FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT: JANUARY 27, 1998
(Date of earliest event reported)
KIMBERLY-CLARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-225 39-0394230
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
P.O. BOX 619100, DALLAS, TEXAS 75261-9100
(Address of principal executive offices) (Zip Code)
(972) 281-1200
(Registrant's telephone number, including area code)
_____________________________________
Item 5. Other Events
Attached hereto as Exhibit 99 is a press release issued by Kimberly-
Clark Corporation in connection with its 1997 fourth quarter and annual
earnings.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KIMBERLY-CLARK CORPORATION
Date: January 30, 1998 By: /s/ John W. Donehower
-----------------------------------
John W. Donehower
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
(99) Press release issued by Kimberly-Clark Corporation in
connection with its 1997 fourth quarter and annual earnings.
Tina S. Barry
(972) 281-1484
KIMBERLY-CLARK REPORTS FOURTH QUARTER & FULL YEAR RESULTS
EXCLUDING NONOPERATING ITEMS, FOURTH QUARTER EARNINGS WERE 62 CENTS PER
SHARE IN 1997 COMPARED TO 63 CENTS PER SHARE IN 1996
DALLAS, January 27, 1998 _ Kimberly-Clark Corporation (NYSE: KMB) today
reported earnings from operations for the fourth quarter of 1997 were 62
cents per share compared to 63 cents in 1996, a decline of 1.6 percent.
Including a charge of 91 cents per share related to the company's
previously announced restructuring plan, as well as nonoperating income
of 3 cents per share, the company reported a net loss of 26 cents per
share for the fourth quarter of 1997. Changes in the value of foreign
currencies reduced fourth quarter 1997 earnings by approximately 2 cents
per share.
For the full year, earnings per share from operations were a record
$2.44 in 1997 compared to $2.37 in 1996, an increase of 3.0 percent.
Including restructuring plan costs and extraordinary gains in 1997 and
other nonoperating items in both years, earnings per share were $1.62 in
1997 versus $2.49 in 1996, with diluted earnings per share 1 cent lower
in both years.
Commenting on the company's 1997 earnings, Wayne R. Sanders,
chairman and chief executive officer, said, "While our earnings per share
from operations set a new record, our results for the year were not all
we had hoped. I continue to be encouraged by the strong performance of
our personal care businesses, but earnings growth in 1997 was depressed
by lower selling prices, particularly for tissue products worldwide;
heightened competition in Europe; and transitional issues in our North
American away-from-home business. Selling prices alone had a negative
impact of approximately $240 million, or 29 cents per share. In this
environment, we are moving aggressively to drive down our costs as we
implement the major restructuring plan announced last November."
Sales of $3.1 billion for the fourth quarter were 7.0 percent lower
than in 1996. The company divested noncore newsprint and pulp operations
and sold its interest in Scott Paper Limited of Canada in 1997. Fourth
quarter sales were down only 2 percent excluding the revenues from these
divested businesses, and would have risen 2 percent absent changes in
foreign exchange rates. Excluding divested businesses, worldwide sales
volumes increased 3 percent.
<PAGE>
Fourth quarter operating profit, before the costs of the
restructuring plan, was $499.2 million in 1997, a decrease of 5.2 percent
from the prior year. Excluding divested businesses, operating profit for
the quarter declined about 3 percent.
In connection with its restructuring plan, the company recorded
pretax charges in the fourth quarter of 1997 amounting to $701.2 million,
of which $220.1 million was included in cost of products sold. The
charges reduced net income by $503.1 million, or 91 cents per share. As
previously announced, the total pretax cost of the plan is approximately
$810 million. The remaining $108.8 million of costs, which could not be
recognized in 1997 under applicable accounting regulations, will be
recorded in 1998.
The key factors affecting fourth quarter results for the company's
primary business segments were (operating profit comparisons exclude 1997
restructuring plan costs):
PERSONAL CARE PRODUCTS - Sales of personal care products in the
fourth quarter were 7 percent greater than in 1996, driven by an
increase in sales volumes of 9 percent. Personal care sales
volumes were higher in every region, fueled by continued strong
growth in developing markets and continued innovations in products
such as Pull-Ups training pants, Huggies baby wipes, and Kotex and
Camelia feminine pads and pantiliners in Europe. Operating profit
increased 11 percent due primarily to the higher volumes and
despite higher marketing costs for the relaunch of improved feminine
care products in Europe.
TISSUE-BASED PRODUCTS - Fourth quarter sales of tissue-based
products excluding divested businesses were 6 percent lower than in
1996, primarily because of changes in foreign currency exchange
rates. On a worldwide basis, sales volumes were virtually even with
last year's levels, as increases in developing markets were offset
by a 3 percent decline in Europe's highly competitive tissue
markets. Selling prices in the fourth quarter of 1997 averaged
approximately 1 percent lower than the prior year.
Fourth quarter 1997 operating profit for tissue-based products was
down 9 percent compared to 1996, mainly because of the impact of
competitive conditions in Europe and the loss of earnings of
divested businesses.
<PAGE>
Interest expense in the fourth quarter of 1997 increased $4.9
million from the prior year primarily because of an increase in the level
of debt from $2.3 billion at year-end 1996 to $2.5 billion at the end of
1997. During the year, the company repurchased 17.9 million shares of
common stock, including 3.4 million shares during the fourth quarter, at
a total cost of nearly $900 million. The company's debt to capital ratio
at December 31, 1997, was 36.5 percent, compared to 32.9 percent at year-
end 1996.
The company sold its interest in Ssangyong Paper Co., Ltd. of Korea
in the fourth quarter of 1997. The resulting gain was included in other
income for the quarter and increased net income by 3 cents per share.
Excluding 1997 restructuring costs and nonoperating items in 1996,
Kimberly-Clark's share of net income of equity companies in the fourth
quarter declined to $36.7 million in 1997 from $51.5 million in 1996, due
primarily to lower net income at Kimberly-Clark de Mexico, S.A. de C.V.
Although the Mexican affiliate's sales and operating profits for the
quarter increased at double-digit rates, the net income comparison was
adversely affected by an unusually low effective tax rate in the fourth
quarter of 1996.
For the full year, 1997 sales of $12.5 billion were down 4.6 percent
from $13.1 billion in 1996. Sales, however, were up slightly excluding
the revenues of divested businesses in both years. Increases in
worldwide sales volumes of nearly 5 percent were offset by lower selling
prices and foreign currency effects. Operating profit in 1997 was
$2,004.4 million before the costs of the restructuring plan, a decrease
of 2.4 percent versus 1996, but was nearly 3 percent greater excluding
the operating profit of divested businesses.
Mr. Sanders said: "As 1997 wound to a close, we took several key steps
which, along with our restructuring plan, should benefit us in the years
to come. We started up our state-of-the-art tissue machine at Beech
Island, S. C., and introduced new Kleenex- Cottonelle bathroom tissue in
the Eastern United States - this differentiated, consumer- preferred
product has exciting potential. We completed the acquisition of Tecnol
Medical Products - our professional health care business is now better
positioned for success in its growing markets, and for becoming an
increasingly important part of Kimberly-Clark. We also completed the
strategic changes in our North American away-from-home business - I
believe this business will regain its historic position of delivering
financial returns in excess of the corporate average by the second
quarter of 1998.
"In addition, we are planning to increase prices of our consumer
tissue products in the U.S. by more than 4 percent for facial tissue, by
5 to 6 percent for paper towels and by approximately 6.5 percent for
bathroom tissue, effective March 1, 1998."
A Fortune 100 company, Kimberly-Clark celebrated its 125th
anniversary in 1997. The company is a leading global manufacturer of
personal care, consumer tissue and away-from-home products. The
company's global brands include Huggies, Pull-Ups, Kotex, Depend,
Kleenex, Scott, Kimwipes and Wypall. Other brands well-known outside the
U.S. include Andrex, Scottex, Page, Popee, and Kimbies. Kimberly-Clark
also is a major producer of professional health care products and premium
business, correspondence and technical papers. The company has
manufacturing operations in 37 countries and sells its products in more
than 150 countries.
Certain matters contained in this news release
concerning the business outlook, anticipated financial and
operating results, strategies, contingencies and
contemplated transactions of the company constitute
forward-looking statements and are based upon management's
expectations and beliefs concerning future events impacting
the company. For a description of certain factors that
could cause the company's future results to differ
materially from those expressed in any such forward-looking
statements, see the section of Part I, Item 1 of the
company's Annual Report on Form 10-K for the year ended
December 31, 1996 entitled "Factors That May Affect Future
Results."
<PAGE>
<TABLE>
<CAPTION>
KIMBERLY-CLARK CORPORATION
FOURTH QUARTER ENDED DECEMBER 31
(Millions except per share amounts)
1997 1996 Change
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 3,089.4 $ 3,323.6 - 7.0%
Cost of products sold 2,106.9 2,094.3 + 0.6%
--------- ---------
Gross Profit 982.5 1,229.3 - 20.1%
Advertising, promotion and selling
expenses 471.4 462.5 + 1.9%
Research expense 61.8 60.9 + 1.5%
General expense 170.2 179.5 - 5.2%
Restructuring and other unusual
charges 481.1 - N.M.
--------- ---------
Operating Profit (Loss) (202.0) 526.4 N.M.
Interest income 6.9 7.5 - 8.0%
Interest expense (46.5) (41.6) + 11.8%
Other income (expense), net 22.6 0.8 N.M.
--------- ---------
Income (Loss) Before Income Taxes (219.0) 493.1 N.M.
Provision (Benefit) for income taxes (31.0) 172.6 N.M.
--------- ---------
Income (Loss) Before Equity Interests (188.0) 320.5 N.M.
Share of net income of
equity companies 34.5 41.6 - 17.1%
Minority owners' share of
subsidiaries' net income 6.5 (15.0) N.M.
--------- ---------
Net Income (Loss) $ (147.0) $ 347.1 N.M.
========= =========
Net Income (Loss) Per Share:
Basic $ (0.26) $ 0.62 N.M.
======== ========
Diluted $ (0.26) $ 0.61 N.M.
======== ========
</TABLE>
See Notes to Financial Summaries
N.M.-Not meaningful
Unaudited
<PAGE>
<TABLE>
<CAPTION>
KIMBERLY-CLARK CORPORATION
YEAR ENDED DECEMBER 31
(Millions except per share amounts)
1997 1996 Change
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $12,546.6 $13,149.1 - 4.6%
Cost of products sold 7,972.6 8,241.4 - 3.3%
--------- ---------
Gross Profit 4,574.0 4,907.7 - 6.8%
Advertising, promotion and selling
expenses 1,937.2 2,029.7 - 4.6%
Research expense 211.8 207.9 + 1.9%
General expense 640.7 616.4 + 3.9%
Restructuring and other unusual
charges 481.1 - N.M.
--------- ---------
Operating Profit 1,303.2 2,053.7 - 36.5%
Interest income 31.4 28.1 + 11.7%
Interest expense (164.8) (186.7) - 11.7%
Other income (expense), net 17.7 107.2 - 83.5%
--------- ---------
Income Before Income Taxes 1,187.5 2,002.3 - 40.7%
Provision for income taxes 433.1 700.8 - 38.2%
--------- ---------
Income Before Equity Interests 754.4 1,301.5 - 42.0%
Share of net income of
equity companies 157.3 152.4 + 3.2%
Minority owners' share of
subsidiaries' net income (27.7) (50.1) - 44.7%
--------- ---------
Net Income Before Extraordinary Items 884.0 1,403.8 - 37.0%
Extraordinary gains, net of income taxes 17.5 - N.M.
--------- ---------
Net Income $ 901.5 $ 1,403.8 - 35.8%
========= =========
Per Share Basis:
Basic:
Income before extraordinary gains $ 1.59 $ 2.49 - 36.1%
Extraordinary gains, net of income taxes .03 - N.M.
-------- --------
Net Income $ 1.62 $ 2.49 - 34.9%
======== ========
Diluted:
Income before extraordinary gains $ 1.58 $ 2.48 - 36.3%
Extraordinary gains, net of income taxes .03 - N.M.
-------- --------
Net Income $ 1.61 $ 2.48 - 35.1%
======== ========
</TABLE>
See Notes to Financial Summaries
N.M.-Not meaningful
Unaudited
<PAGE>
<TABLE>
<CAPTION>
KIMBERLY-CLARK CORPORATION
YEAR ENDED DECEMBER 31
(Millions except per share amounts)
EARNINGS PER SHARE SUMMARY:
Fourth Quarter Year
Ended December 31 Ended December 31
------------------- -------------------
1997 1996 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Income (Loss) Per Share - Basic $ (.26) $ .62 $1.62 $2.49
Adjusted for nonoperating items:
1997 Charge .91 - .91 -
Asset disposals (.03) - (.09) (.13)
Mexican Affiliate restructuring
charge - .01 - .01
------- ------ ----- -----
Earnings Per Share - Operations $ .62 $ .63 $2.44 $2.37
======= ====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
OTHER INFORMATION:
1997 1996 Change
- -------------------------------------------------------------------------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31
Cash Dividends Declared Per Share $ .96 $ .92 +4.3%
Capital Spending 944.3 883.7 +6.9%
Net Income Return on Average
Stockholders' Equity 32.6% * 34.5% -5.5%
</TABLE>
* Excluding the 1997 charge.
See Notes to Financial Summaries
Unaudited
<PAGE>
KIMBERLY-CLARK CORPORATION
NOTES TO FINANCIAL SUMMARIES
(1)In the fourth quarter of 1997, the Corporation announced a
plan to restructure its worldwide operations involving the
sale, closure or downsizing of 18 manufacturing facilities
and for other unusual items ("announced plan"), the cost of
which is approximately $810.0 million. Of the costs of the
announced plan, $701.2 million was recorded as a charge
against 1997 pretax income ("1997 charge"), reducing net
income by $503.1 million, or $.91 per share, for the quarter
and the year ended December 31, 1997. The remainder of the
costs of the announced plan aggregating $108.8 million will
be recorded in 1998 when notification is made to employees
who will be terminated or at the time other costs result in
accruable liabilities. Of the 1997 charge, $220.1 million
relates to the write-down of certain assets and inventories
and has been charged to costs of products sold, and $481.1
million has been recorded as Restructuring and Other Unusual
Charges in the income statement.
(2)Other income (expense), net for the quarter and year ended
December 31, 1997 includes a gain on the sale of the
Company's 17 percent interest in Ssangyong Paper Co., Ltd., a
Korean tissue company. The sale resulted in a gain for the
quarter and the year ended December 31, 1997 of $.03 per
share.
Other income (expense), net for the year ended December 31,
1996 includes gains related to the divestiture of the Scott
baby wipes and certain U.S. facial tissue businesses, the
Lakeview tissue mill in Neenah, Wisconsin, certain U.K.
tissue businesses, and a tissue mill in Prudhoe, England, as
required to meet regulatory requirements for the Scott
merger, and the sale of the Company's remaining 20 percent
interest in Midwest Express Airlines. These divestitures
resulted in net gains for the year ended December 31, 1996 of
$.13 per share.
(3)Share of net income of equity companies for the year ended
December 31, 1997 includes a net nonoperating gain of $16.3
million, or $.03 per share, primarily related to the sale of
a portion of the tissue business of Kimberly-Clark de Mexico,
S.A. de C.V. ("KCM"). The sale was required by the Mexican
regulatory authorities following the 1996 merger of KCM and
Scott Paper Company's ("Scott") former Mexican affiliate.
(4)In June 1997, the Corporation sold Scott Paper Limited, a
50.1 percent-owned Canadian tissue subsidiary, and in March
1997, it sold its Coosa Pines, Alabama, newsprint and pulp
manufacturing mill, together with related woodlands. Also in
March, the Corporation recorded impairment losses on the
planned sales of a pulp manufacturing mill in Miranda, Spain;
a recycled fiber facility in Oconto Falls, Wisconsin; a
tissue converting facility in Yucca, Arizona; and an
integrated pulp making facility in Everett, Washington.
These transactions were aggregated and reported as
extraordinary gains totaling $17.5 million, or $.03 per
share, for the year ended December 31, 1997.
(5)The average number of common shares outstanding for the
twelve months ended December 31, 1997 and 1996 was 555.9
million and 564.0 million, respectively. The number of
common shares outstanding as of December 31, 1997 and 1996
was 556.3 million and 563.4 million, respectively.
Unaudited
<PAGE>
<TABLE>
<CAPTION>
KIMBERLY-CLARK CORPORATION
SELECTED PRODUCT SEGMENT DATA
(millions)
Fourth Quarter Year
Ended December 31 Ended December 31
------------------------------ ------------------------------
1997(a) 1996 Change 1997(a) 1996 Change
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES:
Personal Care Products $1,318.1 $1,235.9 + 6.7% $5,234.8 $4,837.8 + 8.2%
Tissue-Based Products 1,614.4 1,832.1 - 11.9% 6,611.5 7,372.8 -10.3%
Newsprint, Paper and
Other 172.4 272.5 - 36.7% 753.5 1,015.4 -25.8%
Intersegment Sales (15.5) (16.9) N.M. (53.2) (76.9) N.M.
-------- -------- --------- ---------
Consolidated $3,089.4 $3,323.6 - 7.0% $12,546.6 $13,149.1 - 4.6%
======== ======== ========= =========
OPERATING PROFIT:
Personal Care Products $ 41.1 $ 212.8 - 80.7% $ 773.8 $ 791.3 - 2.2%
Tissue-Based Products (255.4) 266.6 N.M. 407.5 1,085.2 -62.4%
Newsprint, Paper and
Other 40.0 41.3 - 3.1% 168.0 211.8 -20.7%
Unallocated Items-net (27.7) 5.7 N.M. (46.1) (34.6) N.M.
------- ------- -------- ---------
Consolidated $(202.0) $ 526.4 N.M. $1,303.2 $ 2,053.7 -36.5%
======= ======= ======== =========
</TABLE>
(a) Operating profit for the quarter and the year ended December 31,
1997 for Personal Care Products; Tissue-Based Products; Newsprint,
Paper and Other; and Unallocated includes $195.3 million, $496.9
million, $.7 million, and $8.3 million, respectively, of the 1997
charge described in Note 1.
Description of Product Segments
- -------------------------------
Personal Care Products includes infant, child, feminine and
incontinence care products; wet wipes; health care products; and
related products.
Tissue-Based Products includes tissue and wipers for household and
away-from-home use; pulp; and related products.
Newsprint, Paper and Other includes newsprint, printing papers,
premium business and correspondence papers, specialty papers,
technical papers, and related products; and other products and
services.
N.M.-Not meaningful
Unaudited
# # #
<PAGE>
