<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 numbers 33-9495, 33-56218 and 33-59125
A. Full title of the plan:
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
B. Name of the issuer of the securities held pursuant to the plan and
the address of its principal executive office:
The Gillette Company
Prudential Tower Building
Boston, MA 02199
<PAGE> 2
FINANCIAL STATEMENTS OF THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
The following audited financial statements with independent auditors'
report thereon are enclosed with this report:
1. Statements of Net Assets Available for Plan Benefits as of
December 31, 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 Savings Plan Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
By ROBERT E. DICENSO
Robert E. DiCenso
Date: June 21, 2000
<PAGE> 3
[KPMG LOGO]
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Financial Statements
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE> 4
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Financial Statements
December 31, 1999 and 1998
TABLE OF CONTENTS
PAGE(S)
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits 2
Statements of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4-17
Note: Supplemental schedules required by the Employee Retirement Income
Security Act of 1974, as amended (ERISA), have not been included due to
their inclusion in master trust information filed with the Department
of Labor for The Gillette Company Savings Plan Trust.
<PAGE> 5
[KPMG LOGO]
99 High Street Telephone 617 988 1000
Boston, MA 02110-2371 Fax 617 988 0800
INDEPENDENT AUDITORS' REPORT
The Savings Plan Committee
The Gillette Company:
We have audited the statements of net assets available for plan benefits of The
Gillette Company Employees' Savings Plan as of December 31, 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 Employees' Savings Plan at 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.
/s/ KPMG LLP
Boston, Massachusetts
June 9, 2000
<PAGE> 6
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
1999 1998
-------------- -------------
Assets:
Investment in the Savings Plan Trust $2,306,247,973 2,331,576,711
-------------- -------------
Net assets available for plan benefits $2,306,247,973 2,331,576,711
============== =============
See accompanying notes to financial statements.
2
<PAGE> 7
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------------- --------------
<S> <C> <C>
Additions to net assets attributed to:
Net investment income from the Savings Plan Trust $ 20,937,242 33,550,314
Contributions:
Employee contributions 67,265,001 49,713,107
Employer contributions 25,597,107 18,585,652
Transfer of assets from Duracell Inc. Thrift Plan 54,496 235,469,789
Rollover contributions from Duracell Inc. Cash Balance Plan 84,824,211 --
--------------- --------------
Total additions 198,678,057 337,318,862
--------------- --------------
Deductions from net assets attributed to:
Benefit payments (223,506,200) (168,706,201)
Forfeitures (500,595) (171,463)
--------------- --------------
Total deductions (224,006,795) (168,877,664)
--------------- --------------
Net (decrease) increase in assets (25,328,738) 168,441,198
Net assets available for plan benefits:
Beginning of year 2,331,576,711 2,163,135,513
--------------- --------------
End of year $ 2,306,247,973 2,331,576,711
=============== ==============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 8
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) DESCRIPTION OF THE PLAN
The Gillette Company Employees' Savings Plan (the "Plan") is sponsored by
The Gillette Company (the "Company"). The following provides only general
information and participants should refer to the Plan document for a more
complete description of the Plan's provisions.
(a) GENERAL
The Plan is a defined contribution plan subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA").
Regular employees of the Company and its participating
subsidiaries are eligible to join the Plan on date of hire.
(b) PARTICIPANT CONTRIBUTIONS
Eligible employees may voluntarily contribute from 2% to 10% of
their compensation as matched savings, and from 1% to 5% of their
compensation as unmatched savings. All contributions must be in
even 1% increments.
All matched savings contributed by an employee are divided equally
between tax deferred and taxed savings. Unmatched savings may be
designated by an employee to be either tax deferred or taxed, but
not both. Tax deferred contributions made by an employee in any
plan year may not exceed the annual limit set by law, which was
$10,000 for both 1999 and 1998.
(c) EMPLOYER CONTRIBUTIONS
For all employee contributions designated as matched savings, the
Company will contribute $.50 for every $1 contributed by the
employee. All matching contributions provided by the Company are
invested in the Gillette Company Stock Fund.
(d) VESTING
Participants are immediately vested in their own employee
contributions plus the actual earnings thereon. Matching
contributions from the Company vest after the participant has
completed the earliest of five years of service, two years from
date of entry into the Plan, or the attainment of age 65.
Participants are also 100% vested in the Company contributions
credited to their accounts upon death, retirement, total and
permanent disability, or layoff for lack of work when it is not
probable that the participant will be recalled to work within one
year of the layoff.
(e) PARTICIPANTS' ACCOUNTS
A separate account is established for each participant at the time
of enrollment in the Plan. The balance in each account is
invested, in accordance with the directions given by the
participant, in one or more of the Plan's investment fund
offerings ("Funds"). A participant may direct employee
contributions in any of the following Funds:
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.
4
(Continued)
<PAGE> 9
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
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.
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.
5
(Continued)
<PAGE> 10
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(f) PARTICIPANT LOANS
The maximum loan available to each participant is the lesser of
(1) $50,000 reduced by the highest outstanding loan balance due
from the participant during the preceding twelve months, or (2)
50% of the participant's vested account balance, reduced by the
current outstanding loan balance due from the participant. The
minimum loan amount available to participants is $500. Each loan
shall bear interest at a rate determined by the Savings Plan
Committee. Repayment of the loan must be made over a period not to
exceed five years.
(g) PLAN EARNINGS
As of the close of each business day, the Plan trustee is
responsible for determining the fair market value of each of the
investment options, which would include all accrued earnings. The
increase or decrease in the fair market value of each investment
fund since the preceding business day is allocated among the
participant accounts invested in each fund based on the
proportionate number of shares or units of the fund held by each
participant at the close of the preceding business day.
With respect to the Gillette Company Stock Fund, the trustee is
responsible for determining the participants' accounts entitled to
receive each quarterly dividend and the number of shares to be
credited to each account, as of the quarterly ex-dividend date. On
the dividend payment date, the trustee also makes all necessary
adjustments to each participant account to reflect any differences
between the value of such Company stock credited to participants'
accounts and the actual purchase and sales price of such shares,
along with any interest or other income earned by the Fund since
the preceding dividend payment date. Such adjustments are included
in the dividend credited to participants' accounts.
(h) BENEFIT PAYMENTS
Upon termination of employment, the participant or 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 or
receive periodic installments. If the termination of employment is
due to retirement, total and permanent disability or death, a
participant (or surviving spouse) may also elect to have the
proceeds of the distribution used to purchase an annuity contract
for their benefit.
Early withdrawals may also be made in the event of financial
hardship and other circumstances, based upon special guidelines
detailed in the Plan documents.
6
(Continued)
<PAGE> 11
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(i) FORFEITURES
Forfeitures by Plan participants are used to reduce Company
contributions.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses. Actual results could
differ from those estimates.
The accompanying financial statements are presented on the accrual
basis of accounting. Benefits payable at year end are not accrued
for as they are considered to be a component of the net assets
available for plan benefits.
(b) INVESTMENTS
Investments are allocations of the assets of The Gillette Company
Master Savings Plan Trust ("Savings Plan Trust") based upon the
proportionate interest of the Plan in the Savings Plan Trust.
Investments of the trust are stated at fair value 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 is determined
daily by the trustee on a per share basis using security prices
quoted on national exchanges, and amortized cost in the case of
any short-term and money market securities held. Participant notes
receivable are valued at cost, which approximates fair value.
Security transactions received prior to 4:00 pm Eastern time by
Fidelity are recognized on that business day. Transactions
received after 4:00 pm Eastern time are valued as of the next
business day. Interest income is recorded on the accrual basis and
dividend income is recorded on the ex-dividend date.
Net appreciation (depreciation) in the fair value of investments
includes both realized and unrealized gains and losses.
(c) PAYMENT OF BENEFITS
Benefits are recorded when paid.
7
(Continued)
<PAGE> 12
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(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 their 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.
8
(Continued)
<PAGE> 13
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
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 $ (143,288,096) 24,027,624 $ 3,713,730 29,898,295 40,215,623 51,890,242
Contributions:
Employee contributions 29,165,918 5,338,907 762,188 9,613,038 7,596,776 5,747,037
Employer contributions 25,597,107 -- -- -- -- --
Transfer of assets from Duracell Inc.
Thrift Plan -- -- 54,496 -- -- --
Rollover contributions from Duracell
Inc. Cash Balance Plan -- -- 84,824,211 -- -- --
--------------- ------------ ------------ ------------ ------------ ------------
Total additions (88,525,071) 29,366,531 89,354,625 39,511,333 47,812,399 57,637,279
--------------- ------------ ------------ ------------ ------------ ------------
Deductions from net assets attributed to:
Benefit payments (107,605,274) (61,357,580) (10,289,259) (7,341,001) (15,154,669) (5,318,605)
Forfeitures (302,364) (154,711) (165) (19,098) (10,577) (1,338)
--------------- ------------ ------------ ------------ ------------ ------------
Total deductions (107,907,638) (61,512,291) (10,289,424) (7,360,099) (15,165,246) (5,319,943)
--------------- ------------ ------------ ------------ ------------ ------------
Net increase (decrease) prior to interfund
transfers (196,432,709) (32,145,760) 79,065,201 32,151,234 32,647,153 52,317,336
Net interfund transfers in (out):
Loans issued (8,727,850) (1,967,085) (8,669,403) (1,949,443) (1,686,903) (782,145)
Loans repaid 9,620,534 1,750,187 720,791 1,898,644 1,324,393 817,394
Other transfers (91,511,562) 42,897,531 (23,451,088) 26,808,641 9,872,620 31,057,181
--------------- ------------ ------------ ------------ ------------ ------------
(90,618,878) 42,680,633 (31,399,700) 26,757,842 9,510,110 31,092,430
--------------- ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (287,051,587) 10,534,873 47,665,501 58,909,076 42,157,263 83,409,766
Net assets available for plan benefits:
Beginning of year 1,419,216,545 382,827,956 19,991,602 103,719,190 185,762,333 47,132,904
--------------- ------------ ------------ ------------ ------------ ------------
End of year $ 1,132,164,958 393,362,829 67,657,103 162,628,266 227,919,596 130,542,670
=============== ============ ============ ============ ============ ============
</TABLE>
9
(Continued)
<PAGE> 14
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED
DECEMBER 31, 1999, CONTINUED:
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY INVESCO
EMERGING DIVERSIFIED GROWTH & TOTAL
MARKETS INTERNATIONAL INCOME RETURN
FUND FUND FUND FUND
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the Savings
Plan Trust $ 1,398,410 9,459,381 4,272,328 (449,779)
Contributions:
Employee contributions 426,314 1,105,750 3,799,607 2,761,320
Employer contributions -- -- -- --
Transfer of assets from Duracell Inc. Thrift Plan -- -- -- --
Rollover contributions from Duracell Inc. Cash Balance Plan -- -- -- --
----------- ----------- ----------- -----------
Total additions 1,824,724 10,565,131 8,071,935 2,311,541
----------- ----------- ----------- -----------
Deductions from net assets attributed to:
Benefit payments (56,576) (1,092,395) (5,460,278) (4,392,101)
Forfeitures -- (4,187) (994) (7,076)
----------- ----------- ----------- -----------
Total deductions (56,576) (1,096,582) (5,461,272) (4,399,177)
----------- ----------- ----------- -----------
Net increase (decrease) prior to interfund transfers 1,768,148 9,468,549 2,610,663 (2,087,636)
Net interfund transfers in (out):
Loans issued (21,882) (114,162) (281,237) (499,025)
Loans repaid 41,704 107,921 464,021 463,590
Other transfers 1,908,156 3,326,348 5,571,905 (8,116,935)
----------- ----------- ----------- -----------
1,927,978 3,320,107 5,754,689 (8,152,370)
----------- ----------- ----------- -----------
Net increase (decrease) 3,696,126 12,788,656 8,365,352 (10,240,006)
Net assets available for plan benefits:
Beginning of year 866,074 17,018,056 35,729,934 68,151,982
----------- ----------- ----------- -----------
End of year $ 4,562,200 29,806,712 44,095,286 57,911,976
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
U. S. BOND PARTICIPANT
INDEX LOAN
FUND FUND TOTAL
--------- ----------- --------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the Savings
Plan Trust (200,516) -- 20,937,242
Contributions:
Employee contributions 948,146 -- 67,265,001
Employer contributions -- -- 25,597,107
Transfer of assets from Duracell Inc. Thrift Plan -- -- 54,496
Rollover contributions from Duracell Inc. Cash Balance Plan -- -- 84,824,211
--------- ----------- --------------
Total additions 747,630 -- 198,678,057
--------- ----------- --------------
Deductions from net assets attributed to:
Benefit payments 3,245,900) (2,192,562) (223,506,200)
Forfeitures (85) -- (500,595)
--------- ----------- --------------
Total deductions 3,245,985) (2,192,562) (224,006,795)
--------- ----------- --------------
Net increase (decrease) prior to interfund transfers 2,498,355) (2,192,562) (25,328,738)
Net interfund transfers in (out):
Loans issued (114,555) 24,813,690 --
Loans repaid 139,353 (17,348,532) --
Other transfers 1,637,203 -- --
--------- ----------- --------------
1,662,001 7,465,158 --
--------- ----------- --------------
Net increase (decrease) (836,354) 5,272,596 (25,328,738)
Net assets available for plan benefits:
Beginning of year 7,733,532 33,426,603 2,331,576,711
--------- ----------- --------------
End of year 6,897,178 38,699,199 2,306,247,973
========= =========== ==============
</TABLE>
10
(Continued)
<PAGE> 15
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE 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 $ (51,898,771) 20,681,897 914,554 15,699,499 25,972,224 10,563,466
Contributions:
Employee contributions 29,401,274 3,648,815 525,388 4,465,169 3,133,989 3,854,165
Employer contributions 18,585,652 -- -- -- -- --
Transfer of assets from Duracell
Inc. Thrift Plan 34,167,806 40,444,609 834,060 37,965,425 67,858,802 --
--------------- ------------ ----------- ------------ ------------ -----------
Total additions 30,255,961 64,775,321 2,274,002 58,130,093 96,965,015 14,417,631
--------------- ------------ ----------- ------------ ------------ -----------
Deductions from net assets attributed to:
Benefit payments (88,497,123) (52,366,984) (5,889,927) (3,911,054) (6,217,745) (3,853,017)
Forfeitures (171,463) -- -- -- --
--------------- ------------ ----------- ------------ ------------ -----------
Total deductions (88,668,586) (52,366,984) (5,889,927) (3,911,054) (6,217,745) (3,853,017)
--------------- ------------ ----------- ------------ ------------ -----------
Net increase (decrease) prior to interfund
transfers (58,412,625) 12,408,337 (3,615,925) 54,219,039 90,747,270 10,564,614
Net interfund transfers in (out):
Loans issued (9,504,386) (1,990,504) (137,092) (1,061,351) (684,864) (607,246)
Loans repaid 10,015,645 1,396,543 159,538 1,178,208 482,671 620,192
Other transfers (72,543,682) 36,752,749 13,316,911 3,482,295 5,880,572 (4,821,617)
--------------- ------------ ----------- ------------ ------------ -----------
(72,032,423) 36,158,788 13,339,357 3,599,152 5,678,379 (4,808,671)
--------------- ------------ ----------- ------------ ------------ -----------
Net increase (decrease) (130,445,048) 48,567,125 9,723,432 57,818,191 96,425,649 5,755,943
Net assets available for plan benefits:
Beginning of year 1,549,661,593 334,260,831 10,268,170 45,900,999 89,336,684 41,376,961
--------------- ------------ ----------- ------------ ------------ -----------
End of year $ 1,419,216,545 382,827,956 19,991,602 103,719,190 185,762,333 47,132,904
=============== ============ =========== ============ ============ ===========
</TABLE>
11
(Continued)
<PAGE> 16
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(5) CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS BY FUND FOR THE YEAR ENDED
DECEMBER 31, 1998, CONTINUED:
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY INVESCO FIDELITY
EMERGING DIVERSIFIED GROWTH & TOTAL U.S. BOND
MARKETS INTERNATION- INCOME RETURN INDEX
FUND AL FUND FUND FUND FUND
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the Savings
Plan Trust $ (741,864) 744,282 6,924,933 3,446,953 1,243,141
Contributions:
Employee contributions 226,121 530,680 1,615,262 1,677,795 634,449
Employer contributions -- -- -- -- --
Transfer of assets from Duracell Inc. Thrift Plan -- 10,091,698 -- 37,828,701 --
----------- ----------- ----------- ----------- -----------
Total additions (515,743) 11,366,660 8,540,195 42,953,449 1,877,590
----------- ----------- ----------- ----------- -----------
Deductions from net assets attributed to:
Benefit payments (185,042) (836,860) (2,105,375) (2,069,119) (1,005,585)
Forfeitures -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total deductions (185,042) (836,860) (2,105,375) (2,069,119) (1,005,585)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) prior to interfund transfers (700,785) 10,529,800 6,434,820 40,884,330 872,005
Net interfund transfers in (out):
Loans issued (26,935) (32,564) (205,227) (321,191) (125,413)
Loans repaid 16,265 56,993 231,198 367,076 161,835
Other transfers 361,832 231,166 8,146,126 3,096,523 6,097,125
----------- ----------- ----------- ----------- -----------
351,162 255,595 8,172,097 3,142,408 6,133,547
----------- ----------- ----------- ----------- -----------
Net increase (decrease) (349,623) 10,785,395 14,606,917 44,026,738 7,005,552
Net assets available for plan benefits:
Beginning of year 1,215,697 6,232,661 21,123,017 24,125,244 10,727,980
----------- ----------- ----------- ----------- -----------
End of year $ 866,074 17,018,056 35,729,934 68,151,982 17,733,532
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
LOAN
FUND TOTAL
----------- --------------
<S> <C> <C>
Additions to net assets attributed to:
Net investment income (loss) from the Savings
Plan Trust -- 33,550,314
Contributions:
Employee contributions -- 49,713,107
Employer contributions -- 18,585,652
Transfer of assets from Duracell Inc. Thrift Plan 6,278,688 235,469,789
----------- --------------
Total additions 6,278,688 337,318,862
----------- --------------
Deductions from net assets attributed to:
Benefit payments (1,768,370) (168,706,201)
Forfeitures -- (171,463)
----------- --------------
Total deductions (1,768,370) (168,877,664)
----------- --------------
Net increase (decrease) prior to interfund transfers 4,510,318 168,441,198
Net interfund transfers in (out):
Loans issued 14,696,773 --
Loans repaid (14,686,164) --
Other transfers -- --
----------- --------------
10,609 --
----------- --------------
Net increase (decrease) 4,520,927 168,441,198
Net assets available for plan benefits:
Beginning of year 28,905,676 2,163,135,513
----------- --------------
End of year 33,426,603 2,331,576,711
=========== ==============
</TABLE>
12
(Continued)
<PAGE> 17
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(6) INVESTMENTS
Investments of the Savings Plan Trust are held in trust by Fidelity Management
Trust Company. The plans participating in the Savings Plan Trust are The
Gillette Company Employees' Savings Plan and The Gillette Company Savings Plan
for Arrow Park Employees. Trust income is allocated ratably between the plans in
accordance with the assets of each plan invested in the trust. The net assets of
the Savings Plan Trust at December 31, 1999 and 1998 are as follows:
1999 1998
-------------- -------------
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
Savings Plan for Arrow Park Employees $ 13,123,944 11,500,182
Assets allocated to The Gillette Company
Employees' Savings Plan $2,306,247,973 2,331,576,711
============== =============
13
(Continued)
<PAGE> 18
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
The statements of changes 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
Forfeitures 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>
14
(Continued)
<PAGE> 19
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(7) UNIT VALUATION
Participants' accounts are maintained on a "unit value" basis. The total
units used in valuing participants' accounts and the per unit values at
December 31, 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 29,682,960 $47.81 382,827,956 $1.00 19,991,602 $1.00
March 31, 1999 28,072,692 59.43 416,890,487 1.00 87,404,421 1.00
June 30, 1999 27,381,004 41.00 412,762,041 1.00 75,418,547 1.00
September 30, 1999 27,262,981 33.93 394,290,602 1.00 70,532,166 1.00
December 31, 1999 27,488,072 41.19 393,362,829 1.00 67,657,103 1.00
FIDELITY FIDELITY U.S. FIDELITY GROWTH
MAGELLAN FUND EQUITY INDEX PORTFOLIO COMPANY FUND
------------------------- ------------------------ -------------------
UNITS VALUE UNITS VALUE UNITS VALUE
---------- ------- ----------- ------ ---------- ------
December 31, 1998 858,460 $120.82 4,225,713 $43.96 923,812 $51.02
March 31, 1999 990,635 129.75 4,565,614 45.95 994,543 55.15
June 30, 1999 1,143,595 129.77 4,604,781 48.86 1,203,995 60.42
September 30, 1999 1,165,550 122.02 4,515,537 45.66 1,297,620 62.83
December 31, 1999 1,190,282 136.63 4,375,496 52.09 1,548,549 84.30
FIDELITY EMERGING FIDELITY DIVERSIFIED FIDELITY GROWTH &
MARKETS FUND INTERNATIONAL FUND INCOME FUND
------------------------- ------------------------ -------------------
UNITS VALUE UNITS VALUE UNITS VALUE
---------- ------- ----------- ------ ---------- ------
December 31, 1998 122,847 $ 7.05 960,387 $17.72 779,449 $45.84
March 31, 1999 150,688 7.71 1,000,657 18.20 898,116 46.64
June 30, 1999 381,614 9.78 982,727 19.43 1,009,256 48.74
September 30, 1999 353,144 9.01 1,013,056 20.47 1,042,580 43.11
December 31, 1999 379,551 12.02 1,163,416 25.62 935,015 47.16
INVESCO TOTAL FIDELITY U.S. BOND
RETURN FUND INDEX FUND
------------------------- ------------------------
UNITS VALUE UNITS VALUE
---------- ------- ----------- ------
December 31, 1998 2,173,214 $31.36 1,609,213 $11.02
March 31, 1999 2,210,065 30.68 2,044,302 10.81
June 30, 1999 2,058,266 33.02 1,973,795 10.48
September 30, 1999 1,984,377 30.06 1,709,491 10.38
December 31, 1999 1,999,723 28.96 1,658,212 10.19
</TABLE>
15
(Continued)
<PAGE> 20
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(8) PARTICIPATION BY FUND
The total number of plan participants in each of the investment funds on
December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Gillette Company Stock Fund 14,121 12,148
Fixed Income Fund 6,449 6,415
Fidelity Retirement Government Money Market Portfolio 3,404 644
Fidelity Magellan Fund 7,112 5,643
Fidelity U.S. Equity Index Portfolio 6,713 6,163
Fidelity Growth Company Fund 4,257 2,471
Fidelity Emerging Markets Fund 628 250
Fidelity Diversified International Fund 2,275 1,932
Fidelity Growth & Income Fund 2,718 1,001
INVESCO Total Return Fund 3,916 3,879
Fidelity U.S. Bond Index Fund 1,189 837
</TABLE>
The numbers shown above reflect the fact that participants may elect to
invest in more than one fund.
(9) ADMINISTRATIVE EXPENSES
The Company bears all trustee and administrative costs of maintaining the
Plan and investment expenses associated with the Fixed Income Fund and
the Gillette Company Stock Fund. Investment expenses associated with the
Fidelity and INVESCO funds offered as investment options under the Plan
are deducted from the assets of each of those funds.
(10) INCOME TAXES
A favorable tax determination letter was received from the Internal
Revenue Service on July 19, 1994 stating that the existing Plan and its
underlying trust qualified under section 401(a) of the Internal Revenue
Code of 1986 (the "Code") as a profit sharing plan, and is exempt from
federal income taxes. Further, the features of the Plan relating to tax
deferred savings qualified under section 401(k) of the Code. 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
applicable requirements of the Code.
16
(Continued)
<PAGE> 21
THE GILLETTE COMPANY EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(11) PLAN MERGER AND TERMINATION OF DURACELL INC. PLANS
The Duracell Inc. Thrift Plan ("Duracell Plan") was merged into the Plan
effective December 31, 1998. The financial statements reflect the plan
merger as of December 31, 1998, the effective date of the transaction. On
the effective date, $232,579,430 of the $235,469,789 of the net assets
attributable to the participants of the Duracell Plan was transferred
into the Plan. The remaining $2,890,395 of net assets from the Duracell
Plan was transferred in January 1999 and was a receivable from the
Duracell Plan at December 31, 1998. Subsequently, an additional $54,496
of net assets from the Duracell Plan was transferred in August 1999 to
the Plan which was not reflected as a receivable from the Duracell Plan
at December 31, 1998.
Additionally, the Duracell Inc. Cash Balance Plan was terminated
effective January 1, 1999. During the first quarter of 1999, rollover
contributions of certain Duracell Inc. Cash Balance Plan participants
totaling $84,824,211 were made to the Plan.
(12) CASH ADVANCE TO THE PLAN TRUSTEE
The Company has deposited with the Plan trustee a cash advance to provide
liquidity to the Gillette Company Stock Fund in order to make
distributions, loans and transfers from the Fund on a timely basis. Any
interest earned on the balance is allocated to participant accounts
within the Gillette Company Stock Fund. The outstanding balance of the
cash advance to the trustee as of December 31, 1999 and 1998 was
$1,500,000.
17
