-----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, Uvq0V3ZltMzX/OnvPIaoLYmw4shO8/A2o+f7vlQHeE1cgHMj4kn9U6+UVEnKzD00 c+Uh/YdO3wpL5XJCIAgT2A== /in/edgar/work/20000621/0000950135-00-003264/0000950135-00-003264.txt : 20000920 0000950135-00-003264.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950135-00-003264 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000621 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GILLETTE CO CENTRAL INDEX KEY: 0000041499 STANDARD INDUSTRIAL CLASSIFICATION: [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: 658203 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 0001.txt THE GILLETTE COMPANY 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, 1999 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, 1999 and 1998. 2. Statements of Changes in Net Assets Available for Plan Benefits for each of the years in the two-year period ended December 31, 1999. 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 ROBERT E. DICENSO Robert E. DiCenso Date: June 21, 2000 3 [KPMG LOGO] THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Financial Statements December 31, 1999 and 1998 (With Independent Auditors' Report Thereon) 4 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Financial Statements December 31, 1999 and 1998 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. 5 [KPMG LOGO] 99 High Street Telephone 617 988 1000 Boston, MA 02110-2371 Fax 617 988 0800 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, 1999 and 1998, 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, 1999 and 1998, and the changes in net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. /s/ KPMG LLP Boston, Massachusetts June 9, 2000 6 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Statements of Net Assets Available for Plan Benefits December 31, 1999 and 1998 1999 1998 -------------- ------------- Assets: Investment in the Savings Plan Trust $2,306,247,973 2,331,576,711 -------------- ------------- Net assets available for plan benefits $2,306,247,973 2,331,576,711 ============== ============= See accompanying notes to financial statements. 2 7 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Statements of Changes in Net Assets Available for Plan Benefits Years ended December 31, 1999 and 1998
1999 1998 --------------- -------------- Additions to net assets attributed to: Net investment income from the Savings Plan Trust $ 20,937,242 33,550,314 Contributions: Employee contributions 67,265,001 49,713,107 Employer contributions 25,597,107 18,585,652 Transfer of assets from Duracell Inc. Thrift Plan 54,496 235,469,789 Rollover contributions from Duracell Inc. Cash Balance Plan 84,824,211 -- --------------- -------------- Total additions 198,678,057 337,318,862 --------------- -------------- Deductions from net assets attributed to: Benefit payments (223,506,200) (168,706,201) Forfeitures (500,595) (171,463) --------------- -------------- Total deductions (224,006,795) (168,877,664) --------------- -------------- Net (decrease) increase in assets (25,328,738) 168,441,198 Net assets available for plan benefits: Beginning of year 2,331,576,711 2,163,135,513 --------------- -------------- End of year $ 2,306,247,973 2,331,576,711 =============== ==============
See accompanying notes to financial statements. 3 8 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (1) DESCRIPTION OF THE PLAN The Gillette Company Employees' Savings Plan (the "Plan") is 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"). Regular employees of the Company and its participating subsidiaries are 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 $10,000 for both 1999 and 1998. (c) EMPLOYER CONTRIBUTIONS For all employee contributions designated as matched savings, the Company will contribute $.50 for every $1 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. (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 Plan's investment fund offerings ("Funds"). A participant may direct employee contributions in any of the following Funds: GILLETTE COMPANY STOCK FUND Invests primarily in shares of The Gillette Company common stock. 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. 4 (Continued) 9 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 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 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. FIDELITY EMERGING MARKETS FUND Seeks capital appreciation from emerging markets around the world. 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. 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. 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. FIDELITY U.S. BOND INDEX FUND Invests in investment grade (medium to high quality) or above with maturities of at least one year. 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. 5 (Continued) 10 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (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. (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 surviving spouse or beneficiary, will receive a lump sum distribution of the participant's vested account balance, or if the account balance exceeds $5,000 at such time, they 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 their 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. 6 (Continued) 11 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (i) FORFEITURES Forfeitures by Plan participants are used to reduce Company contributions. (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 except for guaranteed and synthetic investment contracts which 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, 1999 and 1998 is 6.11% and 6.40%, respectively, and the crediting interest rate as of December 31, 1999 and 1998 is 5.87% and 6.19% respectively, for these investment contracts. Shares of Company stock held in the trust is defined as the composite closing price of the stock on the New York Stock Exchange. 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. (c) PAYMENT OF BENEFITS Benefits are recorded when paid. 7 (Continued) 12 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (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 their 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. 8 (Continued) 13 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1999
RETIREMENT FIDELITY GILLETTE GOVERNMENT U.S. FIDELITY COMPANY FIXED MONEY FIDELITY EQUITY GROWTH STOCK INCOME MARKET MAGELLAN INDEX COMPANY FUND FUND PORTFOLIO FUND PORTFOLIO FUND --------------- ------------ ------------ ------------ ------------ ------------ Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust $ (143,288,096) 24,027,624 $ 3,713,730 29,898,295 40,215,623 51,890,242 Contributions: Employee contributions 29,165,918 5,338,907 762,188 9,613,038 7,596,776 5,747,037 Employer contributions 25,597,107 -- -- -- -- -- Transfer of assets from Duracell Inc. Thrift Plan -- -- 54,496 -- -- -- Rollover contributions from Duracell Inc. Cash Balance Plan -- -- 84,824,211 -- -- -- --------------- ------------ ------------ ------------ ------------ ------------ Total additions (88,525,071) 29,366,531 89,354,625 39,511,333 47,812,399 57,637,279 --------------- ------------ ------------ ------------ ------------ ------------ Deductions from net assets attributed to: Benefit payments (107,605,274) (61,357,580) (10,289,259) (7,341,001) (15,154,669) (5,318,605) Forfeitures (302,364) (154,711) (165) (19,098) (10,577) (1,338) --------------- ------------ ------------ ------------ ------------ ------------ Total deductions (107,907,638) (61,512,291) (10,289,424) (7,360,099) (15,165,246) (5,319,943) --------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) prior to interfund transfers (196,432,709) (32,145,760) 79,065,201 32,151,234 32,647,153 52,317,336 Net interfund transfers in (out): Loans issued (8,727,850) (1,967,085) (8,669,403) (1,949,443) (1,686,903) (782,145) Loans repaid 9,620,534 1,750,187 720,791 1,898,644 1,324,393 817,394 Other transfers (91,511,562) 42,897,531 (23,451,088) 26,808,641 9,872,620 31,057,181 --------------- ------------ ------------ ------------ ------------ ------------ (90,618,878) 42,680,633 (31,399,700) 26,757,842 9,510,110 31,092,430 --------------- ------------ ------------ ------------ ------------ ------------ Net increase (decrease) (287,051,587) 10,534,873 47,665,501 58,909,076 42,157,263 83,409,766 Net assets available for plan benefits: Beginning of year 1,419,216,545 382,827,956 19,991,602 103,719,190 185,762,333 47,132,904 --------------- ------------ ------------ ------------ ------------ ------------ End of year $ 1,132,164,958 393,362,829 67,657,103 162,628,266 227,919,596 130,542,670 =============== ============ ============ ============ ============ ============
9 (Continued) 14 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1999, 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 (loss) from the Savings Plan Trust $ 1,398,410 9,459,381 4,272,328 (449,779) Contributions: Employee contributions 426,314 1,105,750 3,799,607 2,761,320 Employer contributions -- -- -- -- Transfer of assets from Duracell Inc. Thrift Plan -- -- -- -- Rollover contributions from Duracell Inc. Cash Balance Plan -- -- -- -- ----------- ----------- ----------- ----------- Total additions 1,824,724 10,565,131 8,071,935 2,311,541 ----------- ----------- ----------- ----------- Deductions from net assets attributed to: Benefit payments (56,576) (1,092,395) (5,460,278) (4,392,101) Forfeitures -- (4,187) (994) (7,076) ----------- ----------- ----------- ----------- Total deductions (56,576) (1,096,582) (5,461,272) (4,399,177) ----------- ----------- ----------- ----------- Net increase (decrease) prior to interfund transfers 1,768,148 9,468,549 2,610,663 (2,087,636) Net interfund transfers in (out): Loans issued (21,882) (114,162) (281,237) (499,025) Loans repaid 41,704 107,921 464,021 463,590 Other transfers 1,908,156 3,326,348 5,571,905 (8,116,935) ----------- ----------- ----------- ----------- 1,927,978 3,320,107 5,754,689 (8,152,370) ----------- ----------- ----------- ----------- Net increase (decrease) 3,696,126 12,788,656 8,365,352 (10,240,006) Net assets available for plan benefits: Beginning of year 866,074 17,018,056 35,729,934 68,151,982 ----------- ----------- ----------- ----------- End of year $ 4,562,200 29,806,712 44,095,286 57,911,976 =========== =========== =========== ===========
FIDELITY U. S. BOND PARTICIPANT INDEX LOAN FUND FUND TOTAL --------- ----------- -------------- Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust (200,516) -- 20,937,242 Contributions: Employee contributions 948,146 -- 67,265,001 Employer contributions -- -- 25,597,107 Transfer of assets from Duracell Inc. Thrift Plan -- -- 54,496 Rollover contributions from Duracell Inc. Cash Balance Plan -- -- 84,824,211 --------- ----------- -------------- Total additions 747,630 -- 198,678,057 --------- ----------- -------------- Deductions from net assets attributed to: Benefit payments 3,245,900) (2,192,562) (223,506,200) Forfeitures (85) -- (500,595) --------- ----------- -------------- Total deductions 3,245,985) (2,192,562) (224,006,795) --------- ----------- -------------- Net increase (decrease) prior to interfund transfers 2,498,355) (2,192,562) (25,328,738) Net interfund transfers in (out): Loans issued (114,555) 24,813,690 -- Loans repaid 139,353 (17,348,532) -- Other transfers 1,637,203 -- -- --------- ----------- -------------- 1,662,001 7,465,158 -- --------- ----------- -------------- Net increase (decrease) (836,354) 5,272,596 (25,328,738) Net assets available for plan benefits: Beginning of year 7,733,532 33,426,603 2,331,576,711 --------- ----------- -------------- End of year 6,897,178 38,699,199 2,306,247,973 ========= =========== ==============
10 (Continued) 15 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1998
FIDELITY RETIREMENT FIDELITY GILLETTE GOVERNMENT U.S. FIDELITY COMPANY FIXED MONEY FIDELITY EQUITY GROWTH STOCK INCOME MARKET MAGELLAN INDEX COMPANY FUND FUND PORTFOLIO FUND PORTFOLIO FUND --------------- ------------ ----------- ------------ ------------ ----------- Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust $ (51,898,771) 20,681,897 914,554 15,699,499 25,972,224 10,563,466 Contributions: Employee contributions 29,401,274 3,648,815 525,388 4,465,169 3,133,989 3,854,165 Employer contributions 18,585,652 -- -- -- -- -- Transfer of assets from Duracell Inc. Thrift Plan 34,167,806 40,444,609 834,060 37,965,425 67,858,802 -- --------------- ------------ ----------- ------------ ------------ ----------- Total additions 30,255,961 64,775,321 2,274,002 58,130,093 96,965,015 14,417,631 --------------- ------------ ----------- ------------ ------------ ----------- Deductions from net assets attributed to: Benefit payments (88,497,123) (52,366,984) (5,889,927) (3,911,054) (6,217,745) (3,853,017) Forfeitures (171,463) -- -- -- -- --------------- ------------ ----------- ------------ ------------ ----------- Total deductions (88,668,586) (52,366,984) (5,889,927) (3,911,054) (6,217,745) (3,853,017) --------------- ------------ ----------- ------------ ------------ ----------- Net increase (decrease) prior to interfund transfers (58,412,625) 12,408,337 (3,615,925) 54,219,039 90,747,270 10,564,614 Net interfund transfers in (out): Loans issued (9,504,386) (1,990,504) (137,092) (1,061,351) (684,864) (607,246) Loans repaid 10,015,645 1,396,543 159,538 1,178,208 482,671 620,192 Other transfers (72,543,682) 36,752,749 13,316,911 3,482,295 5,880,572 (4,821,617) --------------- ------------ ----------- ------------ ------------ ----------- (72,032,423) 36,158,788 13,339,357 3,599,152 5,678,379 (4,808,671) --------------- ------------ ----------- ------------ ------------ ----------- Net increase (decrease) (130,445,048) 48,567,125 9,723,432 57,818,191 96,425,649 5,755,943 Net assets available for plan benefits: Beginning of year 1,549,661,593 334,260,831 10,268,170 45,900,999 89,336,684 41,376,961 --------------- ------------ ----------- ------------ ------------ ----------- End of year $ 1,419,216,545 382,827,956 19,991,602 103,719,190 185,762,333 47,132,904 =============== ============ =========== ============ ============ ===========
11 (Continued) 16 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED DECEMBER 31, 1998, CONTINUED:
FIDELITY FIDELITY FIDELITY INVESCO FIDELITY EMERGING DIVERSIFIED GROWTH & TOTAL U.S. BOND MARKETS INTERNATION- INCOME RETURN INDEX FUND AL FUND FUND FUND FUND ------------ ------------ ----------- ----------- ----------- Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust $ (741,864) 744,282 6,924,933 3,446,953 1,243,141 Contributions: Employee contributions 226,121 530,680 1,615,262 1,677,795 634,449 Employer contributions -- -- -- -- -- Transfer of assets from Duracell Inc. Thrift Plan -- 10,091,698 -- 37,828,701 -- ----------- ----------- ----------- ----------- ----------- Total additions (515,743) 11,366,660 8,540,195 42,953,449 1,877,590 ----------- ----------- ----------- ----------- ----------- Deductions from net assets attributed to: Benefit payments (185,042) (836,860) (2,105,375) (2,069,119) (1,005,585) Forfeitures -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- Total deductions (185,042) (836,860) (2,105,375) (2,069,119) (1,005,585) ----------- ----------- ----------- ----------- ----------- Net increase (decrease) prior to interfund transfers (700,785) 10,529,800 6,434,820 40,884,330 872,005 Net interfund transfers in (out): Loans issued (26,935) (32,564) (205,227) (321,191) (125,413) Loans repaid 16,265 56,993 231,198 367,076 161,835 Other transfers 361,832 231,166 8,146,126 3,096,523 6,097,125 ----------- ----------- ----------- ----------- ----------- 351,162 255,595 8,172,097 3,142,408 6,133,547 ----------- ----------- ----------- ----------- ----------- Net increase (decrease) (349,623) 10,785,395 14,606,917 44,026,738 7,005,552 Net assets available for plan benefits: Beginning of year 1,215,697 6,232,661 21,123,017 24,125,244 10,727,980 ----------- ----------- ----------- ----------- ----------- End of year $ 866,074 17,018,056 35,729,934 68,151,982 17,733,532 =========== =========== =========== =========== ===========
PARTICIPANT LOAN FUND TOTAL ----------- -------------- Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust -- 33,550,314 Contributions: Employee contributions -- 49,713,107 Employer contributions -- 18,585,652 Transfer of assets from Duracell Inc. Thrift Plan 6,278,688 235,469,789 ----------- -------------- Total additions 6,278,688 337,318,862 ----------- -------------- Deductions from net assets attributed to: Benefit payments (1,768,370) (168,706,201) Forfeitures -- (171,463) ----------- -------------- Total deductions (1,768,370) (168,877,664) ----------- -------------- Net increase (decrease) prior to interfund transfers 4,510,318 168,441,198 Net interfund transfers in (out): Loans issued 14,696,773 -- Loans repaid (14,686,164) -- Other transfers -- -- ----------- -------------- 10,609 -- ----------- -------------- Net increase (decrease) 4,520,927 168,441,198 Net assets available for plan benefits: Beginning of year 28,905,676 2,163,135,513 ----------- -------------- End of year 33,426,603 2,331,576,711 =========== ==============
12 (Continued) 17 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (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, 1999 and 1998 are as follows: 1999 1998 -------------- ------------- Investments, at fair value: Marketable securities: Gillette common stock $1,134,382,567 1,421,628,142 Registered investment companies: Fidelity Short-term Investment Fund 20,704,765 54,284,783 Fidelity Retirement Government Money Market Portfolio 67,770,621 22,247,679 Fidelity Magellan Fund 164,098,622 104,133,549 Fidelity U.S. Equity Index Portfolio 231,880,545 188,119,328 Fidelity Growth Company Fund 131,816,480 47,723,974 Fidelity Emerging Markets Fund 4,619,928 869,866 Fidelity Diversified International Fund 29,877,051 16,836,592 Fidelity Growth & Income Fund 44,456,629 35,977,890 INVESCO Total Return Fund 58,825,435 66,763,014 Fidelity U.S. Bond Index Fund 16,933,455 17,783,501 Investment contracts 375,192,973 330,165,797 Participant loans 38,812,846 33,652,383 -------------- ------------- Total investments 2,319,371,917 2,340,186,498 Receivable from Duracell Inc. Thrift Plan -- 2,890,395 -------------- ------------- Total investments and net assets $2,319,371,917 2,343,076,893 ============== ============= Assets allocated to The Gillette Company Savings Plan for Arrow Park Employees $ 13,123,944 11,500,182 Assets allocated to The Gillette Company Employees' Savings Plan $2,306,247,973 2,331,576,711 ============== ============= 13 (Continued) 18 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 The statements of changes in net assets of the Savings Plan Trust for the years ended December 31, 1999 and 1998 are as follows:
1999 1998 --------------- -------------- Employee contributions $ 67,891,415 50,400,338 Employer contributions 25,769,417 18,776,685 Investment income: Net appreciation (depreciation) on fair value of investments: Gillette common stock (158,603,983) (68,234,619) Fidelity Magellan Fund 16,508,578 12,773,190 Fidelity U.S. Equity Index Portfolio 36,657,461 24,256,268 Fidelity Growth Company Fund 43,484,555 7,200,486 Fidelity Emerging Markets Fund 1,407,735 (745,082) Fidelity Diversified International Fund 8,414,228 476,479 Fidelity Growth & Income Fund 949,119 5,136,757 INVESCO Total Return Fund (4,527,802) 1,974,014 Fidelity U.S. Bond Index Fund (1,570,500) 294,579 Dividends 52,546,774 28,572,861 Interest 27,122,389 23,120,340 --------------- -------------- Net investment income 22,388,554 34,825,273 Transferred from Duracell Inc. Thrift Plan 54,496 235,469,789 Rollover contributions from Duracell Inc. Cash Balance Plan 84,824,211 -- --------------- -------------- Total additions 200,928,093 339,472,085 --------------- -------------- Benefit payments 224,119,714 168,845,644 Forfeitures 513,355 175,579 --------------- -------------- Total deductions 224,633,069 169,021,223 --------------- -------------- Net (decrease) increase (23,704,976) 170,450,862 Net assets: Beginning of year 2,343,076,893 2,172,626,031 --------------- -------------- End of year $ 2,319,371,917 2,343,076,893 =============== ==============
14 (Continued) 19 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (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, 1998 and the four quarters ended December 31, 1999 are as follows:
FIDELITY RETIREMENT GILLETTE COMPANY GOVERNMENT MONEY STOCK FUND FIXED INCOME FUND MARKET PORTFOLIO ------------------------- ----------------------- ------------------- UNITS VALUE UNITS VALUE UNITS VALUE ---------- ------ ----------- ----- ---------- ----- December 31, 1998 29,682,960 $47.81 382,827,956 $1.00 19,991,602 $1.00 March 31, 1999 28,072,692 59.43 416,890,487 1.00 87,404,421 1.00 June 30, 1999 27,381,004 41.00 412,762,041 1.00 75,418,547 1.00 September 30, 1999 27,262,981 33.93 394,290,602 1.00 70,532,166 1.00 December 31, 1999 27,488,072 41.19 393,362,829 1.00 67,657,103 1.00 FIDELITY FIDELITY U.S. FIDELITY GROWTH MAGELLAN FUND EQUITY INDEX PORTFOLIO COMPANY FUND ------------------------- ------------------------ ------------------- UNITS VALUE UNITS VALUE UNITS VALUE ---------- ------- ----------- ------ ---------- ------ December 31, 1998 858,460 $120.82 4,225,713 $43.96 923,812 $51.02 March 31, 1999 990,635 129.75 4,565,614 45.95 994,543 55.15 June 30, 1999 1,143,595 129.77 4,604,781 48.86 1,203,995 60.42 September 30, 1999 1,165,550 122.02 4,515,537 45.66 1,297,620 62.83 December 31, 1999 1,190,282 136.63 4,375,496 52.09 1,548,549 84.30 FIDELITY EMERGING FIDELITY DIVERSIFIED FIDELITY GROWTH & MARKETS FUND INTERNATIONAL FUND INCOME FUND ------------------------- ------------------------ ------------------- UNITS VALUE UNITS VALUE UNITS VALUE ---------- ------- ----------- ------ ---------- ------ December 31, 1998 122,847 $ 7.05 960,387 $17.72 779,449 $45.84 March 31, 1999 150,688 7.71 1,000,657 18.20 898,116 46.64 June 30, 1999 381,614 9.78 982,727 19.43 1,009,256 48.74 September 30, 1999 353,144 9.01 1,013,056 20.47 1,042,580 43.11 December 31, 1999 379,551 12.02 1,163,416 25.62 935,015 47.16 INVESCO TOTAL FIDELITY U.S. BOND RETURN FUND INDEX FUND ------------------------- ------------------------ UNITS VALUE UNITS VALUE ---------- ------- ----------- ------ December 31, 1998 2,173,214 $31.36 1,609,213 $11.02 March 31, 1999 2,210,065 30.68 2,044,302 10.81 June 30, 1999 2,058,266 33.02 1,973,795 10.48 September 30, 1999 1,984,377 30.06 1,709,491 10.38 December 31, 1999 1,999,723 28.96 1,658,212 10.19
15 (Continued) 20 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (8) PARTICIPATION BY FUND The total number of plan participants in each of the investment funds on December 31, 1999 and 1998 are as follows:
1999 1998 ------ ------ Gillette Company Stock Fund 14,121 12,148 Fixed Income Fund 6,449 6,415 Fidelity Retirement Government Money Market Portfolio 3,404 644 Fidelity Magellan Fund 7,112 5,643 Fidelity U.S. Equity Index Portfolio 6,713 6,163 Fidelity Growth Company Fund 4,257 2,471 Fidelity Emerging Markets Fund 628 250 Fidelity Diversified International Fund 2,275 1,932 Fidelity Growth & Income Fund 2,718 1,001 INVESCO Total Return Fund 3,916 3,879 Fidelity U.S. Bond Index Fund 1,189 837
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 and INVESCO funds offered as investment options under the Plan are deducted from the assets of each of those funds. (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. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax advisor believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. 16 (Continued) 21 THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (11) PLAN MERGER AND TERMINATION OF DURACELL INC. PLANS The Duracell Inc. Thrift Plan ("Duracell Plan") was merged into the Plan effective December 31, 1998. The financial statements reflect the plan merger as of December 31, 1998, the effective date of the transaction. On the effective date, $232,579,430 of the $235,469,789 of the net assets attributable to the participants of the Duracell Plan was transferred into the Plan. The remaining $2,890,395 of net assets from the Duracell Plan was transferred in January 1999 and was a receivable from the Duracell Plan at December 31, 1998. Subsequently, an additional $54,496 of net assets from the Duracell Plan was transferred in August 1999 to the Plan which was not reflected as a receivable from the Duracell Plan at December 31, 1998. Additionally, the Duracell Inc. Cash Balance Plan was terminated effective January 1, 1999. During the first quarter of 1999, rollover contributions of certain Duracell Inc. Cash Balance Plan participants totaling $84,824,211 were made to 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, 1999 and 1998 was $1,500,000. 17 EX-23.2 2 0002.txt CONSENT OF KPMG LLP 1 [KPMG LOGO] 99 High Street Telephone 617 988 1000 Boston, MA 02110-2371 Fax 617 988 0800 Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS The Advisory Committee The Gillette Company Employees' Savings Plan: We consent to the incorporation by reference in registration statement No.33-63707 on Form S-8 of The Gillette Company Employees' Savings Plan of our report dated June 9, 2000, relating to the statements of net assets available for plan benefits of The Gillette Company Employees' Savings Plan as of December 31, 1999 and 1998, 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, 1999 annual report on Form 11-K of the Gillette Company Employees' Savings Plan. /s/ KPMG Boston, Massachusetts June 16, 2000 -----END PRIVACY-ENHANCED MESSAGE-----