-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QDDUmupD+w6r2If4Ep29LfdY8xshvj4orrMbxAscplttcsKQT8kOiNX+dJ76pJZu Vw+tKVvbhah4dQyX2K8AWA== 0000950135-97-002809.txt : 19970626 0000950135-97-002809.hdr.sgml : 19970626 ACCESSION NUMBER: 0000950135-97-002809 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970625 SROS: BSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GILLETTE CO CENTRAL INDEX KEY: 0000041499 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 041366970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00922 FILM NUMBER: 97629620 BUSINESS ADDRESS: STREET 1: PRUDENTIAL TOWER BLDG CITY: BOSTON STATE: MA ZIP: 02199 BUSINESS PHONE: 6174217000 MAIL ADDRESS: STREET 1: PRUDENTIAL TOWER BLDG CITY: BOSTON STATE: MA ZIP: 02199 FORMER COMPANY: FORMER CONFORMED NAME: GILLETTE SAFETY RAZOR CO DATE OF NAME CHANGE: 19660911 11-K 1 PARKER PEN 401(K) PLAN 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 Registration number 33-63707 A. Full title of the plan: PARKER PEN 401(K) PLAN B. Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office: The Gillette Company Prudential Tower Building Boston, MA 02199 2 FINANCIAL STATEMENTS OF PARKER PEN 401(k) PLAN The following audited financial statements with independent auditors' report thereon are enclosed with this report: 1. Statements of Net Assets Available for Plan Benefits as of December 31, 1996 and 1995. 2. Statements of Changes in Net Assets Available for Plan Benefits for each of the years in the three-year period ended December 31, 1996. EXHIBIT 23.2 Independent Auditor's Consent SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Advisory Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. PARKER PEN 401(k) PLAN By /s/ CHARLES W. CRAMB ----------------------- Charles W. Cramb Date: June 24, 1997 3 PARKER PEN 401(K) PLAN Financial Statements December 31, 1996 and 1995 (With Independent Auditors' Report Thereon) 4 Independent Auditors' Report ---------------------------- The Savings Plan Committee The Gillette Company Employees' Savings Plan: We have audited the statements of net assets available for plan benefits of the Parker Pen 401(k) Plan as of December 31, 1996 and 1995 and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Parker Pen 401(k) Plan as of December 31, 1996 and 1995 and the changes in assets available for plan benefits for the years then ended in conformity with generally accepted accounting principles. May 23, 1997 5 PARKER PEN 401(K) PLAN Statements of Net Assets Available for Plan Benefits December 31, 1996 and 1995
1996 1995 ---------- --------- Assets: Investments at fair value: Investment in the Savings Plan Trust $7,028,709 - Guaranteed Investment Contract Fund - 3,193,135 Balanced Fund - 1,706,131 Equity Fund - 3,882,421 Payment Reserve Account - 250,774 ---------- --------- Total investments 7,028,709 9,032,461 ---------- --------- Contribution receivable: Employee - 37,961 Employer - 119,715 Accrued investment income - 20,557 ---------- --------- Net assets available for plan benefits $7,028,709 9,210,694 ========== =========
See accompanying notes to financial statements. 6 PARKER PEN 401(K) PLAN Statement of Changes in Net Assets Available for Plan Benefits For the year ended December 31, 1996
Guaranteed Gillettte Fidelity Investment Payment Company Intermediate Fixed Contract Balanced Equity Reserve Stock Bond Income Fund Fund Fund Account Fund Fund Fund ----------- --------- --------- ------- --------- ------------ --------- Additions to net asset attributed to: Net investment income from the Savings Plan Trust $ - - - - 342,697 301 149,500 Contributions Employee contributions - - - - 205,507 7,689 112,485 Employer contributions - - - - 59,594 2,529 34,394 Total additions - - - - 607,798 10,519 296,379 ----------- --------- --------- ------- --------- ------ --------- Deductions from net assets attributed to: Benefit payments - - - - (73) (70) (44,051) Forfeitures - - - - (15) (14) (106) Transfer of assets to The Gillette Company Employees' Savings Plan (837,945) (807,218) (2,160,876) (141,374) - - - ----------- --------- --------- ------- --------- ------ --------- Total deductions (837,945) (807,218) (2,160,876) (141,374) (88) (84) (44,157) Net increase (decrease) prior to interfund transfers (837,945) (807,218) (2,160,876) (141,374) 607,710 10,435 252,222 Net transfers in (out) Loans issued - - - - (11,565) (269) (45,711) Loans repaid - - - - 13,677 46 8,575 Other transfers (2,392,998) (933,384) (1,827,499) (109,400) 778,231 - 1,994,733 ----------- --------- --------- ------- --------- ------ --------- (2,392,998) (933,384) (1,827,499) (109,400) 780,343 (223) 1,957,597 Net increase(decrease) (3,230,943) (1,740,602) (3,988,375) (250,774) 1,388,053 10,212 2,209,819 Net assets available for plan benefits Beginning of year 3,230,943 1,740,602 3,988,375 250,774 - - - ----------- --------- --------- ------- --------- ------ --------- End of year $ - - - - 1,388,053 10,212 2,209,819 =========== ========= ========= ======= ========= ====== ========= Fidelity Retirement Fidelity Fidelity Gov't Money Fidelity Fidelity U.S. Equity Growth Participant Market Magellan Balanced Index Company Loan Portfolio Fund Fund Portfolio Fund Fund Total ----------- -------- -------- ----------- -------- ----------- --------- Additions to net asset attributed to: Net investment income from the Savings Plan Trust 599 31,118 73,961 337,237 17,984 - 953,397 Contributions Employee contributions 15,462 141,423 82,815 83,074 69,187 - 717,642 Employer contributions 4,176 39,662 24,066 21,820 17,402 - 203,643 ------ ------- ------- --------- ------- ------- --------- Total additions 20,237 212,203 180,842 442,131 104,573 - 1,874,682 Deductions from net assets attributed to: Benefit payments (2,089) (989) (7,142) (6,682) - (48,066) (109,162) Forfeitures 57 - (14) - - - (92) Transfer of assets to The Gillette Company Employees' Savings Plan - - - - - - (3,947,413) ------ ------- ------- --------- ------- ------- --------- Total deductions (2,032) (989) (7,156) (6,682) - (48,066) (4,056,667) Net increase (decrease) prior to interfund transfers 18,205 211,214 173,686 435,449 104,573 (48,066) (2,181,985) Net transfers in (out) Loans issued (468) (11,097) (12,196) (23,130) (1,144) 105,580 - Loans repaid 951 7,871 4,650 2,283 972 (39,025) - Other transfers (2,131) 196,549 705,377 1,327,563 153,559 109,400 - ------ ------- ------- --------- ------- ------- --------- (1,648) 193,323 697,831 1,306,716 153,387 175,955 - Net increase(decrease) 16,557 404,537 871,517 1,742,165 257,960 127,889 (2,181,985) Net assets available for plan benefits Beginning of year - - - - - - 9,210,694 ------ ------- ------- --------- ------- ------- --------- End of year 16,557 404,537 871,517 1,742,165 257,960 127,889 7,028,709 ====== ======= ======= ========= ======= ======= =========
See accompanying notes to financial statements. 7 PARKER PEN 401(K) PLAN Statement of Changes in Net Assets Available for Plan Benefits For the year ended December 31, 1995
Guaranteed Investment Payment Contract Balanced Equity Reserve Fund Fund Fund Account Total ---- ---- ---- ------- ----- Additions to net assets attributed to: Investment income Interest income $ 207,923 128,758 240,779 28,177 605,637 Net appreciation (depreciation) in fair value of investments 3 168,259 341,082 -- 509,344 ----------- --------- --------- ------- --------- 207,926 297,017 581,861 28,177 1,114,981 Contributions: Employee contributions 382,171 211,779 371,844 -- 965,794 Employer contributions 127,594 71,676 121,813 -- 321,083 ----------- --------- --------- ------- --------- Total additions 717,691 580,472 1,075,518 28,177 2,401,858 Deductions from net assets attributed to: Benefit payments -- -- -- (803,856) (803,856) Transfer of assets to The Gillette Company Employees' Savings Plan (208,457) (146,027) (221,063) (31,160) (606,707) ----------- --------- --------- ------- --------- (208,457) (146,027) (221,063) (835,016) (1,410,563) Net increase (decrease) prior to interfund transfers 509,234 434,445 854,455 (806,839) 991,295 Net transfers in (out) (767,394) (347,792) 270,752 844,434 -- ----------- --------- --------- ------- --------- Net increase (decrease) (258,160) 86,653 1,125,207 37,595 991,295 Net assets available for plan benefits Beginning of year 3,489,103 1,653,949 2,863,168 213,179 8,219,399 ----------- --------- --------- ------- --------- End of year $ 3,320,943 1,740,602 3,988,375 250,774 9,210,694 =========== ========= ========= ======= =========
See accompanying notes to financial statements. 8 PARKER PEN 401(K) PLAN Notes to Financial Statements December 31, 1996 and 1995 (1) DESCRIPTION OF THE PLAN The following brief description of the Parker Pen 401(k) Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan agreement for more complete informatioNn (a) General The Plan became effective on July 1, 1988 and is a contributory defined contribution plan covering all eligible employees of Parker Pen USA Limited who are covered by a collective bargaining agreement and who have completed six full months of employment. The Plan was amended and restated in its entirety effective January 1, 1996 and The Gillette Company (the "Company") assumed sponsorship and administration of the Plan as of such date. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). (b) Contributions Participants may elect to contribute in whole percentage increments up to 17% of their annual base compensation. The Company will make matching contributions on behalf of a participant equal to 50% of the participant's contribution limited to a maximum match of 6% of the participants' annual compensation. (c) Vesting Participants immediately vest in their voluntary contributions and actual earnings thereon. Vesting in company contributions is 25% per year with full vesting after four years of service, upon attainment of age 65, or termination of employment due to death or disability. Nonvested Company contributions will be forfeited by participants who terminate employment and will be used to reduce future Company matching contributions. (d) Participants' Accounts A separate account is established for each participant at the time of enrollment in the Plan. The balance in each account is invested in accordance with the directions given by the participant in one or more of the Plan's investment fund offerings. The following funds were available for investment beginning January 1, 1996: Gillette Company Stock Fund --------------------------- Invests primarily in shares of The Gillette Company common stock. Fidelity Intermediate Bond Fund ------------------------------- Invests primarily in intermediate maturity foreign and domestic bonds and seeks a high level of current income. Fixed Income Fund ----------------- Seeks to preserve principal as well as generate interest income through investment in high quality short and intermediate term investment contracts as well as other instruments issued by insurance companies and banks. (Continued) 9 PARKER PEN 401(K) PLAN Notes to Financial Statements Fidelity Retirement Government Money Market Fund ------------------------------------------------ Seeks to keep invested principal stable while generating current interest or income by investing in high quality money market instruments issued or guaranteed by the U.S. government or its agencies. Fidelity Magellan Fund ---------------------- Seeks long-term capital appreciation by investing primarily in common stocks and other securities of all types of domestic and international companies in all industries. Fidelity Balanced Fund ---------------------- Seeks to provide the highest amount of income possible consistent with the preservation of capital by investing primarily in common and preferred stocks, and bonds. Fidelity U.S. Equity Index Fund ------------------------------- Seeks to provide investment results that correspond to a recognized index of stock market performance, and invests primarily in the common stocks of the companies that make up the designated stock index. Fidelity Growth Company Fund ---------------------------- Seeks long-term capital appreciation by investing primarily in securities of domestic and foreign growth-oriented companies. Each of the Funds may also hold a portion of its assets in short-term investments in order to meet liquidity needs for transfers, loans, and withdrawals. (e) Participant Loans The maximum loan available to each participant is the lesser of (1) $50,000 reduced by the highest outstanding loan balance due from the participant during the preceding twelve months, or (2) 50% of the participant's vested account balance, reduced by the current outstanding loan balance due from the participant. The minimum loan amount available to participants is $500. Each loan shall bear interest at a rate determined by the Savings Plan Committee. A participant must make a payment of principal and interest to the Plan on at least a quarterly basis. Repayment of the loan must be made over a period not to exceed five years. (f) Plan Earnings As of the close of each business day, the Plan trustee is responsible for determining the fair market value of each of the investment options, which would include all accrued earnings. The increase or decrease in the fair market value of each investment fund since the preceding business day is allocated among the participant accounts invested in each fund based on the proportionate number of shares or units of the fund held by each participant at the close of the preceding business day. (g) Benefit Payments Upon termination of employment, the participant or his or her surviving spouse or beneficiary, will receive a lump sum distribution of the participant's vested account balance, or if the account balance exceeds $3,500 at such time, he/she may elect to defer payment. (Continued) 10 PARKER PEN 401(K) PLAN Notes to Financial Statements Early withdrawals may also be made in the event of financial hardship and other circumstances, based upon special guidelines detailed in the Plan documents. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Accounting The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses. Actual results could differ from those estimates. The accompanying financial statements are presented on the accrual basis of accounting. Benefits payable at year end are not accrued for as they are considered to be a component of the net assets available for plan benefits. (b) Investments Investments are allocations of the assets of The Gillette Company Master Savings Plan Trust ("Savings Plan Trust") based upon the proportionate interest of the Plan in the trust. Investments of the trust are stated at fair value, which for shares of Company stock held in the trust is defined as the composite closing price of the stock on the New York Stock Exchange. Guaranteed investment contracts and synthetic investment contracts are valued at contract value. The fair value for all other investments are determined daily by the trustee on a per share basis using security prices quoted on national exchanges, and amortized cost in the case of any short-term and money market securities held. Participant notes receivable are valued at cost, which approximates fair value. Security transactions received prior to 4:00 pm Eastern time by Fidelity are recognized on that business day. Transactions received after 4:00 pm Eastern time are valued as of the next business day. Interest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date. Net appreciation (depreciation) in the fair value of investments includes both realized and unrealized gains and losses. The Savings Plan Trust's investments in guaranteed and synthetic investment contracts are valued at contract value which approximates fair value. Contract value represents contributions made under the contract plus interest at the contract rate. The crediting interest rate is variable for the synthetic contracts and is reset quarterly based upon the fair value of the underlying securities. The crediting interest rate is fixed for guaranteed contracts. The average yield for the year ended December 31, 1996 is 6.77% and the crediting interest rate as of December 31, 1996 is 5.76% for these investment contracts. (c) Payment of Benefits Benefits are recorded when paid. (Continued) 11 PARKER PEN 401(K) PLAN Notes to Financial Statements (3) FUNDING POLICY The Company's funding policy is to make contributions to the Plan in accordance with the manner described in note 1. (4) PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event of Plan termination, participants will become fully vested in their accounts. (5) INVESTMENTS Investments of the Plan are held in trust by Fidelity Management Trust Company. The Plans participating in the Savings Plan Trust are The Gillette Company Employees' Savings Plan and the Parker Pen 401(k) Plan. Trust income is allocated ratably between the plans in accordance with the assets of each Plan invested in the trust. The net assets of the Savings Plan Trust at December 31, 1996 and 1995 are as follows:
1996 1995 ---- ---- Investments, at fair value: Marketable securities: Gillette common stock $ 1,306,814,500 881,824,305 Registered investment companies: Fidelity Intermediate Bond Fund 9,126,760 9,354,053 Fidelity Short-Term Investment Fund 31,916,887 933,848 Fidelity Retirement Government Money Market Portfolio 5,913,935 3,220,569 Fidelity Magellan Fund 34,287,295 36,325,915 Fidelity Balanced Fund 16,287,310 15,132,881 Fidelity U.S. Equity Index Portfolio 63,606,106 44,600,059 Fidelity Growth Company Fund 35,235,504 25,058,209 Investment contracts 260,086,270 273,957,250 Participant loans 26,347,534 22,371,994 --------------- ------------- Total investments and net assets $ 1,789,622,101 1,312,779,083 =============== ============= Assets allocated to The Gillette Company Employees' Savings Plan $ 1,782,593,392 1,312,779,083 Assets allocated to the Parker Pen 401(k) Plan $ 7,028,709 -- =============== =============
(Continued) 12 PARKER PEN 401(K) PLAN Notes to Financial Statements The statements of change in net assets of the Savings Plan Trust for the years ended December 31, 1996 and 1995 are as follows:
1996 1995 ---- ---- Employee contributions $ 41,325,185 37,954,226 Employer contributions 16,121,454 14,665,668 Investment income: Net appreciation (depreciation) on fair value of investments: Gillette common stock 431,024,386 248,897,067 Fidelity Intermediate Bond Fund (317,625) 506,504 Fidelity Magellan Fund (2,198,991) 6,136,423 Fidelity Balanced Fund 567,308 1,372,542 Fidelity U.S. Equity Index Portfolio 9,906,298 10,832,516 Fidelity Growth Company Fund 2,726,460 3,760,024 Dividends 22,259,897 15,461,620 Interest 20,569,869 19,882,628 -------------- ------------- Net investment income 484,537,602 306,849,324 Transferred from prior trustee 10,698,627 606,707 -------------- ------------- Total additions 552,682,868 360,075,925 Benefit payments 75,766,746 55,638,394 Forfeitures 73,104 135,743 -------------- ------------- Total deductions 75,839,850 55,774,137 -------------- ------------- Net increase 476,843,018 304,301,788 Net assets: Beginning of year 1,312,779,083 1,008,477,295 -------------- ------------- End of year $1,789,622,101 1,312,779,083 ============== =============
(6) ADMINISTRATIVE EXPENSES The Company bears administrative costs of maintaining the Plan and investment expenses associated with the Fixed Income Fund and the Gillette Company Stock Fund. Investment expenses associated with the Fidelity funds offered as investment options under the Plan are deducted from the assets of each of those funds. (7) INCOME TAXES The Plan obtained its latest determination letter on April 18, 1996, in which the Internal Revenue Service stated that the Plan was in compliance with the applicable requirements of the Internal Revenue Code. In the opinion of the Plan administrator and the Plan's tax advisor, the Plan and its underlying trust have operated within the terms of the Plan document and remain qualified under the applicable provisions of the Internal Revenue Code. (Continued) 13 PARKER PEN 401(K) PLAN Notes to Financial Statements (8) PLAN TRANSFERS On September 18, 1995, Parker Pen USA Limited's Board of Directors approved a change in Trustees of the Plan from the Trustee to Fidelity Management Trust Company (Successor Trustee) effective January 1, 1996. During 1995, the account balances of certain participants ($606,707) were transferred into The Gillette Company (parent company of Parker Pen USA Limited) Employees' Savings Plan ("Gillette Plan"). These participants are now participating in the Gillette Plan. The account balances of all remaining non-bargaining unit participants of the Plan totaling $3,806,039 were transferred to The Gillette Plan on January 2, 1996 along with their payment reserve account balances which totaled $141,374. Effective January 1, 1996, the Gillette Company assumed sponsorship and administration of the Plan which was redesigned to replicate the investment options, including Gillette common stock, and administrative features of the Gillette Plan. EX-23.2 2 CONSENT OF KPMG PEAT MARWICK LLP 1 Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS ------------------------------- The Savings Plan Committee The Gillette Company Employees' Savings Plan: We consent to the incorporation by reference in registration statement No. 33-63707 or Form S-8 of the Parker Pen 401(k) Plan of our report dated May 23, 1997, relating to the statements of net assets available for plan benefits of the Parker Pen 401(k) Plan as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan benefits for the years then ended, which report appears in the December 31, 1996 annual report on Form 11-K of the Parker Pen 401(k) Plan. /s/ KPMG PEAT MARWICK LLP ------------------------- KPMG Peat Marwick LLP Boston, Massachusetts June 24, 1997 -----END PRIVACY-ENHANCED MESSAGE-----