Edgar Filing: GILLETTE CO

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-K
(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 2003

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 1-922

The Gillette Company
(Exact name of registrant as specified in its charter)

Incorporated in Delaware 04-1366970
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

Prudential Tower Building, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code 617-421-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
Common Stock, $1.00 par value New York Stock Exchange
Boston Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ([sec]229.405 of this chapter) is not contained herein, and
will not be contained to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [X] No [ ]

The aggregate market value of Gillette Common Stock held by non-affiliates as of
June 30, 2003, (the last day of our most recently completed second quarter) was
approximately $32,033,000,000.*

The number of shares of Gillette Common Stock outstanding as of January 31,
2004, was 1,006,992,734.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the following documents have been incorporated by reference
into this Form 10-K as indicated:

Documents 10-K Parts
----------------------------------------------------------------------------------------------------

1. The Gillette Company 2003 Annual Report
to Shareholders (the "2003 Annual Report") Parts I and II
2. The Gillette Company 2004 Proxy Statement (the "2004 Proxy Statement") Part III

* For purposes of this calculation only, Gillette Common Stock held by
Executive Officers or Directors of the Company has been treated as owned by
affiliates.

Part I

ITEM 1. DESCRIPTION OF BUSINESS

General Development of Business

Founded in 1901, we are a Delaware corporation with our registered office in
Wilmington, Delaware. As of December 31, 2003, we had manufacturing operations
at 32 facilities in 14 countries. Our products are sold in over 200 countries
and territories.

We manufacture and sell a wide variety of consumer products throughout the
world. We have five business segments: Blades and Razors, Duracell, Oral Care,
Braun and Personal Care. In 2000, we sold our Stationery Products business.

Blades and Razors

We are the world leader in blades and razors. We sell male shaving systems under
such brands as Mach3Turbo, Mach3, SensorExcel, Sensor, Atra, and Trac II, and
disposable razors under the Sensor3, Custom Plus, and Good News brands. In
January 2004, we announced M3Power, a battery-powered wet shaving system for
men, which is scheduled to be availaible to consumers in North America in May
2004. In August 2003, we announced the Sensor3 shaving system for men, which
will be available to consumers in North America in March 2004. Our female
shaving systems are sold under the Gillette for Women Venus, SensorExcel for
Women, and Sensor for Women brands, and our disposable razors are sold under the
Agility and Daisy brands. In July 2003, we introduced the Venus Divine shaving
system for women, which is scheduled to be available to consumers in North
America in April 2004.

Duracell

We are the world leader in alkaline batteries for consumers. Our products
include Duracell CopperTop and Duracell Ultra alkaline batteries and Duracell
primary lithium, zinc air, and rechargeable nickel-metal hydride batteries.

Oral Care

We are the world leader in manual and power toothbrushes, all sold under the
Oral-B brand.

Braun

We sell electric shavers under the Braun brand and hair epilators under the
Silk-Epil brand. These products include the number one foil electric shaver for
men and the number one hair epilator for women. We also sell small household and
personal diagnostic appliances under the Braun brand.

Personal Care

We sell shaving preparations, skin care products, and antiperspirants/deodorants
under brands such as Gillette Series, Satin Care, Right Guard, Soft & Dri, and
Dry Idea.

Business Segments

"Operating Segments and Related Information," which contains information on net
sales, profit from operations, identifiable assets, capital expenditures, and
depreciation for each of the last three years, is incorporated by reference from
page 64 of the 2003 Annual Report.

Distribution

In major geographic markets, our products are sold directly to retailers and to
wholesalers for resale through retail stores. Oral Care products and Braun
personal diagnostic appliances are also sold to health care professionals. In
some small geographic markets, our products are distributed by local
distributors and through sales agents. The Company's largest customer, Wal-Mart
Stores, Inc. and its affiliates, accounted for 13% of net sales in 2003,
compared with 12% of net sales in both 2002 and 2001. These sales were made
primarily in the United States and were across all product segments.

Patents

Some of our patents and licenses in the Blades and Razors segment are of
substantial value and importance when considered in the aggregate. Additionally,
we hold significant patents in our Duracell, Oral Care, Braun, and Personal Care
businesses. No single patent or license held by us is material to our total
business. We have licensed many of our blade and razor patents to other
manufacturers. In all of our business segments, our competitors also have
significant patent positions. The patents and licenses held by us are of varying
remaining durations.

Trademarks

In general, our principal trademarks have been registered in the United States
and throughout the world where our products are sold. Our 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 us. In addition, a number of other trademarks owned by us and our
subsidiaries have significant importance within their industries. Our rights in
these trademarks endure for as long as they are used or registered.

Competition

All of our markets are highly competitive. Some of our competitors are larger
and have greater resources than we do. The Blades and Razors segment is highly
competitive in terms of new technology, as well as product perfomance, price,
marketing, advertising, and promotion. Our major competitors worldwide in blades
and razors include Energizer Holdings, Inc., with its Schick product line, and,
in certain countries, its Wilkinson Sword product line, and Societe Bic S.A. The
Duracell segment is highly competitive in terms of price, marketing,
advertising, and promotion. Competition in the Oral Care segment is focused on
product performance, price, and professional endorsement. Competition in the
electric shaver and epilator product lines is based primarily on product
performance, innovation, and price. The Personal Care segment is highly
competitive in terms of price, product innovation, and market positioning, with
frequent introductions of new brands and marketing concepts and with product
life cycles typically shorter than in our other businesses.

Employees

At year-end, we employed approximately 29,400 persons, over 70% of them outside
the United States.

Research and Development

Our research and development efforts are significant to our product innovation,
particularly in Blades and Razors. In 2003, research and development
expenditures were $202 million, compared with $185 million in 2002 and $187
million in 2001.

Raw Materials

The raw materials we use to manufacture our products are purchased from a number
of suppliers, and substantially all such materials are readily available.

Operations by Geographic Area

Net sales and net property, plant, and equipment by geographic area for each of
the last three years is incorporated by reference from page 65 of the 2003
Annual Report.

Availability of Reports and Other Information

Our web site is www.gillette.com. On this web site, the public can access our
annual, quarterly, and current reports, changes in the stock ownership of our
Directors and Executive Officers, and other documents filed with the Securities
and Exchange Commission as soon as reasonably practicable after the filing date.

In addition, under the section entitled, "Corporate Governance," we post
the latest versions of our Certificate of Incorporation, Bylaws, Corporate
Governance Principles, Committee Charters, Committee Assignments, Code of
Conduct, and Code of Ethics for Financial Managers and the Chief Executive
Officer, including any waivers from or amendments to the Code of Ethics. We also
post the procedure for contacting our Board of Directors.

The Corporate Governance Principles, Committee Charters, Code of Conduct
and Code of Ethics, are each available in print to any shareholder upon request
by writing to the Office of the Secretary, The Gillette Company, Prudential
Tower Building, Boston, Massachusetts, 02199.

ITEM 2. DESCRIPTION OF PROPERTY

We own and lease manufacturing facilities and other real estate in the United
States and a number of foreign countries. Our executive offices are located in
the Prudential Tower Building, Boston, Massachusetts, where we hold a long-term
lease. The following table sets forth our principal facilities, defined as those
measuring 250,000 square feet or more.

Business Segment Location Owned/Leased
---------------- -------------------------- ------------

Blades & Razors Boston, MA (US) Owned
Isleworth, UK Owned
Berlin, Germany Owned
Naucalpan, Mexico Owned
Manaus, Brazil Owned
Duracell Nanping, China Owned/Leased
Aarschot, Belgium Owned
Dongguan, China Owned/Leased
Lancaster, SC (US) Owned
LaGrange, GA (US) Owned
Bethel, CT (US) Owned
Oral Care Iowa City, IA (US) Owned
Braun Kronberg, Germany Owned/Leased
Barcelona, Spain Owned/Leased
Walldurn, Germany Owned/Leased
Marktheidenfeld, Germany Owned
Mexico City, Mexico Owned/Leased
Personal Care Andover, MA (US) Owned
Reading, UK Owned/Leased
Multisegment Distribution Romeoville, IL (US) Leased
Centers Ontario, CA (US) Leased
Hemel Hempstead, UK* Leased
Devens, MA (US)* Leased
Altfeld, Germany Owned

*Packaging center that also serves as warehouse/distribution facility.

The above facilities are in good repair, adequately meet our needs, and
operate at reasonable levels of capacity.

ITEM 3. LEGAL PROCEEDINGS

We are subject, from time to time, to legal proceedings and claims arising out
of our business, which cover a wide range of matters, including antitrust and
trade regulation, product liability, advertising, 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 our consolidated financial
condition, results of operations, or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

No matters were submitted to a vote of shareholders during the fourth quarter of
fiscal 2003.

EXECUTIVE OFFICERS OF REGISTRANT

Information relating to our Executive Officers is set out below.

Name and Current Position Five-Year Business History Age
------------------------- --------------------------------------------------------- ---

James M. Kilts Chairman, Chief Executive Officer and President since 56
Chairman of the Board, January 2001, February 2001 and November 2003,
Chief Executive Officer and respectively; President and Chief Executive Officer,
President Nabisco Group Holdings Corp., December 1999 -
December 2000; President and Chief Executive Officer,
Nabisco Holdings Corp. and Nabisco, Inc., January 1998 -
December 1999

Edward F. DeGraan Vice Chairman of the Board since November 2003; 60
Vice Chairman of the Board President and Chief Operating Officer, July 2000 -
November 2003; Acting Chief Executive Officer,
October 2000 - February 2001; Executive Vice President,
Global Business Management, January 2000 - July 2000;
Executive Vice President, Global Business Management,
Gillette Grooming Products and Duracell, January 1999 -
January 2000

Michael T. Cowhig President, Global Technical and Manufacturing, 57
Senior Vice President since January 2004; Senior Vice President, Global
Manufacturing and Technical Operations, September 2002
- December 2003; Senior Vice President, Global Supply
Chain and Business Development, January 2000 - August
2002; Senior Vice President, Manufacturing and Technical
Operations, Global Business Management -- Grooming,
January 1999 - January 2000

Charles W. Cramb Senior Vice President, Finance, and Chief Financial 57
Senior Vice President and Officer since December 1999; Senior Vice President,
Chief Financial Officer Finance, Chief Financial Officer and Principal Accounting
Officer, July 1997 - December 1999

Edward E. Guillet Senior Vice President, Human Resources, since July 2001; 52
Senior Vice President Vice President, Corporate Human Resources, July 1997 -
June 2001

Peter Klein Senior Vice President, Strategy and Business Development, 57
Senior Vice President since March 2001; Executive Vice President, Strategy,
Business Development, Marketing Services and e-Business,
Nabisco Holdings Corp. and Nabisco, Inc., April 1998 -
December 2000

Name and Current Position Five-Year Business History Age
------------------------- --------------------------------------------------------- ---

Kathy S. Lane Senior Vice President, Gillette Information Technology, 46
Senior Vice President and and Chief Information Officer since March 2002; General
Chief Information Officer Manager, eBusiness & IT, General Electric Oil & Gas,
December 2000 - March 2002; Senior Vice President and
Chief Information Officer, Vendor Financial Services,
General Electric Company, February 1999 - December
2000; Manager, General Electric Corporate Initiatives
Group, General Electric Company, September 1998 -
February 1999

John F. Manfredi Senior Vice President, Corporate Affairs, since March 63
Senior Vice President 2001; Executive Vice President, Corporate Affairs,
Nabisco Holdings Corp. and Nabisco, Inc., April 1995 -
December 2000

Edward D. Shirley Senior Vice President, Global Value Chain and Global 47
Senior Vice President Marketing Resources, since May 2002; President,
Commercial Operations Europe, January 2000 -
April 2002; President, Business Development and
Administration, Europe, January 1999 - December 1999

Richard K. Willard Senior Vice President and General Counsel since 55
Senior Vice President and November 1999; Partner, Steptoe & Johnson LLP,
General Counsel 1988 - October 1999

Claudio E. Ruben Vice President, Controller and Principal Accounting 56
Vice President, Controller Officer since January 2001; Vice President, Investor
and Principal Accounting Relations, June 1999 - December 2000; Vice President,
Officer Internal Audit, February 1998 - June 1999

A. Bruce Cleverly President, Global Business Management -- Oral Care, 58
Vice President since February 2001; Senior Vice President, Global
Business Management -- Duracell, January 1999 -
January 2001

Joseph F. Dooley President, Commercial Operations North America, since 50
Vice President July 2000; Senior Vice President, General Merchandise --
Commercial Operations North America, March 1999 - June
2000; Senior Vice President and General Manager, Duracell
North America, September 1997 - February 1999

Ernst A. Haberli President, Commercial Operations International, since 55
Vice President October 2001; President, North American Tissue
Operations and Technology, Fort James Corporation,
January 2000 - December 2000; Director, Fort James
Corporation, May 1998 - December 2000; Executive
Vice President and Chief Financial Officer, Fort James
Corporation, January 1997 - December 1999

Peter K. Hoffman President, Global Business Management -- Blades and 55
Vice President Razors, since January 2000; Senior Vice President,
Grooming -- Global Business Management, January
1999 - December 1999

Name and Current Position Five-Year Business History Age
------------------------- ---------------------------------------------------------- ---

Mark M. Leckie President, Global Business Management -- Duracell, since 50
Vice President April 2001; President and Chief Executive Officer, Heinz
Canada, H.J. Heinz Company, October 2000 - April
2001; President, U.S. Grocery Division, Campbell Soup
Company, September 1997 - June 1999

Joseph Scalzo President, Global Business Management -- Personal Care, 45
Vice President since October 2001; Vice President, Worldwide Core
Brand Development, The Coca-Cola Company, February
2000 - September 2001; Senior Vice President & Chief
Marketing Officer, Minute Maid Division, The Coca-Cola
Company, August 1998 - January 2000

The Executive Officers hold office until the first meeting of the Board of
Directors following the Annual Meeting of Shareholders and until their
successors are 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. MARKET FOR THE REGISTRANT'S COMMON STOCK, RELATED SHAREHOLDER MATTERS,
AND ISSUER PURCHASES OF EQUITY SECURITIES

The information required by this item with respect to our common stock appears
in the 2003 Annual Report incorporated by reference from the inside back cover
under the caption, "Common Stock," and at page 66 of the 2003 Annual Report
under the caption, "Quarterly Financial Information", and is incorporated herein
by reference. As of January 31, 2004, there were 43,106 Gillette stockholders
of record.

The Company has two share repurchase programs in place that, in total,
authorize the purchase of up to 200 million shares in the open market or in
privately negotiated transactions, depending on market conditions and other
factors. During 2003, the Company repurchased 40,755,300 shares for $1.27
billion.

A summary of the repurchase activity for the Company's fourth quarter
follows.

ISSUER PURCHASES OF EQUITY SECURITIES

Total Number
of Shares Maximum Number
Purchased as Part of Shares
Total Number Average of Publicly that May Yet Be
of Shares Price Paid Announced Plans Purchased Under the
Period Purchased per Share or Programs(1) Plans or Programs
---------------------------------------------------------------------------------------------------------

October 1-October 31 -- -- -- 57,000,000
November 1-November 30 3,218,150 $ 33.35 3,218,150 53,781,850
December 1-December 31 2,781,850 $ 34.82 2,781,850 51,000,000
Total Fourth Quarter 6,000,000(2) $ 34.03 6,000,000 51,000,000

(1) The Company has two share repurchase programs. The first was announced on
9/18/97 authorizing the purchase of up to 25 million shares of the
Company's common stock and was subsequently amended to authorize the
purchase of up to 150 million shares. The second program was announced on
9/16/03 and authorizes the purchase of up to 50 million shares of the
Company's common stock. There is no expiration date specified for either of
the programs. The Company intends to repurchase stock under each of the
programs in the future.

(2) All share repurchases were effected in accordance with the safe harbor
provisions of Rule 10b-18 of the Securities Exchange Act.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is incorporated by reference from page 67
of the 2003 Annual Report under the caption, "Historical Financial Summary".

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information required by this item is incorporated by reference from pages 22
through 35 of the 2003 Annual Report under the caption, "Management's Discussion
and Analysis of Financial Condition and Results of Operations".

CAUTIONARY STATEMENT

Certain statements that we may make from time to time, including statements
contained in this report, constitute "forward-looking statements" under the
federal securities laws. Forward-looking statements may be identified by words
such as "plans," "expects," "believes," "anticipates," "estimates," "projects,"
"will" and other words of similar meaning used in conjunction with, among other
things, discussions of future operations, acquisitions and divestitures,
financial performance, our strategy for growth, product development and new
product launches, market position, and expenditures.

Forward-looking statements are based on current expectations of future
events, but actual results could vary materially from our expectations and
projections. Investors are cautioned not to place undue reliance

on any forward-looking statements. We assume no obligation to update any
forward-looking statements. We caution that historical results should not be
relied upon as indications of future performance.

Factors that could cause actual results to differ materially from those
expressed in any forward-looking statement include the following, some of which
are described in greater detail below:

- the pattern of our sales, including variations in sales volume within
periods;
- consumer demands and preferences, including the acceptance by our customers
and consumers of new products and line extensions;
- the mix of products sold;
- our ability to control and reduce our internal costs and the cost of raw
materials;
- competitive factors, including prices, promotional incentives, and trade
terms for our products, and our response, as well as those of our customers
and competitors, to changes in these terms;
- product introductions and innovations by us and our competitors;
- technological advances by us and our competitors;
- new patents granted to us and our competitors;
- changes in exchange rates in one or more of our geographic markets;
- changes in laws and regulations, including trade regulations, accounting
standards and tax laws, governmental actions affecting the manufacturing
and sale of our products, unstable governments and legal systems, and
nationalization of industries;
- changes in accounting policies;
- acquisition, divestiture, and collaborative activities by us, our
competitors, or customers; and
- the impact of general political and economic conditions or hostilities in
the United States and in other parts of the world.

COMPETITIVE ENVIRONMENT

We experience intense competition for sales of our products in most markets. Our
products compete with widely advertised, well-known, branded products, as well
as private label products, which typically are sold at lower prices. In most of
our markets, we have major competitors, some of which are larger and more
diversified than we are. In March 2003, Energizer Holdings, Inc. acquired the
Schick blade and razor business and, in certain countries, the Wilkinson Sword
blade and razor business, from Pfizer Inc. We anticipate increased competition
in our Blades and Razors segment as a result of this change in business
ownership. Aggressive competition within our markets to preserve, gain, or
regain market share can affect our results in any given period.

CHANGES IN TECHNOLOGY AND NEW PRODUCT INTRODUCTIONS

In most product categories in which we compete, there are continuous
technological changes and frequent introductions of new products and line
extensions. Our ability to introduce new products and/or extend lines of
established products successfully will depend on, among other things, our
ability to identify changing consumer tastes and needs, develop new
technologies, differentiate our products, and gain market acceptance of new
products. We cannot be certain that we will successfully achieve these goals.

With respect specifically to primary alkaline batteries, category growth
could be adversely affected by the following additional factors:

- technological or design changes in portable electronic and other devices
that use batteries as a power source;
- continued improvement in the service life of primary batteries;
- improvements in rechargeable battery technology; or
- the development of new battery technologies.

INTELLECTUAL PROPERTY

We rely upon patent, copyright, trademark, and trade secret laws in the United
States and in other countries to establish and maintain our proprietary rights
in technology, products, and our brands. Our intellectual property rights,
however, could be challenged, invalidated, or circumvented. We do not believe
that our products infringe the intellectual property rights of others, but any
such claims, if they were successful, could result in material liabilities or
loss of business.

COST-SAVINGS STRATEGY

We have implemented and approved a number of programs designed to reduce costs.
Such programs will require, among other things, the consolidation and
integration of facilities, functions, systems, and procedures, all of which
present significant management challenges. There can be no assurance that such
actions will be accomplished as rapidly as anticipated or that the full extent
of expected cost reductions will be achieved.

SALES AND OPERATIONS OUTSIDE OF THE UNITED STATES

Sales outside of the United States represent a substantial portion of our
business. In addition, we have a number of manufacturing facilities and
suppliers located outside of the United States. Accordingly, the following
factors could adversely affect operating results in any reporting period:

- changes in political or economic conditions;
- trade protection measures;
- import or export licensing requirements;
- changes in the mix of earnings taxed at varying rates;
- changes in regulatory requirements or tax laws; and
- longer payment cycles in certain countries.

We are also exposed to foreign currency exchange rate risk with respect to
our sales, profits, and assets and liabilities denominated in currencies other
than the U.S. dollar. Although we use instruments to hedge certain foreign
currency risks (through foreign currency forward, swap, and option contracts and
non-U.S. dollar denominated financings) and we are partially hedged through our
foreign manufacturing operations, there can be no assurance that we will be
fully protected against foreign currency fluctuations and our reported earnings
will be affected by changes in exchange rates.

RETAIL ENVIRONMENT

With the growing trend toward retail trade consolidation, especially in
developed markets such as the United States and Europe, we are increasingly
dependent upon key retailers whose bargaining strength is growing. Accordingly,
we face greater pressure from significant retail trade customers to provide more
favorable trade terms.

We can be negatively affected by changes in the policies of our retail
trade customers, such as trade inventory levels, access to shelf space, and
other conditions. Many of our customers, particularly our high-volume retail
trade customers, have engaged in accelerated efforts to reduce inventory levels
and shrinkage and to change inventory delivery systems. While we expect the
level of trade inventory of our products to decline over time, the speed and
magnitude of such reductions and/or our inability to develop satisfactory
inventory delivery systems could adversely affect operating results in any
reporting period.

EFFECT OF POTENTIAL MILITARY ACTION OR WAR

Recent military hostilities and the threat of future hostilities, as well as
attendant political activity, have created an atmosphere of economic uncertainty
throughout the world. A disruption in our supply chain, an increase in import or
export costs, and/or other macroeconomic events resulting from military or
political events could adversely affect operating results in any reporting
period.

ITEM 7A. DISCLOSURES CONCERNING MARKET RISK SENSITIVE INSTRUMENTS

The information required by this item is incorporated by reference from page 32
of the 2003 Annual Report under the caption, "Market Risk."

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following Financial Statements and Supplementary Data for The Gillette
Company and Subsidiary Companies appear in the 2003 Annual Report at the pages
indicated below and are incorporated by reference.

(1) Independent Auditors' Report Page 37
(2) Consolidated Statement of Income for the Years Ended
December 31, 2003, 2002, and 2001 Page 38
(3) Consolidated Balance Sheet at December 31, 2003 and 2002 Page 39
(4) Consolidated Statement of Cash Flows for the Years Ended
December 31, 2003, 2002, and 2001 Page 40
(5) Consolidated Statement of Stockholders' Equity for the Years
Ended December 31, 2003, 2002, and 2001 Page 41
(6) Notes to Consolidated Financial Statements Pages 42 through 66
(7) Computation of Per Share Earnings Pages 38, 44, 45, 66, 67
(8) Quarterly Financial Information Page 66

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Our management, under the supervision and with the participation of our Chief
Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the
effectiveness of our disclosure controls and procedures as defined in Securities
and Exchange Commission ("SEC") Rule 13a-15(e) as of the end of the period
covered by this report. Management has concluded that our disclosure controls
and procedures are effective to ensure that information we are required to
disclose in reports that we file or submit under the Securities Exchange Act is
communicated to management, including the CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure and is recorded, processed,
summarized, and reported within the time periods specified in the SEC's rules
and forms.

During 2003, there were no significant changes in internal controls over
financial reporting that materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.

Part III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The information required by this item with respect to our Directors is
incorporated by reference from the 2004 Proxy Statement under the captions,
"Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance." The information required for our Executive Officers appears at the
end of Part I of this report at pages 4 through 6.

We have an Audit Committee composed of independent directors. The
information required by this item with respect to the Audit Committee and its
members is incorporated by reference from the 2004 Proxy Statement under the
captions, "Committees and Meetings" and "Audit Committee Report."

We have adopted a Code of Ethics for Financial Managers and the Chief
Executive Officer. The information relating to the availability of our Code of
Ethics appears on page 2 of this report under the caption, "Availability of
Reports and Other Information."

The information required by this item with respect to procedures by which
shareholders may recommend nominees to the Board of Directors is incorporated by
reference from the 2004 Proxy

Statement under the captions, "Identifying and Evaluating Nominees for Director"
and "Director Nominations and Other Business for Presentation at the 2005 Annual
Meeting."

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item appears in the 2004 Proxy Statement under
the captions, "Non-employee Director Compensation and Stock Ownership,"
"Executive Compensation," "Compensation Committee Report," and "Gillette
Comparative Five-Year Investment Performance," and is incorporated by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

The information required by this item is incorporated by reference from our 2004
Proxy Statement under the captions, "Securities Ownership of Directors and
Officers," "Five-Percent Beneficial Ownership" and "Equity Compensation Plan
Information."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated by reference from the 2004
Proxy Statement under the captions, "Related Transactions" and "Employment
Contracts, Termination of Employment, and Change-in-Control Arrangements."

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference from the 2004
Proxy Statement under the caption, "Audit Committee Report."

Part IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K

A. Financial Statements, Schedules, and Exhibits

Financial Statements

The following appear in the 2003 Annual Report at the pages indicated below and
are incorporated into Part II by reference.

Schedules

All schedule information is included in the Notes to Consolidated Financial
Statements or is omitted because it is either not required or not applicable.

Exhibits

3 (a) Composite Certificate of Incorporation of The Gillette Company, as
amended, filed as Exhibit 1.1 to The Gillette Company Registration
Statement on Form 8-A on January 11, 2001, Commission File No. 1-922,
incorporated by reference herein.

(b) The Bylaws of The Gillette Company, as amended March 13, 2003, filed
as Exhibit 3.1 to The Gillette Company Quarterly Report on Form 10-Q
for the period ended March 31, 2003, Commission File No. 1-922,
incorporated by reference herein.

4 Instruments Defining the Rights of Security Holders, Including
Indentures
(a) Specimen of form of certificate representing ownership of The Gillette
Company Common Stock, $1.00 par value, effective January 21, 2003,
filed as Exhibit 4(a) to The Gillette Company Annual Report on Form
10-K for the year ended December 31, 2002, Commission File No. 1-922,
incorporated by reference herein.

(b) Form of Certificate of Designation, Preferences and Rights of Series A
Junior Participating Preferred Stock of The Gillette Company, filed as
Exhibit A to Exhibit 1 to The Gillette Company Current Report on Form
8-K, dated December 30, 1985, Commission File No. 1-922, incorporated
by reference herein.

(c) Amendment to Certificate of Designation, Preferences, and Rights of
Series A Junior Participating Preferred Stock of The Gillette Company,
dated December 9, 1996, filed as Exhibit 4(c) to The Gillette Company
Annual Report on Form 10-K for the year ended December 31, 1996,
Commission File No. 1-922, incorporated by reference herein.

(d) Renewed Rights Agreement, dated as of December 14, 1995, between The
Gillette Company and The First National Bank of Boston, filed as
Exhibit 4 to The Gillette Company Current Report on Form 8-K, dated
December 18, 1995, Commission File No. 1-922, incorporated by
reference herein.

(e) Certificate of Amendment relating to an increase in the amount of
authorized shares of preferred stock and common stock, filed as Exhibit
3(i) to The Gillette Company Quarterly Report on Form 10-Q for the
period ended March 31, 1998, Commission File No. 1-922, incorporated by
reference herein.

(f) Registration Statement filed on Form 8-A/A, dated March 25, 2003,
revising the description of The Gillette Company's registered
securities and corresponding rights, Commission File No. 1-922,
incorporated by reference herein.

The Company has issued long-term debt and will furnish copies of the
instruments defining the rights of holders of such debt to the
Commission upon request.

10 Material Contracts
*(a) The Gillette Company 1971 Stock Option Plan, as amended, filed
herewith.

*(b) The Gillette Company Stock Equivalent Unit Plan, as amended, filed as
Appendix B to the 2001 Proxy Statement, Commission File No. 1-922,
incorporated by reference herein.

*(c) The Gillette Company Incentive Bonus Plan, as amended, filed as
Appendix D to the 2001 Proxy Statement, Commission File No. 1-922,
incorporated by reference herein.

*(d) The Gillette Company Executive Life Insurance Program, as amended,
filed as Exhibit 10(d) to The Gillette Company Annual Report on Form
10-K for the year ended December 31, 2000, Commission File No. 1-922,
incorporated by reference herein.

*(e) The Gillette Company Deferred Compensation Plan for Outside Directors,
as amended, filed as Exhibit 10(e) to The Gillette Company Annual
Report on Form 10-K for the year ended December 31, 2001, Commission
File No. 1-922, incorporated by reference herein.

*(f) Employment Agreement, dated January 19, 2001, between The Gillette
Company and James M. Kilts, as amended, filed as Exhibit 10.1 to The
Gillette Company Quarterly Report on Form 10-Q for the period ended
September 30, 2003, Commission File No. 1-922, incorporated by
reference herein.

*(g) Stock Option Agreement, dated January 19, 2001, between The Gillette
Company and James M. Kilts, filed as Exhibit 10(g) to The Gillette
Company Annual Report on Form 10-K for the year ended December 31,
2002, Commission File No. 1-922, incorporated by reference herein.

*(h) Employment Agreement, dated March 19, 2002, between The Gillette
Company and Edward F. DeGraan, filed as Exhibit 10(i) to The Gillette
Company Annual Report on Form 10-K for the year ended December 31,
2001, Commission File No. 1-922, incorporated by reference herein.

*(i) Amendment to Employment Agreement, dated March 19, 2002, between The
Gillette Company and Edward F. DeGraan, filed herewith.

*(j) Form of Agreement Relating to Change of Control between The Gillette
Company and its Executive Officers, filed as Exhibit 10(j) to The
Gillette Company Annual Report on Form 10-K for the year ended December
31, 2001, Commission File No. 1-922, incorporated by reference herein.

*(k) Form of Agreement Relating to Terms of Employment between The Gillette
Company and its named Executive Officers other than Messrs. Kilts and
DeGraan, filed as Exhibit 10(k) to The Gillette Company Annual Report
on Form 10-K for the year ended December 31, 2001, Commission File No.
1-922, incorporated by reference herein.

(l) Letter Agreement, dated July 20, 1989, as amended March 13, 2003,
between The Gillette Company and Berkshire Hathaway Inc., filed as
Exhibit 4.1 to The Gillette Company Current Report on Form 8-K, dated
March 14, 2003, Commission File No. 1-922, incorporated by reference
herein.

*(m) Description of The Gillette Company Personal Financial Planning
Reimbursement Program, as amended, filed as Exhibit 10(q) to The
Gillette Company Annual Report on Form 10-K for the year ended December
31, 2000, Commission File No. 1-922, incorporated by reference herein.

*(n) Description of The Gillette Company Senior Executive Financial Planning
Program, filed herewith.

*(o) The Gillette Company Estate Preservation Plan, filed as exhibit 10(l)
to The Gillette Company Annual Report on Form 10-K for the year ended
December 31, 1997, Commission File No. 1-922, incorporated by reference
herein.

*(p) The Gillette Company Supplemental Retirement Plan, as amended, filed as
Exhibit 10(v) to The Gillette Company Annual Report on Form 10-K for
the year ended December 31, 1999, Commission File No. 1-922,
incorporated by reference herein.

*(q) The Gillette Company Supplemental Savings Plan, as amended, filed as
Exhibit 10(p) to The Gillette Company Annual Report on Form 10-K for
the year ended December 31, 2001, Commission File No. 1-922,
incorporated by reference herein.

(r) $862,500,000 364-Day Credit Agreement, dated as of October 14, 2003,
among The Gillette Company, JPMorgan Chase Bank, as agent, and a
syndicate of domestic and foreign banks, filed as Exhibit 10.2 to The
Gillette Company Quarterly Report on Form 10-Q for the period ended
September 30, 2003, Commission File No. 1-922, incorporated by
reference herein.

(s) $287,500,000 5-Year Credit Agreement, dated as of October 14, 2003,
among The Gillette Company, JPMorgan Chase Bank, as agent, and a
syndicate of domestic and foreign banks, filed as Exhibit 10.3 to The
Gillette Company Quarterly Report on Form 10-Q for the period ended
September 30, 2003, Commission File No. 1-922, incorporated by
reference herein.

12 Statement regarding Computation of Ratio of Earnings to Fixed Charges,
filed herewith.

13 Portions of the 2003 Annual Report to Stockholders of The Gillette
Company incorporated by reference in this Form 10-K, filed herewith.

21 List of Subsidiaries of The Gillette Company, filed herewith.

23 Independent Auditors' Consent, filed herewith.

24 Power of Attorney, filed herewith.

31 (a) Certification of Chief Executive Officer Pursuant to Rule 13a-14(a),
filed herewith.

(b) Certification of Chief Financial Officer Pursuant to Rule 13a-14(a),
filed herewith.

32 (a) Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002,
filed herewith.

(b) Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002,
filed herewith.

* Management contract or compensatory plan or arrangement.

B. REPORTS ON FORM 8-K IN THE FOURTH QUARTER

The Company filed a current report on Form 8-K on November 4, 2003, containing
one exhibit: the press release issued by the Company on November 4, 2003,
reporting its earnings for the third quarter and nine months.

The Company filed a current report on Form 8-K on December 1, 2003,
containing two exhibits: a Terms Agreement and the Note related to the public
offering of the Company's Floating Rate Notes due 2043.

SIGNATURES

Pursuant to the requirements of Section 13 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: /s/ CHARLES W. CRAMB
-----------------------------------------
Charles W. Cramb
Senior Vice President and Chief Financial
Officer

Date: February 27, 2004

Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signatures Title Date
----------------------------- -------------------------------- ------------------

* JAMES M. KILTS Chairman of the Board February 27, 2004
--------------------------- of Directors, Chief Executive
James M. Kilts Officer, President and Director

* EDWARD F. DEGRAAN Vice Chairman of the Board February 27, 2004
--------------------------- of Directors and Director
Edward F. DeGraan

* CHARLES W. CRAMB Senior Vice President and February 27, 2004
--------------------------- Chief Financial Officer
Charles W. Cramb

* CLAUDIO E. RUBEN Vice President, Controller and February 27, 2004
--------------------------- Principal Accounting Officer
Claudio E. Ruben

* ROGER K. DEROMEDI Director February 27, 2004
---------------------------
Roger K. Deromedi

* WILBUR H. GANTZ Director February 27, 2004
---------------------------
Wilbur H. Gantz

* MICHAEL B. GIFFORD Director February 27, 2004
---------------------------
Michael B. Gifford

* RAY J. GROVES Director February 27, 2004
---------------------------
Ray J. Groves

* DENNIS F. HIGHTOWER Director February 27, 2004
---------------------------
Dennis F. Hightower

* HERBERT H. JACOBI Director February 27, 2004
---------------------------
Herbert H. Jacobi

* NANCY J. KARCH Director February 27, 2004
---------------------------
Nancy J. Karch

* FRED H. LANGHAMMER Director February 27, 2004
---------------------------
Fred H. Langhammer

* JORGE PAULO LEMANN Director February 27, 2004
---------------------------
Jorge Paulo Lemann

* MARJORIE M. YANG Director February 27, 2004
---------------------------
Marjorie M. Yang

*By /s/ CHARLES W. CRAMB
------------------------
Charles W. Cramb
for himself and
as Attorney-In-Fact