<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, 1998
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, 1998 and 1997.
2. Statements of Changes in Net Assets Available for
Plan Benefits for each of the years in the two -year
period ended December 31, 1998.
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 ROBERT E. DICENSO
Robert E. DiCenso
Date: June 29, 1999
<PAGE> 3
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Financial Statements
December 31, 1998 and 1997
With Independent Auditors' Report Thereon
<PAGE> 4
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
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 5-11
</TABLE>
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, 1998
and 1997 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, 1998
and 1997 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 21, 1999
<PAGE> 6
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- ---------
<S> <C> <C>
Assets:
Investment in the Savings Plan Trust $11,500,182 9,490,518
----------- ---------
Net assets available for plan benefits $11,500,182 9,490,518
=========== =========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 7
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Statements of Changes in Net Assets Available for Plan Benefits,
with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
FIDELITY
RETIREMENT FIDELITY
GILLETTE GOVERNMENT U.S.
COMPANY FIXED MONEY FIDELITY EQUITY
STOCK INCOME MARKET MAGELLAN INDEX
FUND FUND PORTFOLIO FUND PORTFOLIO
---- ---- --------- ---- ---------
<S> <C> <C> <C> <C> <C>
Additions to net asset attributed to:
Net investment income from the
Savings Plan Trust $ (140,866) 147,521 7,594 244,652 732,224
Contributions:
Employee contributions 241,327 88,837 10,482 106,115 102,963
Employer contributions 68,332 28,360 3,160 29,611 24,705
----------- --------- ------- --------- ---------
Total additions 168,793 264,718 21,236 380,378 859,892
Deductions from net assets attributed to:
Benefit payments (27,043) (26,793) (733) (11,373) (54,771)
Forfeitures (2,419) (209) -- (716) (284)
----------- --------- ------- --------- ---------
Total deductions (29,462) (27,002) (733) (12,089) (55,055)
Net increase prior to interfund transfers 139,331 237,716 20,503 368,289 804,837
Net transfers in (out):
Loans issued (43,709) (29,741) (1,021) (23,877) (17,920)
Loans repaid 37,917 19,335 997 14,491 16,519
Other transfers 82,451 (18,511) (29,970) (34,235) (69,617)
----------- --------- ------- --------- ---------
76,659 (28,917) (29,994) (43,621) (71,018)
Net increase(decrease) 215,990 208,799 (9,491) 324,668 733,819
Net assets available for plan benefits:
Beginning of year 2,285,861 2,260,884 75,832 684,402 2,582,529
----------- --------- ------- --------- ---------
End of year $ 2,501,851 2,469,683 66,341 1,009,070 3,316,348
=========== ========= ======= ========= =========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
FIDELITY FIDELITY FIDELITY GROWTH INVESCO
GROWTH EMERGING DIVERSIFIED & TOTAL
COMPANY MARKETS INTERNATIONAL INCOME RETURN
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Additions to net asset attributed to:
Net investment income from the
Savings Plan Trust 119,255 (776) 2,804 42,381 116,787
Contributions:
Employee contributions 56,266 703 3,164 14,425 55,350
Employer contributions 15,034 145 585 3,367 15,763
------- ------ ------ ------- -------
Total additions 190,555 72 6,553 60,173 187,900
Deductions from net assets attributed to:
Benefit payments (686) -- -- -- (6,081)
Forfeitures (173) -- -- -- (206)
------- ------ ------ ------- -------
Total deductions (859) -- -- -- (6,287)
Net increase prior to interfund transfers 189,696 72 6,553 60,173 181,613
Net transfers in (out):
Loans issued (19,014) (291) -- -- (5,318)
Loans repaid 7,871 700 -- -- 5,144
Other transfers 1,521 (1,987) 13,548 88,292 (36,784)
------- ------ ------ ------- -------
(9,622) (1,578) 13,548 88,292 (36,958)
Net increase(decrease) 180,074 (1,506) 20,101 148,465 144,655
Net assets available for plan benefits:
Beginning of year 410,996 5,298 23,795 99,491 829,771
------- ------ ------ ------- -------
End of year 591,070 3,792 43,896 247,956 974,426
======= ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
U.S.
BOND PARTICIPANT
INDEX LOAN
FUND FUND TOTAL
---- ---- -----
<S> <C> <C> <C>
Additions to net asset attributed to:
Net investment income from the
Savings Plan Trust 3,383 -- 1,274,959
Contributions:
Employee contributions 7,599 -- 687,231
Employer contributions 1,971 -- 191,033
------ -------- ----------
Total additions 12,953 -- 2,153,223
Deductions from net assets attributed to:
Benefit payments (1,159) (10,804) (139,443)
Forfeitures (109) -- (4,116)
------ -------- ----------
Total deductions (1,268) (10,804) (143,559)
Net increase prior to interfund transfers 11,685 (10,804) 2,009,664
Net transfers in (out):
Loans issued (1,642) 142,533 --
Loans repaid 1,789 (104,763) --
Other transfers 5,292 -- --
------ -------- ----------
5,439 37,770 --
Net increase(decrease) 17,124 26,966 2,009,664
Net assets available for plan benefits:
Beginning of year 32,845 198,814 9,490,518
------ -------- ----------
End of year 49,969 225,780 11,500,182
====== ======== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 8
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Statements of Changes in Net Assets Available for Plan Benefits,
with Fund Information - Continued
Year ended December 31, 1997
<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 asset attributed to:
Net investment income from the
Savings Plan Trust $ 492,089 167 144,167 3,252 122,921
Contributions:
Employee contributions 251,531 -- 94,550 13,767 125,437
Employer contributions 71,732 -- 28,931 3,689 34,366
----------- ------- --------- ------ -------
Total additions 815,352 167 267,648 20,708 282,724
Deductions from net assets attributed to:
Benefit payments (8,070) -- (39,309) (211) (1,566)
Forfeitures (666) -- (104) (69) --
----------- ------- --------- ------ -------
Total deductions (8,736) -- (39,413) (280) (1,566)
Net increase prior to interfund transfers 806,616 167 228,235 20,428 281,158
Net transfers in (out):
Loans issued (60,907) (237) (14,513) (1,063) (17,623)
Loans repaid 19,412 -- 13,490 165 13,495
Other transfers 132,687 (10,142) (176,147) 39,745 2,835
----------- ------- --------- ------ -------
91,192 (10,379) (177,170) 38,847 (1,293)
Net increase(decrease) 897,808 (10,212) 51,065 59,275 279,865
Net assets available for plan benefits:
Beginning of year 1,388,053 10,212 2,209,819 16,557 404,537
----------- ------- --------- ------ -------
End of year $ 2,285,861 -- 2,260,884 75,832 684,402
=========== ======= ========= ====== =======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
U.S. FIDELITY FIDELITY FIDELITY
FIDELITY EQUITY GROWTH EMERGING DIVERSIFIED
BALANCED INDEX COMPANY MARKETS INTERNATIONAL
FUND PORTFOLIO FUND FUND FUND
-------- --------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Additions to net asset attributed to:
Net investment income from the
Savings Plan Trust 66,259 612,450 54,733 (3,132) 1,616
Contributions:
Employee contributions -- 89,540 67,735 3,215 1,508
Employer contributions -- 22,443 17,502 865 319
-------- --------- ------- ------ ------
Total additions 66,259 724,433 139,970 948 3,443
Deductions from net assets attributed to:
Benefit payments (8,231) (6,680) (6,855) -- --
Forfeitures -- -- (86) -- --
-------- --------- ------- ------ ------
Total deductions (8,231) (6,680) (6,941) -- --
Net increase prior to interfund transfers 58,028 717,753 133,029 948 3,443
Net transfers in (out):
Loans issued (2,172) (13,494) (6,386) -- --
Loans repaid -- 4,886 2,408 -- --
Other transfers (927,373) 131,219 23,985 4,350 20,352
-------- --------- ------- ------ ------
(929,545) 122,611 20,007 4,350 20,352
Net increase(decrease) (871,517) 840,364 153,036 5,298 23,795
Net assets available for plan benefits:
Beginning of year 871,517 1,742,165 257,960 -- --
-------- --------- ------- ------ ------
End of year -- 2,582,529 410,996 5,298 23,795
======== ========= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY
GROWTH INVESCO U.S.
& TOTAL BOND PARTICIPANT
INCOME RETURN INDEX LOAN
FUND FUND FUND FUND TOTAL
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Additions to net asset attributed to:
Net investment income from the
Savings Plan Trust 13,250 102,039 1,690 -- 1,611,501
Contributions:
Employee contributions 7,937 65,143 11,865 -- 732,228
Employer contributions 1,836 17,745 2,898 -- 202,326
------ ------- ------ ------- ---------
Total additions 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 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 78,650 662,394 17,445 -- --
------ ------- ------ ------- ---------
76,468 654,584 16,392 73,584 --
Net increase(decrease) 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 99,491 829,771 32,845 198,814 9,490,518
====== ======= ====== ======= =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 9
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1998 and 1997
(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. A participant may
direct employee contributions in any of the following 11
investment options:
- Gillette Company Stock Fund
Invests primarily in shares of The Gillette Company common
stock.
- 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.
(Continued)
5
<PAGE> 10
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1998 and 1997
- 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 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.
- 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.
- 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.
- Fidelity U.S. Bond Index Fund
Invests in investment grade (medium to high quality) or
above with maturities of at least one year.
- Fidelity Growth & Income
Seeks high total return through a combination of current
income and capital appreciation. Invests primarily in U.S.
and foreign stocks.
- Fidelity Emerging Markets Fund
Seeks capital appreciation from emerging markets around the
world.
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.
(Continued)
6
<PAGE> 11
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1998 and 1997
(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.
(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 $5,000 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.
(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 trust.
(Continued)
7
<PAGE> 12
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1998 and 1997
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.
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, 1998
is 6.40% and the crediting interest rate as of December 31, 1998
is 6.19% 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.
(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.
(Continued)
8
<PAGE> 13
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1998 and 1997
The net assets of the Savings Plan Trust at December 31, 1998 and 1997
are as follows:
<TABLE>
<CAPTION>
1998 1997
-------------- -------------
<S> <C> <C>
Investments, at fair value:
Marketable securities:
Gillette common stock $1,421,628,142 1,551,947,454
Registered investment companies:
Fidelity Short-Term Investment Fund 54,284,783 23,695,057
Fidelity Retirement Government Money Market Portfolio 22,247,679 10,344,002
Fidelity Magellan Fund 104,133,549 46,585,401
Fidelity U.S. Equity Index Portfolio 188,119,328 91,919,213
Fidelity Growth Company Fund 47,723,974 41,787,957
Fidelity Emerging Markets Fund 869,866 1,220,995
Fidelity Diversified International Fund 16,836,592 6,256,456
Fidelity Growth & Income Fund 35,977,890 21,222,508
INVESCO Total Return Fund 66,763,014 24,955,015
Fidelity U.S. Bond Index Fund 17,783,501 10,760,825
Investment contracts 330,165,797 312,826,658
Participant loans 33,652,383 29,104,490
-------------- -------------
Total investments 2,340,186,498 2,172,626,031
Receivable from Duracell Inc. Thrift Plan 2,890,395 --
-------------- -------------
Total investment and net assets $2,343,076,893 2,172,626,031
============== =============
Assets allocated to The Gillette Company Employees'
Savings Plan $2,331,576,711 2,163,135,513
Assets allocated to The Gillette Company Savings Plan
for Arrow Park Employees $ 11,500,182 9,490,518
============== =============
</TABLE>
(Continued)
9
<PAGE> 14
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1998 and 1997
The statements of change in net assets of the Savings Plan Trust for the
years ended December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
--------------- -------------
<S> <C> <C>
Employee contributions $ 50,400,338 47,855,615
Employer contributions 18,776,685 17,683,710
Investment income:
Net appreciation (depreciation) on fair value of investments:
Gillette common stock (68,234,619) 368,245,796
Fidelity Intermediate Bond Fund -- (89,828)
Fidelity Magellan Fund 12,773,190 5,830,143
Fidelity Balanced Fund -- 1,100,411
Fidelity U.S. Equity Index Portfolio 24,256,268 19,620,590
Fidelity Growth Company Fund 7,200,486 2,204,172
Fidelity Emerging Markets Fund (745,082) (881,794)
Fidelity Diversified International Fund 476,479 246,019
Fidelity Growth & Income Fund 5,136,757 2,048,113
INVESCO Total Return Fund 1,974,014 2,287,046
Fidelity U.S. Bond Index Fund 294,579 315,599
Dividends 28,572,861 24,656,455
Interest 23,120,340 22,065,612
--------------- -------------
Net investment income 34,825,273 447,648,334
Transferred from Duracell Inc. Thrift Plan 235,469,789 --
--------------- -------------
Total additions 339,472,085 513,187,659
Benefit payments 168,845,644 130,062,739
Forfeitures 175,579 120,990
--------------- -------------
Total deductions 169,021,223 130,183,729
--------------- -------------
Net increase 170,450,862 383,003,930
Net assets:
Beginning of year 2,172,626,031 1,789,622,101
--------------- -------------
End of year $ 2,343,076,893 2,172,626,031
=============== =============
</TABLE>
(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.
(Continued)
10
<PAGE> 15
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1998 and 1997
(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.
11
<PAGE> 1
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 21, 1999, relating to the statements of net
assets available for plan benefits of The Gillette Company Savings Plan for
Arrowpark Employees as of December 31, 1998 and 1997, 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, 1998, which report appears in the
December 31, 1998 annual report on Form 11-K of The Gillette Company Savings
Plan for Arrowpark Employees.
KPMG LLP
Kpmg llp
Boston, Massachusetts
June 29, 1999
