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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 28, 1998
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THE GILLETTE COMPANY
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(Exact name of registrant as specified in charter)
DELAWARE 1-922 04-1366970
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) 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
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This is page 1 of 5 pages.
Exhibit Index appears on page 5.
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ITEM 5. OTHER EVENTS
On January 28, 1998, The Gillette Company (the "Company") made the
announcements described in Exhibits 99.1 and 99.2 hereto which are incorporated
herein by reference.
In addition, the Company announced that, beginning in 1998, it will
harmonize the various year-ends for each of its operating groups into a common
calendar year-end of December 31. The Company's Braun operation has historically
ended its year on September 30 and the Company's other international operating
units have previously ended their year-end on November 30, while the rest of the
corporation has operated on a calendar cycle.
In order to provide comparable results between 1997 and 1998, the Company
will also report its 1997 results on a pro forma calendar quarter-end basis. The
Company does not plan to report pro forma financial results prior to 1997 as it
would be cost-prohibitive.
In the 1997 financial statements, Braun's results for the three-month
"stub" period ended December 31, 1997 and the results of the other Gillette
international operations for the one-month "stub" period ended December 31,
1997, in the aggregate a small loss, will be reflected as a charge in the
stockholders' equity section of the 1997 balance sheet. Also reflected in this
section will be a charge adjusting for seasonality of advertising. The
accounting for the "stub" period will be consistent with what other companies
have done in the past in similar circumstances.
The harmonization is in line with a Financial Accounting Standards Board
proposed exposure draft. The change is possible because of the technology now
available which permits rapid reporting of international results. It is designed
to make it easier to focus on the various segments of the Company's business by
providing a common reporting period.
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This report contains certain "forward-looking" statements, as that term is
defined in the Private Securities Litigation Reform Act of 1995 or by the
Securities 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. Investors should
also be aware of factors that could have a negative impact on prospects and the
consistency of progress. These include political, economic, or other factors
such as currency exchange rates, inflation rates, recessionary or expansive
trends, taxes and regulations and laws affecting the worldwide business in each
of the Company's markets; competitive product, advertising, promotional and
pricing activity; dependence on the rate of development and degree of acceptance
of new product introductions in the marketplace; and the difficulty of
forecasting sales at certain times in certain markets.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1. Press release issued by The Gillette Company on January 28, 1998.
99.2. Press release issued by The Gillette Company on January 28, 1998.
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SIGNATURE
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 hereunto duly authorized.
THE GILLETTE COMPANY
BY: /s/ CHARLES W. CRAMB
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Name: Charles W. Cramb
Title: Senior Vice President --
Finance, Chief Financial
Officer and Principal
Accounting Officer
Date: January 29, 1998
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EXHIBIT INDEX
Exhibit No. Description of Exhibits Page
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99.1 Press release issued by The Gillette Company on January 28,
1998.
99.2 Press release issued by The Gillette Company on January 28,
1998.
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Exhibit 99.1
News Release
[LETTERHEAD:THE GILLETTE COMPANY]
Date: January 28, 1998
For Release: Immediately
Contact: David A. Fausch, Vice President, Corporate Public Relations
(617) 421-7765
Everett R. Howe, Vice President, Corporate Investor Relations
(617) 421-7750
GILLETTE REPORTS RECORD RESULTS FOR THE FOURTH QUARTER AND TOTAL YEAR
Boston, MA - Sales, profit from operations, net income and basic net income per
common share of The Gillette Company reached record levels for the fourth
quarter and total year ended December 31, 1997.
Sales for the three months ended December 31, 1997, were $3.16 billion, a gain
of 5% from $3 billion in 1996. Without the negative impact of exchange, sales
would have increased by 10%. Profit from operations was $765 million, up 16%
from $657 million a year earlier. Net income increased 18% to $471 million,
compared with $398 million last year. Basic net income per common share of 84
cents climbed 17% from the 72 cents reported in the prior year's fourth quarter.
"For the 30th consecutive quarter, our basic earnings per share, before special
charges, increased at a double-digit rate. This sustained growth was achieved
despite the increasingly negative effects of exchange due to a strong dollar and
economic weakness in some key markets," Alfred M. Zeien, chairman and chief
executive officer, said today.
"Our plan for 1998 calls for a series of major new product introductions to
drive both top- and bottom-line results," he added.
(More)
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2
Total year sales rose 4% to $10.06 billion, compared with $9.70 billion in 1996.
Profit from operations was $2.32 billion, an increase of 13% from the $2.05
billion of the year before. Net income of $1.43 billion climbed 16% from the
$1.23 billion last year. Basic net income per common share of $2.55 compared
with $2.22, a gain of 15% over that of the prior year.
All comparisons with 1996 results are before one-time costs related to the
Duracell merger, which reduced 1996 profit from operations by $413 million, net
income by $283 million and basic net income per common share by 51 cents in both
the fourth quarter and the total year.
Results by business segment follow.
- - The Company's BLADE AND RAZOR sales in the fourth quarter were moderately
higher, and profits moved well above those of a year earlier. For the total
year, sales rose modestly and profits were well above those of 1996.
- - DURACELL sales in the fourth quarter advanced well above last year's level,
while profits were considerably higher. For the total year, sales rose
notably, and profits increased substantially over those of the prior year.
- - Sales of BRAUN PRODUCTS in the fourth quarter were virtually unchanged,
while profits increased significantly. For the total year, sales were
slightly below those of 1996, while profits showed little change.
- - TOILETRIES AND COSMETICS sales in the fourth quarter were virtually
unchanged, while profits climbed sharply. For the total year, sales
increased modestly and profits were substantially higher.
(More)
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3
- - Fourth quarter sales of STATIONERY PRODUCTS rose well above those of the
previous year, while profits grew significantly. For the total year, sales
were about the same as last year's, but profits climbed sharply.
- - ORAL-B sales and profits for the fourth quarter and total year advanced
significantly from those of 1996.
Net interest expense was higher for the fourth quarter and total year, while net
exchange losses and the effective tax rate were lower in both periods.
This release contains certain "forward-looking" statements, as that term is
defined in the Private Securities Litigation Reform Act of 1995 or by the
Securities 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. Investors should
also be aware of factors that could have a negative impact on prospects and the
consistency of progress. These include political, economic, or other factors
such as currency exchange rates, inflation rates, recessionary or expansive
trends, taxes and regulations and laws affecting the worldwide business in each
of the Company's markets; competitive product, advertising, promotional and
pricing activity; dependence on the rate of development and degree of acceptance
of new product introductions in the marketplace; and the difficulty of
forecasting sales at certain times in certain markets.
(More)
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4
The consolidated income account, excluding one-time merger-related costs,
follows.
(Millions of dollars, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Total Year Ended
December 31 December 31
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Net Sales $3,160.2 $3,001.0 $10,062.1 $ 9,697.7
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Profit from Operations (a) $ 764.9 $ 657.3 $ 2,323.5 $ 2,049.3
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Income Before Income Taxes (a) $ 732.9 $ 622.5 $ 2,221.3 $ 1,938.0
Income Taxes 262.0 224.2 794.1 706.3
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Net Income (b) 470.9 398.3 1,427.2 1,231.7
Preferred Stock Dividends 1.2 1.1 4.6 4.6
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Net Income Available to
Common Stockholders (b) $ 469.7 $ 397.2 $ 1,422.6 $ 1,227.1
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Basic Net Income Per Common
Share Before One-Time,
Merger-Related Costs $ 0.84 $ 0.72 $ 2.55 $ 2.22
Effect of One-Time, Merger-
Related Costs -- $ 0.51 -- $ 0.51
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Net Income Per Common
Share, Basic $ 0.84 $ 0.21 $ 2.55 $ 1.71
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Average Number of Common
Shares Outstanding
(Thousands) 560,189 555,117 558,851 553,501
Net Income Per Common
Share, Assuming Full Dilution $ 0.82 $ 0.20 $ 2.49 $ 1.66
</TABLE>
(a) Excludes $413 million for one-time, merger-related costs in the fourth
quarter and total year 1996.
(b) Excludes $283 million for one-time, merger-related costs in the fourth
quarter and total year 1996.
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Exhibit 99.2
News Release
[LETTERHEAD:THE GILLETTE COMPANY]
Date: January 28, 1998
For Release: Immediately
Contact: Stephen Brayton, Corporate Public Relations, 617-421-8173
GILLETTE REACHES AGREEMENT TO SELL JAFRA COSMETICS INT'L
Boston, Mass. (January 28, 1998) -- The Gillette Company today announced a
definitive agreement to sell its Jafra Cosmetics International business to
Clayton, Dubilier & Rice, Inc.
Jafra is a leading international marketer of skin care and color cosmetics
products through independent consultants.
Terms of the transaction, including price, were not disclosed. The transaction
is expected to be completed early in the second quarter of 1998.
Jacques Lagarde, Executive Vice President, Diversified Group, said the decision
to divest Jafra resulted from Gillette's core business strategy. "While a
growing, profitable business, Jafra is not one of Gillette's core businesses,"
Mr. Lagarde said.
Jafra sales represent a very small portion of Gillette's total sales, and the
transaction is not expected to have a material impact on Gillette's financial
results.
Mr. Lagarde said, "Clayton, Dubilier & Rice, Inc. is the ideal buyer for Jafra.
It is committed to continuing Jafra's growth, both in the United States and in
international markets."
Gillette acquired Jafra in 1973. Under Gillette, Jafra has grown from a regional
U.S. business to an international direct-selling cosmetics company.
Founded in 1901, The Gillette Company is the world leader in male grooming
products, a category that includes blades and razors, shaving preparations and
electric shavers. Gillette also holds the number one position worldwide in
selected female grooming products, such as wet shaving products and hair
epilation devices. The Company is the world's top seller of writing instruments
and correction products, toothbrushes and oral care appliances. In addition, the
Company is the world leader in alkaline batteries.
Gillette manufacturing operations are conducted in 64 facilities in 26
countries, and products are distributed in over 200 countries and territories.
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