Gillette Reports Record Fourth-Quarter and Full-Year Results.BOSTON Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. -- The Gillette Company (NYSE NYSE See: New York Stock Exchange :G) today reported record annual and fourth-quarter results with double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. percentage increases in net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight , profit from operations, net income and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per share. The solid gains reflected one of the strongest Company-wide new product efforts in Gillette's history, including the introduction of the M3Power and Venus Venus, in astronomy Venus, in astronomy, 2d planet from the sun; it is often called the evening star or morning star and is brighter than any object in the sky except the sun and the moon. Divine shaving systems, Oral-B Oral-B is a brand name of toothbrush and other dental care products (such as dental floss) manufactured by Procter and Gamble who acquired Gillette in 2005. The brand also includes power toothbrushes and interdental products (such as irrigators and oral care centers). Sonic Complete and Brush-Ups oral care products, the Gillette Complete Skincare line for men and the Braun Braun , Eva 1912-1945. German lover and later wife of Adolf Hitler. They began living together in 1936, but the liaison was kept secret, and she was never seen in public with him. They were married hours before their double suicide on April 30, 1945. Activator activator /ac·ti·va·tor/ (ak´ti-va?ter) 1. a substance that combines with an enzyme to increase its catalytic activity. 2. a substance that stimulates the development of a specific structure in the embryo. electric shaver. The profit increase was driven by strong organic net sales growth of existing products, trade-up to premium products in both developed and developing countries, increased manufacturing efficiencies and reduced overhead costs overhead costs see fixed costs. . For the year, net sales rose 13 percent to $10.48 billion from $9.25 billion in 2003. Solid volume gains and trade-up were achieved across Gillette's core categories and in all regions, with significant increases in the developing markets of Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). and China. Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign exchange, notably in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia,
contributed 5 percentage points of the net sales gain.
Profit from operations for the year rose 23 percent to $2.47 billion from $2 billion in 2003. The strong profit gain reflected solid sales growth, driven by a 40 percent increase in the Company's advertising investment, plus significant overhead savings and improved operational efficiencies. Net income for the year climbed 22 percent to $1.69 billion from the prior year's $1.39 billion, fueled by the robust operating results. Higher exchange-related expenses were offset by a lower effective income tax rate, down 1 percentage point from a year ago to 29 percent. Diluted net income per common share rose 24 percent to $1.68, up from $1.35 in 2003. For the fourth quarter, net sales grew 19 percent to $3.11 billion, compared with $2.62 billion for the same period in 2003. The gains were driven by strong consumer demand for new products, two additional selling days and the flow of shipments at the beginning of the quarter versus the same period last year. Favorable foreign exchange, primarily in Europe, contributed 4 percentage points of the net sales advance. Profit from operations for the quarter climbed 19 percent to $610 million from $514 million for the corresponding period in 2003. Net income for the quarter was $415 million, up 13 percent from $368 million last year, or an increase of 14 percent to 41 cents, from 36 cents last year in diluted net income per share. "We made significant progress last year in all areas of our business," said James M. Kilts James M. Kilts was a chief executive officer of The Gillette Company. He negotiated the sale of the company to Procter & Gamble for US$57 billion. Press investigators estimate that he stood to gain more than $165 million personally in the purchase. , chairman, president and chief executive officer of Gillette. "We capped a four-year climb to the top of our sector with a second consecutive year of record results. And on the strength of all we accomplished, we took a giant step into the future. Our announced union with Procter
Mr. Kilts said that "Gillette posted excellent results across the board, fueled by our largest and most successful new products effort ever." Key successes included M3Power, the first battery powered wet shaving system; the Venus Divine premium system for women; the Oral B Professional Care 8000 power rechargeable re·charge tr.v. re·charged, re·charg·ing, re·charg·es To charge again, especially to reenergize a storage battery. re toothbrush toothbrush, n a handheld device with an arrangement of bristles at one end, and a handle designed to reach effectively all exposed surfaces of the teeth and gingiva. ; and the Sonic Complete, the Company's first entry in the sonic segment of brushing. "Our Duracell Duracell is a brand of batteries manufactured by Procter and Gamble. Duracell is the leading brand of batteries worldwide. Additionally, Duracell owns the Procell professional-use brand. battery business had an exceptional year within a very difficult competitive environment. And, we also intensified in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: our efforts in developing countries, which significantly increased our sales in those markets," he said. "The overall impact of all our effort is clear -- an exceptional year of both top-line and bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. growth. "We look forward to another very good year in 2005. It promises to again be our most active year for new products, with the ongoing international roll out of M3Power and several Oral Care products and the introduction of several major new trade-up products, including Venus Vibrance, our powered wet shaving system for women, and Venus Disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. , the most advanced women's disposable razor." Results by business segment follow. --Blades and Razors net sales for the year rose 12 percent to $4.33 billion from $3.87 billion in 2003. Profit from operations climbed 14 percent to $1.63 billion from $1.43 billion last year, fueled by new premium products, including the launch of M3Power in the U.S., U.K., Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and Japan, and trade-up in developing markets to entry-level en·try-lev·el adj. Appropriate for or accessible to one who is inexperienced in a field or new to a market: an entry-level job in advertising; an entry-level computer. systems and premium disposables. Strong consumer demand for M3Power drove six consecutive months of value share gains in the U.S. blade and razor market and increased Gillette's U.K. value share of razors to 80 percent in the fourth quarter, up 17 points. On a global basis, consumer sales of the Mach See Mach kernel. Mach - An operating system kernel under development at Carnegie-Mellon University to support distributed and parallel computation. Mach is designed to support computing environments consisting of networks of uniprocessors and multiprocessors. 3 family grew 10 percent in constant dollars, increasing its global value share of the blade and razor market by 1 percentage point to 31 percent. In Latin America, the success of the Prestobarba Excel A full-featured spreadsheet for Windows and the Macintosh from Microsoft. It can link many spreadsheets for consolidation and provides a wide variety of business graphics and charts for creating presentation materials. premium disposable led to an increase in Gillette's total blade value share in 2004 for the first time in more than a decade. In Russia, Gillette's blade value share grew 1.5 points to 89 percent, driven by the Slalom slalom Alpine skiing event in which competitors race one at a time down a zigzag or wavy course past a series of flags or markers called gates. The course is carefully designed to test the skier's skill, timing, and judgment. entry-level system and stepped-up marketing initiatives. Profit gains for the year reflected the significant growth of premium systems and disposables in all markets, which helped fund a double-digit percentage increase in advertising for new and established products. For the fourth quarter, net sales climbed 16 percent to $1.09 billion, up from $939 million for the same quarter last year. Net sales last year were dampened by advance shipments of a holiday razor program in the third quarter. Profit from operations increased 17 percent to $358 million from $305 million for the same period in 2003. --Duracell net sales for the year rose 11 percent to $2.23 billion from $2.02 billion in 2003, reflecting growth in all regions of the world driven by a double-digit percentage increase in advertising. Profit from operations climbed 41 percent to $490 million from $348 million in 2003, as gains from manufacturing efficiencies and lower overhead costs led Duracell to achieve its goal of industry-leading margins. Net sales benefited from strong demand in international markets, particularly the developing markets of Russia and Turkey, and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. consumption resulting from the unusually active hurricane season Hurricane season refers to a period in a year when hurricanes usually form. For more information see: Tropical cyclone#Times of formation. For a lists of past seasons, see:
Compared with original zinc-carbon batteries, while both produce approximately 1. value share in the U.S. held steady in the fourth quarter and for the year. Heightened promotional and give-away activity by high-end alkaline alkaline /al·ka·line/ (al´kah-lin) (-lin) 1. having the reactions of an alkali. 2. having a pH greater than 7.0. al·ka·line adj. 1. competition, and aggressive promotion and increased distribution of low-priced, low-performance zinc zinc, metallic chemical element; symbol Zn; at. no. 30; at. wt. 65.38; m.p. 419.58°C;; b.p. 907°C;; sp. gr. 7.133 at 25°C;; valence +2. Zinc is a lustrous bluish-white metal. It is found in Group 12 of the periodic table. batteries, continued to negatively impact the category. Duracell's strong profit growth reflected both the solid net sales advance and ongoing manufacturing efficiencies. For the quarter, net sales were up 12 percent to $770 million from $685 million in the fourth quarter of 2003, due to strong performance in Latin America and the developing markets of Russia and Turkey. Profit from operations rose 11 percent to $166 million from $149 million for the same quarter last year. --Oral Care net sales for the year climbed 20 percent to $1.59 billion from $1.33 billion for last year, with profit from operations up 14 percent to $249 million from $218 million. The strong net sales growth was driven by new product initiatives and ongoing trade-up to premium products, resulting in growing market share. Oral-B strengthened its number one position in the global brushing market, led by the launch of the Professional Care 8000 and Sonic Complete premium rechargeable brushes, as well as the success of the high-performance CrossAction Vitalizer and Advantage Artica toothbrushes. The acquisitions of Rembrandt teeth-whitening products and Zooth character-based children's brushes during the year also contributed to the net sales advance. Profit for the year reflected the strong net sales gain, balanced primarily by a significant increase in advertising to support multiple new product introductions. For the fourth quarter, net sales were up 28 percent to $498 million from $388 million, due to strong new product activity and consumer trade-up to premium-performing products. Profit from operations rose to $63 million, up 21 percent from $52 million in the prior year. --Braun net sales for the year increased 16 percent to $1.37 billion from $1.18 billion in 2003, and profit from operations was $95 million, up 94 percent from $49 million a year ago. The increase in net sales reflected the introduction of new products such as the top-of-the-line Activator men's shaver; the youth-oriented CruZer shaver and styler; and strong demand for the SoftPerfection female epilator in Europe, Russia and Turkey. During the year, Braun made significant progress in growing its core hair removal business. In the fourth quarter, Braun increased its value share of male electric shavers in the U.S., Europe and Japan with Activator and Syncro, which were the two top-selling male shaver products in the U.S. in December. Contributors to the very strong profit increase were solid net sales growth and a favorable mix of higher margin products, particularly male shavers and female epilators, which were supported by a double-digit percentage increase in marketing investment. For the fourth quarter, net sales rose to $493 million, up 28 percent from $385 million for the fourth quarter of 2003, while profit from operations increased to $28 million from $6 million in the previous year. --Personal Care net sales for the year grew 11 percent to $961 million from $864 million in 2003. Profit from operations rose 30 percent to $95 million from $73 million last year. Double-digit percentage net sales gains in Europe and in the Africa, Middle East and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. (AMEE AMEE Association for Medical Education in Europe AMEE Avoiding Mass Extinctions Engine AMEE Autonomous Mapping Exploration and Evasion (the robot in the movie 'Red Planet') AMEE Africa, Middle East and Eastern Europe ) region were driven by strong trade-up from foam shave shave (shav) 1. to cut at or parallel to the surface of the skin. 2. to remove the beard or other body hair by such a process. 3. to cut thin slices from or to cut into thin slices. preparations to premium gel-based shave preparations. Gillette's global leadership in shave preparations increased in key markets during the year. Strong consumer demand for Right Guard Cool Spray produced Gillette's first share gain in the UK in a decade. Profit growth reflected favorable product mix, manufacturing savings and level overhead costs. For the fourth quarter, net sales increased 16 percent to $262 million from $225 million for the same period last year, and profit from operations was up 9 percent to $25 million from $23 million, reflecting growth in all regions driven by strong demand for shave preparations and new product introductions. The Company's cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses remained strong. Capital expenditures, at $616 million in 2004, were up from $408 million a year ago, due to investments to support new product programs and the realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of the Company's European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. blade and razor manufacturing and distribution network. The Company's strong operating performance resulted in $1.70 billion in free cash flow(a) in 2004. Free cash flow for the fourth quarter was $401 million, down from $765 million for the same period in 2003. The decrease was due in part to incremental pension and retiree medical plan funding in the fourth quarter of approximately $300 million. During 2004, the Company repurchased 24.8 million shares, at a cost of $1.02 billion. (a) Free cash flow, defined as net cash provided by operating activities net of additions to and disposals of property, plant and equipment, is analyzed an·a·lyze tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es 1. To examine methodically by separating into parts and studying their interrelations. 2. Chemistry To make a chemical analysis of. 3. by the Company as a measure of its liquidity, as well as its ability to fund future growth and to provide a return to shareholders. Free cash flow is not a measure of the residual cash flow that is available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. from the measure. This release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " 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 and the competitive market environment, 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 statement consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. data follow. (Millions, except per share amounts)
Three Months Twelve Months
Ended Ended
December 31, December 31,
-------------------------------------
2004 2003 2004 2003
-------- -------- ------- -------
Net Sales $ 3,108 $ 2,622 $10,477 $ 9,252
======== ======== ======= =======
Profit from Operations $ 610 $ 514 $ 2,465 $ 2,003
======== ======== ======= =======
Income from Continuing
Operations, before Income Taxes $ 583 $ 512 $ 2,384 $ 1,964
Income Taxes $ 168 $ 154 $ 693 $ 589
-------- -------- ------- -------
Income from Continuing Operations$ 415 $ 358 $ 1,691 $ 1,375
Income from Discontinued
Operations $ - $ 10 $ - $ 10
-------- -------- ------- -------
Net Income $ 415 $ 368 $ 1,691 $ 1,385
======== ======== ======= =======
Net Income per Common Share:
- Basic:
Continuing Operations 0.42 0.36 1.69 1.35
Discontinued Operations $ 0.00 $ 0.00 $ 0.00 $ 0.01
Net Income $ 0.42 $ 0.36 $ 1.69 $ 1.36
- Assuming Full Dilution:
Continuing Operations $ 0.41 $ 0.35 $ 1.68 $ 1.34
Discontinued Operations $ 0.00 $ 0.01 $ 0.00 $ 0.01
Net Income $ $0.41 $ $0.36 $ $1.68 $ $1.35
Average Number of Common Shares
Outstanding:
Basic 992 1,010 999 1,021
Assuming Full Dilution 1,001 1,013 1,007 1,024
The data reported above for the three and twelve months ended
December 31, 2004 and 2003, are based on unaudited statements of
income, but include all adjustments that the Company considers
necessary for a fair presentation of results for these periods.
The unaudited consolidated balance sheet data follow.
December 31, December 31,
2004 2003
--------------------------
(millions)
Cash and Cash Equivalents $ 1,066 $ 681
Net Trade Accounts Receivable 835 920
Inventories 1,291 1,094
Other Current Assets 850 955
Net Property, Plant and Equipment 3,747 3,644
Other Assets, Including Goodwill and
Intangibles 2,880 2,687
--------- ---------
Total Assets $ 10,669 $ 9,981
========= =========
Total Debt $ 3,386 $ 3,312
Other Current Liabilities 2,934 2,825
Other Noncurrent Liabilities 1,513 1,620
Stockholders' Equity, before
Treasury Stock 10,519 8,889
Treasury Stock (7,683) (6,665)
Stockholders' Equity 2,836 2,224
--------- ---------
Total Liabilities and Stockholders' Equity $ 10,669 $ 9,981
========= =========
The data reported above for December 31, 2004 and 2003 are based on an
unaudited balance sheets, and include all adjustments that the Company
considers necessary for a fair presentation of financial position for
these periods.
Free cash flow, defined as net cash provided by operating activities
net of additions to and disposals of property, plant and equipment, is
analyzed by the Company as a measure of its liquidity, as well as its
ability to fund future growth and to provide a return to shareholders.
Free cash flow is not a measure of the residual cash flow that is
available for discretionary expenditures since the Company has certain
non-discretionary obligations such as debt service that are not
deducted from the measure. A reconciliation of free cash flow to the
increase in cash and cash equivalents in accordance with Generally
Accepted Accounting Principles (GAAP) follows.
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------------------------
2004 2003 2004 2003
------ ------- ------- -------
(millions)
Free Cash Flow $ 401 $ 765 $ 1,697 $ 2,277
Additions to property, plant
and equipment 237 190 616 408
Disposals of property, plant
and equipment (23) (17) (67) (45)
Net Cash Provided by
Operating Activities $ 615 $ 938 $ 2,246 $ 2,640
Net Cash Used in Investing
Activities $ (215) $ (170) $ (665) $ (518)
Net Cash Used in Financing
Activities(a) $ (230) $ (935) $(1,199) $(2,250)
Effect of Exchange Rate
Changes on Cash 5 3 3 8
Increase (Decrease) in Cash
and Cash Equivalents (GAAP
basis) $ 175 $ (164) $ 385 $ (120)
====== ======= ======= =======
(a) Share repurchases of $242 million and $204 million were included
in the three month periods ended December 31, 2004 and 2003,
respectively. The twelve month periods ended December 31, 2004 and
2003 include share repurchases of $1.02 billion and $1.27 billion,
respectively.
The data reported above are based on unaudited statements of cash
flows, and include all adjustments that the Company considers
necessary for a fair presentation of results for these periods.
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