys 2005 Annual Report under the caption Research and Development and is incorporated herein by reference. (xi) 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. (xii) Employees. As of December 31, 2005, the Company employed approximately 14,300 persons worldwide. 4
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(d) Financial Information About Foreign and Domestic Operations and Export Sales. Information concerning the Companys operations in different geographic areas for the years ended December 31, 2005, 2004, and 2003 is hereby incorporated by reference from the Companys 2005 Annual Report on pages 58 and 59 , under the caption segment information, and on pages 20 through 23 under the caption Results of Operations. (e) Available Information. Information regarding the Companys annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, will be made available in print, free of charge, to any stockholder who request them, or at the Companys internet website at www.wrigley.com, as soon as reasonably practicable after the Company electronically files such reports with or furnishes them to the Securities and Exchange Commission. In addition, information regarding the Companys corporate governance guidelines (Principles of Corporate Governance) and code of ethics (Code of Business Conduct), and the charters of the Companys Audit, Compensation and Corporate Governance Committees, are available free of charge also on the above-mentioned Companys website or in print to any shareholder who request them. Item 1A. Risk Factors. Significant factors that could impact the Companys business operations include, without limitation, the following: Availability or retention of retail space - In those countries where we maintain market leadership in the chewing gum segment, our ability to retain preferred retail space allocation will impact results, and if we are not able to retain this allocation, our results could be negatively impacted. Availability of raw materials - Failure to maintain the availability, pricing and sourcing of raw materials could negatively impact results. Changes in demography and consumer preferences - We market our products to different segments of the population. Failure to adequately anticipate and react to changing demographics and product preferences could negatively impact results. Changes in foreign currency and markets conditions - Both manufacturing and sales of a significant portion of our products are outside the United States and could be negatively impacted by volatile foreign currencies and geographies. Changes in product performance and competition - We compete worldwide with other well-established manufacturers of confectionery products, including chewing gum. Our results may be negatively impacted by a failure of new or existing products to be favorably received, by ineffective advertising, or by failure to sufficiently counter aggressive competitive actions. Underutilization of or inadequate manufacturing capacity - Underutilization of or inadequate manufacturing capacity due to unanticipated movements in consumer demands could negatively impact manufacturing efficiencies and costs. Discounting and other competitive actions - Discounting and other competitive actions may make it more difficult for us to maintain our operating margins. Governmental regulations - Governmental regulations with respect to import duties, tariffs, taxes and environmental controls, both in and outside the U.S., could negatively impact our costs and ability to compete in domestic or foreign marketplaces. Labor stoppages - To the extent we could experience any material labor stoppages, such disputes or strikes could negatively affect shipments from suppliers or shipments of finished product. Outcome of integrating Kraft assets acquired - Our ability to successfully integrate certain confectionery assets
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of Kraft Foods Global, Inc. could cause actual results to differ from anticipated results or expectations of the Companys business. Political, economic and social instability While the countries in which we operate tend to be politically, socially and economically stable, to the extent there is political or social unrest, civil war, terrorism or significant economic instability, the results of our business in such countries could be negatively impacted. 5
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Additional significant factors that may affect the Companys operations, performance, development business results include the risks and uncertainties listed from time to time in the Companys 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 impact the Companys business. Unpredictable or unknown factors could also have material effects on us. Item 1B. Unresolved Staff Comments. None. Item 2. Properties. The information below relates to the principal properties of the Company, which are primarily devoted to confectionery 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 Companys business. All properties are owned by the Company unless otherwise indicated.
PROPERTY AND LOCATION TYPES OF PRODUCT
FACTORIES North America Region Chicago, Illinois Gainesville, Georgia Yorkville, Illinois Chattanooga, Tennessee Don Mills, Ontario, Canada West Chicago, Illinois Edison, New Jersey EMEAI Region Plymouth, England Bridgend, Wales Biesheim, France Poznan, Poland St. Petersburg, Russia Bangalore, India Baddi, India Nairobi, Kenya Tarazona, Spain (a) Santiga, Spain (b) Asia Region Guangzhou, China, P.R.C. (c) Panyu, China (c) Antipolo, Philippines Taipei, Taiwan, R.O.C. Shanghai, China (c) Wuzhou, China (c) Pacific Region Asquith, N.S.W., Australia
Gum Gum Gum and Candy Candy Gum Raw materials flavors Raw materials - gum base
Gum Candy Gum, candy and raw materials gum base Gum and candy Gum and candy Gum Gum and candy Gum Gum and candy Raw material - gum base Gum Gum and candy Gum Gum Raw materials - gum base Raw materials - gum base
Gum
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Latin America Region Silao, Mexico 6 Gum
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OFFICE BUILDINGS Wrigley Building, Chicago, Illinois (d) EMEAI Regional Offices, Unterhaching, Germany (d) RESEARCH AND DEVELOPMENT CENTER/OFFICE Global Innovation Center, Chicago, Illinois (e)
(a) (b) (c)
Includes an 8,000 square foot leased warehouse facility. Includes a 3,635 square foot leased warehouse facility. In China, the Company has a 50-year lease on each of the four factories with the relevant Chinese economic technological development authorities, with expiration dates as follows: (i) (ii) (iii) (iv) Guangzhou - November 14, 2039; Panyu - July 6, 2050; Shanghai - November 20, 2051; and Wuzhou - September 27, 2051.
(d)
These buildings are the Companys principal non-manufacturing properties. The Wrigley Building houses the offices of the Companys corporate headquarters and U.S. operations. The EMEAI (Europe, Middle East, Africa and India) Regional Offices in Unterhaching, Germany, houses the regional sales and administrative offices for the Companys EMEAI region and German operations. This building, which was commissioned for business on April 25, 2005, houses the Companys principal research and development activities, consisting of laboratories, offices, and infrastructure.
(e)
In the case of each factory listed above, the information also includes some office and warehouse facilities. Also, the Company maintains primarily leased branch sales offices and warehouse facilities in the United States and abroad. Item 3. Legal Proceedings. None. Item 4. Submission of Matters to a Vote of Security Holders. None. 7
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Executive Officers of the Registrant. All officers are elected for a term, which ordinarily expires on the date of the meeting of the Board of Directors following the Annual Meeting of Stockholders. The positions and ages listed below are as of December 31, 2005. There were no arrangements or understandings between any of the officers and any other person(s) pursuant to which such officers were elected.
Name and Age Position(s) with Registrant Effective Date(s)
William Wrigley, Jr., 42
Chairman of the Board, President and Chief Executive Officer President and Chief Executive Officer Vice President Vice President & Assistant to the President Assistant to the President Vice President, Manufacturing International Vice President - Manufacturing Vice President - Worldwide Manufacturing Vice President - Production Senior Director - U.S. Production Vice President and Managing Director - West Europe Vice President - Worldwide Gum Base Operations Vice President - Organizational Development President, L.A. Dreyfus, Inc. Various executive and management positions within the L.A. Dreyfus, Inc. organization General Manager - New Confectionery Brands Senior Director - Global Branding Senior Director - Consumer Marketing Vice President and Chief Financial Officer Vice President and Controller Controller Controller-International Senior Vice President - Worldwide Strategy & New Business Senior Vice President - International Vice President - Chief Information Officer Vice President - People, Learning & Development Senior Director, Benefits & Compensation Assistant Vice President-Personnel
since 2004 1999-2003 1992-1999 1991-1992 1985-1991 since 2005 since 2005 1999-2005 1994-1999 1991-1994 since 2005 since 2004 2001-2004 1991-2000 1970-1991 since 2005 2001-2004 2000-2001 since 2004 2001-2003 1999-2001 1996-1999 since 2004 1999-2003 since 2000 since 2003 1995-2003 1991-1995 since 2006 1999 - 2005 1994-1999 1988-1994 since 2003
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John Adams, 59 (a) Donald E. Balster, 61
Frank Birkel, 42 (b) Vincent C. Bonica, 60
A. Rory Finlay, 44
Reuben Gamoran, 45
Peter Hempstead, 54
Donagh Herlihy, 42 Philip C. Johnson, 60
Shaun Kim, 62
Retired Vice President - Worldwide Engineering Vice President - Engineering Senior Director - Engineering Senior Vice President & Chief Innovation Officer
Surinder Kumar, 61 (c)
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Chief Innovation Officer 8
2001-2003
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Name and Age
Position(s) with Registrant
Effective Date(s)
Howard Malovany, 55
Vice President, Secretary and General Counsel Secretary and General Counsel Assistant Secretary & Senior Counsel Vice President - Worldwide Procurement Vice President - Nordic Vice President - International & Managing Director - North Region Vice President - International Managing Director, Wrigley Scandinavia AB, Sweden Senior Vice President & Chief Administrative Officer Senior Vice President - People, Learning and Development Vice President - People, Learning and Development Vice President Vice President - Organizational Development Vice President - Controller Vice President - Treasurer Treasurer Retired Vice President and Chairman - Europe Vice President - International & Managing Director - EMEAI Vice President - International & Managing Director - Europe Vice President - International Co-Managing Director of Wrigley GmbH, Munich, Germany Vice President and Treasurer Treasurer Vice President & Managing Director - North America/Pacific Vice President - General Manager U.S. Vice President - U.S. Sales and Customer Marketing Vice President and Managing Director - Asia Vice President - International & Managing Director - Asia Regional Managing Director - North Asia Senior Vice President - Worldwide Supply Chain Senior Vice President - Supply Chain & Corporate Development Vice President - Supply Chain & Corporate Development
since 2001 1998-2001 1996-1998 since 2002 since 2005 2001-2005 1993-2001 1983-1993 since 2004 2002-2003 2001-2002 2000-2001 1999-2000 1996-1999 1993-1996 1992 since 2006 2004-2005 2003 1996-2003 1992-1996 1981-1992 since 2001 1996-2001 since 2004 2002-2003 2001-2002 since 2005 2000-2005 1998-2000 since 2004 2001-2003 2000-2001 since 2004
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Patrick Mitchell, 50 (d) Jon Orving, 56
Dushan Petrovich, 52
Stefan Pfander, 62
Alan J. Schneider, 60 Ralph P. Scozzafava, 47 (e)
Michael F. Wong, 52
Darrell R. Splithoff, 56
Ronald V. Waters, 53
Chief Operating Officer
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Senior Vice President & Chief Financial Officer Igor Saveliev, 44 (f) Vice President and Managing Director East and Central Europe 9
1999-2003 since 2005
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Denis Schrey, 42(g) Tawfik Sharkasi, 55 (h) Samson Suen, 56 (i)
Vice President and Managing Director - North Europe Vice President - Research & Development Vice President and Managing Director - China
since 2005 since 2005 since 2005
(a)
Mr. Adams was elected Vice President, Manufacturing - International in 2005. Mr. Adams joined the Company in 1999 as Senior Director, Manufacturing Operations in the Europe, Middle East and Africa (EMEAI), with responsibility for all regional factories, and in 2001, served as Senior Director, Supply Chain, with responsibilities for supply chain operations within the Companys manufacturing organizations. Prior to joining the Company, Mr. Adams was employed by Diageo from 1995 to 1999, most recently as Senior Vice President, Operations - North America. Mr. Birkel was elected Vice President and Managing Director - West Europe in 2005. Mr. Birkel joined the Company in 2001 as Managing Director - Germany, with responsibility for the Companys commercial business within Germany. Until his present position, Mr. Birkel served the Company as Regional Vice President - West Europe between 2004 and 2005. Prior to joining the Company, he was employed by Procter & Gamble from 1992 to 2001, most recently as Marketing Director, Laundry & Cleaning for several European countries. Dr. Kumar joined the Company in 2001 as Chief Innovation Officer, and in 2003 was elected Senior Vice President & Chief Innovation Officer with responsibility for worldwide research and development, product and technical development, quality assurance, and regulatory affairs. Before joining the Company, from 1998-2000, Dr. Kumar was Senior Vice President, Research and Development for Bristol Myers Squibb, and from 1995-1998, Dr. Kumar held the position of Senior Vice President, Research and Development/Quality for Pepsi Company Restaurants International. Mr. Mitchell joined the Company in 2002 as Vice President Procurement with responsibility for the Companys global procurement activities. Before joining the Company, from 1992 through 2002, he held various positions with the Kellogg Company, most recently as Vice President-Global Procurement. Mr. Scozzafava was elected Vice President and Managing Director North America/Pacific effective January 1, 2004, heading up the Companys new North America Group and the Pacific Region. Mr. Scozzafava joined the Company in 2000 as Vice President Sales and Customer Marketing and, in 2002, took the position of Vice President General Manager - U.S. with responsibility for the sales, marketing, finance and people, learning and development functions for the Companys U.S. business. Mr. Scozzafava held various executive positions with the Campbells Soup Company for five years prior to joining the Company. Mr. Saveliev was elected Vice President and Managing Director East and Central Europe in 2005. Mr. Saveliev joined the Company in 1995 as General Manager - Russia, with responsibility for improving the Companys commercial business in Russia. Until his present position, Mr. Saveliev served the Company as General Manager EMEAI East (between 2000 and 2004) and Regional Vice President East and Central Europe (between 2004-2005). Prior to joining the Company, he was employed by Nabisco (1995) and Coca-Cola (1994). Mr. Schrey was elected Vice President and Managing Director - North Europe in 2005. Mr. Schrey joined the Company in 2001 as Director, Business Development - International, with responsibility for expanding sales to global customers. Until his present position, Mr. Schrey served the Company as Regional Managing Director Pacific (between 2003 and 2004) and Regional Vice President North Europe (between 2004 and 2005). Prior to joining the Company, he was employed by Procter & Gamble from 1989 to 2001, most recently as Associate Director for Germany, Austria and Switzerland. Dr. Sharkasi was elected Vice President - Research & Development in 2005. Dr. Sharkasi joined the Company in 2004 as Vice President - Research & Development, Gum, with primary responsibility for gum development. Prior to joining the Company, he was employed by Nestle from 1994 to 2004, most recently as Director of Research & Development Ice Cream. Mr. Suen was elected Vice President and Managing Director - China in 2005. Mr. Suen joined the Company in 1979
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(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
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as Marketing Manager - Hong Kong, became Managing Director - Hong Kong later that year, and leading up to his present position, Mr. Suen held various senior management positions in the Companys subsidiaries in Hong Kong, Indonesia, Taiwan and, most recently, as General Manager of Wrigley China. 10
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PART II Item 5. Market for Registrants Common Stock, Dividend and Stockholder Information. (a) (i) Market Information. As of December 31, 2005, the Company had two classes of stock outstanding: Common Stock, listed on both the New York and Chicago 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. (ii) Holders. As of December 31, 2005, there were 40,545 stockholders of record holding Common Stock and 2,658 stockholders of record holding Class B Common Stock. (iii) Dividends. Dividends, 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 for the two-year period ended December 31, 2005 is set forth in the Companys 2005 Annual Report on page 31 under the captions Market Prices and Dividends and is incorporated herein by reference. (iv) Securities Authorized for Issuance Under Equity Compensation Plans. The following table provides information for all equity compensation plans as of the fiscal year ended December 31, 2005, under which the equity securities of the Company were authorized for issuance:
Number of securities remaining available for future issuance under equity compensation plans (ex cluding securities reflected in column (a)) (c)
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
Weighted average ex ercise price of outstanding options, warrants and rights (b)
Equity compensation plans approved by security holders (1) Equity compensation plans not approved by security holders Total
9,772,525 0 9,772,525
58.76 0
5,904,397 0 5,904,397
(1)
Includes shares and share units of Common Stock of the Company authorized for awards under the various programs of the Companys 1997 Management Incentive Plan (MIP), as amended. Descriptions of the various programs under the MIP are, with respect to the Directors, set forth on pages 14 and 16 of the Companys Proxy Statement, under the caption Compensation of Directors and, with respect to executive officers, set forth on pages 48-52 of the Companys Proxy Statement beginning with the caption Management Incentive Plan, which descriptions are incorporated herein by reference. No specific amount of shares has been dedicated to any particular program within the MIP. In the aggregate, 20,000,000 shares are authorized for the MIP. Shares awarded under all above plans may be newly issued, from the Companys treasury or acquired in the open market.
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(b) Not applicable 11
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c) Repurchases of Equity Securities.

Total Number of Shares Purchased as Part of Publicly Announced Share Repurchase Plan (i) (b) Approx imate Dollar Value of Shares that May Yet Be Purchased Under the Share Repurchase Programs
Period
Total Number of Shares Purchased (a)
Average Price Paid Per Share
October 1st October 31st November 1st November 30th December 1st December 31st
103,000 1,507,000
68.92 68.19
103,000 1,507,000
238,577,000 231,513,000 128,733,000
(i) Represents actual number of shares purchased under the Board of Directors authorized and publicly announced Share Repurchase Program resolution of August 18, 2004, to purchase up to $300,000,000 of shares, in the open market. At December 31, 2005, $128,733,000 remains available for repurchase under the Programs. The Programs will expire when the authorized amounts are completely utilized. Item 6. Selected Financial Data. An eleven-year summary of selected financial data for the Company is set forth in the Companys 2005 Annual Report under the following captions and page numbers: Operating Data and Other Financial Data on pages 32 and 33 and is incorporated herein by reference. Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations. Managements discussion and analysis of results of operations and financial condition, including a discussion of liquidity and capital resources and the accompanying forward looking and cautionary statements, is set forth in the Companys 2005 Annual Report on pages 19 through 29 and is incorporated herein by reference. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Disclosure about market risk is set forth on pages 27 and 28 of the Companys 2005 Annual Report under the heading Market Risk and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. The Companys audited consolidated financial statements, accounting policies and notes to consolidated financial statements, with the reports of management and the independent registered public accounting firm, at December 31, 2005 and 2004 and for each of the three years in the period ended December 31, 2005, are set forth in the Companys 2005 Annual Report on pages 34 through 59, and selected unaudited quarterly data-consolidated results for the years ended December 31, 2005 and 2004 are set forth in the Companys 2005 Annual Report on page 30 under the caption Quarterly Data, and all such pages are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. (i) Disclosure Controls and Procedures. The Companys Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the
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Companys disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures were effective as of December 31, 2005. (ii) Internal Control Over Financial Reporting. (a) Managements annual report on internal control over financial reporting. The Companys management report on internal control over financial reporting is set forth in the Companys 2005 Annual Report on page 34 and is incorporated herein by reference. 12
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(b) Attestation report of the registered public accounting firm. The report of Ernst & Young LLP, the Companys independent registered public accounting firm, on managements assessment of the effectiveness of the Companys internal control over financial reporting and the effectiveness of the Companys internal control over financial reporting is set forth in the Companys 2005 Annual Report on page 35 and is incorporated herein by reference. (c) Changes in internal control over financial reporting. There was no change in the Companys internal control over financial reporting during the Companys fourth fiscal quarter ended December 31, 2005 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting. PART III Item 10. Directors and Executive Officers of the Registrant. Information regarding directors and nominees for directorship is set forth in the Companys Proxy Statement on pages 5 through 8 under the caption Election of Class I Directors and is incorporated herein by reference. For information concerning the Companys executive officers, see Executive Officers of the Registrant set forth in Part I hereof. Item 11. Executive Compensation. Information regarding the compensation of directors and executive officers is set forth in the Companys Proxy Statement on pages 14 through 16, and 47 through 58 under the general captions Compensation of Directors and Executive Compensation, respectively, and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 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 set forth in the Companys Proxy Statement on pages 17 through 19 under the captions Security Ownership of Directors and Executive Officers and Security Ownership of Certain Beneficial Owners and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. Information regarding certain relationships is hereby incorporated by reference from the Companys Proxy Statement on pages 18 and 19 under the heading Security Ownership of Certain Beneficial Owners. Item 14. Principal Accountant Fees and Services. Information regarding principal accountant fees and services is incorporated by reference from the Companys Proxy Statement on page 60 under the heading Service Fees Paid to the Independent Registered Public Accounting Firm. PART IV Item 15. Exhibits and Financial Statement Schedules. (a) 1 and 2. Financial Statements and Financial Statement Schedule The data listed in the accompanying Index to Financial Statements and Financial Statement Schedule, on Pages F-1 and F2 hereof, are filed as part of this Report. 3. Exhibits
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The exhibits listed in the accompanying Index to Exhibits, on page F-3 hereof, are filed as part of this Report or are incorporated by reference herein as indicated thereon. (b) Exhibits are attached hereto (c) See (a) 1 and 2 above. 13
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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: February 16, 2006 WM. WRIGLEY JR. COMPANY (Registrant) By: /s/ RONALD V. WATERS Ronald V. Waters Chief Operating 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
/s/ WILLIAM WRIGLEY, JR. William Wrigley, Jr. /s/ RONALD V. WATERS Ronald V. Waters /s/ REUBEN GAMORAN Reuben Gamoran /s/ DUANE PORTWOOD Duane Portwood * John F. Bard * Howard B. Bernick * Thomas A. Knowlton * John Rau * Melinda R. Rich *
Chairman of the Board, President and Chief Executive Officer Chief Operating Officer
Vice President and Chief Financial Officer Controller
Director
Director
Director
Director
Director
Director
*By: /s/ HOWARD MALOVANY

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Steven B. Sample * Alex Shumate * Richard K. Smucker 14 Director Director
Howard Malovany Vice President, Secretary and General Counsel Date: February 16, 2006
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EXHIBIT 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in this Annual Report (Form 10-K) of Wm. Wrigley Jr. Company of our reports dated February 3, 2006, with respect to the consolidated financial statements of Wm. Wrigley Jr. Company, Wm. Wrigley Jr. Company managements assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Wm. Wrigley Jr. Company, included in the 2005 Annual Report to Stockholders of Wm. Wrigley Jr. Company. Our audits also included the financial statement schedule of Wm. Wrigley Jr. Company listed in Item 15(a). This schedule is the responsibility of Wm. Wrigley Jr. Companys management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statements pertaining to the Wm. Wrigley Jr. Company shelf registration of certain securities of Wm. Wrigley Jr. Company (333-123077 (2005)) in Form S-3, the Wrigley Savings Plan for Wrigley Employees (33-15061 (1987) and 33-43738 (1991)) in Form S-8, the Wm. Wrigley Jr. Company Management Incentive Plan (33-22788 (1988)) in Form S-8 and the 1997 Management Incentive Plan (333-48715 (1998)) in Form S-8, respectively, of our reports dated February 3, 2006, with respect to the consolidated financial statements of Wm. Wrigley Jr. Company, Wm. Wrigley Jr. Company managements assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Wm. Wrigley Jr. Company, incorporated herein by reference and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of Wm. Wrigley Jr. Company for the year ended December 31, 2005. /s/ ERNST & YOUNG LLP Ernst & Young LLP Chicago, Illinois February 14, 2006 15
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WM. WRIGLEY JR. COMPANY INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES (Item 15 (a))
Reference Annual Report to Stockholders
Form 10-K Report
Data incorporated by reference from the Companys Annual Report: Consolidated balance sheet as of December 31, 2005 and 2004 Consolidated statement of earnings for the years ended December 31, 2005, 2004 and 2003 Consolidated statement of cash flows for the years ended December 31, 2005, 2004 and 2003 Consolidated statement of stockholders equity for the years ended December 31, 2005, 2004 and 2003 Accounting policies and notes to consolidated financial statements Consolidated financial statement schedule for the years ended December 31, 2005, 2004 and 2003 Schedule II Valuation and Qualifying Accounts F-2
38-39 37 40 41 42-59
All other schedules are omitted because 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 policy notes thereto. With the exception of the pages listed in the above index and the Items referred to in Items 1, 5, 6, 7, 8 and 9A of this Form 10-K Report, the Companys 2005 Annual Report is not to be deemed filed as part of this Form 10-K Report. F-1
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WM. WRIGLEY JR. COMPANY SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 (In Thousands)
Column A Column B Column C Column D Column E
Additions Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Balance at Deductions (A)
Description
End of Period
2005: Allowance for Doubtful accounts 2004: Allowance for Doubtful accounts 2003: Allowance for Doubtful accounts $ 5,850 $ 4,204 $ 822 $ 9,232 $ 9,232 $ 3,584 $ 1,134 $ 11,682 $ 11,682 $ 1,193 $ 4,862 $ 8,013
(A) Uncollectible accounts written-off, net of recoveries. F-2
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WM. WRIGLEY JR. COMPANY AND WHOLLY OWNED ASSOCIATED COMPANIES INDEX TO EXHIBITS (Item 15 (a))
Ex hibit Number Description of Ex hibit
Proxy Statement of the Registrant, dated February 16, 2006, for the April 4, 2006 Annual Meeting of Stockholders, is herein incorporated by reference. 1. (a). Underwriting Agreement Underwriting Agreement dated July 11, 2005, between Wm. Wrigley Jr. Company and Goldman Sachs & Co., J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the Underwriters, is incorporated by reference to Exhibit 99.1 to the Companys Form 8-K filed on July 14, 2005. Articles of Incorporation and By-laws. (i) Restated Certificate of Incorporation of Wm. Wrigley Jr. Company, as amended by the Certificate of Amendment of the Restated Certificate of Incorporation of Wm. Wrigley Jr. Company dated March 22, 2005, is incorporated by reference to Exhibit 3(i)(a) to the Companys Form 10-Q filed for the fiscal quarter ended March 31, 2005; (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)(b) to the Companys Form 10-Q filed for the fiscal quarter ended March 31, 2005. (b). By-laws of the Registrant. The Registrants Amended and Restated By-laws effective March 5, 2002 is incorporated by reference to Exhibit 3(ii) of the Companys Quarterly Report on Form 10-Q filed for the fiscal quarter ended March 31, 2002. Instruments defining the rights of security holders. The Stockholder Rights Plan is incorporated by reference to Exhibit 4.1 of the Companys Report on Form 8-K filed June 5, 2001. 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 Companys Form 8-K filed on July 14, 2005 Officers Certificate of Wm. Wrigley Jr. Company establishing the terms of the 4.30% Senior Notes due 2010 is incorporated by reference to Exhibit 99.3 to the Companys Form 8-K filed on July 14, 2005 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 Companys Form 8-K filed on July 14, 2005. Form of Global Note representing the 4.30% Senior Notes due 2010 is incorporated by reference to Exhibit 99.5 to the Companys Form 8-K filed on July 14, 2005. Form of Global Note representing the 4.65% Senior Notes due 2015 is incorporated by reference to Exhibit 99.6 to the Companys Form 8-K filed on July 14, 2005. Material Contracts Non-Employee Directors Death Benefit Plan. Incorporated by reference to the Companys Form 10-K filed for the fiscal year ended December 31, 1994. Senior Executive Insurance Plan. Incorporated by reference to the Companys Form 10-K filed for the fiscal year ended December 31, 1995.
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3. (a).
4. 4(a). 4(b).
4(c). 4(d). 4(e). 4(f). 10. 10(a). 10(b).
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F-3
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10(c). 10(d).
Supplemental Retirement Plan. Incorporated by reference to the Companys Form 10-K filed for the fiscal year ended December 31, 1995. Wm. Wrigley Jr. Company 1997 Management Incentive Plan. The Registrants Amended Management Incentive Plan, effective as of March 9, 2004 (MIP), is incorporated by reference to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004. Deferred Compensation Program for Non-Employee Directors under the MIP is incorporated by reference to Exhibit 10(e) to the Companys Form 10-K filed for the fiscal year ended December 31, 2004.. Stock Deferral Program For Non-Employee Directors under the MIP is incorporated by reference to Exhibit 10(f) to the Companys Form 10-K filed for the fiscal year ended December 31, 2004. Stock Award Program under the MIP as amended, effective as of January 1, 2005, is incorporated by reference to Exhibit 99.2 of the Companys Form 8-K filed on October 28, 2005. Stock Option Program under the MIP is incorporated by reference to Exhibit 10(h) to the Companys Form 10-K filed for the fiscal year ended December 31, 2004. Executive Incentive Compensation Program under the MIP is incorporated by reference to Exhibit 10(i) to the Companys Form 10-K filed for the fiscal year ended December 31, 2004. Executive Incentive Compensation Deferral Program under the MIP, as amended, effective as of January 1, 2005, is incorporated by reference to Exhibit 99.3 to the Companys Form 8-K filed on October 28, 2005. . Long-term Stock Grant Program under the MIP, as amended, effective as of January 1, 2005, is incorporated by reference to Exhibit 99.1 to the Companys Form 8-K filed on October 28, 2005. Forms of Change-in-Control Severance Agreement. Incorporated by reference to Exhibits 10(h) and 10(i) to the Companys Quarterly Report on Form 10-Q for the quarter ended September 30, 2001. Asset Purchase Agreement dated November 14, 2004, between Kraft Foods Global, Inc. and Wm. Wrigley Jr. Company is incorporated by reference to Exhibit 99.1 to the Companys Form 8-K filed on November 18, 2004. Restricted Stock Program under the MIP is incorporated by reference to Exhibit 99.1 to the Companys Form 8K filed on February 22, 2005. Commercial Paper Dealer Agreement dated April 29, 2005, between Wm. Wrigley Jr. Company and Merrill Lynch Money Markets Inc. and Merrill Lynch Pierce, Fenner & Smith Incorporated, is incorporated by reference to Exhibit 99.1(a) to the Companys Form 8-K filed on May 4, 2005. Commercial Paper Dealer Agreement dated April 29, 2005, between Wm. Wrigley Jr. Company and Goldman Sachs & Co., is incorporated by reference to Exhibit 99.1(b) to the Companys Form 8-K filed on May 4, 2005. Commercial Paper Dealer Agreement dated April 29, 2005, between Wm. Wrigley Jr. Company and J.P. Morgan Securities Inc. is incorporated by reference to Exhibit 99.1(c) to the Companys Form 8-K filed on May 4, 2005. Issuing and Paying Agency Agreement dated April 29, 2005, between Wm. Wrigley Jr. Company and JP Morgan Chase Bank, N.A., is incorporated by reference to Exhibit 99.2 to the Companys Form 8-K filed on May 4, 2005.
10(e). 10(f). 10(g). 10(h). 10(i). 10(j). 10(k). 10(l). 10(m). 10(n). 10(o).
10(p). 10(q). 10(r).
10(s).
Credit Agreement, dated as of July 14, 2005, among Wm. Wrigley Jr. Company, the Lenders thereto and JP Morgan Chase Bank, N.A., as Administrative Agent, is incorporated by reference to Exhibit 99.1 to the Companys Form 8-K filed on July 15, 2005. 2005 Annual Report to Stockholders of the Registrant is attached hereto as Exhibit 13. Code of Ethics Code of Business Conduct is incorporated by reference to Exhibit 14 of the Companys Annual Report on Form 10-K dated February 9, 2004, filed for the fiscal year ended December 31, 2003.
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13. 14.
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21.
List of Subsidiaries of the Registrant is attached hereto as Exhibit 21. F-3 Contd
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23. 24. 31.
Consent of Independent Registered Public Accounting Firm is attached hereto as Exhibit 23. (See page 15) Power of Attorney of each independent director signed on varying dates in January 2006 are attached hereto as Exhibit 24. Rule 13a-14(a)/15d-14(a) Certification of: (a) Mr. William Wrigley, Jr., Chairman of the Board, President and Chief Executive Officer; and (b) Mr. Reuben Gamoran, Vice President and Chief Financial Officer; Attached hereto as Exhibits 31(i) and (ii) respectively.
32.
Section 1350 Certifications of: (a) Mr. William Wrigley, Jr., Chairman of the Board, President and Chief Executive Officer; and (b) Mr. Reuben Gamoran, Vice President and Chief Financial Officer; Attached hereto as Exhibits 32(i) and (ii) respectively.
99.
(a) Forward-Looking Statements.
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. F-3 Contd
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4/23/12

10-K 1 wm112429.htm FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

For the fiscal year ended December 31, 2005

WM. WRIGLEY JR. COMPANY

410 North Michigan Avenue Chicago, Illinois

Title of each class

Name of each ex change on which registered

New York Stock Exchange Chicago Stock Exchange

Class B Common Stock, no par value

Latin America Region Silao, Mexico 6 Gum

(a) (b) (c)

William Wrigley, Jr., 42

John Adams, 59 (a) Donald E. Balster, 61

Frank Birkel, 42 (b) Vincent C. Bonica, 60

Donagh Herlihy, 42 Philip C. Johnson, 60

Surinder Kumar, 61 (c)

Chief Innovation Officer 8

Name and Age

Position(s) with Registrant

Patrick Mitchell, 50 (d) Jon Orving, 56

Alan J. Schneider, 60 Ralph P. Scozzafava, 47 (e)

Chief Operating Officer

1999-2003 since 2005

Denis Schrey, 42(g) Tawfik Sharkasi, 55 (h) Samson Suen, 56 (i)

since 2005 since 2005 since 2005

(b) Not applicable 11

c) Repurchases of Equity Securities.

Total Number of Shares Purchased (a)

Average Price Paid Per Share

238,577,000 231,513,000 128,733,000

Vice President and Chief Financial Officer Controller

*By: /s/ HOWARD MALOVANY

Steven B. Sample * Alex Shumate * Richard K. Smucker 14 Director Director

Form 10-K Report

(A) Uncollectible accounts written-off, net of recoveries. F-2

4(c). 4(d). 4(e). 4(f). 10. 10(a). 10(b).

10(p). 10(q). 10(r).

23. 24. 31.

(a) Forward-Looking Statements.

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