<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, 1997
Registration numbers 33-9495, 33-56218 and 33-59125
A. Full title of the plan:
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
B. Name of the issuer of the securities held pursuant to the plan and
the address of its principal executive office:
The Gillette Company
Prudential Tower Building
Boston, MA 02199
<PAGE> 2
FINANCIAL STATEMENTS OF THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
The following audited financial statements with independent auditors'
report thereon are enclosed with this report:
1. Statements of Net Assets Available for Plan Benefits as of
December 31, 1997 and 1996.
2. Statements of Changes in Net Assets Available for Plan Benefits
for each of the years in the three-year period ended December 31,
1997.
EXHIBIT
23.2 Independent Auditor's Consent
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Savings Plan Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
By: /s/ Robert E. DiCenso
-----------------------------
Robert E. DiCenso
Date: June 25, 1998
<PAGE> 3
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Financial Statements
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
1
<PAGE> 4
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Financial Statements
December 31, 1997 and 1996
TABLE OF CONTENTS
Page(s)
-------
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits 2
Statements of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4-17
Note: Supplemental schedules required by the Employee Retirement Income
Security Act of 1974, as amended (ERISA), have not been included due to
their inclusion in master trust information filed with the Department of
Labor for The Gillette Company Savings Plan Trust.
2
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Savings Plan Committee
The Gillette Company:
We have audited the statements of net assets available for plan benefits of The
Gillette Company Employees' Savings Plan as of December 31, 1997 and 1996, and
the related statements of changes in net assets available for plan benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of The
Gillette Company Employees' Savings Plan at December 31, 1997 and 1996, and the
changes in net assets available for plan benefits for the years then ended, in
conformity with generally accepted accounting principles.
May 15, 1998
3
<PAGE> 6
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1997 and 1996
1997 1996
-------------- -------------
Assets:
Investment in the Savings Plan Trust $2,163,135,513 1,782,593,392
-------------- -------------
Net assets available for plan benefits $2,163,135,513 1,782,593,392
============== =============
See accompanying notes to financial statements.
4
<PAGE> 7
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------------- -------------
<S> <C> <C>
Additions to net assets attributed to:
Net investment income from the Savings Plan Trust $ 446,036,833 483,584,205
Contributions:
Employee contributions 47,123,387 40,607,543
Employer contributions 17,481,384 15,917,811
Transfer of assets from Parker Pen and
Thermoscan, Inc. 401(k) Plans - 5,435,346
-------------- -------------
Total additions 510,641,604 545,544,905
Deductions from net assets attributed to:
Benefit payments (129,979,418) (75,657,584)
Forfeitures (120,065) (73,012)
-------------- -------------
Total deductions (130,099,483) (75,730,596)
Net increase in assets 380,542,121 469,814,309
Net assets available for plan benefits:
Beginning of year 1,782,593,392 1,312,779,083
-------------- -------------
End of year $2,163,135,513 1,782,593,392
============== =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 8
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1997 and 1996
(1) DESCRIPTION OF THE PLAN
The Gillette Company Employees' Savings Plan (the "Plan") is a defined
contribution plan sponsored by The Gillette Company (the "Company"). The
following provides only general information and participants should refer
to the Plan document for a more complete description of the Plan's
provisions.
(a) GENERAL
The Plan is a defined contribution plan subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
Effective January 1, 1993 regular employees of the Company and its
participating subsidiaries became eligible to join the Plan on date
of hire.
(b) PARTICIPANT CONTRIBUTIONS
Eligible employees may voluntarily contribute from 2% to 10% of
their compensation as matched savings, and from 1% to 5% of their
compensation as unmatched savings. All contributions must be in even
1% increments.
All matched savings contributed by an employee are divided equally
between tax deferred and taxed savings. Unmatched savings may be
designated by an employee to be either tax deferred or taxed, but
not both. Tax deferred contributions made by an employee in any plan
year may not exceed the annual limit set by law, which was $9,500
for 1997 and 1996.
(c) EMPLOYER CONTRIBUTIONS
For all employee contributions designated as matched savings, the
Company will contribute $1 for every $2 contributed by the employee.
All matching contributions provided by the Company are invested in
the Gillette Company Stock Fund.
(d) VESTING
Participants are immediately vested in their own employee
contributions plus the actual earnings thereon. Matching
contributions from the Company vest after the participant has
completed the earliest of five years of service, two years from date
of entry into the Plan, or the attainment of age 65. Participants
are also 100% vested in the Company contributions credited to their
accounts upon death, retirement, total and permanent disability, or
layoff for lack of work when it is not probable that the participant
will be recalled to work within one year of the layoff.
6
<PAGE> 9
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(1), CONTINUED
(e) PARTICIPANTS' ACCOUNTS
A separate account is established for each participant at the time
of enrollment in the Plan. The balance in each account is invested,
in accordance with the directions given by the participant, in one
or more of the following Funds:
GILLETTE COMPANY STOCK FUND
Invests primarily in shares of The Gillette Company common
stock.
FIDELITY INTERMEDIATE BOND FUND
Invests primarily in intermediate maturity foreign and
domestic bonds and seeks a high level of current income.
During 1997, this fund was terminated as an investment option.
FIXED INCOME FUND
Seeks to preserve principal as well as generate interest
income through investment in high quality short and
intermediate term investment contracts as well as other
instruments issued by insurance companies and banks.
FIDELITY RETIREMENT GOVERNMENT MONEY MARKET PORTFOLIO
Seeks to keep invested principal stable while generating
current interest or income by investing in high quality money
market instruments issued or guaranteed by the U.S. government
or its agencies.
FIDELITY MAGELLAN FUND
Seeks long-term capital appreciation by investing primarily in
common stocks and other securities of all types of domestic
and international companies in all industries.
FIDELITY BALANCED FUND
Seeks to provide the highest amount of income possible
consistent with the preservation of capital by investing
primarily in common and preferred stocks, and bonds. During
1997, this fund was terminated as an investment option.
FIDELITY U.S. EQUITY INDEX PORTFOLIO
Seeks to provide investment results that correspond to a
recognized index of stock market performance, and invests
primarily in the common stocks of the companies that make up
the designated stock index.
FIDELITY GROWTH COMPANY FUND
Seeks long-term capital appreciation by investing primarily in
securities of domestic and foreign growth-oriented companies.
7
<PAGE> 10
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(1), CONTINUED
INVESCO TOTAL RETURN FUND
Seeks to provide high total return through capital growth and
current income by investing in stocks and in fixed and variable
income securities. This fund became a new investment option for
participants in 1997.
FIDELITY DIVERSIFIED INTERNATIONAL FUND
Seeks capital growth by investing primarily in equity securities
of companies located outside the U.S. Seeks stocks that are
undervalued compared to industry norms in their countries. This
fund became a new investment option for participants in 1997.
FIDELITY U.S. BOND INDEX FUND
Invests in investment grade (medium to high quality) or above
with maturities of at least one year. This fund became a new
investment option for participants in 1997.
FIDELITY GROWTH & INCOME FUND
Seeks high total return through a combination of current income
and capital appreciation. Invests primarily in U.S. and foreign
stocks. This fund became a new investment option for
participants in 1997.
FIDELITY EMERGING MARKETS FUND
Seeks capital appreciation from emerging markets around the
world. This fund became a new investment option for participants
in 1997.
Each of the Funds may also hold a portion of its assets in short-term
investments in order to meet liquidity needs for transfers, loans,
and withdrawals.
(f) PARTICIPANT LOANS
The maximum loan available to each participant is the lesser of (1)
$50,000 reduced by the highest outstanding loan balance due from the
participant during the preceding twelve months, or (2) 50% of the
participant's vested account balance, reduced by the current
outstanding loan balance due from the participant. The minimum loan
amount available to participants is $500. Each loan shall bear
interest at a rate determined by the Savings Plan Committee.
Repayment of the loan must be made over a period not to exceed five
years.
8
<PAGE> 11
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(1), CONTINUED
(g) PLAN EARNINGS
As of the close of each business day, the Plan trustee is responsible
for determining the fair market value of each of the investment
options, which would include all accrued earnings. The increase or
decrease in the fair market value of each investment fund since the
preceding business day is allocated among the participant accounts
invested in each fund based on the proportionate number of shares or
units of the fund held by each participant at the close of the
preceding business day.
With respect to the Gillette Company Stock Fund, the trustee is
responsible for determining the participants' accounts entitled to
receive each quarterly dividend and the number of shares to be
credited to each account, as of the quarterly ex-dividend date. On
the dividend payment date, the trustee also makes all necessary
adjustments to each participant account to reflect any differences
between the value of such Company stock credited to participants'
accounts and the actual purchase and sales price of such shares,
along with any interest or other income earned by the Fund since the
preceding dividend payment date. Such adjustments are included in the
dividend credited to participants' accounts.
(h) BENEFIT PAYMENTS
Upon termination of employment, the participant or his or her
surviving spouse or beneficiary, will receive a lump sum distribution
of the participant's vested account balance, or if the account
balance exceeds $3,500 at such time, he/she may elect to defer
payment or receive periodic installments. If the termination of
employment is due to retirement, total and permanent disability or
death, a participant (or surviving spouse) may also elect to have the
proceeds of the distribution used to purchase an annuity contract for
his/her benefit.
Early withdrawals may also be made in the event of financial hardship
and other circumstances, based upon special guidelines detailed in
the Plan documents.
(i) FORFEITURES
Forfeitures by Plan participants are used to reduce Company
contributions.
9
<PAGE> 12
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses. Actual results could differ from those
estimates.
The accompanying financial statements are presented on the accrual
basis of accounting. Benefits payable at year end are not accrued
for as they are considered to be a component of the net assets
available for plan benefits.
(b) INVESTMENTS
Investments are allocations of the assets of The Gillette Company
Master Savings Plan Trust ("Savings Plan Trust") based upon the
proportionate interest of the Plan in the Savings Plan Trust.
Investments of the trust are stated at fair value, which for shares
of Company stock held in the trust is defined as the composite
closing price of the stock on the New York Stock Exchange.
Guaranteed investment contracts and synthetic investment contracts
are valued at contract value. The fair value for all other
investments is determined daily by the trustee on a per share basis
using security prices quoted on national exchanges, and amortized
cost in the case of any short-term and money market securities held.
Participant notes receivable are valued at cost, which approximates
fair value.
Security transactions received prior to 4:00 pm Eastern time by
Fidelity are recognized on that business day. Transactions received
after 4:00 pm Eastern time are valued as of the next business day.
Interest income is recorded on the accrual basis and dividend income
is recorded on the ex-dividend date.
Net appreciation (depreciation) in the fair value of investments
includes both realized and unrealized gains and losses.
The Savings Plan Trust's investments in guaranteed and synthetic
investment contracts are valued at contract value which approximates
fair value. Contract value represents contributions made under the
contract plus interest at the contract rate. The crediting interest
rate is variable for the synthetic contracts and is reset quarterly
based upon the fair value of the underlying securities. The
crediting interest rate is fixed for guaranteed contracts. The
average yield for the year ended December 31, 1997 is 6.67% and the
crediting interest rate as of December 31, 1997 is 6.15% for these
investment contracts.
10
<PAGE> 13
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(2), CONTINUED
(c) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(3) FUNDING POLICY
The Company's funding policy is to make contributions to the Plan in
accordance with the manner described in note 1.
(4) PLAN TERMINATION
The Company expects the Plan to continue indefinitely, but reserves the
right to amend or terminate the Plan at its discretion. If the Plan is
terminated or if contributions are completely discontinued, each
participant's interest in that portion of his or her account balance
attributable to Company contributions shall become fully vested. Upon
termination of the Plan, the Trust may continue in existence at the
direction of the Board of Directors of the Company, subject to the
provisions of the Plan and the Trust agreement, or the Trust may be
terminated and the assets distributed to participants.
11
<PAGE> 14
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Fidelity
Retirement
Gillette Fidelity Government
Company Intermediate Fixed Money
Stock Bond Income Market
Fund Fund Fund Portfolio
-------------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income from the Savings
Plan Trust $ 382,295,874 135,362 19,748,355 439,278
Contributions:
Employee contributions 26,899,546 - 4,307,341 644,933
Employer contributions 17,481,384 - - -
-------------- ---------- ----------- ----------
Total additions 426,676,804 135,362 24,055,696 1,084,211
Deductions from net assets attributed to:
Benefit payments (71,917,356) (729,362) (40,701,584) (4,717,505)
Forfeitures (120,065) - - -
-------------- ---------- ----------- ----------
Total deductions (72,037,421) (729,362) (40,701,584) (4,717,505)
Net increase (decrease) prior to interfund transfers 354,639,383 (594,000) (16,645,888) (3,633,294)
Net interfund transfers in (out):
Loans issued (10,332,596) (31,040) (2,834,569) (178,374)
Loans repaid 8,557,304 - 1,673,673 180,682
Other transfers (108,628,945) (8,491,508) 62,274,277 8,001,778
-------------- ---------- ----------- ----------
(110,404,237) (8,522,548) 61,113,381 8,004,086
Net increase (decrease) 244,235,146 (9,116,548) 44,467,493 4,370,792
Net assets available for plan benefits:
Beginning of year 1,305,426,447 9,116,548 289,793,338 5,897,378
-------------- ---------- ----------- ----------
End of year $1,549,661,593 - 334,260,831 10,268,170
============== ========== =========== ==========
<CAPTION>
Fidelity
U.S. Fidelity
Fidelity Fidelity Equity Growth
Magellan Balanced Index Company
Fund Fund Portfolio Fund
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income from the Savings
Plan Trust 8,678,247 1,187,143 21,059,474 6,238,947
Contributions:
Employee contributions 4,383,711 - 2,979,719 4,296,784
Employer contributions - - - -
---------- ----------- ---------- ----------
Total additions 13,061,958 1,187,143 24,039,193 10,535,731
Deductions from net assets attributed to:
Benefit payments (1,857,129) (350,578) (4,907,432) (1,939,117
Forfeitures - - - -
---------- ----------- ---------- ----------
Total deductions (1,857,129) (350,578) (4,907,432) (1,939,117
Net increase (decrease) prior to interfund transfers 11,204,829 836,565 19,131,761 8,596,614
Net interfund transfers in (out):
Loans issued (1,354,083) (156,736) (957,461) (749,634
Loans repaid 1,171,217 - 532,214 774,517
Other transfers 996,278 (16,095,622) 8,766,229 (2,222,080
---------- ----------- ---------- ----------
813,412 (16,252,358) 8,340,982 (2,197,197
Net increase (decrease) 12,018,241 (15,415,793) 27,472,743 6,399,417
Net assets available for plan benefits:
Beginning of year 33,882,758 15,415,793 61,863,941 34,977,544
---------- ----------- ---------- ----------
End of year 45,900,999 - 89,336,684 41,376,961
========== =========== ========== ==========
</TABLE>
12
<PAGE> 15
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED
DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
Fidelity Fidelity Fidelity INVESCO
Emerging Diversified Growth & Total
Markets International Income Return
Fund Fund Fund Fund
---------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income from the Savings
Plan Trust $ (846,361) 480,528 2,803,389 3,077,360
Contributions:
Employee contributions 222,804 340,774 816,379 1,696,966
Employer contributions - - - -
---------- --------- ---------- ----------
Total additions (623,557) 821,302 3,619,768 4,774,326
Deductions from net assets attributed to:
Benefit payments (164,157) (295,525) (438,684) (548,897)
Forfeitures - - - -
---------- --------- ---------- ----------
Total deductions (164,157) (295,525) (438,684) (548,897)
Net increase (decrease) prior to interfund transfers (787,714) 525,777 3,181,084 4,225,429
Net interfund transfers in (out):
Loans issued (12,648) (25,605) (89,550) (202,097)
Loans repaid 34,071 34,484 76,943 428,823
Other transfers 1,981,988 5,698,005 17,954,540 19,673,089
---------- --------- ---------- ----------
2,003,411 5,706,884 17,941,933 19,899,815
Net increase (decrease) 1,215,697 6,232,661 21,123,017 24,125,244
Net assets available for plan benefits:
Beginning of year - - - -
---------- --------- ---------- ----------
End of year $1,215,697 6,232,661 21,123,017 24,125,244
========== ========= ========== ==========
<CAPTION>
Fidelity
U.S.
Bond Participant
Index Loan
Fund Fund Total
---------- ----------- -------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Net investment income from the Savings
Plan Trust 739,237 - 446,036,833
Contributions:
Employee contributions 534,430 - 47,123,387
Employer contributions - - 17,481,384
---------- ----------- -------------
Total additions 1,273,667 - 510,641,604
Deductions from net assets attributed to:
Benefit payments (619,122) (792,970) (129,979,418)
Forfeitures - - (120,065)
---------- ----------- -------------
Total deductions (619,122) (792,970) (130,099,483)
Net increase (decrease) prior to interfund transfers 654,545 (792,970) 380,542,121
Net interfund transfers in (out):
Loans issued (124,480) 17,048,873 -
Loans repaid 105,944 (13,569,872) -
Other transfers 10,091,971 - -
---------- ----------- -------------
10,073,435 3,479,001 -
Net increase (decrease) 10,727,980 2,686,031 380,542,121
Net assets available for plan benefits:
Beginning of year - 26,219,645 1,782,593,392
---------- ----------- -------------
End of year 10,727,980 28,905,676 2,163,135,513
========== =========== =============
</TABLE>
13
<PAGE> 16
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED
DECEMBER 31, 1996, CONTINUED
<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) (24,516,459) (2,306,171) (2,284,655)
Net increase (decrease) prior to interfund transfers 440,663,285 (126,158) (271,556) (1,394,911) 7,350,267
Net interfund transfers in (out):
Loans issued (8,156,885) (127,637) (3,244,339) (273,869) (1,421,251)
Loans repaid 6,613,605 132,305 1,653,682 168,077 1,220,409
Other transfers (15,517,863) (116,015) 16,764,453 4,177,512 (9,592,582)
-------------- ---------- ----------- ---------- ----------
(17,061,143) (111,347) 15,173,796 4,071,720 (9,793,424)
Net increase (decrease) 423,602,142 (237,505) 14,902,240 2,676,809 (2,443,157)
Net assets available for plan benefits:
Beginning of year 881,824,305 9,354,053 274,891,098 3,220,569 36,325,915
-------------- ---------- ----------- ---------- ----------
End of year $1,305,426,447 9,116,548 289,793,338 5,897,378 33,882,758
============== ========== =========== ========== ==========
<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:
Net investment income from the Savings
Plan Trust 1,341,912 11,224,400 4,362,576 - 483,584,205
Contributions:
Employee contributions 1,929,831 2,199,250 4,232,019 - 40,607,543
Employer contributions - - - - 15,917,811
Transfer of assets from Parker Pen and
Thermoscan, Inc. 401(k) Plans 915,870 2,700,297 409,599 166,391 5,435,346
---------- ---------- ---------- ----------- -------------
Total additions 4,187,613 16,123,947 9,004,194 166,391 545,544,905
Deductions from net assets attributed to:
Benefit payments (1,342,324) (1,899,379) (1,859,447) (787,613) (75,657,584)
Forfeitures - - - - (73,012)
---------- ---------- ---------- ----------- -------------
Total deductions (1,342,324) (1,899,379) (1,859,447) (787,613) (75,730,596)
Net increase (decrease) prior to interfund transfers 2,845,289 14,224,568 7,144,747 (621,222) 469,814,309
Net interfund transfers in (out):
Loans issued (390,065) (1,271,355) (903,713) 15,789,114 -
Loans repaid 403,376 389,504 739,283 (11,320,241) -
Other transfers (2,575,688) 3,921,165 2,939,018 - -
---------- ---------- ---------- ----------- -------------
(2,562,377) 3,039,314 2,774,588 4,468,873 -
Net increase (decrease) 282,912 17,263,882 9,919,335 3,847,651 469,814,309
Net assets available for plan benefits:
Beginning of year 15,132,881 44,600,059 25,058,209 22,371,994 1,312,779,083
---------- ---------- ---------- ----------- -------------
End of year 15,415,793 61,863,941 34,977,544 26,219,645 1,782,593,392
========== ========== ========== =========== =============
</TABLE>
15
<PAGE> 17
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(6) INVESTMENTS
Investments of the Savings Plan Trust are held in trust by Fidelity
Management Trust Company. The Plans participating in the Savings Plan
Trust are The Gillette Company Employees' Savings Plan and The Gillette
Company Savings Plan for Arrow Park Employees. Trust income is allocated
ratably between the plans in accordance with the assets of each Plan
invested in the trust. The net assets of the Savings Plan Trust at
December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------------- -------------
<S> <C> <C>
Investments, at fair value:
Marketable securities:
Gillette common stock $1,551,947,454 1,306,814,500
Registered investment companies:
Fidelity Intermediate Bond Fund - 9,126,760
Fidelity Short-term Investment Fund 23,695,057 31,916,887
Fidelity Retirement Government Money
Market Portfolio 10,344,002 5,913,935
Fidelity Magellan Fund 46,585,401 34,287,295
Fidelity Balanced Fund - 16,287,310
Fidelity U.S. Equity Index Portfolio 91,919,213 63,606,106
Fidelity Growth Company Fund 41,787,957 35,235,504
Fidelity Emerging Markets Fund 1,220,995 -
Fidelity Diversified International Fund 6,256,456 -
Fidelity Growth & Income Fund 21,222,508 -
INVESCO Total Return Fund 24,955,015 -
Fidelity U.S. Bond Index Fund 10,760,825 -
Investment contracts 312,826,658 260,086,270
Participant loans 29,104,490 26,347,534
-------------- -------------
Total investments and net assets $2,172,626,031 1,789,622,101
============== =============
Assets allocated to The Gillette Company
Savings Plan for Arrow Park Employees $ 9,490,518 7,028,709
Assets allocated to The Gillette Company
Employees' Savings Plan $2,163,135,513 1,782,593,392
============== =============
</TABLE>
16
<PAGE> 18
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(6), CONTINUED
The statements of changes in net assets of the Savings Plan Trust for the
years ended December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------------- -------------
<S> <C> <C>
Employee contributions $ 47,855,615 41,325,185
Employer contributions 17,683,710 16,121,454
Investment income:
Net appreciation (depreciation) on fair
value of investments:
Gillette common stock 368,245,796 431,024,386
Fidelity Intermediate Bond Fund (89,828) (317,625)
Fidelity Magellan Fund 5,830,143 (2,198,991)
Fidelity Balanced Fund 1,100,411 567,308
Fidelity U.S. Equity Index Portfolio 19,620,590 9,906,298
Fidelity Growth Company Fund 2,204,172 2,726,460
Fidelity Emerging Markets Fund (881,794) -
Fidelity Diversified International Fund 246,019 -
Fidelity Growth & Income Fund 2,048,113 -
INVESCO Total Return Fund 2,287,046 -
Fidelity U.S. Bond Index Fund 315,599 -
Dividends 24,656,455 22,259,897
Interest 22,065,612 20,569,869
-------------- -------------
Net investment income 447,648,334 484,537,602
Transferred from prior trustee - 10,698,627
-------------- -------------
Total additions 513,187,659 552,682,868
Benefit payments (130,062,739) (75,766,746)
Forfeitures (120,990) (73,104)
-------------- -------------
Total deductions (130,183,729) (75,839,850)
-------------- -------------
Net increase 383,003,930 476,843,018
Net assets:
Beginning of year 1,789,622,101 1,312,779,083
-------------- -------------
End of year $2,172,626,031 1,789,622,101
============== =============
</TABLE>
17
<PAGE> 19
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(7) UNIT VALUATION
Participants' accounts are maintained on a "unit value" basis. The total
units used in valuing participants' accounts and the per unit values at
December 31, 1996 and the four quarters ended December 31, 1997 are as
follows:
<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, 1996 16,790,501 $ 77.75 904,416 $10.08 289,793,338 $1.00
March 31, 1997 16,595,211 72.62 835,431 9.90 280,859,835 1.00
June 30, 1997 15,907,757 94.75 - - 315,407,119 1.00
September 30, 1997 15,947,957 86.31 - - 307,641,658 1.00
December 31, 1997 15,429,114 100.44 - - 334,260,831 1.00
<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, 1996 5,897,378 $1.00 420,121 $80.65 1,094,872 $14.08
March 31, 1997 5,864,097 1.00 398,629 80.20 950,646 14.11
June 30, 1997 10,267,657 1.00 405,113 91.05 - -
September 30, 1997 9,685,198 1.00 410,655 99.85 - -
December 31, 1997 10,268,170 1.00 481,799 95.27 - -
<CAPTION>
Fidelity U.S. Fidelity Growth Fidelity Growth &
Equity Index Portfolio Company Fund Income Fund
---------------------- ------------------- -----------------
Units Value Units Value Units Value
--------- ------- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 2,295,508 $26.95 864,497 $40.46 $
March 31, 1997 2,346,949 27.54 823,008 39.29 220,540 30.98
June 30, 1997 2,405,219 32.06 794,382 45.46 340,098 36.05
September 30, 1997 2,440,321 34.31 807,568 49.81 430,690 37.16
December 31, 1997 2,553,936 34.98 955,147 43.32 554,410 38.10
<CAPTION>
Fidelity Emerging Fidelity Diversified Fidelity U.S. Bond
Market Fund International Fund Index Fund
------------------- -------------------- ------------------
Units Value Units Value Units Value
------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 $ $ $
March 31, 1997 83,913 17.49 190,284 15.08 76,203 10.31
June 30, 1997 125,366 16.24 331,132 16.90 859,249 10.50
September 30, 1997 115,132 12.71 375,831 17.48 874,464 10.66
December 31, 1997 126,635 9.60 386,402 16.13 994,252 10.79
</TABLE>
18
<PAGE> 20
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(7), CONTINUED
INVESCO Total
Return Fund
-------------------
Units Value
------- ------
December 31, 1996 - -
March 31, 1997 118,030 $24.67
June 30, 1997 737,957 27.40
September 30, 1997 737,328 29.00
December 31, 1997 829,331 29.09
(8) PARTICIPATION BY FUND
The total number of plan participants in each of the investment funds on
December 31, 1997 and 1996 are as follows:
1997 1996
----- -----
Gillette Company Stock Fund 9,346 8,752
Fidelity Intermediate Bond Fund - 842
Fixed Income Fund 4,095 4,400
Fidelity Retirement Government Money Market Portfolio 651 692
Fidelity Magellan Fund 3,087 3,131
Fidelity Balanced Fund - 1,422
Fidelity U.S. Equity Index Portfolio 3,021 2,976
Fidelity Growth Company Fund 2,543 2,495
Fidelity Growth & Income Fund 629 -
Fidelity Emerging Markets Fund 205 -
Fidelity Diversified International Fund 380 -
Fidelity U.S. Bond Index Fund 778 -
INVESCO Total Return 1,422 -
The numbers shown above reflect the fact that participants may elect to
invest in more than one fund.
(9) ADMINISTRATIVE EXPENSES
The Company bears all trustee and administrative costs of maintaining the
Plan and investment expenses associated with the Fixed Income Fund and the
Gillette Company Stock Fund. Investment expenses associated with the
Fidelity funds offered as investment options under the Plan are deducted
from the assets of each of those funds.
19
<PAGE> 21
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements, Continued
(10) INCOME TAXES
A favorable tax determination letter was received from the Internal
Revenue Service on July 19, 1994 stating that the existing Plan and its
underlying trust qualified under section 401(a) of the Internal Revenue
Code of 1986 (the "Code") as a profit sharing plan, and is exempt from
federal income taxes. Further, the features of the Plan relating to tax
deferred savings qualified under section 401(k) of the Code. In the
opinion of the Plan administrator and the Plan's tax advisor, the Plan and
its underlying trust have operated within the terms of the Plan document
and remain qualified under the applicable provisions of the Internal
Revenue Code.
(11) PLAN MERGER AND TRANSFERS
Effective March 31, 1995, the account balances of certain Gillette Company
Savings Plan for Arrow Park Employees participants were transferred into
the Plan. The account balances of all remaining non-bargaining unit
participants of the Gillette Company Savings Plan for Arrow Park Employees
totaling $3,806,039 were transferred to the Plan on January 2, 1996 along
with their participant loan balances which totaled $141,374.
Effective July 1, 1996, the net assets of the Thermoscan Inc. 401(k) Plan
were merged into The Gillette Company Employees' Savings Plan. The account
balances of the plan participants were transferred into the Plan.
(12) CASH ADVANCE TO THE PLAN TRUSTEE
The Company has deposited with the Plan trustee a cash advance to provide
liquidity to the Gillette Company Stock Fund in order to make
distributions, loans and transfers from the Fund on a timely basis. Any
interest earned on the balance is allocated to participant accounts within
the Gillette Company Stock Fund. The outstanding balance of the cash
advance to the trustee as of December 31, 1997 was $1,500,000.
20
<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 statement Nos.
33-9495, 33-56218 and 33-59125 on Form S-8 of The Gillette Company Employees'
Savings Plan of our report dated May 15, 1998, relating to the statements of net
assets available for plan benefits of The Gillette Company Employees' Savings
Plan as of December 31, 1997 and 1996, and the related statements of changes in
net assets available for plan benefits for each of the years in the two-year
period ended December 31, 1997, which report appears in the December 31, 1997
annual report on Form 11-K of The Gillette Company Employees' Savings Plan.
s/ KPMG Peat Marwick LLP
Boston, Massachusetts
June 24, 1997
