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FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
Commission file number 1-225
KIMBERLY-CLARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 39-0394230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 619100, DALLAS, TEXAS 75261-9100
(Address of principal executive offices) (ZIP CODE)
Registrant's telephone number, including area code: (972) 281-1200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------------------- -----------------------------------------
Common Stock - $1.25 Par Value New York Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
Pacific Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securit-ies Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X. No.
---- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of March 17, 2000, 546,361,849 shares of common stock were outstanding, and
the aggregate market value of the registrant's common stock held by
non-affiliates on such date (based on the closing stock price on the New York
Stock Exchange) was approximately $29.5 billion.
(Continued)
FACING SHEET
(CONTINUED)
DOCUMENTS INCORPORATED BY REFERENCE
Kimberly-Clark Corporation's 1999 Annual Report to Stockholders and 2000 Proxy
Statement contain much of the information required in this Form 10-K, and
portions of those documents are incorporated by reference herein from the
applicable sections thereof. The following table identifies the sections of
this Form 10-K which incorporate by reference portions of the Corporation's
1999 Annual Report to Stockholders and 2000 Proxy Statement. The Items of
this Form 10-K, where applicable, specify which portions of such documents are
incorporated by reference. The portions of such documents that are
not incorporated by reference shall not be deemed to be filed with the
Commission as part of this Form 10-K.
DOCUMENT OF WHICH PORTIONS ITEMS OF THIS FORM 10-K
ARE INCORPORATED BY REFERENCE IN WHICH INCORPORATED
- ---------------------------------------- -----------------------
1999 Annual Report to Stockholders PART I
(Year ended December 31, 1999) ITEM 1. Business
PART II
ITEM 5. Market for the Registrant's
Common Stock and Related
Stockholder Matters
ITEM 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations
ITEM 7A. Quantitative and
Qualitative Disclosures About
Market Risk
ITEM 8. Financial Statements and
Supplementary Data
PART IV
ITEM 14. Exhibits, Financial
Statement Schedules and Reports
on Form 8-K
2000 Proxy Statement PART III
ITEM 10. Directors and Executive
Officers of the Registrant
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of
Certain Beneficial Owners and
Management
ITEM 13. Certain Relationships and
Related Transactions
PART I
ITEM 1. BUSINESS
Kimberly-Clark Corporation was incorporated in Delaware in 1928. As used in
Items 1, 2 and 7 of this Form 10-K, the term "Corporation" refers to
Kimberly-Clark Corporation and its consolidated subsidiaries. In the
remainder of this Form 10-K, the terms "Kimberly-Clark" or "Corporation" refer
only to Kimberly-Clark Corporation. Financial information by business segment
and geographic area, and information about principal products and markets of
the Corporation, contained under the caption "Management's Discussion and
Analysis" and in Note 16 to the Consolidated Financial Statements contained in
the 1999 Annual Report to Stockholders, are incorporated in this Item 1 by
reference.
RECENT DEVELOPMENTS. Historically, the Corporation has been engaged in a wide
variety of diversified businesses, including the manufacture and sale of
consumer products, paper and forest products, airline services and various
other businesses. In recent years, the Corporation has been undergoing a
transition to a global consumer products company based on the strategy of
building its tissue, personal care and health care businesses. Businesses
that did not, or could not, build on the Corporation's strengths were
candidates for divestiture. Businesses that fit into the Corporation's
strategy were candidates for further investment and support. Outside
businesses that were perceived as opportunities consistent with the strategy
were candidates for acquisition. As a result, since 1992, the Corporation has
completed over 30 strategic acquisitions and approximately 20 strategic
divestitures, including the following transactions:
- - On December 12, 1995, Scott Paper Company ("Scott") became a
wholly-owned subsidiary of Kimberly-Clark upon completion of a merger
transaction in which the outstanding Scott common shares were converted
into shares of Kimberly-Clark common stock. The transaction was valued
at approximately $9.4 billion and accounted for as a pooling of interests.
On February 14, 1996, Scott changed its name to Kimberly-Clark Tissue
Company ("KCTC").
- - On June 28, 1996, the Corporation sold the baby and child wipe
businesses previously conducted by Scott, consisting of the Baby Fresh,
Wash a-Bye Baby and Kid Fresh brands and the Dover, Delaware production
facility, to The Procter & Gamble Company. This divestiture was required
by the U.S. Department of Justice as part of the Scott merger.
- - On September 16, 1996, the Corporation sold its tissue mill in Prudhoe,
England and certain consumer tissue businesses in the United Kingdom
and Ireland to Svenska Cellulosa Aktiebolaget (SCA) of Sweden. This
divestiture was required by the European Commission as part of the
Scott merger.
- - On March 27, 1997, the Corporation sold its Coosa Pines, Alabama pulp
and newsprint operations, and related woodlands ("Coosa"), to Alliance
Forest Products Inc., a publicly-held Canadian corporation, for
approximately $600 million in cash.
- - On June 6, 1997, the Corporation sold its 50.1 percent interest in Scott
Paper Limited ("SPL"), a publicly-traded Canadian company to Kruger, Inc.,
a Canadian paper and forest products company, for approximately $127
million.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
- - On December 18, 1997, the Corporation acquired Tecnol Medical Products,
Inc. ("Tecnol"), a leading maker of disposable face masks and patient
care products, in a merger transaction which involved the conversion
of all outstanding shares of Tecnol common stock into shares of
Kimberly-Clark common stock. The transaction was valued at approximately
$428 million and was accounted for as a purchase.
- - On May 28, 1998, the Corporation purchased a 50 percent equity interest in
Klabin Tissue S.A. (now known as Klabin Kimberly S.A.), the leading tissue
manufacturer in Brazil.
- - On July 21, 1998, the Corporation purchased an additional 10 percent
ownership interest in its Korean affiliate, YuHan-Kimberly, Limited,
increasing its ownership interest to 70 percent.
- - On July 29, 1998, the Corporation purchased a 51 percent ownership interest
in Kimberly Bolivia, S.A., a new joint venture company in Bolivia.
- - On August 19, 1998, the Corporation sold the outstanding shares of K-C
Aviation Inc. ("KCA"), a leading provider of business aviation services,
to Gulfstream Aerospace Corporation for $250 million in cash.
- - On June 10, 1999, the Corporation purchased the European consumer and
away-from-home tissue businesses of Attisholz Holding AG for approximately
$365 million. The acquired businesses are located in Germany, Switzerland
and Austria.
- - On September 23, 1999, the Corporation acquired Ballard Medical Products,
a leading maker of disposable medical devices for respiratory care,
gastroenterology and cardiology, at a cost of approximately $788 million,
including the value of common stock exchanged and other costs of
the transaction. This acquisition has been accounted for as a purchase.
- - On September 30, 1999, the Corporation completed the sale of
approximately 460,000 acres of timberland in Alabama, Mississippi and
Tennessee to Joshua Timberlands, LLC for notes receivable with a fair value
of approximately $383 million. Also, as part of its previously announced
intention to exit the entire integrated pulp operation in Mobile, Alabama,
the Corporation shut down the pulp mill facility in August 1999.
- - On February 8, 2000, the Corporation acquired Safeskin Corporation
("Safeskin"), a leading maker of disposable gloves for health care,
high-technology and scientific industries, in a merger transaction pursuant
to which Safeskin shareholders received .1956 of a share of the
Corporation's common stock for each share Safeskin common stock. The
transaction is valued at approximately $800 million and will be
accounted for as a purchase.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
In the fourth quarter of 1995, in connection with the Scott merger, the
Corporation announced a plan to restructure the combined operations and to
accomplish other business improvement objectives (the "1995 Plan"). The
original estimated pretax cost of the 1995 Plan was $1,440 million. The plan
was completed in 1998 at a pretax cost of $1,305 million. Costs of the 1995
Plan were charged to earnings as follows: $814.3 million in 1995, $429.9
million in 1996 and $64.1 million in 1997. A credit of $3.3 million was
recorded in 1998.
On November 21, 1997, the Corporation announced a restructuring plan (the
"1997 Plan"). The plan included the sale, closure or downsizing of
17 manufacturing facilities worldwide and a workforce reduction of
approximately 4,800 employees. Costs for the 1997 Plan of $250.8 million and
$414.2 million were recorded in 1998 and 1997, respectively, at the time
costs became accruable under appropriate accounting principles. Included in
such costs was accelerated depreciation charged to cost of products sold
related to assets that were to be disposed of but which continued to be
operated during 1997 and 1998. In 1999, the Corporation recorded a net
credit of $16.7 million, which was comprised of accelerated depreciation
expense of $23.7 million, reductions in accrued costs of $31.9 million and
lower asset write-offs and higher sales proceeds totaling $8.5 million, due
to changes in estimates.
In the fourth quarter of 1998, the Corporation announced a facilities
consolidation plan (the "1998 Plan") to, among other things, further align
tissue manufacturing capacity with demand in Europe, close a diaper
manufacturing facility in Canada, shut down and dispose of a tissue machine in
Thailand, write down certain excess feminine care production equipment in
North America and reduce the Corporation's workforce by approximately 830
employees. Costs for the 1998 Plan of $42.6 million and $49.1 million were
recorded in 1999 and 1998, respectively, and charged to cost of products sold.
Costs of approximately $20 million will be charged to cost of products sold in
2000. These costs are comprised primarily of certain severance costs and
charges for accelerated depreciation for the Corporation's Larkfield, U.K.
tissue manufacturing facility that will remain in use until its expected
shutdown in October 2000.
Pursuant to the 1998 Plan, through December 31, 1999, 800 employees have been
notified of the Corporation's plans to terminate their employment, and the
costs of this workforce reduction were charged to earnings in the period in
which such employee severance benefits were appropriately communicated. Of
the employees that have been notified, 530 employees have been terminated and
270 additional employees will be terminated in 2000. Approximately 50
additional employees will be notified in 2000 of the Corporation's plans to
terminate their employment. Their severance costs, which are included in the
$20 million discussed above, will be accrued and charged to cost of products
sold at that time.
DESCRIPTION OF THE CORPORATION. The Corporation is principally engaged in the
manufacturing and marketing throughout the world of a wide range of products
for personal, business and industrial uses. Most of these products are made
from natural and synthetic fibers using advanced technologies in fibers,
nonwovens and absorbency.
The Corporation is organized into three global business segments: Tissue;
Personal Care; and Health Care and Other.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
The Tissue segment includes facial and bathroom tissue, paper towels and
wipers and napkins for household and away-from-home use; wet wipes; printing,
premium business and correspondence papers; and related products. Products in
this business segment are sold under the Kleenex, Scott, Kimberly-Clark,
Kleenex Cottonelle, Kleenex Viva, Huggies, Kimwipes, Wypall, Surpass and other
brand names.
The Personal Care segment includes disposable diapers, training and youth
pants and swimpants; feminine and incontinence care products; and related
products. Products in this business segment are primarily for household use
and are sold under a variety of well-known brand names, including Huggies,
Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend, Poise and
other brand names.
The Health Care and Other segment includes health care products, consisting of
surgical gowns, drapes, infection control products, sterilization wraps,
disposable face masks, respiratory products and other disposable medical
products; specialty and technical papers; and other products. Products in
this segment are sold under the Kimberly-Clark, Tecnol, Ballard and other
brand names.
Products for household use are sold directly, and through wholesalers, to
supermarkets, mass merchandisers, drugstores, warehouse clubs, home health
care, variety and department stores and other retail outlets. Products for
away-from-home use are sold through distributors and directly to
manufacturing, lodging, office building, food service and health care
establishments and other high volume public facilities. Paper products are
sold directly to users, converters, manufacturers, publishers and printers,
and through paper merchants, brokers, sales agents and other resale agencies.
Health care products are sold to distributors, converters and end-users.
PATENTS AND TRADEMARKS. The Corporation owns various patents and trademarks
registered domestically and in many foreign countries. The Corporation
considers the patents and trademarks which it owns and the trademarks under
which it sells certain of its products to be material to its business.
Consequently, the Corporation seeks patent and trademark protection by all
available means, including registration. A partial list of the Corporation's
trademarks is included under the caption "Trademarks" contained in the 1999
Annual Report to Stockholders and is incorporated herein by reference.
RAW MATERIALS. Superabsorbent materials are important components in
disposable diapers, training and youth pants and incontinence care products.
Polypropylene and other synthetics and chemicals are primary raw materials for
manufacturing nonwoven fabrics which are used in disposable diapers, training
and youth pants, wet wipes, feminine pads, incontinence and health care
products, and away-from-home wipers.
Cellulose fiber, in the form of kraft pulp or recycled fiber, is the primary
raw material for the Corporation's tissue and paper products and is an
important component in disposable diapers, training pants, feminine pads and
incontinence care products.
Most recovered paper and all synthetics are purchased from third parties.
Pulp and recycled fiber are produced by the Corporation and purchased from
others. The Corporation considers the supply of such raw materials to be
adequate to meet the needs of its businesses. See "Factors That May Affect
Future Results - Raw Materials."
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
The Corporation owns or controls approximately 5.7 million acres of forestland
in Canada, principally as a fiber source for pulp production which is consumed
internally within the tissue business. Approximately 1.0 million acres in the
province of Nova Scotia are owned by the Corporation, and approximately 4.7
million acres, principally in the province of Ontario, are held under
long-term Crown rights or leases. The Corporation closed its Mobile, Alabama
pulp mill in August of 1999 and during 1999 sold approximately 530,000 acres
of timberlands it owned or held under long term leases in North America.
COMPETITION. For a discussion of the competitive environment in which the
Corporation conducts its business, see "Factors That May Affect Future Results
- - Competitive Environment."
RESEARCH AND DEVELOPMENT. A major portion of total research and development
expenditures is directed toward new or improved personal care, health care and
tissue products, and nonwoven materials. Consolidated research and development
expense was $249.8 million in 1999, $224.8 million in 1998 and $211.8 million
in 1997.
ENVIRONMENTAL MATTERS. Total worldwide capital expenditures for environmental
controls to meet legal requirements or otherwise relating to the protection of
the environment at the Corporation's facilities are expected to be
approximately $72 million in 2000 and $44 million in 2001. Of this amount,
approximately $27 million in 2000, and $18 million in 2001 are expected to be
spent at facilities in the United States. Approximately $15 million of U.S.
expenditures in 2000 relate to compliance with the U. S. Environmental
Protection Agency's ("EPA") Cluster Rule for sulfite pulping operations at
the Corporation's Everett, Washington pulp mill. The remainder of the expected
expenditures in the U. S., approximately $12 million in 2000, will be applied
at various other production facilities of the Corporation for other
environmental control system improvements. For facilities outside of the
U. S., capital expenditures for environmental controls are expected to e
$45 million in 2000 and $26 million in 2001.
Total worldwide operating expenses for environmental compliance are expected
to be $167 million in 2000 and $172 million in 2001. U. S. operating expenses
are expected to be $89 million in 2000 and $89 million in 2001. Operating
expenses for facilities outside the U. S. are expected to be $78 million in
2000 and $83 million in 2001. Operating expenses include pollution control
equipment operation and maintenance costs, governmental payments, and research
and engineering costs.
Total environmental capital expenditures and operating expenses are not
expected to have a material effect on the Corporation's total capital and
operating expenditures, consolidated earnings or competitive position.
However, current environmental spending estimates could be modified as a
result of changes in the Corporation's plans, changes in legal requirements or
other factors.
In connection with certain divestitures, including those described in "Recent
Developments," the Corporation has agreed to indemnify the purchasers of
certain divested businesses against certain contingent environmental
liabilities. Generally, these indemnification obligations apply only to
environmental liabilities which are actually incurred by the purchaser within
a specified time period after closing and are limited to a specified dollar
amount of coverage. The Corporation does not consider these obligations to be
material and has established appropriate accrued liabilities with respect
thereto.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
EMPLOYEES. In its worldwide consolidated operations, the Corporation had
54,800 employees as of December 31, 1999.
Approximately 22 percent of the Corporation's United States workforce and
approximately 34 percent of the Corporation's non-United States workforce are
represented by unions. In the United States, the largest concentration of
union membership is with the Paper, Allied-Industrial, Chemical & Energy
Workers International Union (PACE). Other employees are represented by the
International Brotherhood of Electrical Workers (IBEW), the International
Association of Machinists and Aerospace Workers (IAM), the Association of
Western Pulp and Paper Workers (AWPPW), and various independent unions.
Throughout the Corporation, management seeks to establish and maintain an open
and respectful relationship with its employees. Management believes that
communications should flow freely in the organization to provide all employees
the opportunity to maximize the use of their talents in the attainment of the
Corporation's business objectives.
INSURANCE. The Corporation maintains coverage consistent with industry
practice for most risks that are incident to its operations.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain matters discussed in this Form 10-K, or documents a portion of which
are incorporated herein by reference, concerning, among other things, the
business outlook, anticipated financial and operating results, strategies,
contingencies and contemplated transactions of the Corporation, including, but
not limited to, the adequacy of the 1997 Plan and the 1998 Plan constitute
forward-looking statements and are based upon management's expectations and
beliefs concerning future events impacting the Corporation. There can be no
assurance that these events will occur or that the Corporation's results will
be as estimated.
The following factors, as well as factors described elsewhere in this Form
10-K, or in other SEC filings, among others, could cause the Corporation's
future results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Corporation.
Such factors are described in accordance with the provisions of the Private
Securities Litigation Reform Act of 1995, which encourages companies to
disclose such factors.
COMPETITIVE ENVIRONMENT. The Corporation experiences intense competition for
sales of its principal products in its major markets, both domestically and
internationally. The Corporation's products compete with widely advertised,
well-known, branded products, as well as private label products which are
typically sold at lower prices. The Corporation has several major competitors
in most of its markets, some of which are larger and more diversified than the
Corporation. The principal methods and elements of competition include brand
recognition and loyalty, product quality and performance, price, marketing and
distribution capabilities. Inherent risks in the Corporation's competitive
strategy include uncertainties concerning trade and consumer acceptance, the
effects of recent consolidations of retailers and distribution channels,
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
and competitive reaction. Aggressive competitive reaction may lead to
increased advertising and promotional spending by the Corporation in
order to maintain market share. Increased competition with respect to
pricing would reduce revenue and could have an adverse impact on the
Corporation's financial results. In addition, the Corporation relies on
the development and introduction of new products and line extensions as a
means of achieving and/or maintaining category leadership. In order to
maintain its competitive position, the Corporation must develop technological
innovation with respect to its products.
COST SAVING STRATEGY. A significant portion of the Corporation's anticipated
cost savings are expected to result from operating efficiencies, the 1997 Plan
and the 1998 Plan. However, such savings will require the continued
consolidation and integration of facilities, functions, systems and
procedures, all of which present significant management challenges. There can
be no assurance that such actions will be successfully accomplished as rapidly
as expected or of the extent to which such cost savings and efficiencies will
be achieved.
RAW MATERIALS. Cellulose fiber, in the form of kraft pulp or recycled fiber,
is used extensively in the Corporation's tissue and paper products and is
subject to significant price fluctuations due to the cyclical nature of the
pulp markets. Recycled fiber accounts for approximately 20 percent of the
Corporation's overall fiber requirements. On a worldwide basis, the
Corporation has reduced its internal supply of pulp to approximately 40
percent of its virgin fiber requirements.
The Corporation has announced its intention to reduce its level of pulp
integration to approximately 20 percent. However, such a reduction in pulp
integration could increase the Corporation's commodity price risk.
Specifically, increases in pulp prices could adversely affect the
Corporation's earnings if selling prices for its finished products are not
adjusted or if such adjustments significantly trail the increases in pulp
prices. The Corporation has not used derivative instruments in the management
of these risks.
ACQUISITION AND DIVESTITURE STRATEGY. The Corporation's anticipated financial
results and business outlook are dependent in part upon the consummation of a
proposed divestiture on terms advantageous to the Corporation and the
availability of suitable acquisition candidates. There can be no assurance
that such divestiture will be consummated, or, if consummated, that the terms
of such divestiture will be advantageous to the Corporation. In addition, the
Corporation could encounter significant challenges in locating suitable
acquisition candidates that are consistent with its strategic objectives and
will contribute to its long-term success. Furthermore, there can be no
assurance that any such acquired business can or will be successfully
integrated with the Corporation's businesses in order to provide anticipated
synergies and earnings growth.
VOLUME FORECASTING. The Corporation's anticipated financial results reflect
forecasts of future volume increases in the sales of its products. Challenges
in such forecasting include anticipating consumer preferences, estimating
sales of new products, estimating changes in population characteristics (such
as birth rates and changes in per capita income), anticipating changes in
technology and estimating the acceptance of the Corporation's products in new
markets. As a result, there can be no assurance that the Corporation's volume
increases will occur as estimated.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
FOREIGN MARKET RISKS. Because the Corporation and its equity companies have
manufacturing facilities in 40 countries and its products are sold in more
than 150 countries, the Corporation's results may be substantially affected by
foreign market risks. The Corporation is subject to the impact of economic
and political instability in developing countries. The extremely competitive
situation in European personal care and tissue markets, and the challenging
economic environments in Mexico and developing countries in eastern Europe and
Latin America, may slow the Corporation's sales growth and earnings potential.
In addition, the Corporation is subject to the strengthening or weakening of
various currencies against each other and local currencies versus the U.S.
dollar, and foreign currency risk arising from transactions and commitments
denominated in non-local currencies. See "Management's Discussion and
Analysis - Market Risk Sensitivity and Inflation Risks", contained in the 1999
Annual Report to Stockholders, which is incorporated herein by reference.
Translation exposure for the Corporation's balance sheet with respect to
foreign operations is not hedged. Although the Corporation uses instruments
to hedge its foreign currency risks (through foreign currency forward, swap
and option contracts), these instruments are used selectively to manage risk
and there can be no assurance that the Corporation will be fully protected
against substantial foreign currency fluctuations.
CONTINGENCIES. The costs and other effects of pending litigation and
administrative actions against the Corporation cannot be determined with
certainty. Although management believes that no such proceedings will have a
material adverse effect on the Corporation, there can be no assurance that the
outcome of such proceedings will be as expected. See "Item 3. Legal
Proceedings."
"YEAR 2000". For a discussion regarding "Year 2000" compliance in terms of
its computer systems, see "Management's Discussion and Analysis - 'Year 2000
Readiness' contained in the 1999 Annual Report to Stockholders, which is
incorporated herein by reference.
PART I
(Continued)
ITEM 2. PROPERTIES
Management believes that the Corporation's production facilities are suitable
for their purpose and adequate to support its busi-nesses. The extent of
utilization of individual facilities varies, but they operate at or near
capacity, except in certain instances such as when new products or technology
are being introduced or when mills are being shut down. Certain facilities of
the Corporation are being expanded. Various facilities contain pollution
control, solid waste disposal and other equipment which have been financed
through the issuance of industrial revenue or similar bonds and are held by
the Corporation under lease or installment purchase agreements.
The principal facilities of the Corporation (including the Corporation's
equity companies) and the products or groups of products made at such
facilities are as follows:
HEADQUARTERS LOCATIONS
Dallas, Texas
Roswell, Georgia
Neenah, Wisconsin
Reigate, United Kingdom
Bangkok, Thailand
ADMINISTRATIVE CENTER
Knoxville, Tennessee
WORLDWIDE PRODUCTION AND SERVICE FACILITIES
UNITED STATES
ALABAMA
Mobile - tissue products
ARIZONA
Tucson - health care products
ARKANSAS
Conway - feminine care, incontinence care and nonwovens
Maumelle - wet wipes and nonwovens
CALIFORNIA
Escondido - printing inks
Fullerton - tissue products
CONNECTICUT
New Milford - diapers and tissue products
GEORGIA
LaGrange - nonwovens
IDAHO
Pocatello - respiratory care and gastroenterology products
KENTUCKY
Owensboro - tissue products
MICHIGAN
Munising - technical papers
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
MISSISSIPPI
Corinth - nonwovens, wipers and towels
Hattiesburg - tissue products
NORTH CAROLINA
Hendersonville - nonwovens
Lexington - nonwovens
OHIO
Piqua - printing inks
OKLAHOMA
Jenks - tissue products
PENNSYLVANIA
Chester - tissue products
SOUTH CAROLINA
Beech Island - diapers and tissue products
TENNESSEE
Loudon - tissue products
TEXAS
Cleburne - apparel products (1)
Del Rio - health care products
Fort Worth - health care products
Paris - diapers, training and youth pants
San Antonio - personal cleansing products and systems
UTAH
Draper - respiratory care and gastroenterology products
Ogden - diapers
VERMONT
East Ryegate - technical papers
WASHINGTON
Everett - tissue products and pulp
WISCONSIN
Marinette - tissue products
Neenah - diapers, training and youth pants, feminine care, incontinence care,
business and correspondence papers and nonwovens
Whiting - business and correspondence papers
OUTSIDE THE UNITED STATES
ARGENTINA
*Bernal - tissue products
Pilar - feminine care and incontinence care
San Luis - diapers
* Equity company production facility
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
AUSTRALIA
*Albury - nonwovens
*Ingleburn - diapers
*Lonsdale - diapers, incontinence care and feminine care
*Millicent - pulp and tissue products
*Tantanoola - pulp
*Warwick Farm - tissue products
BAHRAIN
*East Riffa - tissue products
BELGIUM
Duffel - tissue products
BOLIVIA
La Paz - tissue products
Santa Cruz - diapers, feminine care and tissue products
BRAZIL
*Bahia - tissue products
Barueri - wet wipes
*Correia Pinto - tissue products
*Cruzeiro - tissue products
*Mendes - tissue products
*Mogi das Cruzes - tissue products
Porto Alegre - feminine care
*Recife - tissue products
Rio de Janeiro - diapers, feminine care and incontinence care
*Sao Paulo - tissue products
Suzano - diapers
CANADA
Huntsville, Ontario - tissue products and wipers
New Glasgow, Nova Scotia - pulp
St. Hyacinthe, Quebec - feminine care
Terrace Bay, Ontario - pulp (2)
CHINA (3)
Beijing - feminine care and diapers
Chengdu - feminine care
Guangzhou - tissue products
Handan - feminine care
Nanjing - feminine care
Shanghai - tissue products
Shenyang - feminine care
Wuhan - feminine care
* Equity company production facility
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
COLOMBIA
Barbosa - business, notebooks and correspondence papers
Guarne - tissue products
Pereira - tissue products, feminine care, incontinence care and diapers
Tocancipa - diapers
*Villa Rica - diapers and incontinence care
COSTA RICA
Belen - tissue products
Cartago - diapers and feminine care
CZECH REPUBLIC
Jaromer - diapers and incontinence care
Litovel - feminine care
DOMINICAN REPUBLIC
Santo Domingo - tissue products
ECUADOR
Babahoyo - tissue products
Duran - diapers and feminine care
Mapasingue - tissue products and notebooks
EL SALVADOR
San Salvador - tissue products
Sitio del Nino - tissue products and feminine care
FRANCE
Rouen - tissue products
Villey-Saint-Etienne - tissue products
GERMANY
Forchheim - feminine care and incontinence care
Koblenz - tissue products
Mainz - tissue products
Reisholz - tissue products
GUATEMALA
Poza Verde - tissue products, feminine care and notebooks
HONDURAS
San Pedro Sula - tissue products
Villanueva - health care products
INDIA
*Pune - feminine care and diapers
INDONESIA
Jakarta - tissue products
*Medan - specialty papers
ISRAEL
*Afula - diapers, feminine care and incontinence care
*Hadera - tissue products
* Equity company production facility
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
ITALY
Alanno - tissue products
Romagnano - tissue products
Villanovetta - tissue products
JAPAN
Shinga - soap
KOREA
Anyang - feminine care, diapers and tissue products
Kimcheon - tissue products and nonwovens
Taejon - feminine care and diapers
MALAYSIA
Kluang - tissue products, feminine care and diapers
MEXICO
Acuna - health care products
*Bajio - tissue products, fine papers and notebooks
*Cuautitlan - feminine care, diapers and nonwovens
*Ecatepec - tissue products
Empalme - health care products
Magdalena - health care products
*Morelia - tissue products, pulp and fine papers
*Naucalpan - tissue products, diapers and feminine care
Nogales - health care products
*Orizaba - tissue products, fine papers and pulp
*Ramos Arizpe - tissue products and diapers
*San Rafael - tissue products and fine papers
Texmelucan - tissue products
Tijuana - printing inks
*Tlaxcala - diapers
PERU
Ate - tissue products
Santa Clara - tissue products
Villa Corrillos - diapers, feminine care and incontinence care
PHILIPPINES
San Pedro, Laguna - feminine care, diapers, tissue products and specialty
papers
SAUDI ARABIA
*Al-Khobar - diapers, feminine care and tissue products
SLOVAK REPUBLIC
Piestany - health care products
SOUTH AFRICA
Cape Town - tissue products, feminine care and incontinence care
Springs - tissue products and diapers
* Equity company production facility
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
SPAIN
Aranguren - tissue products
Arceniega - tissue products, personal cleansing products and systems
Calatayud - diapers
Canary Islands - tissue products
Salamanca - tissue products
SWITZERLAND
Balsthal - tissue products and specialty papers
Niederbipp - tissue products
Reichenburg - tissue products
TAIWAN
Hsin-Ying - tissue products (4)
Ta-Yuan - tissue products
THAILAND
Pathumthani - feminine care, diapers and tissue products
Samut Prakarn - tissue products
TURKEY
*Istanbul - diapers
UNITED KINGDOM
Barrow - tissue products
Barton-upon-Humber - diapers
Flint - tissue products and nonwovens
Larkfield - tissue products (1)
Northfleet - tissue products
VENEZUELA
Guacara - diapers and feminine care
Maracay - tissue products
VIETNAM
Binh Duong - feminine care
Hanoi - feminine care
* Equity company production facility
_________________________________
(1) The Corporation has announced its intention to close this facility.
(2) The Corporation has announced its intention to sell this facility.
(3) The land on which these facilities are located is held under long-term
leases.
(4) The land and a portion of this facility are subject to a mortgage.
PART I
(Continued)
ITEM 3. LEGAL PROCEEDINGS
The following is a brief description of certain legal and administrative
proceedings to which the Corporation or its subsidiaries is a party or to
which the Corporation's or its subsidiaries' properties is subject:
Litigation
- ----------
A. On May 13, 1997, the State of Florida, acting through its attorney
general, filed a complaint in the Gainesville Division of the United
States District Court for the Northern District of Florida (the
"Florida District Court") alleging that manufacturers of tissue products
for away-from-home use, including the Corporation and Scott, agreed to
fix prices by coordinating price increases for such products. Following
Florida's complaint, actions by the States of Maryland, New York and West
Virginia, as well as approximately 45 class action complaints, have been
filed in various federal and state courts around the United States. These
actions contain allegations similar to those made by the State of Florida
in its complaint. The actions in federal courts have been consolidated for
pretrial proceedings in the Florida District Court. Class certification
was granted in the federal proceedings in July 1998 and will be contested
in the state cases. The foregoing actions seek an unspecified amount of
actual and treble damages.
In February 2000, the State of Florida agreed to dismiss its complaint
with prejudice pursuant to a settlement with defendants. With respect
to the remaining actions, the Corporation has answered the complaints in
these actions and has denied the allegations contained therein as
well as any liability. Discovery is proceeding. The Corporation intends
to contest these claims vigorously. These actions are not expected to have
a material adverse effect on the Corporation's business, financial
condition or results of operations.
B. On January 14, 1999, Mobile Energy Services Company, L.L.C. ("MESC") and
Mobile Energy Services Holdings, Inc. filed an adversary proceeding
against Kimberly-Clark Tissue Company in the United States Bankruptcy Court
in Mobile, Alabama. Plaintiffs, as debtors-in-possession, own a
cogeneration complex that provides energy services to KCTC's Mobile
facility. The complaint alleges that: (i) the sale of the cogeneration
complex by KCTC to MESC in December 1994 was a fraudulent transfer;
(ii) KCTC cannot effect a pulp mill closure while it continues to operate
the wastewater treatment facility and "produce pulp" at the Mobile facility;
(iii) Kimberly-Clark's announced pulp mill closure was a repudiation of
the site operating agreements; (iv) KCTC breached the master operating
agreement by failing to give MESC reasonable assistance in developing new
business opportunities for the energy complex after Kimberly-Clark
announced the pulp mill closure; and (v) KCTC failed to allow the sale
of the Mobile pulp mill. The complaint does not specify the amount of
damages demanded.
On December 31, 1999, a joint motion of the debtors and the MESC
bondholders' steering committee (the "Motion") was filed with the U.S.
Bankruptcy Court seeking approval of a settlement and compromise of claims
against KCTC arising from the closure of the Mobile pulp mill and
termination of the pulp mill's energy services agreement. The Motion,
which was granted by the U.S. Bankruptcy Court by order dated January 24,
2000, outlines the terms of settlement for various litigation matters
between KCTC and MESC. Under the proposed settlement, KCTC agreed to
pay MESC at closing approximately $30 million, in addition to amounts
previously paid pursuant to contractual obligations, subject to certain
adjustments. Closing of the settlement is subject to, among other
PART I
(Continued)
ITEM 3. LEGAL PROCEEDINGS (CONTINUED)
conditions, MESC filing a plan of reorganization from bankruptcy and the
ultimate approval of that plan by the U.S. Bankruptcy Court. In addition,
the proposed settlement provides MESC with an option to purchase the Mobile
pulp mill at a nominal price; a settlement of all pending litigation and
arbitration between the KCTC and MESC; mutual releases by KCTC, MESC and
its affiliate (the Southern Company and affiliates), and the
representatives of the MESC bondholders; and an agreement by MESC to
terminate the existing tissue mill energy services agreement and to
provide the Mobile tissue mill energy at market rates. This action is
not expected to have a material adverse effect on the Corporation's
business, financial condition or results of operations.
C. The Corporation is subject to routine litigation from time to time, which,
individually or in the aggregate, is not expected to have a material adverse
effect on the Corporation's business, financial condition or results of
operations.
Environmental Matters
- ----------------------
The Corporation is subject to federal, state and local environmental
protection laws and regulations with respect to its business operations and is
operating in compliance with, or taking action aimed at ensuring compliance
with, such laws and regulations. Compliance with these laws and regulations
is not expected to have a material adverse effect on the Corporation's
business, financial condition or results of operations.
The Corporation has been named a potentially responsible party under the
provisions of the federal Comprehensive Environmental Response, Compensation
and Liability Act, or analogous state statute, at a number of waste disposal
sites, none of which, individually or in the aggregate, in management's
opinion, is likely to have a material adverse effect on the Corporation's
business, financial condition or results of operations.
Notwithstanding its opinion, management believes it appropriate to discuss the
following matters concerning three of these sites where the Corporation's
estimated share of total site remediation costs, if any, cannot be established
on the basis of currently available information:
A. In 1994, Scott received a notice of responsibility from the
Massachusetts Department of Environmental Protection regarding the South
Hadley Site in South Hadley, Massachusetts. The notice implicated Scott
Graphics, Inc., a former Scott subsidiary, as having disposed of hazardous
waste at the site. There have been no significant developments since the
date the Corporation received the notice.
B. In January 1998, the Corporation was notified by the Tennessee
Department of Environment and Conservation of its status as a potentially
liable party at the Bellevue Avenue Landfill in Shelby County, Tennessee.
The Corporation currently lacks adequate information to make a determination
as to the extent of its liability at the site.
PART I
(Continued)
C. In June 1999, the Corporation was notified that S.D. Warren, a former
division of Scott, had been named as a potentially responsible party at
the Sunrise Landfill in Wayland, Allegan County, Michigan. Scott agreed
to be responsible for S.D. Warren's liability at the site pursuant
to an indemnification agreement between Scott and S.D. Warren. The
Corporation currently lacks adequate information to make a determination as
to the extent of its liability at the site.
PART I
(Continued)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of the executive officers of the Corporation as of March 1,
2000, together with certain biographical information, are as follows:
ROBERT E. ABERNATHY, 45, was elected Group President effective January 1,
1997. He is responsible for the global health care business, nonwovens
manufacturing and research, the technical paper business and corporate
research and development. Mr. Abernathy joined the Corporation in 1982. His
past responsibilities in the Corporation have included operations and major
project management in North America. He was appointed Vice President-North
American Diaper Operations in 1992 and Managing Director of Kimberly-Clark
Australia Pty. Limited in 1994.
JOHN W. DONEHOWER, 53, was elected Senior Vice President and Chief Financial
Officer in 1993. Mr. Donehower joined the Corporation in 1974. He was
appointed Director of Finance - Europe in 1978, Vice President, Marketing and
Sales - Nonwovens in 1981, Vice President, Specialty Papers in 1982, Managing
Director, Kimberly-Clark Australia Pty. Limited in 1982, and Vice President,
Professional Health Care, Medical and Nonwoven Fabrics in 1985. He was
appointed President, Specialty Products - U.S. in 1987, and President - World
Support Group in 1990. Mr. Donehower is a director of Eastman Chemical Co.
and Factory Mutual Insurance Company.
O. GEORGE EVERBACH, 61, was elected Senior Vice President - Law and Government
Affairs in 1988. Mr. Everbach joined the Corporation in 1984. His
responsibilities have included direction of legal, human resources and
administrative functions. He was elected Vice President and General Counsel
in 1984; Vice President, Secretary and General Counsel in 1985; and Senior
Vice President and General Counsel in 1986.
THOMAS J. FALK, 41, has served as President and Chief Operating Officer of the
Corporation since his election on November 16, 1999. He previously had been
elected Group President - Tissue, Pulp and Paper in 1998 where he was
responsible for the Corporation's global tissue businesses. He also was
responsible for the Wet Wipes and Neenah Paper sectors, Pulp Operations and
Consumer Business Services, Environment and Energy and Human Resources
organizations. Mr. Falk joined the Corporation in 1983. His prior
responsibilities have included internal audit, finance and strategic analysis,
and operations management. In 1993, he was elected Group President - Infant
and Child Care and has held various senior management positions in the
Corporation's Consumer and Away From Home businesses in North America and
Europe since that time. Mr. Falk is a member of the University of Wisconsin -
Madison School of Business Dean's Advisory Board and serves on the Board of
Directors of Newell Rubbermaid Inc. He has been a director of the Corporation
since November 1999.
PART I
(Continued)
EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
WAYNE R. SANDERS, 52, has served as Chief Executive Officer of the Corporation
since 1991 and Chairman of the Board of the Corporation since 1992. He
previously had been elected President and Chief Operating Officer in 1990.
Employed by the Corporation in 1975, Mr. Sanders was appointed Vice President
of Kimberly-Clark Canada Inc., a wholly owned subsidiary of the Corporation,
in 1981 and was appointed Director and President in 1984. Mr. Sanders was
elected Senior Vice President of Kimberly-Clark Corporation in 1985 and was
appointed President - Infant Care Sector in 1987, President - Personal Care
Sector in 1988 and President - World Consumer, Nonwovens and Service and
Industrial Operations in 1990. Mr. Sanders is a director of Adolph Coors
Company, Coors Brewing Company, Texas Instruments Incorporated and Chase Bank
of Texas, National Association. He also is a member of the Marquette
University Board of Trustees and is a national trustee of the Boys and Girls
Clubs of America. He has been a director of the Corporation since 1989.
KATHI P. SEIFERT, 50, was elected Executive Vice President in November 1999.
She is responsible for the Infant Care, Child Care, Feminine Care, and Adult
Care business sectors, the Safety and Quality Assurance team and the U.S. and
Canadian Sales organizations, and leads a team responsible for the
Corporation's global personal care businesses. Ms. Seifert joined
Kimberly-Clark in 1978. Her responsibilities in the Corporation have included
various marketing positions within the Away From Home, Consumer Tissue and
Feminine Care business sectors. She was appointed President - Feminine Care
Sector in 1991, was elected Group President - Feminine and Adult Care in 1994,
elected Group President - North American Consumer Products in January 1995,
elected Group President - North American Personal Care Products in July 1995
and elected Group President - Global Personal Care Products in April 1998.
Ms. Seifert is a member of the Board of Directors of Eli Lilly and Company and
Aid Association for Lutherans.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The dividend and market price data included in Note 14 to the Consolidated
Financial Statements, and the information set forth under the captions
"Dividends and Dividend Reinvestment Plan" and "Stock Exchanges" contained in
the 1999 Annual Report to Stockholders are incorporated in this Item 5 by
reference.
As of March 17, 2000, the Corporation had 52,331 holders of record of its
common stock.
PART II
ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31
(Millions of dollars, -----------------------------------------------------
except per share amounts) 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------------
Net Sales . . . . . . . . $13,373.0 $13,149.1 $12,546.6 $12,297.8 $13,006.8
Gross Profit. . . . . . . 4,544.9 4,688.5 4,607.6 4,597.6 5,325.2
Operating Profit. . . . . 942.3 1,666.0 1,486.1 1,697.7 2,435.4
Share of Net Income of
Equity Companies . . . 113.3 152.4 157.3 137.1 189.6
Income from Continuing
Operations Before
Extraordinary Items and
Cumulative Effect of
Accounting Change. . . 507.2 1,035.4 985.4 1,114.3 1,668.1
Per Share Basis:
Basic . . . . . . . .91 1.84 1.77 2.02 3.11
Diluted . . . . . . .90 1.83 1.76 2.01 3.09
Net Income. . . . . . . . 507.2 1,035.4 1,002.9 1,103.1 1,668.1
Per Share Basis:
Basic . . . . . . . .91 1.84 1.80 2.00 3.11
Diluted . . . . . . .90 1.83 1.79 1.99 3.09
Cash Dividends Per Share
Declared . . . . . . . .90 .92 .96 1.00 1.04
Paid . . . . . . . . . .90 .92 .95 .99 1.03
Total Assets. . . . . . . $11,561.0 $11,820.4 $11,417.1 $11,687.8 $12,815.5
Long-Term Debt. . . . . . 1,984.7 1,738.6 1,803.9 2,068.2 1,926.6
Stockholders' Equity. . . 4,141.3 4,595.0 4,340.3 4,031.5 5,093.1
NOTES TO SELECTED FINANCIAL DATA
(1) Included in the selected financial data for 1995 are the following items:
Diluted
Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Income per Share
- ----------------------------------------------------- ---------- ------ ----------
Charges for business improvement and other programs. . . $814.3 $596.9
Unusual charges, net . . . . . . . . . . . . . . . . . . 21.7 14.8
Net gains on asset disposals . . . . . . . . . . . . . . (126.6) (78.9)
Change in value of Mexican peso. . . . . . . . . . . . . - 38.5
------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $709.4 $571.3 $1.01
====== ====== =====
PART II
ITEM 6. SELECTED FINANCIAL DATA (Continued)
NOTES TO SELECTED FINANCIAL DATA
(2) Included in the selected financial data for 1996 are the following items:
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
- --------------------------------------------------- -------- ---------- ------ ----------
Charges for business improvement and other
programs . . . . . . . . . . . . . . . . . . . . . $154.2 $429.9 $328.6
Gains on asset disposals . . . . . . . . . . . . . . - (93.6) (72.6)
Change in value of Mexican peso. . . . . . . . . . . - - 2.3
Restructuring of Mexican operations. . . . . . . . . - - 5.5
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . $154.2 $336.3 $263.8 $.46
====== ====== ====== ====
(3) Included in the selected financial data for 1997 are the following items:
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
- --------------------------------------------------- -------- ---------- ------ ----------
Charges for business improvement and other
programs . . . . . . . . . . . . . . . . . . . . . $128.8 $478.3 $366.3
Gain on asset disposal . . . . . . . . . . . . . . . - (26.5) (16.8)
Gain on sale of K-C de Mexico's Regio business . . . - - (16.3)
Extraordinary gains, net of income taxes . . . . . . - - (17.5)
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . $128.8 $451.8 $315.7 $.57
====== ====== ====== ====
(4) Included in the selected financial data for 1998 are the following
items:
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
- --------------------------------------------------- -------- ---------- ------ ----------
Charges for business improvement and other
programs . . . . . . . . . . . . . . . . . . . . . $191.6 $377.8 $276.8
Mobile pulp mill fees and related severances . . . . 42.3 42.3 25.9
Gain on asset disposal . . . . . . . . . . . . . . . - (140.0) (78.3)
Change in value of Mexican peso. . . . . . . . . . . - - 9.2
Cumulative effect of accounting change, net of
income taxes . . . . . . . . . . . . . . . . . . . . - - 11.2
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . $233.9 $280.1 $244.8 $.45
====== ====== ====== ====
PART II
ITEM 6. SELECTED FINANCIAL DATA (Continued)
NOTES TO SELECTED FINANCIAL DATA
(5) Included in the selected financial data for 1999 are the following items:
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
- --------------------------------------------------- -------- ---------- ------ ----------
Charges for business improvement and other
programs. . . . . . . . . . . . . . . . . . . . . $69.0 $47.8 $35.6
Business integration and other costs. . . . . . . . 11.2 22.6 14.5
Mobile pulp mill fees and related severances. . . . 9.0 9.0 5.6
Gains on asset disposals. . . . . . . . . . . . . . - (176.7) (112.3)
----- ------ ------
Total . . . . . . . . . . . . . . . . . . . . . . . $89.2 $(97.3) $(56.6) $(.11)
===== ====== ====== =====
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion and
Analysis" contained in the 1999 Annual Report to Stockholders is incorporated
in this Item 7 by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the caption "Management's Discussion and
Analysis - Market Risk Sensitivity and Inflation Risks" contained in the 1999
Annual Report to Stockholders is incorporated in this Item 7A by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Corporation and its consolidated
subsidiaries and the independent auditors' report thereon contained in the
1999 Annual Report to Stockholders are incorporated in this Item 8 by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The section of the 2000 Proxy Statement captioned "Certain Information
Regarding Directors and Nominees" under "Proposal 1. Election of Directors"
identifies members of the board of directors of the Corporation and nominees,
and is incorpor-ated in this Item 10 by reference.
See also "EXECUTIVE OFFICERS OF THE REGISTRANT" appearing in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information in the section of the 2000 Proxy Statement captioned
"Executive Compensation" under "Proposal 1. Election of Directors" is
incorporated in this Item 11 by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information in the section of the 2000 Proxy Statement captioned "Security
Ownership of Management" under "Proposal 1. Election of Directors" is
incorporated in this Item 12 by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in the section of the 2000 Proxy Statement captioned "Certain
Transactions and Business Relationships" under "Proposal 1. Election of
Directors" is incorporated in this Item 13 by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) DOCUMENTS FILED AS PART OF THIS REPORT.
1. Financial statements:
The Consolidated Balance Sheet as of December 31, 1999 and 1998, and the
related Consolidated Statements of Income, Stockholders' Equity and Cash Flow
for the years ended December 31, 1999, 1998 and 1997, and the related Notes
thereto, and the Indepen-dent Auditors' Report of Deloitte & Touche LLP
thereon are incorporated in Part II, Item 8 of this Form 10-K by reference to
the financial statements contained in the 1999 Annual Report to Stockholders.
In addition, related reports of Deloitte & Touche LLP are included herein.
2. Financial statement schedule:
The following information is filed as part of this Form 10-K and should be
read in conjunction with the financial statements contained in the 1999 Annual
Report to Stockholders.
Independent Auditors' Report
Schedule for Kimberly-Clark Corporation and Subsidiaries:
Schedule II Valuation and Qualifying Accounts
All other schedules have been omitted because they were not applicable or
because the required information has been included in the financial statements
or notes thereto.
3. Exhibits:
Exhibit No. (3)a. Restated Certificate of Incorporation, dated June 12, 1997.
Exhibit No. (3)b. By-Laws, as amended November 22, 1996, incorporated by
reference to Exhibit No. 4.2 of the Corporation's Registration Statement on
Form S-8 filed with the Securities and Exchange Commission on December 6, 1996
(File No. 333-17367).
Exhibit No. (4). Copies of instruments defining the rights of holders of
long-term debt will be furnished to the Securities and Exchange Commission on
request.
Exhibit No. (10)a. Management Achievement Award Program, as amended and
restated as of January 1, 1998, incorporated by reference to Exhibit No. (10)a
of the Corporation's Annual Report on Form 10-K for the year ended December
31, 1997.
Exhibit No. (10)b. Executive Severance Plan, as amended and restated as of
December 10, 1998, incorporated by reference to Exhibit No. (10)b to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1998.
Exhibit No. (10)c. Fourth Amended and Restated Deferred Compensation Plan for
Directors, incorporated by reference to Exhibit No. (10)c of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996.
PART IV
(Continued)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(Continued)
Exhibit No. (10)d. 1986 Equity Participation Plan, as amended effective
November 20, 1997, incorporated by reference to Exhibit No. (10)d of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.
Exhibit No. (10)e. 1992 Equity Participation Plan, as amended effective
November 15, 1999.
Exhibit No. (10)f. Deferred Compensation Plan, as amended effective June 9,
1999.
Exhibit No. (10)g. Outside Directors' Stock Compensation Plan, incorporated by
reference to Exhibit No. 4.5 to the Corporation's Registration Statement on
Form S-8 filed with the Securities and Exchange Commission on April 18, 1996
(File No. 33-02607).
Exhibit No. (10)h. Supplemental Benefit Plan to Salaried Employees' Retirement
Plan, amended and restated as of November 17, 1994, incorporated by reference
to Exhibit No. (10)i of the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996.
Exhibit No. (10)i. Second Supplemental Benefit Plan to Salaried Employees'
Retirement Plan, amended and restated as of November 17, 1994, incorporated by
reference to Exhibit No. (10)j of the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1996.
Exhibit No. (10)j. Retirement Contribution Excess Benefit Program, as amended
and restated as of August 19, 1998, incorporated by reference to Exhibit (10)k
of the Corporation's Annual Report on Form 10-K for the year ended December
31, 1998.
Exhibit No. (10)k. 1999 Restricted Stock Plan, effective as of January 1,
1999, incorporated by reference to Exhibit No. 4.5 to the Corporation's
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on February 3, 1999 (File No. 333-71661).
Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 1999.
Exhibit No. (13). Portions of the Corporation's 1999 Annual Report to
Stockholders incorporated by reference in this Form 10-K.
Exhibit No. (21). Subsidiaries of the Corporation.
Exhibit No. (23). Independent Auditors' Consent of Deloitte & Touche LLP.
PART IV
(Continued)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(Continued)
Exhibit No. (24). Powers of Attorney.
Exhibit No. (27). The Financial Data Schedule required by Item 601(b)(27) of
Regulation S-K has been included with the electronic filing of this Form 10-K.
(B) REPORTS ON FORM 8-K
The Corporation filed on December 3, 1999 a Current Report on Form 8-K, dated
November 30, 1999, in connection with an improved product, the Corporation's
outlook and other matters.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
KIMBERLY-CLARK CORPORATION
March 24, 2000
By: /s/ John W. Donehower
-----------------------------
John W. Donehower
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Wayne R. Sanders
- --------------------------------- Chairman of the Board March 24, 2000
Wayne R. Sanders and Chief Executive Officer
and Director
(principal executive officer)
/s/ John W. Donehower
- --------------------------------- Senior Vice President and March 24, 2000
John W. Donehower Chief Financial Officer
(principal financial officer)
/s/ Randy J. Vest
- --------------------------------- Vice President and March 24, 2000
Randy J. Vest Controller
(principal accounting officer)
Directors
John F. Bergstrom Claudio X. Gonzalez
Pastora San Juan Cafferty Louis E. Levy
Paul J. Collins Frank A. McPherson
Robert W. Decherd Linda Johnson Rice
Thomas J. Falk Wolfgang R. Schmitt
William O. Fifield Randall L. Tobias
By: /s/ O. George Everbach
--------------------------------------- March 24, 2000
O. George Everbach, Attorney-in-Fact
INDEPENDENT AUDITORS' REPORT
KIMBERLY-CLARK CORPORATION:
We have audited the consolidated financial statements of Kimberly-Clark
Corporation as of December 31, 1999 and 1998, and for each of the three years
in the period ended December 31, 1999, and have issued our report thereon
dated January 24, 2000; such consolidated financial statements and report are
included in your Annual Report and are incorporated herein by reference. Our
audits also included the consolidated financial statement schedule of
Kimberly-Clark Corporation, listed in Item 14. This consolidated financial
statement schedule is the responsibility of the Corporation's management. Our
responsibility is to express an opinion on the financial statement schedule
based on our audits. In our opinion, the consolidated financial statement
schedule listed in Item 14, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
- ---------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
January 24, 2000
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(Millions of dollars)
ADDITIONS DEDUCTIONS
------------------------- ---------------
BALANCE AT CHARGED TO CHARGED TO WRITE-OFFS BALANCE
BEGINNING COSTS AND OTHER AND DISCOUNTS AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(A) ALLOWED PERIOD
- ------------------- ----------- ----------- ----------- -------------- ---------
DECEMBER 31, 1999
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . . . . . $51.5 $ 23.8 $(3.1) $ 21.3 (b) $50.9
Allowances for sales
discounts. . . . . . . . . . . . 15.8 176.4 (.6) 170.9 (c) 20.7
DECEMBER 31, 1998
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . . . . . $37.8 $ 21.5 $3.1 $ 10.9 (b) $51.5
Allowances for sales
discounts. . . . . . . . . . . . 22.1 182.5 .2 189.0 (c) 15.8
DECEMBER 31, 1997
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . . . . . $33.0 $ 12.3 $ 2.2 $ 9.7 (b) $37.8
Allowances for sales
discounts. . . . . . . . . . . . 13.3 174.5 7.8 173.5 (c) 22.1
(a) Includes bad debt recoveries and the effects of changes in foreign
currency exchange rates. 1997 includes the balances of Tecnol
Medical Products, Inc. acquired in December 1997.
(b) Primarily uncollectible receivables written off.
(c) Sales discounts allowed.
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(Millions of dollars)
ADDITIONS DEDUCTIONS
------------------------ -----------------
BALANCE AT CHARGED TO CHARGED TO WRITE-OFFS BALANCE
BEGINNING COSTS AND OTHER AND AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RECLASSIFICATIONS PERIOD
- ------------------- ----------- ----------- ----------- ----------------- ---------
1998 AND 1997 PLANS
DECEMBER 31, 1999
Contra assets deducted from
assets to which they apply
Inventory . . . . . . . . . . . . $10.9 $(.3) $ - $10.6 $ -
Other Assets. . . . . . . . . . . .5 (.5) - - -
DECEMBER 31, 1998
Contra assets deducted from
assets to which they apply
Inventory . . . . . . . . . . . . $23.8 $4.1 $ - $17.0 $10.9
Other Assets. . . . . . . . . . . 12.1 .2 - 11.8 .5
DECEMBER 31, 1997
Contra assets deducted from
assets to which they apply
Inventory . . . . . . . . . . . . $ - $28.8 $ - $5.0 $23.8
Other Assets. . . . . . . . . . . - 15.1 - 3.0 12.1
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(Millions of dollars)
ADDITIONS DEDUCTIONS
------------------------ -----------------
BALANCE AT CHARGED TO CHARGED TO WRITE-OFFS BALANCE
BEGINNING COSTS AND OTHER AND AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RECLASSIFICATIONS PERIOD
- ------------------- ----------- ----------- ----------- ----------------- ---------
1995 PLAN
DECEMBER 31, 1998
Contra assets deducted from
assets to which they apply
Inventory. . . . . . . . . . . . . $.6 $- $- $.6 $-
DECEMBER 31, 1997
Contra assets deducted from
assets to which they apply
Accounts receivable. . . . . . . . $.6 $- $- $.6 $-
Inventory. . . . . . . . . . . . . 14.1 (3.1) - 10.4 .6
Other assets . . . . . . . . . . . .5 (.5) - - -
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(Millions of dollars)
ADDITIONS
------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(A) PERIOD
- ------------------- ----------- ----------- ----------- ------------- ---------
DECEMBER 31, 1999
Deferred Taxes
Valuation Allowance. . . . . . . $271.9 $25.7 $- $ 41.5 $256.1
DECEMBER 31, 1998
Deferred Taxes
Valuation Allowance. . . . . . . $203.0 $63.4 $- $(5.5) $271.9
DECEMBER 31, 1997
Deferred Taxes
Valuation Allowance. . . . . . . $174.3 $72.4 $- $43.7 $203.0
(a) Includes the net currency effects of translating valuation allowances
at current rates under SFAS No. 52 of $(39.4) million in 1999, $15.6
million in 1998 and $(26.0) million in 1997. Included in this column
are also expired income tax loss carryforwards of $15.8 million in
1998 and $16.9 million in 1997. These items offset deferred tax assets
resulting in no effect on the consolidated balance sheet.
INDEX TO DOCUMENTS FILED AS PART OF THIS REPORT.
________________________________________________________________
DESCRIPTION
-----------
Consolidated financial statements, incorporated by reference
Independent Auditors' Reports, incorporated by reference
Independent Auditors' Reports
Schedule for Kimberly-Clark Corporation and Subsidiaries:
Schedule II Valuation and Qualifying Accounts
Exhibit No. (3)a. Restated Certificate of Incorporation, dated June 12, 1997.
Exhibit No. (3)b. By-Laws, as amended November 22, 1996, incorporated by
reference to Exhibit No. 4.2 of the Corporation's Registration Statement on
Form S-8 filed with the Securities and Exchange Commission on December 6, 1996
(File No. 333-17367).
Exhibit No. (4). Copies of instruments defining the rights of holders of
long-term debt will be furnished to the Securities and Exchange Commission on
request.
Exhibit No. (10)a. Management Achievement Award Program, as amended and
restated as of January 1, 1998, incorporated by reference to Exhibit No. (10)a
of the Corporation's Annual Report on Form 10-K for the year ended December
31, 1997.
Exhibit No. (10)b. Executive Severance Plan, as amended and restated as of
December 10, 1998, incorporated by reference to Exhibit No. (10)b to the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1998.
Exhibit No. (10)c. Fourth Amended and Restated Deferred Compensation Plan for
Directors, incorporated by reference to Exhibit No. (10)c of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996.
Exhibit No. (10)d. 1986 Equity Participation Plan, as amended effective
November 20, 1997, incorporated by reference to Exhibit No. (10)d of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.
Exhibit No. (10)e. 1992 Equity Participation Plan, as amended effective
November 15, 1999.
Exhibit No. (10)f. Deferred Compensation Plan, as amended effective June 9,
1999.
Exhibit No. (10)g. Outside Directors' Stock Compensation Plan, incorporated by
reference to Exhibit No. 4.5 to the Corporation's Registration Statement on
Form S-8 filed with the Securities and Exchange Commission on April 18, 1996
(File No. 33-02607).
INDEX TO DOCUMENTS FILED AS PART OF THIS REPORT.
(continued)
_________________________________________________________________
DESCRIPTION
-----------
Exhibit No. (10)h. Supplemental Benefit Plan to Salaried Employees' Retirement
Plan, amended and restated as of November 17, 1994, incorporated by reference
to Exhibit No. (10)i of the Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996.
Exhibit No. (10)i. Second Supplemental Benefit Plan to Salaried Employees'
Retirement Plan, amended and restated as of November 17, 1994, incorporated by
reference to Exhibit No. (10)j of the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1996.
Exhibit No. (10)j. Retirement Contribution Excess Benefit Program, as amended
and restated as of August 19, 1998, incorporated by reference to Exhibit (10)k
of the Corporation's Annual Report on Form 10-K for the year ended December
31, 1998.
Exhibit No. (10)k. 1999 Restricted Stock Plan, effective as of January 1,
1999, incorporated by reference to Exhibit No. 4.5 to the Corporation's
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on February 3, 1999 (File No. 333-71661).
Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 1999.
Exhibit No. (13). Portions of the Corporation's 1999 Annual Report to
Stockholders incorporated by reference in this Form 10-K.
Exhibit No. (21). Subsidiaries of the Corporation.
Exhibit No. (23). Independent Auditors' Consent of Deloitte & Touche LLP.
Exhibit No. (24). Powers of Attorney.
Exhibit No. (27). The Financial Data Schedule required by Item 601(b)(27) of
Regulation S-K has been included with the electronic filing of this Form 10-K.