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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NO. I-922
THE GILLETTE COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INCORPORATED IN DELAWARE 04-1366970
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
PRUDENTIAL TOWER BUILDING, BOSTON, MASSACHUSETTS 02199
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 617-421-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE
BOSTON STOCK EXCHANGE
CHICAGO STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
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 X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ((sec.)229.405 of this chapter) is not contained herein,
and will not be contained to the best of registrant's 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. [ ]
The aggregate market value of Gillette Common Stock held by non-affiliates
as of February 29, 2000 was approximately $32,315,000,000.*
The number of shares of Gillette Common Stock outstanding as of February
29, 2000 was 1,054,679,181.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the following documents have been incorporated by
reference into this Form 10-K as indicated:
DOCUMENTS 10-K PARTS
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1. The Gillette Company 1999 Annual Report to Stockholders
(the "1999 Annual Report")............................... Parts I and II
2. The Gillette Company 2000 Proxy Statement (The "2000
Proxy Statement")......................................... Part III
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* This amount does not include the value of 140,312 shares of Series C ESOP
Convertible Preferred Stock issued for $602.875 per share. For purposes of
this calculation only, Gillette Common Stock held by Executive Officers or
directors of the Company has been treated as owned by affiliates.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
The Gillette Company, a Delaware corporation incorporated in 1917, was
founded in 1901 by King C. Gillette, the inventor of the safety razor. Gillette
manufactures and sells a wide variety of consumer products throughout the world.
Gillette's primary businesses are:
- Grooming, which includes male and female wet and dry shaving franchises
and related toiletries.
- Portable Power, including alkaline and specialty batteries.
- Oral Care, including toothbrushes and power-assisted plaque removers.
Gillette also manufactures and sells stationery products and small
household appliances. Gillette has manufacturing operations at 54 facilities in
20 countries and distributes products in over 200 countries and territories.
Grooming
Gillette is the global leader in the Blade and Razor segment of its
business. Its shaving systems include the Mach3(R), SensorExcel(R), Sensor(R),
and Trac II(R) brands, as well as disposable razors brands such as Custom
Plus(R) and Good News(R). The Company is also the world leader in the women's
wet shaving market. Gillette's female shaving systems include Gillette for Women
SensorExcel(R) and Sensor for Women(R) brands. In the second half of 2000,
Gillette expects to unveil a new female shaving system that incorporates
features of the Mach3 brand with features custom-designed for women.
The Company sells electric shavers and electric hair epilators as part of
its Braun Products segment. These products include the world's number one foil
electric shaver for men and electric hair epilator for women. The Toiletries
segment includes deodorants, antiperspirants, shave preparations, and
after-shave products sold under the Gillette(R) Series, Right Guard(R), Soft &
Dri(R), Satin Care(R) and Dry Idea(R) brands.
Portable Power
In the Duracell Products segment, the Company is the global leader in
alkaline batteries, including premium-performing Duracell Ultra(R) batteries, as
well as Duracell(R) batteries, the best-selling brand of alkaline batteries in
the world.
Oral Care
The Company holds the global leadership positions in manual and
power-assisted plaque removal with its Oral-B(R) toothbrushes and Braun(R)
Oral-B plaque removers. The Company also manufactures and sells other oral care
products under the Oral-B brand as part of the Oral-B Products segment of its
business.
Other Products
The Company is a top seller of writing instruments and correction products.
The products in the Stationery Products segment consist of four major brands,
Paper Mate(R), Parker(R), Waterman(R), and Liquid Paper(R). The Company also
produces small household appliances through its Braun Products segment. The
Company is reviewing the strategic alternatives for these businesses. The
Company has reached an agreement to sell its White Rain(R) line of toiletry
products to a third party.
Organizational Changes
During 1999, the Company implemented the reorganization announced in the
fall of 1998, which created both business management and commercial operations
functions. Within commercial operations, which are organized geographically, the
Company established a single commercial unit in each market, responsible for
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selling and trade marketing. In January 2000, the Company further streamlined
its organization by consolidating business management into a single, focused
unit responsible for global strategic marketing, product development,
manufacturing and distribution.
INDUSTRY SEGMENTS
"Operating Segments and Related Information," containing information on net
sales, profit from operations, identifiable assets, capital expenditures and
depreciation for each of the last three years, appears in the Company's 1999
Annual Report at page 33 and is incorporated herein by reference.
DISTRIBUTION
In major geographic markets, Gillette products are sold directly to
retailers and to wholesalers for resale through retail stores. Braun personal
diagnostic appliances and Oral-B products are also sold directly to dental
professionals for distribution to patients. In small geographic markets,
products are distributed through local distributors and sales agents.
PATENTS
Certain of the Company's patents and licenses in the Blade and Razor
segment are of substantial value and importance when considered in the
aggregate. Additionally, the Company holds significant patents in its
Toiletries, Stationery products, Duracell, Braun, and Oral-B businesses. No
patent or license held by the Company is material to the Company's total
business. Gillette has licensed many of its blade and razor patents to other
manufacturers. In all of these categories, Gillette competitors also have
significant patent positions. The patents and licenses held by the Company are
of varying remaining durations.
TRADEMARKS
In general, the Company's principal trademarks have been registered in the
United States and throughout the world where the Company's products are sold.
Gillette products are marketed outside the United States under various
trademarks, many of which are the same as those used in the United States. The
trademark "Gillette" is of principal importance to the Company. In addition, a
number of other trademarks owned by the Company and its subsidiaries have
significant importance within their industries. The Company's rights in these
trademarks endure for as long as they are used or registered.
COMPETITION
All of the Company's markets are highly competitive. Many of the Company's
competitors are larger and have greater resources than the Company. Grooming
products are marked by competition in new technology, as well as by competition
in price, marketing, advertising and promotion to retail outlets and to
consumers. The Company's major competitors worldwide in blades and razors
include Warner-Lambert Company, with its Schick product line and, in North
America and Europe, its Wilkinson Sword product line, and Societe Bic S.A., a
French company. Additional competition in the United States and in certain other
markets is provided by the American Safety Razor Company, Inc. under its own
brands and a number of private label brands, as well as other private label
suppliers. Toiletries is highly competitive in terms of price, product
innovation and market positioning, with frequent introduction of new brands and
marketing concepts, especially for products sold through retail outlets, and
with product life cycles typically shorter than in the other businesses of the
Company. Portable power products compete on the basis of product performance,
innovation, price and in marketing, advertising and promotion. Competition in
oral care products is focused on product performance, price and professional
endorsement. Competition in writing instruments is marked by a high degree of
competition from domestic and foreign suppliers and low entry barriers, and is
focused on a wide variety of factors, including product performance, design and
price, with price an especially important factor in the commercial sector.
Competition in small household appliance products is based primarily on product
performance, innovation and price, with numerous competitors.
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EMPLOYEES
At year-end, Gillette employed approximately 39,800 persons, nearly
three-quarters of them outside the United States.
RESEARCH AND DEVELOPMENT
In 1999, research and development expenditures were $223 million, compared
with $209 million in 1998 and $212 million in 1997.
RAW MATERIALS
The raw materials used by Gillette in the manufacture of products are
purchased from a number of suppliers, and substantially all such materials are
readily available.
OPERATIONS BY GEOGRAPHIC AREA
Net sales and long-lived assets by geographic area for each of the last
three years appear in the 1999 Annual Report at page 34 and are incorporated by
reference.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns and leases manufacturing facilities and other real estate
properties in the United States and a number of foreign countries. The Company's
executive offices are located in the Prudential Center, Boston, Massachusetts,
where it holds a long-term lease. The following table sets forth the Company's
principal plants:
BUSINESS SEGMENT LOCATION OWNED/LEASED
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Blades & Razors Boston, MA (US) Owned
Isleworth, UK Owned
Berlin, Germany Owned
Shanghai, China* Leased
Naucalli, Mexico* Owned
Manaus, Brazil* Owned
Toiletries St. Paul, MN (US)* Owned/Leased
Andover, MA (US) Owned
Reading, UK Owned/Leased
Stationery Santa Monica, CA (US) Leased
Saint Herblain, France Owned/Leased
Braun Kronberg, Germany Owned/Leased
Barcelona, Spain Owned/Leased
Walldurn, Germany Owned/Leased
Marktheidenfeld, Germany Owned
Mexico City, Mexico Owned/Leased
Oral-B Iowa City, IA (US) Owned
Duracell Port Elizabeth, S. Africa Owned
Aarschot, Belgium Owned
Lancaster, SC (US) Owned
LaGrange, GA (US) Owned
Multi-segment packaging Hemel Hempstead, Leased
operations UK Pkg. Ctr
Devens, MA, US Pkg. Ctr Leased
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The above facilities are in good repair, meet the Company's needs adequately and
operate at reasonable levels of production capacity.
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* Engaged in the manufacture of products for two or more business segments.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject, from time to time, to legal proceedings and claims
arising out of its business, which cover a wide range of matters, including
antitrust and trade regulation, product liability, advertising, contracts,
environmental issues, patent and trademark matters and taxes. Management, after
review and consultation with counsel, considers that any liability from all of
these legal proceedings and claims would not materially affect the consolidated
financial position, results of operations or liquidity of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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EXECUTIVE OFFICERS OF REGISTRANT
Information regarding the Executive Officers of the Company as of March 16,
2000 is set out below.
NAME AND CURRENT POSITION FIVE-YEAR BUSINESS HISTORY AGE
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Michael C. Hawley Chairman of the Board and Chief Executive Officer since 62
Chairman of the Board and Chief April 1999; President and Chief Operating Officer, April
Executive Officer 1995 - April 1999; Executive Vice President,
International Group, December 1993 - March 1995
Edward F. DeGraan Executive Vice President, Global Business Management 56
Executive Vice President since January 2000; Executive Vice President, Global
Business Management, Gillette Grooming Products and
Duracell, January 1999 - January 2000; Executive Vice
President, Duracell North Atlantic Group, January 1997 -
December 1998; Senior Vice President, Manufacturing and
Technical Operations, Gillette North Atlantic Group, May
1991 - December 1996
Robert G. King Executive Vice President, Commercial Operations, Western 54
Executive Vice President Hemisphere, since January 1999; Executive Vice
President, Gillette North Atlantic Group, February 1997
-December 1998; Executive Vice President, International
Group, April 1995 - January 1997; Group Vice President -
Latin America, March 1991 - March 1995
Archibald Livis Executive Vice President, Chairman's Office, since 61
Executive Vice President January 2000; Executive Vice President, Global Business
Management, Diversified Group, January 1999 - January
2000; Executive Vice President, Diversified Group, May
1998 - December 1998; Chairman, Braun Board of
Management, October 1993 - April 1998
Jorgen Wedel Executive Vice President, Commercial Operations, Eastern 50
Executive Vice President Hemisphere, since January 1999; Executive Vice
President, International Group since February 1997 -
December 1998; President, Oral-B Laboratories, Inc.,
November 1993 - January 1997
Charles W. Cramb Senior Vice President, Finance and Chief Financial 52
Senior Vice President and Officer since December 1999; Senior Vice President,
Chief Financial Officer Finance, Chief Financial Officer and Principal
Accounting Officer, July 1997 - December 1999; Vice
President and Controller, July 1995 - June 1997; Vice
President, Finance, Planning and Administration,
Diversified Group, October 1992 - June 1995
Robert E. DiCenso Senior Vice President, Personnel and Administration, 58
Senior Vice President since July 1994; Vice President, Investor Relations,
January 1993 - June 1994
Richard K. Willard Senior Vice President, Legal, since November 1999; 51
Senior Vice President Partner, Steptoe & Johnson LLP, 1988 - October 1999
Mark N. Edoff Principal Accounting Officer, since December 1999; 40
Principal Accounting Officer Partner, KPMG LLP, July 1997 - November 1999; Senior
Manager, KPMG LLP, 1991-June 1997
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The Executive Officers hold office until the first meeting of the Board of
Directors following the annual meeting of the stockholders and until their
successors are elected or appointed and qualified, unless a shorter period shall
have been specified by the terms of their election or appointment, or until
their earlier resignation, removal or death.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The information required by this item with respect to the Company's common
stock appears in the 1999 Annual Report on the inside back cover under the
caption, "Common Stock," and at page 34 under the caption, "Quarterly Financial
Information," and is incorporated by reference. As of February 29, 2000, the
record date for the 2000 Annual Meeting, there were 57,340 Gillette stockholders
of record.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item appears in the 1999 Annual Report at
page 35 under the caption, "Historical Financial Summary," and is incorporated
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item appears in the 1999 Annual Report at
pages 13 through 17 under the caption, "Management's Discussion," and is
incorporated by reference.
CAUTIONARY STATEMENT
From time to time, the Company may make statements which constitute or
contain "forward-looking" information as that term is defined within the meaning
of the Federal securities laws. These statements may be identified by such
forward-looking words as "expect," "look," "believe," "anticipate," "may,"
"will" and variations of these words or other forward-looking terminology.
Forward-looking statements made by the Company are not guarantees of future
performance. Actual results may differ materially from those in the
forward-looking statements as the result of risks and uncertainties including
those listed below. The Company assumes no obligation to update any
forward-looking information:
- the pattern of the Company's sales, including variations in sales volume
within periods, which makes forward-looking statements about sales and
earnings difficult and may result in variance of actual results from
those contained in statements made at any time prior to the period's
close;
- vigorous competition within the Company's product markets, including
pricing and promotional, advertising or other activities in order to
preserve or gain market share, the timing of which cannot be foreseen by
the Company;
- the Company's reliance on the development of new products and the
inherent risks associated with new product introductions, including
uncertainty of trade and customer acceptance and competitive reaction;
- the costs and effects of unanticipated legal and administrative
proceedings;
- the impacts of unusual items resulting from ongoing evaluations of
business strategies, asset valuations and organizational structure;
- a substantial portion of the Company's sales having been made outside the
United States, making forecasting of sales more difficult;
- the impact on sales or earnings of fluctuations in exchange rates in one
or more of the Company's geographic markets;
- the ability of the Company to successfully reduce trade inventories to
levels consistent with the changing needs of the more concentrated retail
trade;
- the possibility of one or more of the global markets in which the Company
competes being impacted by variations in political, economic or other
factors, such as inflation rates, recessionary or expansive trends, tax
changes, legal and regulatory changes or other external factors over
which the Company has no control.
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- the effects of rapid technological change on product development,
differentiation, acceptance and costs including technological advances of
competitors;
- the effects of patents including possible new patents granted to
competitors or challenges to Company patents and expiration of patents,
which affect competition and product acceptance.
ITEM 7A. DISCLOSURES CONCERNING MARKET RISK SENSITIVE INSTRUMENTS
The information required by this item appears in the 1999 Annual Report at
page 16 under the caption, "Market Risk," and is incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Financial Statements and Supplementary Data for The Gillette
Company and Subsidiary Companies appear in the 1999 Annual Report at the pages
indicated below and are incorporated by reference.
(1) Independent Auditors' Report................................ Page 18
(2) Consolidated Statement of Income for the Years Ended
December 31, 1999, 1998 and 1997............................ Page 19
(3) Consolidated Balance Sheet at December 31, 1999 and 1998.... Page 20
(4) Consolidated Statement of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997............................ Page 21
(5) Consolidated Statement of Stockholders' Equity for the
periods ended December 31, 1999, 1998 and 1997.............. Page 22
(6) Notes to Consolidated Financial Statements.................. Pages 23
through 34
(7) Computation of per share earnings........................... Pages 19, 23,
24, 34 and 35
(8) Quarterly Financial Information............................. Page 34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information required by this item with respect to the Directors of the
Company appears in the 2000 Proxy Statement at pages 2 through 4 and at pages 7
and 8, under the caption "Company Transactions with Directors and Officers," and
at page 18 under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance," the texts of which are incorporated by reference.
The information required for Executive Officers of the Company appears at
the end of Part I of this report at page 5.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item appears in the 2000 Proxy Statement
at pages 8 through 17 under the captions "Compensation of Non-Employee
Directors", "Personnel Committee Report on Executive Compensation", "Gillette
Comparative Five-Year Investment Performance", and "Executive Compensation" and
is incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item concerning the security ownership of
certain beneficial owners and management appears in the 2000 Proxy Statement at
pages 6 and 7 under the caption "Stock Ownership of Five Percent Beneficial
Owners and Management" and is incorporated by reference.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item appears in the 2000 Proxy Statement
at pages 7 and 8 under the caption "Company Transactions with Directors and
Officers" and is incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
A. FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
FINANCIAL STATEMENTS
The following appear in the 1999 Annual Report at the pages indicated below
and are incorporated into Part II by reference.
(1) Independent Auditor's Report................................ Page 18
(2) Consolidated Statement of Income for the Years Ended
December 31, 1999, 1998 and 1997............................ Page 19
(3) Consolidated Balance Sheet at December 31, 1999 and 1998.... Page 20
(4) Consolidated Statement of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997............................ Page 21
(5) Consolidated Statement of Stockholders' Equity for the
periods ended December 31, 1999, 1998 and 1997.............. Page 22
(6) Notes to Consolidated Financial Statements.................. Pages 23
through 34
(7) Computation of per share earnings........................... Pages 19, 23,
24, 34 and 35
SCHEDULES
The following schedule appears at page 13 of this report:
II. Valuation and Qualifying Accounts
Schedules other than those listed above are omitted because they are either
not required or not applicable.
EXHIBITS
3(a) Composite Certificate of Incorporation of The Gillette
Company, as amended, filed as Exhibit 3(i) to The Gillette
Company Quarterly Report on Form 10-Q for the period ended
March 31, 1998, Commission File No. 1-922, incorporated by
reference herein.
(b) The Bylaws of The Gillette Company, as amended March 16,
2000 filed herewith.
4 Instruments Defining the Rights of Security Holders,
Including Indentures.
(a) Specimen of form of certificate representing ownership of
The Gillette Company Common Stock, $1.00 par value,
effective December 10, 1996, filed as Exhibit 4(a) to The
Gillette Company Annual Report on Form 10-K for the year
ended December 31, 1996, Commission File No. 1-922,
incorporated by reference herein.
(b) Form of Certificate of Designation, Preferences and Rights
of Series A Junior Participating Preferred Stock of the
Gillette Company filed as Exhibit A to Exhibit 1 to The
Gillette Company Current Report on Form 8-K, dated December
30, 1985, Commission File No. 1-911, incorporated by
reference as Exhibit 4(c) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 1996,
Commission File No. 1-922, incorporated by reference herein.
(c) Amendment to Certificate of Designations, Preferences and
Rights of Series A Junior Participating Preferred Stock
dated December 9, 1996, filed as Exhibit 4(c) to The
Gillette Company Annual Report on Form 10-K for the year
ended December 31, 1996, File No. 1-922, incorporated by
reference herein.
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(d) Renewed Rights Agreement dated as of December 14, 1995
between The Gillette Company and The First National Bank of
Boston, filed as Exhibit 4 to The Gillette Company Current
Report on Form 8-K, dated December 18, 1995, Commission File
No. 1-911, incorporated by reference herein.
(e) Certificate of Designation of the Series C ESOP Convertible
Preferred Stock of The Gillette Company, dated January 17,
1990, filed as Exhibit 4(e) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 1989,
Commission File No. 1-922, incorporated by reference herein.
(f) Certificate of Amendment relating to an increase in the
amount of authorized shares of preferred stock and common
stock, filed as Exhibit 3(i) to The Gillette Company
Quarterly Report on Form 10-Q for the period ended March 31,
1998, Commission File No. 1-922, incorporated by reference
herein.
(g) Form of $150,000,000 6.25% note due August 15, 2003, issued
pursuant to Registration Statement No. 33-54974 of The
Gillette Company, filed November 24, 1992, as amended May
14, 1993 and June 24, 1993 and the Trust Indenture filed
therewith as Exhibit 4.1, filed as part of Exhibit 4(f) to
The Gillette Company Annual Report on Form 10-K for the year
ended December 31, 1993, Commission File No. 1-922,
incorporated by reference herein.
(h) Form of $150,000,000 and $50,000,000 5.75% notes due October
15, 2005, issued pursuant to Registration Statement No.
33-50303 of The Gillette Company, filed September 17, 1993
and the Trust Indenture filed as Exhibit 4.1 to Registration
Statement No. 3354974 of The Gillette Company, as amended
May 14, 1993 and June 24, 1993, filed as part of Exhibit
4(f) to The Gillette Company Annual Report on Form 10-K for
the year ended December 31, 1993, Commission File No. 1-922,
incorporated by reference herein.
The Company has issued non-registered debt instruments
copies of which will be furnished to the Commission upon
request.
10 Material Contracts
*(a) The Gillette Company 1971 Stock Option Plan, as amended,
filed herewith.
*(b) The Gillette Company Stock Equivalent Unit Plan, as amended,
filed herewith.
*(c) The Gillette Company Incentive Bonus Plan, as amended, filed
herewith.
*(d) The Gillette Company Executive Life Insurance Program, filed
as Exhibit 10(d) to The Gillette Company Annual Report on
Form 10-K for the year ended December 31, 1997, incorporated
by reference herein.
(e) Directors and Officers and Company Liability Policy and
Fiduciary Liability Insurance policy, filed herewith.
*(f) Description of Conversion of Outside Directors' Vested
Pension Benefit into Deferred Stock Units, as amended, filed
herewith.
*(g) The Gillette Company Deferred Compensation Plan for Outside
Directors, filed as Exhibit 10(g) to The Gillette Company
Annual Report on Form 10-K for the year ended December 31,
1996, Commission File No. 1-922, incorporated by reference
herein.
*(h) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Michael C. Hawley, filed herewith.
*(i) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Edward F. DeGraan, filed herewith.
*(j) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Robert G. King, filed herewith.
*(k) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Archibald Livis, filed herewith.
*(l) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Jorgen Wedel, filed herewith.
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*(m) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Charles W. Cramb, filed herewith.
*(n) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Robert E. DiCenso, filed herewith.
*(o) Employment Agreement, dated December 16, 1999, between The
Gillette Company and Richard K. Willard, filed herewith.
*(p) The Gillette Company Change of Control Severance Program for
Key Executives, filed herewith.
*(q) Letter Agreement Re: Estate Preservation Plan II dated May
27, 1999, between The Gillette Company and Alfred M. Zeien,
filed herewith.
(r) Letter Agreement, dated July 20, 1989, between The Gillette
Company and Berkshire Hathaway Inc., filed as Exhibit 4(a)
to The Gillette Company Current Report on Form
8-K, dated July 20, 1989, Commission File No. 1-922,
incorporated by reference herein.
*(s) Description of agreement between The Gillette Company and
Robert J. Murray, effective January 1, 1996, filed as
Exhibit 10(l) to The Gillette Company Annual Report on Form
10-K for the year ending December 31, 1995, Commission File
No. 1-922, incorporated by reference herein.
*(t) Description of The Gillette Company Estate Planning Program,
filed as Exhibit 10(o) to The Gillette Company Annual Report
on Form 10-K for the year ended December 31, 1993,
Commission File No. 1-922, incorporated by reference herein.
*(u) The Gillette Company Estate Preservation Plan, filed as
Exhibit 10(1) to The Gillette Company Annual Report on Form
10-K for the year ended December 31, 1997, incorporated by
reference herein.
*(v) The Gillette Company Supplemental Retirement Plan, as
amended, filed herewith.
*(w) The Gillette Company Supplemental Savings Plan, as amended,
filed herewith.
(x) Multi-year Credit Agreement dated as of December 20, 1996,
among The Gillette Company, Morgan Guaranty Trust Company of
New York, as agent, and a syndicate of domestic and foreign
banks, filed as Exhibit 10(o) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 1996,
Commission File No.
1-922, incorporated by reference herein.
(y) $2,335,000,000 364-Day Credit Agreement dated as of December
20, 1996, and amended and restated as of October 20, 1997,
October 19, 1998, October 18, 1999, and supplemental as of
March 24, 2000 among The Gillette Company, Morgan Guaranty
Trust Company of New York, as agent and a syndicate of
domestic and foreign banks, filed herewith.
(z) Registration Rights Agreement dated as of September 12, 1996
among The Gillette Company, KKR Partners II, L.P. and DI
Associates, L.P., filed as Exhibit 10.2 to The Gillette
Company Current Report on Form 8-K filed September 16, 1996,
Commission File No. 1-922, incorporated by reference herein.
12 Computation of the ratios of current assets to current
liabilities for the years 1999, 1998 and 1997, filed
herewith.
13 Portions of the 1999 Annual Report to Stockholders of The
Gillette Company incorporated by reference in this Form
10-K, filed herewith.
22 List of subsidiaries of The Gillette Company, filed
herewith.
23 Independent Auditors' Consent, filed herewith.
24 Power of Attorney, filed herewith.
27 Financial Data Schedule (not considered to be filed).
- ---------------
* Filed pursuant to Item 14(c).
11
13
B. REPORTS ON FORM 8-K
A report on Form 8-K was filed on November 8, 1999, which announced the
Company's third-quarter results, an expansion of the stock repurchase program
and a program to reduce trade inventories.
OTHER MATTERS
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into the following Registration Statements of the
registrant on Form S-8 (1) No. 33-27916, filed April 10, 1989, and amended
thereafter, which incorporates by reference therein Registration Statements on
Form S-8 Nos. 2-90276, 2-63951 and 1-50710, and all amendments thereto, all
relating to shares issuable and deliverable under The Gillette Company 1971
Stock Option Plan and 1974 Stock Purchase Plan and on Form S-7 No. 2-41016
relating to shares issuable and deliverable under The Gillette Company 1971
Stock Option Plan; (2) No. 33-9495, filed October 20, 1986, and all amendments
thereto, relating to shares and plan interests in The Gillette Company
Employees' Savings Plan; (3) No. 2-93230, filed September 12, 1984, and all
amendments thereto, relating to shares and plan interests in the Oral B
Laboratories Savings Plan; (4) No. 33-56218, filed December 23, 1992, relating
to shares and plan interests in The Gillette Company Employees' Savings Plan;
(5) No. 33-52465, filed March 1, 1994, and all amendments thereto, relating to
shares issuable and deliverable under The Gillette Company Global Employee Stock
Ownership Plan; (6) No. 33-53257, filed April 25, 1994, and all amendments
thereto, relating to shares issuable and deliverable under The Gillette Company
Outside Director's Stock Ownership Plan; (7) No. 33-53258, filed April 25, 1994,
and all amendments thereto, relating to shares issuable and deliverable under
The Gillette Company 1971 Stock Option Plan; (8) No. 33-59125, filed May 5,
1995, and all amendments thereto, relating to shares and plan interests in The
Gillette Company Employees' Savings Plan; (9) No. 33-63707 filed October 26,
1995, and all amendments thereto, relating to shares and plan interests in the
Parker Pen 401(K) Plan; (10) No. 333-19133 filed December 31, 1996, and all
amendments thereto, relating to shares issuable and deliverable under the
Duracell Shares Plan and Stock Option Plan for Key Employees of Duracell
International Inc. and Subsidiaries and (11) No. 333-25533 filed April 21, 1997,
and all amendments thereto, relating to shares issuable and deliverable under
The Gillette Company 1971 Stock Option Plan.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event a claim for indemnification against such liabilities (other than the
payments by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
12
14
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
of THE GILLETTE COMPANY:
Under date of February 11, 2000, we reported on the consolidated balance
sheet of The Gillette Company and subsidiary companies as of December 31, 1999
and 1998, and the related consolidated statements of income, cash flows and
stockholders' equity for each of the years in the three-year period ended
December 31, 1999, as contained in the 1999 Annual Report to Stockholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the year 1999. In connection
with our audits of the aforementioned consolidated financial statements, we also
audited the financial statement schedule on page 13 of this report. The
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Boston, Massachusetts
February 11, 2000
13
15
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(MILLIONS OF DOLLARS)
ADDITIONS DEDUCTIONS
---------------------- ----------
CHARGED LOSSES
BALANCE AT TO CHARGED BALANCE AT
BEGINNING PROFIT CHARGED TO TO END OF
DESCRIPTION OF YEAR AND LOSS OTHER RESERVES YEAR
----------- ---------- -------- ---------- -------- ----------
1999
- -----
Reserves deducted from assets:
Receivables....................... $79 $50 -- $55 $74
=== === === === ===
1998
- -----
Reserves deducted from assets:
Receivables....................... $74 $43 -- $38 $79
=== === === === ===
1997
- -----
Reserves deducted from assets:
Receivables....................... $81 $42 -- $49 $74
=== === === === ===
14
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE GILLETTE COMPANY
(Registrant)
By CHARLES W. CRAMB
------------------------------------
Charles W. Cramb
Senior Vice President and Chief
Financial Officer
Date: March 30, 2000
Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
---------- ----- ----
* MICHAEL C. HAWLEY Chairman of the Board March 30, 2000
- ----------------------------------------------------- of Directors, Chief Executive Officer
Michael C. Hawley and Director
* CHARLES W. CRAMB Senior Vice President March 30, 2000
- ----------------------------------------------------- and Chief Financial Officer
Charles W. Cramb
* MARK N. EDOFF Principal Accounting Officer March 30, 2000
- -----------------------------------------------------
Mark N. Edoff
* WARREN E. BUFFETT Director March 30, 2000
- -----------------------------------------------------
Warren E. Buffett
* WILBUR H. GANTZ Director March 30, 2000
- -----------------------------------------------------
Wilbur H. Gantz
* MICHAEL B. GIFFORD Director March 30, 2000
- -----------------------------------------------------
Michael B. Gifford
* CAROL R. GOLDBERG Director March 30, 2000
- -----------------------------------------------------
Carol R. Goldberg
* DENNIS F. HIGHTOWER Director March 30, 2000
- -----------------------------------------------------
Dennis F. Hightower
* HERBERT H. JACOBI Director March 30, 2000
- -----------------------------------------------------
Herbert H. Jacobi
* HENRY R. KRAVIS Director March 30, 2000
- -----------------------------------------------------
Henry R. Kravis
* JORGE PAULO LEMANN Director March 30, 2000
- -----------------------------------------------------
Jorge Paulo Lemann
* RICHARD R. PIVIROTTO Director March 30, 2000
- -----------------------------------------------------
Richard R. Pivirotto
* ALEXANDER B. TROWBRIDGE Director March 30, 2000
- -----------------------------------------------------
Alexander B. Trowbridge
* MARJORIE M. YANG Director March 30, 2000
- -----------------------------------------------------
Marjorie M. Yang
* ALFRED M. ZEIEN Director March 30, 2000
- -----------------------------------------------------
Alfred M. Zeien
*By CHARLES W. CRAMB
---------------------------------------------------
Charles W. Cramb
as Attorney-In-Fact
15