SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File Number 1-922
THE GILLETTE COMPANY
(Exact name of registrant as specified in its charter)
Incorporated in Delaware 04-1366970
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Prudential Tower Building, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 421-7000
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of each class
Common Stock, $1.00 par value
Shares Outstanding September 30, 1997 . . . . . . . . . . . . . . . 560,077,218
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<TABLE>
PAGE 1
PART I. FINANCIAL INFORMATION
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(Millions of dollars, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net Sales........................................ $2,436.7 $2,365.7 $6,901.9 $6,696.7
Cost of Sales.................................... 929.3 887.1 2,614.0 2,501.2
Gross Profit................................. 1,507.4 1,478.6 4,287.9 4,195.5
Selling, General and Administrative expenses..... 932.3 970.4 2,729.3 2,803.5
Profit from operations....................... 575.1 508.2 1,558.6 1,392.0
Non-operating Charges (Income):
Interest income................................ (2.3) (2.7) (7.0) (7.7)
Interest expense............................... 20.8 21.0 57.7 59.5
Exchange....................................... 3.8 2.6 9.1 23.6
Other charges - net............................ 2.2 1.6 10.4 1.1
24.5 22.5 70.2 76.5
Income before Income Taxes .................. 550.6 485.7 1,488.4 1,315.5
Income Taxes..................................... 196.9 178.3 532.1 482.1
Net Income................................... 353.7 307.4 956.3 833.4
Preferred Stock dividends, net of tax benefit.... 1.1 1.2 3.4 3.5
Net Income Available to Common Stockholders...... $ 352.6 $ 306.2 $ 952.9 $ 829.9
Net Income per Common Share...................... $ .63 $ .55 $ 1.71 $ 1.50
Dividends declared per common share: Gillette ... .215 .18 .43 .36
Duracell ... - .29 - .87
Average number of common shares outstanding
(thousands) 560,107 553,657 558,438 552,908
<FN>
See Accompanying Notes to Consolidated Financial Statements.
/TABLE
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PAGE 2
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
ASSETS
(Millions of dollars)
<CAPTION>
September 30 December 31
1997 1996
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents.................... $ 99.0 $ 76.9
Short-term investments, at cost, which
approximates market value................. 3.8 7.0
Receivables, less allowances of $70.6
($80.8 at 12/31/96)...................... 2,304.0 2,724.6
Inventories:
Raw materials and supplies............... 280.0 281.2
Work in process.......................... 206.3 161.4
Finished goods........................... 1,171.0 915.6
Total Inventories...................... 1,657.3 1,358.2
Deferred Income Taxes........................ 286.3 359.3
Prepaid expenses............................. 262.6 227.2
Total Current Assets................... 4,613.0 4,753.2
Property, Plant and Equipment, at cost........... 4,829.6 4,561.2
Less accumulated depreciation............ 2,039.2 1,995.4
Net Property, Plant and Equipment...... 2,790.4 2,565.8
Intangible Assets, less accumulated amortization 2,505.3 2,626.2
Other Assets..................................... 612.9 490.1
$10,521.6 $10,435.3
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
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<TABLE>
PAGE 3
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Millions of dollars)
<CAPTION>
September 30 December 31
1997 1996
(Unaudited)
<S> <C> <C>
Current Liabilities:
Loans payable................................ $ 719.5 $ 656.7
Current portion of long-term debt............ 11.3 14.5
Accounts payable............................. 456.0 547.3
Accrued liabilities.......................... 898.2 1,317.5
Dividends payable............................ - 100.1
Income taxes................................. 399.0 298.6
Total Current Liabilities................. 2,484.0 2,934.7
Long-Term Debt................................... 1,481.9 1,490.4
Deferred Income Taxes............................ 278.1 298.9
Other Long-Term Liabilities...................... 1,117.0 1,190.5
Minority Interest................................ 36.9 29.9
Contingent redemption value of common stock
put option..................................... 43.0 -
Stockholders' Equity:
8.0% Cumulative Series C ESOP Convertible
Preferred, without par value, issued: 1997,
155,306 shares; 1996, 157,925 shares....... 93.6 95.2
Unearned ESOP Compensation................... (21.2) (25.2)
Common stock, par value $1.00 per share:
Authorized 1,160,000,000 shares
Issued: 1997, 675,658,859 shares;
1996, 671,431,800 shares........... 675.7 671.4
Additional paid-in capital................... 1,233.2 1,158.6
Earnings reinvested in the business.......... 4,866.7 4,168.7
Cumulative foreign currency
translation adjustments.................... (683.2) (521.6)
Treasury stock, at cost:
1997, 115,581,641 shares;l996, 115,353,687 shares (1,084.1) (1,056.2)
Total Stockholders' Equity............... 5,080.7 4,490.9
$10,521.6 $10,435.3
<FN>
See Accompanying Notes to Consolidated Financial Statements
/TABLE
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<TABLE>
PAGE 4
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30
1997 1996
<S> <C> <C>
Operating Activities
Net income $ 956.3 $ 833.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 311.0 284.5
Other (17.0) (1.5)
Changes in assets and liabilities, net of
effects from acquisition of businesses:
Accounts receivable 286.3 195.5
Inventories (357.1) (320.9)
Accounts payable and accrued liabilities (417.8) (228.4)
Other working capital items 95.6 (4.3)
Other non-current assets and liabilities (107.5) 21.6
Net cash provided by operating activities 749.8 779.9
Investing Activities
Additions to property, plant & equipment (609.2) (521.0)
Disposals of property, plant & equipment 35.5 35.4
Acquisition of businesses, less cash acquired (3.0) (159.5)
Other 6.5 (23.6)
Net cash used in investing activities (570.2) (668.7)
Financing Activities
Purchase of Treasury Stock (28.9) (11.4)
Proceeds from sale of put options 2.2 -
Proceeds from exercise of stock option and
purchase plans 118.8 46.4
Decrease in long-term debt (4.2) (160.6)
Increase in loans payable 104.8 378.4
Dividends paid (344.1) (334.3)
Net cash used in financing activities (151.4) (81.5)
Effect of Exchange Rate Changes on Cash (6.1) (13.8)
Increase in Cash and Cash Equivalents 22.1 15.9
Cash and Cash Equivalents at Beginning of Year 76.9 81.6
Cash and Cash Equivalents at End of Quarter $ 99.0 $ 97.5
Supplemental disclosure of cash paid for:
Interest $ 77.5 $ 67.4
Income taxes $ 331.1 $ 312.4
Non-cash investing and financing activities:
Acquisition of businesses:
Fair value of assets acquired $ 3.0 $ 191.0
Cash paid 3.0 159.5
Liabilities assumed $ - $ 31.5
<FN>
See Accompanying Notes to Consolidated Financial Statements
/TABLE
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THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accounting Comments
Reference is made to the registrant's 1996 annual report to stockholders, which
contains, at pages 24 through 39, financial statements and the notes thereto,
which are incorporated by reference in the registrant's annual report on Form
10-K for the year ended December 31, 1996.
For interim reporting purposes, advertising expenses are charged to operations
as a percentage of sales based on estimated sales and advertising expense for
the full year.
With respect to the financial information for the interim periods included in
this report, which is unaudited, the management of the Company believes that
all adjustments necessary to a fair presentation of the results for such
interim periods have been included.
Recent Accounting Pronouncements
In 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings
per Share." The statement is effective for periods ending after December 15,
1997, and will be adopted by The Gillette Company at the end of the fiscal year
1997. The adoption of this statement will not have a material impact on
reported net income per common share.
In 1997, the Financial Accounting Standards Board issued SFAS No. 129,
"Disclosure of Information about Capital Structure." The statement is effective
for periods ending after December 15, 1997. This statement will have no impact
on disclosures within the financial statements.
In 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," which establishes standards for reporting and
display of comprehensive income and its components. The statement is effective
for fiscal years beginning after December 15, 1997, and will be adopted by The
Gillette Company for fiscal year 1998.
In 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The
statement is effective for periods beginning after December 15, 1997, and will
be adopted by The Gillette Company for fiscal year 1998. Current financial
statements are presented substantially in accordance with SFAS No. 131.
Merger Related Costs
In conjunction with the 1996 merger with Duracell International Inc., the
Company recorded, in the fourth quarter of 1996, a charge to operating expenses
of $413 million ($283 million after taxes or $.51 per common share) for direct
and other merger-related costs pertaining to the merger transaction and certain
restructuring programs.
Merger transaction costs consist primarily of fees for investment bankers,
attorneys, accountants, financial printing and other related charges. Restruct-
uring costs include severance and outplacement of terminated employees and exit
costs. Exit costs include activities such as cancellation of lease agreements
and distributor contracts, and the writeoff of unutilized fixed assets.
Restructuring activities primarily relate to the consolidation of distribution
and administrative functions, which will result in the phased reduction of
approximately 1,700 employees. Through September 30, 1997, the reductions total
828 employees.
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<PAGE> PAGE 6
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Activity through September 30, 1997 follows:
1996 Charges
(Millions of dollars) Provision to Date Balance
Merger Transaction Costs $ 65.0 $ 60.8 $ 4.2
Restructuring Costs
Employee Severance 165.9 42.8 123.1
Exit Costs 182.1 92.4 89.7
Total $413.0 $196.0 $217.0
Share Repurchase Program
On September 18, 1997, the Company's Board of Directors authorized a share
repurchase program to take place over the next two years. The Company plans to
purchase up to 25 million shares over the two-year period in the open market or
in privately negotiated transactions, depending on market conditions and other
factors.
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PAGE 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
In reviewing the following analysis, it should be understood that results
for any interim period are not necessarily indicative of the results for
the entire year. For Duracell's foreign operations, reference to the
current year includes periods ending August 31, 1997, and for the prior
year periods ending September 30, 1996.
Third Quarter 1997 versus 1996
Sales for the quarter ended September 30, 1997, were $2.44 billion, a
gain of 3% over the same quarter of the prior year. This growth was
attributable to a 6% increase in volume and new products, as well as a 1%
increase in prices, while the effect of unfavorable exchange rates
depressed sales by 4%. Sales of domestic operations were marginally
below those of the prior year. Sales in foreign operations were higher
as sharp increases in the AMEE markets, which include Africa, the Middle
East, Eastern Europe and India, were partially offset by the continued
sluggish economic conditions in Germany, Japan and some Latin American
markets.
Sales of blade and razor products were virtually unchanged from those of
the prior year, while profits were notably higher. The AMEE markets had
significant sales and profit increases in the third quarter, offset by
European results which were affected by exchange. The Gillette Sensor
franchise continues to grow as older blade products decline.
Sales of Duracell products rose considerably and profits were sharply
above those of the prior year, particularly in AMEE and Asia Pacific
markets, aided somewhat by the acquisition in South Korea in October
1996. Excluding the acquisition, sales were well above the prior year
and profits were up sharply.
Braun product sales were slightly below prior year due to continuing
adverse economic conditions in Japan and Germany, combined with
unfavorable exchange in Japan and Europe. Profits decreased
significantly, due primarily to sales mix, particularly lower sales in
the highly profitable electric shaver line.
Sales of toiletries and cosmetics equalled those of the prior year, while
profits were significantly higher. The continuing expansion of the
Gillette Series male grooming line, the success of Satin Care female
products, and the growth of clear deodorant/antiperspirant products
contributed to these results. Jafra sales continued to improve in
Mexico, with a substantial increase over the prior year. Offsetting the
gains were unmatched 1996 sales of Unisa, which was divested in 1996, and
lower sales of White Rain in the United States.
Sales of stationery products were slightly below those of 1996, as
international sales were somewhat lower and sales in the United States
were virtually unchanged. Profits were substantially higher versus the
prior year.
Sales of Oral-B products in the third quarter rose appreciably over those
of the prior year. This gain is attributable to strong growth in North
America and the success of new products in other major markets. Profits
were sharply higher, due to increased sales and lower product costs.
<PAGE>
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PAGE 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Nine Months 1997 versus 1996
Sales for the nine months ended September 30, 1997, were $6.90 billion, an
increase of 3% over the same period of the prior year. This growth was
attributable to a 5% increase in volume and new products, as well as a 1%
increase in prices, while the effect of unfavorable exchange rates depressed
sales by 3%. Sales of domestic operations were virtually unchanged versus
those of the prior year. Sales in foreign operations advanced as sharp
increases in the AMEE markets, led by excellent performances in the Former
Soviet Union, Eastern Europe, Poland and India, combined with higher sales
in Latin America, were partially offset by the continued sluggish economic
conditions in Germany and Japan.
Sales of blade and razor products showed little change versus those of the
prior year, and profits were well above those of a year earlier due to
considerable increases in the United States as well as significant growth in
AMEE and Latin America markets. These increases reflect the continued
growth and expansion of the Gillette Sensor franchise, including SensorExcel
and SensorExcel for Women.
Sales of Duracell products were considerably higher and profits were
substantially higher than those of the prior year, particularly in AMEE and
Asia Pacific markets, aided by the acquisitions in South Africa and South
Korea. Excluding these acquisitions, sales were higher than prior year and
profits were up sharply.
Braun product sales were marginally lower and profits were considerably
below those of a year earlier due to continuing adverse economic conditions
in Japan and Germany, combined with unfavorable exchange in Japan and
Europe. Braun's fourth quarter, which ended September 30, 1997, will show
modest sales growth and strong profit growth.
Sales of toiletries and cosmetics were modestly above those of the prior
year and profits were significantly higher. The continuing expansion of the
Gillette Series male grooming line, the success of Satin Care female
products, and the growth of clear deodorant/antiperspirant products
contributed to this increase. Jafra sales were slightly below prior year,
as softness in the United States and Germany was partially offset by strong
increases in Mexico.
Sales of stationery products were marginally below those of 1996, due to
reductions in the United States and Europe. Profits were substantially
above those of prior year.
Sales of Oral-B products for nine months rose sharply over those of the
prior year, due to increases in all major geographies. This gain is
attributable to increased volume in North America and the success of new
products in other major markets. Profits were substantially higher, due to
increased sales and lower product costs.
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PAGE 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The approximate percentages of consolidated net sales for each of the
Company's business segments are set forth below.
Blades Toiletries
& & Stationery Braun Oral-B Duracell
Period Razors Cosmetics Products Products Products Products
Nine Months 1997 29% 15% 9% 17% 6% 24%
Nine Months 1996 30% 15% 9% 18% 6% 22%
Gross profit was $4.29 billion, an increase of $92 million, or 2%, from 1996.
The gross profit percentage of sales was 62.1%, marginally below the 62.7%
for the same period in 1996, due to product mix.
Selling, general and administrative expenses decreased by $74 million, or
3%. Combined advertising and sales promotion expense decreased 2% versus
the prior year. Spending on research and development increased 2%, while
other marketing and administrative expenses decreased 4%.
Profit from Operations was $1.56 billion, up 12% from $1.39 billion a year
earlier. Profit from operations increased considerably in the United States
and was appreciably above the prior year in foreign operations.
Net interest expense was somewhat lower, while net exchange losses and the
effective tax rate were lower through nine months.
Net income of $956 million increased 15%, compared with $833 million in
1996. Net income per common share of $1.71 increased 14% over the $1.50
reported a year earlier.
* * * * * *
Interim financial results may also be viewed on an organizational basis. For
this purpose, operating profits from major operational units are reported
before net corporate headquarters expense, net interest expense, exchange
losses and income taxes.
Sales of the Gillette North Atlantic Group in the quarter were moderately
below and for the nine months were marginally below the corresponding periods
of a year ago. Operating profits in the quarter were slightly below those of
last year and were somewhat higher for the nine months.
Sales of the Duracell North Atlantic Group were higher for the quarter and
nine months, while profits were markedly higher for both periods.
The International Group had excellent growth in sales and profits for the
third quarter and for the nine months.
Sales of the Diversified Group in the quarter were virtually unchanged while
profits were significantly below the prior year. For the nine months, sales
were little changed and profits were somewhat lower.
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PAGE 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financial Condition
Net cash provided by operating activities for the nine months ended
September 30, 1997, amounted to $750 million, compared with $780 million
in the same period last year. The decrease versus a year ago is primarily
due to cash expenses related to the 1996 Duracell merger provision.
Net debt (total debt, net of associated swaps, less cash and short-term
investments) at September 30, 1997, amounted to $2.05 billion, compared to
$2.08 billion at year end 1996. The Company's current ratio at September
30, 1997, was 1.86, compared to 1.62 at December 31, 1996.
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PAGE 11
PART II. OTHER INFORMATION
Item 1. 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, 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 5. Other Information
Forward-Looking Statements
From time to time, the Company may make statements which constitute or
contain "forward-looking" information as that term is defined in the
Private Securities Litigation Reform Act of 1995 (the "Act") or by the
Securitites and Exchange Commission in its rules, regulations and
releases. The Company cautions investors that any such forward-looking
statements made by the Company are not guarantees of future performance
and that actual results may differ materially from those in the forward-
looking statements. The following are some of the factors that could
cause actual results to differ materially from estimates contained in the
Company's forward-looking statements: 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; historically, almost two-thirds
of the Company's sales having been made outside the United States, making
forward-looking statements more difficult; and 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 currency
exchange rates, 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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PAGE 12
Item 6 (a) Exhibits
Exhibit 10 Amended and Restated Credit Agreement dated as of October 20,
1997, among The Gillette Company, Morgan Guaranty Trust Company
of New York, as agent, and a syndicate of domestic and foreign
banks, filed herewith.
<TABLE>
Exhibit 11
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(Millions of dollars, except per share amounts; shares in millions)
Nine Months Ended September 30
1997 1996
<S> <C> <C>
Net Income Per Common Share-Assuming No Dilution
Net income as reported....................... $ 956.3 $ 833.4
Less: Preferred Stock Dividends, net of tax
benefit............................... (3.4) (3.5)
Net Income available to Common Shareholders.. $ 952.9 $ 829.9
Average common shares outstanding............ 558.4 552.9
Reported net income per common share......... $ 1.71 $ 1.50
Net Income Per Common Share-Assuming Full Dilution
Net Income available to Common Shareholders
(As Above)................................. $ 952.9 $ 829.9
Add: Series C ESOP Preferred Stock Dividend,
net of tax benefit......................... 3.4 3.5
Add(Deduct): Add'l ESOP Costs, net of tax benefit .1 (.7)
Adjusted Net Income available to Common Share-
holders.................................... $ 956.4 $ 832.7
Average common shares outstanding (as above). 558.4 552.9
Add: Conversion of Series C ESOP Preferred
Stock.................................. 6.3 6.4
Net additional common shares upon
exercise of stock options.............. 9.1 10.5
Adjusted average common shares outstanding... 573.8 569.8
Net Income per Common Share -
assuming full dilution..................... $ 1.67 $ 1.46
</TABLE>
Exhibit 27 Financial Data Schedule filed herewith.
Item 6 (b). Reports on Form 8-K
The Company filed a current report on Form 8-K on September 22, 1997,
which referred to an announcement by the company on September 19, 1997,
of a plan to repurchase up to 25 million shares of its common stock on
the open market or in privately negotiated transactions over a two-year
period.<PAGE>
<PAGE>
PAGE 13
SIGNATURE
SIGNATURES
Pursuant to the requirements 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)
CHARLES W. CRAMB
Charles W. Cramb
Senior Vice President-Finance,
Chief Financial Officer and
Principal Accounting Officer
October 28, 1997
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The data reported in this exhibit are based on unaudited statements but
include all adjustments which the company considers necessary for a fair
presentation of results for this period.
</LEGEND>
<CIK> 0000041499
<NAME> THE GILLETTE COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 99,000
<SECURITIES> 3,800
<RECEIVABLES> 2,374,600
<ALLOWANCES> 70,600
<INVENTORY> 1,657,300
<CURRENT-ASSETS> 4,613,000
<PP&E> 4,829,600
<DEPRECIATION> 2,039,200
<TOTAL-ASSETS> 10,521,600
<CURRENT-LIABILITIES> 2,484,000
<BONDS> 1,481,900
0
93,600
<COMMON> 675,700
<OTHER-SE> 4,311,400
<TOTAL-LIABILITY-AND-EQUITY> 10,521,600
<SALES> 6,901,900
<TOTAL-REVENUES> 6,901,900
<CGS> 2,613,900
<TOTAL-COSTS> 2,613,900
<OTHER-EXPENSES> 2,729,300
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,700
<INCOME-PRETAX> 1,488,400
<INCOME-TAX> 532,100
<INCOME-CONTINUING> 956,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 956,300
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.67
</TABLE>
CONFORMED COPY
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of October 20, 1997 among
THE GILLETTE COMPANY (the "Borrower"), the BANKS listed on the signature pages
hereof (the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent
(the "Agent"). W I T N E S S E T H : WHEREAS, the parties hereto have heretofore
entered into a 364-Day Credit Agreement dated as of December 20, 1996 (the
"Agreement"); WHEREAS, no Loans are outstanding under the Agreement at the date
hereof; and WHEREAS, the parties hereto desire to amend the Agreement to
increase the aggregate amount of the Commitments to $1,000,000,000, to make the
other amendments specified below and to restate the Agreement in its entirety to
read as set forth in the Agreement with the amendments specified below; NOW,
THEREFORE, the parties hereto agree as follows: Section 1. Definitions;
References. Unless otherwise specifically defined herein, each term used herein
which is defined in the Agreement shall have the meaning assigned to such term
in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the Agreement shall from and after the date
hereof refer to the Agreement as amended hereby. Section 2. Amendment of the
Agreement. (a) Each reference to "1995" in the definition of "Company's 1995
Form 10-K", in Section 4.04(a) and in Section 4.07 is changed to "1996". (b)
Each reference to "September 30, 1996" in the definition of "Company's Latest
Form 10-Q", in Section 4.04(b) and in Section 4.05 is changed to "June 30,
1997", and the word "nine" is changed to "six" each place it appears in Section
4.04(b).
(c) The date "December 19, 1997" appearing in the definition of
"Termination Date" is changed to "October 19, 1998".
(d) The rate of "0.035%" appearing in Section 2.08(a) is changed to
"0.030%".
(e) The rate of "0.265%" in the definition of "CD Margin" set forth in
Section 2.07(b) is changed to "0.270%".
(f) The rate of "0.140%" in the definition of "Euro-Dollar Margin" set
forth in Section 2.07(c) is changed to "0.145%".
Section 3. Changes in Commitments. With effect from and including the date
this Amended and Restated Credit Agreement becomes effective in accordance with
Section 5 hereof, the Commitment Schedule annexed hereto is substituted for the
Commitment Schedule attached to the Agreement. Section 4. Governing Law. This
Amended and Restated Credit Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Section 5. Counterparts;
Effectiveness. This Amended and Restated Credit Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Amended and Restated Credit Agreement shall become effective as of the date
hereof when the Agent shall have received (i) duly executed counterparts hereof
signed by the Company and the Banks (or, in the case of any party as to which an
executed counterpart shall not have been received, the Agent shall have received
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party); (ii) an opinion of the General Counsel of
the Company (or such other counsel for the Company as may be acceptable to the
Agent) substantially in the form of Exhibit E to the Agreement with reference to
this Amended and Restated Credit Agreement and the Agreement as amended and
restated hereby; and (iii) all documents it may reasonably request relating to
the existence of the Company, the corporate authority for and the validity of
this Agreement and the Notes, and any other matters relevant hereto, all in form
and substance satisfactory to the Agent.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended
and Restated Credit Agreement to be duly executed as of the date first
above written.
THE GILLETTE COMPANY
By /s/ Gianulderico Camuzzi
Title: Vice President Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Deborah A. Brodheim
Title: Vice President
CREDIT SUISSE FIRST BOSTON
By /s/ Lynn Allegaert
Title: Vice President
By /s/ David W. Kratovil
Title: Director
BANKBOSTON, N.A.
By /s/ Grace A. Barnett
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Tom Dao
Title: Corporate Banking Officer
FLEET NATIONAL BANK
By /s/ Roger C. Boucher
Title: Vice President
ABN AMRO BANK N.V.
By /s/ Nancy W. Lanzoni
Title: Group Vice President
By /s/ John M. Kinney
Title: Assistant Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ David Noda
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ M. R. Bradley
Title: Authorized Signatory
THE CHASE MANHATTAN BANK
By /s/ Michael Lancia
Title: Associate
ROYAL BANK OF CANADA
By /s/ Sheryl L. Greenberg
Title: Senior Manager
BANCA COMMERCIALE ITALIANA,
NEW YORK BRANCH
By /s/ Karen Purelis
Title: Vice President
BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
By /s/ John Kippax
Title: Vice President & Manager
By /s/ Mallika Kambhampati
Title: Vice President and Manager Credit Analysis
THE BANK OF TOKYO-MITSUBISHI, LTD.
By /s/ Michael J. Cronin
Title: Attorney-in-fact
BANQUE PARIBAS
By /s/ John J. McCormick, III
Title: Vice President
By /s/ Robert G. Carino
Title: Vice President
CITIBANK, N.A.
By /s/ Robert M. Spence
Title: Attorney-in-fact
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS
BRANCHES
By /s/ Stephan A. Wiedmann
Title: Director
By /s/ Thomas A. Foley
Title: Assistant Vice President
MELLON BANK, N.A.
By /s/ R. Jane Westrich
Title: Vice President
THE SANWA BANK, LIMITED
By /s/ Takayoshi Futae
Title: Deputy General Manager
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Jeffery S. Nurkiewicz
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Deborah A. Brodheim
Title: Vice President
<PAGE>
COMMITMENT SCHEDULE
Bank .................................................... Commitment
Morgan Guaranty Trust Company ........................... $ 122,000,000
of New York
Credit Suisse First Boston .............................. $ 100,000,000
BankBoston, N.A ......................................... $ 80,000,000
The First National Bank of Chicago ...................... $ 80,000,000
Fleet National Bank ..................................... $ 80,000,000
ABN AMRO Bank N.V ....................................... $ 50,000,000
Bank of America National Trust
and Savings Association ............................... $ 50,000,000
The Bank of Nova Scotia ................................. $ 50,000,000
The Chase Manhattan Bank ................................ $ 50,000,000
Royal Bank of Canada .................................... $ 50,000,000
Banca Commerciale Italiana, ............................. $ 32,000,000
New York Branch
Bank Brussels Lambert, New York Branch .................. $ 32,000,000
The Bank of Tokyo-Mitsubishi, Ltd. ...................... $ 32,000,000
Banque Paribas .......................................... $ 32,000,000
Citibank, N.A ........................................... $ 32,000,000
Deutsche Bank AG, New York and/or ....................... $ 32,000,000
Cayman Islands Branches
Mellon Bank, N.A ........................................ $ 32,000,000
The Sanwa Bank, Limited ................................. $ 32,000,000
Wachovia Bank of Georgia, N.A ........................... $ 32,000,000
Total .............................................. $1,000,000,000
