Wrigley Brands

Wrigley Brands WM. WRIGLEY JR. COMPANY | 2002 ANNUAL REPORT . woven into the fabric of everyday life around the world Building Brands. For more than a century, the Wrigley Company has been defined by its brands. This iconic portfolio has brought fun, flavor and quality to millions of consumers across the globe for generations. Today, the personalities of Wrigley brands have never been more vibrant. In the U.S., long-standing favorites including Wrigley’s Spearmint, Doublemint and Juicy Fruit have been recreated with longer-lasting taste and bold new packaging to ensure that they will remain a vital part of the confectionery CONTENTS landscape for generations to come. More recently Financial Highlights 3 introduced Wrigley confections like Eclipse Flash President’s Letter 4 Management’s Discussion and Analysis 14 strips and Orbit Drops are delivering great benefits Quarterly Data 20 and taste in forms completely new to Wrigley. These Selected Financial Data 22 Report of Management and non-gum brands help further define Wrigley as an Report of Independent Auditors 24 Consolidated Statement of Earnings 25 innovator in confections and an expert in delivering Consolidated Balance Sheet 26 what consumers want – whether its dental benefits, Consolidated Statement of Cash Flows 28 Consolidated Statement of fresh breath, throat soothing, or just great taste. Stockholders’ Equity 29 Accounting Policies and Notes to Consolidated Financial Statements 30 Elected Officers 39 Board of Directors 40 Stockholder Information 41 Corporate Facilities and Principal Associated Companies 43 Wrigley Brands 44 FINANCIAL HIGHLIGHTS In thousands of dollars except per share amounts 2002 2001 Net Sales $ 2,746,318 $ 2,401,419 Net Earnings $ 401,525 $ 362,986 – Per Share of Common Stock (basic and diluted) $ 1.78 $ 1.61 Dividends Paid $ 181,232 $ 167,922 – Per Share of Common Stock $ .805 $ .745 Additions to Property, Plant and Equipment $ 216,872 $ 181,760 Stockholders' Equity $ 1,522,576 $ 1,276,197 Return on Average Equity 28.7 % 30.1 % Stockholders of Record at Close of Year 40,534 38,701 Average Shares Outstanding (000) 225,145 225,349 For additional historical financial data see page 22. 3 TO OUR STOCKHOLDERS AND THE WORLDWIDE WRIGLEY TEAM: Two thousand and two was a very successful year for your Company, as we achieved record levels of product shipments, sales and earnings worldwide. These gains were made against a backdrop of economic and political uncertainty in a number of geographies as well as a shifting competitive landscape within our industry. It is during unsettled times like these that the clarity and consistency of our vision, mission, values and strategies are particularly important. Equally essential are the unique talents of our team and their ability to work together seamlessly to execute our plans in the global marketplace. All of this enables us to stand out against the competition and continue to build shareholder value. There have been notable changes within the chewing gum business and the broader confectionery industry that will continue to impact the Wrigley Company. Acceleration of sales growth for chewing gum in recent years, largely due to our new product initiatives, has attracted attention and spurred activity. New players are entering our core business and various competitive brands have been changing hands. Notably, Cadbury has been adding chewing gum companies to its portfolio and within the last year, acquired Dandy (a Danish gum maker and our principal competitor in Russia) and agreed to purchase Adams confectionery (our nearest competitor in the United States). Given the new field of play, it is more important than ever to reiterate the commitment present at every level of our organization to executing against our six core strategic choices: – Boosting our core business – Expanding our business into new geographies and distribution channels – Diversifying close to home remaining dedicated to doing what is right for our business and for our stakeholders. We will be driven – Maintaining a focus on innovation to create significant value, seeking a tight fit with our – Delivering the highest quality at the lowest cost core competencies, our strategic long-term plan and – Growing and developing our people our Company values and focusing on potential growth synergies as opposed to just cost synergies. Although all six remain critical, three played especially The path to our successful future will never be set significant roles in 2002 – diversification, core business in stone – we must remain flexible and continue to expansion and innovation – and so it is worthwhile to explore multiple strategies and parallel initiatives to discuss them in more detail and to understand their give ourselves the best possibility of achieving robust, importance for our continued success. generational growth. Were we disappointed that the This past year, we executed against our strategic choice Wrigley-Hershey combination did not come together to “diversify close to home” by pursuing a business as planned? Absolutely. Did it prevent us from making combination with Hershey Foods. While the Wrigley- substantial progress in 2002? Absolutely not. Even if the Hershey transaction did not take place, it is important to right acquisition opportunity does not present itself, we share with you key considerations that speak to our will move forward confident in the knowledge that our merger and acquisition philosophy and how these core business is healthy and growing, as evidenced by the principles will remain a steadfast component of our significant organic growth generated by our internally approach to similar opportunities in the future. developed line extensions and new confectionery items. Our motivation was pure and simple – it was a unique Turning to our core business expansion, a key competi- opportunity that made good business sense on many tive advantage for the Wrigley Company and central to levels, and we had the talent and resources to fully our success is our portfolio of iconic brands, trusted by capitalize on it and deliver results. Our due diligence, our consumers around the world. Some have been around offer and our plans for the integrated organization were for more than a century, while others have yet to reach thorough, thoughtful, strategic, and extremely well- their first anniversary. Though different in form, taste executed. Our detailed analysis reinforced the tremendous and function, they are all grounded in deep synergies, consumer growth opportunities and value consumer understanding and deliver quality, value creation inherent in the envisioned combination of our and meaningful consumer benefits. This past year saw companies. Additionally, the many similarities in heritage, a significant increase in our already strong levels of culture and values, and the complementary nature of the marketing investment in our brands – both new and old respective product lines, iconic brands and geographic – with impressive sales results. strengths, made this potential transaction very attractive. In the U.S., three of our longest established brands – As with any such bold business move, there was risk Wrigley’s Spearmint®, Doublemint® and Juicy Fruit® – were involved; but measured risk-taking is one of the Wrigley modified with improved formulas, updated packaging, Company’s key values and is necessary to grow the business. and new marketing campaigns intended to grab people’s Going forward, we reaffirm our intention to pursue attention and satisfy the next generation of Wrigley confectionery acquisitions around the world, while consumers. Change of this magnitude is often difficult, 5 and we recognize that it may be disconcerting for some past year, we took some major steps forward in our longstanding consumers; however, ensuring the vitality ongoing implementation of global enterprise software, of our brands requires their thoughtful evolution and including the conversion of our operations in Western renewal – a delicate blending of past, present and future. Europe and the Americas. As of this time, over 60% of the worldwide Wrigley organization is operating on a unified These initiatives – along with our support of the vigorous systems platform. This could not have been achieved growth of Orbit® and Eclipse® in the U.S., the continuing without the tremendous effort and dedication of our expansion of our international Airwaves brand franchise, people across a number of functions and regions who are and the introduction of a new product format with single-minded in their determination to use technology X•Cite™ – all reaffirm our commitment to our first strategic choice of “boosting the core chewing gum business.” to add value to what we offer our consumers, customers and associates. Finally, our focus on innovation – in our products, processes, and systems – is providing us with essential building blocks The global integration of our operating and financial for future growth. In 2002, we systems makes us a more power- unveiled Eclipse Flash™ strips (fla- ful manufacturer and an agile vorful, dissolvable films for instant partner to both our suppliers fresh breath) and Orbit Drops™ and our customers. It will pro- (sugar-free lozenges). In addition vide us with more complete, to being innovative, they also sup- higher quality data on a more port our strategic choice to timely basis. We will be in a bet- diversify our business “close to ter position to share data and home.” Both of these confectionery learnings with our supply chain

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