-----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, EQu1XndAkv3HlGN0Dti12uME8NQyY1Y5hEINb0VEWcjzIKCtpSJoiIh2GSb2nXSW Fdnx1YPKWOflluDDxaUApA== 0000950135-98-004058.txt : 19980630 0000950135-98-004058.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950135-98-004058 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: BSE SROS: NYSE SROS: PCX 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: SEC FILE NUMBER: 001-00922 FILM NUMBER: 98656275 BUSINESS ADDRESS: STREET 1: PRUDENTIAL TOWER BLDG STREET 2: SUITE 4800 CITY: BOSTON STATE: MA ZIP: 02199 BUSINESS PHONE: 6174217000 MAIL ADDRESS: STREET 1: PRUDENTIAL TOWER BLDG STREET 2: SUITE 4800 CITY: BOSTON STATE: MA ZIP: 02199 FORMER COMPANY: FORMER CONFORMED NAME: GILLETTE SAFETY RAZOR CO DATE OF NAME CHANGE: 19660911 11-K 1 THE GILLETTE COMPANY EMPLOYEE'S SAVINGS 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, 1997 Registration numbers 33-9495, 33-56218 and 33-59125 A. Full title of the plan: THE GILLETTE COMPANY EMPLOYEES' SAVINGS 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 THE GILLETTE COMPANY EMPLOYEES' SAVINGS 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, 1997 and 1996. 2. Statements of Changes in Net Assets Available for Plan Benefits for each of the years in the three-year period ended December 31, 1997. EXHIBIT 23.2 Independent Auditor's Consent SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Savings Plan Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN By: /s/ Robert E. DiCenso ----------------------------- Robert E. DiCenso Date: June 25, 1998 3 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Financial Statements December 31, 1997 and 1996 (With Independent Auditors' Report Thereon) 1 4 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Financial Statements December 31, 1997 and 1996 TABLE OF CONTENTS Page(s) ------- Independent Auditors' Report 1 Statements of Net Assets Available for Plan Benefits 2 Statements of Changes in Net Assets Available for Plan Benefits 3 Notes to Financial Statements 4-17 Note: Supplemental schedules required by the Employee Retirement Income Security Act of 1974, as amended (ERISA), have not been included due to their inclusion in master trust information filed with the Department of Labor for The Gillette Company Savings Plan Trust. 2 5 INDEPENDENT AUDITORS' REPORT The Savings Plan Committee The Gillette Company: We have audited the statements of net assets available for plan benefits of The Gillette Company Employees' Savings Plan as of December 31, 1997 and 1996, 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 Gillette Company Employees' Savings Plan at December 31, 1997 and 1996, and the changes in net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. May 15, 1998 3 6 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Statements of Net Assets Available for Plan Benefits December 31, 1997 and 1996 1997 1996 -------------- ------------- Assets: Investment in the Savings Plan Trust $2,163,135,513 1,782,593,392 -------------- ------------- Net assets available for plan benefits $2,163,135,513 1,782,593,392 ============== ============= See accompanying notes to financial statements. 4 7 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Statements of Changes in Net Assets Available for Plan Benefits Years ended December 31, 1997 and 1996
1997 1996 -------------- ------------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust $ 446,036,833 483,584,205 Contributions: Employee contributions 47,123,387 40,607,543 Employer contributions 17,481,384 15,917,811 Transfer of assets from Parker Pen and Thermoscan, Inc. 401(k) Plans - 5,435,346 -------------- ------------- Total additions 510,641,604 545,544,905 Deductions from net assets attributed to: Benefit payments (129,979,418) (75,657,584) Forfeitures (120,065) (73,012) -------------- ------------- Total deductions (130,099,483) (75,730,596) Net increase in assets 380,542,121 469,814,309 Net assets available for plan benefits: Beginning of year 1,782,593,392 1,312,779,083 -------------- ------------- End of year $2,163,135,513 1,782,593,392 ============== =============
See accompanying notes to financial statements. 5 8 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1997 and 1996 (1) DESCRIPTION OF THE PLAN The Gillette Company Employees' Savings Plan (the "Plan") is a defined contribution plan sponsored by The Gillette Company (the "Company"). The following provides only general information and participants should refer to the Plan document for a more complete description of the Plan's provisions. (a) GENERAL The Plan is a defined contribution plan subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Effective January 1, 1993 regular employees of the Company and its participating subsidiaries became eligible to join the Plan on date of hire. (b) PARTICIPANT CONTRIBUTIONS Eligible employees may voluntarily contribute from 2% to 10% of their compensation as matched savings, and from 1% to 5% of their compensation as unmatched savings. All contributions must be in even 1% increments. All matched savings contributed by an employee are divided equally between tax deferred and taxed savings. Unmatched savings may be designated by an employee to be either tax deferred or taxed, but not both. Tax deferred contributions made by an employee in any plan year may not exceed the annual limit set by law, which was $9,500 for 1997 and 1996. (c) EMPLOYER CONTRIBUTIONS For all employee contributions designated as matched savings, the Company will contribute $1 for every $2 contributed by the employee. All matching contributions provided by the Company are invested in the Gillette Company Stock Fund. (d) VESTING Participants are immediately vested in their own employee contributions plus the actual earnings thereon. Matching contributions from the Company vest after the participant has completed the earliest of five years of service, two years from date of entry into the Plan, or the attainment of age 65. Participants are also 100% vested in the Company contributions credited to their accounts upon death, retirement, total and permanent disability, or layoff for lack of work when it is not probable that the participant will be recalled to work within one year of the layoff. 6 9 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (1), CONTINUED (e) 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 following Funds: 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. During 1997, this fund was terminated as an investment option. 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. FIDELITY RETIREMENT GOVERNMENT MONEY MARKET PORTFOLIO 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. During 1997, this fund was terminated as an investment option. FIDELITY U.S. EQUITY INDEX PORTFOLIO 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. 7 10 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (1), CONTINUED INVESCO TOTAL RETURN FUND Seeks to provide high total return through capital growth and current income by investing in stocks and in fixed and variable income securities. This fund became a new investment option for participants in 1997. FIDELITY DIVERSIFIED INTERNATIONAL FUND Seeks capital growth by investing primarily in equity securities of companies located outside the U.S. Seeks stocks that are undervalued compared to industry norms in their countries. This fund became a new investment option for participants in 1997. FIDELITY U.S. BOND INDEX FUND Invests in investment grade (medium to high quality) or above with maturities of at least one year. This fund became a new investment option for participants in 1997. FIDELITY GROWTH & INCOME FUND Seeks high total return through a combination of current income and capital appreciation. Invests primarily in U.S. and foreign stocks. This fund became a new investment option for participants in 1997. FIDELITY EMERGING MARKETS FUND Seeks capital appreciation from emerging markets around the world. This fund became a new investment option for participants in 1997. 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. (f) 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. Repayment of the loan must be made over a period not to exceed five years. 8 11 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (1), CONTINUED (g) 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. With respect to the Gillette Company Stock Fund, the trustee is responsible for determining the participants' accounts entitled to receive each quarterly dividend and the number of shares to be credited to each account, as of the quarterly ex-dividend date. On the dividend payment date, the trustee also makes all necessary adjustments to each participant account to reflect any differences between the value of such Company stock credited to participants' accounts and the actual purchase and sales price of such shares, along with any interest or other income earned by the Fund since the preceding dividend payment date. Such adjustments are included in the dividend credited to participants' accounts. (h) 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 or receive periodic installments. If the termination of employment is due to retirement, total and permanent disability or death, a participant (or surviving spouse) may also elect to have the proceeds of the distribution used to purchase an annuity contract for his/her benefit. Early withdrawals may also be made in the event of financial hardship and other circumstances, based upon special guidelines detailed in the Plan documents. (i) FORFEITURES Forfeitures by Plan participants are used to reduce Company contributions. 9 12 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (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 Savings Plan 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 is 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, 1997 is 6.67% and the crediting interest rate as of December 31, 1997 is 6.15% for these investment contracts. 10 13 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (2), CONTINUED (c) PAYMENT OF BENEFITS Benefits are recorded when paid. (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 The Company expects the Plan to continue indefinitely, but reserves the right to amend or terminate the Plan at its discretion. If the Plan is terminated or if contributions are completely discontinued, each participant's interest in that portion of his or her account balance attributable to Company contributions shall become fully vested. Upon termination of the Plan, the Trust may continue in existence at the direction of the Board of Directors of the Company, subject to the provisions of the Plan and the Trust agreement, or the Trust may be terminated and the assets distributed to participants. 11 14 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1997
Fidelity Retirement Gillette Fidelity Government Company Intermediate Fixed Money Stock Bond Income Market Fund Fund Fund Portfolio -------------- ------------ ----------- ---------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust $ 382,295,874 135,362 19,748,355 439,278 Contributions: Employee contributions 26,899,546 - 4,307,341 644,933 Employer contributions 17,481,384 - - - -------------- ---------- ----------- ---------- Total additions 426,676,804 135,362 24,055,696 1,084,211 Deductions from net assets attributed to: Benefit payments (71,917,356) (729,362) (40,701,584) (4,717,505) Forfeitures (120,065) - - - -------------- ---------- ----------- ---------- Total deductions (72,037,421) (729,362) (40,701,584) (4,717,505) Net increase (decrease) prior to interfund transfers 354,639,383 (594,000) (16,645,888) (3,633,294) Net interfund transfers in (out): Loans issued (10,332,596) (31,040) (2,834,569) (178,374) Loans repaid 8,557,304 - 1,673,673 180,682 Other transfers (108,628,945) (8,491,508) 62,274,277 8,001,778 -------------- ---------- ----------- ---------- (110,404,237) (8,522,548) 61,113,381 8,004,086 Net increase (decrease) 244,235,146 (9,116,548) 44,467,493 4,370,792 Net assets available for plan benefits: Beginning of year 1,305,426,447 9,116,548 289,793,338 5,897,378 -------------- ---------- ----------- ---------- End of year $1,549,661,593 - 334,260,831 10,268,170 ============== ========== =========== ========== Fidelity U.S. Fidelity Fidelity Fidelity Equity Growth Magellan Balanced Index Company Fund Fund Portfolio Fund ---------- ----------- ---------- ---------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust 8,678,247 1,187,143 21,059,474 6,238,947 Contributions: Employee contributions 4,383,711 - 2,979,719 4,296,784 Employer contributions - - - - ---------- ----------- ---------- ---------- Total additions 13,061,958 1,187,143 24,039,193 10,535,731 Deductions from net assets attributed to: Benefit payments (1,857,129) (350,578) (4,907,432) (1,939,117 Forfeitures - - - - ---------- ----------- ---------- ---------- Total deductions (1,857,129) (350,578) (4,907,432) (1,939,117 Net increase (decrease) prior to interfund transfers 11,204,829 836,565 19,131,761 8,596,614 Net interfund transfers in (out): Loans issued (1,354,083) (156,736) (957,461) (749,634 Loans repaid 1,171,217 - 532,214 774,517 Other transfers 996,278 (16,095,622) 8,766,229 (2,222,080 ---------- ----------- ---------- ---------- 813,412 (16,252,358) 8,340,982 (2,197,197 Net increase (decrease) 12,018,241 (15,415,793) 27,472,743 6,399,417 Net assets available for plan benefits: Beginning of year 33,882,758 15,415,793 61,863,941 34,977,544 ---------- ----------- ---------- ---------- End of year 45,900,999 - 89,336,684 41,376,961 ========== =========== ========== ==========
12 15 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1997, CONTINUED
Fidelity Fidelity Fidelity INVESCO Emerging Diversified Growth & Total Markets International Income Return Fund Fund Fund Fund ---------- ------------- ---------- ---------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust $ (846,361) 480,528 2,803,389 3,077,360 Contributions: Employee contributions 222,804 340,774 816,379 1,696,966 Employer contributions - - - - ---------- --------- ---------- ---------- Total additions (623,557) 821,302 3,619,768 4,774,326 Deductions from net assets attributed to: Benefit payments (164,157) (295,525) (438,684) (548,897) Forfeitures - - - - ---------- --------- ---------- ---------- Total deductions (164,157) (295,525) (438,684) (548,897) Net increase (decrease) prior to interfund transfers (787,714) 525,777 3,181,084 4,225,429 Net interfund transfers in (out): Loans issued (12,648) (25,605) (89,550) (202,097) Loans repaid 34,071 34,484 76,943 428,823 Other transfers 1,981,988 5,698,005 17,954,540 19,673,089 ---------- --------- ---------- ---------- 2,003,411 5,706,884 17,941,933 19,899,815 Net increase (decrease) 1,215,697 6,232,661 21,123,017 24,125,244 Net assets available for plan benefits: Beginning of year - - - - ---------- --------- ---------- ---------- End of year $1,215,697 6,232,661 21,123,017 24,125,244 ========== ========= ========== ========== Fidelity U.S. Bond Participant Index Loan Fund Fund Total ---------- ----------- ------------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust 739,237 - 446,036,833 Contributions: Employee contributions 534,430 - 47,123,387 Employer contributions - - 17,481,384 ---------- ----------- ------------- Total additions 1,273,667 - 510,641,604 Deductions from net assets attributed to: Benefit payments (619,122) (792,970) (129,979,418) Forfeitures - - (120,065) ---------- ----------- ------------- Total deductions (619,122) (792,970) (130,099,483) Net increase (decrease) prior to interfund transfers 654,545 (792,970) 380,542,121 Net interfund transfers in (out): Loans issued (124,480) 17,048,873 - Loans repaid 105,944 (13,569,872) - Other transfers 10,091,971 - - ---------- ----------- ------------- 10,073,435 3,479,001 - Net increase (decrease) 10,727,980 2,686,031 380,542,121 Net assets available for plan benefits: Beginning of year - 26,219,645 1,782,593,392 ---------- ----------- ------------- End of year 10,727,980 28,905,676 2,163,135,513 ========== =========== =============
13 16 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1996, CONTINUED
Fidelity Retirement Gillette Fidelity Government Company Intermediate Fixed Money Fidelity Stock Bond Income Market Magellan Fund Fund Fund Portfolio Fund -------------- ------------ ----------- ---------- ---------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust $ 443,492,386 348,748 18,626,503 237,916 3,949,764 Contributions: Employee contributions 20,826,272 529,920 4,549,074 656,019 5,685,158 Employer contributions 15,917,811 - - - - Transfer of assets from Parker Pen and Thermoscan, Inc. 401(k) Plans - 156,538 1,069,326 17,325 - -------------- ---------- ----------- ---------- ---------- Total additions 480,236,469 1,035,206 24,244,903 911,260 9,634,922 Deductions from net assets attributed to: Benefit payments (39,500,172) (1,161,364) (24,516,459) (2,306,171) (2,284,655) Forfeitures (73,012) - - - - -------------- ---------- ----------- ---------- ---------- Total deductions (39,573,184) (1,161,364) (24,516,459) (2,306,171) (2,284,655) Net increase (decrease) prior to interfund transfers 440,663,285 (126,158) (271,556) (1,394,911) 7,350,267 Net interfund transfers in (out): Loans issued (8,156,885) (127,637) (3,244,339) (273,869) (1,421,251) Loans repaid 6,613,605 132,305 1,653,682 168,077 1,220,409 Other transfers (15,517,863) (116,015) 16,764,453 4,177,512 (9,592,582) -------------- ---------- ----------- ---------- ---------- (17,061,143) (111,347) 15,173,796 4,071,720 (9,793,424) Net increase (decrease) 423,602,142 (237,505) 14,902,240 2,676,809 (2,443,157) Net assets available for plan benefits: Beginning of year 881,824,305 9,354,053 274,891,098 3,220,569 36,325,915 -------------- ---------- ----------- ---------- ---------- End of year $1,305,426,447 9,116,548 289,793,338 5,897,378 33,882,758 ============== ========== =========== ========== ========== Fidelity U.S. Fidelity Fidelity Equity Growth Participant Balanced Index Company Loan Fund Portfolio Fund Fund Total ---------- ---------- ---------- ----------- ------------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust 1,341,912 11,224,400 4,362,576 - 483,584,205 Contributions: Employee contributions 1,929,831 2,199,250 4,232,019 - 40,607,543 Employer contributions - - - - 15,917,811 Transfer of assets from Parker Pen and Thermoscan, Inc. 401(k) Plans 915,870 2,700,297 409,599 166,391 5,435,346 ---------- ---------- ---------- ----------- ------------- Total additions 4,187,613 16,123,947 9,004,194 166,391 545,544,905 Deductions from net assets attributed to: Benefit payments (1,342,324) (1,899,379) (1,859,447) (787,613) (75,657,584) Forfeitures - - - - (73,012) ---------- ---------- ---------- ----------- ------------- Total deductions (1,342,324) (1,899,379) (1,859,447) (787,613) (75,730,596) Net increase (decrease) prior to interfund transfers 2,845,289 14,224,568 7,144,747 (621,222) 469,814,309 Net interfund transfers in (out): Loans issued (390,065) (1,271,355) (903,713) 15,789,114 - Loans repaid 403,376 389,504 739,283 (11,320,241) - Other transfers (2,575,688) 3,921,165 2,939,018 - - ---------- ---------- ---------- ----------- ------------- (2,562,377) 3,039,314 2,774,588 4,468,873 - Net increase (decrease) 282,912 17,263,882 9,919,335 3,847,651 469,814,309 Net assets available for plan benefits: Beginning of year 15,132,881 44,600,059 25,058,209 22,371,994 1,312,779,083 ---------- ---------- ---------- ----------- ------------- End of year 15,415,793 61,863,941 34,977,544 26,219,645 1,782,593,392 ========== ========== ========== =========== =============
15 17 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (6) INVESTMENTS Investments of the Savings Plan Trust 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 Gillette Company Savings Plan for Arrow Park Employees. 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, 1997 and 1996 are as follows:
1997 1996 -------------- ------------- Investments, at fair value: Marketable securities: Gillette common stock $1,551,947,454 1,306,814,500 Registered investment companies: Fidelity Intermediate Bond Fund - 9,126,760 Fidelity Short-term Investment Fund 23,695,057 31,916,887 Fidelity Retirement Government Money Market Portfolio 10,344,002 5,913,935 Fidelity Magellan Fund 46,585,401 34,287,295 Fidelity Balanced Fund - 16,287,310 Fidelity U.S. Equity Index Portfolio 91,919,213 63,606,106 Fidelity Growth Company Fund 41,787,957 35,235,504 Fidelity Emerging Markets Fund 1,220,995 - Fidelity Diversified International Fund 6,256,456 - Fidelity Growth & Income Fund 21,222,508 - INVESCO Total Return Fund 24,955,015 - Fidelity U.S. Bond Index Fund 10,760,825 - Investment contracts 312,826,658 260,086,270 Participant loans 29,104,490 26,347,534 -------------- ------------- Total investments and net assets $2,172,626,031 1,789,622,101 ============== ============= Assets allocated to The Gillette Company Savings Plan for Arrow Park Employees $ 9,490,518 7,028,709 Assets allocated to The Gillette Company Employees' Savings Plan $2,163,135,513 1,782,593,392 ============== =============
16 18 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (6), CONTINUED The statements of changes in net assets of the Savings Plan Trust for the years ended December 31, 1997 and 1996 are as follows:
1997 1996 -------------- ------------- Employee contributions $ 47,855,615 41,325,185 Employer contributions 17,683,710 16,121,454 Investment income: Net appreciation (depreciation) on fair value of investments: Gillette common stock 368,245,796 431,024,386 Fidelity Intermediate Bond Fund (89,828) (317,625) Fidelity Magellan Fund 5,830,143 (2,198,991) Fidelity Balanced Fund 1,100,411 567,308 Fidelity U.S. Equity Index Portfolio 19,620,590 9,906,298 Fidelity Growth Company Fund 2,204,172 2,726,460 Fidelity Emerging Markets Fund (881,794) - Fidelity Diversified International Fund 246,019 - Fidelity Growth & Income Fund 2,048,113 - INVESCO Total Return Fund 2,287,046 - Fidelity U.S. Bond Index Fund 315,599 - Dividends 24,656,455 22,259,897 Interest 22,065,612 20,569,869 -------------- ------------- Net investment income 447,648,334 484,537,602 Transferred from prior trustee - 10,698,627 -------------- ------------- Total additions 513,187,659 552,682,868 Benefit payments (130,062,739) (75,766,746) Forfeitures (120,990) (73,104) -------------- ------------- Total deductions (130,183,729) (75,839,850) -------------- ------------- Net increase 383,003,930 476,843,018 Net assets: Beginning of year 1,789,622,101 1,312,779,083 -------------- ------------- End of year $2,172,626,031 1,789,622,101 ============== =============
17 19 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (7) UNIT VALUATION Participants' accounts are maintained on a "unit value" basis. The total units used in valuing participants' accounts and the per unit values at December 31, 1996 and the four quarters ended December 31, 1997 are as follows:
Gillette Company Fidelity Intermediate Stock Fund Bond Fund Fixed Income Fund ----------------------- --------------------- --------------------- Units Value Units Value Units Value ---------- ------- -------- ------- ----------- ----- December 31, 1996 16,790,501 $ 77.75 904,416 $10.08 289,793,338 $1.00 March 31, 1997 16,595,211 72.62 835,431 9.90 280,859,835 1.00 June 30, 1997 15,907,757 94.75 - - 315,407,119 1.00 September 30, 1997 15,947,957 86.31 - - 307,641,658 1.00 December 31, 1997 15,429,114 100.44 - - 334,260,831 1.00 Fidelity Retirement Government Money Fidelity Fidelity Market Portfolio Magellan Fund Balanced Fund ---------------------- ------------------- ------------------- Units Value Units Value Units Value ---------- ----- ------- ------ --------- ------ December 31, 1996 5,897,378 $1.00 420,121 $80.65 1,094,872 $14.08 March 31, 1997 5,864,097 1.00 398,629 80.20 950,646 14.11 June 30, 1997 10,267,657 1.00 405,113 91.05 - - September 30, 1997 9,685,198 1.00 410,655 99.85 - - December 31, 1997 10,268,170 1.00 481,799 95.27 - - Fidelity U.S. Fidelity Growth Fidelity Growth & Equity Index Portfolio Company Fund Income Fund ---------------------- ------------------- ----------------- Units Value Units Value Units Value --------- ------- ------- ------ ------- ------ December 31, 1996 2,295,508 $26.95 864,497 $40.46 $ March 31, 1997 2,346,949 27.54 823,008 39.29 220,540 30.98 June 30, 1997 2,405,219 32.06 794,382 45.46 340,098 36.05 September 30, 1997 2,440,321 34.31 807,568 49.81 430,690 37.16 December 31, 1997 2,553,936 34.98 955,147 43.32 554,410 38.10 Fidelity Emerging Fidelity Diversified Fidelity U.S. Bond Market Fund International Fund Index Fund ------------------- -------------------- ------------------ Units Value Units Value Units Value ------- ------ -------- ------ -------- ------ December 31, 1996 $ $ $ March 31, 1997 83,913 17.49 190,284 15.08 76,203 10.31 June 30, 1997 125,366 16.24 331,132 16.90 859,249 10.50 September 30, 1997 115,132 12.71 375,831 17.48 874,464 10.66 December 31, 1997 126,635 9.60 386,402 16.13 994,252 10.79
18 20 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (7), CONTINUED INVESCO Total Return Fund ------------------- Units Value ------- ------ December 31, 1996 - - March 31, 1997 118,030 $24.67 June 30, 1997 737,957 27.40 September 30, 1997 737,328 29.00 December 31, 1997 829,331 29.09 (8) PARTICIPATION BY FUND The total number of plan participants in each of the investment funds on December 31, 1997 and 1996 are as follows: 1997 1996 ----- ----- Gillette Company Stock Fund 9,346 8,752 Fidelity Intermediate Bond Fund - 842 Fixed Income Fund 4,095 4,400 Fidelity Retirement Government Money Market Portfolio 651 692 Fidelity Magellan Fund 3,087 3,131 Fidelity Balanced Fund - 1,422 Fidelity U.S. Equity Index Portfolio 3,021 2,976 Fidelity Growth Company Fund 2,543 2,495 Fidelity Growth & Income Fund 629 - Fidelity Emerging Markets Fund 205 - Fidelity Diversified International Fund 380 - Fidelity U.S. Bond Index Fund 778 - INVESCO Total Return 1,422 - The numbers shown above reflect the fact that participants may elect to invest in more than one fund. (9) ADMINISTRATIVE EXPENSES The Company bears all trustee and 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. 19 21 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements, Continued (10) INCOME TAXES A favorable tax determination letter was received from the Internal Revenue Service on July 19, 1994 stating that the existing Plan and its underlying trust qualified under section 401(a) of the Internal Revenue Code of 1986 (the "Code") as a profit sharing plan, and is exempt from federal income taxes. Further, the features of the Plan relating to tax deferred savings qualified under section 401(k) of the 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. (11) PLAN MERGER AND TRANSFERS Effective March 31, 1995, the account balances of certain Gillette Company Savings Plan for Arrow Park Employees participants were transferred into the Plan. The account balances of all remaining non-bargaining unit participants of the Gillette Company Savings Plan for Arrow Park Employees totaling $3,806,039 were transferred to the Plan on January 2, 1996 along with their participant loan balances which totaled $141,374. Effective July 1, 1996, the net assets of the Thermoscan Inc. 401(k) Plan were merged into The Gillette Company Employees' Savings Plan. The account balances of the plan participants were transferred into the Plan. (12) CASH ADVANCE TO THE PLAN TRUSTEE The Company has deposited with the Plan trustee a cash advance to provide liquidity to the Gillette Company Stock Fund in order to make distributions, loans and transfers from the Fund on a timely basis. Any interest earned on the balance is allocated to participant accounts within the Gillette Company Stock Fund. The outstanding balance of the cash advance to the trustee as of December 31, 1997 was $1,500,000. 20 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 Nos. 33-9495, 33-56218 and 33-59125 on Form S-8 of The Gillette Company Employees' Savings Plan of our report dated May 15, 1998, relating to the statements of net assets available for plan benefits of The Gillette Company Employees' Savings Plan as of December 31, 1997 and 1996, and the related statements of changes in net assets available for plan benefits for each of the years in the two-year period ended December 31, 1997, which report appears in the December 31, 1997 annual report on Form 11-K of The Gillette Company Employees' Savings Plan. s/ KPMG Peat Marwick LLP Boston, Massachusetts June 24, 1997 -----END PRIVACY-ENHANCED MESSAGE-----