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, 1995
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
<PAGE>
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,
1995 and 1994.
2. Statements of Changes in Net Assets Available for Plan Benefits for each of
the years in the three-year period ended December 31, 1995.
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 THOMAS F. SKELLY
Thomas F. Skelly
Date: June 25, 1996
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 statements No.
33-63707 on Form S-8 of the Parker Pen 401(k)Plan of our report dated May 16
1996, relating to the statements of assets available for plan benefits of Parker
Pen 401(k) Plan as of December 31, 1995 and 1994, and the related statements of
changes in assets available for plan benefits for the years then ended, which
report appears in the December 31, 1995 annual report on Form 11-K of Parker Pen
401(k) Plan.
KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
June 26, 1996
THE PARKER PEN 401(k) PLAN
Financial Statements and Schedules
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
THE PARKER PEN 401(k) PLAN
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<CAPTION>
TABLE OF CONTENTS
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Page(s)
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Independent Auditors' Report .......................................... 1
Statements of Assets Available for Plan Benefits,
December 31, 1995 and 1994 ........................................ 2
Statements of Changes in Assets Available for Plan Benefits,
Years ended December 31, 1995 and 1994 ............................ 3
Notes to Financial Statements ......................................... 4-9
Schedule 1 - Item 27a, Schedule of Assets Held for Investment Purposes,
December 31, 1995 ................................................. 10
Schedule 2- Item 27d, Schedule of Reportable Transactions,
Year ended December 31, 1995 ...................................... 11
<FN>
Note: Supplemental schedules required by the Employee Retirement Income Security Act of 1974, as amended
(ERISA), that have not been included are not applicable.
</FN>
</TABLE>
<PAGE>
1
Independent Auditors' Report
The Savings Plan Committee of
The Gillette Company Employees' Savings Plan:
We have audited the financial statements and supplemental schedules of The
Parker Pen 401(k) Plan as of December 31, 1995 and 1994 and for the years then
ended, as listed in the accompanying table of contents. These financial
statements and schedules are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
schedules 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 and schedules 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 assets available for plan benefits of The Parker Pen
401(k) Plan as of December 31, 1995 and 1994, and the changes in assets
available for plan benefits for the years then ended in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1995 and reportable transactions for
the year ended December 31, 1995 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
KPMG Peat Marwick LLP
May 16, 1996
<PAGE>
THE PARKER PEN 401(k) PLAN
Statements of Assets Available for Plan Benefits
December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Assets:
Investments at fair value (note 3):
Guaranteed Investment Contract Fund ...... $3,193,135 3,440,078
Balanced Fund ............................ 1,706,131 1,614,224
Equity Fund .............................. 3,882,421 2,811,905
Payment Reserve Account .................. 250,774 214,673
--------- ---------
Total investments ................................ 9,032,461 8,080,880
Contributions receivable:
Employer ................................. 37,961 29,550
Employee ................................. 119,715 87,119
Accrued investment income ........................ 20,557 21,850
--------- ---------
Total assets available for plan benefits ......... 9,210,694 8,219,399
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
THE PARKER PEN 401(k) PLAN
Statements of Changes in Assets Available for Plan Benefits
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Additions:
Contributions:
Employer $ 321,083 323,891
Employee 965,794 948,793
--------- ---------
1,286,877 1,272,684
Investment income (note 3):
Interest and dividends, net of trustee fees 605,637 383,336
Net unrealized appreciation (depreciation)
in fair value of investments and
realized gain (loss) on sale of investments 509,344 (255,140)
--------- ---------
Total additions 2,401,858 1,400,880
Deductions:
Withdrawals and distributions to participants 803,856 312,752
Transfer of assets to Gillette Company
Employees' Savings Plan (note 7) 606,707 -
--------- ---------
Total deductions 1,410,563 312,752
Increase (decrease) in assets available for plan benefits 991,295 1,088,128
Assets available for plan benefits:
Balance at beginning of year 8,219,399 7,131,271
--------- ---------
Balance at end of year $ 9,210,694 8,219,399
========= =========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
THE PARKER PEN 401(k) PLAN
Notes to Financial Statements
December 31, 1995 and 1994
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1
(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 information.
(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 (the "Company") who have attained one-half year of
service. The Plan was amended July 1, 1989 to allow participation in
the Plan by eligible persons covered by the Parker Retirement Plan
for Machinists. 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 compensation. The Company will make a
matching contribution on behalf of a participant equal to 50% of the
participant's contribution to a maximum of 6% of annual compensation.
(c) Investment Alternatives
Participants had the right to elect the investment vehicle for their
contributions and the Company matching contributions. Participants
could invest in one or a combination of the following funds:
Guaranteed Investment Contract (GIC) Fund - consists of
insurance annuity contracts with three to five year maturities
which pay a stated rate of return.
Balanced Fund - invests equal amounts in fixed income
securities and common stock and other equity investments.
Equity Fund - invests in common stock and other equity
investments.
<PAGE>
In anticipation of the change in sponsorship and administration of
the Plan described in note 7, all investments held in the Guaranteed
Investment Contract Fund, Balanced Fund and Equity Fund were sold and
invested in the One Group Prime Money Market Fund as of December 29,
1995. The participants will have the right to elect new investment
vehicles for their balance, their future contributions and the
Company matching contributions. See note 7. Participants may invest
in one or a combination of the following funds:
Retirement Government Money Market Portfolio - invests in
obligations issued or guaranteed as to principal and interest by
the U.S. government, its agencies or instrumentalities, and in
repurchase agreements secured by these obligations.
Fixed Income Fund - invests in high quality short and
intermediate term investment contracts, issued by insurance
companies and banks and short term money market instruments and
other debt obligations for liquidity.
Fidelity Intermediate Bond Fund - invests primarily in
investment-grade fixed-income obligation rated Baa or better by
Moody's or BBB or better by Standard & Poor's, including
corporate bonds, mortgage securities, bank obligation and U.S.
government and agency securities. The Fund's dollar-weighted
average maturity ranges between three and ten years.
Fidelity Balanced Fund - invests in investment grade or higher
bonds and other high-yielding securities, including common and
preferred stocks. At least 25% of the fund's assets are always
invested in fixed income senior securities.
Fidelity U.S. Equity Index Portfolio - invests in common stocks
and seeks investment results that correspond to the total return
performance of the S&P 500 Index.
Fidelity Magellan Fund - invests in the stocks of both
well-known and lesser-known companies with potentially above
average growth potential and a correspondingly higher level of
risk. Securities may be of foreign and domestic companies.
Fidelity Growth Company Fund - invests primarily in common
stocks and securities convertible into common stocks. It may
invest in companies of any size with above-average growth
potential though growth is most often sought in smaller, less
well known companies in emerging areas of the economy.
Gillette Company Stock Fund - invests in The Gillette Company
common stock. A small portion of the Fund may be invested in
short term liquid investments to satisfy the Fund's cash needs.
The Plan also maintains a Payment Reserve Account which is used to
temporarily hold funds designated for distribution to participants
and to account for participant loans outstanding.
<PAGE>
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THE PARKER PEN 401(k) PLAN
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Notes to Financial Statements
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1
(d) 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.
(e) Payment of Benefits
The vested portion of a participant's account is distributable in the
form of a lump sum payment at the later of normal retirement age or
termination of service, but in no event may payment be delayed after
attainment of age 70-1/2.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements present the assets available
for plan benefits and the changes in those assets on the accrual
basis.
(b) Valuation of Investments
The Plan's investments consist of units of participation,
representing an interest in the underlying assets of a commingled
trust fund maintained by Bank One Wisconsin Trust Company, N.A., the
trustee of the Plan. The trust's assets are valued based on the fair
value of the underlying assets of each of the investment funds. The
trust's investments in securities (equity and debt securities) traded
on a national securities exchange are valued at the last reported
sales price on the last business day of the year; securities traded
in the over-the-counter market and listed securities for which no
sale was reported on that date are valued at the price as of the
close of the previous business day. Money market funds held by the
trust are valued at cost which approximates fair value. Guaranteed
investment contracts are carried at contract value, which represents
contributions received plus interest less withdrawals and contract
charges and approximates fair value. Purchases and sales of
securities are reflected on a trade-date basis. Participant loans are
valued at the principal balance of the loan outstanding and are
reflected in the Payment Reserve Account on the statement of assets
available for plan benefits.
(c) Investment Income
Dividend income is recorded on the ex-dividend date. Income from
other investments is recorded as earned on an accrual basis.
(d) Administrative Expenses
Except for fees paid to the trustee for investment management, which
amounted to $24,950 and $11,184 for the years ended December 31, 1995
and 1994, respectively, expenses incurred in the administration of
the Plan are paid directly by the Company and are not reflected
within these financial statements.
<PAGE>
(e) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period to prepare these financial
statements in conformity with general accepted accounting principles.
Actual results could differ from those estimates.
(3) Investments
The Plan's investments are held by its trustee, Bank One Wisconsin Trust
Company, N.A. The fair value of investments held by the trustee in each
Fund at December 31, 1995 and 1994 are summarized as follows:
<TABLE>
<CAPTION>
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1995
Guaranteed
Investment Payment
Contract Balanced Equity Reserve
Fund Fund Fund Account Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The One Group
Prime Money Market Fund $ 3,193,135 1,706,131 3,882,421 - 8,781,687
Notes receivable-participants - - - 250,774 250,774
- -------------------------------------------------------------------------------------------------------------------
$ 3,193,135 1,706,131 3,882,421 250,774 9,032,461
</TABLE>
<TABLE>
<CAPTION>
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1994
Guaranteed
Investment Payment
Contract Balanced Equity Reserve
Fund Fund Fund Account Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 243 31 30 255 559
The One Group's Funds:
Prime Money Market 91,380 58,971 84,358 - 234,709
Government Bond - 416,066 - - 416,066
Income Bond - 407,480 - - 407,480
International Equity Index - 79,655 392,377 - 472,032
Disciplined Value - 201,454 800,542 - 1,001,996
Large Company Growth - 134,961 356,597 - 491,558
Large Company Value - 133,618 456,932 - 590,550
Small Company Growth - 181,988 721,069 - 903,057
Commingled Funds Guaranteed
Investment Contracts 3,348,455 - - - 3,348,455
Notes receivable-participants - - - 214,418 214,418
- -------------------------------------------------------------------------------------------------------------------
$ 3,440,078 1,614,224 2,811,905 214,673 8,080,880
===================================================================================================================
</TABLE>
<PAGE>
A summary of the activity in each of the funds for the year ended December
31, 1995 is as follows:
<TABLE>
<CAPTION>
===================================================================================================================
Year ended December 31, 1995
Guaranteed
Investment Payment
Contract Balanced Equity Reserve
Fund Fund Fund Account Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 127,594 71,676 121,813 - 321,083
Employee 382,171 211,779 371,844 - 965,794
Interest and dividends,
net of trustee fees 207,923 128,758 240,779 28,177 605,637
Net unrealized appreciation
(depreciation) in fair
value of investments and
realized gain (loss) on
sale of investments 3 168,259 341,082 - 509,344
- -------------------------------------------------------------------------------------------------------------------
Net additions 717,691 580,472 1,075,518 28,177 2,401,858
Deductions:
Withdrawals and
distributions
to participants - - - 803,856 803,856
Transfers 767,394 347,792 (270,752) (844,434) -
Transfer of assets to
Gillette Company
Employees' Savings Plan 208,457 146,027 221,063 31,160 606,707
- -------------------------------------------------------------------------------------------------------------------
Net deductions 975,851 493,819 (49,689) (9,418) 1,410,563
- -------------------------------------------------------------------------------------------------------------------
Net increase(decrease) (258,160) 86,653 1,125,207 37,595 991,295
Assets available for benefits:
Beginning of year 3,489,103 1,653,949 2,863,168 213,179 8,219,399
- -------------------------------------------------------------------------------------------------------------------
End of year $ 3,230,943 1,740,602 3,988,375 250,774 9,210,694
===================================================================================================================
</TABLE>
<PAGE>
(4) Tax Status
The Plan obtained its latest determination letter on February 14, 1995, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of the Internal Revenue
Code.
(5) Party-In-Interest Transactions
The Plan Administrator may direct the trustee to make loans available to
all Plan participants. Such loans may not exceed the lesser of $50,000 or
50% of the participant's vested account balance subject to a $1,000
minimum. The interest rate on the loan shall be one percent plus the prime
rate of interest in effect at the time the loan is processed. A
participant must make a payment of principal and interest to the plan on
at least a quarterly basis. The maximum term for repayment of a loan is
five years.
All transactions involving investments in the four funds administered by
the trustee are considered party-in-interest transactions. These
transactions are not, however, considered prohibited transactions under
Section 408(b) of the ERISA regulations.
(6) 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.
(7) Plan Transfers
On September 18, 1995, the Company'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.
As of January 1, 1996 the Gillette Company will assume sponsorship and
administration of the Plan which will be redesigned to replicate the
investment options, including Gillette common stock, and administrative
features of the Gillette Plan (see note 1c).
<PAGE>
THE PARKER PEN 401(k) PLAN
Schedule 1 - Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1995
(c)
(b) Description of investment
Identity of issuer, including maturity date, (e)
borrower, lessor rate of interest, collateral (d) Current
(a) or similar party par or maturity value Cost value
- --------------------------------------------------------------------------------
* Bank One Wisconsin 8,781,687 shares, The One Group
Trust Company, N.A. Prime Money Market Fund $8,781,687 8,781,687
* Notes receivable-participants 250,774 250,774
Total investments $9,032,461 9,032,461
Cost refers to historical cost.
* Denotes party-in-interest
See accompanying independent auditors' report.
<PAGE>
THE PARKER PEN 401(k) PLAN
Schedule 2 - Item 27d - Schedule of Reportable Transactions
Year ended December 31, 1995
<TABLE>
<CAPTION>
(h)
(f) Current
(a) (b) Expense value of
Identity of Description of asset (include (c) (d) (e) incurred (g) asset on (i)
party interest rate and maturity Purchase Selling Lease with Cost of transaction Net gain
involved in case of a loan) price price rental transaction asset date or (loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Bank One Wisconsin Commingled Funds Guaranteed
Trust Company, N.A. Investment Contracts $ 522,643 - - - 522,643 522,643 -
Bank One Wisconsin Commingled Funds Guaranteed
Trust Company, N.A. Investment Contracts - 3,871,100 - - 3,871,097 3,871,100 3
Bank One Wisconsin The One Group Disciplined
Trust Company, N.A. Value Fund 152,060 - - - 152,060 152,060 -
Bank One Wisconsin The One Group Disciplined
Trust Company, N.A. Value Fund - 1,272,607 - - 1,147,930 1,272,607 124,677
Bank One Wisconsin The One Group Government
Trust Company, N.A. Bond Fund 26,982 - - - 26,982 26,982 -
Bank One Wisconsin The One Group Government
Trust Company, N.A. Bond Fund - 484,024 - - 481,360 484,024 2,664
Bank One Wisconsin The One Group Income
Trust Company, N.A. Bond Fund 28,257 - - - 28,257 28,257 -
Bank One Wisconsin The One Group Income
Trust Company, N.A. Bond Fund - 471,139 - - 477,679 471,139 (6,540)
Bank One Wisconsin The One Group International
Trust Company, N.A. Equity Index Fund 64,639 - - - 64,639 64,639 -
Bank One Wisconsin The One Group International
Trust Company, N.A. Equity Index Fund - 582,760 - - 551,057 582,760 31,703
Bank One Wisconsin The One Group Large
Trust Company, N.A. Company Growth Fund 325,531 - - - 325,531 325,531 -
Bank One Wisconsin The One Group Large
Trust Company, N.A. Company Growth Fund - 971,100 - - 800,201 971,100 170,899
Bank One Wisconsin The One Group Large
Trust Company, N.A. Company Value Fund 554,890 - - - 554,890 554,890 -
Bank One Wisconsin The One Group Large
Trust Company, N.A. Company Value Fund - 1,196,096 - - 1,189,374 1,196,096 6,722
Bank One Wisconsin The One Group Prime
Trust Company, N.A. Money Market Fund 10,743,418 - - - 10,743,418 10,743,418 -
Bank One Wisconsin The One Group Prime
Trust Company, N.A. Money Market Fund - 2,196,440 - - 2,196,440 2,196,440 -
Bank One Wisconsin The One Group Small
Trust Company, N.A. Company Growth Fund 99,871 - - - 99,871 99,871 -
Bank One Wisconsin The One Group Small
Trust Company, N.A. Company Growth Fund - 1,063,528 - - 924,433 1,063,528 139,095
<C> <C> <C> <C> <C> <C> <C> <C> <C>
<FN>
Note: The above data represents a series of transactions where the
aggregate amount exceeds five percent of the fair value of the Plan
assets as of the beginning of the Plan year.
Cost refers to historical cost.
See accompanying independent auditors' report.
</FN>
</TABLE>
