NDIC CONSUMER DIVISION Recommendation: Buy Wrigley (WWY)

1. NDIC CONSUMER DIVISIONRecommendation: Buy Wrigley (WWY) Lauren Wilcox- Associate Analysts: Renee Gipson & Steve Howenstein (GPS) Greg Stewart (WMT) Colleen Day & Carolyn White (JNJ) Frank Barra & Randy Yang (PEP) Patrick Schafer (WWY)

2. CONSUMER HOLDINGS • Insert Pie Chart

3. SECTOR OVERVIEW

4. Gap Inc. (GPS) GPS current trading price - November 4, 2004 - approx. 22.37

5. Gap Inc. Overview • Gap is an International specialty retailer selling casual apparel, personal care items, and other accessories for men, women, and children, celebrating its 35th anniversary in 2004. • Fiscal 2003 Revenue of $15.9 billion • October 2004: Comparable store sales grew 3%, as net revenue for the month increased 5%, compared to a year ago • Controls various affiliates that target different consumer interests with diverse marketing styles: The Gap, Gapkids, babyGap, Banana Republic, and Old Navy. • As of October 22, 2004, Operates 3,038 stores in the United States, the United Kingdom, Canada, France, and Japan.

6. Competitor Comparisons Major Competitors: American Eagle Outfitters Abercrombie & Fitch

7. Strengths Diversity under different brands Appealing to all ages and genders and providing products in all price ranges Brand recognition and effective advertising…2004 “How Do You Wear It?” campaign and tour New private label credit card awarding customers at Gap, Old Navy, and Banana Republic Weaknesses Heavily influenced by consumer spending and current economic state of the nation Gap must be able to compete with its competitor in the market for teen apparel SWOT Analysis

8. Opportunities Gap and Old Navy maternity and Old Navy plus-size lines Appeal to Internet shoppers with new credit card and special offers Development of an entire new line for women over 35 years old Former Oscar de La Renta VP of design and senior designer of J Crew will oversee product design Ten stores in two markets will open in Fall 2005 Threats Gap continues transitions with new management and designers American Eagle continues to report increased sales Gap CEO, Paul Pressler, could potentially return to Disney New set of competitors with the new brand Stability of international operations SWOT Analysis

9. Future Outlook • Stock re-purchase program is up to $750 million • Continue “pop culture” marketing campaign with various entertainment stars • Focus on inventory management • Likely to be more management changes • Keep an eye on development and success of new line

10. PepsiCo, Inc (PEP)

11. PepsiCo, Inc Overview • PepsiCo, Inc. is a global snack and beverage company. The Company manufactures, markets and sells a variety of salty, convenient, sweet and grain-based snacks, carbonated and non-carbonated beverages and foods. • It is organized in four divisions: Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America. • Its North American divisions operate in the United States and Canada. Its international divisions operate in nearly 200 countries, with its largest operations in Mexico and the United Kingdom.

12. Competitor Comparison

13. Strengths Strong brand name (Number 2 in industry) Strong international market Rising earnings in 2004 Weaknesses People are questioning its water purification process Health craze may lower consumption of products SWOT Analysis

14. Opportunity Changed name of Diet Sierra Mist to Sierra Mist Free Growing international market after Coca-Cola’s European anti-trust settlement Threats Relationship with Advertising Agency is in jeopardy NHL Lockout means lack of exposure for Pepsi Center in Denver SWOT Analysis

15. Future Outlook • Growing international market should bring on greater sales • May need to focus on healthier products • Expecting increase earnings and growth in 2004 of 13-15%.

16. Johnson & Johnson (JNJ) • GRAPH

17. JNJ Overview • Johnson & Johnson is engaged in the manufacture and sale of products related to human health and well-being. • Over 200 operating companies worldwide. • The Company's business is divided into three segments: Consumer, Pharmaceutical and Medical Devices and Diagnostics. • Consumer segment: baby and child care, skin care, oral and wound care and women's healthcare fields, as well as nutritional and over-the-counter pharmaceutical products. • Pharmaceutical segment: antifungal, anti-infective, cardiovascular, dermatology, gastrointestinal, hematology, immunology, neurology, oncology, pain management, psychotropic and urology fields. • Medical Devices and Diagnostics segment: products used by or under the direction of physicians, nurses, therapists, hospitals, diagnostic laboratories and clinics.

18. STRENGTHS Surpass industry averages in sales and income JNJ: 45,850.0 mil vs. 15,012.1 mil JNJ: 9,137.0 mil vs. 2,747.3 mil For the nine months revenues rose 13% to $34.6 billion: Revenues reflect a strong performance of RISPERDAL, LEVAQUIN, and TOPAMAX 36.30% one-year income growth WEAKNESSES Patients taking JNJ’s arthritis drug Remicade may have higher risk of lymphoma Relative price strength decreasing P/E to growth ratio suggests stock may be overvalued SWOT Analysis

19. OPPORTUNITIES Most pharmaceutical stocks rose as a Bush victory is seen as reducing the threat of government-imposed price cuts on drug companies & the threat of drug imports FDA approved a JNJ company’s CHARITE artificial disc to treat severe low back pain Viactiv introduced new Vitamin Chews in new flavors THREATS PG has been very successful (billion dollar sales) in China market Negative financing cash flow SWOT Analysis

20. Wal-Mart, Inc. (WMT)

21. Wal-Mart Stores, Inc. Overview • Wal-Mart Stores, Inc. operates discount stores and Supercenters, as well as Sam's Clubs. The Company's Wal-Mart discount stores and Supercenters offer merchandise such as apparel, housewares, small appliances, electronics, and hardware. • The products are categorized into grocery, candy and tobacco; hardgoods; soft goods-domestics; pharmaceuticals; electronics; sporting goods and toys; health and beauty aids; stationery; one-hour photo; jewelry; apparel and shoes. • In the United States Wal-Mart operates 1478 discount stores, over 1,471 Supercenters, 538 SAM's CLUBs and 64 Neighborhood Markets. It also operates 1,400 units internationally. • The company operates in the United States, the United Kingdom, Argentina, Brazil, Canada, China, Germany, South Korea, Mexico and Puerto Rico.

22. Competitor Comparisons

23. SWOT Analysis • Strengths • Gross margins stronger in 3rd Qtr., • changed tax rate pushed earning to "high end" of per-share forecast range of 52 cents to 54 cents • Foods division producing steady profits, becoming even greater threat to supermarkets • Steady international expansion and sales abroad • For October, total sales increased 10.4 % For the quarter, sales rose 11.4%

24. SWOT Analysis • Weaknesses • Sales at stores open longer than a year rose only 2.8 percent • lower end of an earlier forecast of 2 percent to 4 percent • Senior management dedicating too much time to legal and publicity issues, hurting WMT’s focus • Focusing on price points: quantity rather than quality • Targeting low-end customers • Losing high income shoppers • Disturbing trend in non-food/general merchandise • Only exceeded 2% growth sales in one quarter since 3rd Qtr. ’02

25. Opportunities Food market is strong Higher consumer spending post-election Worst is behind us attitude Stocked price target around $64 Increased holiday sales Wal-Mart International: continued growth Beginning to focus on quality Threats Target: Capturing high income customers Focusing on quality with more high-end products Gap between companies increasing Employee health care issues Retail stocks risen without WMT about 11% since August, while WMT has done nothing SWOT Analysis

26. Future Outlook • Analysts believe that WMT’s next move is up. • Company is beginning to focus on quality to better compete with Target. • Positive impact of increasing consumer spending. • Continuous improvements in stores.

27. PROPOSAL: BUY Wm. WRIGLEY Jr. Company (WWY) • World’s #1 maker of chewing gum. World famous brands marketed in over 180 countries. • Manufactures & markets chewing gum and other confectionary products. • Factories: 4 in U.S. and 11 abroad • Subsidiary: Amurol Confections--maker of novelty gums and candies, such as Bubble Tape, Everest, Squeeze Pop and Velamints. • 2 Domestically wholly owned associated companies: L.A. Dreyfus Company (gum base) & Northwestern Flavors, LLC (processes flavorings and rectifies mint oil)--both manufacture products other than chewing gum. • Chairman & CEO Bill Wrigley Jr. represents 4th generation of company’s helm.

28. Taste: Juicy Fruit Spearmint Doublemint Extra Oral Care: Orbit White Orbit Freedent Breath-Freshening: Winterfresh Big Red Eclipse Eclipse Flash Wellness: Airwaves Alpine Products

29. Recent News/ Past Performance • CHICAGO, Oct. 26: WWY announced today double-digit volume, sales and earnings growth for the third quarter and the nine months ended September 30, 2004. Earnings per share of $0.56 for the quarter and $1.67 through nine months were up 12% from the year-ago periods on global sales growth of 17% for the quarter and 20% year to date. • Sales increases were driven by worldwide shipment growth of 13% in the quarter and 14% through nine months. • Volume gains reflect solid performance of WWY & impact of Joyco Acquisition. • More International Expansion- Oct 21, 2004: Close down plant made fresh breath film in AZ and move it to Poland because revenue from the breath film in Europe is increasing.

30. International- Joyco Acquisition • Last April 2004: WWY acquired confectionery businesses of the Joyco Group from Agrolimen, a privately held Spanish conglomerate. • Key additions to the Wrigley Company's portfolio of brands will include Boomer bubble gum, Pim Pom lollipops, and Solano candy. • Wrigley will also acquire major sales and production operations in China, India and Spain, smaller commercial operations in France, Italy and Poland, as well as Cafosa, Joyco's gum base business.

31. Recent Performance • Sales for the quarter in North America up 6%- driven by volume growth and positive mix. • U.S.- Orbit and Eclipse were key contributors to sales • Wrigley’s EMEAI Region (particularly Europe) sales were up 25% on strong volume growth. • Asia: Sales up 23% • Consolidated operating profits in quarter grew by 10%, reflecting sales increases in all regions and positive impact of currency (somewhat offset by increased investment in brand support, selling infrastructure, IT, R & D as well as costs of Joyco acquisition.)

32. Recent News • Dividends Declaration: • Oct 26: Wrigley Company declared a regular dividend of $0.235 on each share of Common Stock three-month period beginning February 1, 2005. • Stock Repurchase: Aug 18, 2004: Board of Directors authorized future stock repurchases of up to $300 million. • This new repurchase program will follow the completion of the Share Repurchase Program authorized by the Board in January of this year, under which $60 million remains available for repurchase of company stock. • “The authorization underscores the continued confidence the Board of Directors has in the Company's financial strength and long term business prospects," said Bill Wrigley, Jr., Chairman of the Board, President and CEO.

33. KEY STATISTICS

34. Competitor Comparison

35. Strengths: With acquisition of Joyco, WWY expands to new foreign markets and increases product mix. Exceeded estimated EPS two consecutive quarters Increasing product mix with research and innovation For the nine months ended 9/30/04, revenues rose 20% to $2.69 billion. Net income rose 12% to $376 million. Revenues reflect higher Russia, China and U.S. shipments and improved product mix. Net income was partially offset by higher expenses for increased research. Not much competition Weaknesses: New products? Aside from flavors may not be much technological improvements in the gum business. SWOT Analysis

36. Opportunities: International Expansions with Joyco acquisition (Global revenue up 17% in just one year.) New brand developments Threats: Competition from companies with other big name products in addition to gum. Ex: Hershey’s makes Bubble Yum & Cadbury Adams makes Bubblicious. Only company solely manufactures gum products/ breath strips. SWOT Analysis

37. Future Outlook • Solid company with increasing revenue and net income • Growth potential internationally • Innovations- increased research spending; continue to update product mix • Analyst Recommendations: Analysts estimate growth of 10.8% over the next 5 years as compared to an industry growth of only 8.43%.

38. Questions?