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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): October 21, 1999
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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 9 pages.
Exhibit Index appears on page 5.
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ITEM 5. OTHER EVENTS
On October 21, 1999, The Gillette Company announced its third-quarter
results, the expansion of its stock repurchase program and the initiation of a
program designed to optimize trade inventories. A copy of the press release
announcing this information is attached to this report as Exhibit 99.1 hereto
and is incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1. Press release issued by The Gillette Company on October 21, 1999.
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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: November 8, 1999
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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 October 21,
1999.
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Exhibit 99.1
News Release
[LETTERHEAD:THE GILLETTE COMPANY]
GILLETTE REPORTS THIRD-QUARTER AND NINE-MONTH RESULTS, ANNOUNCES EXPANSION OF
STOCK REPURCHASE PROGRAM
October 21, 1999
Boston - Sales for the three months ended September 30, 1999, were $2.51
billion, a decrease of 1% from $2.53 billion in 1998. Excluding the adverse
effect of exchange, sales increased by 3%.
Comparing third-quarter 1999 results with the prior year before the one-time
realignment charge taken in the third quarter of 1998, profit from operations
was $590 million, up 3% from $575 million a year earlier. Higher interest costs
associated with our share repurchase program held net income in the third
quarter at $352 million, virtually unchanged from last year's net income of $353
million. Diluted net income per common share of 32 cents advanced by 7%,
compared with 30 cents in the prior year's third quarter.
Comparing third-quarter 1999 results with the prior year as reported, after the
one-time realignment charge, profit from operations, net income and diluted net
income per common share all increased by more than 100%.
"Our third-quarter results benefited from continued outstanding performance in
the core blade and razor, Duracell and oral care businesses, as well as from
savings generated by the reorganization program. This strong performance was
tempered by unfavorable exchange, by adverse economic conditions in several key
markets and by lower sales in our Braun and stationery products businesses,"
said Michael C. Hawley, chairman and chief executive officer.
Mr. Hawley added, "In the fourth quarter, we are optimizing trade inventories,
primarily blade inventories in Europe, to better align them with the significant
contraction resulting from trade consolidations and increased efficiencies in
supply chain management. We expect that this corrective action will result in a
fourth-quarter sales decline in the mid-single digits and a quarterly earnings
decrease in the middle to high teens.
"Gillette remains confident that the continued strength of its core businesses,
benefits from its reorganization and its optimization of trade inventories,
coupled with an improvement in international economies, bode well for a return
to its historic
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high growth rates in the near future."
For the nine months ended September 30, 1999, net sales were $6.86 billion,
virtually unchanged from $6.88 billion in 1998. Excluding the adverse effects of
exchange and the divestiture of Jafra Cosmetics, sales increased by 5%. Profit
from operations, when compared with 1998 before the one-time realignment charge,
decreased by 5% to $1.53 billion, from $1.60 billion. Net income of $921 million
declined by 7%, compared with last year's net income of $993 million. Diluted
net income per common share of 82 cents compared with 86 cents, a decrease of 5%
from the prior year.
Comparing nine-month 1999 results with the prior year as reported, after the
one-time realignment charge, profit from operations, net income and diluted net
income per common share all increased by more than 40%.
Results by business segment follow:
- For the third quarter, the Company's BLADE AND RAZOR sales increased by
9%, and profits grew by 24%, compared with those of the prior year. For
the nine months, sales were up by 10% and profits by 14%, versus 1998.
- DURACELL sales rose by 6% and profits by 25% in the third quarter,
compared with a year earlier. For the nine months, sales and profits
were 4% above those of the prior year.
- Sales of BRAUN PRODUCTS in the third quarter declined by 15% and profits
by 39%, compared with a year ago. For the nine months, sales were down
11%, and profits decreased by 43%, from the prior year's levels.
- TOILETRIES third-quarter sales fell by 5%, but profits were 6% above
those of a year ago. For the nine months, sales decreased by 13%, while
profits were down 2% from those of 1998.
- Third-quarter sales of STATIONERY PRODUCTS fell by 18%, and the business
reported a slight loss in the quarter. For the nine months, sales
declined by 11% and profits by 78% from the levels of a year earlier.
- ORAL-B sales in the third quarter decreased by 1%, but profits climbed
by 30%, compared with the prior year. For the nine months, sales rose by
1% and profits by 2% from those of 1998.
For the third quarter and the nine months, net interest expense and exchange
losses were substantially higher, while the effective tax rate was slightly
lower.
At its meeting today, the Board of Directors declared the regular quarterly
dividend of 14.75 cents per common share, payable
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December 3, 1999, to stockholders of record November 1, 1999, and the regular
quarterly dividend of $12.0575 per share on the 8% Cumulative Series C ESOP
convertible preferred stock, payable December 31, 1999.
The Company's Board of Directors also authorized an expansion of its stock
repurchase program, which began in September 1997, from 75 million to 100
million shares. The Company plans to purchase the additional 25 million shares
over a two-year period in the open market or in privately negotiated
transactions, depending on market conditions and other factors.
This release contains "forward-looking statements" about the Company's future
performance. There are, however, a number of factors that can affect the
Company's future prospects and progress. These include, among other things, the
acceptance of new products, economic conditions, the competitive market
environment and the effectiveness of our actions with respect to optimizing
trade blade inventories, all of which contain elements of uncertainty. Please
refer to the Cautionary Statements contained in the Company's 10-K and 10-Q
filings for a more detailed explanation of the inherent limitations in such
forward-looking statements.
The unaudited consolidated income account follows:
(Millions except per share amounts)
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<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30 September 30
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net Sales $2,509 $2,531 $6,862 $6,881
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Profit from Operations(a) $590 $40 $1,529 $1,069
Income Before Income
Taxes(a) $541 $9 $1,412 $998
Income Taxes(a) $189 $3 $491 $352
Net Income(a) $352 $6 $921 $646
Average Number of
Common
Shares Outstanding
- Basic 1,080 1,116 1,096 1,120
- Assuming Full Dilution 1,101 1,143 1,119 1,149
Net Income Per Common
Share (a)
- Basic $.33 -- $.84 $.57
- Assuming Full Dilution $.32 -- $.82 $.56
</TABLE>
(a) 1998 third-quarter and nine-month year-to-date figures include a one-time
realignment charge, which reduced reported profit from operations and
income before income taxes by $535 million, income taxes by $188 million,
net income by $347 million, net income per common share, basic, by $.31 and,
assuming full dilution, by $.30.
THE DATA REPORTED ABOVE ARE BASED ON UNAUDITED STATEMENTS OF INCOME, BUT INCLUDE
ALL ADJUSTMENTS WHICH THE COMPANY CONSIDERS NECESSARY FOR A FAIR PRESENTATION OF
RESULTS FOR THESE PERIODS.
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