Gillette Reports Third Quarter and Nine-Month Results.

BOSTON--(BUSINESS WIRE)--Oct. 15, 1998--Sales, profit from operations, net income and net income per common share of The Gillette Company were lower, as expected, for the third quarter and nine months ended September 30, 1998.

Sales for the three months ended September 30, 1998, were $2.53 billion. Excluding the adverse effects of exchange and the divestiture of Jafra Cosmetics International, sales would have been down 2% from the prior year, rather than the reported 6% decrease. Net income, including one-time realignment costs of $347 million, was slightly above breakeven.

Before one-time realignment costs, profit from operations was $575 million, down 18% from $702 million a year earlier, and net income was $353 million, a 19% decrease from last year's net income of $437 million. Diluted net income per common share, before one-time realignment costs, declined 21% to 30 cents, compared with 38 cents in the prior year's third quarter.

"Our third-quarter results reflect broad-based economic weakness in international markets, the one-time start-up expenses associated with the accelerated launch plan for the MACH3 shaving system and the continuing negative effects of a strong dollar," Alfred M. Zeien, chairman and chief executive officer, said today. "The MACH3 shaving system is making excellent progress. Further, worldwide share positions throughout our core categories continue to improve, demonstrating that our fundamentals have never been stronger," he added.

For the nine months ended September 30, 1998, sales were $6.88 billion. Excluding the adverse effects of exchange and the divestiture of Jafra Cosmetics International, sales increased 2%, rather than the reported 3% decrease. Net income, including one-time realignment costs of $347 million, was $646 million.

Before one-time realignment costs, profit from operations was $1.60 billion, a decrease of 2% from $1.64 billion the year before. Net income, before one-time realignment costs, was $993 million, a decrease of 2%, compared with last year's net income of $1.01 billion. Diluted net income per common share, before one-time realignment costs, declined 2% to 86 cents, compared with 88 cents in the prior year.

Results by business segment before one-time realignment costs follow.

--The Company's Blade and Razor sales in the third quarter were moderately higher, while profits decreased substantially from those of 1997. For the nine months, blade and razor sales were virtually unchanged, and profits fell below those of the prior year.

--Duracell third-quarter sales increased slightly, while profits were lower than those of last year. For the nine months, sales grew moderately from the level of a year earlier, and profits rose sharply.

--Sales and profits of Braun products in the third quarter were down significantly from those of the prior year. For the nine months, sales were well below those of last year, while profits decreased considerably.

--Toiletries sales and profits for the third quarter and nine months were significantly below those of a year ago. Jafra results up until the April 30, 1998, divestiture are included.

--Third-quarter sales of Stationery Products were down considerably from those of the prior year, and profits were much lower. For the nine months, sales were well below, and profits sharply below, those of 1997.

--Oral-B sales in the third quarter declined, and profits were down substantially from last year's. For the nine months, sales showed little change, and profits climbed sharply.

Net interest expense and net exchange losses were higher for the third quarter and nine months, while the effective tax rate was lower in both periods.

At its meeting today, the Board of Directors declared the regular quarterly dividend of 12.75 cents per common share, payable December 4, 1998, to stockholders of record November 2, 1998, and the regular quarterly dividend of $12.0575 per share on the 8% Cumulative Series C ESOP convertible preferred stock, payable December 31, 1998.

Financial results for 1997 have been recast to provide comparability to the Company's 1998 results to reflect the harmonization of our operating groups on a common calendar quarter and year-end basis.

This report contains "forward-looking statements" about the Company's prospects and progress. Investors should 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 the degree of acceptance of new product introductions in the marketplace; and the difficulty of forecasting sales at certain times in certain markets. Any such "forward-looking statements" are also qualified by the detailed statement under Item 7, "Cautionary Statement," in the Company's most recent Annual Report on Form 10-K, and under Item 5, "Forward-Looking Statements" or "Cautionary Statement," in the Company's most recent Quarterly Report on Form 10-Q.

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The unaudited consolidated income account follows:


(Millions except per share amounts)

                               Three Months Ended  Nine Months Ended
                                    September 30      September 30
                                   1998     1997     1998     1997
                                  ------   ------   ------   ------

Net Sales                         $2,531   $2,701   $6,881   $7,066
                                  ======   ======   ======   ======

Profit from Operations (a)        $   40   $  702   $1,069   $1,639
                                  ======   ======   ======   ======

Income Before Income Taxes (a)    $    9   $  680   $  998   $1,570

Income Taxes (a)                       3      243      352      561
                                  ------   ------   ------   ------

Net Income (a)                    $    6   $  437   $  646   $1,009
                                  ======   ======   ======   ======

Average Number of Common
Shares Outstanding:
  - Basic                          1,116    1,120    1,120    1,117
  - Assuming Full Dilution         1,143    1,150    1,149    1,148

Net Income Per Common Share (a)
  - Basic                          ---     $  .39   $  .57   $  .90
                                  ======   ======   ======   ======
  - Assuming Full Dilution         ---     $  .38   $  .56   $  .88
                                  ======   ======   ======   ======

(a) 1998 third-quarter and nine-month year-to-date figures include
one-time charges for realignment costs, 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.