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, 2001
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
incor-porated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of March 14, 2002, 519,504,160 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 $33 billion.
(Continued)
FACING SHEET
(CONTINUED)
DOCUMENTS INCORPORATED BY REFERENCE
Kimberly-Clark Corporation's 2001 Annual Report to Stockholders and 2002 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
2001 Annual Report to Stockholders and 2002 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
- ---------------------------------- ---------------------------------------
2001 Annual Report to Stockholders PART I
(Year ended December 31, 2001) 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
2002 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 15 to the Consolidated Financial Statements contained in
the 2001 Annual Report to Stockholders, are incorporated in this Item 1 by
reference.
RECENT DEVELOPMENTS. The Corporation is a global consumer products company
based on the strategy of building its personal care, consumer tissue and
business-to-business businesses. Since 1997, the Corporation has completed
about 30 acquisitions in its core businesses and approximately 10 strategic
divestitures, including the following transactions:
- - On March 27, 1997, the Corporation sold its Coosa Pines, Alabama pulp
and newsprint operations, and related woodlands, 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, a publicly-traded Canadian company to Kruger, Inc., a
Canadian paper and forest products company, for approximately $127
million.
- - 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 in which the outstanding Tecnol
shares were converted 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 August 19, 1998, the Corporation sold the outstanding shares of K-C
Aviation Inc., 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 was 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 for notes receivable having a face value of $397 million
(and a fair value of $383 million).
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
- - 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
in which the outstanding Safeskin shares were converted into shares of
Kimberly-Clark common stock. The transaction was valued at approximately
$750 million and was accounted for as a purchase.
- - On July 5, 2000, the Corporation acquired a majority of the shares of
privately held S-K Corporation of Taiwan, which held trademark and
distribution rights in Taiwan for the Corporation's global brands
including Kleenex, Huggies and Kotex. Prior to the acquisition, the
Corporation owned approximately 3 percent of S-K Corporation.
- - On December 20, 2000, the Corporation purchased an additional 33.3
percent ownership interest in its Taiwanese affiliate, Taiwan Scott
Paper Corporation, increasing its ownership interest to 100 percent.
- - On January 31, 2001, the Corporation acquired Linostar S.p.A., a leading
Italian-based diaper manufacturer that produced and marketed Lines,
Italy's second largest diaper brand.
- - On July 1, 2001, the Corporation acquired an additional 5 percent equity
interest in its Australian affiliate, Kimberly-Clark Australia Pty
Ltd., increasing its ownership interest to 55 percent. The Corporation and
the owner of the remaining 45 percent also exchanged options for the
purchase by the Corporation of the remaining 45 percent prior to
June 30, 2005.
On November 21, 1997, the Corporation announced a restructuring plan (the
"1997 Plan"). The 1997 Plan, among other things, resulted in the sale, closure
or downsizing of 16 manufacturing facilities worldwide and a workforce
reduction of approximately 3,740 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 composed 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"). The 1998 Plan, among other things,
resulted in further alignment of tissue manufacturing capacity with demand in
Europe, closure of a diaper manufacturing facility in Canada, shut down and
disposal of a tissue machine in Thailand, write down of certain excess
feminine care production equipment in North America and a reduction in the
Corporation's workforce of 814 employees. Costs for the 1998 Plan of $18.2
million, $42.6 million and $49.1 million were recorded in 2000, 1999 and 1998,
respectively, and charged to cost of products sold. The year 2000 costs
are composed primarily of certain severance costs and charges for accelerated
depreciation for the Corporation's Larkfield, U.K. tissue manufacturing
facility that remained in use until it was shutdown in October 2000.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
The 1997 Plan and the 1998 Plan were completed as of December 31, 2000.
DESCRIPTION OF THE CORPORATION. The Corporation is principally engaged in the
manufacturing and marketing throughout the world of a wide range of consumer
and business-to-business products. The Corporation also produces premium
business correspondence and technical papers. Most of these products are made
from natural and synthetic fibers using advanced technologies in fibers,
nonwovens and absorbency.
Following an internal organization change in late 2001, the Corporation is
organized into three business segments: Personal Care; Consumer Tissue; and
Business-to-Business. The financial information by business segment for
earlier periods which is incorporated in this Item 1 by reference has been
reclassified to conform to the new business segments.
The Personal Care segment manufactures and markets 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 Consumer Tissue segment manufactures and markets facial and bathroom
tissue, paper towels and napkins for household use; wet wipes; and related
products. Products in this business segment are sold under the Kleenex,
Scott, Cottonelle, Viva, Andrex, Scottex, Page, Huggies and other brand names.
The Business-to-Business segment manufactures and markets facial and bathroom
tissue, paper towels, wipers and napkins for away-from-home use; health care
products such as surgical gowns, drapes, infection control products,
sterilization wraps, disposable face masks and exam gloves, respiratory
products and other disposable medical products; printing, premium business and
correspondence papers; specialty and technical papers; and other products.
Products in this business segment are sold under the Kimberly-Clark, Kleenex,
Scott, Kimwipes, WypAll, Surpass, Safeskin, Tecnol, Ballard, and other brand
names.
Products for household use are sold directly, and through wholesalers, to
supermarkets, mass merchandisers, drugstores, warehouse clubs, 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. Health care products are primarily sold to distributors,
converters and end-users. Paper products are sold directly to users,
converters, manufacturers, publishers and printers, and through paper
merchants, brokers, sales agents and other resale agencies.
In 2001, approximately 10.4% of net sales were to Wal-Mart Stores, Inc.,
primarily in the Personal Care and Consumer Tissue businesses. No single
customer accounted for 10% or more of net sales in 2000 and 1999.
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 "Additional Information - Trademarks"
contained in the 2001 Annual Report to Stockholders and is incorporated herein
by reference.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
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 the 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 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."
The Corporation owns or controls approximately 5.9 million acres of forestland
in Canada, principally as a fiber source for pulp production, which is
consumed internally for tissue products. Approximately 1.0 million acres in
the province of Nova Scotia are owned by the Corporation, and approximately
4.9 million acres, principally in the province of Ontario, are held under
long-term Crown rights or leases.
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, tissue and
health care products and nonwoven materials. Consolidated research and
development expense was $295.3 million in 2001, $277.4 million in 2000, and
$249.8 million in 1999.
ENVIRONMENTAL MATTERS. Total worldwide capital expenditures for voluntary
environmental controls or controls necessary to comply with legal requirements
relating to the protection of the environment at the Corporation's facilities
are expected to be approximately $57 million in 2002 and $53 million in 2003.
Of these amounts, approximately $15 million in 2002, and $28 million in 2003
are expected to be spent at facilities in the U.S. For facilities outside of
the U.S., capital expenditures for environmental controls are expected to be
approximately $42 million in 2002 and $25 million in 2003.
Total worldwide operating expenses for environmental compliance are expected
to be approximately $180 million in 2002 and $182 million in 2003. Operating
expenses for environmental compliance with respect to U.S. facilities are
expected to be approximately $98 million in 2002 and $99 million in 2003.
Operating expenses for environmental compliance with respect to facilities
outside the U.S. are expected to be approximately $82 million in 2002 and $83
million in 2003. 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.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
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 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 has established appropriate accrued liabilities
with respect thereto, and does not otherwise consider these obligations to be
material.
EMPLOYEES. In its worldwide consolidated operations, the Corporation had
64,200 employees as of December 31, 2001.
Approximately 22 percent of the Corporation's United States workforce and
approximately 25 percent of the Corporation's workforce outside of the United
States are represented by unions. In the U.S., 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), the United Brotherhood of Carpenters
and Joiners and various independent unions. The Corporation's collective
bargaining agreements in the U.S. typically have a term of 5 to 6 years and
provide for wage and fringe benefit increases during the term. The agreements
have staggered termination dates.
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 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 innovation, quality and performance, price,
and marketing and distribution capabilities. Inherent risks in the
Corporation's
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
competitive strategy include uncertainties concerning trade and consumer
acceptance, the effects of recent consolidations of retailers and distribution
channels, 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 or improved products as a means of achieving and/or
maintaining category leadership. In order to maintain its competitive
position, the Corporation must develop technology to support its products.
COST SAVING STRATEGY. A significant portion of the Corporation's anticipated
cost savings are expected to result from operating efficiencies, including
those anticipated to be derived from the Corporation's Go-To-Market
initiatives that are intended to drive costs out of its supply chain. The
Corporation's information system upgrades are an integral part of that series
of initiatives. There can be no assurance that 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 25 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 still intends to reduce its level of pulp integration, when
market conditions permit, to approximately 20 percent, and such a reduction in
pulp integration, if accomplished, 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. Derivative instruments have not been used to manage these risks.
Polymer resins, principally polypropylene, are used extensively in the
Corporation's products, such as diapers, training and youth pants, and
incontinence care products. Polymer resins, which are principally derived
from petroleum, may be subject to price fluctuations. The Corporation
purchases polymer resins from a number of suppliers. Significant increases in
resin prices could adversely affect the Corporation's earnings if selling
prices for its finished products are not adjusted or if adjustments
significantly trail the increases in resin prices.
ENERGY COSTS. The Corporation's manufacturing operations utilize electricity,
natural gas and petroleum-based fuels. To insure that it uses all forms of
energy cost-effectively, the Corporation maintains ongoing energy efficiency
improvement programs at all of its manufacturing sites and also provides
expert staff assistance to operating units in negotiating favorable utility
and other energy supply agreements. The Corporation's contracts with energy
suppliers vary as to price, payment terms, quantities and duration.
Kimberly-Clark's energy costs are also affected by various market factors
including the availability of supplies of particular forms of energy, energy
prices and local and national regulatory decisions. There can be no assurance
that the Corporation will be fully protected against substantial changes in
the price or availability of energy sources. Derivative instruments are used
to hedge natural gas price risk when management deems it prudent to do so.
See also "Item 3. Legal Proceedings" for discussion of Mobile Energy Services
Company, LLC.
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
ACQUISITION STRATEGY. The Corporation's anticipated financial results and
business outlook are dependent in part upon the availability of suitable
acquisition candidates. 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.
FOREIGN MARKET RISKS. Because the Corporation and its equity companies have
manufacturing facilities in 42 countries and their 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 Argentina, Brazil, Mexico and developing countries in
eastern Europe, Asia and Latin America, may slow the Corporation's sales
growth and earnings potential. In addition, the Corporation is subject to the
strengthening and weakening of various currencies against each other and local
currencies versus the U.S. dollar. Transaction exposure, arising from
transactions and commitments denominated in non-local currency, is selectively
hedged (through foreign currency forward, swap and option contracts). See
"Management's Discussion and Analysis - Risk Sensitivity", contained in the
2001 Annual Report to Stockholders, which is incorporated herein by reference.
Translation exposure for the Corporation with respect to foreign operations is
generally not hedged. 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".
One of the Corporation's North American tissue mills has an agreement to
provide its local utility company a specified amount of electric power per
year for the next 17 years. In the event that the mill was shut down, the
Corporation would be required to continue to operate the power generation
facility on behalf of its owner, the local utility company. The net present
value of the cost to fulfill this agreement as of December 31, 2001 is
estimated to be approximately $85 million. However, management considers the
probability of closure of this mill to be remote.
PART I
(Continued)
- -----------
ITEM 2. PROPERTIES
Management believes that the Corporation's production facilities are suitable
for their purpose and adequate to support its businesses. The extent of
utilization of individual facilities varies, but they generally 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 CENTERS
Knoxville, Tennessee
Brighton, United Kingdom
WORLDWIDE PRODUCTION AND SERVICE FACILITIES
UNITED STATES
ALABAMA
Mobile - tissue products
ARIZONA
Tucson - health care products
ARKANSAS
Conway - feminine care and incontinence care products and nonwovens
Maumelle - wet wipes and nonwovens
CALIFORNIA
Fullerton - tissue products
San Diego - health care 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
OKLAHOMA
Jenks - tissue products
PENNSYLVANIA
Chester - tissue products
SOUTH CAROLINA
Beech Island - diapers and tissue products
TENNESSEE
Loudon - tissue products
TEXAS
Del Rio - health care products
Fort Worth - health care products
Paris - diapers and training and youth pants
San Antonio - personal cleansing products and systems
UTAH
Draper - respiratory care and gastroenterology products
Ogden - diapers
WASHINGTON
Everett - tissue products and pulp
WISCONSIN
Marinette - tissue products
Neenah - diapers, training and youth pants, feminine care and incontinence
care products, 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 products
San Luis - diapers
AUSTRALIA
Albury - nonwovens
Ingleburn - diapers
Lonsdale - diapers and feminine care and incontinence care products
Millicent - pulp and tissue products
Tantanoola - pulp
Warwick Farm - tissue products
BAHRAIN
* East Riffa - tissue products
* Equity company production facility
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
BELGIUM
Duffel - tissue products
BOLIVIA
La Paz - tissue products
Santa Cruz - diapers and feminine care and tissue products
BRAZIL
* Bahia - tissue products
Barueri - wet wipes
* Correia Pinto - tissue products
* Cruzeiro - tissue products
* Mogi das Cruzes - tissue products
Porto Alegre - feminine care products
* Sao Paulo - tissue products
Suzano - diapers and incontinence care products
CANADA
Huntsville, Ontario - tissue products and wipers
New Glasgow, Nova Scotia - pulp
St. Hyacinthe, Quebec - feminine care and incontinence care products
Terrace Bay, Ontario - pulp
CHILE
Colina - tissue products
Santiago - diapers and feminine care products
CHINA
Beijing - feminine care products and diapers
Chengdu - feminine care products
Guangzhou - tissue products
Nanjing - feminine care products
Shanghai - tissue products
Wuhan - feminine care products
COLOMBIA
Barbosa - notebooks, business and correspondence papers and wipers
Guarne - tissue products
Pereira - tissue products, feminine care and incontinence care products
and diapers
Puerto Tejada - tissue products
Tocancipa - diapers and feminine care products
* Villa Rica - diapers and incontinence care products
COSTA RICA
Belen - tissue products
Cartago - diapers and feminine care and incontinence care products
CZECH REPUBLIC
Jaromer - diapers and incontinence care products
Litovel - feminine care products
DOMINICAN REPUBLIC
Santo Domingo - tissue products
* Equity company production facility
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
ECUADOR
Babahoyo - tissue products
Mapasingue - tissue products, diapers and feminine care products
EL SALVADOR
Sitio del Nino - tissue products
FRANCE
Rouen - tissue products
Villey-Saint-Etienne - tissue products
GERMANY
Forchheim - feminine care and incontinence care products
Koblenz - tissue products
Mainz - tissue products
Reisholz - tissue products
GUATEMALA
Poza Verde - tissue products
HONDURAS
Villanueva - health care products
INDIA
* Pune - feminine care products and diapers
INDONESIA
Jakarta - tissue products
* Medan - specialty papers
ISRAEL
Afula - diapers and feminine care and incontinence care products
Hadera - tissue products
ITALY
Alanno - tissue products
Patrica - diapers
Romagnano - tissue products
Villanovetta - tissue products
JAPAN
Shiga - soap
KOREA
Anyang - feminine care products, diapers and tissue products
Kimcheon - tissue products and nonwovens
Taejon - feminine care products, diapers and nonwovens
MALAYSIA
Kluang - tissue products, feminine care products and diapers
* Equity company production facility
PART I
(Continued)
- -----------
ITEM 2. PROPERTIES (Continued)
MEXICO
Acuna - health care products
* Bajio - tissue products, fine papers and notebooks
* Cuautitlan - feminine care products, diapers and nonwovens
* Ecatepec - tissue products
Empalme - health care products
Magdalena - health care products
* Morelia - tissue products, pulp and fine papers
* Naucalpan - tissue products and specialty papers
Nogales - health care products
* Orizaba - tissue products, fine papers and pulp
* Ramos Arizpe - tissue products and diapers
* San Rafael - fine papers
* Texmelucan - tissue products
* Tlaxcala - diapers, nonwovens and wet wipes
PERU
Puente Piedra - tissue products
Villa - diapers and feminine care and incontinence care products
PHILIPPINES
San Pedro, Laguna - feminine care products, diapers, tissue products and
specialty papers
PUERTO RICO
Toa Alta - diapers
SAUDI ARABIA
* Al-Khobar - diapers and feminine care and tissue products
SLOVAK REPUBLIC
Piestany - health care products
SOUTH AFRICA
Cape Town - tissue, feminine care and incontinence care products
Springs - tissue products and diapers
SPAIN
Aranguren - tissue products
Arceniega - tissue products and personal cleansing products and systems
Calatayud - diapers
Salamanca - tissue products
Telde, Canary Islands - tissue products
SWITZERLAND
Balsthal - tissue products and specialty papers
Niederbipp - tissue products
Reichenburg - tissue products
TAIWAN
Chung Li -tissue products, feminine care products and diapers
Hsin-Ying - tissue products
Neihu - feminine care products and diapers
Ta-Yuan - tissue products
* Equity company production facility
PART I
(Continued)
- -----------
ITEM 2. PROPERTIES (Continued)
THAILAND
Hat Yai - disposable gloves
Pathumthani - feminine care products, 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
Northfleet - tissue products
VENEZUELA
Maracay - tissue products and diapers
VIETNAM
Binh Duong - feminine care products
Hanoi - feminine care products
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 are subject. In
management's opinion, none of the legal and administrative proceedings
described below, individually or in the aggregate, is expected to have a
material adverse effect on the Corporation's business, financial condition or
results of operations.
Approximately 300 product liability lawsuits seeking monetary damages, in most
cases of an unspecified amount, are pending in federal and state courts
against Safeskin. Safeskin is typically one of several defendants who
manufacture or sell natural rubber latex gloves. These lawsuits allege
injuries ranging from dermatitis to severe allergic reactions caused by the
residual chemicals or latex proteins in gloves worn by health care workers and
other individuals while performing their duties. Safeskin has referred the
defense of these lawsuits to its insurance carriers.
In 1999, prior to the acquisition of Safeskin, numerous lawsuits
(collectively the "Securities Actions") were filed in the U.S. District Court
for the Southern District of California against Safeskin and certain of its
officers and directors alleging violations of Sections 10(b) and 20(a) of the
Securities and Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
The Securities Actions were brought by plaintiffs in their individual capacity
and on behalf of a purported class of persons who purchased or otherwise
acquired Safeskin publicly traded securities during various periods occurring
prior to the Corporation's acquisition of Safeskin. The suits allege that
plaintiffs purchased Safeskin securities at prices artificially inflated by
defendants' misrepresentations and omissions concerning Safeskin's financial
condition and prospects and seek an unspecified amount of damages.
Defendants' motion to dismiss was denied. A plaintiffs' class has been
certified consisting of those who purchased Safeskin common stock and options
during the period of February 18, 1998 to March 11, 1999. Discovery is
continuing and the Corporation continues to contest liability.
In addition, a shareholder derivative action has been filed against certain of
Safeskin's directors, and Safeskin as a nominal defendant, in the Supreme
Court of the State of California, San Diego County (the "Derivative Action").
The Derivative Action alleges breach of fiduciary duty, waste of corporate
assets and gross negligence in connection with Safeskin's stock repurchase
program and seeks an unspecified amount of damages. The court has continued
discovery in the Derivative Action so that it can be completed following the
resolution of the Securities Actions.
PART I
(Continued)
- -----------
ITEM 3. LEGAL PROCEEDINGS (Continued)
On April 14, 2000, a complaint was filed by Anne Meader and others against the
Corporation and others in the State of Maine Superior Court. Eighteen
plaintiffs seek compensation for injuries allegedly caused by exposure to
substances allegedly emitted by the defendants' mills, including two mills
formerly owned by the Corporation, and from the Central Maine Disposal
Landfill in Fairfield, Maine. The Corporation is contesting the claims
asserted by the plaintiffs.
Since 1998, the Corporation has been involved in a series of complex legal
disputes between the Corporation and Mobile Energy Services Company, L.L.C.
and related parties ("MESC"). These disputes arose from the closure of the
Corporation's Mobile pulp mill. MESC owns a cogeneration complex that
provides energy services to the Corporation's Mobile mill.
In 1998, the Corporation decided to close its Mobile pulp mill and gave notice
to MESC of its intent to terminate a long-term energy services agreement. In
January 1999, MESC filed for Chapter 11 bankruptcy protection and brought an
adversary proceeding in the United States Bankruptcy Court against the
Corporation claiming unspecified damages arising from the mill closure and
termination of the energy services agreement.
In March 2001, an arbitration ruling was issued. In that ruling, the
arbitrator rejected MESC's claims related to the pulp mill closure finding
that the Corporation had affected a proper pulp mill closure. However, the
arbitrator also ruled that the operation of certain assets by the Corporation
after the pulp mill closure permitted MESC to reinstate the pulp mill energy
services agreement. This reinstatement became subject to binding arbitration
brought by MESC in April 2001. A ruling issued in this arbitration on January
31, 2002 resulted in the Corporation recording a pre-tax charge of
approximately $27 million in its 2001 earnings.
In addition, MESC submitted binding arbitration claims for reimbursement by
the Corporation of certain capital and energy costs incurred by MESC. A
ruling issued in this arbitration on January 21, 2002 resulted in the
Corporation recording a pre-tax charge of approximately $17 million in its
2001 earnings.
Of the numerous allegations made against the Corporation in the 1999 adversary
proceeding, only fraudulent transfer claims remain pending before the
Bankruptcy Court. In addition, MESC subsequently filed three additional
adversary proceedings and one arbitration proceeding against the Corporation.
The Corporation continues to contest vigorously MESC's various claims.
As of March 1, 2002, the Corporation, along with numerous other non-affiliated
companies, was a party to approximately 105 lawsuits in California, Florida,
Georgia, Illinois, Louisiana, Mississippi, Missouri, Pennsylvania and Texas
state courts with allegations of personal injury resulting from asbestos
exposure on the defendants' premises and/or allegations that the defendants
manufactured, sold, distributed or installed products which cause
asbestos-related lung disease. No specific product ever manufactured by the
Corporation or its subsidiaries has been identified by the plaintiffs as
having caused or contributed to any asbestos-related lung disease. The
Corporation has denied the allegations and raised numerous defenses in all of
these asbestos cases. All asbestos cases have been tendered to the
Corporation's insurance carriers for defense and indemnity.
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.
PART I
(Continued)
- -----------
ITEM 3. LEGAL PROCEEDINGS (Continued)
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 statutes, 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 two 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. There have been no significant developments since
the date the Corporation received the notice.
PART II
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,
2002, together with certain biographical information, are as follows:
ROBERT E. ABERNATHY, 47, was elected Group President effective January 1,
1997. He is responsible for the global Business-to-Business segment which
includes the Away-From-Home Tissue and Wipes business, the Health Care
business, Nonwovens manufacturing, Research and Sales, the Technical Paper
business, the Neenah Paper business and the Energy and Environment
organization. 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, 55, 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, 63, 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, 43, has served as President and Chief Operating Officer of the
Corporation since his election in 1999. He previously had been elected Group
President - Global 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 and has held other senior management positions
in the Corporation. Mr. Falk is a member of the University of Wisconsin -
Madison School of Business Dean's Advisory Board. He has been a director of
the Corporation since 1999.
STEVEN R. KALMANSON, 49, was elected Group President in January 1996. He is
responsible for the Consumer Tissue Segment, which includes the Family Care
and Wet Wipes sectors, Pulp Operations and North America Supply Chain and
Logistics organizations. Mr. Kalmanson joined the Corporation in 1977. His
past responsibilities have included various marketing positions within the
consumer products sectors. He was appointed President, Adult Care sector in
1990, President of the Child Care sector in 1991, and President of the Family
Care sector in 1995.
PART II
(Continued)
- -----------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (Continued)
WAYNE R. SANDERS, 54, 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 since 1975, Mr. Sanders also has held various
other senior management positions in the Corporation. Mr. Sanders is a
director of Adolph Coors Company, Coors Brewing Company and Texas Instruments
Incorporated. He also is Chairman of the Marquette University Board of
Trustees and is Chairman of the Southwest Region and a member of the National
Board of Governors of the Boys and Girls Clubs of America. He has been a
director of the Corporation since 1989.
KATHI P. SEIFERT, 52, was elected Executive Vice President in November 1999.
She is responsible for the Personal Care Segment which includes the Infant
Care, Child Care, Feminine Care, and Adult Care business sectors, and the
Safety and Quality Assurance team and the U.S. and Canadian Sales
organizations. 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, Theda Care and Fox Cities
Performing Arts Center.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The dividend and market price data included in Note 13 to the Consolidated
Financial Statements, and the information set forth under the captions
"Additional Information - Dividends and Dividend Reinvestment Plan" and
"Additional Information - Stock Exchanges" contained in the 2001 Annual
Report to Stockholders are incorporated in this Item 5 by reference.
As of March 14, 2002, the Corporation had 45,812 holders of record of its
common stock.
PART II
(Continued)
ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31
(Millions of dollars, -----------------------------------------------------
except per share amounts) 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------
Net Sales. . . . . . . . . . . . . . . $12,546.6 $12,297.8 $13,006.8 $13,982.0 $14,524.4
Gross Profit . . . . . . . . . . . . . 4,607.6 4,597.6 5,325.2 5,753.5 5,908.9
Operating Profit . . . . . . . . . . . 1,486.1 1,697.7 2,435.4 2,633.8 2,338.2
Share of Net Income of
Equity Companies . . . . . . . . . . 157.3 137.1 189.6 186.4 154.4
Income from Continuing
Operations Before
Extraordinary Items and
Cumulative Effect of
Accounting Change. . . . . . . . . . 985.4 1,114.3 1,668.1 1,800.6 1,609.9
Per Share Basis:
Basic. . . . . . . . . . . . . . . 1.77 2.02 3.11 3.34 3.04
Diluted. . . . . . . . . . . . . . 1.76 2.01 3.09 3.31 3.02
Net Income . . . . . . . . . . . . . . 1,002.9 1,103.1 1,668.1 1,800.6 1,609.9
Per Share Basis:
Basic. . . . . . . . . . . . . . . 1.80 2.00 3.11 3.34 3.04
Diluted. . . . . . . . . . . . . . 1.79 1.99 3.09 3.31 3.02
Cash Dividends Per Share
Declared . . . . . . . . . . . . . . .96 1.00 1.04 1.08 1.12
Paid . . . . . . . . . . . . . . . . .95 .99 1.03 1.07 1.11
Total Assets . . . . . . . . . . . . . $11,417.1 $11,687.8 $12,815.5 $14,479.8 $15,007.6
Long-Term Debt . . . . . . . . . . . . 1,803.9 2,068.2 1,926.6 2,000.6 2,424.0
Stockholders' Equity . . . . . . . . . 4,340.3 4,031.5 5,093.1 5,767.3 5,646.9
NOTES TO SELECTED FINANCIAL DATA
(1) 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
------------------------------------------------------------------------------------
Business improvement 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
====== ====== ====== ====
PART II
(Continued)
ITEM 6. SELECTED FINANCIAL DATA (Continued)
(2) 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
------------------------------------------------------------------------------------
Business improvement programs. . . . . . . . . $191.6 $ 377.8 $276.8
Mobile pulp mill fees and related severance. . 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
====== ======= ====== ====
(3) 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
------------------------------------------------------------------------------------
Business improvement programs . . . . . . . $69.0 $ 47.8 $ 35.6
Business integration and other costs. . . . 11.2 22.6 14.5
Mobile pulp mill fees and related severance 9.0 9.0 5.6
Gains on asset disposals. . . . . . . . . . - (176.7) (112.3)
----- ------- -------
Total . . . . . . . . . . . . . . . . . . $89.2 $ (97.3) $ (56.6) $(.11)
===== ======= ======= =====
(4) Included in the selected financial data for 2000 are the following
items:
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
------------------------------------------------------------------------------------
Business improvement programs . . . . . . . . $20.2 $ 24.4 $ 16.4
Business integration and other costs. . . . . 10.1 35.1 23.0
Litigation settlements and other. . . . . . . - (60.6) (37.2)
----- ------ ------
Total . . . . . . . . . . . . . . . . . . $30.3 $ (1.1) $ 2.2 $.01
===== ====== ====== ====
(5) Included in the selected financial data for 2001 are the following items:
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
----------------------------------------------------------------------------------------
North American mill closing and other write-offs . $ 50.1 $ 52.6 $ 32.6
Latin American asset plan. . . . . . . . . . . . . 32.3 32.5 19.8
Business improvement programs. . . . . . . . . . . 54.7 55.5 33.8
Business integration and other costs . . . . . . . 4.6 29.1 19.2
Arbitration settlements. . . . . . . . . . . . . . - 43.2 26.9
----- ----- ------
Total . . . . . . . . . . . . . . . . . . . . . $141.7 $212.9 $132.3 $.25
====== ====== ====== ====
PART II
(Continued)
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 2001 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 - Risk Sensitivity" contained in the 2001 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
2001 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 2002 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 incorporated 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 2002 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 2002 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 2002 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, 2001 and 2000, and the
related Consolidated Statements of Income, Stockholders' Equity and Cash Flow
for the years ended December 31, 2001, 2000 and 1999, and the related Notes
thereto, and the Independent 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 2001 Annual Report to Stockholders.
In addition, a related report of Deloitte & Touche LLP is 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 2001 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,
incorporated by reference to Exhibit (3)(a) of the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1999.
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
June 8, 2000, incorporated by reference to Exhibit No. (10)b of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.
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 14, 2000, incorporated by reference to Exhibit No. (10)e of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.
Exhibit No. (10)f. Deferred Compensation Plan, as amended effective November
14, 2000, incorporated by reference to Exhibit No. (10)f of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2000.
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 June 29, 2000, incorporated by reference to Exhibit No.
(10)j of the Corporation's Annual Report on Form 10-K for the year ended
December 31, 2000.
Exhibit No. (10)k. 1999 Restricted Stock Plan, as amended effective November
14, 2000, incorporated by reference to Exhibit No. (10)k of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2000.
Exhibit No. (10)l. Outside Directors' Stock Option Plan, effective January 1,
2001, incorporated by reference to Exhibit No. (10)l of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2000.
Exhibit No. (10)m. 2001 Equity Participation Plan.
Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 2001.
Exhibit No. (13). Portions of the Corporation's 2001 Annual Report to
Stockholders incorporated by reference in this Form 10-K.
Exhibit No. (21). Subsidiaries of the Corporation.
PART IV
(Continued)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(Continued)
Exhibit No. (23). Independent Auditors' Consent.
Exhibit No. (24). Powers of Attorney.
(B) REPORTS ON FORM 8-K
The Corporation filed the following Current Reports on Form 8-K since October
1, 2001:
1. Current Report on Form 8-K, dated November 30, 2001, to report the
text of a web-casted conference call concerning the Corporation's 2002
outlook and the planning assumptions relating thereto.
2. Current Report on Form 8-K, dated January 17, 2002, to report the
reclassification of business segment sales and operating profit for
1999, 2000 and the first nine months of 2001 to reflect newly defined
business segments of the Corporation.
3. Current Report on Form 8-K, dated January 23, 2002, to report further
reclassification of certain amounts contained in the Form 8-K dated
January 17, 2002.
4. Current Report on Form 8-K, dated February 5, 2002, to report the text
of a press release issued on January 23, 2002 relating to the
Corporation's 2001 fourth quarter earnings and the results of an
arbitration ruling.
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 18, 2002
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 18, 2002
- ----------------------- and Chief Executive Officer
Wayne R. Sanders and Director
(principal executive officer)
/s/ John W. Donehower Senior Vice President and March 18, 2002
- ------------------------ Chief Financial Officer
John W. Donehower (principal financial officer)
/s/ Randy J. Vest Vice President and March 18, 2002
- -------------------- Controller
Randy J. Vest (principal accounting officer)
Directors
John F. Bergstrom Claudio X. Gonzalez
Pastora San Juan Cafferty Linda Johnson Rice
Paul J. Collins Wolfgang R. Schmitt
Robert W. Decherd Marc J. Shapiro
Thomas J. Falk Randall L. Tobias
William O. Fifield
By: /s/ O. George Everbach March 18, 2002
-------------------------------------
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, 2001 and 2000, and for each of the three years
in the period ended December 31, 2001, and have issued our report thereon
dated February 8, 2002; such consolidated financial statements and report are
included in your 2001 Annual Report to Stockholders 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
February 8, 2002
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(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(A) RECLASSIFICATIONS PERIOD
- ------------------------------------------------------------------------------------------------------------
DECEMBER 31, 2001
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . $53.2 $ 18.2 $(3.1) $ 18.5 (B) $49.8
Allowances for sales
discounts. . . . . . . . 19.9 215.9 2.0 217.8 (C) 20.0
DECEMBER 31, 2000
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . $50.9 $ 12.7 $ 3.9 $ 14.3 (b) $53.2
Allowances for sales
discounts. . . . . . . . 20.7 203.7 (.4) 204.1 (c) 19.9
DECEMBER 31, 1999
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . $51.5 $ 13.9 $ 6.8 $ 21.3 (b) $50.9
Allowances for sales
discounts. . . . . . . . 15.8 176.2 (.4) 170.9 (c) 20.7
(a) Includes bad debt recoveries and the effects of changes in foreign currency exchange
rates. Also includes the beginning balances resulting from acquisitions made during the year
and from the consolidation of Kimberly-Clark Australia Holding Pty., Ltd, the Corporation's
Australian affiliate, Hogla-Kimberly Limited, the Corporation's Israeli affiliate, and
Colombiana Kimberly Colpapel S.A., its Colombian affiliate, in 2001, 2000 and 1999,
respectively.
(b) Primarily uncollectible receivables written off.
(c) Sales discounts allowed.
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1999
(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) - - -
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(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, 2001
Deferred Taxes
Valuation Allowance. . . . . . $158.8 $ - $ - $(18.4) $177.2
DECEMBER 31, 2000
Deferred Taxes
Valuation Allowance. . . . . . $279.0 $(102.6) $ - $ 17.6 $158.8
DECEMBER 31, 1999
Deferred Taxes
Valuation Allowance. . . . . . $285.6 $ 34.9 $ - $ 41.5 $279.0
(a) Includes the net currency effects of translating valuation allowances at current rates under
SFAS No. 52 of $(3.4) million in 2001, $(17.8) million in 2000 and $(39.4) million in 1999. Also,
reflects a valuation allowance of approximately $24 million in 2001 related to a net operating loss
carryforward that had not previously been recorded. This entry had no effect on the consolidated
statement of income or the consolidated balance sheet.