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1999 The Wim. Wrigley Jr. Company Statement of Earnings year ended December 31 (in thousands, except per-share amounts) 2001 2000 Earnings Net sales $ 2,429,646 S 2,145,706 $ Cost of sales 997,054 904.266 Gross profit 1,432,592 1.241,440 Selling, general and administrative expenses 919,236 778,197 Operating income 513,356 463,243 Investment income 18,553 19,185 Other expense (4,543) (3.116) Earnings before income taxes 527,366 479,312 Income taxes 164,380 150,370 Net earnings $ 362,986 S 328.942 S 2,061,602 904,183 1,157,419 721,813 435.606 17,636 (8.812) 444,430 136,247 308.183 Per-share amounts Net earnings per share of common stock Dividends paid per share of common stock S S 1.61 S 0.745 S 1.45 S 0.70 S 1.33 0.66 2001 2000 The Vin. Yrigley Jr. Company Consolidated Balance Sheet in thousands of dollara ASSETS Current assete: Cash and equivalents $ Short-term investments, at amortised cost Accounts receivable Inventorico Finished goods Raw materials and pupplies 307.785 25.450 239.885 $ 300,599 29,301 191,570 Other current asseto Deferred income taxe current Total current assets Marketable cquity securities, at fair value Deferred charges and other assets Deferred income taxenoncurrent Property, plant, and equipment (at cost) 75,693 203.288 278.981 46.896 14,846 913.843 25,300 115,745 26.381 64,676 188,615 253,231 39,728 14,226 828,715 28,535 83,713 26,743 Land Buildings and building equipment Machinery and equipment 39.933 359,109 857,044 1,256,086 571.717 684.373 11.765,648 39,125 344,457 756,050 1,139,632 532,598 607,034 $1,574,740 Less accumulated depreciation Net property, plant and equipment TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses Dividends payable Income and other taxes payable Deferred income taxed current Total current liabilities Deferred income taxes - noncurrent Other non-current liabilities Common stock Class B convertible stock Additional paid-in capital Retained earningo Treasury stock Accumulated other comprehensive income Total stockholders' equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 91,225 $ 73,129 128.406 113,779 42.711 39,467 68.437 60,976 1.455 859 332,234 288,210 43,206 40,144 113.921 113,489 12.646 12,558 2.850 2,936 1.153 346 1.684,337 1,492,547 (283,799) (256,470) (134,900) (119,014) 1,276,287 1,132,897 $1,765,648 1.574,740 $1,500 Wrigley $1,400 $1,300 when wann $1,200 $1,100 S&P Food Beverage & Tobacco Index $1,000 $900 S&P 500 mno $800 $700 saya $600 Oct-00 Sep-00 Jul-00 Aug-00 Jun-00 Jan-01 Apr-01 May-01 Aug-01 Oct-01 Jun-02 Apr-02 May-02 Nov-00 Dec-00 Feb-01 Mar-01 Jun-01 Jul-01 Sep-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Financial Characteristics of Major Confectionary Firms Company Name Cadbury Schweppes plc Hershey Foods Corp Kraft Foods Tootise Roll Industries Inc. Wm. Wrigley Jr. Co. S&P 500 Composite Recent Price S 26.66 S 65.45 S 38.82 S 31.17 S 56.37 S 1.148.08 Common Market Book Shares Value of Value of Total LT Outstandin Equity Equity Debt (millions) (millions) (millions) (millions) 502.50 $ 13,397 S 5,264 S 2.264 136.63 $ 8.942 $ 2.785 $ 869 1.735.00 $ 67,353 S 39.920 S 8,548 51.66 $ 1,610 S 509 S 8 232.44 S 13.103 S 1,276 S LT Debt/ (LT Debt + LT Debt/ (LT Book Debt +Mkt Value of Value of Equity) Equity) 30.07% 14.46% 23.77% 8.85% 17.64% 11.26% 1.45% 0.00% 0.00% 18.23% 8.76% LT Debt/Book LT Debt / Value of Mkt Value of Equity Equity 43.01% 16.90% 31.18% 9.71% 21.41% 12.69% 1.47% 0.47% 0.00% 0.00% 24.27% 9.94% 0.46% EPS 1.39 2.74 Company Name Cadbury Schweppes plc Hershey Foods Corp. Kraft Foods Tootise Roll Industries Inc. Wm. Wrigley Jr. Co. S&P 500 Composite Beta 0.60 0.60 nmf 0.65 0.75 1.00 Price! Earnings 15.20 20.40 18.70 24.00 29.30 40.55 Cash Dividend S 0.67 S 1.16 S 0.26 S 0.28 $ 0.75 Dividend Payout 44.0% 41.0% 12.0% 22.0% 46.0% Dividend Yield 2.50% 2.00% 1.50% 0.90% 1.50% Interest Coverage Before Tax 4.6x 11.1x 3.4x nmf nmf Compound Growth of EPS Past 5 Yrs 6.50% 6.50% nmf 12.50% 9.00% -49.57% Firm Value EBITDA 10.3 11.4 10.1 14.6 22.6 1.17 1.30 1.61 18.78 Key Industrial Financial Ratios (Three-year medians 2000-2002) 1.0 EBIT interest coverage (x) Funds from operations/total debt (%) Free operating cash flow/total debt (%) Return on capital (%) Operating income/sales (%) Long-term debt/capital (%) Total debt/capital, incl. short-term debt (%) Investment Grade AAA AA A 23.4 13.3 6.3 214.2 65.7 42.2 156.6 33.6 22.3 35.0 26.6 18.1 23.4 24.0 18.1 (1.1) 21.1 33.8 5.0 35.9 42.6 BBB 3.9 30.6 12.8 13.1 15.5 40.3 47.0 Non-Investment Grade BB B 2.2 19.7 10.4 7.3 1.5 11.5 8.0 15.4 14.7 53.6 72.6 57.7 75.1 Source of data: Standard & Poor's Credit Stats, September 8, 2003. 3- Definitions: EBIT interest coverage divides earnings before interest and taxes (EBIT) by gross interest expense (before subtracting capitalized interest and interest income). and amortization, deferred income taxes, and other noncash items/Long-term debt + current maturities + commercial paper, and other short- term borrowings. (excluding changes in cash, marketable securities, and short-term debt)/Long-term debt + current maturities, commercial paper, and other short-term borrowings Total debt/EBITDA. Long-term debt + current maturities, commercial paper, and other short-term borrowings/Adjusted earnings from continuing operations before interest, taxes, and depreciation and amortization. Return on capital. EBIT/Average of beginning of year and end of year capital, including short-term debt current maturities, long-term debt, noncurrent deferred taxes, minority interest, and equity (common and preferred stock). Total debt/capital. Long-term debt + current maturities, commercial paper, and other short-term borrowings/Long-term debt + current maturities, commercial paper, and other short-term borrowings + shareholders' equity (including preferred stock) + minority interest. Capital Market Conditions, June 7, 2002 U.S. Treasury obligations 3 mos. 6 mos. Other instruments U.S. Federal Reserve Bank discount rate LIBOR (1 month) Certificates of deposit (6 month) Prime interest rates 1.730% 1.840% 1.980% 4.750% Yield 1.670% 1.710% 2.310% 3.160% 3.660% 4.090% 4.520% 4.860% 5.650% 1 yr. 2 yr. 3 yr. 5 yr. U.S. Treasury yield curve 7 yr. 10 yr. June 7, 2002 6% 5% 4% 3% 20 yr. Corporate debt obligations (10 year) AAA AA A BBB BB B Yield 9.307% 9.786% 10.083% 10.894% 12.753% 14.663% 2% 1% 0% 3 mos. 6 mos. 1 yr. 2 yr. 3 yr. 5 yr. 7 yr. 10 yr. 20 yr. EPS v. EBIT Analysis Before recapitalization After recapitalization Assumptions Interest rate on debt Pre-recap debt Tax rate Assumptions Interest rate on debt Pre-recap debt Tax rate Worst case Most likely Best case Worst case Most likely Best case Before recapitalization Operating income (EBIT) Interest expense Taxable income Taxes Net income Shares outstanding Earnings per share After recapitalization Operating income (EBIT) Interest expense Taxable income Taxes Net income Shares outstanding Earnings per share WRIGLEY WILLIAM JR. S&P 500 COMPOSITE PRICE INDEX Name S&P500 FOOD BEV & TOBACCO - PRICE INDEX S&P Food SS&P Food Beverage & & Bev Tobacco Indexed US WWY Indexed Code Wrigley CURRENCY US 3/1/1999 $ 3/2/1999 $ 3/3/1999 S 3/4/1999 S 3/5/1999 $ 3/8/1999 $ 3/9/1999 S 3/10/1999 $ 3/11/1999 $ 3/12/1999 S 3/15/1999 $ 3/16/1999 S 3/17/1999 $ 3/18/1999 S 3/19/1999 S 46.62 45.47 45.81 46.41 46.50 46.84 45.81 44.72 45.78 46.94 47.37 47.25 46.59 46.19 45.28 S&P S&P 500 Comp Indexed US S 1,236.16 S 1,225.50 S 1.227.70 $ 1.246.64 S 1.275.47 S 1,282.73 S 1,279.84 S 1.286.84 S 1.297.68 S 1.294.59 S 1,307.26 $ 1.306.38 S 1,297.82 S 1.316.55 S 1.299.29 1999 The Wim. Wrigley Jr. Company Statement of Earnings year ended December 31 (in thousands, except per-share amounts) 2001 2000 Earnings Net sales $ 2,429,646 S 2,145,706 $ Cost of sales 997,054 904.266 Gross profit 1,432,592 1.241,440 Selling, general and administrative expenses 919,236 778,197 Operating income 513,356 463,243 Investment income 18,553 19,185 Other expense (4,543) (3.116) Earnings before income taxes 527,366 479,312 Income taxes 164,380 150,370 Net earnings $ 362,986 S 328.942 S 2,061,602 904,183 1,157,419 721,813 435.606 17,636 (8.812) 444,430 136,247 308.183 Per-share amounts Net earnings per share of common stock Dividends paid per share of common stock S S 1.61 S 0.745 S 1.45 S 0.70 S 1.33 0.66 2001 2000 The Vin. Yrigley Jr. Company Consolidated Balance Sheet in thousands of dollara ASSETS Current assete: Cash and equivalents $ Short-term investments, at amortised cost Accounts receivable Inventorico Finished goods Raw materials and pupplies 307.785 25.450 239.885 $ 300,599 29,301 191,570 Other current asseto Deferred income taxe current Total current assets Marketable cquity securities, at fair value Deferred charges and other assets Deferred income taxenoncurrent Property, plant, and equipment (at cost) 75,693 203.288 278.981 46.896 14,846 913.843 25,300 115,745 26.381 64,676 188,615 253,231 39,728 14,226 828,715 28,535 83,713 26,743 Land Buildings and building equipment Machinery and equipment 39.933 359,109 857,044 1,256,086 571.717 684.373 11.765,648 39,125 344,457 756,050 1,139,632 532,598 607,034 $1,574,740 Less accumulated depreciation Net property, plant and equipment TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses Dividends payable Income and other taxes payable Deferred income taxed current Total current liabilities Deferred income taxes - noncurrent Other non-current liabilities Common stock Class B convertible stock Additional paid-in capital Retained earningo Treasury stock Accumulated other comprehensive income Total stockholders' equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 91,225 $ 73,129 128.406 113,779 42.711 39,467 68.437 60,976 1.455 859 332,234 288,210 43,206 40,144 113.921 113,489 12.646 12,558 2.850 2,936 1.153 346 1.684,337 1,492,547 (283,799) (256,470) (134,900) (119,014) 1,276,287 1,132,897 $1,765,648 1.574,740 $1,500 Wrigley $1,400 $1,300 when wann $1,200 $1,100 S&P Food Beverage & Tobacco Index $1,000 $900 S&P 500 mno $800 $700 saya $600 Oct-00 Sep-00 Jul-00 Aug-00 Jun-00 Jan-01 Apr-01 May-01 Aug-01 Oct-01 Jun-02 Apr-02 May-02 Nov-00 Dec-00 Feb-01 Mar-01 Jun-01 Jul-01 Sep-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Financial Characteristics of Major Confectionary Firms Company Name Cadbury Schweppes plc Hershey Foods Corp Kraft Foods Tootise Roll Industries Inc. Wm. Wrigley Jr. Co. S&P 500 Composite Recent Price S 26.66 S 65.45 S 38.82 S 31.17 S 56.37 S 1.148.08 Common Market Book Shares Value of Value of Total LT Outstandin Equity Equity Debt (millions) (millions) (millions) (millions) 502.50 $ 13,397 S 5,264 S 2.264 136.63 $ 8.942 $ 2.785 $ 869 1.735.00 $ 67,353 S 39.920 S 8,548 51.66 $ 1,610 S 509 S 8 232.44 S 13.103 S 1,276 S LT Debt/ (LT Debt + LT Debt/ (LT Book Debt +Mkt Value of Value of Equity) Equity) 30.07% 14.46% 23.77% 8.85% 17.64% 11.26% 1.45% 0.00% 0.00% 18.23% 8.76% LT Debt/Book LT Debt / Value of Mkt Value of Equity Equity 43.01% 16.90% 31.18% 9.71% 21.41% 12.69% 1.47% 0.47% 0.00% 0.00% 24.27% 9.94% 0.46% EPS 1.39 2.74 Company Name Cadbury Schweppes plc Hershey Foods Corp. Kraft Foods Tootise Roll Industries Inc. Wm. Wrigley Jr. Co. S&P 500 Composite Beta 0.60 0.60 nmf 0.65 0.75 1.00 Price! Earnings 15.20 20.40 18.70 24.00 29.30 40.55 Cash Dividend S 0.67 S 1.16 S 0.26 S 0.28 $ 0.75 Dividend Payout 44.0% 41.0% 12.0% 22.0% 46.0% Dividend Yield 2.50% 2.00% 1.50% 0.90% 1.50% Interest Coverage Before Tax 4.6x 11.1x 3.4x nmf nmf Compound Growth of EPS Past 5 Yrs 6.50% 6.50% nmf 12.50% 9.00% -49.57% Firm Value EBITDA 10.3 11.4 10.1 14.6 22.6 1.17 1.30 1.61 18.78 Key Industrial Financial Ratios (Three-year medians 2000-2002) 1.0 EBIT interest coverage (x) Funds from operations/total debt (%) Free operating cash flow/total debt (%) Return on capital (%) Operating income/sales (%) Long-term debt/capital (%) Total debt/capital, incl. short-term debt (%) Investment Grade AAA AA A 23.4 13.3 6.3 214.2 65.7 42.2 156.6 33.6 22.3 35.0 26.6 18.1 23.4 24.0 18.1 (1.1) 21.1 33.8 5.0 35.9 42.6 BBB 3.9 30.6 12.8 13.1 15.5 40.3 47.0 Non-Investment Grade BB B 2.2 19.7 10.4 7.3 1.5 11.5 8.0 15.4 14.7 53.6 72.6 57.7 75.1 Source of data: Standard & Poor's Credit Stats, September 8, 2003. 3- Definitions: EBIT interest coverage divides earnings before interest and taxes (EBIT) by gross interest expense (before subtracting capitalized interest and interest income). and amortization, deferred income taxes, and other noncash items/Long-term debt + current maturities + commercial paper, and other short- term borrowings. (excluding changes in cash, marketable securities, and short-term debt)/Long-term debt + current maturities, commercial paper, and other short-term borrowings Total debt/EBITDA. Long-term debt + current maturities, commercial paper, and other short-term borrowings/Adjusted earnings from continuing operations before interest, taxes, and depreciation and amortization. Return on capital. EBIT/Average of beginning of year and end of year capital, including short-term debt current maturities, long-term debt, noncurrent deferred taxes, minority interest, and equity (common and preferred stock). Total debt/capital. Long-term debt + current maturities, commercial paper, and other short-term borrowings/Long-term debt + current maturities, commercial paper, and other short-term borrowings + shareholders' equity (including preferred stock) + minority interest. Capital Market Conditions, June 7, 2002 U.S. Treasury obligations 3 mos. 6 mos. Other instruments U.S. Federal Reserve Bank discount rate LIBOR (1 month) Certificates of deposit (6 month) Prime interest rates 1.730% 1.840% 1.980% 4.750% Yield 1.670% 1.710% 2.310% 3.160% 3.660% 4.090% 4.520% 4.860% 5.650% 1 yr. 2 yr. 3 yr. 5 yr. U.S. Treasury yield curve 7 yr. 10 yr. June 7, 2002 6% 5% 4% 3% 20 yr. Corporate debt obligations (10 year) AAA AA A BBB BB B Yield 9.307% 9.786% 10.083% 10.894% 12.753% 14.663% 2% 1% 0% 3 mos. 6 mos. 1 yr. 2 yr. 3 yr. 5 yr. 7 yr. 10 yr. 20 yr. EPS v. EBIT Analysis Before recapitalization After recapitalization Assumptions Interest rate on debt Pre-recap debt Tax rate Assumptions Interest rate on debt Pre-recap debt Tax rate Worst case Most likely Best case Worst case Most likely Best case Before recapitalization Operating income (EBIT) Interest expense Taxable income Taxes Net income Shares outstanding Earnings per share After recapitalization Operating income (EBIT) Interest expense Taxable income Taxes Net income Shares outstanding Earnings per share WRIGLEY WILLIAM JR. S&P 500 COMPOSITE PRICE INDEX Name S&P500 FOOD BEV & TOBACCO - PRICE INDEX S&P Food SS&P Food Beverage & & Bev Tobacco Indexed US WWY Indexed Code Wrigley CURRENCY US 3/1/1999 $ 3/2/1999 $ 3/3/1999 S 3/4/1999 S 3/5/1999 $ 3/8/1999 $ 3/9/1999 S 3/10/1999 $ 3/11/1999 $ 3/12/1999 S 3/15/1999 $ 3/16/1999 S 3/17/1999 $ 3/18/1999 S 3/19/1999 S 46.62 45.47 45.81 46.41 46.50 46.84 45.81 44.72 45.78 46.94 47.37 47.25 46.59 46.19 45.28 S&P S&P 500 Comp Indexed US S 1,236.16 S 1,225.50 S 1.227.70 $ 1.246.64 S 1.275.47 S 1,282.73 S 1,279.84 S 1.286.84 S 1.297.68 S 1.294.59 S 1,307.26 $ 1.306.38 S 1,297.82 S 1.316.55 S 1.299.29
