<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 number 33-63707
A. Full title of the plan:
THE GILLETTE COMPANY SAVINGS PLAN FOR ARROWPARK EMPLOYEES
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 SAVINGS PLAN FOR ARROWPARK
EMPLOYEES
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
Advisory Committee has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROWPARK EMPLOYEES
By /s/ Robert E. DiCenso
-----------------------------------
Robert E. DiCenso
Date: June 25, 1998
<PAGE> 3
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Financial Statements
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE> 4
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
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 3-4
Notes to Financial Statements 5-12
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 of The Gillette Company Savings Plan Trust.
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
The Savings Plan Committee
The Gillette Company Savings Plan for Arrow Park Employees:
We have audited the statements of net assets available for plan benefits of The
Gillette Company Savings Plan for Arrow Park Employees 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 Savings Plan for Arrow Park Employees as of 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.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Fund Information in the statement of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the changes in net assets available
for plan benefits of each fund. The Fund Information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
May 15, 1998
<PAGE> 6
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Statements of Net Assets Available for Plan Benefits
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Assets:
Investment in the Savings Plan Trust $9,490,518 7,028,709
---------- ---------
Net assets available for plan benefits $9,490,518 7,028,709
========== =========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 7
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Fidelity
Fidelity Retirement Fidelity
Gillette Interme- Government U.S. Fidelity
Company diate Fixed Money Fidelity Fidelity Equity Growth
Stock Bond Income Market Magellan Balanced Index Company
Fund Fund Fund Portfolio Fund Fund Portfolio Fund
-------- -------- ------ ---------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net asset
attributed to:
Net investment income
from the Savings
Plan Trust $ 492,089 167 144,167 3,252 122,921 66,259 612,450 54,733
Contributions
Employee contributions 251,531 -- 94,550 13,767 125,437 -- 89,540 67,735
Employer contributions 71,732 -- 28,931 3,689 34,366 -- 22,443 17,502
---------- ------ ---------- ------ ------- -------- --------- -------
Total additions 815,352 167 267,648 20,708 282,724 66,259 724,433 139,970
Deductions from net assets
attributed to:
Benefit payments (8,070) -- (39,309) (211) (1,566) (8,231) (6,680) (6,855)
Forfeitures (666) -- (104) (69) -- -- -- (86)
---------- ------ ---------- ------ ------- -------- --------- -------
Total deductions (8,736) -- (39,413) (280) (1,566) (8,231) (6,680) (6,941)
Net increase prior to
interfund transfers 806,616 167 228,235 20,428 281,158 58,028 717,753 133,029
Net transfers in (out)
Loans issued (60,907) (237) (14,513) (1,063) (17,623) (2,172) (13,494) (6,386)
Loans repaid 19,412 -- 13,490 165 13,495 -- 4,886 2,408
Other transfers 132,687 (10,142) (176,147) 39,745 2,835 (927,373) 131,219 23,985
---------- ------ ---------- ------ ------- -------- --------- -------
91,192 (10,379) (177,170) 38,847 (1,293) (929,545) 122,611 20,007
Net increase(decrease) 897,808 (10,212) 51,065 59,275 279,865 (871,517) 840,364 153,036
---------- ------ ---------- ------ ------- -------- --------- -------
Net assets available for
plan benefits Beginning
of year 1,388,053 10,212 2,209,819 16,557 404,537 871,517 1,742,165 257,960
---------- ------ ---------- ------ ------- -------- --------- -------
End of year $2,285,861 -- 2,260,884 75,832 684,402 -- 2,582,529 410,996
========== ====== ========= ====== ======= ======== ========= =======
<CAPTION>
Fidelity
Fidelity Fidelity Fidelity INVESCO U.S.
Emerging Diversified Growth & Total Bond Participant
Markets International Income Return Index Loan
Fund Fund Fund Fund Fund Fund Total
-------- ------------- -------- ------- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Additions to net asset
attributed to:
Net investment income
from the Savings
Plan Trust (3,132) 1,616 13,250 102,039 1,690 -- 1,611,501
Contributions
Employee contributions 3,215 1,508 7,937 65,143 11,865 -- 732,228
Employer contributions 865 319 1,836 17,745 2,898 -- 202,326
------ ------ ------ ------- ------ ------- ---------
Total additions 948 3,443 23,023 184,927 16,453 -- 2,546,055
Deductions from net assets
attributed to:
Benefit payments -- -- -- (9,740) -- (2,659) (83,321)
Forfeitures -- -- -- -- -- -- (925)
------ ------ ------ ------- ------ ------- ---------
Total deductions -- -- -- (9,740) -- (2,659) (84,246)
Net increase prior to
interfund transfers 948 3,443 23,023 175,187 16,453 (2,659) 2,461,809
Net transfers in (out)
Loans issued -- -- (2,182) (11,724) (1,157) 131,458 --
Loans repaid -- -- -- 3,914 104 (57,874) --
Other transfers 4,350 20,352 78,650 662,394 17,445 -- --
------ ------ ------ ------- ------ ------- ---------
4,350 20,352 76,468 654,584 16,392 73,584 --
Net increase(decrease) 5,298 23,795 99,491 829,771 32,845 70,925 2,461,809
Net assets available for
plan benefits Beginning of year -- -- -- -- -- 127,889 7,028,709
------ ------ ------ ------- ------ ------- ---------
End of year 5,298 23,795 99,491 829,771 32,845 198,814 9,490,518
====== ====== ====== ======= ====== ======= =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 8
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits,
with Fund Information
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Guaranteed Gillette Fidelity
Investment Payment Company Intermediate Fixed
Contract Balanced Equity Reserve Stock Bond Income
Fund Fund Fund Account Fund Fund Fund
----------- -------- ------ -------- -------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net asset
attributed to:
Net investment income
from the Savings
Plan Trust $ -- -- -- -- 342,697 301 149,500
----------- ---------- ---------- -------- ---------- ---------- ----------
Contributions
Employee contributions -- -- -- -- 205,507 7,689 112,485
Employer contributions -- -- -- -- 59,594 2,529 34,394
----------- ---------- ---------- -------- ---------- ---------- ----------
Total additions -- -- -- -- 607,798 10,519 296,379
Deductions from net assets
attributed to:
Benefit payments -- -- -- -- (73) (70) (44,051)
Forfeitures -- -- -- -- (15) (14) (106)
Transfer of assets to The
Gillette Company
Employees' Savings Plan (837,945) (807,218) (2,160,876) (141,374) -- -- --
----------- ---------- ---------- -------- ---------- ---------- ----------
Total deductions (837,945) (807,218) (2,160,876) (141,374) (88) (84) (44,157)
Net increase (decrease)
prior to interfund
transfers (837,945) (807,218) (2,160,876) (141,374) 607,710 10,435 252,222
Net transfers in (out)
Loans issued -- -- -- -- (11,565) (269) (45,711)
Loans repaid -- -- -- -- 13,677 46 8,575
Other transfers (2,392,998) (933,384) (1,827,499) (109,400) 778,231 -- 1,994,733
----------- ---------- ---------- -------- ---------- ---------- ----------
(2,392,998) (933,384) (1,827,499) (109,400) 780,343 (223) 1,957,597
Net increase(decrease) (3,230,943) (1,740,602) (3,988,375) (250,774) 1,388,053 10,212 2,209,819
Net assets available for
plan benefits Beginning
of year 3,230,943 1,740,602 3,988,375 250,774 -- -- --
----------- ---------- ---------- -------- ---------- ---------- ----------
End of year $ -- -- -- -- 1,388,053 10,212 2,209,819
=========== ========== ========== ======== ========== ========== ==========
<CAPTION>
Fidelity
Retirement Fidelity Fidelity
Gov't Money Fidelity Fidelity U.S. Equity Growth Participant
Market Magellan Balanced Index Company Loan
Portfolio Fund Fund Portfolio Fund Fund Total
----------- -------- -------- ----------- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Additions to net asset
attributed to:
Net investment income from
the Savings Plan Trust 599 31,118 73,961 337,237 17,984 -- 953,397
Contributions
Employee contributions 15,462 141,423 82,815 83,074 69,187 -- 717,642
Employer contributions 4,176 39,662 24,066 21,820 17,402 -- 203,643
------ ------- ------- --------- ------- ------- ---------
Total additions 20,237 212,203 180,842 442,131 104,573 -- 1,874,682
Deductions from net assets
attributed to:
Benefit payments (2,089) (989) (7,142) (6,682) -- (48,066) (109,162)
Forfeitures 57 -- (14) -- -- -- (92)
Transfer of assets to The
Gillette Company
Employees' Savings Plan -- -- -- -- -- -- (3,947,413)
------ ------- ------- --------- ------- ------- ---------
Total deductions (2,032) (989) (7,156) (6,682) -- (48,066) (4,056,667)
Net increase (decrease) prior
to interfund transfers 18,205 211,214 173,686 435,449 104,573 (48,066) (2,181,985)
Net transfers in (out)
Loans issued (468) (11,097) (12,196) (23,130) (1,144) 105,580 --
Loans repaid 951 7,871 4,650 2,283 972 (39,025) --
Other transfers (2,131) 196,549 705,377 1,327,563 153,559 109,400 --
------ ------- ------- --------- ------- ------- ---------
(1,648) 193,323 697,831 1,306,716 153,387 175,955 --
Net increase(decrease) 16,557 404,537 871,517 1,742,165 257,960 127,889 (2,181,985)
Net assets available for
plan benefits Beginning
of year -- -- -- -- -- -- 9,210,694
------ ------- ------- --------- ------- ------- ---------
End of year 16,557 404,537 871,517 1,742,165 257,960 127,889 7,028,709
====== ======= ======= ========= ======= ======= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 9
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1997 and 1996
(1) DESCRIPTION OF THE PLAN
The following brief description of The Gillette Company Savings Plan for
Arrow Park Employees (the "Plan") is provided for general information
purposes only. Participants should refer to the Plan document 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 the
Arrow Park facility of The Gillette Company's Stationary Products
Group who are covered by a collective bargaining agreement and who
have completed six full months of employment. The Plan was amended
and restated in its entirety effective January 1, 1996 and The
Gillette Company (the "Company") assumed sponsorship and
administration of the Plan as of such date. 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 base compensation. The
Company will make matching contributions on behalf of a
participant equal to 50% of the participant's contribution up to
6% of the participants' annual compensation.
(c) VESTING
Participants immediately vest in their own contributions and
actual earnings thereon. Vesting in company contributions occurs
at a rate of 25% per year of service 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.
(d) PARTICIPANTS' ACCOUNTS
A separate account is established for each participant at the time
of enrollment in the Plan. The balance in each account is invested
in accordance with the directions given by the participant in one
or more of the Plan's investment fund offerings. The following
funds were available for investment beginning January 1, 1996:
GILLETTE COMPANY STOCK FUND
Invests primarily in shares of The Gillette Company common stock.
6
<PAGE> 10
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements, Continued
(1), CONTINUED
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 FUND
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 FUND
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.
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.
<PAGE> 11
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements, Continued
(1), CONTINUED
FIDELITY DIVERSIFIED INTERNATIONAL
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
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.
(e) 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. A participant must make a payment of principal and
interest to the Plan on at least a quarterly basis. Repayment of
the loan must be made over a period not to exceed five years.
(f) 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.
8
<PAGE> 12
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements, Continued
(1), CONTINUED
(g) 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.
Early withdrawals may also be made in the event of financial
hardship and other circumstances, based upon special guidelines
detailed in the Plan documents.
(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.
(c) 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 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 are 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.
9
<PAGE> 13
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements, Continued
(2), CONTINUED
Security transactions received prior to 4:00 p.m. Eastern time by
Fidelity are recognized on that business day. Transactions
received after 4:00 p.m. 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.
(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
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.
10
<PAGE> 14
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements, Continued
(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 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
Employees' Savings Plan $2,163,135,513 1,782,593,392
Assets allocated to The Gillette Company
Savings Plan for Arrow Park Employees $ 9,490,518 7,028,709
============== =============
</TABLE>
11
<PAGE> 15
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements, Continued
(5), CONTINUED
The statements of change 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>
12
<PAGE> 16
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements, Continued
(6) ADMINISTRATIVE EXPENSES
The Company bears 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.
(7) INCOME TAXES
A favorable tax determination letter was received from the Internal
Revenue Service on April 18, 1996 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.
(8) PLAN TRANSFERS
On September 18, 1995, Parker Pen USA Limited's Board of Directors
approved a change in Trustees of the Plan from Marshall & Ilslay Bank and
Trust Company to Fidelity Management Trust Company effective January 1,
1996.
During 1995, the account balances of certain participants ($606,707) were
transferred into The Gillette Company Employees' Savings Plan ("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. These participants are now participating
in the Gillette Plan.
Effective January 1, 1996, The Gillette Company assumed sponsorship and
administration of the Plan which was redesigned to replicate the
investment options, including Gillette common stock, and administrative
features of the Gillette Plan.
(9) PLAN AMENDMENT
Effective July 1, 1997, the name of the Plan changed from the "Parker
Plan 401(k) Plan" to "The Gillette Company Savings Plan for Arrow Park
Employees."
13
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Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Advisory Committee
The Gillette Company Savings Plan for Arrowpark Employees:
We consent to the incorporation by reference in registration statement No.
33-63707 on Form S-8 of The Gillette Company Savings Plan for Arrowpark
Employees of our report dated May 15, 1998, relating to the statements of net
assets available for plan benefits of The Gillette Company Savings Plan for
Arrowpark Employees 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 Savings
Plan for Arrowpark Employees.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
June 24, 1997
