<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 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
<PAGE> 2
FINANCIAL STATEMENT 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, 1996 and 1995.
2. Statements of Changes in Net Assets Available for Plan Benefits for
each of the years in the three-year period ended December 31, 1996.
EXHIBIT
23.2 Independent Auditor's Consent
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
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
/s/ Charles W. Cramb
By: __________________________
Charles W. Cramb
Date: June 24, 1997
<PAGE> 3
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Financial Statements
December 31, 1996, 1995 and 1994
(With Independent Auditors' Report Thereon)
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
The Savings Plan Committee
The Gillette Company Employees' Savings Plan:
We have audited the statements of net assets available for plan benefits of The
Gillette Company Employees' Savings Plan as of December 31, 1996 and 1995, and
the related statements of changes in net assets available for plan benefits for
each of the years in the three-year period ended December 31, 1996. 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, 1996 and 1995, and the
changes in net assets available for plan benefits for each of the years in the
three-year period ended December 31, 1996, in conformity with generally accepted
accounting principles.
May 23, 1997
1
<PAGE> 5
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Assets:
Investment in the Savings Plan Trust $ 1,782,593,392 1,312,779,083
--------------- -------------
Net assets available for plan benefits $ 1,782,593,392 1,312,779,083
=============== =============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 6
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Fidelity
Retirement
Gillette Fidelity Government
Company Intermediate Fixed Money Fidelity
Stock Bond Income Market Magellan
Fund Fund Fund Portfolio Fund
---- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C>
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) (24,516,439) (2,306,171) (,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
=============== ========= =========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Fidelity
U.S. Fidelity
Fidelity Equity Growth Participant
Balanced Index Company Loan
Fund Portfolio Fund Fund Total
---- --------- ---- ---- -----
<S> <C> <C> <C> <C>
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 (1,342,124) (1,889,379) (1,859,447) (787,613) (75,657,584)
Forfeitures -- -- -- -- (73,012)
------------ ---------- ---------- ---------- -------------
Total deductions
(1,342,324) (1,889,379) (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
============ ========== ========== ========== =============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 7
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Fidelity
Retirement
Gillette Fidelity Government
Company Intermediate Fixed Money Fidelity
Stock Bond Income Market Magellan
Fund Fund Fund Portfolio Fund
---- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Dividends on Gillette Common Stock $ 9,131,552 -- -- -- --
Interest income -- -- 18,273,773 -- --
Interest earned on loans 867,292 20,092 267,710 34,266 201,721
Income earned on registered investment
companies -- 563,144 664,110 191,207 2,075,654
Net appreciation in the fair value of investments 248,897,067 506,504 -- -- 6,136,423
------------ --------- ----------- --------- ----------
258,895,911 1,089,740 19,205,593 225,473 8,413,798
Contributions:
Employee contributions 17,240,404 568,578 5,359,461 891,490 6,171,529
Employer contributions 14,665,668 -- -- -- --
Transfer of assets from Parker Pen 401(k) Plan -- -- 208,457 -- --
------------ --------- ----------- --------- ----------
Total additions 290,801,983 1,658,318 24,773,511 1,116,963 14,585,327
Deductions from net assets attributed to:
Benefit payments (30,405,841) (565,376) (19,275,291) (423,337) (1,387,036)
Forfeitures (135,743) -- -- -- --
------------ --------- ----------- --------- ----------
Total deductions (30,541,584) (565,376) (19,275,291) (423,337) (1,387,036)
Net increase (decrease) prior to interfund transfers 260,260,399 1,092,942 5,498,220 693,626 13,198,291
Net interfund transfers in (out):
Loans issued (5,591,861) (107,448) (4,318,870) (209,602) (1,335,490)
Loans repaid 4,842,533 146,114 1,659,995 204,643 1,165,420
Other transfers 7,772,022 (307,496) (5,961,136) (1,237,305) (2,066,725)
------------ --------- ----------- --------- ----------
7,022,694 (268,830) (8,620,011) (1,242,264) (2,236,795)
Net increase (decrease) 267,283,093 824,112 (3,121,791) (548,638) 10,961,496
Net assets available for plan benefits:
Beginning of year 614,541,212 8,529,941 278,012,889 3,769,207 25,364,419
------------ --------- ----------- --------- ----------
End of year $881,824,305 9,354,053 274,891,098 3,220,569 36,325,915
============ ========= =========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Fidelity
U.S. Fidelity
Fidelity Equity Growth Participant
Balanced Index Company Loan
Fund Portfolio Fund Fund Total
---- --------- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Dividends on Gillette Common Stock -- -- -- -- 9,131,552
Interest income -- -- -- -- 18,273,773
Interest earned on loans 70,154 51,183 96,437 -- 1,608,855
Income earned on registered investment
companies 624,323 1,091,395 1,120,235 -- 6,330,068
Net appreciation in the fair value of investments 1,372,542 10,832,516 3,760,024 -- 271,505,076
---------- ---------- ---------- ---------- -------------
2,067,019 11,975,094 4,976,696 -- 306,849,324
Contributions:
Employee contributions 2,450,105 1,684,975 3,587,684 -- 37,954,226
Employer contributions -- -- -- -- 14,665,668
Transfer of assets from Parker Pen 401(k) Plan 146,027 221,060 -- 31,163 606,707
---------- ---------- ---------- ---------- -------------
Total additions 4,663,151 13,881,129 8,564,380 31,163 360,075,925
Deductions from net assets attributed to:
Benefit payments (685,953) (1,363,790) (897,579) (634,191) (55,638,394)
Forfeitures -- -- -- -- (135,743)
---------- ---------- ---------- ---------- -------------
Total deductions (685,953) (1,363,790) (897,579) (634,191) (55,774,137)
Net increase (decrease) prior to interfund transfers 3,977,198 12,517,339 7,666,801 (603,028) 304,301,788
Net interfund transfers in (out):
Loans issued (337,933) (1,543,055) (574,431) 14,018,690 --
Loans repaid 416,369 273,630 541,654 (9,250,358) --
Other transfers (2,928,923) (191,122) 4,920,685 -- --
---------- ---------- ---------- ---------- -------------
(2,850,487) (1,460,547) 4,887,908 4,768,332 --
Net increase (decrease) 1,126,711 11,056,792 12,554,709 4,165,304 304,301,788
Net assets available for plan benefits:
Beginning of year 14,006,170 33,543,267 12,503,500 18,206,690 1,008,477,295
---------- ---------- ---------- ---------- -------------
End of year 15,132,881 44,600,059 25,058,209 22,371,994 1,312,779,083
========== ========== ========== ========== =============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 8
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended December 31, 1994
<TABLE>
<CAPTION>
Fidelity
Retirement
Gillette Fidelity Government
Company Intermediate Fixed Money Fidelity
Stock Bond Income Market Magellan
Fund Fund Fund Portfolio Fund
---- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Dividends on Gillette Common Stock $ 7,821,941 -- -- -- --
Interest income -- -- 19,092,798 -- --
Interest earned on loans 453,481 16,679 187,596 31,373 171,313
Income earned on registered investment
companies -- 654,195 -- 127,369 892,348
Net appreciation (depreciation) in the
fair value of investments 125,259,640 (854,224) -- -- (1,485,087)
------------ --------- ----------- --------- ----------
133,535,062 (183,350) 19,280,394 158,742 (421,426)
Contributions:
Employee contributions 11,598,877 679,685 6,125,910 890,243 7,180,773
Employer contributions 13,773,890 -- -- -- --
------------ --------- ----------- --------- ----------
Total additions 158,907,829 496,335 25,406,304 1,048,985 6,759,347
Deductions from net assets attributed to:
Benefit payments (19,443,509) (479,043) (18,158,557) (569,577) (839,612)
Forfeitures (84,098) -- -- -- --
------------ --------- ----------- --------- ----------
Total deductions (19,527,607) (479,043) (18,158,557) (569,577) (839,612)
Net increase (decrease) prior to interfund transfers 139,380,222 17,292 7,247,747 479,408 5,919,735
Net interfund transfers in (out):
Loans issued (3,017,398) (91,502) (6,501,220) (239,476) (1,260,428)
Loans repaid 2,559,551 93,062 1,202,953 213,033 1,018,899
Other transfers (16,669,323) (1,168,149) 11,417,844 233,403 5,526,157
------------ --------- ----------- --------- ----------
(17,127,170) (1,166,589) 6,119,577 206,960 5,284,628
Net increase (decrease) 122,253,052 (1,149,297) 13,367,324 686,368 11,204,363
Net assets available for plan benefits:
Beginning of year 492,288,160 9,679,238 264,645,565 3,082,839 14,160,056
------------ --------- ----------- --------- ----------
End of year $614,541,212 8,529,941 278,012,889 3,769,207 25,364,419
============ ========= =========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Fidelity
U.S. Fidelity
Fidelity Equity Growth Participant
Balanced Index Company Loan
Fund Portfolio Fund Fund Total
---- --------- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Dividends on Gillette Common Stock -- -- -- -- 7,821,941
Interest income -- -- -- -- 19,092,798
Interest earned on loans 58,579 33,224 72,657 -- 1,024,902
Income earned on registered investment
companies 442,386 1,108,382 475,767 -- 3,700,447
Net appreciation (depreciation) in the
fair value of investments (1,262,680) (762,569) (685,336) -- 120,209,744
---------- ---------- ---------- ---------- -------------
(761,715) 379,037 (136,912) -- 151,849,832
Contributions:
Employee contributions 3,125,103 1,762,379 3,852,940 -- 35,215,910
Employer contributions -- -- -- -- 13,773,890
---------- ---------- ---------- ---------- -------------
Total additions 2,363,388 2,141,416 3,716,028 200,839,632
Deductions from net assets attributed to:
Benefit payments (705,328) (1,009,128) (390,618) (358,426) (41,953,798)
Forfeitures -- -- -- -- (84,098)
---------- ---------- ---------- ---------- -------------
Total deductions (705,328) (1,009,128) (390,618) (358,426) (42,037,896)
Net increase (decrease) prior to interfund transfers 1,658,060 1,132,288 3,325,410 (358,426) 158,801,736
Net interfund transfers in (out):
Loans issued (312,651) (2,323,438) (522,960) 14,269,073 --
Loans repaid 298,371 227,380 478,463 (6,091,712) --
Other transfers 2,869,666 (5,284,981) 3,075,383 -- --
---------- ---------- ---------- ---------- -------------
2,855,386 (7,381,039) 3,030,886 8,177,361 --
Net increase (decrease) 4,513,446 (6,248,751) 6,356,296 7,818,935 158,801,736
Net assets available for plan benefits:
Beginning of year 9,492,724 39,792,018 6,147,204 10,387,755 849,675,559
---------- ---------- ---------- ---------- -------------
End of year 14,006,170 33,543,267 12,503,500 18,206,690 1,008,477,295
========== ========== ========== ========== =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 9
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1996, 1995 and 1994
(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, $9,240 and $9,240 for 1996, 1995
and 1994, respectively.
(c) Employer Contributions
For all employee contributions designated as matched savings, the Company
will provide $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.
(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.
(Continued)
6
<PAGE> 10
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
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.
Fidelity U.S. Equity Index Portfolio
------------------------------------
Seeks to provide investment results that correspond to a recognized index
of stock market performance, and invests primary in the common stocks of
the companies that make up the designated stock index.
Fidelity Growth Company Fund
----------------------------
Seeks long-term capital appreciation by investing primarily in securities
of domestic and foreign growth-oriented companies.
Each of the Funds may also hold a portion of its assets in short-term
investments in order to meet liquidity needs for transfers, loans, and
withdrawals.
(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.
(Continued)
7
<PAGE> 11
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
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.
(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.
(Continued)
8
<PAGE> 12
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
Security transactions received prior to 4:00 pm Eastern time by Fidelity
are recognized on that business day. Transactions received after 4:00 pm
Eastern time are valued as of the next business day. Interest income is
recorded on the accrual basis and dividend income is recorded on the
ex-dividend date.
Net appreciation (depreciation) in the fair value of investments includes
both realized and unrealized gains and losses.
The Savings Plan Trust's investments in guaranteed and synthetic investment
contracts are valued at contract value which approximates fair value.
Contract value represents contributions made under the contract plus
interest at the contract rate. The crediting interest rate is variable for
the synthetic contracts and is reset quarterly based upon the fair value of
the underlying securities. The crediting interest rate is fixed for
guaranteed contracts. The average yield for the year ended December 31,
1996 is 6.77% and the crediting interest rate as of December 31, 1996 is
5.76% for these investment contracts.
(c) Payment of Benefits
Benefits are recorded when paid.
(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.
(5) INVESTMENTS
Investments of the Plan are held in trust by Fidelity Management Trust
Company. The Plans participating in the Savings Plan Trust are The Gillette
Company Employees' Savings Plan and the Parker Pen 401(k) Plan. Trust
income is allocated ratably between the plans in accordance with the assets
of each Plan invested in the trust. The net assets of the Savings Plan
Trust at December 31, 1996 and 1995 are as follows:
(Continued)
9
<PAGE> 13
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Investments, at fair value:
Marketable securities:
Gillette common stock $1,306,814,500 881,824,305
Registered investment companies:
Fidelity Intermediate Bond Fund 9,126,760 9,354,053
Fidelity Short-term Investment Fund 31,916,887 933,848
Fidelity Retirement Government Money
Market Portfolio 5,913,935 3,220,569
Fidelity Magellan Fund 34,287,295 36,325,915
Fidelity Balanced Fund 16,287,310 15,132,881
Fidelity U.S. Equity Index Portfolio 63,606,106 44,600,059
Fidelity Growth Company Fund 35,235,504 25,058,209
Investment contracts 260,086,270 273,957,250
Participant loans 26,347,534 22,371,994
-------------- -------------
Total investments and net assets $1,789,622,101 1,312,779,083
============== =============
Assets allocated to the Parker Pen 401(k) Plan $ 7,028,709 --
Assets allocated to The Gillette Company
Employees' Savings Plan $1,782,593,392 1,312,779,083
============== =============
</TABLE>
(Continued)
10
<PAGE> 14
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
<TABLE>
The statements of changes in net assets of the Savings Plan Trust for the years
ended December 31, 1996 and 1995 are as follows:
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Employee contributions $ 41,325,185 37,954,226
Employer contributions 16,121,454 14,665,668
Investment income:
Net appreciation (depreciation) on fair
value of investments:
Gillette common stock 431,024,386 248,897,067
Fidelity Intermediate Bond Fund (317,625) 506,504
Fidelity Magellan Fund (2,198,991) 6,136,423
Fidelity Balanced Fund 567,308 1,372,542
Fidelity U.S. Equity Index Portfolio 9,906,298 10,832,516
Fidelity Growth Company Fund 2,726,460 3,760,024
Dividends 22,259,897 15,461,620
Interest 20,569,869 19,882,628
-------------- -------------
Net investment income 484,537,602 306,849,324
Transferred from prior trustee 10,698,627 606,707
-------------- -------------
Total additions 552,682,868 360,075,925
Benefit payments 75,766,746 55,638,394
Forfeitures 73,104 135,743
-------------- -------------
Total deductions 75,839,850 55,774,137
-------------- -------------
Net increase 476,843,018 304,301,788
Net assets:
Beginning of year 1,312,779,083 1,008,477,295
-------------- -------------
End of year $1,789,622,101 1,312,779,083
============== =============
</TABLE>
(Continued)
11
<PAGE> 15
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(6) UNIT VALUATION
Participants' accounts are maintained on a "unit value" basis. The total
units used in valuing participant's accounts and the per unit values at
December 31, 1995 and the four quarters ended December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Gillette Company Fidelity Intermediate
Stock Fund Bond Fund Fixed Income Fund
--------------------- --------------------- ---------------------
Units Value Units Value Units Value
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
December 31, 1995 16,917,493 $52.13 898,564 $10.41 274,891,099 $1.00
March 31, 1996 17,011,433 51.75 961,118 10.14 268,350,908 1.00
June 30, 1996 16,629,371 62.38 916,430 10.00 283,498,961 1.00
September 30, 1996 16,690,613 72.13 970,060 10.00 290,375,815 1.00
December 31, 1996 16,790,501 77.75 904,416 10.08 289,793,338 1.00
</TABLE>
<TABLE>
<CAPTION>
Fidelity Retirement
Government Money Fidelity Fidelity
Market Portfolio Magellan Fund Balanced Fund
--------------------- ------------------ -------------------
Units Value Units Value Units Value
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
December 31, 1995 3,220,568 $ 1.00 422,493 $85.98 1,119,296 $13.52
March 31,1996 3,399,386 1.00 436,209 87.51 1,196,284 13.13
June 30, 1996 3,549,338 1.00 492,024 74.80 1,163,922 13.21
September 30, 1996 4,660,438 1.00 434,835 76.05 1,085,393 13.32
December 31, 1996 5,897,378 1.00 420,121 80.65 1,094,872 14.08
</TABLE>
<TABLE>
<CAPTION>
Fidelity Fidelity Growth
U.S.Equity Index Portfolio Company Fund
-------------------------- -----------------
Units Value Units Value
----- ----- ----- -----
<S> <C> <C> <C> <C>
December 31, 1995 1,976,077 $22.57 690,499 $36.29
March 31,1996 2,135,501 23.69 699,811 38.10
June 30, 1996 2,266,100 24.53 838,454 39.81
September 30, 1996 2,248,400 25.15 807,568 40.86
December 31, 1996 2,295,508 26.95 864,497 40.46
</TABLE>
(7) PARTICIPATION BY FUND
The total number of plan participants in each of the investment funds on
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Gillette Company Stock Fund 8,752 8,136
Fidelity Intermediate Bond Fund 842 864
Fixed Income Fund 4,400 4,832
Fidelity Retirement Government Money Market Portfolio 692 771
Fidelity Magellan Fund 3,131 3,414
Fidelity Balanced Fund 1,422 1,471
Fidelity U.S. Equity Index Portfolio 2,976 2,865
Fidelity Growth Company Fund 2,495 2,158
</TABLE>
(Continued)
12
<PAGE> 16
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
The numbers shown above reflect the fact that participants may elect to
invest in more than one fund.
(8) 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.
(9) 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.
(10) PLAN MERGER AND TRANSFERS
Effective March 31, 1995, the account balances of certain Parker Pen 401(k)
Plan ("Parker Plan") participants were transferred into the Plan. The
account balances of all remaining non-bargaining unit participants of the
Parker Plan 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.
(11) 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, 1996 was $1,500,000.
13
<PAGE> 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 statements Nos.
33-9495, 33-56218 and 33-59125 on Form S-8 of the Gillette Company Employees'
Savings Plan of our report dated May 23, 1997, relating to the statements of net
assets available for plan benefits of The Gillette Company Employees' Savings
Plan as of December 31, 1996 and 1995, and the related statements of changes in
net assets available for plan benefits for each of the years in the three-year
period ended December 31, 1996, which report appears in the December 31, 1996
annual report on Form 11-K of the Gillette Company Employees' Savings Plan.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
June 24, 1997
