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 June 30, 2008
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   (I.R.S. Employer Identification No.)
Incorporation or organization)    
     
410 North Michigan Avenue    
Chicago, Illinois   60611
     
(Address of principal   (Zip Code)
executive offices)    
     
(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, a non-accelerated filer or a smaller reporting Company. See definition of accelerated filer, large accelerated filer and smaller reporting Company in Rule 12b-2 of the Securities Exchange Act (Check one):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
        (Do not check if a smaller reporting company)    
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 No þ
218,664,257 shares of Common Stock and 54,043,124 shares of Class B Common Stock were outstanding as of July 31, 2008.
 
 

 


 

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     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
Net sales
  $ 1,571,291       1,377,780       3,022,841       2,631,826  
 
Cost of sales
    708,402       644,547       1,389,405       1,237,442  
 
Restructuring charges
          4,486             12,635  
 
                       
 
Gross profit
    862,889       728,747       1,633,436       1,381,749  
 
Selling, general and administrative expense
    564,976       465,819       1,065,951       908,617  
 
                       
 
Operating income
    297,913       262,928       567,485       473,132  
 
Interest expense
    (16,072 )     (17,123 )     (31,293 )     (33,725 )
 
Investment income
    5,393       2,537       8,782       4,427  
 
Other income (expense), net
    (2,277 )     1,421       (12,077 )     18,124  
 
                       
 
Earnings before income taxes
    284,957       249,763       532,897       461,958  
 
Income taxes
    91,186       79,950       170,527       149,444  
 
                       
 
Net earnings
  $ 193,771       169,813       362,370       312,514  
 
                       
 
Net earnings per share of common stock (basic)
  $ 0.71       0.62       1.33       1.13  
 
                       
 
Net earnings per share of common stock (diluted)
  $ 0.70       0.61       1.31       1.13  
 
                       
 
Dividends declared per share of common stock
  $ 0.335       0.29       0.67       0.58  
 
                       
Notes to financial statements beginning on page 5 are an integral part of these statements.

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WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONDENSED)
(Unaudited)
(All amounts in thousands)
                 
    Six Months Ended  
    June 30,  
    2008     2007  
OPERATING ACTIVITIES
               
Net earnings
  $ 362,370       312,514  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation and amortization
    116,260       101,868  
Net loss (gain) on retirements of property, plant and equipment
    8,450       (13,735 )
Non-cash share-based compensation
    27,899       30,801  
Deferred income taxes
    6,157       1,112  
(Increase) decrease in:
               
Accounts receivable
    (39,085 )     (22,222 )
Inventories
    7,077       43,575  
Other current assets
    (30,754 )     (23,324 )
Deferred charges and other assets
    (9,101 )     (14,386 )
Increase (decrease) in:
               
Accounts payable and accrued expenses
    26,821       (8,369 )
Income and other taxes payable
    3,875       18,083  
Other noncurrent liabilities
    24,081       11,333  
 
           
 
               
Net cash provided by operating activities
    504,050       437,250  
 
           
 
               
INVESTING ACTIVITIES
               
Additions to property, plant and equipment
    (86,206 )     (97,759 )
Proceeds from retirements of property, plant and equipment
    3,261       23,165  
Proceeds from sale of investments
    635       685  
Acquisition, net of cash acquired
    (95,726 )     (293,912 )
 
           
 
               
Net cash used in investing activities
    (178,036 )     (367,821 )
 
           
 
               
FINANCING ACTIVITIES
               
Dividends paid
    (170,486 )     (150,371 )
Common Stock purchased and issued, net
    (191,090 )     (147,905 )
Issuances of short-term debt, net
    130,000       266,444  
 
           
 
Net cash used in financing activities
    (231,576 )     (31,832 )
 
           
 
               
Effect of exchange rate changes on cash and cash equivalents
    10,070       3,440  
 
           
 
               
Net increase in cash and cash equivalents
    104,508       41,037  
Cash and cash equivalents at beginning of period
    278,843       253,666  
 
           
 
               
Cash and cash equivalents at end of period
  $ 383,351       294,703  
 
           
 
               
SUPPLEMENTAL CASH FLOW INFORMATION
               
 
               
Income taxes paid
  $ 161,485       142,397  
 
           
Interest paid
  $ 24,835       29,028  
 
           
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)        
    June 30, 2008     December 31, 2007  
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 383,351       278,843  
Short-term investments, at amortized cost
          635  
Accounts receivable (less allowance for doubtful accounts: 6/30/08 - $5,880; 12/31/07 - $5,791)
    530,142       469,221  
Inventories:
               
Finished goods
    292,773       280,712  
Raw materials, work in process and supplies
    333,040       339,370  
 
           
 
    625,813       620,082  
Other current assets
    200,201       180,997  
 
           
Total current assets
    1,739,507       1,549,778  
 
               
Deferred charges and other assets
    222,293       214,457  
Goodwill
    1,487,106       1,422,957  
Other intangibles
    493,742       484,256  
 
Property, plant and equipment, at cost
    3,033,384       2,870,917  
Less accumulated depreciation
    (1,458,606 )     (1,310,853 )
 
           
Net property, plant and equipment
    1,574,778       1,560,064  
 
           
Total assets
  $ 5,517,426       5,231,512  
 
           
 
               
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Short-term debt
  $ 130,000        
Accounts payable and accrued expenses
    903,714       871,901  
Dividends payable
    91,109       79,965  
Income and other taxes payable
    155,155       149,254  
 
           
Total current liabilities
    1,279,978       1,101,120  
 
               
Other noncurrent liabilities
    334,022       312,912  
Long term debt
    1,000,000       1,000,000  
 
           
Total liabilities
    2,614,000       2,414,032  
Stockholders’ equity:
               
Preferred stock — no par value Authorized - 20,000 shares; Issued — None
               
Common Stock — no par value Authorized - 1,000,000 shares Issued — 233,036 and 231,579 shares at 6/30/08 and 12/31/07, respectively
    14,116       14,084  
Class B Common Stock — convertible Authorized - 300,000 shares Issued — 57,515 and 58,972 shares at 6/30/08 and 12/31/07, respectively
    1,380       1,412  
Additional paid-in capital
    160,215       140,357  
Retained earnings
    3,445,959       3,264,484  
Common Stock and Class B Common Stock in treasury, at cost - 18,133 and 15,176 shares at 6/30/08 and 12/31/07, respectively
    (895,473 )     (712,841 )
Accumulated other comprehensive income
    177,229       109,984  
 
           
Total stockholders’ equity
    2,903,426       2,817,480  
 
           
Total liabilities and stockholders’ equity
  $ 5,517,426       5,231,512  
 
           
Notes to financial statements beginning on page 5 are an integral part of these statements.

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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 ended and six months ended June 30, 2008 and 2007, the Consolidated Statement of Cash Flows (Condensed) for the six months ended June 30, 2008 and 2007, and the Consolidated Balance Sheet (Condensed) at June 30, 2008, 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 2007 audited consolidated financial statements. These Consolidated Financial Statements (Condensed) should be read in conjunction with the 2007 audited consolidated financial statements and related notes which are an integral part thereof. Certain amounts recorded in 2007 have been reclassified to conform to the 2008 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. Merger
On April 28, 2008, the Company announced that it had reached an agreement to merge with Mars, Incorporated, one of the world’s leading confectionery and consumer goods companies. As a result of this transaction, Wrigley will become a private company. Mars, Incorporated will acquire 100% of the outstanding stock of Wrigley and has agreed to pay $80 per each share of the Company’s Common Stock and Class B Common Stock. The terms of the transaction have been unanimously approved by the Wrigley Board of Directors. The Company incurred merger related expenses, including investment banking fees, legal fees and other such costs, of $16,788 in the second quarter and first six months of 2008. On August 4, 2008 the Company filed with the SEC its definitive proxy statement in connection with the Special Meeting of Stockholders scheduled for September 25, 2008. At the Special Meeting, stockholders of record as of July 28, 2008 will consider and vote upon the adoption of the Agreement and Plan of Merger, dated as of April 28, 2008, among the Company, Mars, Incorporated, New Uno Holdings Corporation, and New Uno Acquisition Corporation.
3. Recently Issued Accounting Pronouncements
In March 2008, SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities -an amendment of FASB Statement No. 133” was issued. SFAS No. 161 is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance and cash flows. SFAS 161 is effective for the Company’s fiscal year beginning 2009. The Company does not expect a material impact to its financial position, earnings or cash flows upon adoption.
4. Acquisitions
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 $318,590, financing the acquisition through short-term debt and cash on hand. Included in this purchase price is $25,000 the Company paid in the second quarter of 2008 to A. Korkunov’s minority shareholders, due to the entity exceeding certain performance targets in 2007. The Company also acquired an incremental 10% interest in the second quarter of 2008 for an additional $70,726, including direct acquisition costs, and expects to acquire the final 10% interest in 2009. The results of operations have been included since January 31, 2007.
5. 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 sold the New Jersey property in the fourth quarter of 2007, and held the Illinois property for sale at June 30, 2008; however, final sale will depend on certain activities, some of which are external and beyond the Company’s control.
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. All expenses are recorded as

5


 

restructuring charges in the Consolidated Statement of Earnings (Condensed). The Company incurred a $4,486 charge in the second quarter of 2007, including $4,138 in the North America segment with the remaining $348 in the All Other segment. The Company incurred a $12,635 charge for the first six months of 2007, including $8,789 in the North America segment with the remaining $3,846 in the All Other segment.
6. 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. At June 30, 2008, the Company had $130,000 of commercial paper outstanding under its commercial paper program bearing an average interest rate of 2.22%.
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 June 30, 2008, the Company was compliant. The Company had no borrowings outstanding under the credit facility at June 30, 2008.
7. Fair Value of Financial Instruments
The Company adopted SFAS No. 157 “Fair Value Measurements” on January 1, 2008 for financial assets and liabilities measured at fair value on a recurring basis. The Company has not adopted SFAS No. 157 for nonfinancial assets and liabilities as permitted by FASB Staff Position FAS 157-2, which provided a deferral of such provisions until 2009. SFAS No. 157 defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
SFAS No. 157 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The basis of fair value measurement in the three levels of the fair value hierarchy, in order of priority, is described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable; thus, reflecting assumptions about the market participants.
Assets and liabilities recorded at fair value are valued using quoted market prices or under a market approach using other relevant information generated by market transactions involving identical or comparable instruments and included:

6


 

7. (Continued)
                                 
    Fair Value at June 30, 2008  
Description   Level 1     Level 2     Level 3     Total  
Assets:
                               
Trusts holding deferred compensation investments
  $ 127,282                   127,282  
 
                       
Total assets
  $ 127,282                   127,282  
 
                       
 
Liabilities:
                               
Liabilities related to deferred compensation held in trusts
  $ 127,282                   127,282  
Foreign currency derivatives
          8,231             8,231  
 
                       
Total liabilities
  $ 127,282       8,231             135,513  
 
                       
8. 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     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
Net earnings
  $ 193,771       169,813       362,370       312,514  
 
                       
 
                               
Basic shares outstanding
    272,010       274,961       272,612       275,490  
Effect of dilutive securities – stock options, restricted stock and long-term stock grants
    3,865       2,047       3,067       1,809  
 
                       
Dilutive shares outstanding
    275,875       277,008       275,679       277,299  
 
                       
 
                               
Net earnings per share:
                               
Basic
  $ 0.71       0.62       1.33       1.13  
Diluted
  $ 0.70       0.61       1.31       1.13  
9. Comprehensive Income
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
Net earnings
  $ 193,771       169,813       362,370       312,514  
 
                       
Changes in accumulated other comprehensive income (loss):
                               
Foreign currency translation, net of tax
    1,921       20,305       68,925       29,051  
All other changes, net of tax
    (4,885 )     5,801       (1,680 )     9,057  
 
                       
 
                               
Comprehensive income
  $ 190,807       195,919       429,615       350,622  
 
                       

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10. 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 contributions paid and expected to be paid during the current year to 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  
    June 30,     June 30,  
    2008     2007     2008     2007  
Service cost
  $ 5,300       3,700       4,200       4,200  
Interest cost
    7,300       6,900       5,400       4,100  
Expected return on plan assets
    (9,000 )     (9,100 )     (5,600 )     (4,800 )
Transition asset
                (100 )     (100 )
Prior service costs
    500       500       100       100  
Net actuarial loss
    600       300       700       800  
 
                       
Net pension benefit cost
  $ 4,700       2,300       4,700       4,300  
 
                       
                                 
    U.S. Plans     Non-U.S. Plans  
    Six Months Ended     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
Service cost
  $ 10,600       9,200       8,400       8,100  
Interest cost
    14,600       13,400       10,500       8,100  
Expected return on plan assets
    (18,000 )     (17,800 )     (11,100 )     (9,300 )
Transition asset
                (200 )     (200 )
Prior service costs
    1,000       1,000       200       200  
Net actuarial loss
    1,200       600       1,300       1,600  
 
                       
Net pension benefit cost
  $ 9,400       6,400       9,100       8,500  
 
                       
The Company disclosed in its financial statements for the year ended December 31, 2007 that it expected to contribute approximately $400 to the U.S. pension plans in 2008. The Company continues to anticipate funding approximately $400 for the U.S. pension plans in 2008. The Company disclosed in its financial statements for the year ended December 31, 2007 that it expected to contribute approximately $17,100 to the non-U.S. plans in 2008. The Company currently anticipates funding approximately $13,400 to the non-U.S. plans in 2008. During the six months ended June 30, 2008, the Company contributed $280 to the U.S. plans and $4,600 to the non-U.S. plans.

8


 

10. (Continued)
The components of net post-retirement benefit cost are as follows:
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
Service cost
  $ 800       900       1,600       1,800  
Interest cost
    1,100       1,300       2,200       2,100  
Expected return on plan assets
    (900 )     (1,000 )     (1,700 )     (1,600 )
Prior service costs
    (100 )     (100 )     (200 )     (200 )
Net actuarial loss
    300       300       600       500  
 
                       
Net post-retirement benefit cost
  $ 1,200       1,400       2,500       2,600  
 
                       
The Company previously disclosed in its financial statements for the year ended December 31, 2007 that it expected to contribute approximately $5,200 to the post-retirement plans in 2008. The Company continues to anticipate funding approximately $5,200 to the post-retirement plans in 2008. During the six months ended June 30, 2008, the Company contributed $2,600 to the post-retirement plans.
11. Segment Information
Management organizes the Company’s chewing gum and other confectionery businesses principally along geographic regions. The operating geographic regions below have been revised as of the first quarter of 2008 to reflect the Company’s current management and reporting structure. In 2008, the Company moved the Pacific and Latin America regions from their previous Other Geographic Regions segment into Asia/Pacific and All Other, respectively. The tables below summarize the net sales and operating income for the current segment presentation.
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. The U.S. accounts for approximately 90% of North America’s net sales in all periods.
 
    EMEAI —These operations, which include two operating segments, West Europe and East/South Europe, that have been aggregated into a single reporting segment due to similar economic characteristics, products and customer and distribution types, manufacture and market gum and other confectionery products principally in Europe as well as in the Middle East, Africa and India.
 
    Asia/Pacific — These operations manufacture and market gum and other confectionery products in a number of Asian and Pacific region geographies including China, Taiwan, the Philippines and Australia.
 
    All Other — These operations manufacture gum base, manufacture and market gum and other confectionary products in Latin America and include corporate expenses such as costs related to research and development, information systems and certain administrative functions.

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11. (Continued)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
Net Sales   2008     2007     2008     2007  
North America
  $ 474,475       452,110       907,666       866,097  
EMEAI
    782,578       671,451       1,461,666       1,237,158  
Asia/ Pacific
    290,238       231,601       607,685       485,666  
All Other
    24,000       22,618       45,824       42,905  
 
                       
Net sales
  $ 1,571,291       1,377,780       3,022,841       2,631,826  
 
                       
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
Operating Income   2008     2007     2008     2007  
North America
  $ 114,506       95,520       200,449       171,634  
EMEAI
    206,930       189,177       362,122       329,052  
Asia/Pacific
    79,170       63,466       175,122       137,091  
All Other
    (102,693 )     (85,235 )     (170,208 )     (164,645 )
 
                       
Operating income
  $ 297,913       262,928       567,485       473,132  
 
                       

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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 or Wrigley) achieved 15% growth in diluted earnings per share in the second quarter of 2008 compared to the second quarter of 2007. Diluted earnings per share increased to $0.70 in the second quarter of 2008 compared to $0.61 in the second quarter of 2007, due to earnings growth across all segments, a $0.08 per share favorable impact from foreign exchange and a $0.01 per share favorable impact due to restructuring charges in the prior period, partially offset by a $0.04 unfavorable impact related to expenses associated with the planned merger with Mars.
The Company achieved 16% growth in diluted earnings per share in the first six months of 2008 compared to the first six months of 2007. Diluted earnings per share increased to $1.31 in the first six months of 2008 compared to $1.13 in the first six months of 2007, due to earnings growth across all segments, a $0.15 per share favorable impact from foreign exchange, a $0.03 per share favorable impact due to restructuring charges in the prior period, partially offset by a $0.03 unfavorable impact due to a gain on the sale of corporate assets in the prior period and a $0.04 unfavorable impact related to expenses associated with the planned merger with Mars. Additionally, the Company’s effective tax rate decreased to 32.0% from 32.4% in the first six months of 2007. The Company expects a slightly lower tax rate compared to 2007 to continue through 2008.
Net sales increased 14% and 15% in the second quarter and first six months of 2008, respectively, driven primarily by average translation of foreign currencies and price/mix. Net sales growth was particularly strong in Asia/Pacific and EMEAI, led by double digit volume growth in China and Russia, respectively. Net sales in North America increased moderately despite declines in U.S. volume.
Average foreign currency translation favorably impacted diluted earnings per share in the second quarter and first six months of 2008 compared to the respective periods in 2007. This benefit was primarily due to average translation rates of stronger foreign currencies, particularly the euro, Polish zloty, Chinese renminbi, Russian ruble 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.
The operating geographic regions below have been revised as of the first quarter of 2008 to reflect the Company’s current management and reporting structure. In 2008, the Company moved the Pacific and Latin America regions from their previous Other Geographic Regions segment into Asia/Pacific and All Other, respectively.
On April 28, 2008, the Company announced that it had reached an agreement to merge with Mars, Incorporated, one of the world’s leading confectionery and consumer goods companies. As a result of this transaction, Wrigley will become a private company. Mars, Incorporated will acquire 100% of the outstanding stock of Wrigley and has agreed to pay $80 per each share of the Company’s Common Stock and Class B Common Stock. The terms of the transaction have been unanimously approved by the Wrigley Board of Directors. The Company incurred merger related expenses, including investment banking fees, legal fees and other such costs, of $16,788 in the second quarter and first six months of 2008.
2008 vs. 2007 Second Quarter
Net Sales
Consolidated net sales for the second quarter of 2008 were $1,571,291, an increase of $193,511 or 14% from the second quarter of 2007. Volume growth increased net sales 1% and price/mix increased net sales 5%. Average translation of stronger foreign currencies to the weaker U.S. dollar increased net sales approximately 8%.
North America net sales for the second quarter of 2008 were $474,475, an increase of $22,365 or 5% from the second quarter of 2007. Favorable price/mix increased net sales 9% due to pricing increases phased in across the product portfolio beginning late in the second quarter of 2007. Volume declines, primarily due to U.S. nongum products, decreased net sales 5%. Average translation of the stronger Canadian dollar to the weaker U.S. dollar increased net sales approximately 1%.
EMEAI net sales for the second quarter of 2008 were $782,578, an increase of $111,127 or 17% from the second quarter of 2007. Volume growth increased net sales 1%, primarily due to higher volume in Russia, partially offset by lower volume in the U.K. and Spain. Favorable

11


 

price/mix increased net sales 4%. Average translation of stronger European currencies, primarily the Russian ruble, euro and the Polish zloty, to the weaker U.S. dollar increased net sales approximately 12%.
Asia/Pacific net sales for the second quarter of 2008 were $290,238, an increase of $58,637 or 25% from the second quarter of 2007. Volume growth increased net sales 12%, primarily led by China, where the Extra® and Doublemint® brands drove growth, and Australia and Vietnam. Favorable price/mix increased net sales 1%. Average translation, primarily from a stronger Chinese renminbi and 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  
    June 30,  
    2008     2007  
Gross profit
    54.9 %     52.9 %
Selling, general and administrative
               
Advertising
    (11.5 )     (10.7 )
Merchandising and promotion/other
    (5.8 )     (4.6 )
Selling and other marketing
    (9.8 )     (10.2 )
General and administrative
    (8.8 )     (8.3 )
 
           
Total selling, general and administrative*
    (36.0 )     (33.8 )
 
           
Operating income*
    19.0 %     19.1 %
 
           
 
*   May not total due to rounding
Consolidated operating income for the second quarter of 2008 increased $34,985 or 13% compared to the second quarter of 2007. Average translation of stronger foreign currencies to the weaker U.S. dollar increased operating income approximately 12%. Gross profit increased $134,142 or 18% from 2007 due to increased net sales while gross profit as a percentage of sales (gross profit margin) increased 2.0 percentage point primarily due to favorable price/mix combined with restructuring charges in the prior quarter, partially offset by slightly unfavorable cost in the quarter. Average translation of stronger foreign currencies increased gross profit approximately 9%. Selling, general and administrative (SG&A) expense increased $99,157 or 21% from 2007, primarily due to increased advertising and merchandising and promotion. In addition, the second quarter of 2008 also included merger expenses of $16,788. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 7%.
North America operating income for the second quarter of 2008 increased $18,986 or 20% compared to the second quarter of 2007. Average translation of the Canadian dollar to the weaker U.S. dollar increased operating income approximately 1%. Gross profit increased $29,462 or 14% from 2007 due to higher gross profit margin and increased net sales. Average translation of the Canadian dollar to the U.S. dollar increased gross profit approximately 1%. Gross profit margin increased 4.0 percentage points compared to the prior period primarily due to favorable price/mix and restructuring charges in the prior quarter. SG&A expense increased $10,476 or 9% primarily due to higher advertising, merchandising and promotion (brand support) partially offset by lower general and administrative expense. Average translation of the Canadian dollar to the U.S. dollar increased SG&A expense approximately 1%.
EMEAI operating income for the second quarter of 2008 increased $17,753 or 9% compared to the second quarter of 2007. Average translation of foreign currencies to the U.S. dollar increased operating income approximately 12%. Gross profit increased $69,603 or 18% from 2007 primarily due to increased net sales and gross profit margin. Average translation of foreign currencies to the U.S. dollar increased gross profit approximately 13%. Gross profit margin increased 0.5 percentage points compared to the second quarter of 2007 primarily due to favorable price, partially offset by higher cost and unfavorable mix. SG&A expense increased $51,850 or 25% primarily due to average foreign currency translation, increased brand support and selling expense. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 14%.
Asia/Pacific operating income for the second quarter of 2008 increased $15,704 or 25% compared to the second quarter of 2007. Average translation of the stronger Chinese renminbi and Australian dollar to the weaker U.S. dollar increased operating income approximately 14%. Gross profit increased $37,782 or 30% from 2007 primarily due to increased net sales and higher gross profit margin. Average translation of stronger foreign currencies increased gross profit approximately 12%. Gross profit margin increased 2.0 percentage points primarily due to favorable cost and price/mix. SG&A expense increased $22,078 or 36% primarily due to increased brand support and selling expenses. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 10%.

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All Other operating expense for the second quarter of 2008 increased $17,458 or 21% compared to the second quarter of 2007. The increase was primarily due to merger expenses, partially offset by lower central marketing expenses including global marketing, due to the marketing realignment in the fourth quarter of 2007 and restructuring charges in the second quarter of 2007.
Interest Expense
Interest expense for the second quarter of 2008 was $16,072, down $1,051 compared to the second quarter of 2007 due to a decrease in short-term interest rates, partially offset by a slight increase in the average commercial paper balances outstanding during the second quarter of 2008 compared to the second quarter of 2007.
Investment Income
Investment income for the second quarter of 2008 was $5,393, up $2,856 compared to the second quarter of 2007. The increase was primarily due to higher average cash balances and higher international investment yields during the second quarter of 2008.
Other Income (Expense), Net
Other income (expense), net for the second quarter of 2008 was $2,277 of expense, compared to $1,421 of income in the second quarter of 2007. The change was primarily due to a foreign currency transaction gain in the second quarter of 2007.
Income Taxes
Income taxes for the second quarter of 2008 were $91,186, up $11,236 or 14% from the second quarter of 2007. The increase was primarily due to the increase in pretax earnings as the effective tax rate remained consistent at 32.0% between periods.
2008 vs. 2007 First Six Months
Net Sales
Consolidated net sales for the first six months of 2008 were $3,022,841, an increase of $391,015 or 15% from the first six months of 2007. Volume growth increased net sales 1% and price/mix increased net sales 6%. Average translation of stronger foreign currencies to the weaker U.S. dollar increased net sales approximately 8%.
North America net sales for the first six months of 2008 were $907,666, an increase of $41,569 or 5% from the first six months of 2007. Favorable price/mix increased net sales 11% due to pricing increases phased in across the product portfolio beginning late in the second quarter of 2007. Volume declines, primarily due to U.S. nongum products, decreased net sales 7%. Average translation of the stronger Canadian dollar to the weaker U.S. dollar increased net sales approximately 1%.
EMEAI net sales for the first six months of 2008 were $1,461,666, an increase of $224,508 or 18% from the first six months of 2007. Volume growth increased net sales 2%, primarily due to higher volume in Russia and India, partially offset by lower volume in the U.K. and France. Favorable price/mix increased net sales 4%. Average translation of stronger European currencies, primarily the Russian ruble, euro and the Polish zloty, to the weaker U.S. dollar increased net sales approximately 12%.
Asia/Pacific net sales for the first six months of 2008 were $607,685, an increase of $122,019 or 25% from the first six months of 2007. Volume growth increased net sales 12%, primarily led by China, where the Extra and Doublemint brands drove growth, and Australia and Vietnam. Favorable price/mix increased net sales 2%. Average translation of a stronger Chinese renminbi and Australian dollar to the weaker U.S. dollar increased net sales approximately 11%.

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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.
                 
    Six Months Ended  
    June 30,  
    2008     2007  
Gross profit
    54.0 %     52.5 %
Selling, general and administrative
               
Advertising
    (11.8 )     (10.6 )
Merchandising and promotion/other
    (5.3 )     (5.1 )
Selling and other marketing
    (10.0 )     (10.3 )
General and administrative
    (8.2 )     (8.4 )
 
           
Total selling, general and administrative*
    (35.3 )     (34.5 )
 
           
Operating income*
    18.8 %     18.0 %
 
           
 
*   May not total due to rounding
Consolidated operating income for the first six months of 2008 increased $94,353 or 20% compared to the first six months of 2007. Average translation of stronger foreign currencies to the weaker U.S. dollar increased operating income approximately 13%. Gross profit increased $251,687 or 18% from 2007 due to increased net sales while gross profit as a percentage of sales (gross profit margin) increased 1.5 percentage points primarily due to favorable price/mix combined with restructuring charges in the prior year, partially offset by slightly higher cost. Average translation of stronger foreign currencies increased gross profit approximately 9%. SG&A expense increased $157,334 or 17% from 2007, primarily due to increased advertising and selling expense. In addition, the first six months of 2008 also included $16,788 of merger expenses. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 7%.
North America operating income for the first six months of 2008 increased $28,815 or 17% compared to the first six months of 2007. Average translation of the Canadian dollar to the weaker U.S. dollar increased operating income approximately 1%. Gross profit increased $56,848 or 14% from 2007 due to higher gross profit margin and increased net sales. Average translation of the Canadian dollar to the U.S. dollar increased gross profit approximately 1%. Gross profit margin increased 4.1 percentage points compared to the prior period primarily due to favorable price/mix and restructuring charges in the prior quarter, partially offset by higher cost. SG&A expense increased $28,033 or 12% primarily due to advertising and merchandising and promotion (brand support). Average translation of the Canadian dollar to the U.S. dollar increased SG&A expense approximately 1%.
EMEAI operating income for the first six months of 2008 increased $33,070 or 10% compared to the first six months of 2007. Average translation of foreign currencies to the U.S. dollar increased operating income approximately 13%. Gross profit increased $117,230 or 16% from 2007 primarily due to increased net sales, partially offset by lower gross profit margin. Average translation of foreign currencies to the U.S. dollar increased gross profit approximately 12%. Gross profit margin decreased 1.1 percentage points compared to the first six months of 2007 primarily due to unfavorable mix and cost, partially offset by favorable price. SG&A expense increased $84,160 or 21% primarily due to average foreign currency translation and increased brand support and selling expense. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 12%.
Asia/Pacific operating income for the first six months of 2008 increased $38,031 or 28% compared to the first six months of 2007. Average translation of the stronger Chinese renminbi and Australian dollar to the weaker U.S. dollar increased operating income approximately 14%. Gross profit increased $78,792 or 30% from 2007 primarily due to increased net sales and higher gross profit margin. Average translation of stronger foreign currencies increased gross profit approximately 11%. Gross profit margin increased 2.0 percentage points primarily due to favorable cost and price, partially offset by unfavorable mix. SG&A expense increased $40,761 or 32% primarily due to increased brand support and average foreign currency translation. Average translation of foreign currencies to the U.S. dollar increased SG&A expense approximately 8%.
All Other operating expense for the first six months of 2008 increased $5,563 or 3% compared to the first six months of 2007. The increase was primarily due to merger expenses, partially offset by lower central marketing expenses including global marketing, due to the marketing realignment in the fourth quarter of 2007 and restructuring charges in the first six months of 2007.
Interest Expense
Interest expense for the first six months of 2008 was $31,293, down $2,432 compared to the first six months of 2007 due to lower average commercial paper balances outstanding during the first six months of 2008, primarily due to the A. Korkunov acquisition in the prior year, and a decrease in short-term interest rates.

14


 

Investment Income
Investment income for the first six months of 2008 was $8,782, up $4,355 compared to the first six months of 2007. The increase was primarily due to higher average cash balances and higher international investment yields during the first six months of 2008.
Other Income (Expense), Net
Other income (expense), net for the first six months of 2008 was $12,077 of expense, compared to $18,124 of income in the first six months of 2007. The change was primarily due to an approximately $14,000 gain on the sale of corporate assets in the prior period and foreign currency transaction losses in the first six months of 2008.
Income Taxes
Income taxes for the first six months of 2008 were $170,527, up $21,083 or 14% from the first six months of 2007. The increase was primarily due to the increase in pretax earnings of $70,939 or 15% partially offset by a decrease in the effective tax rate. The consolidated effective tax rate decreased to 32.0% in the first six months of 2008 compared to 32.4% in the first six months of 2007 mainly due to geographic earnings mix.
LIQUIDITY AND CAPITAL RESOURCES
Operating Cash Flow and Current Ratio
Net cash provided by operating activities for the first six months of 2008 was $504,050 compared to $437,250 for the same period in 2007. The increase was primarily due to increased earnings. The Company’s current ratio (current assets divided by current liabilities) was approximately 1.4 to 1 at June 30, 2008 and December 31, 2007.
Additions to Property, Plant, and Equipment
Capital expenditures for the first six months of 2008 were $86,206 compared to $97,759 in the first six months of 2007. The decrease was primarily due to timing as the Company expects additions to property, plant and equipment in 2008 will be somewhat higher than 2007. The Company plans to fund additions from cash flow from operations.
The Company closed on the acquisition of an additional 10% interest in A. Korkunov in the second quarter of 2008. The cost of this 10% interest, as well as the final 10% interest expected to be acquired in 2009, was based on an earnings multiple that depends upon A. Korkunov’s fiscal year financial performance in the year immediately prior to closing compared to agreed upon targets. The cost of the 10% interest acquired in the second quarter of 2008 was $70,726, including direct acquisition costs. Additionally, as an adjustment to the initial closing and acquisition of the 80% interest in January 2007, the Company also paid, in the second quarter of 2008, an additional $25,000, due to A. Korkunov exceeding an agreed upon financial target for fiscal year 2007. Thus, the Company’s total cash outlay related to the A. Korkunov acquisition was $95,726 in the second quarter of 2008.
Borrowing Arrangements and External Capital Resources
At June 30, 2008, the Company had $130,000 of commercial paper outstanding under its commercial paper program bearing an average interest rate of 2.22% 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 remaining 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 June 30, 2008, the Company was compliant. The Company had no borrowings outstanding under the credit facility at June 30, 2008.

15


 

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, 2007. 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 June 30, 2008. 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 June 30, 2008.
(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 June 30, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

16


 

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 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 industry. 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 customer and consumer needs could result in increased capital, marketing or other expenditures or may result in a decrease in category share growth, any of which 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, given the global nature of the Company’s business, the Company earns revenue, pays expenses, incurs liabilities and holds assets in a variety of foreign currencies which are translated into U.S. dollars for financial statement reporting purposes at the then — applicable exchange rate. Consequently, 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 marketplaces.
  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.
  Merger. On April 28, 2008, the Company announced that it had reached an agreement to merge with Mars, Incorporated, one of the world’s leading confectionery and consumer goods companies. To the extent the transaction is not consummated for any reason, our stock price may be adversely affected. In addition, inability to retain our key personnel during this period may have a material adverse effect on our operations and our financial results. Other related risks that could have a material adverse effect on our financial results include, without limitation: (a) the outcome of any legal proceedings which may be instituted against the Company and (b) risks that the proposed transaction disrupts current plans and operations.

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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.
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 August 5, 2008  

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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
 
       
2.   Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
 
       
 
  (a)   Agreement and Plan of Merger, dated April 28, 2008, among Wm. Wrigley Jr. Company, Mars, Incorporated, New Uno Holdings Corporation and New Uno Acquisition Corporation (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed on April 30, 2008).
 
       
4.   Instruments Defining the Rights of Security Holders
 
       
 
  (a)   Amendment to Rights Agreement, dated April 27, 2008, by and between Wm. Wrigley Jr. Company and ComputerShare Trust Company N.A. (as successor to EquiServe, L.P.), as Rights Agent, dated June 1, 2001 (incorporated by reference from Exhibit 4.1 to the Current Report on Form 8-K filed on April 30, 2008).
 
       
10.   Material Contracts
 
       
 
  (a)*   Amendment to Wm. Wrigley Jr. Company Executive Compensation Deferral Program effective July 1, 2008.
 
       
 
  (b)*   Amendment to Wm. Wrigley Jr. Company Stock Award Program effective July 1, 2008.
 
       
31.   Rule 13a-14(a)/15d-14(a) Certification of:
 
       
 
  (a)*   Mr. William D. Perez, President and Chief Executive Officer; and
 
       
 
  (b)*   Mr. Reuben Gamoran, Senior Vice President and Chief Financial Officer.
 
       
32.   Section 1350 Certification of:
 
       
 
  (a)*   Mr. William D. Perez, President and Chief Executive Officer; and
 
       
 
  (b)*   Mr. Reuben Gamoran, Senior Vice President and Chief Financial Officer.
 
*   Indicates that such document is filed herewith.

20

Exhibit 10.a
FIRST AMENDMENT TO THE
WM. WRIGLEY JR. COMPANY
EXECUTIVE COMPENSATION DEFERRAL PROGRAM
(As Amended and Restated Effective January 1, 2008)
     WHEREAS, Wm. Wrigley Jr. Company, a Delaware corporation (the “Company”), has adopted and maintains the Wm. Wrigley Jr. Company Executive Compensation Deferral Program, as amended and restated effective January 1, 2008 (the “Program”), a program established under the Wm. Wrigley Jr. Company 2007 Management Incentive Plan (the “MIP”); and
     WHEREAS, the Company desires to amend the Program to provide for nonelective deferrals to be allocated to a participant’s account to the extent that Retirement Contributions allocated to such participant’s account under the Wrigley Savings Plan are subject to certain statutory and plan limitations, and in certain other respects.
     NOW THEREFORE, pursuant to the power of amendment contained in Section 1.10 of the MIP, the Program hereby is amended, effective January 1, 2008, or as of such other date set forth herein, as follows:
     1. Section 1 of the Program is hereby amended by replacing the first sentence as it appears therein with the following sentence:
The purpose of this Wm. Wrigley Jr. Company Executive Compensation Deferral Program (the “Deferral Program”) is to provide eligible executives of Wm. Wrigley Jr. Company (the “Company”), or any corporation or other form of business association of which 50% or more of the shares or other ownership interests are owned or controlled by the Company (each, a “Subsidiary”), (i) with the opportunity to defer the receipt of all or any portion of their awards under the Company’s Executive Incentive Compensation Program (the “EICP”), Long-Term Stock Grant Program (the “LTSG Program”) and Stock Award Program (the “SAP”); (ii) effective January 1, 2006, with the opportunity to defer the receipt of up to 25% of their base salary, to the extent such deferral amount exceeds the statutory limits applicable to salary deferrals under the Wrigley Savings Plan, and to receive

 


 

from the Company related matching contributions; and (iii) effective July 1, 2008, with nonelective deferrals to the extent that Retirement Contributions allocated to their account under the Wrigley Savings Plan are subject to certain statutory and plan limitations.
     2. Section 2 of the Program is hereby amended in its entirety to read as follows:
(a) Each executive of the Company or a Subsidiary who is eligible to receive an award under the EICP, LTSG Program or SAP shall be eligible to defer all or any portion of such award in accordance with Sections 3, 4 and 5, respectively, of the Deferral Program.
(b) Each executive of the Company or a Subsidiary who is employed in a grade level or position designated by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shall be eligible to defer up to 25% of such executive’s base salary in accordance with Section 6 of the Deferral Program.
(c) Each executive of the Company or a Subsidiary who is employed in a grade level or position designated by the Compensation Committee and is eligible to receive an allocation of a Retirement Contribution for a Plan Year, within the meaning of and pursuant to the terms of the Wrigley Savings Plan, shall be eligible for an Excess Retirement Contribution in accordance with Section 7 of the Deferral Program.
(d) Each eligible executive who participates in this Deferral Program shall be referred to herein as a “Participant.”
     3. Section 3(d) of the Program is hereby amended by replacing the fourth and fifth sentences as they appear therein with the following two sentences:
In such event, the Compensation Committee shall transfer the amounts deferred in the discontinued investment option to such other investment option that the Compensation Committee deems appropriate; provided, however, the Participant may elect, if he or she does so in a timely manner and in accordance with the procedures prescribed by the Company, to transfer such amounts to such other investment options as the Compensation Committee shall make available at such time. For purposes of a transfer

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election described in this Section, a Share Unit shall have a value equal to the price of Common Stock on the New York Stock Exchange during such period immediately preceding and/or immediately following the date of the transfer, as the Compensation Committee shall determine.
     4. Section 4(c) of the Program is hereby amended by replacing the fifth and sixth sentences as they appear therein with the following sentence:
In such event, the Compensation Committee shall transfer the amounts deferred in the discontinued investment option to such other investment option that the Compensation Committee deems appropriate; provided, however, the Participant may elect, if he or she does so in a timely manner and in accordance with the procedures prescribed by the Company, to transfer such amounts to such other investment options as the Compensation Committee shall make available at such time.
     5. Section 5(c) of the Program is hereby amended by replacing the fourth and fifth sentences as they appear therein with the following sentence:
In such event, the Compensation Committee shall transfer the amounts deferred in the discontinued investment option to such other investment option that the Compensation Committee deems appropriate; provided, however, the Participant may elect, if he or she does so in a timely manner and in accordance with the procedures prescribed by the Company, to transfer such amounts to such other investment options as the Compensation Committee shall make available at such time.
     6. Section 6(c) of the Program is hereby amended by replacing the phrase “Internal Revenue Code of 1986, as amended (the “Code”)” with the term “Code” as it appears therein.
     7. Section 6(f) of the Program is hereby amended by replacing the fourth and fifth sentences as they appear therein with the following two sentences:

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In such event, the Compensation Committee shall transfer the amounts deferred in the discontinued investment option to such other investment option that the Compensation Committee deems appropriate; provided, however, the Participant may elect, if he or she does so in a timely manner and in accordance with the procedures prescribed by the Company, to transfer such amounts to such other investment options as the Compensation Committee shall make available at such time. For purposes of a transfer election described in this Section, a Share Unit shall have a value equal to the price of Common Stock on the New York Stock Exchange during such period immediately preceding and/or immediately following the date of the transfer, as the Compensation Committee shall determine.
     8. The following new Section 7 is hereby added to the Program and the remaining subsequent Sections (including all references made thereto) are hereby renumbered accordingly:
     7. Excess Retirement Contributions.
     (a) Amount of Contribution. If an eligible executive is entitled to an allocation of a Retirement Contribution for a Plan Year, within the meaning of and pursuant to the terms of the Wrigley Savings Plan, the Excess Retirement Contribution Account established for such executive pursuant to Section 7(c) shall be credited with an amount (an “Excess Retirement Contribution”) equal to the excess, if any, of:
(i) 5% of the sum of (i) the executive’s Retirement Contribution Compensation for such Plan Year, as defined in the Wrigley Savings Plan but determined without regard to the limitation set forth in section 401(a)(17) of the Code, plus (ii) the executive’s EICP bonus earned for such Plan Year, over
(ii) the amount of the Retirement Contribution actually credited to the executive’s Retirement Contribution Account for such Plan Year under the Wrigley Savings Plan.
     (b) Investment Options. Each Excess Retirement Contribution shall be credited to the Participant’s Excess Retirement Contribution Account as either Share Units or

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Investment Fund Credits, as specified by the executive in accordance with procedures established by the Company.
     (c) Excess Retirement Contribution Account. There shall be established for each Participant who is entitled to an Excess Retirement Contribution an account to be designated as an Excess Retirement Contribution Account.
(i) Crediting of Excess Retirement Contributions. An Excess Retirement Contribution shall be credited to a Participant’s Excess Retirement Contribution Account with respect to a Plan Year concurrently with the allocation of the related Retirement Contribution to such Participant’s Retirement Contribution Account for such Plan Year under the Wrigley Savings Plan.
(ii) Share Units. To the extent that a Participant has elected that amounts be credited to his or her Excess Retirement Contribution Account as Share Units, the number of such Share Units shall be determined on the basis of the price of Common Stock on the New York Stock Exchange during such period immediately preceding and/or immediately following the date or dates the Share Units are to be credited, as the Compensation Committee shall determine. As soon as administratively practicable following the payment date of any dividend on Common Stock, the Excess Retirement Contribution Account of each Participant shall be credited with dividend equivalents equal to the sum of all dividends that such Participant would have received on such date had the Participant been the owner of a number of shares of Common Stock equal to the number of Share Units in the Participant’s Excess Retirement Contribution Account on the record date for such dividend. The amount so credited shall be converted into additional Share Units with the number of Share Units being determined on the basis of the price of Common Stock on the New York Stock Exchange during such period immediately preceding and/or immediately following the date or dates as of which dividends are to be credited, as the Compensation Committee shall determine.
(iii) Investment Fund Credits. During such period as Investment Fund Credits are credited to a Participant’s Excess Retirement Contribution Account, the amount of such account allocated to each Investment Fund shall be credited with interest and earnings (including gains and losses) equivalent to the amount that would have accrued

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during such period had the amount so credited been actually invested in such Investment Fund.
     (d) Changes in Investment Election. Each Participant may elect to transfer amounts deferred as Share Units or Investment Fund Credits into Share Units or Investment Fund Credits, including transferring Investment Fund Credits from one Investment Fund to a different Investment Fund; provided, however, that if the Participant is a person subject to Section 16(b), then the Compensation Committee, in its discretion, may require that such election be made at such time and in such manner as complies with the applicable provisions of Rule l6b-3. A transfer election pursuant to this Section 7(d) shall be made in accordance with procedures prescribed by the Company. The Compensation Committee may, from time to time, discontinue any of the investment options available under this Section 7. In such event, the Compensation Committee shall transfer the amounts deferred in the discontinued investment option to such other investment option that the Compensation Committee deems appropriate; provided, however, the Participant may elect, if he or she does so in a timely manner and in accordance with the procedures prescribed by the Company, to transfer such amounts to such other investment options as the Compensation Committee shall make available at such time. For purposes of a transfer election described in this Section, a Share Unit shall have a value equal to the price of Common Stock on the New York Stock Exchange during such period immediately preceding and/or immediately following the date of the transfer, as the Compensation Committee shall determine.
     9. The first sentence of Section 8(c) of the Program (as renumbered pursuant to item 8 above) is hereby amended by (i) replacing the word “and” with a comma “,” and (ii) inserting the phrase “and Excess Retirement Contribution Account” after the phrase “Savings Restoration Account,” where it appears therein.
     10. Section 8(c)(i) of the Program (as renumbered pursuant to item 8 above) is hereby amended in its entirety as follows:
(i) Initial Deferral Election. If an eligible executive’s participation in the Deferral Program commences upon such executive’s

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election to participate pursuant to Section 3, 4, 5 or 6, then prior to the first day of the calendar year for which such election takes effect, such executive shall elect the time and form of distribution of all of such executive’s accounts maintained under the Deferral Program; provided, however, that executives who are Participants in the Deferral Program as of December 31, 2006 may elect the time and form of distribution of such accounts on or before December 31, 2006. If an eligible executive’s participation in the Deferral Program commences upon the crediting of an Excess Retirement Contribution to such executive’s Excess Retirement Contribution Account pursuant to Section 7, then not later than 30 days after the first day of the calendar year immediately following the first year in which the executive accrues a benefit under Section 7, such executive shall elect the time and form of distribution of all of such executive’s accounts maintained under the Deferral Program.
     11. Section 13 of the Program (as renumbered pursuant to item 8 above) is hereby amended by replacing the term “Plan” with the term “Deferral Program” as it appears therein.

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Exhibit 10.b
FIRST AMENDMENT TO THE
WM. WRIGLEY JR. COMPANY
STOCK AWARD PROGRAM
(As Amended and Restated Effective January 1, 2005)
     WHEREAS, Wm. Wrigley Jr. Company, a Delaware corporation (the “Company”), has adopted and maintains the Wm. Wrigley Jr. Company Stock Award Program, as amended and restated effective January 1, 2005 (the “Program”), a program established under the Wm. Wrigley Jr. Company 2007 Management Incentive Plan (the “MIP”); and
     WHEREAS, the Company desires to amend the Program to exclude from participation any employees hired on or after July 1, 2008 and in certain other respects.
     NOW THEREFORE, pursuant to the power of amendment contained in Section 1.10 of the MIP, the Program is amended, effective January 1, 2008 or as of such other date set forth herein, as follows:
     1. Section 2(h) of the Program is hereby amended by adding the following sentence at the end thereof:
Notwithstanding anything contained herein to the contrary, the term “Eligible Employee” shall not include any person who was not an employee of the Company or of an Associated Company as of June 30, 2008.
     2. Section 4(c) of the Program is hereby amended by adding the following phrase at the end thereof:
, and any deferred shares shall be credited as Share Units, subject to the terms of the Deferral Program.

 

EXHIBIT 31(a)
Rule 13a-14(a)/15d-14(a) Certification of Mr. William Perez
I, William D. Perez certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Wm. Wrigley Jr. Company;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  (a)   Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the generally accepted accounting principles;
 
  (c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  (d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;
5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
  (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 5, 2008
         
     
  /s/ WILLIAM D. PEREZ    
  William D. Perez   
  President and Chief Executive Officer   
 

 

EXHIBIT 31(b)
Rule 13a-14(a)/15d-14(a) Certification of Mr. Reuben Gamoran.
I, Reuben Gamoran certify that:
1.   I have reviewed this quarterly report on Form 10-Q of Wm. Wrigley Jr. Company;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  (a)   Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
  (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the generally accepted accounting principles;
 
  (c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  (d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and;
5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
  (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
  (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 5, 2008
         
     
  /s/ REUBEN GAMORAN    
  Reuben Gamoran   
  Senior Vice President and
Chief Financial Officer