<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 33-63707
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, 1999 and 1998.
2. Statements of Changes in Net Assets Available for Plan Benefits
for each of the years in the two-year period ended December 31,
1999.
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 21, 2000
<PAGE> 3
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Financial Statements
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE> 4
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
TABLE OF CONTENTS
PAGE
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 for 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, 1999
and 1998 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, 1999
and 1998 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.
/s/ KPMG LLP
Boston, Massachusetts
June 9, 2000
<PAGE> 6
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
1999 1998
----------- -----------
Assets:
Investment in the Savings Plan Trust $13,123,944 11,500,182
=========== ===========
Net assets available for plan benefits $13,123,944 11,500,182
=========== ===========
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, 1999
<TABLE>
<CAPTION>
FIDELITY
RETIREMENT FIDELITY
GILLETTE GOVERNMENT U.S. FIDELITY
COMPANY FIXED MONEY FIDELITY EQUITY GROWTH
STOCK INCOME MARKET MAGELLAN INDEX COMPANY
FUND FUND PORTFOLIO FUND PORTFOLIO FUND
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the
Savings Plan Trust $ (256,613) 154,845 (1,143) 271,804 675,369 543,320
Contributions:
Employee contributions 194,051 83,482 10,948 100,382 104,075 53,178
Employer contributions 54,455 27,651 3,580 27,316 25,532 13,179
----------- ----------- ----------- ----------- ----------- -----------
Total additions (8,107) 265,978 13,385 399,502 804,976 609,677
----------- ----------- ----------- ----------- ----------- -----------
Deductions from net assets attributed to:
Benefit payments (93,846) (293,467) (588) (62,936) (61,830) (16,924)
Forfeitures (5,236) (1,316) (163) (1,671) (809) (2,251)
----------- ----------- ----------- ----------- ----------- -----------
Total deductions (99,082) (294,783) (751) (64,607) (62,639) (19,175)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) prior to interfund
transfers (107,189) (28,805) 12,634 334,895 742,337 590,502
Net transfers in (out):
Loans issued (11,769) (5,549) (1,516) (1,303) (3,153) (88)
Loans repaid 39,598 11,962 2,671 20,689 5,844 12,673
Other transfers (204,882) 87,618 33,388 107,005 (100,427) 79,653
----------- ----------- ----------- ----------- ----------- -----------
(177,053) 94,031 34,543 126,391 (97,736) 92,238
----------- ----------- ----------- ----------- ----------- -----------
Net increase(decrease) (284,242) 65,226 47,177 461,286 644,601 682,740
Net assets available for plan benefits:
Beginning of year 2,501,851 2,469,683 66,341 1,009,070 3,316,348 591,070
----------- ----------- ----------- ----------- ----------- -----------
End of year $ 2,217,609 2,534,909 113,518 1,470,356 3,960,949 1,273,810
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY
FIDELITY FIDELITY GROWTH INVESCO U.S.
EMERGING DIVERSIFIED & TOTAL BOND PARTICIPANT
MARKETS INTERNATION- INCOME RETURN INDEX LOAN
FUND AL FUND FUND FUND FUND FUND TOTAL
---------- ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the
Savings Plan Trust 17,456 24,537 31,861 (9,999) (125) -- 1,451,312
Contributions:
Employee contributions 217 3,733 19,090 51,731 5,527 -- 626,414
Employer contributions 43 709 4,071 14,387 1,387 -- 172,310
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total additions 17,716 28,979 55,022 56,119 6,789 -- 2,250,036
---------- ---------- ---------- ---------- ---------- ---------- ----------
Deductions from net assets attributed to:
Benefit payments (26) (3,225) (5,408) (48,888) (4,936) (21,440) (613,514
Forfeitures (13) (131) (144) (563) (463) -- (12,760
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total deductions (39) (3,356) (5,552) (49,451) (5,399) (21,440) (626,274
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) prior to interfund
transfers 17,677 25,623 49,470 6,668 1,390 (21,440) 1,623,762
Net transfers in (out):
Loans issued -- -- -- (3,048) (996) 27,422 --
Loans repaid 17,573 95 -- 5,964 1,046 (118,115) --
Other transfers 18,686 725 63,917 (70,551) (15,132) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
36,259 820 63,917 (67,635) (15,082) (90,693) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase(decrease) 53,936 26,443 113,387 (60,967) (13,692) (112,133) 1,623,762
Net assets available for plan benefits:
Beginning of year 3,792 43,896 247,956 974,426 49,969 225,780 11,500,182
---------- ---------- ---------- ---------- ---------- ---------- ----------
End of year 57,728 70,339 361,343 913,459 36,277 113,647 13,123,944
========== ========== ========== ========== ========== ========== ==========
</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
Year ended December 31, 1998
<TABLE>
<CAPTION>
FIDELITY
RETIREMENT FIDELITY
GILLETTE GOVERNMENT U.S. FIDELITY
COMPANY FIXED MONEY FIDELITY EQUITY GROWTH
STOCK INCOME MARKET MAGELLAN INDEX COMPANY
FUND FUND PORTFOLIO FUND PORTFOLIO FUND
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the
Savings Plan Trust $ (140,866) 147,521 7,594 244,652 732,224 119,255
Contributions:
Employee contributions 241,327 88,837 10,482 106,115 102,963 56,266
Employer contributions 68,332 28,360 3,160 29,611 24,705 15,034
----------- ----------- ----------- ----------- ----------- -----------
Total additions 168,793 264,718 21,236 380,378 859,892 190,555
----------- ----------- ----------- ----------- ----------- -----------
Deductions from net assets attributed to:
Benefit payments (27,043) (26,793) (733) (11,373) (54,771) (686)
Forfeitures (2,419) (209) -- (716) (284) (173)
----------- ----------- ----------- ----------- ----------- -----------
Total deductions (29,462) (27,002) (733) (12,089) (55,055) (859)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) prior to interfund
transfers 139,331 237,716 20,503 368,289 804,837 189,696
Net transfers in (out):
Loans issued (43,709) (29,741) (1,021) (23,877) (17,920) (19,014)
Loans repaid 37,917 19,335 997 14,491 16,519 7,871
Other transfers 82,451 (18,511) (29,970) (34,235) (69,617) 1,521
----------- ----------- ----------- ----------- ----------- -----------
76,659 (28,917) (29,994) (43,621) (71,018) (9,622)
----------- ----------- ----------- ----------- ----------- -----------
Net increase(decrease) 215,990 208,799 (9,491) 324,668 733,819 180,074
Net assets available for plan benefits:
Beginning of year 2,285,861 2,260,884 75,832 684,402 2,582,529 410,996
----------- ----------- ----------- ----------- ----------- -----------
End of year $ 2,501,851 2,469,683 66,341 1,009,070 3,316,348 591,070
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY
FIDELITY FIDELITY GROWTH INVESCO U.S.
EMERGING DIVERSIFIED & TOTAL BOND PARTICIPANT
MARKETS INTERNATION- INCOME RETURN INDEX LOAN
FUND AL FUND FUND FUND FUND FUND TOTAL
-------- ------------ -------- -------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the
Savings Plan Trust (776) 2,804 42,381 116,787 3,383 -- 1,274,959
Contributions:
Employee contributions 703 3,164 14,425 55,350 7,599 -- 687,231
Employer contributions 145 585 3,367 15,763 1,971 -- 191,033
------- ------ -------- -------- ------- -------- -----------
Total additions 72 6,553 60,173 187,900 12,953 -- 2,153,223
------- ------ -------- -------- ------- -------- -----------
Deductions from net assets attributed to:
Benefit payments -- -- -- (6,081) (1,159) (10,804) (139,443)
Forfeitures -- -- -- (206) (109) -- (4,116)
------- ------ -------- -------- ------- -------- -----------
Total deductions -- -- -- (6,287) (1,268) (10,804) (143,559)
------- ------ -------- -------- ------- -------- -----------
Net increase (decrease) prior to interfund
transfers 72 6,553 60,173 181,613 11,685 (10,804) 2,009,664
Net transfers in (out):
Loans issued (291) -- -- (5,318) (1,642) 142,533 --
Loans repaid 700 -- -- 5,144 1,789 (104,763) --
Other transfers (1,987) 13,548 88,292 (36,784) 5,292 -- --
------- ------ -------- -------- ------- -------- -----------
(1,578) 13,548 88,292 (36,958) 5,439 37,770 --
------- ------ -------- -------- ------- -------- -----------
Net increase(decrease) (1,506) 20,101 148,465 144,655 17,124 26,966 2,009,664
Net assets available for plan benefits:
Beginning of year 5,298 23,795 99,491 829,771 32,845 198,814 9,490,518
------- ------ -------- -------- ------- -------- -----------
End of year 3,792 43,896 247,956 974,426 49,969 225,780 11,500,182
======= ====== ======== ======== ======= ======== ===========
</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, 1999 and 1998
(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 Stationery 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.
Tax deferred contributions made by an employee in any plan year
may not exceed the annual limit set by law, which was $10,000 for
both 1999 and 1998.
(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 ("Funds"). 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.
5
(Continued)
<PAGE> 10
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1999 and 1998
- 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 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.
- Fidelity Emerging Markets Fund
Seeks capital appreciation from emerging markets around the
world.
- 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.
- 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.
- 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.
6
(Continued)
<PAGE> 11
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1999 and 1998
- Fidelity U.S. Bond Index Fund
Invests in investment grade (medium to high quality) or above
with maturities of at least one year.
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.
(g) BENEFIT PAYMENTS
Upon termination of employment, the participant or their 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, they 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.
7
(Continued)
<PAGE> 12
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1999 and 1998
(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 except for
guaranteed and synthetic investment contracts which 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, 1999 and 1998 is 6.11% and 6.40%, respectively,
and the crediting interest rate as of December 31, 1999 and 1998
is 5.87% and 6.19%, respectively, for these investment contracts.
Shares of Company stock held in the trust is defined as the
composite closing price of the stock on the New York Stock
Exchange. 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.
(C) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(3) FUNDING POLICY
The Company's funding policy is to make contributions to the Plan in
accordance with the manner described in note 1.
(4) PLAN TERMINATION
The Company expects the Plan to continue indefinitely, but reserves the
right to amend or terminate the Plan at its discretion. If the Plan is
terminated or if contributions are completely discontinued, each
participant's interest in that portion of his or her account balance
attributable to Company contributions shall become fully vested. Upon
termination of the Plan, the Trust may continue in existence at the
direction of the Board of Directors of the Company, subject to the
provisions of the Plan and the Trust agreement, or the Trust may be
terminated and the assets distributed to participants.
(5) INVESTMENTS
Investments of the Plan are held in trust by Fidelity Management Trust
Company. The plans participating in the Savings Plan Trust are The
Gillette Company Employees' Savings Plan and The
8
(Continued)
<PAGE> 13
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1999 and 1998
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, 1999 and 1998
are as follows:
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Investments, at fair value:
Marketable securities:
Gillette common stock $1,134,382,567 1,421,628,142
Registered investment companies:
Fidelity Short-Term Investment Fund 20,704,765 54,284,783
Fidelity Retirement Government Money
Market Portfolio 67,770,621 22,247,679
Fidelity Magellan Fund 164,098,622 104,133,549
Fidelity U.S. Equity Index Portfolio 231,880,545 188,119,328
Fidelity Growth Company Fund 131,816,480 47,723,974
Fidelity Emerging Markets Fund 4,619,928 869,866
Fidelity Diversified International Fund 29,877,051 16,836,592
Fidelity Growth & Income Fund 44,456,629 35,977,890
INVESCO Total Return Fund 58,825,435 66,763,014
Fidelity U.S. Bond Index Fund 16,933,455 17,783,501
Investment contracts 375,192,973 330,165,797
Participant loans 38,812,846 33,652,383
-------------- --------------
Total investments 2,319,371,917 2,340,186,498
Receivable from Duracell Inc. Thrift Plan -- 2,890,395
-------------- --------------
Total investments and net assets $2,319,371,917 2,343,076,893
============== ==============
Assets allocated to The Gillette Company Employees'
Savings Plan $2,306,247,973 $2,331,576,711
============== ==============
Assets allocated to The Gillette Company Savings Plan
for Arrow Park Employees $ 13,123,944 $ 11,500,182
============== ==============
</TABLE>
9
(Continued)
<PAGE> 14
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1999 and 1998
The statements of change in net assets of the Savings Plan Trust for the years
ended December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------------- --------------
<S> <C> <C>
Employee contributions $ 67,891,415 50,400,338
Employer contributions 25,769,417 18,776,685
Investment income:
Net appreciation (depreciation) on fair value
of investments:
Gillette common stock (158,603,983) (68,234,619)
Fidelity Magellan Fund 16,508,578 12,773,190
Fidelity U.S. Equity Index Portfolio 36,657,461 24,256,268
Fidelity Growth Company Fund 43,484,555 7,200,486
Fidelity Emerging Markets Fund 1,407,735 (745,082)
Fidelity Diversified International Fund 8,414,228 476,479
Fidelity Growth & Income Fund 949,119 5,136,757
INVESCO Total Return Fund (4,527,802) 1,974,014
Fidelity U.S. Bond Index Fund (1,570,500) 294,579
Dividends 52,546,774 28,572,861
Interest 27,122,389 23,120,340
--------------- --------------
Net investment income 22,388,554 34,825,273
Transferred from Duracell Inc. Thrift Plan 54,496 235,469,789
Rollover contributions from Duracell Inc. Cash Balance Plan 84,824,211 --
--------------- --------------
Total additions 200,928,093 339,472,085
--------------- --------------
Benefit payments 224,119,714 168,845,644
Forteitures 513,355 175,579
--------------- --------------
Total deductions 224,633,069 169,021,223
--------------- --------------
Net (decrease) increase (23,704,976) 170,450,862
Net assets:
Beginning of year 2,343,076,893 2,172,626,031
--------------- --------------
End of year $ 2,319,371,917 2,343,076,893
=============== ==============
</TABLE>
10
(Continued)
<PAGE> 15
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1999 and 1998
(6) 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, 1998 and the four quarters ended December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
FIDELITY RETIREMENT
GILLETTE COMPANY GOVERNMENT MONEY
STOCK FUND FIXED INCOME FUND MARKET PORTFOLIO
--------------------- --------------------- -------------------
UNITS VALUE UNITS VALUE UNITS VALUE
------ ------- --------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
December 31, 1998 52,326 $ 47.81 2,469,683 $1.00 66,341 $1.00
March 31, 1999 48,362 59.43 2,567,005 1.00 174,881 1.00
June 30, 1999 50,954 41.00 2,684,019 1.00 78,746 1.00
September 30, 1999 52,216 33.93 2,570,489 1.00 127,047 1.00
December 31, 1999 53,842 41.19 2,534,909 1.00 113,518 1.00
FIDELITY FIDELITY U.S. FIDELITY GROWTH
MAGELLAN FUND EQUITY INDEX PORTFOLIO COMPANY FUND
--------------------- ---------------------- -------------------
UNITS VALUE UNITS VALUE UNITS VALUE
------ ------- --------- ------ ------- -----
December 31, 1998 8,352 $120.82 75,440 $43.96 11,585 $51.02
March 31, 1999 8,618 129.75 75,440 45.95 12,618 55.15
June 30, 1999 9,728 129.77 74,847 48.86 12,751 60.42
September 30, 1999 10,069 122.02 74,937 45.66 13,633 62.83
December 31, 1999 10,762 136.63 76,041 52.09 15,110 84.30
FIDELITY EMERGING FIDELITY DIVERSIFIED FIDELITY GROWTH &
MARKETS FUND INTERNATIONAL FUND INCOME FUND
--------------------- ---------------------- -------------------
UNITS VALUE UNITS VALUE UNITS VALUE
------ ------- --------- ------ ------- -----
December 31, 1998 538 $7.05 2,477 $17.72 5,409 $45.84
March 31, 1999 623 7.71 2,729 18.20 6,564 46.64
June 30, 1999 5,453 9.78 2,702 19.43 7,049 46.74
September 30, 1999 4,797 9.01 2,768 20.47 7,539 43.11
December 31, 1999 4,803 12.02 2,746 25.62 7,662 47.16
INVESCO TOTAL FIDELITY U.S. BOND
RETURN FUND INDEX FUND
--------------------- ----------------------
UNITS VALUE UNITS VALUE
------ ------- --------- ------
December 31, 1998 31,072 $31.36 4,534 $11.02
March 31, 1999 31,246 30.68 3,892 10.81
June 30, 1999 31,387 33.02 3,898 10.48
September 30, 1999 30,255 30.06 3,931 10.38
December 31, 1999 31,542 28.96 3,560 10.19
</TABLE>
11
(Continued)
<PAGE> 16
THE GILLETTE COMPANY SAVINGS PLAN
FOR ARROW PARK EMPLOYEES
Notes to Financial Statements
December 31, 1999 and 1998
(7) 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 and INVESCO funds offered as investment options under the Plan
are deducted from the assets of each of those funds.
(8) INCOME TAXES
A favorable tax determination letter was received from the Internal
Revenue Service on March 27, 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. The Plan has
been amended since receiving the determination letter. However, the Plan
administrator and the Plan's tax advisor believe that the Plan is
designed and is currently being operated in compliance with the
requirements of the Code.
12
