UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2000
Registration numbers: 33-9495, 33-56218, 33-59125 and 333-55790
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
Financial Statements of The Gillette Company
Employees' Savings Plan
The following audited financial statements are enclosed with this report:
- Statement of Net Assets Available for Plan Benefits as of December 31, 2000 and December 31, 1999.
- Statement of Changes in Net Assets Available for Plan Benefits for each of the years in the two-year period ended December 31, 2000.
Exhibits
23.2 Independent Auditors´ 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: /s/ CHARLES W. CRAMB, JR.
Charles W. Cramb, Jr.
June 27, 2001
THE GILLETTE COMPANY
EMPLOYEES´ SAVINGS PLAN
Financial Statements
December 31, 2000 and 1999
(With Independent Auditors´ Report Thereon)
THE GILLETTE COMPANY
EMPLOYEES´ SAVINGS PLAN
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 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 Master Savings Plan Trust.
Independent Auditors´ Report
The Savings Plan Committee
The Gillette Company Employees´ Savings Plan:
We have audited the statements of net assets available for plan benefits of The Gillette Company Employees´ Savings Plan as of December 31, 2000 and 1999, 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 auditing standards generally accepted in the United States of America. 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, 2000 and 1999, and the changes in net assets available for plan benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
Boston, Massachusetts
June 25, 2001
THE GILLETTE COMPANY
EMPLOYEES´ SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2000 and 1999
2000 1999 -------------------- ------------------ Assets: Investment in the Savings Plan Trust $ 2,037,701,145 2,306,247,973 -------------------- ------------------ Net assets available for plan benefits $ 2,037,701,145 2,306,247,973 ==================== ================== See accompanying notes to financial statements.
THE GILLETTE COMPANY
EMPLOYEES´ SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 2000 and 1999
2000 1999 -------------------- -------------------- Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust $ (145,878,698) 20,937,242 Contributions: Employee contributions 64,475,730 67,265,001 Employer contributions 25,192,250 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 (56,210,718) 198,678,057 -------------------- -------------------- Deductions from net assets attributed to: Benefit payments (211,951,151) (223,506,200) Forfeitures (384,959) (500,595) -------------------- -------------------- Total deductions (212,336,110) (224,006,795) -------------------- -------------------- Net decrease in assets (268,546,828) (25,328,738) Net assets available for plan benefits: Beginning of year 2,306,247,973 2,331,576,711 -------------------- -------------------- End of year $ 2,037,701,145 2,306,247,973 ==================== ==================== See accompanying notes to financial statements.
THE GILLETTE COMPANY
EMPLOYEES´ SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(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 their 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 $10,500 for 2000 and $10,000 for 1999. (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. 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 securities 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. (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. (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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein and disclosure of contingent assets and liabilities. 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, 2000 and 1999 is 6.22% and 6.11%, respectively, and the crediting interest rate as of December 31, 2000 and 1999 is 6.24% and 5.87%, respectively, for these investment contracts. Fair value 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. 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 loans receivable are valued at cost, which approximates fair value. Security transactions received prior to 4:00 pm Eastern time by Fidelity Management Trust Company 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. (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. THE GILLETTE COMPANY EMPLOYEES´ SAVINGS PLAN Notes to Financial Statements December 31, 2000 and 1999 (5) Changes in Net Assets Available for Plan Benefits by Fund for the Year Ended December 31, 2000 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 ----------------- ---------------- ---------------- --------------- --------------- --------------- Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust $ (118,336,886) 23,110,092 3,644,512 (14,232,982) (18,609,418) (15,301,564) Contributions: Employee contributions 23,277,393 4,887,981 752,010 10,094,459 6,918,096 9,174,106 Employer contributions 25,192,250 ---- ---- ---- ---- ---- ----------------- ---------------- ---------------- --------------- --------------- --------------- Total additions (69,867,243) 27,998,073 4,396,522 (4,138,523) (11,691,322) (6,127,458) ----------------- ---------------- ---------------- --------------- --------------- --------------- Deductions from net assets attributed to: Benefit payments (74,129,784) (56,489,421) (14,719,697) (15,346,380) (17,594,323) (15,547,700) Forfeitures (318,877) (25,368) ---- (14,775) (17,658) (1,346) ----------------- ---------------- ---------------- --------------- --------------- --------------- Total deductions (74,448,661) (56,514,789) (14,719,697) (15,361,155) (17,611,981) (15,549,046) ----------------- ---------------- ---------------- --------------- --------------- --------------- Net increase (decrease) prior to interfund transfers (144,315,904) (28,516,716) (10,323,175) (19,499,678) (29,303,303) (21,676,504) Net interfund transfers in (out): Loans issued (5,896,931) (1,419,091) (2,739,310) (1,711,829) (1,165,181) (1,388,945) Loans repaid 7,732,360 1,584,882 1,454,143 1,923,022 1,271,555 1,375,509 Other transfers (20,664,165) 13,486,208 (4,150,216) (370,252) (18,045,222) 41,172,544 ----------------- ---------------- ---------------- --------------- --------------- --------------- (18,828,736) 13,651,999 (5,435,383) (159,059) (17,938,848) 41,159,108 ----------------- ---------------- ---------------- --------------- --------------- --------------- Net increase (decrease) (163,144,640) (14,864,717) (15,758,558) (19,658,737) (47,242,151) 19,482,604 Net assets available for plan benefits: Beginning of year 1,132,164,958 393,362,829 67,657,103 162,628,266 227,919,596 130,542,670 ----------------- ---------------- ---------------- --------------- --------------- --------------- End of year $ 969,020,318 378,498,112 51,898,545 142,969,529 180,677,445 150,025,274 ================= ================ ================ =============== =============== =============== (Continued) Fidelity Fidelity Fidelity INVESCO Fidelity Emerging Diversified Growth & Total U. S. Bond Participant Markets International Income Return Index Loan Fund Fund Fund Fund Fund Fund Total -------------- -------------- -------------- -------------- -------------- -------------- ----------------- Additions to net assets attributed to: Net investment income (loss) from the Savings Plan Trust $ (1,918,555) (2,694,486) (813,430) (2,253,677) 1,527,696 ---- (145,878,698) Contributions: Employee contributions 720,215 1,884,415 3,705,095 2,255,773 806,187 ---- 64,475,730 Employer contributions ---- ---- ---- ---- ---- ---- 25,192,250 -------------- -------------- -------------- -------------- -------------- -------------- ----------------- Total additions (1,198,340) (810,071) 2,891,665 2,096 ,333,883 ---- (56,210,718) -------------- -------------- -------------- -------------- -------------- -------------- ----------------- Deductions from net assets attributed to: Benefit payments (421,575) (3,816,171) (4,536,009) (4,809,902) (1,776,874) (2,763,315) (211,951,151) Forfeitures ---- (3,745) ---- (3,116) (74) ---- (384,959) -------------- -------------- -------------- -------------- -------------- -------------- ----------------- Total deductions (421,575) (3,819,916) (4,536,009) (4,813,018) (1,776,948) (2,763,315) (212,336,110) -------------- -------------- -------------- -------------- -------------- -------------- ----------------- Net increase (decrease) prior to interfund transfers (1,619,915) (4,629,987) (1,644,344) (4,810,922) 556,935 (2,763,315) (268,546,828) Net interfund transfers in (out): Loans issued (63,271) (171,414) (260,212) (333,501) (95,079) 15,244,764 ---- Loans repaid 114,214 166,083 437,298 416,872 151,291 (16,627,229) ---- Other transfers 577,365 2,913,959 (2,305,061) (10,954,669) (1,660,491) ---- ---- -------------- -------------- -------------- -------------- -------------- -------------- ----------------- 628,308 2,908,628 (2,127,975) (10,871,298) (1,604,279) (1,382,465) ---- -------------- -------------- -------------- -------------- -------------- -------------- ----------------- Net increase (decrease) (991,607) (1,721,359) (3,772,319) (15,682,220) (1,047,344) (4,145,780) (268,546,828) Net assets available for plan benefits: Beginning of year 4,562,200 29,806,712 44,095,286 57,911,976 16,897,178 38,699,199 2,306,247,973 -------------- -------------- -------------- -------------- -------------- -------------- ----------------- End of year $ 3,570,593 28,085,353 40,322,967 42,229,756 15,849,834 34,553,419 2,037,701,145 ============== ============== ============== ============== ============== ============== ================= (Continued) Fidelity Retirement Fidelity Company Fixed Money Fidelity Equity Growth Stock Income Market Magellan Index Company Fund Fund Portfolio Fund Portfolio Fund ----------------- --------------- --------------- -------------- ---------------- --------------- 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 ---- ---- 84,824,211 ---- ---- ---- Plan ----------------- --------------- --------------- -------------- ---------------- --------------- 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 ================= =============== =============== ============== ================ =============== (Continued) Fidelity Fidelity Fidelity INVESCO Fidelity Emerging Diversified Growth & Total U. S. Bond Participant Markets International Income Return Index Loan Fund Fund Fund Fund Fund Fund Total ------------- -------------- -------------- --------------- -------------- --------------- ---------------- 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) (200,516) ---- 20,937,242 Contributions: Employee contributions 426,314 1,105,750 3,799,607 2,761,320 948,146 ---- 67,265,001 Employer contributions ---- ---- ---- ---- ---- ---- 25,597,107 Transfer of assets from Duracell Inc. Thrift Plan ---- ---- ---- ---- ---- ---- 54,496 Rollover contributions from Duracell Inc. Cash ---- ---- ---- ---- ---- ---- 84,824,211 Balance Plan ------------- -------------- -------------- --------------- -------------- --------------- ---------------- Total additions 1,824,724 10,565,131 8,071,935 2,311,541 747,630 ---- 198,678,057 ------------- -------------- -------------- --------------- -------------- --------------- ---------------- Deductions from net assets attributed to: Benefit payments (56,576) (1,092,395) (5,460,278) (4,392,101) (3,245,900) (2,192,562) (223,506,200) Forfeitures ---- (4,187) (994) (7,076) (85) ---- (500,595) ------------- -------------- -------------- --------------- -------------- --------------- ---------------- Total deductions (56,576) (1,096,582) (5,461,272) (4,399,177) (3,245,985) (2,192,562) (224,006,795) ------------- -------------- -------------- --------------- -------------- --------------- ---------------- Net increase (decrease) prior to interfund transfers 1,768,148 9,468,549 2,610,663 (2,087,636) (2,498,355) (2,192,562) (25,328,738) Net interfund transfers in (out): Loans issued (21,882) (114,162) (281,237) (499,025) (114,555) 24,813,690 ---- Loans repaid 41,704 107,921 464,021 (8,116,935) 1,637,203 ---- ---- ------------- -------------- -------------- --------------- -------------- --------------- ---------------- 1,927,978 3,320,107 5,754,689 (8,152,370) 1,662,001 7,465,158 ---- ------------- -------------- -------------- --------------- -------------- --------------- ---------------- Net increase (decrease) 3,696,126 12,788,656 8,365,352 (10,240,006) (836,354) 5,272,596 (25,328,738) Net assets available for plan benefits: Beginning of year 866,074 17,018,056 35,729,934 68,151,982 17,733,532 33,426,603 2,331,576,711 ------------- -------------- -------------- --------------- -------------- --------------- ---------------- End of year $ 4,562,200 29,806,712 44,095,286 57,911,976 16,897,178 38,699,199 2,306,247,973 ============= ============== ============== =============== ============== =============== ================ (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 Janesville Business-to-Business Collectively Bargained 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, 2000 and 1999 are as follows: 2000 1999 -------------------- -------------------- -------------------- -------------------- Investments, at fair value: Marketable securities: Gillette common stock $ 970,541,433 1,134,382,567 Registered investment companies: Fidelity Short-term Investment Fund 31,289,710 20,704,765 Fidelity Retirement Government Money Market Portfolio 51,965,990 67,770,621 Fidelity Magellan Fund 144,065,103 164,098,622 Fidelity U.S. Equity Index Portfolio 183,705,815 231,880,545 Fidelity Growth Company Fund 151,188,654 131,816,480 Fidelity Emerging Markets Fund 3,606,892 4,619,928 Fidelity Diversified International Fund 28,125,992 29,877,051 Fidelity Growth & Income Fund 40,564,587 44,456,629 INVESCO Total Return Fund 42,890,820 58,825,435 Fidelity U.S. Bond Index Fund 15,894,729 16,933,455 Investment contracts, at contract value 349,035,041 375,192,973 Participant loans, at cost 34,603,591 38,812,846 -------------------- -------------------- -------------------- -------------------- Total investments 2,047,478,357 2,319,371,917 -------------------- -------------------- -------------------- -------------------- Total investments and net assets $ 2,047,478,357 2,319,371,917 ==================== ==================== ==================== ==================== Assets allocated to The Gillette Company Savings Plan for Janesville Business-to-Business Collectively Bargained Employees $ 9,777,212 13,123,944 -------------------- -------------------- -------------------- -------------------- Assets allocated to The Gillette Company Employees´ Savings Plan $ 2,037,701,145 2,306,247,973 ==================== ==================== The aggregate fair value of investment contracts was $350,636,244 at December 31, 2000. The statements of changes in net assets of the Savings Plan Trust for the years ended December 31, 2000 and 1999 are as follows: 2000 1999 ------------------- ------------------- ------------------- ------------------- Employee contributions $ 64,743,964 67,891,415 Employer contributions 25,269,848 25,769,417 Investment income: Net appreciation (depreciation) on fair value of investments: Gillette common stock (137,276,488) (158,603,983) Fidelity Magellan Fund (20,505,350) 16,508,578 Fidelity U.S. Equity Index Portfolio (21,328,876) 36,657,461 Fidelity Growth Company Fund (29,705,221) 43,484,555 Fidelity Emerging Markets Fund (1,968,025) 1,407,735 Fidelity Diversified International Fund (4,376,093) 8,414,228 Fidelity Growth & Income Fund (4,567,332) 949,119 INVESCO Total Return Fund (4,718,760) (4,527,802) Fidelity U.S. Bond Index Fund 522,415 (1,570,500) Dividends 51,262,322 52,546,774 Interest 26,112,303 27,122,389 ------------------- ------------------- ------------------- ------------------- Net investment income (loss) (146,549,105) 22,388,554 Transfer of assets from Duracell Inc. Thrift Plan --- 54,496 Rollover contributions from Duracell Inc. Cash Balance Plan --- 84,824,211 ------------------- ------------------- ------------------- ------------------- Total additions (56,535,293) 200,928,093 ------------------- ------------------- ------------------- ------------------- Benefit payments 214,973,056 224,119,714 Forfeitures 385,211 513,355 ------------------- ------------------- ------------------- ------------------- Total deductions 215,358,267 224,633,069 ------------------- ------------------- ------------------- ------------------- Net decrease in assets (271,893,560) (23,704,976) Net assets: Beginning of year 2,319,371,917 2,343,076,893 ------------------- ------------------- ------------------- ------------------- End of year $ 2,047,478,357 2,319,371,917 =================== =================== (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, 1999 and the four quarters ended December 31, 2000 are as follows: Gillette Company Stock Fixed Income Fund Fidelity Retirement Government Money Market Fund Portfolio --------------------------- -------------------------- --------------------------- --------------------------- ---------------- -------- --------------------------- Units Value Units Value Units Value --------------- ---------- ---------------- -------- -------------- ----------- --------------- ---------------- -------------- December 31, 1999 27,488,072 $ 41.19 393,362,829 $ 1.00 67,657,103 $ 1.00 March 31, 2000 27,380,901 37.68 377,272,823 1.00 62,570,847 1.00 June 30, 2000 27,022,910 34.93 373,168,988 1.00 52,817,248 1.00 September 30, 2000 27,111,384 30.87 373,916,587 1.00 51,640,083 1.00 December 31, 2000 26,824,092 36.12 378,498,112 1.00 51,898,545 1.00 Fidelity U.S. Equity Fidelity Growth Company Fidelity Magellan Fund Index Portfolio Fund --------------------------- -------------------------- --------------------------- --------------------------- -------------------------- --------------------------- Units Value Units Value Units Value --------------- ---------- ---------------- -------- -------------- ----------- --------------- ---------------- -------------- December 31, 1999 1,190,282 $ 136.63 4,375,496 $ 52.09 1,548,549 $ 84.30 March 31, 2000 1,163,107 143.25 4,031,573 53.12 1,812,529 98.99 June 30, 2000 1,171,521 134.63 3,993,331 51.57 1,862,663 90.89 September 30, 2000 1,167,852 133.84 3,915,222 50.93 1,856,328 93.35 December 31, 2000 1,198,403 119.30 3,859,804 46.81 2,100,312 71.43 Fidelity Emerging Markets Fidelity Diversified Fidelity Growth & Income Fund International Fund Fund --------------------------- -------------------------- --------------------------- --------------------------- -------------------------- --------------------------- Units Value Units Value Units Value --------------- ---------- ---------------- -------- -------------- ----------- --------------- ---------------- -------------- December 31, 1999 379,551 $ 12.02 1,163,416 $ 25.62 935,015 $ 47.16 March 31, 2000 518,280 12.21 1,196,490 25.69 858,738 47.31 June 30, 2000 498,357 10.97 1,203,766 24.65 837,858 47.31 September 30, 2000 441,858 9.35 1,207,765 23.87 888,766 44.81 December 31, 2000 444,657 8.03 1,280,098 21.94 957,790 42.10 Fidelity U.S. Bond Index INVESCO Total Return Fund Fund --------------------------- -------------------------- --------------------------- -------------------------- Units Value Units Value --------------- ---------- ---------------- -------- --------------- ---------------- December 31, 1999 1,999,723 $ 28.96 1,658,212 $ 10.19 March 31, 2000 1,734,839 27.78 1,278,616 10.25 June 30, 2000 1,653,220 27.11 1,296,304 10.23 September 30, 2000 1,592,577 27.13 1,315,747 10.35 December 31, 2000 1,597,796 26.43 1,496,679 10.59 (8) Participation by Fund The total number of plan participants in each of the investment funds on December 31, 2000 and 1999 are as follows: 2000 1999 ---------------- ----------------- ---------------- ----------------- Gillette Company Stock Fund 14,033 14,121 Fixed Income Fund 5,928 6,449 Fidelity Retirement Government Money Market Portfolio 3,057 3,404 Fidelity Magellan Fund 7,194 7,112 Fidelity U.S. Equity Index Portfolio 6,302 6,713 Fidelity Growth Company Fund 5,296 4,257 Fidelity Emerging Markets Fund 852 628 Fidelity Diversified International Fund 2,517 2,275 Fidelity Growth & Income Fund 2,805 2,718 INVESCO Total Return Fund 3,434 3,916 Fidelity U.S. Bond Index Fund 1,206 1,189 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. (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 reflected 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, 2000 and 1999 was $1,500,000. (13) Subsequent Events The Plan was amended on February 15, 2001, such that effective July 1, 2001, the Company will contribute $1 for every $1 contributed by the employee as matched savings up to 5% of the employee´s compensation and $.20 for every $1 contributed by the employee as matched savings in excess of 5%. Effective January 1, 2001, the Invesco Total Return Fund was closed to new investments and all remaining balances on March 30, 2001 were transferred to the Vanguard Balanced Index Fund. The following new investment fund offerings were added beginning January 1, 2001. Vanguard Balanced Index Fund Washington Mutual Investors Fund PIMCO Mid Cap Fund – Institutional John Hancock Small Cap Growth Fund – Class A