WRIGLEY WM JR CO 10-K 2008
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the fiscal year ended December 31, 2007
Commission file number 1-800
WM. WRIGLEY JR. COMPANY
(Exact name of registrant as specified in its charter)
410 North Michigan Avenue
Chicago, Illinois 60611
(Address of principal executive offices)
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Securities registered pursuant to Section 12(g) of the Act
Class B Common Stock, no par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨
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 ¨ No þ
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 ¨
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. þ
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 þ Accelerated filer ¨ Non-accelerated filer ¨
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 ¨ No þ
As of June 30, 2007, there were outstanding 216,858,217 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 June 30, 2007) held by non-affiliates was approximately $8,161,510,627. As of June 30, 2007, there were outstanding 57,606,232 shares of Class B Common Stock, no par value. Class B Common Stock carries ten 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, 2007 (based upon the closing price of the stock on the New York Stock Exchange on such date) would have been approximately $9,281,827,768. 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 January 15, 2008, there were outstanding 217,515,229 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 January 15, 2008) held by non-affiliates was approximately $8,790,807,617. As of January 15, 2008, there were outstanding 56,453,637 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 January 15, 2008 (based upon the closing price of the stock on the New York Stock Exchange on such date) would have been approximately $9,911,111,670. 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 (i) Notice of Annual Meeting and Proxy Statement, dated February 11, 2008, for the March 12, 2008 Annual Meeting of Stockholders (the Proxy Statement), and (ii) Annual Report to Stockholders for the fiscal year ended December 31, 2007 (the 2007 Annual Report), are incorporated by reference into portions of Parts I, II, III and IV of this Report.
The Wm. Wrigley Jr. Company (the Company or Wrigley) is a Delaware corporation. From 1891 to 1903, the Company was operated as a partnership until its incorporation in Illinois as Wm. Wrigley Jr. Co. in December 1903. In November 1910, the Company was reincorporated under West Virginia law as Wm. Wrigley Jr. Company, and in October 1927, was reincorporated under the same name under Delaware law. Wrigley is a recognized leader in the confectionery field and the worlds largest manufacturer and marketer of chewing gum.
Wrigley products are sold in over 180 countries and, in the over 110 years since Wrigley introduced its first two products, Juicy Fruit® and Wrigleys Spearmint®, its portfolio of products has grown to include many innovative brands that provide consumers with a variety of benefits, including breath freshening and tooth whitening. The Companys principal business remains 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 76 and 77 of the Companys 2007 Annual Report under the caption Segment Information, which information is incorporated herein by reference.
For financial reporting purposes, management organizes the Companys chewing gum and other confectionery business based principally on geographic regions. Descriptions of the Companys reportable segments are as follows.
In addition to internal product development, the Company has continued to enhance the portfolio of products it offers through the diversification of its business within the broader confectionery category.
On January 31, 2007, the Company acquired an 80 percent initial interest in A. Korkunov®, a privately held premium chocolate company in Russia. This acquisition provided the Company with an opportunity to enter the chocolate confectionery marketplace with a well recognized brand in a growing region.
In 2005, the Company acquired certain non-chocolate confectionery assets from Kraft Foods Global, Inc., including the purchase of the Life Savers®, Altoids®, Crème Savers®, and Sugus® brands. The purchase provided additional diversification in the key categories of mints and hard and chewy candy, expanded the Companys product offering to customers worldwide, added scale and brand depth to the innovation pipeline and increased efficiency across the Companys supply chain.
In 2004, the Company acquired certain confectionery businesses of the Joyco Group from Agrolimen, a privately-held Spanish conglomerate. This transaction strengthened the Companys operations in key geographies such as Spain, India and China by giving us a broader confectionery brand portfolio, access to additional distribution channels and enhanced manufacturing capabilities.
In 2007, chewing gum and other confectionery products were manufactured in three factories in the United States and sixteen factories in other countries. Northwestern Flavors, LLC, a domestic wholly-owned subsidiary of the Company, processes flavorings and refined mint oil for the Company. In addition, four foreign facilities also manufacture gum base for the Companys international production facilities and for third-party gum product manufacturers. Two others produce gum base for their own use. In 2005, the Company announced plans to restructure its North American production network in order to maximize supply chain efficiencies. As a result, in late 2006 the Company closed its chewing gum plant in Chicago, Illinois and its L.A. Dreyfus gum base subsidiary in Edison, New Jersey, and transferred production to remaining facilities. Also, in April, 2006, the Company closed the facility located in Bridgend, Wales which was acquired in the transaction with Kraft Foods Global, Inc.
Raw materials such as sugar, corn syrup, flavoring oils, polyols and high-intensity sweeteners blended to make chewing gum are readily available in the open market. Other ingredients and necessary packaging materials are also available and purchased in the open market. Inventory requirements of the Company are not materially affected by seasonal or other factors.
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 with consumer purchases at the retail level generated primarily through the Companys advertisements on television as well as in newspapers, magazines and other media, all designed to best reach consumers. Additional direct customers are vending distributors, concessionaires and other established customers purchasing in wholesale quantities.
Customer orders are usually received electronically, by mail, telephone, facsimile or e-mail and are generally shipped by truck from factory warehouses or leased warehousing facilities. In general, the Company does not offer its customers extended payment terms. 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. The Company believes these conditions are not materially different from those of its competitors. On a consolidated basis, sales are relatively consistent throughout the year.
In 2007, the Companys ten largest revenue producing countries outside of the United States were, in alphabetical order: Australia, Canada, China, France, Germany, Poland, Romania, Russia, Spain and the United Kingdom.
Innovation has been a key element of Wrigleys success. The Company holds numerous patents and patent applications relating to packaging, manufacturing processes and product formulas, including approximately 200 significant patents relating to packaging, chewing gum confection processing, product formula and sweetener
encapsulation. Most of these patents expire in the countries in which they are registered at various times through the year 2021. While the Company considers its patent portfolio to be valuable, the Company does not believe that its business is dependent upon any single patent or group of related patents.
In addition, trademarks are of material importance to the Company globally. Generally, Wrigley products are marketed under trademarks owned by the Company. These trademarks are registered and maintained for brands of the Companys products where appropriate. Generally, trademarks are valid as long as they are in use and/or their registrations are properly maintained. The Company actively monitors the registrations of its trademark and patent portfolios to ensure that the intellectual property is appropriately protected and maintained.
The Company maintains an active in-house research and development program, and also contracts with outside services for developing and improving Wrigley products, machinery and operations. In 2005, the Company opened its Global Innovation Center which is a state-of-the-art facility dedicated to the development of new products and the enhancement of the Companys existing product lines. 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 55 of the Companys 2007 Annual Report under the caption Research and Development and is incorporated herein by reference.
The confectionery business is an intensely competitive one 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 gum category, the Company is a worldwide leader. The Company competes primarily with Cadbury Adams and Mars Incorporated, on a global basis, and Lotte Co., Ltd. in Asia, Perfetti van Melle S.p.A. in Europe, the Middle East, Africa and India, and The Hershey Company in North America.
The continued growth of alternative store formats, product and packaging innovations, technological advances, and new industry techniques have all added 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.
As of December 31, 2007, the Company employed approximately 16,400 people worldwide.
Financial Information About Foreign and Domestic Operations
Information concerning the Companys operations in different geographic areas for the years ended December 31, 2007, 2006 and 2005 is hereby incorporated by reference from the Companys 2007 Annual Report on pages 76 and 77, under the caption Segment Information, and on pages 34 through 37 under the caption Results of Operations.
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. Copies of the materials filed by the Company with the Securities and Exchange Commission are available at the Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information regarding the operation of the Public Reference Room is available by calling the Securities and Exchange Commission at 1-800-SEC-0330. Reports, proxy and information statements and other information regarding issues that file electronically with the SEC are available on the SECs website at www.sec.gov.
In addition, information regarding the Companys corporate governance guidelines (entitled Principles of Corporate Governance) and code of ethics (entitled the Code of Business Conduct), and the charters of the Companys Audit, Compensation and Corporate Governance Committees, are available free of charge on the Companys website listed above or in print to any stockholder who requests them.
Significant factors that could impact the Companys business operations include, without limitation, the following:
Availability or retention of retail space. In those countries where the Company maintains leadership in the gum segment, the Companys ability to retain preferred retail space allocation will impact results. If the Company is not able to retain this allocation, the Companys 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 Companys results could be negatively impacted.
Changes in demographics and consumer preference. The Company operates in an increasingly competitive industry. As such, the Companys 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 Companys 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 Companys operating results.
Changes in foreign currency and marketplace conditions. Manufacturing and sales of a significant portion of the Companys 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 Companys business in such countries could be negatively impacted. In addition, given the global nature of our business, we earn revenue, pay expenses, incur liabilities and hold assets in a variety of foreign currencies which we translate into U.S. Dollars for financial reporting purposes at the then-applicable exchange rate. Consequently, volatility in foreign currencies and the U.S. Dollar could have a material adverse effect on the Companys 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. In addition, the Companys results may be negatively impacted by ineffective advertising, or by our failure to sufficiently counter aggressive competitive actions. In addition, discounting and other competitive actions may also 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 Companys manufacturing capacity, which could negatively impact manufacturing efficiencies and costs.
Governmental regulations. Government regulations with respect to import duties, tariffs, taxes and environmental controls, both in and outside the United States, could negatively impact the Companys 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 Companys inability to successfully integrate any acquired businesses or assets could cause actual results to differ from anticipated results or expectations of the business.
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 I, Item 1A) and those 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 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.
The information below relates to the principal properties of the Company organized by reportable segments. These properties are primarily devoted to confectionery production or raw materials processing. In the case of each factory listed below, 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.
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.
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 immediately following the Annual Meeting of Stockholders. The positions and ages listed below are as of December 31, 2007. There were no arrangements or understandings between any of the officers and any other person(s) pursuant to which such officers were elected.
Executive Leadership Team
Executive Leadership Team
William Wrigley, Jr.,Executive Chairman and Chairman of the Board of DirectorsMr. Wrigley, Jr. served as the Companys Chairman of the Board, President and Chief Executive Officer from 2004 until 2006 when he was appointed Executive Chairman and Chairman of the Board of Directors. Prior to 2004, Mr. Wrigley, Jr. served as the Companys President and Chief Executive Officer from 1999 to 2003, its Vice President from 1992 through 1999, its Vice President and Assistant to the President from 1991 through 1992, and its Assistant to the President from 1985 through 1991.
William D. PerezPresident and Chief Executive Officer and DirectorMr. Perez was elected President, Chief Executive Officer and a member of the Companys Board of Directors in 2006. Prior to joining the Company, Mr. Perez spent 34 years with S.C. Johnson & Son, Inc., including eight years as President and Chief Executive Officer of the multi-billion dollar privately held global consumer products company. In 2004, Mr. Perez joined Nike, Inc., where he served as President and Chief Executive Officer until 2006.
Reuben GamoranSenior Vice President and Chief Financial OfficerIn 2006, Mr. Gamoran was elected Senior Vice President and Chief Financial Officer of the Company. Prior to his current position, Mr. Gamoran served as the Companys ControllerInternational from 1996 until 1999, its Controller from 1999 through 2001, and its Vice President and Controller from 2001 through 2003. From 2004 through 2005, Mr. Gamoran was the Companys Vice President and Chief Financial Officer.
Mary Kay HabenGroup Vice President and Managing DirectorNorth AmericaMs. Haben was elected Group Vice President and Managing DirectorNorth America in 2007. Prior to joining the Company, Ms. Haben spent 27 years with Kraft, Inc., a multi-billion dollar global food company, most recently as the Senior Vice President, Open Innovation. From 2000 to 2004, Ms. Haben served as Krafts Group Vice President responsible for cheese, meals and enhancers and from 2004 to 2006, she served as Krafts Senior Vice President responsible for the global convenient meals, grocery and snack sectors.
Peter HempsteadSenior Vice PresidentWorldwide Strategy and New BusinessIn 2004, Mr. Hempstead was elected to serve as the Companys Senior Vice PresidentWorldwide Strategy and New Business. From 1999 through 2003, Mr. Hempstead served as the Companys Senior Vice PresidentInternational.
Surinder KumarSenior Vice President and Chief Innovation OfficerDr. Kumar joined the Company in 2001 as Chief Innovation Officer, and in 2003 was elected Senior Vice President & Chief Innovation Officer.
Howard MalovanySenior Vice President, Secretary and General CounselMr. Malovany was elected Senior Vice President, Secretary and General Counsel of the Company in 2007. Prior to his current position, Mr. Malovany served as the Companys Assistant Secretary and Senior Counsel from 1996 to 1998, as the Companys Secretary and General Counsel from 1998 to 2001 and as the Companys Vice President, Secretary and General Counsel from 2001 to 2007.
Dushan PetrovichSenior Vice President and Chief Administrative OfficerMr. Petrovich was elected Senior Vice President and Chief Administrative Officer in 2004. Prior to his current position, Mr. Petrovich served as the Companys Treasurer from 1992 to 1993, Vice PresidentTreasurer from 1993 to 1996, Vice PresidentController from 1996 to 1999, Vice PresidentOrganizational Development from 1999 to 2000 and Vice President from 2000 to 2001. In 2001, Mr. Petrovich was elected Vice PresidentPeople, Learning and Development and in 2002 he was elected Senior Vice PresidentPeople, Learning and Development.
Igor SavelievGroup Vice President and Managing DirectorEast/South EuropeMr. Saveliev was elected Group Vice President and Managing DirectorEast/South Europe in 2007. Mr. Saveliev joined the Company in 1995 as Executive DirectorRussia. Until his present position, Mr. Saveliev served the Company as General ManagerEMEAI East between 2000 and 2004, Regional Vice PresidentEast and Central Europe from 2004 to 2005 and Vice President and Managing DirectorEast and Central Europe from 2005 to 2007.
Martin SchlatterVice President and Chief Marketing OfficerMr. Schlatter was elected Vice President and Chief Marketing Officer in 2006 until which time he served as the General Manager for Wrigleys U.S. Commercial Business since 2004. From 2002 to 2004, Mr. Schlatter served as the Companys DirectorNew Business Development and in 2004 was appointed the Companys Senior DirectorNew Business Development.
Michael WongGroup Vice President and Managing DirectorAsia/PacificMr. Wong was elected Group Vice President and Managing DirectorAsia/Pacific in 2007. Prior to his current position, Mr. Wong served as the Companys Regional Managing DirectorNorth Asia from 1998 to 2000, Vice PresidentInternational & Managing DirectorAsia from 2000 to 2005 and Vice President and Managing DirectorAsia from 2005 to 2007.
Other Executive Officers
John AdamsVice PresidentWorldwide Supply ChainMr. Adams was elected Vice PresidentWorldwide Supply Chain in 2007 prior to which, Mr. Adams served as the Companys Vice PresidentWorldwide Manufacturing since 2006. Mr. Adams joined the Company in 1999 as Senior Director, Manufacturing Operations in Europe, Middle East and Africa, and in 2001, served as Senior Director, Supply Chain.
Maxim GrishakovVice PresidentManaging DirectorRussiaMaxim Grishakov was elected Vice President and Managing DirectorRussia in 2007. Prior to 2007, he served as the General Manager for Russia. From 2000 to 2004, Mr. Grishakov served as the marketing director for Russia and EMEAI East Region, and, prior to that, was in charge of the marketing operations in Russia.
Susan HendersonVice PresidentCorporate CommunicationsMs. Henderson was elected Vice PresidentCorporate Communications in 2006. Prior to joining the Company, Ms. Henderson was the Vice President, Public Relations of Kohls Department Stores from 2000 until 2003 and the President of Henderson Consulting from 2003 until 2005.
Donagh HerlihyVice PresidentSupply Chain Strategy and Planning and Chief Information OfficerMr. Herlihy was elected Vice PresidentSupply Chain Strategy and Planning and Chief Information Officer in 2007. He served as the Companys Vice PresidentPeople, Learning & Development and Chief Information Officer from 2006 to 2007 and as the Vice PresidentChief Information Officer from 2000 to 2006.
Carol KnightVice PresidentScientific and Regulatory AffairsDr. Knight was elected Vice PresidentScientific and Regulatory Affairs in 2006 and served as the Companys Senior DirectorScientific and Regulatory Affairs from 2003 to 2006. Prior to joining the Company, from 2000 to 2003, Dr. Knight served as the President of Knight International, a company providing international scientific and regulatory strategy and consulting within the food industry.
Shaun MaraVice President and ControllerMr. Mara was elected as Vice President and Controller in 2006. From 2005 to 2006, Mr. Mara served as the Companys Vice President Finance, Commercial Operations and from 2002 to 2004 as the Companys Senior Director Finance, Americas.
Patrick D. MitchellVice PresidentWorldwide Procurement and Chief Procurement OfficerMr. Mitchell was elected Vice PresidentWorldwide Procurement and Chief Procurement Officer in 2006 with responsibility for the Companys global procurement activities. Prior to his current position, Mr. Mitchell served as the Companys Vice PresidentWorldwide Procurement from 2002 to 2006.
Jon OrvingVice PresidentNordicMr. Orving was elected Vice PresidentNordic in 2005. Until his present position, Mr. Orving served as the Managing Director of Wrigley Scandinavia AB, Sweden from 1983 to 1993, Vice PresidentInternational from 1993 to 2001 and Vice PresidentInternational & Managing DirectorNorth Region from 2001 to 2005.
Alan J. SchneiderVice President and TreasurerMr. Schneider was elected Vice President and Treasurer in 2001. Prior to 2001, Mr. Schneider served as the Companys Treasurer since 1996.
Tawfik SharkasiVice President and Chief Science and Technology OfficerDr. Sharkasi was elected Vice President and Chief Science and Technology Officer in 2007. Dr. Sharkasi joined the Company in 2004 as Vice PresidentResearch & Development, Gum. He served as the Companys Vice PresidentResearch and Development from 2005 to 2007 and thereafter as the Companys Vice PresidentResearch & DevelopmentGum and Confections. Prior to joining the Company, he was employed by Nestle from 1994 to 2004, most recently as Director of Research & DevelopmentIce Cream.
Samson SuenVice President and Managing DirectorChinaMr. Suen was elected Vice President and Managing DirectorChina in 2005. Mr. Suen joined the Company in 1979 as Marketing ManagerHong Kong and became Managing DirectorHong Kong later that year. 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.
(a) Market Information
As of December 31, 2007, 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. Additionally, shares of Class B Common Stock were issued pursuant to a one-time 5 for 4 stock split (in the form of a 25% stock dividend) in which one share of Class B Common Stock was issued for every 4 shares of Common Stock and every 4 shares of Class B Common Stock held as of the close of business on April 17, 2006. 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. The closing price of the Companys Common Stock on the New York Stock Exchange on January 15, 2008 was $58.61. Information regarding the high and low sales price for the Common Stock for each full quarterly period within the two most recently completed fiscal years is set forth in the Companys 2007 Annual Report on page 43 under the caption Market Prices and is incorporated herein by reference.
As of January 15, 2008, there were 41,020 stockholders of record holding Common Stock and 24,905 stockholders of record holding Class B Common Stock.
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, 2007 is set forth in the Companys 2007 Annual Report on page 43 under the captions Market Prices and Dividends and is incorporated herein by reference.
(d) 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, 2007, under which the equity securities of the Company were authorized for issuance:
Shares awarded under all above plans may be newly issued, from the Companys treasury or acquired in the open market.
(b) Not applicable
(c) Issuer Purchases of Equity Securities.
An eleven-year summary of selected financial data for the Company is set forth in the Companys 2007 Annual Report under the following captions and page numbers and is incorporated herein by reference: Operating Data and Other Financial Data on pages 44 and 45, respectively.
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 2007 Annual Report on pages 33 through 42 and is incorporated herein by reference.
Disclosure about market risk is set forth on pages 40 and 41 of the Companys 2007 Annual Report under the heading Market Risk and is incorporated herein by reference.
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, 2007, and 2006 and for each of the three years in the period ended December 31, 2007, are set forth in the Companys 2007 Annual Report on pages 47 through 77, and selected unaudited quarterly data-consolidated results for the years ended December 31, 2007, and 2006 are set forth in the Companys 2007 Annual Report on page 43 under the caption Quarterly Data, and all such pages are incorporated herein by reference.
(i) Disclosure Controls and Procedures.
The Companys Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the 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, 2007.
(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 2007 Annual Report on page 47 and is incorporated herein by reference.
(b) Attestation report of the registered public accounting firm.
The attestation report of Ernst & Young LLP, the Companys independent registered public accounting firm, on the effectiveness of the Companys internal control over financial reporting is set forth in the Companys 2007 Annual Report on page 48 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, 2007, that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.
Information regarding directors and nominees for directorship is set forth in the Companys Proxy Statement on pages 5 through 7 under the caption Election of Class III 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. Information regarding Compliance with Section 16(a) of the Exchange Act is set forth in the Companys Proxy Statement on page 48 under the caption Section 16(a) Beneficial Ownership Reporting Compliance and is incorporated herein by reference. Information regarding the Companys code of ethics is set forth in the Companys Proxy Statement on page 11 under the caption Code of Ethics and is herein incorporated by reference. Information regarding the Companys Audit Committee, Corporate Governance and Nominating Committee are set forth in the Companys Proxy Statement on pages 8 through 14 under the caption Corporate Governance and is incorporated herein by reference.
Information regarding the compensation of directors and executive officers is set forth in the Companys Proxy Statement on pages 15 through 40, and 40 through 42 under the general captions Executive Compensation and Director Compensation, respectively, and is incorporated herein by reference.
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 43 through 45 under the captions Security Ownership of Directors and Executive Officers and Security Ownership of Certain Beneficial Owners and is incorporated herein by reference.
Information regarding certain relationships is hereby incorporated by reference from the Companys Proxy Statement on page 8 under the headings Corporate Governance Guidelines and Related Party Transactions, and pages 43 through 45 under the headings Security Ownership or Directors and Executive Officers and Security Ownership of Certain Beneficial Owners. Information regarding director independence is hereby incorporated by reference from pages 8 through 9 of the Companys Proxy Statement under the heading Director Independence.
Information regarding principal accountant fees and services is incorporated by reference from the Companys Proxy Statement on page 47 under the heading Service Fees Paid to the Independent Registered Public Accounting Firm.
(a)(1) Financial Statements
See the Index to Financial Statements and Financial Statement Schedule, which is included on page F-1 of this Report.
(a)(2) Financial Statement Schedules
The following financial statement schedule, located at page F-2 of this Report, is included in Part II, Item 8 of this Report: Schedule II Valuation and Qualifying Accounts.
The following exhibits were previously filed unless otherwise noted.
Copies of Exhibits are not attached hereto, but the Registrant will furnish then upon request and upon payment to the Registrant of a fee in the amount of $20.00 representing reproduction and handling costs.
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 11, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K for the fiscal year ended December 31, 2007, has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: February 11, 2008
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
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, 7A, 8 and 9A of this Form 10-K Report, the Companys 2007 Annual Report is not to be deemed filed as part of this Form 10-K Report.
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005