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
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:
"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.


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.
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.
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.
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.
ITEM 3.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable. ------------------------
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.
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.
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.
ITEM 7.
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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.


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.
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.
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.
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.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
A. FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
Schedules other than those listed above are omitted because they are either not required or not applicable.
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.
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
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
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(A) -- Transfers between accounts.
(B) -- Foreign currency exchange fluctuations from beginning of year to end of year.
(C) -- Acquisitions.
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
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Note -- Depreciation is computed primarily on a straight-line basis over the estimated useful lives of assets which are as follows:
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
* Acquisition balances
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
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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.
THE GILLETTE COMPANY AND SUBSIDIARY COMPANIES
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* Restated to reflect reported years on a comparable basis.
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
By THOMAS F. SKELLY -------------------------- Thomas F. Skelly as Attorney-In-Fact