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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, 1993
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
(Exact name of registrant as specified in its charter)
INCORPORATED IN DELAWARE 04-1366970
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
PRUDENTIAL TOWER BUILDING, BOSTON, MASSACHUSETTS 02199
(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
MIDWEST 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 March 1, 1994 was approximately $11,906,000,000.*
The number of shares of Gillette Common Stock outstanding as of March 1,
1994 was 220,979,835.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the following documents have been incorporated by
reference into the 10-K Parts indicated:
DOCUMENTS 10-K PARTS
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1. The Gillette Company 1993 Annual Report to Stockholders (The "1993
Annual Report")............................................................ Parts I and II
2. The Gillette Company 1994 Proxy Statement (The "1994 Proxy Statement")..... Part III
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* This amount does not include the value of 164,216.1969 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 was incorporated under the laws of the State of
Delaware in 1917 as the successor of a Massachusetts corporation incorporated in
1912 which corporation was the successor of a Maine corporation organized in
1901 by King C. Gillette, inventor of the safety razor.
A description of the Company and its businesses appears in the 1993 Annual
Report on the inside of the front cover and at pages 3 through 5 under the
caption "Letter to Stockholders" and at page 42 under the caption "Principal
Divisions and Subsidiaries," the texts of which are incorporated by reference.
See also Item 7, Management's Discussion.
BUSINESS SEGMENTS
The approximate percentages of consolidated net sales and segment profit
from operations during the last five years for each of the Company's business
segments appear in the 1993 Annual Report at page 39 under the caption,
"Business Segments," and are incorporated by reference.
"Financial Information by Business Segment," and "Segment and Area
Commentary" containing information on net sales, profit from operations,
identifiable assets, capital expenditures and depreciation for each of the last
three years, appear in the 1993 Annual Report at page 37 and are incorporated by
reference.
The Company's businesses range across several industry segments, including
blades and razors, toiletries and cosmetics, stationery products, electric
shavers, small household appliances, hair care appliances, oral care appliances
and oral care products. Descriptions of those businesses appear in the 1993
Annual Report at pages 6 through 15, the text of which is incorporated by
reference.
DISTRIBUTION
In the Company's major markets, traditional Gillette product lines are sold
to wholesalers, chain stores and large retailers and are resold to consumers
primarily through food, drug, discount, stationery, tobacco and department
stores. Jafra skin care products are sold directly to consumers by independent
consultants, primarily at classes in the home. Waterman and Parker products are
sold to wholesalers and retailers and are resold to consumers through fine
jewelry, fine stationery and department stores, pen specialists and other retail
outlets. Braun products are sold to wholesalers and retailers and are resold to
consumers mainly through department, discount, catalogue and specialty stores.
In many small Gillette International and Braun markets, products are distributed
through local distributors and sales agents. Oral-B products are marketed
directly to dental professionals for distribution to patients and also are sold
to wholesalers, chain stores and large retailers for resale to consumers through
food, drug and discount stores.
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 the toiletries
and cosmetics, writing instruments and Braun business segments. No patent or
license held by the Company is considered to be of material importance when
judged from the standpoint of the Company's total business. Gillette has
licensed many of its blade and razor patents to other manufacturers. In all
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
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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 business segments. The
Company's rights in these trademarks endure for as long as they are used or
registered.
COMPETITION
The blades and razors segment is marked by competition in product
performance, innovation and price, as well as by competition in marketing,
advertising and promotion to retail outlets and to consumers. The Company's
major competitors worldwide are Warner-Lambert Company, with its Schick and
Wilkinson Sword (in North America and Europe) product lines, and Societe Bic
S.A., a French company. Additional competition in the United States is provided
by the American Safety Razor Company, Inc. under its own brands and a number of
private label brands. The toiletries and cosmetic segment 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 business segments of the Company. Competition in the stationery
products segment, particularly in the writing instruments market, 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 the electric shaver, small household, hair
care and oral care appliances segments is based primarily on product
performance, innovation and price, with numerous competitors in the small
household and hair care appliances segments. Competition in the oral care
product segment is focused on product performance, price and dental profession
endorsement.
EMPLOYEES
At year-end, Gillette employed 33,400 persons, three-quarters of them
outside the United States.
RESEARCH AND DEVELOPMENT
In 1993, research and development expenditures were $133.1 million,
compared with $123.8 million in 1992 and $108.9 million in 1991.
RAW MATERIALS
The raw materials used by Gillette in the manufacture of products are
purchased from a number of outside suppliers, and substantially all such
materials are readily available.
OPERATIONS BY GEOGRAPHIC AREA
The following table indicates the geographic sources of consolidated net
sales and profit from operations of the Company for the last three years:
1993 1992 1991
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NET NET NET
SALES PROFIT SALES PROFIT SALES PROFIT
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United States......................... 33% 29% 31% 30% 32% 31%
Foreign............................... 67% 71% 69% 70% 68% 69%
"Financial Information by Geographic Area" and "Segment and Area
Commentary" containing information on net sales, profit from operations and
identifiable assets for each of the last three years appear in the 1993 Annual
Report under the same captions at page 37 and are incorporated by reference.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns and leases manufacturing facilities and other important
properties in the United States and abroad consisting of approximately
14,041,000 square feet of floor space, of which 76%, or about 10,690,000 square
feet, is devoted to the Company's principal manufacturing operations.
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Additional premises, such as sales and administrative offices, research
laboratories, and warehouse, distribution and other manufacturing facilities
account for about 24% of Gillette's principal property holdings, or about
3,370,000 square feet. Gillette's executive offices are located in the
Prudential Center, Boston, Massachusetts, where the Company holds a long-term
lease covering approximately 300,000 square feet.
In the United States, Gillette's principal manufacturing facilities consist
of the following:
APPROXIMATE
AREA
BUSINESS SEGMENT LOCATION (SQUARE FEET)
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Blades and Razors Boston, Massachusetts 1,450,000
Toiletries and Cosmetics Andover, Massachusetts 593,000
St. Paul, Minnesota 833,000
Westlake Village,
California 181,000
Stationery Products Santa Monica, California 320,000
Janesville, Wisconsin 215,000
Oral-B Products Iowa City, Iowa 258,000
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Total 3,850,000
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Approximately 84% of these U.S. manufacturing facilities and the land they
occupy are owned by Gillette. The Santa Monica property is leased in its
entirety and 308,000 square feet of the St. Paul facility is located on leased
land.
Foreign manufacturing subsidiaries of Gillette, excluding Braun and Oral-B,
operate plants with an aggregate of approximately 4.7 million square feet of
floor space, about 87% of which is on land owned by Gillette. Many of the
international facilities are engaged in the manufacture of products from two or
more of the Company's major business segments.
Braun's executive offices are located in Kronberg, Germany, and the
locations and approximate areas of its principal manufacturing facilities are as
follows:
APPROXIMATE
AREA
(SQUARE
LOCATION FEET)
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Germany (3 facilities)............................ 1,200,000
Spain............................................. 400,000
Ireland........................................... 200,000
Mexico............................................ 300,000
France............................................ 30,000
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Total................................... 2,130,000
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Approximately 85% of these facilities and 94% of the land they occupy are
owned by Braun.
Oral-B's executive offices are in leased space in Redwood City, California.
In addition to its Iowa City plant, it owns or leases approximately 200,000
square feet of manufacturing facilities in four countries outside the United
States.
Miscellaneous manufacturing operations in North Chicago, Illinois and other
locations account for approximately 80,000 square feet.
The above facilities are in good repair, adequately meet the Company's
needs and operate at reasonable levels of production capacity.
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ITEM 3. LEGAL PROCEEDINGS
The Company is subject to legal proceedings and claims arising out of its
business, which cover a wide range of matters, including antitrust and trade
regulation, product liability, 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 or
results of operations of the Company.
The previously reported class action titled In re Gillette Securities
Litigation filed in the Federal District Court in Boston has been settled
subject to the final approval of the court. The previously reported derivative
action titled Albert B. Evans v. Colman M. Mockler, Jr., et al. filed in the
same court has been dismissed with prejudice.
The previously reported environmental suits filed in the Federal District
Court in Boston titled United States v. Charles George Trucking Company, Inc.,
et al. and Commonwealth of Massachusetts v. Charles George Trucking Company,
Inc., et al. have been settled and consent decrees have been entered. Certain
parties have appealed the settlements.
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 17,
1994 is set out below.
NAME AND CURRENT POSITION FIVE-YEAR BUSINESS HISTORY AGE
------------------------- -------------------------- ---
Alfred M. Zeien Chairman of the Board and Chief Executive Officer 64
Chairman of the Board and Chief since February 1991; President and Chief
Executive Officer Operating Officer, January 1991 - February 1991;
Vice Chairman of the Board,
International/Diversified Operations, November
1987 - January 1991
Joseph E. Mullaney Vice Chairman of the Board since November 1990; 60
Vice Chairman of the Board Senior Vice President, Legal, April 1977 -
November 1990; Vice President, September 1973 -
April 1977; General Counsel, September 1973 -
September 1990
Jacques Lagarde Executive Vice President, Diversified Group since 55
Executive Vice President October 1993; Vice President, February 1990 -
September 1993; Chairman, Board of Management,
Braun AG, February 1990 - September 1993; Deputy
Chairman, Board of Management, Braun AG, July
1989 - January 1990; President, Oral-B
Laboratories, Inc., November 1985 - June 1989
Michael C. Hawley Executive Vice President, International Group 55
Executive Vice President since December 1993; President, Oral-B
Laboratories, Inc., May 1989 - November 1993;
Vice President, Administrative Services, January
1989 - April 1989
Robert J. Murray Executive Vice President, North Atlantic Group 52
Executive Vice President since January 1991; Vice President, October
1987 - January 1991; Chairman, Board of
Management, Braun AG, November 1985 - January
1990
William J. McMorrow Senior Vice President, Administration since 62
Senior Vice President December 1987
Thomas F. Skelly Senior Vice President, Finance since May 1980 60
Senior Vice President
Anthony S. Lucas Vice President since July 1983; Controller since 61
Vice President and Controller June 1980
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 respectively 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.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The information required by this item appears in the 1993 Annual Report on
the inside back cover and at page 39 under the caption, "Quarterly Financial
Information," and is incorporated by reference. As of March 1, 1994, the record
date for the 1994 Annual Meeting, there were 29,067 Gillette stockholders of
record.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item appears in the 1993 Annual Report at
pages 40 and 41 under the caption, "Historical Financial Summary," and is
incorporated by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item appears in the 1993 Annual Report at
pages 23 through 25 under the caption, "Management's Discussion," 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 1993 Annual Report at the pages
indicated below and are incorporated by reference.
(1) Independent Auditors' Report..................................... Page 38
(2) Consolidated Statement of Income and Earnings Reinvested in the
Business for the Years Ended December 31, 1993, 1992 and 1991.... Page 26
(3) Consolidated Balance Sheet at December 31, 1993 and 1992......... Page 27
(4) Consolidated Statement of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991................................. Page 28
(5) Notes to Consolidated Financial Statements....................... Pages 29
through 37
(6) Quarterly Financial Information.................................. Page 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
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 1994 Proxy Statement at pages 1 through 4, at page 7
under the caption "Certain Transactions with Directors and Officers" and at page
24 under the caption "Compliance with Section 16(a) of the Exchange Act," 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 1994 Proxy Statement
at page 8 under the caption "Compensation of Directors" and at pages 11 through
17 under the captions "Compensation of Chief Executive Officer" 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 1994 Proxy Statement at
pages 6 through 7 under the caption, "Stock Ownership of Certain Beneficial
Owners and Management," and is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item appears in the 1994 Proxy Statement
at page 7 under the caption "Certain Transactions with Directors and Officers"
and at page 8 under the caption "Compensation of Directors" and is incorporated
by reference.
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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 1993 Annual Report at the pages indicated below
and are incorporated into Part II by reference.
(1) Independent Auditors' Report..................................... Page 38
(2) Consolidated Statement of Income and Earnings Reinvested in the
Business for the Years Ended December 31, 1993, 1992 and 1991.... Page 26
(3) Consolidated Balance Sheet at December 31, 1993 and 1992......... Page 27
(4) Consolidated Statement of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991................................. Page 28
(5) Notes to Consolidated Financial Statements....................... Pages 29
through 37
SCHEDULES
The following schedules appear at pages 11 through 15 of this report:
V. Property, Plant and Equipment
VI. Accumulated Depreciation and Obsolescence of Property, Plant and Equipment
VIII. Valuation and Qualifying Accounts
IX. Short-Term Borrowings
X. Supplementary Income Statement Information
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(a) to The Gillette Company Annual Report on Form 10-K
for the year ended December 31, 1989, Commission File No. I-922,
incorporated by reference herein.
(b) The Bylaws of The Gillette Company, as amended April 15, 1993, filed as
Exhibit 3(b) to the Gillette Company Quarterly Report on Form 10-Q for the
period ended March 31, 1993, incorporated by reference herein.
4(a) Specimen of form of certificate representing ownership of The Gillette
Company Common Stock, $1.00 par value, as adopted by the Board of Directors
of the Company on December 15, 1977, filed as Exhibit 4(a) to The Gillette
Company Annual Report on Form 10-K for the year ended December 31, 1986,
Commission File No. I-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. I-911, incorporated by
reference herein.
(c) Rights Agreement dated as of November 26, 1986, and amended and restated as
of January 17, 1990, between The Gillette Company and The First National
Bank of Boston, filed as Exhibit 1 to The Gillette Company Form 8, dated
January 18, 1990, incorporated by reference herein.
(d) 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. I-922, incorporated by reference herein.
(e) Certificate of Amendment relating to an increase in the amount of
authorized shares of preferred stock and common stock, filed as Exhibit
3(e) to The Gillette Company Annual Report on Form 10-K for the year ended
December 31, 1991, Commission File No. I-922, incorporated by reference
herein.
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(f) Instruments relating to long-term debt.
Credit agreement dated August 19, 1988, amended and restated as of October
16, 1989, and amended as of December 10, 1990 among The Gillette Company
and a group of United States and international banks, filed as Exhibit 4(f)
to The Gillette Company Annual Report on Form 10-K for the year ended
December 31, 1990, Commission File No. I-922, incorporated by reference
herein.
Form of $150,000,000 4.75% note due August 15, 1996 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 filed herewith, and the
Trust Indenture filed therewith as Exhibit 4.1, incorporated by reference
herein.
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 filed herewith, and the
Trust Indenture filed therewith as Exhibit 4.1, incorporated by reference
herein.
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 filed herewith, and the Trust Indenture
filed as Exhibit 4.1 to Registration Statement No. 33-54974 of The Gillette
Company, as amended May 14, 1993 and June 24, 1993, incorporated by
reference herein.
(Others not filed, but the registrant agrees to file a copy of such
instruments upon the request of the Securities and Exchange Commission.)
10 Material Contracts
*(a) The Gillette Company 1971 Stock Option Plan, as amended, subject to the
approval of the stockholders at their annual meeting on April 21, 1994,
filed herewith.
*(b) The Gillette Company Stock Equivalent Unit Plan, as amended, subject to the
approval of the stockholders at their annual meeting on April 21, 1994,
filed herewith.
*(c) The Gillette Company Incentive Bonus Plan, as amended, filed herewith.
*(d) The Gillette Company Outside Directors' Stock Ownership Plan, subject to
the approval of the stockholders at their annual meeting on April 21, 1994,
filed herewith.
*(e) Description of 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, 1991, Commission File No. I-922, incorporated by
reference herein.
(f) Directors and Officers and Company Reimbursement Indemnity Insurance and
Pension and Welfare Fund Fiduciary Responsibility Insurance policy, filed
herewith.
*(g) The Retirement Plan for Directors of The Gillette Company, as amended,
filed as Exhibit 10(f) to The Gillette Company Annual Report on Form 10-K
for the year ended December 31, 1987, Commission File No. I-922,
incorporated by reference herein.
*(h) The Deferred Compensation Plan for Directors of The Gillette Company, as
amended, filed herewith.
(i) Stock Purchase Agreement dated November 24, 1986, between The Gillette Com-
pany and a group of entities consisting of Revlon Group Incorporated,
MacAndrews & Forbes, Incorporated and certain of their affiliates, filed as
Exhibit No. 28.2 to The Gillette Company Current Report on Form 8-K dated
November 24, 1986, Commission File No. I-922, incorporated by reference
herein.
*(j) Description of severance pay and benefit arrangements for employees in the
event of a change in control, filed as Exhibit 10(j) to The Gillette
Company Annual Report on Form 10-K for the year ending December 31, 1989,
Commission File No. I-922, incorporated by reference herein.
(k) 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. I-922,
incorporated by reference herein.
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*(l) Description of agreement between The Gillette Company and Gaston R. Levy
dated December 27, 1993, filed herewith.
*(m) Description of agreement between The Gillette Company and Lorne R. Waxlax
dated September 30, 1993, filed herewith.
*(n) Description of The Gillette Company Estate Preservation Plan, filed
herewith.
*(o) Description of The Gillette Company Estate Planning Program, filed
herewith.
11 Computation of per share earnings, filed herewith.
13 Portions of the 1993 Annual Report to Stockholders of The Gillette Company
incorporated by reference in this Form 10-K.
22 List of subsidiaries of The Gillette Company, filed herewith.
23 Independent Auditors' Consent.
24 Power of Attorney.
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* Filed pursuant to Item 14(c).
B. REPORTS ON FORM 8-K
There were no reports on Form 8-K filed by the Company during the last
quarter of the period covered by this report.
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;
and (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.
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.
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INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
of The Gillette Company:
Under date of January 27, 1994, we reported on the consolidated balance
sheet of The Gillette Company and subsidiary companies as of December 31, 1993
and 1992, and the related consolidated statements of income and earnings
reinvested in the business and cash flows for each of the years in the
three-year period ended December 31, 1993, as contained in the 1993 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 1993. In connection with our audits of the aforementioned consolidated
financial statements, we also have audited the related financial statement
schedules listed on page 7 of this report. These financial statement schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK
Boston, Massachusetts
January 27, 1994
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THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(MILLIONS OF DOLLARS)
BALANCE RETIRE- OTHER BALANCE
AT MENTS CHANGES AT
BEGINNING ADDITIONS OR ADD END OF
CLASSIFICATION OF YEAR AT COST SALES (DEDUCT) YEAR
-------------- ------- --------- ------- -------- -------
1993
$ 1.6 (A)
Land............................. $ 28.2 $ .4 $ .1 (.9)(B) $ 29.9
.7 (C)
10.8 (A)
Buildings........................ 388.7 34.0 2.1 (24.1)(B) 420.5
13.2 (C)
(12.4)(A)
Machinery and equipment.......... 1,996.7 317.6 74.4 (129.0)(B) 2,125.5
27.0 (C)
-------- ------ ------ -------- --------
Total....................... $2,413.6 $352.0 $ 76.6 $ (113.1) $2,575.9
-------- ------ ------ -------- --------
-------- ------ ------ -------- --------
1992
$ -- (A)
Land............................. $ 24.7 $ 2.0 $ .1 .2 (B) $ 28.2
1.4 (C)
5.0 (A)
Buildings........................ 328.7 41.1 3.9 12.8 (B) 388.7
5.0 (C)
(5.0)(A)
Machinery and equipment.......... 1,771.6 278.3 101.0 46.0 (B) 1,996.7
6.8 (C)
-------- ------ ------ -------- --------
Total....................... $2,125.0 $321.4 $105.0 $ 72.2 $2,413.6
-------- ------ ------ -------- --------
-------- ------ ------ -------- --------
1991
$ -- (A)
Land............................. $ 20.2 $ 5.7 $ .6 (.7)(B) $ 24.7
.1 (C)
.1 (A)
Buildings........................ 319.8 21.5 3.8 (9.5)(B) 328.7
.6 (C)
(.1)(A)
Machinery and equipment.......... 1,646.1 258.8 67.5 (70.8)(B) 1,771.6
5.1 (C)
-------- ------ ------ -------- --------
Total....................... $1,986.1 $286.0 $ 71.9 $ (75.2) $2,125.0
-------- ------ ------ -------- --------
-------- ------ ------ -------- --------
- ---------------
(A) -- Transfers between accounts.
(B) -- Foreign currency exchange fluctuations from beginning of year to end of
year.
(C) -- Acquisitions.
11
13
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND OBSOLESCENCE OF
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
ADDITIONS
CHARGED
TO BALANCE
BALANCE AT PROFIT OTHER AT
BEGINNING AND RETIREMENTS CHANGES END OF
DESCRIPTION OF YEAR LOSS OR SALES ADD (DEDUCT) YEAR
--------- --------- ---------- ------------ ---------
1993
$ 3.2 (A)
Buildings..................... $ 164.3 $ 14.7 $ .8 (10.3)(B) $ 171.1
(3.2)(A)
Machinery and equipment....... 1,173.9 174.3 65.0 (89.7)(B) 1,190.3
-------- ------- ------ -------- --------
Total.................... $1,338.2 $ 189.0 $ 65.8 $ (100.0) $1,361.4
-------- ------- ------ -------- --------
-------- ------- ------ -------- --------
1992
$ (.5)(A)
Buildings..................... $ 149. 0 $ 12.0 $ 2.8 6.6 (B) $ 164.3
.5 (A)
Machinery and equipment....... 1,044.6 176.0 89.9 42.7 (B) 1,173.9
-------- ------- ------ -------- --------
Total.................... $1,193.6 $ 188.0 $ 92.7 $ 49.3 $1,338.2
-------- ------- ------ -------- --------
-------- ------- ------ -------- --------
1991
$ 3.4 (A)
Buildings..................... $ 139.0 $ 13.0 $ 1.5 (4.9)(B) $ 149.0
(3.4)(A)
Machinery and equipment....... 985.5 159.4 55.1 (41.8)(B) 1,044.6
-------- ------- ------ -------- --------
Total.................... $1,124.5 $ 172.4 $ 56.6 $ (46.7) $1,193.6
-------- ------- ------ -------- --------
-------- ------- ------ -------- --------
- ---------------------
(A) -- Transfers between accounts.
(B) -- Foreign currency exchange fluctuations from beginning of year to end of year.
Note -- Depreciation is computed primarily on a straight-line basis over the
estimated useful lives of assets which are as follows:
Buildings and land improvements......... 10 to 50 years
Furniture and fixtures.................. 5 to 15 years
Machinery, equipment and vehicles....... 3 to 15 years
12
14
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
ADDITIONS DEDUCTIONS
--------------------- ----------
BALANCE CHARGED LOSSES BALANCE
AT TO CHARGED CHARGED AT
BEGINNING PROFIT TO TO END OF
DESCRIPTION OF YEAR AND LOSS OTHER RESERVES YEAR
----------- --------- --------- --------- ---------- ---------
1993
Reserves deducted from assets:
Receivables...................... $41.8 $18.0 $ 2.5* $ 16.4 $45.9
----- ----- ----- ------ -----
----- ----- ----- ------ -----
1992
Reserves deducted from assets:
Receivables...................... $50.7 $ 8.2 $ -- $ 17.1 $41.8
----- ----- ----- ------ -----
----- ----- ----- ------ -----
1991
Reserves deducted from assets:
Receivables...................... $46.1 $19.5 $ -- $ 14.9 $50.7
----- ----- ----- ------ -----
----- ----- ----- ------ -----
* Acquisition balances
13
15
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE IX -- SHORT-TERM BORROWINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
WEIGHTED
YEAR END AVERAGE
BALANCE WEIGHTED MAXIMUM AVERAGE INTEREST
AT END AVERAGE OUTSTANDING OUTSTANDING RATE
OF INTEREST DURING DURING DURING
YEAR RATE THE YEAR THE YEAR THE YEAR
------- ------------ ----------- ----------- ------------
1993
Banks and Financial
Institutions................. $341.0 5% $ 236.9 $ 260.7 7%
Commercial Paper................ 54.0 3 477.0 140.2 3
------ -- ------- ------- --
Total................... $395.0 4% $ 713.9 $ 400.9 5%
------ -- ------- ------- --
------ -- ------- ------- --
1992
Banks and Financial
Institutions................. $265.2 9% $ 265.2 $ 186.1 10%
Commercial Paper................ 42.0 4 42.0 55.4 4
------ -- ------- ------- --
Total................... $307.2 8% $ 307.2 $ 241.5 8%
------ -- ------- ------- --
------ -- ------- ------- --
1991
Banks and Financial
Institutions................. $194.4 10% $ 297.4 $ 233.5 18%
Commercial Paper................ 13.0 5 26.0 33.5 6
------ -- ------- ------- --
Total................... $207.4 10% $ 323.4 $ 267.0 17%
------ -- ------- ------- --
------ -- ------- ------- --
- ---------------
NOTE: Short-term borrowings, excluding commercial paper, represent primarily
foreign currency debt. The maximum and average amounts outstanding during
the year are based on quarter-end total outstanding balances and are
representative of the year. Average interest rates on short-term
borrowings in all three years have been materially impacted by high
interest rates in the hyperinflationary economies. Borrowings in these
economies have been significantly reduced compared with 1991.
14
16
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(MILLIONS OF DOLLARS)
1993 1992 1991
------- ------ ------
Maintenance and repairs...................................... $ 42.3 $ 47.8* $ 47.3*
------ ------ ------
------ ------ ------
Taxes, other than payroll and income taxes................... $ 42.6 $ 39.3 $ 34.9
------ ------ ------
------ ------ ------
Advertising costs............................................ $428.0 $446.8 $402.2
------ ------ ------
------ ------ ------
- ---------------
* Restated to reflect reported years on a comparable basis.
15
17
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 THOMAS F. SKELLY
-------------------------------
Thomas F. Skelly
Senior Vice President and Chief
Financial Officer
Date: March 22, 1994
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
---------- ----- ----
ALFRED M. ZEIEN Chairman of the Board March 22, 1994
----------------------------------------- of Directors, Chief Executive
Alfred M. Zeien Officer and Director
JOSEPH E. MULLANEY Vice Chairman of the Board and March 22, 1994
----------------------------------------- Director
Joseph E. Mullaney
THOMAS F. SKELLY Senior Vice President and March 22, 1994
----------------------------------------- Chief Financial Officer
Thomas F. Skelly
ANTHONY S. LUCAS Vice President, March 22, 1994
----------------------------------------- Controller and Principal
Anthony S. Lucas Accounting Officer
WARREN E. BUFFETT Director March 22, 1994
-----------------------------------------
Warren E. Buffett
LAWRENCE E. FOURAKER Director March 22, 1994
-----------------------------------------
Lawrence E. Fouraker
WILBUR H. GANTZ Director March 22, 1994
-----------------------------------------
Wilbur H. Gantz
MICHAEL B. GIFFORD Director March 22, 1994
-----------------------------------------
Michael B. Gifford
CAROL R. GOLDBERG Director March 22, 1994
-----------------------------------------
Carol R. Goldberg
HERBERT H. JACOBI Director March 22, 1994
-----------------------------------------
Herbert H. Jacobi
RICHARD R. PIVIROTTO Director March 22, 1994
-----------------------------------------
Richard R. Pivirotto
JUAN M. STETA Director March 22, 1994
-----------------------------------------
Juan M. Steta
ALEXANDER B. TROWBRIDGE Director March 22, 1994
-----------------------------------------
Alexander B. Trowbridge
JOSEPH F. TURLEY Director March 22, 1994
-----------------------------------------
Joseph F. Turley
By THOMAS F. SKELLY
--------------------------
Thomas F. Skelly
as Attorney-In-Fact
16