<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Registration number 33-52465
A. Full title of the plan:
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP 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
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Financial Statements of The Gillette Company
Global Employee Stock Ownership Plan
The following audited financial statements are enclosed with this
report:
1. Statement of Net Assets Available for Plan Benefits as of
December 31, 1996 and December 31, 1995.
2. Statement of Changes in Net Assets Available for Plan
Benefits for the years ended December 31, 1996 and December
31, 1995.
Exhibits
23.1 Independent Auditors' Report
23.2 Independent Auditors' Consent
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee of The Gillette Company Global Employee Stock
Ownership Plan has caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
The Gillette Company Global
Employee Stock Ownership Plan
BY /s/ Robert E.DiCenso
--------------------------------
Robert E. DiCenso
Date: March 28, 1997
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THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements
December 31, 1996 and 1995
(With Independent Auditors' Report Thereon)
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Independent Auditors' Report
The Administrative Committee
The Gillette Company Global Employee Stock Ownership Plan:
We have audited the accompanying statements of net assets available for plan
benefits of The Gillette Company Global Employee Stock Ownership Plan as of
December 31, 1996 and 1995 and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 1996 and 1995 and the changes in net assets available for plan benefits for
the years then ended in conformity with generally accepted accounting
principles.
Boston, Massachusetts
March 14, 1997
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THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Assets:
The Gillette Company common stock, at market value $20,216,301 7,659,298
Cash 1,116 733
Employee contributions receivable 652,780 454,240
Employer contributions receivable 182,607 137,699
----------- ---------
Net assets available for plan benefits $21,052,804 8,251,970
=========== =========
</TABLE>
See accompanying notes to financial statements.
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THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Dividends on The Gillette Company common stock $ 118,677 42,515
Realized gains on investments sold 391,595 45,023
Change in unrealized appreciation in the market value of
investments 5,286,365 1,349,268
----------- ---------
5,796,637 1,436,806
----------- ---------
Contributions:
Employee 6,524,495 4,044,450
Employer 1,866,571 1,218,085
----------- ---------
8,391,066 5,262,535
----------- ---------
Total additions 14,187,703 6,699,341
Deductions from net assets attributed to:
Benefit payments 1,386,869 251,622
----------- ---------
Net increase 12,800,834 6,447,719
Net assets available for plan benefits:
Beginning of period 8,251,970 1,804,251
----------- ---------
End of period $21,052,804 8,251,970
=========== =========
</TABLE>
See accompanying notes to financial statements.
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THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1996 and 1995
(1) Description of the Plan
The Gillette Company Global Employee Stock Ownership Plan (the "Plan")
is a defined contribution plan sponsored by The Gillette Company
(the "Company"). The following provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
General
The Plan was adopted by the Board of Directors of the Company on
December 16, 1993 to become effective June 1, 1994. Its goal is to
provide eligible Gillette employees the opportunity to purchase
common stock of the Company through payroll deduction and Company
contributions. All Plan assets are held by the Plan Fiduciary,
Banque Internationale a Luxembourg (the "Fiduciary"). Buck
Consultants is the record keeper for the Plan.
Eligibility
Employees eligible to participate in the Plan include all regular
employees of participating subsidiaries of the Company with the
exception of employees considered to be an executive, officer,
director, or 10% shareholder of the Company and employees eligible
for a savings plan maintained in the United States, Canada, or
Puerto Rico. Eligible employees may enroll in the Plan on the first
day of each calendar quarter and on the initial participation date
for each participating subsidiary.
Contributions
Eligible employees may contribute 2% to 10% of their compensation to
the Plan through payroll deductions. A participating employee may
change the contribution rate once each calendar quarter. Employer
contributions are made to the accounts of participants who are
contributing to the Plan in amounts equal to 1% of each
participant's eligible pay.
Investments
All employee and employer contributions are converted into U.S. dollars
and then invested in shares of the Company common stock generally on
the 15th day of each month (or if that date is not a business day,
the next preceding business day). Sales of Company common stock are
made generally on the last business day of each month and
subsequently converted into the applicable local currencies to pay
Plan benefits. Any dividends on shares of the Company common stock
are invested in additional shares of the Company common stock.
Vesting
Participants are immediately vested in all shares of Company common
stock credited to their respective Plan accounts.
(Continued)
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2
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
Benefit Payments
Distributions of account balances will be made when the employment of a
participant ceases unless upon retirement, the participant's account
is credited with at least 100 shares of Company stock and the
participant elects to defer payment. If an election is made to defer
the distribution, retirees may make up to two requests a year for
distributions of all or a portion of their account balance.
For those retirees who do not elect to defer payment and for all other
participants who terminate employment for reasons other than
retirement, a distribution of Plan benefits is made in the form of a
lump sum payment.
All distributions are made in cash, unless the participant elects to
receive the benefit payment in the form of shares of the Company
common stock; however, in the event of a participant or retiree's
death, all distributions will be made in the form of a lump sum cash
payment.
While employed, participants may elect to take up to two in-service
withdrawals from their account balances during a calendar year.
Shares purchased with Company contributions and dividends thereon
are not eligible for in-service withdrawal until 24 months from
their date of purchase.
Plan Expenses
Brokerage commissions, fees and other security transaction costs are
paid by participants as part of the purchase and sale of Company
common stock.
All contributions and cash dividends awaiting investment are held in an
interest bearing account maintained by the Plan Fiduciary. Any
interest earned on the account is used to pay costs relating to the
administration of the Plan. Any remaining costs of administering the
Plan are allocated and paid by the Company subsidiaries
participating in the Plan.
(2) Summary of Significant Accounting Policies
Basis of Presentation
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,
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 prepared on the accrual basis
of accounting.
Investments
Investments in the Company common stock are stated at market value,
based on the composite closing price of the stock on the New York
Stock Exchange as reported by Reuters. Purchases and sales of the
Company's common stock are recorded on the trade date (the date the
order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date net of any U.S.
withholding taxes. Realized gains and losses are based upon the
identified cost method.
(Continued)
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3
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
Cash
Amounts shown as cash are foreign cash balances held by the Fiduciary
that are to be invested in Company stock in the following month. The
balances have been translated into U.S. dollars using the effective
exchange rates as of December 31, 1996 and 1995.
Contributions Receivable
Contributions held at the participating subsidiaries and pending
transfer to the Fiduciary have been translated into U.S. dollars
using the effective exchange rates as of December 31, 1996 and 1995.
(3) Investment in Gillette Company Common Stock
Investments in the Gillette Company common stock held by the Plan at
December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Number of shares 260,017 146,941
Cost $13,513,254 6,242,616
Market Value $20,216,301 7,659,298
</TABLE>
The realized gains on sales of The Gillette Company common stock were
determined as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Proceeds on sales of shares $1,385,012 251,172
Cost 993,417 206,149
---------- ------
$ 391,595 45,023
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</TABLE>
(4) Plan Participants
As of December 31, 1996, the Plan had 5,434 participants employed at
Company subsidiaries located in Argentina, Australia, Austria,
Chile, Costa Rica, Denmark, Ecuador, Finland, France, Germany, Hong
Kong, Indonesia, Ireland, Italy, Korea, Malaysia, Mexico,
Netherlands, New Zealand, Norway, Peru, Philippines, Poland,
Portugal, Singapore, Spain, Sweden, Switzerland, Taiwan, Thailand,
Turkey, United Kingdom, and Uruguay.
(5) Plan Amendment and Termination
Although the Company intends to continue the Plan
indefinitely, it reserves the right on behalf of itself and its
participating subsidiaries to modify or terminate the Plan at any
time; however, the Plan may not be amended to adversely affect the
rights of participants with respect to shares previously credited to
their accounts.
In the event of termination, the assets held by the Plan Fiduciary may
continue to be held subject to the provisions of the Plan, or at the
direction of the Board of Directors of the Company, the assets of
the Plan may be distributed to the participants.
(Continued)
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4
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
(6) Tax Status
The Plan is not qualified under Section 401(a) of the Internal Revenue
Code, and is exempt from the provisions of Title I of ERISA pursuant
to Section 4(b)(4) thereof. The Company believes that the Fiduciary
should be viewed as a directed custodian and that, for U.S. tax
purposes, the participating employees should be treated as the
owners of the shares of Company stock held for their account under
the Plan.
The Company has received a private letter ruling from the Internal
Revenue Service confirming that the participating employees should
be treated as the beneficial owners of the shares of Company stock
held for their account under the Plan for U.S. tax purposes and
that, subject to certain procedural conditions, the information
provided by the employees may be relied upon in determining the
applicable U.S. tax withholding rate on dividends paid by the
Company with respect to these shares.
(7) Subsequent Events
Subsequent to December 31, 1996, the Company's subsidiaries in Belgium,
Colombia, Guatemala, Japan and Panama commenced participation in the
Plan.
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Exhibit 23.2
Consent of Independent Auditors
The Administrative Committee
The Gillette Company Global Employee Stock Ownership Plan:
We consent to the incorporation by reference in the registration statement No.
33-52465 on Form S-8 of The Gillette Company Global Employee Stock Ownership
Plan of our report dated March 14, 1997, relating to the statement of net assets
available for plan benefits of The Gillette Company Global Employee Stock
Ownership Plan as of December 31, 1996 and 1995 and the related statements of
changes in net assets available for plan benefits for the years then ended,
which report appears in the December 31, 1996 annual report on Form 11-K of The
Gillette Company Global Employee Stock Ownership Plan.
KPMG Peat Marwick LLP
Boston, Massachusetts
March 28, 1997
