<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, 1999
Registration number 33-52465
A. Full title of the plan:
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
The Gillette Company
Prudential Tower Building
Boston, MA 02199
<PAGE> 2
Financial Statements of The Gillette Company
Global Employee Stock Ownership Plan
The following audited financial statements are enclosed with this
report:
1. Statement of Assets Available for Plan Benefits as of
December 31, 1999 and December 31, 1998.
2. Statement of Changes in Net Assets Available for Plan Benefits
for the three years ended December 31, 1999.
Exhibits
23.2 Independent Auditors' Consent
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee of The Gillette Company Global Employee Stock
Ownership Plan has caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
The Gillette Company
Global Employee Stock Ownership Plan
BY ROBERT E. DICENSO
----------------------------------
Robert E. DiCenso
Date: March 30, 2000
<PAGE> 3
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Financial Statements
As of December 31, 1999 and 1998
and for the years ended December 31, 1999, 1998 and 1997
With Independent Auditors' Report Thereon
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
The Administrative Committee
The Gillette Company Global Employee Stock Ownership Plan:
We have audited the accompanying statements of assets available for plan
benefits of The Gillette Company Global Employee Stock Ownership Plan as of
December 31, 1999 and 1998 and the related statements of changes in assets
available for plan benefits for each of the years in the three-year period ended
December 31, 1999. 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, information regarding the Plan's assets available for
plan benefits as of December 31, 1999 and 1998 and the changes in assets
available for plan benefits for each of the years in the three-year period ended
December 31, 1999, in conformity with generally accepted accounting principles.
KPMG LLP
Boston, Massachusetts
March 22, 2000
<PAGE> 5
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Assets Available for Plan Benefits
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ---------- ----------
<S> <C> <C> <C>
Additions to assets attributed to:
Investment income:
Dividends on The Gillette Company common stock $ 450,414 312,546 210,497
Realized gains on investments sold 1,276,227 1,767,363 1,297,021
Change in unrealized appreciation/(depreciation) in
the market value of investments (7,642,637) (3,662,233) 5,692,073
----------- ---------- ----------
(5,915,996) (1,582,324) 7,196,591
----------- ---------- ----------
Contributions:
Employee 11,805,410 11,088,686 8,821,695
Employer 3,007,615 2,728,611 2,311,534
----------- ---------- ----------
14,813,025 13,817,297 11,133,229
----------- ---------- ----------
Total additions 8,897,029 12,234,973 18,329,820
Deduction from assets attributed to:
Distributions 7,167,370 5,170,329 3,444,377
----------- ---------- ----------
Net increase 1,729,659 7,064,644 14,885,443
Assets available for plan benefits:
Beginning of year 43,002,891 35,938,247 21,052,804
----------- ---------- ----------
End of year $44,732,550 43,002,891 35,938,247
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 6
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Assets Available for Plan Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- ----------
<S> <C> <C>
Assets:
The Gillette Company common stock, at market value $43,237,864 41,623,735
Cash 1,989 1,422
Employees' contributions receivable 1,193,182 1,107,819
Employer's contributions receivable 299,515 269,915
----------- ----------
Assets available for plan benefits $44,732,550 43,002,891
=========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 7
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(1) DESCRIPTION OF THE PLAN
The Gillette Company Global Employee Stock Ownership Plan (the "Plan") is a
defined contribution plan sponsored by The Gillette Company (the
"Sponsor"). The following provides only general information. Participants
should refer to the Plan document for a more complete description of the
Plan's provisions.
(a) GENERAL
The Plan was adopted by the Board of Directors of the Sponsor on
December 16, 1993 to become effective June 1, 1994 and is not subject
to the provisions of the Employee Retirement Income Security Act of
1974. The Plan is not subject to income taxation. The Plan's goal is
to provide eligible Gillette employees the opportunity to purchase
common stock of the Sponsor through payroll deductions and
contributions from the Sponsor. All Plan assets are held by the Plan
Fiduciary, Banque Internationale a Luxembourg (the "Fiduciary"). Buck
Consultants is the record keeper for the Plan.
(b) ELIGIBILITY
Employees eligible to participate in the Plan include all regular
employees of participating subsidiaries of the Sponsor with the
exception of employees considered to be an executive, officer,
director, or 10% shareholder of the Sponsor and employees eligible for
a savings plan maintained in the United States, Canada, or Puerto
Rico. Eligible employees may enroll in the Plan on the first day of
each month and on the initial participation date for each
participating subsidiary.
(c) CONTRIBUTIONS
Eligible employees may contribute 2% to 10% of their compensation to
the Plan through payroll deductions. A participating employee may
change the contribution rate effective as of the first day of any
month.
Employer contributions are made to the accounts of participants who
are contributing to the Plan in amounts equal to 1% of each
participant's eligible pay.
(d) INVESTMENTS
All employee and employer contributions are converted into U.S.
dollars and then invested in shares of the Sponsor's common stock
generally on the 15th day of each month (or if that date is not a
business day, the preceding business day). Sales of the Sponsor's
common stock are made generally on the last business day of each month
and subsequently converted into the applicable local currencies for
payment to employees. Any dividends on shares of the Sponsor's common
stock are invested in additional shares of the Sponsor's common stock.
4
<PAGE> 8
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(e) VESTING
Participants are immediately vested in all shares of the Sponsor's
common stock credited to their respective Plan accounts.
(f) BENEFIT PAYMENTS
Distributions of account balances will be made when the employment of
a participant ceases, unless upon retirement the participant's account
is credited with at least 100 shares of the Sponsor's common stock,
and the participant elects to defer payment. If an election is made to
defer the distribution, retirees may make up to two requests a year
for distributions of all or a portion of their account balance.
For those retirees who do not elect to defer payment and for all other
participants who terminate employment for reasons other than
retirement, a distribution of Plan Accounts is made in the form of a
lump sum payment.
All distributions are made in cash, unless the participant elects to
receive the Account Balance in the form of shares of the Sponsor's
common stock. However, in the event of a participant or retiree's
death, all distributions will be made in the form of a lump sum cash
payment.
While employed, participants may elect to take up to two in-service
withdrawals from their account balances during a calendar year. Shares
purchased with the Sponsor's contributions and dividends thereon are
not eligible for in-service withdrawal until 24 months from their date
of purchase.
(g) PLAN EXPENSES
Brokerage commissions, fees and other security transaction costs are
paid by participants as part of the purchase and sale of the Sponsor's
common stock.
All contributions and cash dividends awaiting investment are held in
an interest bearing account maintained by the Plan Fiduciary. Any
interest earned on the account is used to pay costs relating to the
administration of the Plan. Any remaining costs of administering the
Plan are allocated and paid by the Sponsor's subsidiaries
participating in the Plan.
5
<PAGE> 9
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses. Actual results could differ from those estimates.
The accompanying financial statements are prepared on the accrual
basis of accounting.
(b) INVESTMENTS
Investments in the Sponsor's common stock are stated at market value,
based on the composite closing price of the stock on the New York
Stock Exchange as reported by Reuters. Purchases and sales of the
Sponsor's common stock are recorded on the trade date (the date the
order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date, net of any U.S.
withholding taxes. Realized gains and losses are based upon the
identified cost method.
(c) CASH
Amounts shown as cash are foreign cash balances held by the Fiduciary
that are to be invested in the Sponsor's common stock in the following
month. The balances have been translated into U.S. dollars using the
effective exchange rates as of December 31, 1999 and 1998.
(d) CONTRIBUTIONS RECEIVABLE
Contributions held at the participating subsidiaries and pending
transfer to the Fiduciary have been translated into U.S. dollars using
the effective exchange rates as of December 31, 1999 and 1998.
(3) INVESTMENT IN THE GILLETTE COMPANY COMMON STOCK
Investments in The Gillette Company common stock held by the Plan at
December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------- ----------
<S> <C> <C>
Number of shares 1,049,768 870,553
Cost $ 42,147,614 32,890,848
Market Value $ 43,237,864 41,623,735
</TABLE>
6
<PAGE> 10
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999, 1998 and 1997
The realized gains on sales of The Gillette Company common stock for the
years ended December 31, 1999, 1998 and 1997 were determined as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Proceeds on sales of shares $ 7,160,510 5,165,842 3,441,987
Cost 5,884,283 3,398,479 2,147,966
--------- --------- ---------
$ 1,276,227 1,767,363 1,294,021
========= ========= =========
</TABLE>
(4) PLAN PARTICIPANTS
As of December 31, 1999, the Plan had 8,472 participants employed at the
Sponsor's subsidiaries located in Argentina, Australia, Austria, Belgium,
Brazil, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Dominican
Republic, Ecuador, Egypt, El Salvador, Finland, France, Germany, Guatemala,
Hong Kong, Hungary, Indonesia, Ireland, Italy, Japan, Korea, Malaysia,
Mexico, Netherlands, New Zealand, Norway, Panama, Peru, Philippines,
Poland, Portugal, Singapore, Spain, Slovakia, South Africa, Sweden,
Switzerland, Taiwan, Thailand, Turkey, United Kingdom, Uruguay and
Venezuela.
(5) PLAN AMENDMENT AND TERMINATION
Although the Sponsor intends to continue the Plan indefinitely, it reserves
the right on behalf of itself and its participating subsidiaries to modify
or terminate the Plan at any time. However, the Plan may not be amended to
adversely affect the rights of participants with respect to shares
previously credited to their accounts.
In the event of termination, the assets held by the Plan Fiduciary may
continue to be held subject to the provisions of the Plan, or at the
direction of the Board of Directors of the Sponsor, the assets of the Plan
may be distributed to the participants.
(6) TAX STATUS
The Plan is not qualified under Section 401(a) of the Internal Revenue
Code, and is exempt from the provisions of Title I of ERISA pursuant to
Section 4(b)(4) thereof. The Sponsor believes that the Fiduciary should be
viewed as a directed custodian and that, for U.S. tax purposes, the
participating employees should be treated as the owners of the shares of
the Sponsor's common stock held for their account under the Plan.
The Sponsor has received a private letter ruling from the Internal Revenue
Service confirming that the participating employees should be treated as
the beneficial owners of the shares of the Sponsor's common stock held for
their account under the Plan for U.S. tax purposes and that, subject to
certain
7
<PAGE> 11
THE GILLETTE COMPANY
GLOBAL EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999, 1998 and 1997
procedural conditions, the information provided by the employees may be
relied upon in determining the applicable U.S. tax withholding rate on
dividends paid by the Sponsor with respect to these shares.
8
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Administrative Committee
The Gillette Company Global Employee Stock Ownership Plan:
We consent to the incorporation by reference in registration statement No.
33-52465 on Form S-8 of The Gillette Company Global Employee Stock Ownership
Plan of our report dated March 22, 2000, relating to the statements of assets
available for plan benefits of The Gillette Company Global Employee Stock
Ownership Plan as of December 31, 1999 and 1998 and the related statements of
changes in assets available for plan benefits for each of the years in the
three-year period ended December 31, 1999 which report appears in the December
31, 1999 annual report on Form 11-K of The Gillette Company Global Employee
Stock Ownership Plan
KPMG LLP
Boston, Massachusetts
March 30, 2000
