KIMBERLY CLARK CORP, 10-K, 1998-03-26

KIMBERLY CLARK CORP
10-K, 1998-03-26
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<PAGE>

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, 1997
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 (ZIP CODE)
executive offices)

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
Securities 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 20, 1998, 556,999,429 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 $27.7 billion.

<PAGE> 1

DOCUMENTS INCORPORATED BY REFERENCE

Kimberly-Clark Corporation's 1997 Annual Report to Stockholders
and 1998 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 1997 Annual Report to Stockholders and 1998 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 ITEMS OF THIS FORM 10-K
PORTIONS ARE INCORPORATED IN WHICH INCORPORATED
BY REFERENCE
- - ----------------------------- --------------------------------------

1997 Annual Report to PART I
Stockholders
(Year ended December 31, 1997) ITEM 1. Business

ITEM 3. Legal Proceedings

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 8. Financial Statements
and Supplementary Data

PART IV
ITEM 14. Exhibits, Financial
Statement Schedules, and
Reports on Form 8-K

1998 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

<PAGE> 2

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 17 to
the Financial Statements contained in the 1997 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 on its core technologies, well-known trademarks and
consumer product franchises. Those businesses that did not, or
could not, build on these strengths were candidates for
divestiture. Those 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, the Corporation has completed a number of acquisitions
and divestitures, including the following transactions since
December 1995:

o On December 12, 1995, Scott Paper Company ("Scott") became a
wholly-owned subsidiary of Kimberly-Clark upon consummation of
a merger transaction in which each Scott common share
outstanding immediately prior to the effective time of the
merger (other than shares owned by Kimberly-Clark or Scott,
which shares were canceled) was converted into .78 of a share
of common stock of Kimberly-Clark. The transaction was
accounted for as a pooling of interests. On February 14,
1996, Scott changed its name to Kimberly-Clark Tissue Company.

o 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. Justice
Department as part of the Scott merger.

o On July 31, 1996, the Corporation sold Scott's Fort Edward,
New York tissue mill and licensed the Scotties facial tissue
brand name to Irving Tissue, Inc., a privately-held Canadian
company. This divestiture was required by the U.S. Justice
Department as part of the Scott merger.

o 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.

o On November 22, 1996, the Corporation sold its Lakeview tissue
mill in Neenah, Wisconsin to American Tissue Mills of Neenah,
LLC. This divestiture was required by the U.S. Justice
Department as part of the Scott merger.

<PAGE> 3

o 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 (the
"Coosa Sale").

o 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.

o On December 18, 1997, the Corporation acquired Tecnol Medical
Products, Inc. ("Tecnol"), a leading maker of disposable face
masks and patient care products. The transaction was
accounted for as a purchase and involved the exchange of
approximately 8.7 million shares of Kimberly-Clark common
stock for all outstanding shares of Tecnol common stock.

On February 25, 1997, the Corporation announced its intention to
sell its pulp operations and related woodlands at Terrace Bay,
Ontario; New Glasgow, Nova Scotia; and Miranda, Spain as part of
its plan to reduce its exposure to the cyclical, capital-
intensive pulp business. Although the Corporation had an
agreement to sell its mills and related woodlands at Terrace Bay,
Ontario and New Glasgow, Nova Scotia to Vancouver-based Harmac
Pacific Inc., that sale was not completed, and management is
evaluating its options for these facilities. See "Raw Materials"
and "Factors That May Affect Future Results - Raw Materials."

On November 21, 1997, the Corporation announced a restructuring
plan ("Announced Plan") which includes the sale, closure or
downsizing of 18 manufacturing facilities worldwide and a
workforce reduction of approximately 5,000 employees. In
connection with the Announced Plan, the Corporation recorded a
pretax charge of $701.2 million ("1997 Charge").

On March 12, 1998, the Corporation announced that it anticipates
earnings from operations for the first quarter of 1998 will be in
the range of 54-to-58 cents per share. The Corporation also announced
that it expects earnings from operations to improve over the balance
of the year as savings from the Announced Plan and benefits of
recently implemented price increases for consumer and
away-from-home tissue products in the United States are realized.
As a result, earnings per share from operations during the last nine
months of 1998 should be greater than the same period a year ago.

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.

For financial reporting purposes, the Corporation's businesses
are separated into three segments: Personal Care Products;
Tissue-Based Products; and Newsprint, Paper and Other.

<PAGE> 4

Personal Care Products includes disposable diapers, training and
youth pants, feminine and incontinence care products; wet wipes;
health care products; and related products. Products in this
business segment are for household use and are sold under a
variety of well-known brand names, including Huggies, Pull-Ups,
GoodNites, Kotex, New Freedom, Lightdays, Depend and Poise.

Tissue-Based Products includes tissue and wipers for household
and away-from-home use; pulp; and related products. Products in
this business segment are sold under the Kleenex, Scott, Kleenex
Cottonelle, Kleenex Viva, Kimwipes, Wypall 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. Health care products are sold to
distributors, converters and end-users. 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.

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. Prior to the Coosa Sale, newsprint and groundwood
printing papers were sold directly to newspaper publishers and
commercial printers. Premium business and correspondence papers
and specialty papers are sold directly to users, converters,
manufacturers, publishers and printers, and through paper
merchants, brokers, sales agents and other resale agencies.

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 1997 Annual Report to Stockholders
and is incorporated herein by reference.

RAW MATERIALS. Cellulose fibers in the form of wood pulp are the
primary raw materials for the Corporation's paper and tissue
products and are important components in disposable diapers,
training pants, feminine pads and incontinence care products.
Large amounts of recovered or recycled paper are also consumed,
primarily in tissue products. Superabsorbent materials are
important components in disposable diapers, training 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
pants, feminine pads, incontinence and health care products and
away-from-home wipers. Most recovered paper and all synthetics
are purchased. Wood pulp, deinked pulp (recycled) and nonwood
cellulose fibers 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."

<PAGE> 5

Production at the Corporation's pulp mills at Mobile, Alabama;
Everett, Washington; Terrace Bay, Ontario; New Glasgow, Nova
Scotia; and Miranda, Spain supplied approximately 70 percent of
the Corporation's 1997 virgin fiber requirements. The
Corporation sold its Coosa Pines, Alabama pulp and newsprint
facility on March 27, 1997. See "Recent Developments."

The Corporation owns or controls 6.4 million acres of forestland
in North America, principally as a fiber source for pulp
production which is consumed internally within the tissue and
personal care businesses. In the United States, approximately .5
million acres are owned in Alabama and Mississippi. In Canada,
1.0 million acres in the province of Nova Scotia are owned by the
Corporation, and 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, health care and household products, and nonwoven
materials. Consolidated research and development expense was
$211.8 million in 1997, $207.9 million in 1996 and
$207.2 million in 1995.

ENVIRONMENTAL MATTERS. Capital expenditures for environmental
controls to meet legal requirements and otherwise relating to the
protection of the environment at the Corporation's facilities in
the United States are expected to be $102.6 million in 1998 and
$167.1 million in 1999. Approximately $87.0 million and
$138.6 million of such expenditures in 1998 and 1999,
respectively, relate to compliance with the U.S. Environmental
Protection Agency's ("EPA") Cluster Rule for kraft and sulfite
pulping operations at the Corporation's Everett, Washington and
Mobile, Alabama pulp mills. The remainder of the forecasted
expenditures, $15.6 million in 1998 and $28.5 million in 1999,
will be applied at various other tissue and paper production
facilities in the United States for other environmental control
system improvements. Cluster Rule capital expenditures for the
year 2000 are estimated at $52.8 million.

Total environmental capital expenditures are not expected to have
a material effect on the Corporation's total capital
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.

<PAGE> 6

EMPLOYEES. In its worldwide consolidated operations, the
Corporation had 57,000 employees as of December 31, 1997.

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
the business outlook, anticipated financial and operating
results, strategies, contingencies and contemplated transactions
of the Corporation; the adequacy of the 1997 Charge and the 1995
charge for estimated costs of the Scott merger, for restructuring
the combined operations and for other unusual charges; and the
remaining costs of the Announced 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 Securities and Exchange Commission
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 both 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 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.

<PAGE> 7

COST SAVING STRATEGY. A significant portion of the Corporation's
anticipated cost savings are expected to result from operating
efficiencies, continued synergies attributable to the Scott
merger and the Announced 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. The Corporation uses a variety of raw materials
in its manufacturing processes, including wood pulp and deinked
pulp (recycled), polypropylene and other synthetics and
chemicals. Wood based raw materials are subject to significant
price variations due to the cyclical nature of the market. On a
worldwide basis, the Corporation has reduced its internal pulp
supply to approximately 70 percent of its virgin fiber needs and
has announced its intention to further reduce its level of pulp
integration to approximately 30 percent. However, following the
consummation of such strategy, increases in pulp prices could
adversely affect the Corporation's earnings if selling prices are
not adjusted or if such adjustments significantly trail the
increases in pulp prices. If the Corporation is not successful
in reducing its level of pulp integration, its financial results
could be subject to fluctuations in the market price of pulp.

ACQUISITION AND DIVESTITURE STRATEGY. The Corporation's
anticipated financial results and business outlook are dependent
in part upon the consummation of projected divestitures on terms
advantageous to the Corporation and the availability of suitable
acquisition candidates. There can be no assurance that such
divestitures will be consummated, or, if consummated, that the
terms of such divestitures 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. Therefore, there can
be no assurance that such acquisitions will be consummated, or,
if consummated, that the acquired businesses will be successfully
integrated with the Corporation in order to provide anticipated
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) 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 be as estimated.

<PAGE> 8

FOREIGN MARKET RISKS. Because the Corporation and its equity
companies have manufacturing facilities in 38 countries and its
products are sold in approximately 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.
Recent economic uncertainty and currency devaluations in
Southeast Asia have and may continue to have an impact on the
Corporation's earnings. Also, the extremely competitive and
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 (i) foreign exchange translation
risk associated with the strengthening or weakening of various
currencies against each other and local currencies versus the
U.S. dollar, and (ii) 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 1997 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," below.

<PAGE> 9

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. New facilities of the Corporation are under
construction and others 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

*Equity company production facility

<PAGE> 10

WORLDWIDE PRODUCTION AND SERVICE FACILITIES

UNITED STATES

ALABAMA
Mobile - tissue products and pulp (1)
ARIZONA
Tucson - nonwovens
ARKANSAS
Conway - feminine care, incontinence care, nonwovens
Maumelle - wet wipes, nonwovens
CALIFORNIA
Fullerton - tissue products
CONNECTICUT
New Milford - diapers, tissue products
GEORGIA
LaGrange - nonwovens
KENTUCKY
Owensboro - tissue products
MAINE
Winslow - tissue products (2)(3)
MASSACHUSETTS
Westfield - aircraft maintenance, finishing and refurbishing
MICHIGAN
Munising - technical papers
MISSISSIPPI
Corinth - nonwovens, away-from-home 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, tissue products
TENNESSEE
Loudon - tissue products
TEXAS
Cleburne - away-from-home products
Dallas - aircraft maintenance, finishing and refurbishing
Del Rio - nonwovens
Fort Worth - nonwovens
Italy - away-from-home products
Paris - diapers, training and youth pants
San Antonio - personal cleansing products and systems
UTAH
Ogden - diapers
VERMONT
East Ryegate - technical papers
WASHINGTON
Everett - tissue products, pulp
WISCONSIN
Appleton - aircraft maintenance, finishing and refurbishing
Marinette - tissue products
Neenah - diapers, feminine care, incontinence care, business
and correspondence papers,
industrial wipers, nonwovens
Whiting - business and correspondence papers

*Equity company production facility

<PAGE> 11

OUTSIDE THE UNITED STATES

ARGENTINA
* Bernal - tissue products
Cordoba - diapers
Pilar - feminine care, incontinence care
San Luis - diapers
AUSTRALIA
* Albury - nonwovens
* Ingleburn - diapers
* Lonsdale - diapers, incontinence care, feminine care
* Millicent - pulp, tissue products
* Tantanoola - pulp
* Warwick Farm - tissue products
BAHRAIN
* East Riffa - tissue products
BELGIUM
Duffel - tissue products
BRAZIL
Porto Alegre - diapers, feminine care
Suzano - diapers, feminine care
CANADA
Huntsville, Ontario - tissue products, away-from-home wipers
New Glasgow, Nova Scotia - pulp (2)
St. Hyacinthe, Quebec - feminine care, diapers
Terrace Bay, Ontario - pulp (2)
CHINA (4)
Beijing - feminine care, diapers
Changchun - feminine care
Chengdu - feminine care
Guangzhou - tissue products
Handan - feminine care
Harbin - feminine care
Hong Kong - tissue products (5)
Kunming - feminine care
Nanjing - feminine care
Shanghai - tissue products
Shenyang - feminine care
Taiyuan - feminine care
Wuhan - feminine care
COLOMBIA
* Barbosa - away-from-home products, specialty papers,
fine papers, notebooks
* Guarne - tissue products
* Pereira - tissue products, feminine care, incontinence
care, diapers
* Tocancipa - diapers
COSTA RICA
Belen - tissue products
Cartago - diapers
San Jose - tissue products
San Jose - feminine care (2)
CZECH REPUBLIC
Jaromer - diapers, incontinence care
Litovel - feminine care
ECUADOR
Guayaquil - diapers, feminine care
EL SALVADOR
San Salvador - tissue products
Sitio del Nino - tissue products, feminine care

*Equity company production facility

<PAGE> 12

FRANCE
Orleans - tissue products (2)
Rouen - tissue products
Villey-Saint-Etienne - tissue products
GERMANY
Flensburg - tissue products
Forchheim - feminine care, incontinence care
Koblenz - tissue products
Reisholz - tissue products
GUATEMALA
Guatemala City - tissue products, feminine care, notebooks
HONDURAS
Cortes - nonwovens
San Pedro Sula - tissue products, feminine care
INDIA
* Pune - feminine care, diapers
Pune - tissue products
INDONESIA
Jogjakarta - tissue products
* Medan - specialty papers
ISRAEL
* Afula - diapers, feminine care, incontinence care
* Hadera - tissue products
ITALY
Alanno - tissue products
Romagnano - tissue products
Villanovetta - tissue products
JAPAN
Shinga - personal cleansing products, soap
KOREA
Anyang - feminine care, diapers, tissue products
Kimcheon - feminine care, tissue products, nonwovens
Taejon - feminine care, diapers
MALAYSIA
Kluang - tissue products
MEXICO
Acuna - nonwovens
* Bajio - tissue products, fine papers
* Cuautitlan - feminine care, diapers, nonwovens
* Ecatepec - tissue products
Empalme - nonwovens
Magdalena - nonwovens
* Morelia - tissue products, pulp
* Naucalpan - tissue products, diapers, feminine care
Nogales - nonwovens
* Orizaba - tissue products, fine papers, pulp
* Ramos Arizpe - tissue products, diapers
* San Juan - tissue products
* San Rafael - tissue products, fine papers
* Tlaxcala - diapers
NETHERLANDS
Gennep - tissue products
PANAMA
Panama City - feminine care, tissue products
PERU
Lima - tissue products, feminine care
PHILIPPINES
San Pedro, Laguna - feminine care, diapers, tissue products,
specialty papers
SAUDI ARABIA
* Al-Khobar - diapers, feminine care, tissue products
SLOVAK REPUBLIC
Piestany - nonwovens
SOUTH AFRICA
Cape Town - tissue products, feminine care, incontinence care
Springs - tissue products, diapers

*Equity company production facility

<PAGE> 13

SPAIN
Aranguren - tissue products
Arceniega - tissue products, personal cleansing products and systems
Calatayud - diapers
Canary Islands - tissue products
Miranda del Ebro - pulp (2)
Salamanca - tissue products
TAIWAN
Hsin-Ying - tissue products (6)
Ta-Yuan - tissue products
THAILAND
Pathumthanee - feminine care, diapers, tissue products
Samutprakarn - tissue products
UNITED KINGDOM
Barrow - tissue products
Barton-upon-Humber - diapers
Flint - tissue products, nonwovens
Larkfield - tissue products
Northfleet - tissue products
Sealand - feminine care
VENEZUELA
Guacara - diapers, feminine care
Maracay - tissue products
VIETNAM
Hanoi - feminine care
Ho Chi Minh City - feminine care
- - ---------------------------------------

(1) Portions of the land under this facility are held under
various long-term operating leases, the more significant of
which contain options to purchase the land.

(2) The Corporation has announced its intention to close or sell
this facility.

(3) The fiber recycling facility at this mill is held under an
operating lease expiring in 2008 under which the Corporation
has the option of renewing the lease for terms not exceeding
nine additional years or purchasing the facility for its
then fair market value.

(4) Except as otherwise noted, the land on which these
facilities are located is held under long-term leases.

(5) This facility is held under a short-term renewable lease.

(6) The land and a portion of this facility are subject to a
mortgage.

*Equity company production facility

<PAGE> 14

ITEM 3. LEGAL PROCEEDINGS

The following is a brief description of certain legal and
administrative proceedings to which the Corporation or any of its
subsidiaries is a party or of which any of its or their
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, approximately 45 class action complaints
have been filed in various federal and state courts around
the United States which 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. The foregoing
actions seek an unspecified amount of actual and treble
damages.

The Corporation has answered the complaints in these actions
and has denied the allegations contained therein as well as
any liability. Discovery with respect to class certification
and the merits of the claims has commenced. The Corporation
intends to contest these claims vigorously. These actions
are not expected to have a material adverse effect on the
Corporation's business or results of operations.

B. 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 or results of operations.

Environmental Matters

The information set forth under the "Environmental Matters"
section of "Management's Discussion and Analysis" contained in
the 1997 Annual Report to Stockholders is incorporated in this
Item 3 by reference.

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 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:

<PAGE> 15

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.

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, 1998, together with certain biographical
information, are as follows:

ROBERT E. ABERNATHY, 43, was elected Group President effective
January 1, 1997. He is responsible for the professional health
care business, nonwovens manufacturing and research, the
technical papers business, K-C Aviation Inc. and the World
Support Group. 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, 51, 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.

<PAGE> 16

O. GEORGE EVERBACH, 59, 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, 39, was elected Group President - North American
Tissue, Pulp and Paper in January 1996. He is responsible for the
Family Care, Wet Wipes, Away From Home and Neenah Paper Sectors,
Pulp Operations, and the Consumer Business Services, Environment
and Energy and Human Resources organizations. Mr. Falk joined
the Corporation in 1983. His responsibilities have included
internal audit, financial and strategic analysis, and operations
management. Mr. Falk was appointed Vice President - Operations
Analysis and Control in 1990. He was elected Senior Vice
President - Analysis and Administration in 1992, Group President
- - - Infant and Child Care in 1993, Group President - North American
Consumer Products in January 1995, and Group President - North
American Tissue Products in July 1995. 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 Rubbermaid
Incorporated.

PAUL S. GEISLER, 56, was elected Group President - Asia/Pacific
in April 1996. He was appointed President - Asia in 1994. Mr.
Geisler joined the Corporation in 1982 as Marketing Director -
Facial Tissue and Table Napkins. He was appointed Vice-President
- - - DEPEND(R) Absorbent Products and New Technology Products in
1984, and Vice-President - Home Health Care in 1985. In 1990,
Mr. Geisler was appointed President - U.S. Infant Care Sector,
and in 1992, he was elected Group President - North American
Feminine Care and Adult Care Sectors.

WAYNE R. SANDERS, 50, 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.

<PAGE> 17

KATHI P. SEIFERT, 48, was elected Group President - North
American Personal Care Products in July 1995. She is responsible
for the Infant and Child Care and Feminine and Adult Care
Sectors, as well as the U.S. and Canadian Consumer Sales,
Canadian Administrative and Safety and Quality Assurance
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 Products business sectors. She was appointed
President - Feminine Care Sector in 1991 and was elected Group
President - Feminine and Adult Care in 1994 and Group President -
North American Consumer Products in January 1995. Ms. Seifert is
a member of the Board of Directors of Eli Lilly and Company and
the Aid Association for Lutherans.

JOHN A. VAN STEENBERG, 50, was elected President - European
Consumer and Service & Industrial Operations in January 1994 and
President - European Consumer and Away From Home Operations in
April 1996. He is responsible for the Household Products, Infant
and Child Care, Feminine and Adult Care and Away From Home
Sectors in Europe, as well as the European Consumer Sales and
Distribution organizations, and the Central and Eastern Europe
Consumer and Away From Home businesses. Mr. Van Steenberg joined
the Corporation in 1978. His responsibilities have included
operations and major project management in North America. He was
appointed Managing Director of Kimberly-Clark Australia Pty.
Limited in 1990.

<PAGE> 18

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS

The dividend and market price data included in Note 16 to the
Consolidated Financial Statements, and the information set forth
under the captions "Dividends and Dividend Reinvestment Plan" and
"Stock Exchanges" contained in the 1997 Annual Report to
Stockholders are incorporated in this Item 5 by reference.

As of March 20,1998, the Corporation had 56,059 stockholders of
record.

ITEM 6. SELECTED FINANCIAL DATA

(Millions of Dollars, Year Ended December 31
----------------------------------------------------------------------------------
except per share amounts) 1997 1996 1995 1994 1993
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales................................. $12,546.6 $13,149.1 $13,373.0 $11,627.9 $11,341.1
Restructuring and Other
Unusual Charges (1)..................... 481.1 -- 1,440.0 -- 378.9
Operating Profit (1)...................... 1,303.2 2,053.7 213.0 1,277.1 734.5
Share of Net Income of
Equity Companies (2).................... 157.3 152.4 113.3 110.5 76.1
Income from Continuing
Operations Before
Extraordinary Items (1)(2).............. 884.0 1,403.8 33.2 766.5 287.2
Net Income (1)(2)(3)(4)................... 901.5 1,403.8 33.2 753.8 231.0
Per Share Basis:
Basic Earnings Per Share:
Income from Continuing
Operations Before
Extraordinary Items (1)(2).......... 1.59 2.49 .06 1.38 .52
Net Income (1)(2)(3)(4)............... 1.62 2.49 .06 1.35 .42
Diluted Earnings Per Share:
Income from Continuing
Operations Before
Extraordinary Items (1)(2).......... 1.58 2.48 .06 1.37 .51
Net Income (1)(2)(3)(4)............... 1.61 2.48 .06 1.34 .41
Cash Dividends Declared................... .96 .92 .90 .88 .64
Cash Dividends Paid....................... .95 .92 .90 .88 .85
Total Assets.............................. $11,266.0 $11,845.7 $11,439.2 $12,555.7 $13,210.4
Long-Term Debt............................ 1,803.9 1,738.6 1,984.7 2,085.4 3,403.0
Stockholders' Equity...................... 4,125.3 4,483.1 3,650.4 4,134.9 3,810.7

</TABLE>

<PAGE> 19

(1) In the fourth quarter of 1997, the Corporation announced a plan
to restructure its worldwide operations ("Announced Plan"), the
total pretax 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") or $503.1
million after income taxes, equity company effects and minority
interests ($.91 per share). The remaining $108.8 million of
costs related to the Announced Plan will be recorded in 1998 when
notification is made to employees whose employment will be
terminated or at the time other costs result in accruable
expenses. Of the 1997 Charge, $220.1 million relates to the
write-down of certain assets and inventories and has been charged
to cost of products sold, and $481.1 million has been recorded as
restructuring and other unusual charges in the income statement.
Results for 1995 include a pretax charge of $1,440.0 million or
$1,070.9 million after income taxes and minority interests ($1.92
per share) for the estimated costs of the merger with Scott Paper
Company ("Scott"), for restructuring the combined operations, and
for other unusual charges. Results for 1993 include a pretax
charge of $378.9 million or $283.2 million after-tax ($.51 per
share) for restructuring and other unusual charges.

(2) Share of net income of equity companies and net income for 1997
includes a net nonoperating gain of $16.3 million, or $.03 per
share, relating 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
merger of KCM and Scott's former Mexican affiliate. Also
included is a nonoperating charge recorded by KCM in 1996 for
restructuring costs related to its merger with Scott's former
Mexican affiliate. The Corporation's share of the after-tax
charge was $5.5 million, or $.01 per share. In 1995, net income
of equity companies and net income includes a nonoperating charge
of $38.5 million ($.07 per share) for foreign currency losses
incurred by the Corporation's Mexican affiliates on the
translation of the net exposure of U.S. dollar-denominated
liabilities into pesos. In 1994, peso losses charged to net
income of equity companies and net income was $39.2 million ($.07
per share). The translation losses are related to the
devaluation of the Mexican peso in December 1994 and subsequent
periods.

(3) Results for 1994 include income of a discontinued operation, net
of taxes, of $48.4 million ($.08 per share) related to S.D.
Warren Company, a former printing and publishing papers
subsidiary, which was sold on December 20, 1994. Results for
1993 include a loss of a discontinued operation, net of taxes, of
$46.6 million ($.09 per share).

(4) In 1997, the Corporation sold its equity interest in SPL, a 50.1
percent-owned Canadian tissue subsidiary, and its Coosa Pines,
Alabama, newsprint and pulp manufacturing mill, together with
related woodlands. Also, 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; and a tissue converting facility in Yucca, Arizona;
and on 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. Results for
1994 and 1993 include an extraordinary loss related to the early
extinguishment of debt of $61.1 million ($.11 per share) and $9.6
million ($.01 per share), respectively.

<PAGE> 20

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 1997 Annual Report to Stockholders is
incorporated in this Item 7 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 1997 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.

<PAGE> 21

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The section of the 1998 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 1998 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 1998 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 1998 Proxy Statement captioned
"Certain Transactions and Business Relationships" under "Proposal 1.
Election of Directors" is incorporated in this Item 13 by reference.

<PAGE> 22

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, 1997 and 1996, and
the related Consolidated Income Statement and Consolidated Cash Flow
Statement for the years ended December 31, 1997, 1996 and 1995, 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 1997 Annual Report to Stockholders. In addition, related reports
of Deloitte & Touche LLP and other auditors 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 1997 Annual Report to Stockholders.

Independent Auditors' Reports

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 No. (3)a to the
Corporation's Quarterly Report on Form 10-Q for the quarter ended June
30, 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. 33-17367).

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.

<PAGE> 23

Exhibit No. (10)b. Executive Severance Plan, incorporated by reference
to Exhibit No. (10)c of the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1992.

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.

Exhibit No. (10)e. 1992 Equity Participation Plan, as amended
effective November 20, 1997.

Exhibit No. (10)f. Deferred Compensation Plan, effective as of October
1, 1994, incorporated by reference
to Exhibit No. (10)g of the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1994.

Exhibit No. (10)g. First Amendment to Deferred Compensation Plan,
effective as of November 22, 1996, incorporated by reference to
Exhibit No. (10)g of the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1996.

Exhibit No. (10)h. 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)j. 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)k. Retirement Contribution Excess Benefit Program,
amended as of January 1, 1997.

Exhibit No. (12). Computation of ratio of earnings to fixed charges
for the five years ended December 31, 1997.

<PAGE> 24

Exhibit No. (13). Portions of the Corporation's 1997 Annual Report to
Stockholders incorporated by reference in this Form 10-K.

Exhibit No. (21). Significant Subsidiaries of the Corporation.

Exhibit No. (23)a. Independent Auditors' Consent of Deloitte & Touche
LLP

Exhibit No. (23)b. Independent Auditors' Consent of Coopers & Lybrand
L.L.P.

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

(i) The Corporation filed a Current Report on Form 8-K, dated
October 30, 1997, to report its 1997 third quarter earnings.

(ii) The Corporation filed a Current Report on Form 8-K, dated
November 25, 1997, to report the 1997 Restructuring Plan.

(iii) The Corporation filed a Current Report on Form 8-K, dated
January 30, 1998, to report its 1997 fourth quarter and annual
earnings.

(iv) The Corporation filed a Current Report on Form 8-K, dated
February 27, 1998, to report its 1997 audited financial
statements.

<PAGE> 25

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 26, 1998

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 26, 1998
- - ----------------------- and Chief Executive Officer
Wayne R. Sanders and Director
(principal executive
officer)

/s/ John W. Donehower Senior Vice President and March 26, 1998
- - ---------------------- Chief Financial Officer
John W. Donehower (principal financial
officer)

/s/ Randy J. Vest Vice President and March 26, 1998
- - ------------------ Controller
Randy J. Vest (principal accounting
officer)

Directors

John F. Bergstrom Louis E. Levy
Pastora San Juan Cafferty Frank A. McPherson
Paul J. Collins Linda Johnson Rice
Robert W. Decherd Wolfgang R. Schmitt
William O. Fifield Randall L. Tobias
Claudio X. Gonzalez

By: /s/ O. George Everbach March 26, 1998
-----------------------------
O. George Everbach, Attorney-in-Fact

<PAGE> 26

INDEPENDENT AUDITORS' REPORT

KIMBERLY-CLARK CORPORATION:

We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of Kimberly-Clark
Corporation and Subsidiaries for the year ended December 31, 1995, and
have issued our report thereon dated January 30, 1996. The financial
statements of Scott Paper Company, a wholly-owned subsidiary of
Kimberly-Clark Corporation, were audited by other auditors whose report
has been furnished to us, and our opinion on the consolidated financial
statements referred to above, insofar as it relates to the amounts
included for Scott Paper Company (except for the provision for
restructuring and other unusual charges described below), is based on
the report of such other auditors. We have also audited the
accompanying schedule of the Scott Paper Company provision for
restructuring and other unusual charges of $827.0 million, the related
tax benefit of $218.0 million and the related effect on minority
owners' share of subsidiaries' net income of $.8 million for the year
ended December 30, 1995. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on
the schedule based on our audit.

We conducted our audit of the schedule in accordance with generally
accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
schedule is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the schedule. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the
schedule. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the schedule referred to above presents fairly, in all
material respects, the Scott Paper Company provision for restructuring
and other unusual charges and the related tax benefits for the year
ended December 30, 1995 in conformity with generally accepted
accounting principles.

/S/ DELOITTE & TOUCHE LLP
- - --------------------------

DELOITTE & TOUCHE LLP

Dallas, Texas
January 30, 1996

INDEPENDENT AUDITORS' REPORT

KIMBERLY-CLARK CORPORATION:

We have audited the consolidated financial statements of Kimberly-
Clark Corporation as of December 31, 1997 and 1996, and for each of
the three years in the period ended December 31, 1997, and have
issued our report thereon dated January 26, 1998; such consolidated
financial statements and report are included in your 1997 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.
The financial statements and financial statement schedule of
Kimberly-Clark Tissue Company (formerly Scott Paper Company), a
wholly-owned subsidiary of Kimberly-Clark Corporation, for the year
ended December 31, 1995, were audited by other auditors whose
report has been furnished to us, and our opinions, insofar as they
relate to the amounts included for Kimberly-Clark Tissue Company,
are based solely on the report of such other auditors.

In our opinion, based on our audits and the report of other auditors
referred to above, 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 26, 1998

INDEPENDENT AUDITORS' REPORT

KIMBERLY-CLARK CORPORATION:

We have audited the consolidated statements of operations, changes in
stockholders' equity, and cash flows for the year ended December 30,
1995 of Scott Paper Company and its subsidiaries (not presented herein).
We have also audited the schedule of valuation and qualifying accounts
of Scott Paper Company and its subsidiaries as of and for the year ended
December 30, 1995 (not presented herein). These financial statements
and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements and the financial statement schedule based on
our audits. We did not audit the provision for restructuring and other
unusual charges of $827.0 million, the related tax benefit of $218.0
million and related effect on minority owners' share of subsidiaries'
net income of $0.8 million for the year ended December 30, 1995, nor the
related effect of $17.9 million on additional paid in capital as of
December 30, 1995. Such provision and related accounts were audited by
other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the aforementioned amounts, is based solely on
the report of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits and the report of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors,
(1) the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations, changes in
stockholders' equity, and cash flows for the year ended December 30,
1995 of Scott Paper Company and its subsidiaries, in conformity with
generally accepted accounting principles, and (2) the financial
statement schedule referred to above, when considered in relation to the
basic financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included therein.

As discussed in Note 1 of the Financial Review Notes, the Company
adopted the provisions of Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" in 1995.

/S/ COOPERS & LYBRAND L.L.P.
- - ------------------------------

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, PA
January 30, 1996

<TABLE><CAPTION>
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(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
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

DECEMBER 31, 1997
Allowances deducted from
assets to which they apply

Allowances for doubtful
accounts ................... $ 33.0 $ 12.9 $ 1.6 $ 9.7(b) $ 37.8

Allowances for sales
discounts .................. 13.3 174.5 7.8 173.5(c) 22.1
------- -------- ------- ------- --------

Total ................ $ 46.3 $ 187.4 $ 9.4 $ 183.2 $ 59.9
======= ======== ======= ======= ========

DECEMBER 31, 1996
Allowances deducted from
assets to which they apply

Allowances for doubtful
accounts ..................... $ 54.0 $ 13.1 $ .1 $ 34.2(b) $33.0

Allowances for sales
discounts .................. 30.7 181.4 - 198.8(c) 13.3
------- -------- ------- ------- --------

Total ................ $ 84.7 $ 194.5 $ .1 $ 233.0 $ 46.3
======= ======== ======= ======= ========

DECEMBER 31, 1995
Allowances deducted from
assets to which they apply

Allowances for doubtful
accounts ..................... $ 23.5 $ 41.7 $ .8 $ 12.0(b) $ 54.0

Allowances for sales
discounts .................. 22.1 201.7 .1 193.2(c) 30.7
------- -------- ------- --------- --------

Total ...................... $ 45.6 $ 243.4 $ .9 $ 205.2 $ 84.7
======= ======== ======= ========= ========

<FN>

(a) Primarily bad debt recoveries and the inclusion of Tecnol Medical Products, Inc. balances acquired in 1997
(b) Primarily uncollectible receivables written off
(c) Sales discounts allowed

</TABLE>

INDEX TO DOCUMENTS FILED AS A PART OF THIS REPORT

DESCRIPTION

Consolidated financial statements, incorporated by reference

Independent Auditors' Reports, incorporated by reference

Independent Auditors' Reports

Schedules for Kimberly-Clark Corporation and Subsidiaries:
Schedule II Valuation and Qualifying Accounts

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 as
of January 1, 1998.

Exhibit No. (10)b. Executive Severance Plan, incorporated by reference
to Exhibit No. (10)c of the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1992.

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.

Exhibit No. (10)e. 1992 Equity Participation Plan, as amended
effective November 20, 1997.

Exhibit No. (10)f. Deferred Compensation Plan, effective as of October
1, 1994, incorporated by reference to Exhibit No. (10)g of the
Corporation's Annual Report on Form 10-K for the year ended December
31, 1994.

<PAGE> 27

Exhibit No. (10)i. 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)j. 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)k. Retirement Contribution Excess Benefit Program,
amended as of January 1, 1997.

Exhibit No. (12). Computation of ratio of earnings to fixed charges
for the five years ended December 31, 1997.

Exhibit No. (13). Portions of the Corporation's 1997 Annual Report to
Stockholders incorporated by reference in this Form 10-K.

Exhibit No. (21). Significant Subsidiaries of the Corporation.

Exhibit No. (23)a. Independent Auditors' Consent of Deloitte & Touche
LLP

Exhibit No. (23)b. Independent Auditors' Consent of Coopers & Lybrand
L.L.P.

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.

<PAGE>
Exhibit 10.1

KIMBERLY-CLARK CORPORATION

MANAGEMENT ACHIEVEMENT AWARD PROGRAM

AS AMENDED AND RESTATED AS OF JANUARY 1, 1998
MANAGEMENT ACHIEVEMENT AWARD PROGRAM

AS AMENDED AND RESTATED AS OF JANUARY 1, 1998

1. PURPOSE

This Management Achievement Award Program ("MAAP" or the "Plan") is amended
and restated as of January 1, 1998. The purpose of MAAP is to further
unite the interests of the stockholders of the Company and its key
executives through:

(a) the annual establishment of Company objectives and the maintenance of
a dividend level which are deemed by the Company's Board of Directors
(the "Board") to be in the best short- and long-range interests of the
Company, and

(b) the annual payment, or provision for future payment, of incentive
compensation to each eligible participating key executive in the form
of a cash award which is in an amount significantly above competitive
base salary, provided his or her performance has meaningfully
contributed to the attainment of Company objectives.

2. ELIGIBILITY

Employees eligible to participate in MAAP (the "Participant") shall include
any employee of the Company or any subsidiary or affiliate whose position
is evaluated under the Company's Exempt Salary Administration Program (the
"Salary Program") at 994 total Hay points, or more, with at least 304
accountability points. Notwithstanding the above, the Chief Executive
Officer (the "CEO") of the Company or the Compensation Committee of the
Board (the "Compensation Committee") may, in their sole discretion,
determine that an employee of the Company or any subsidiary or affiliate is
to be eligible to participate in MAAP, or exclude any employee who is
otherwise determined to be eligible.

3. OBJECTIVE AREAS AND PERFORMANCE LEVELS

Prior to the beginning of each calendar year, or as soon thereafter as
reasonably practicable, performance objectives (the "Objective(s)") shall
be established for each Participant in one or more of the four objective
areas ("Objective Areas"), i.e. Corporate, Group, Sector or Individual.

The Board shall establish the Objective(s) and any Control Measures (as
defined in section 6 below) in the Corporate Objective Area. The CEO, or
his delegate, shall establish the Objectives and any Control Measures in
all Group, Sector and Individual Objective Areas for all Participants,
except as otherwise determined by the Compensation Committee.

For each Objective there may be established performance levels
("Performance Level(s)") which shall consist of successively better
standards or ranges taking into consideration actual progress in the
calendar year in accomplishing the Objective(s). For each Objective
there may be established Performance Levels under which the percentage
of the incentive payout shall be determined by taking into consideration
actual progress in the calendar year in achieving the Objective. A
payment range, with a minimum and maximum payment, may be established
for the Objective.

From time to time, it may be desirable to establish the Objective(s) in
such a manner that specific Performance Levels cannot be defined. In
such cases, the specific Performance Level(s) will be determined
pursuant to section 7 of this Plan.

The Objective(s) in the Individual Objective Area for a Participant may
be defined to include specific target areas on which such Participant
should focus during the year.

The original definition of any and all Objectives, Objective Areas,
Performance Levels, Percentage Weightings (as defined in section 4
below), and Control Measures shall not be changed during the course of a
calendar year, except by the approval of the individual or body who
originally approved the same. When mid-calendar year changes in the
Company's accounting or internal reporting policies have the effect of
making the financial results between two periods not fairly comparable
for the purpose of properly measuring performance where Objectives are
stated in financial terms, such results may be adjusted in such manner
as shall be deemed fair and appropriate by the individual or body who
originally approved the Objective.

4. OBJECTIVE AREA WEIGHTINGS

Coincident with the establishment of Objective Areas, Objectives, and
Performance Levels, the CEO, or his delegate, or the Compensation Committee
in the case of employees who are either directors of the Company or
officers of the Company who are elected by the Board, shall establish a
percentage weighting ("Percentage Weighting") applicable to each Objective
Area, or, where applicable, to each Objective within an Objective Area.
The total of all Percentage Weightings in all Objective Areas for each
Participant shall be 100 percent.

5. ACCOUNTABILITY POINT VALUATION

Prior to the beginning of each calendar year, or as soon thereafter as
reasonably practicable, the Board shall, after review by the Compensation
Committee, establish the Target Value of each Accountability Point as
established under the Salary Program. The Board shall also establish a
maximum payout stated as a percentage of such Target Value. Such
valuations shall at all times take into account the basic purposes of MAAP,
and shall in no event result in the potential obligation to pay incentive
compensation which, in the Board's opinion, is not in the best short- and
long-range interests of the Company.

6. CONTROL MEASURES

At the time the Objectives are established, there may also be established
certain conditions known as control measures ("Control Measures") which are
either personal as to one individual, or general as to a group of
individuals. Failure to fulfill a Control Measure may partially or totally
deprive the individual to whom the Control Measure applies of the right to
receive an award, notwithstanding the level of performance attained on any
or all Objectives, or in any or all Objective Areas.

In the event that the Company's dividend rate is reduced, other than by
reason of stock splits or other similar events having no effect on the
actual amount paid out in dividends, no award shall be paid under MAAP for
performance during the calendar year in which such a reduction occurs.
This shall be a Control Measure and shall apply in each calendar year
during which the Plan is in effect.

7. ASCERTAINMENT OF PERFORMANCE LEVELS

The Performance Level actually attained with respect to any Objective will
be stated as a percentage of the Target Value.

The Performance level actually attained with respect to any Objective or
Control Measure stated in financial terms, and the payment with respect
thereto, shall be determined upon the completion of audited results of the
Company and its subsidiaries.

When specific Performance Levels in the Corporate Objective Area have not
been defined under section 3 of this Plan, the Board will determine the
Performance Level attained following the end of the calendar year.

The Performance Level attained with respect to any Group or Sector
Objective or Control Measure stated in nonfinancial terms shall be
determined and approved by all levels in the chain of command which
originally approved or defined such Objective or Control Measure following
the end of the calendar year.

Performance in the Individual Objective Area will be determined by the CEO,
or his delegate, following the end of the calendar year, based upon the
Participant's performance with respect to the specified target areas.

Notwithstanding the above, the Compensation Committee may, in its sole
discretion, authorize that such determinations of the Performance Levels
attained be made prior to the end of the calendar year, and that the
payment of awards be made pursuant to section 10 of this Plan.

8. AMOUNT OF INCENTIVE COMPENSATION

The amount of incentive compensation an employee is eligible to receive
depends upon:

(a) the Percentage Weighting applicable to that Objective Area,

(b) the value of an Accountability Point (as established under
the Salary Program) which applies as a consequence of the
Performance Level attained in that area, and

Performance in each Objective Area shall be valued by multiplying (a) times
(b) times (c).

Except as otherwise hereinafter provided, the total award a Participant is
eligible to receive is the sum of the values attributable to performance
actually attained in each Objective Area, as determined by the preceding
paragraph.

9. ADJUSTMENT OF AWARD

Except as otherwise determined by the Compensation Committee, in its sole
and absolute discretion, the amount of an award may be adjusted by the CEO,
in his sole discretion, to more accurately reflect an individual
Participant's performance during the calendar year.

The amount of the award, in the event of transfers to, from, or between
MAAP eligible positions may be reviewed, and may be adjusted and
prorated, on such basis as shall be determined fair and equitable by
the CEO, or his delegate.

Adjustments may be made in the amount of an award after the potential
thereof has been authorized, if the applicable position is reevaluated
under the Salary Program during the calendar year, on such basis as shall
be determined fair and equitable by the CEO, or his delegate.

Termination of employment for any reason other than death, retirement, or
total and permanent disability shall result in a forfeiture of any MAAP
award attributable to performance during the calendar year in which
termination occurred. A Participant's death, retirement, or total and
permanent disability may result in the pro rata or other adjustment to the
amount of the award on such basis as shall be determined fair and equitable
by the CEO, or his delegate.

Notwithstanding any provision of MAAP, no award shall be paid to any
individual who, in any calendar year, has discharged his principal
accountabilities in a manner deemed unacceptable under the Salary Program.

10. PAYMENT OF AWARDS

Awards shall be paid in one lump sum in cash in the first calendar quarter
following the calendar year for which the Objectives were established.
Notwithstanding the above, the Compensation Committee may make payments at
such earlier times as it may, in its sole discretion, determine, and the
Compensation Committee, or the CEO, in their sole discretion, will make
such determinations as to performance, and establish procedures (including
repayment of any overpayment which is determined after the completion of
the final audit), implementing such early payment.

Prior to becoming entitled to receive an award, an individual may elect to
defer the receipt thereof to some future date or dates. Deferred MAAP
awards shall not bear interest.

11. ADMINISTRATION AND INTERPRETATION

Except as otherwise provided by this Plan, the Compensation Committee has
discretionary authority to construe and interpret the Plan and to resolve
all questions arising thereunder, and such action shall be final and
conclusive as to all individuals affected thereby.

Except as provided in this Plan, no right of any Participant shall be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, attachment, garnishment,
execution, levy, bankruptcy, or any other disposition of any kind, whether
voluntary or involuntary, prior to actual payment of an award. No
Participant, or any other person, shall have any interest in any fund, or
in any specific asset or assets of the Company, by reason of an award that
has been made but has not been paid or distributed.

Nothing contained in MAAP shall be construed as a contract of employment or
as a right of any Participant to be continued in the employment of the
Company, or as a limitation on the right of the Company to discharge any
Participant with or without cause.

The Board may, at any time, amend this Plan, order the temporary
suspension of its application, or terminate it in its entirety,
provided, however, that no such action shall adversely affect the
rights or interests of Participants theretofore vested hereunder.

MAAP is hereby amended and restated effective as of January 1, 1998.

<PAGE>
Exhibit 10.4

KIMBERLY-CLARK CORPORATION
1986 EQUITY PARTICIPATION PLAN
(AS AMENDED EFFECTIVE NOVEMBER 20, 1997)

1. PURPOSE

This 1986 Equity Participation Plan (the "Plan") of Kimberly-Clark
Corporation (the "Corporation") is intended to encourage those employees
who materially contribute, by managerial, scientific or other innovative
means, to the success of the Corporation, or of a consolidated subsidiary
or an equity company of the Corporation (collectively, the "Subsidiaries"),
to acquire an ownership interest in the Corporation, thereby increasing
their motivation for and interest in the Corporation's or Subsidiaries'
long-term success.

2. EFFECTIVE DATE

The Plan was originally adopted as of April 17, 1986 upon (a) approval
by the Board of Directors of the Corporation (the "Board of Directors"),
and (b) approval by the stockholders of the corporation at the 1986 Annual
Meeting. The Plan as hereby amended and restated is adopted effective as
of November 1, 1996.

3. ADMINISTRATION

The Plan shall be administered by the Compensation Committee of the
Board of Directors consisting of not less than three (3) members of the
Board of Directors, provided that if all members of the Committee are not
disinterested persons, the Plan shall be administered by a committee, all
of whom are disinterested persons, appointed by the Board of Directors and
consisting of three (3) or more directors with full authority to act in the
matter.

For purposes of this section, a "disinterested person" shall mean a
person who, at the time action is taken, is a "Non-Employee Director" for
purposes of rule 16b-3 under the Securities Exchange Act of 1934, or any
successor provision, and who is also an "outside director" for purposes of
section 162(m) of the Internal Revenue Code, as amended.

The term 'Committee' shall mean the Compensation Committee or the
committee appointed by the Board of Directors under this section 3, as the
case may be.

The Committee shall have the power to interpret and construe the Plan.
Any interpretation or construction of any provisions of this Plan by the
Committee shall be final. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good
faith. Within 60 days following the close of each calendar year that the
Plan is in operation, the Committee shall make a report to the Board of
Directors. The report shall specify the employees who received awards
under the Plan during the prior year, the form and size of the awards to
the individual employees, and the status of prior awards.

The Committee shall have the power to promulgate rules in connection
with the performance of its obligations, powers and duties under the Plan,
including its duty to administer and construe the Plan.

4. ELIGIBILITY

The Committee shall from time to time select the employees who are to
receive awards under the Plan (collectively, the "Participants") from those
employees whom the Committee determines either to be in a position to
contribute materially to the success of the Corporation or a Subsidiary, or
to have in the past so contributed. Only full-time employees (including
officers and directors who are full-time employees) of the Corporation and
its Subsidiaries are eligible to participate in the Plan. Employees of a
Subsidiary shall participate in the Plan under such conditions as the
Committee shall prescribe.

5. FORMS OF AWARDS

All awards under the Plan shall be made in the form of Participation
Shares as described in Section 6(a), or options to purchase shares of
common stock, par value $2.50 per share, of the Corporation (the "Common
Stock"). Generally, an award will consist of an equal number of
Participation Shares and optioned shares, but the Committee may make awards
solely in stock options or Participation Shares, or in any combination of
the two.

6. PARTICIPATION SHARES

The Committee shall from time to time designate those Participants who
shall receive Participation Share awards. The Committee shall advise such
Participants of their Participation Share awards by a letter indicating the
number of Participation Shares awarded and the following terms and
conditions of the award.

(a) Base Value of Participation Shares. The number of Participation
Shares awarded to a Participant shall be entered in such Participant's
memorandum account (the "Account") established for this purpose as of
the date of the award. Each Participation Share shall be assigned a
base value equal to the book value of one share of Common Stock as of
the close of the fiscal year of the Corporation preceding the date of
the award (the "Base Value"). Book value per share shall be defined
for purposes of the Plan as common stockholders' equity, as reported in
the year-end audited consolidated financial statements, or in the
quarter-end unaudited consolidated financial statements, of the
Corporation (as the case may be), divided by the number of shares of
Common Stock outstanding as of the date of such financial statements,
as adjusted pursuant to the provisions of the Plan (the "Book Value").
The term "book value", when used without initial capital letters, shall
be defined as in the preceding sentence without the adjustments.

(b) Maturation of Participation Shares. An award of Participation
Shares shall reach maturity at the close of the fiscal year in which
(i) the fifth anniversary of the date of the award occurs, (ii) the
Participant who holds such award dies, retires, or becomes totally and
permanently disabled, or (iii) the events described in subsection 8(a)
occur, whichever is earlier (the "Maturity Date"). The Book Value at
the Maturity Date shall be the Book Value as of the close of the fiscal
year of the Corporation in which such Maturity Date occurs.

(c) Participation Share Payments. Each Participant shall be entitled
to receive a cash payment for his Participation Share award, payable as
provided in subsection 6(g), equal to the sum of the Maturity Value and
the Dividend Share Value.

The "Maturity Value" of an award shall be equal to the Book Value of
the Participation Shares subject to such award at the Maturity Date
less the Base Value of such Participation Shares.

Participants are not entitled to receive current dividends on their
Participation Shares, but in lieu thereof their Accounts shall be
credited with dividend shares (the "Dividend Shares"). The "Dividend
Share Value" of an award shall be equal to the product of (A) the
number of Dividend Shares credited to a Participant's Account and (B)
the book value per share of the Common Stock at the Maturity Date. The
amount available for the acquisition of Dividend Shares for a
Participant's Account at the end of each fiscal quarter of the
Corporation shall be determined by multiplying the total cash dividend
declared per share of Common Stock during such quarter (but subsequent
to the date of the award in the case of Participation Shares and
subsequent to the date of crediting in the case of Dividend Shares) by
the total of the Participation Shares and Dividend Shares in the
Participant's Account. The amount so determined shall be divided by
the book value of one share of Common Stock as of the close of such
fiscal quarter, and the quotient shall represent the number of full and
fractional Dividend Shares credited to the Participant's Account for
that quarter.

(d) Dividend Maintenance. No Dividend Shares shall be credited to a
Participant's Account in any quarter (i) in which the total cash
dividends declared per share of Common Stock are less than $.62, or
(ii) in which the total cash dividends declared per share of Common
Stock are less than the total cash dividends declared per share of
Common Stock in the same quarter of the immediately preceding year,
except that in the final three quarters of 1987 and thereafter the
determination of whether the total cash dividends per share of Common
Stock are less than in the immediately preceding year shall be made
after adjustment for the two-for-one stock split which occurred in
1987, the two-for-one stock split which occurred in 1992, and the two-
for-one stock split which was declared on February 20, 1997, in
accordance with generally accepted accounting principles. When total
cash dividends declared per share of Common Stock are less than total
cash dividends declared per share of common Stock in the same quarter
of the immediately preceding year as described in clause (ii)
immediately above, the book value of each Participation Share held by a
Participant shall be reduced by an amount equal to the difference
between the cash dividend declared in such immediately preceding
quarter less the cash dividend declared in the quarter the cash
dividend is reduced. This subsection 6(d) shall be inoperative during
such fiscal years of the Corporation as the Committee in its discretion
shall determine.

(e) Adjustments. The Committee may adjust Book Value, for purposes
of the Plan, to preserve the benefit to the Participant and the
Corporation contemplated hereby if, in the opinion of the Committee
after consultation with the Corporation's independent accountants,
changes in the Corporation's accounting policies, acquisitions,
divestitures or other unusual or extraordinary transactions or events
have materially affected the Corporation's net income, book value,
shares of Common Stock outstanding, or stockholders' equity
(collectively, the "Events"), provided that any decisions or actions of
the management of the Corporation which resulted in an Event were made
or taken in the best interests of the Corporation's stockholders. To
preserve the benefit to the Participant and the Corporation
contemplated hereby, if a cash dividend is declared in any quarter and
the payment date for such cash dividend is later than the immediately
subsequent quarter, then such cash dividend will be deemed to be
declared in the quarter immediately preceding the payment date for all
purposes of this Plan, as of the first date the Board meets in such
quarter, or if the Board does not meet in such quarter, on the first
business day of such quarter, including, but not limited to, the
determination of (i) Book Value in subsection 6(a), (ii) Dividend
Shares in subsection 6(c) and (iii) whether the total cash dividends
declared per share of Common Stock in a quarter is less than $.155 or
whether the total cash dividends declared per share of Common Stock are
less than the total cash dividends declared per share of Common Stock
in the same quarter of the immediately preceding year in subsection
6(d).

(f) Absence of Rights as a Stockholder. A Participant shall not be
entitled, on the basis of a Participation Share award, to any of the
rights of a stockholder of the Corporation, including the right to vote
and receive dividends on Common Stock.

(g) Date of Payment. Except as provided in subsection 14(j), the
cash payment provided for in subsection 6(c) shall be payable within 90
days following the Maturity Date. The Corporation shall deduct
applicable withholding and employment taxes from all payments made to
Participants.

(h) Termination of Employment. Except as provided in subsections
6(b), 8(a) and 14(j), any Participation or Dividend Shares credited to
a Participant's Account shall be subject to forfeiture if the
Participant is dismissed or leaves the service of the Corporation or a
Subsidiary prior to the maturity of the award for any reason other than
death, retirement or total and permanent disability.

(i) Termination of Award. After the Corporation makes the cash
payment provided for in subsection 6(c), any rights of the Participant
(or the Participant's estate or beneficiaries) in the Participation
Share award shall end.

7. STOCK OPTIONS

The Committee shall determine and designate from time to time those
Participants to whom options are to be granted and the number of shares of
Common Stock to be optioned to each (an "Option"). Such Options may be in
the form of "incentive stock options" as that term is defined in Section
422A of the Internal Revenue Code, as amended (an "Incentive Stock Option")
or in the form of options which are not Incentive Stock Options
("Nonqualified Stock Options"). After granting an Option to a Participant,
the Committee shall cause to be delivered to the Participant a document to
be executed by the Corporation and the Participant evidencing the granting
of the Option and the terms and conditions of such Option. The document
shall be in such form as the Committee shall from time to time approve.
The terms and conditions of all Options granted under the Plan need not be
the same, but all Options must meet the applicable terms and conditions
specified in subsections 7(a) through 7(h). Unless indicated otherwise,
when the term Option appears in subsections 7(a) through 7(h), such term
shall include Incentive Stock Options.

(a) Period of Option. The Period of each Incentive Stock Option
shall be no more than 10 years, and the period of each Nonqualified
Stock Option shall be no more than 10 years and one day, from the date
it is granted.

(b) Option Price. The Option price shall be determined by the
Committee, but shall not in any instance be less than the Fair Market
Value of the Common Stock at the time that the Option is granted (the
"Option Price"). Fair Market Value shall be defined as the reported
closing price of the Common Stock on the date the Option is granted as
reported on the composite list used by The Wall Street Journal for
reporting stock prices, or if no such sale shall have been made on that
day, on the last preceding day on which there was such a sale.

(i) In General. The Option shall not be exercisable until
at least one year has expired after the granting of the Option,
during which time the Participant shall have been in the continuous
employ of the Corporation or a Subsidiary. At any time during the
period of the Option after the end of the first year, the
Participant may purchase up to 30 percent of the shares covered by
the Option; after the end of the second year, an additional 30
percent; and after the end of the third year, the remaining 40
percent of the total number of shares covered by the Option;
provided, however, that if the Participant's employment is
terminated for any reason other than death, retirement, or total
and permanent disability, the Option shall be exercisable only for
three months following such termination and only for the number of
shares of Common Stock which were exercisable on the date of such
termination. In no event, however, may an Incentive Stock Option
be exercised more than 10 years, and in no event may a Nonqualified
Stock Option be exercised more than 10 years and one day, after the
date of its grant.

(ii) Prior Option Rule. An Incentive Stock Option granted
before January 1, 1987 shall not be exercisable while there is
outstanding any prior Incentive Stock Option which was granted to
such Participant to purchase stock in the Corporation, a Subsidiary
or a predecessor corporation of the Corporation or a Subsidiary.

(d) Exercise after Death, Retirement, or Disability. If a
Participant dies, retires or becomes totally and permanently disabled
without having exercised the Option in full, the remaining portion of
such Option may be exercised, without regard to the limitations in
subsection 7(c)(i), within (i) three years from the date of any such
event or (ii) the remaining period of the Option, whichever is earlier.
Upon a Participant's death, the Option may be exercised by the person
or persons to whom such Participant's rights under the Option shall
pass by will or by applicable law or, if no such person has such
rights, by his executor or administrator.

(f) Exercise; Notice Thereof. Options shall be exercised by
delivering to the Corporation, at the office of the Treasurer at the
Dallas World Headquarters, written notice of the number of shares with
respect to which Option rights are being exercised and by paying in
full the Option Price of the shares at the time being acquired.
Payment may be made in cash, a check payable to the Corporation or, if
the Committee so determines, pursuant to rules adopted by the
Committee, in shares of Common Stock transferable to the Corporation
and having a Fair Market Value on the transfer date equal to the amount
payable to the Corporation. The date of exercise shall be deemed to be
the date the Corporation receives the written notice and payment for
the shares being purchased. A Participant shall have none of the
rights of a stockholder with respect to shares covered by such Option
until the Participant becomes the record holder of such shares.

(g) Purchase for Investment. It is contemplated that the Corporation
will register shares sold to Participants pursuant to the Plan under
the Securities Act of 1933. In the absence of an effective
registration, however, a Participant exercising an Option hereunder may
be required to give a representation that he/she is acquiring such
shares as an investment and not with a view to distribution thereof.

(h) Limitations on Incentive Stock Option Grants.

(i) An Incentive Stock Option shall be granted only to an
individual who, at the time the Option is granted, does not own
stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Corporation or Subsidiaries.
(ii) The aggregate Fair Market Value of all shares covered
by the Incentive Stock Options granted to a Participant by the
Corporation and any of its Subsidiaries in any calendar year prior
to 1987 shall not exceed $100,000 plus any unused limit carryover
carried to such year. The unused limit carryover shall be one-half
of the amount by which $100,000 exceeds the aggregate Fair Market
Value of such stock Options granted in any calendar year. The
unused limit carryover from any year is the amount of unused limit
carryover reduced by the amount of such carryover which was used in
prior calendar years. Such unused limit carryover may only be
carried over to each of the three calendar years succeeding the
year in which the limit carryover arises, and the amount of any
Options granted during any calendar year shall be treated as first
using up the $100,000 limitation and then shall be treated as using
up unused limit carryovers to such year in the order of the
calendar years in which such carryovers arose. The aggregate Fair
Market Value of such stock shall be determined as of the time the
Option is granted. This paragraph 7(h)(ii) shall be construed in
accordance with subsection (b) of Section 422A of the Internal
Revenue Code as in effect on April 17, 1986.

(iii) With respect to Incentive Stock Options granted on or
after January 1, 1987, the aggregate Fair Market Value of all
shares with respect to which such Incentive Stock Options are
exercisable by a Participant for the first time during any year
shall not exceed $100,000. The aggregate Fair Market Value of such
shares shall be determined at the time the Option is granted.

(i) Options for Nonresident Aliens. In the case of any Option
awarded to a Participant who is not a resident of the United States or
who is employed by a Subsidiary other than a Subsidiary that is
incorporated, or whose place of business is, in a State of the United
States, the Committee may (i) waive or alter the conditions set forth
in subsections 7(a) through 7(h) to the extent that such action is
necessary to conform such Option to applicable foreign law, or (ii)
take any action, either before or after the award of such Option, which
it deems advisable to obtain approval of such Option by an appropriate
governmental entity; provided, however, that no action may be taken
hereunder if such action would (1) materially increase any benefits
accruing to any Participants under the Plan, (2) materially increase
the number of securities which may be issued under the Plan, (3)
materially modify the requirements for eligibility to participate in
the Plan or (4) result in a failure to comply with applicable
provisions of the Securities Act of 1933, the Securities and Exchange
Act of 1934 or the Internal Revenue Code.

8. GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER TERMINATIONS

(a) In the sole and absolute discretion of the Committee, a
Participation Share award may be considered to reach maturity as of the
close of the fiscal year in which (i) a Participant enters such
governmental or military service as may be approved by the Committee or
(ii) the Participant's employment with the Corporation is terminated by
reason of a shutdown or divestiture of a portion of the Corporation's
business.

(b) A leave of absence approved by the Committee shall not be deemed
to be a termination of employment for the purposes of the Plan. A
termination of employment with the Corporation or a Subsidiary to
accept immediate reemployment with the Corporation or a Subsidiary
likewise shall not be deemed to be a termination of employment for
purposes of the Plan.

9. SHARES SUBJECT TO THE PLAN

The number of shares of common Stock available for option and sale
under the Plan and the number of Participation Shares which may be awarded
shall not exceed 16,000,000 in the aggregate, of which not more than
12,000,000 shall be available for option and sale. If an Option ceases to
be exercisable in whole or in part by reason of expiration of time
permitted for its exercise, termination of employment of a Participant who
has been granted an Option, cancellation, surrender, or for any other
reason, the shares which had been subject to such Option shall continue to
be available for Options or Participation Share awards under the Plan. The
shares of Common Stock subject to the Plan may consist in whole or in part
of authorized but unissued shares or of treasury shares, as the Board of
Directors may from time to time determine. Participation Shares which are
retired through forfeiture or maturity shall again be available for awards
of Participation Shares or grants of Options under the Plan.

10. INDIVIDUAL LIMITS

The maximum number of Participation Shares or shares of Common Stock
covered by Options which may be granted to any Participant shall be
determined from time to time by the Committee.

11. CHANGES IN CAPITALIZATION

In the event there are any changes in the Common Stock or the
capitalization of the Corporation through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or other
change in the corporate structure, appropriate adjustments and changes may
be made by the Committee in (a) the aggregate number of shares subject to
the Plan, (b) the maximum number of shares for which Options of
Participation Shares may be granted or awarded to any Participant, (c) the
number of shares and the Option Price per share of all shares of Common
Stock subject to outstanding Options, (d) the number of Participation
Shares, the Base Value per Participation Share awarded to Participants, and
Dividend Shares credited to Participants' Accounts, and (e) such other
provisions of the Plan as may be necessary and equitable to carry out its
purposes.

12. EFFECT ON OTHER PLANS

All payments and benefits under the Plan shall constitute special
compensation and shall not affect the level of benefits provided to or
received by any Participant (or the Participant's estate or beneficiaries)
as part of any employee benefit plan of the Corporation or a Subsidiary.
The Plan shall not be construed to affect in any way a Participant's rights
and obligations under any other plan maintained by the Corporation or a
Subsidiary on behalf of employees.

13. TERM OF THE PLAN

The term of the Plan shall be six years, beginning April 17, 1986 and
ending April 16, 1992, unless the Plan is terminated sooner by action of
the Board of Directors or extended by action of the stockholders of the
Corporation. No Option may be granted or Participation Share awarded after
the termination date of the Plan, but Options and Participation Shares
theretofore granted or awarded shall continue in force beyond that date
pursuant to their terms.

14. GENERAL PROVISIONS

(a) Designated Beneficiary. Each Participant who shall be granted a
Participation Share award under the Plan may designate a beneficiary or
beneficiaries with the Committee on a form to be prescribed by it;
provided that no such designation shall be effective unless so filed
prior to the death of such Participant.

(b) No Right of Continued Employment. Neither the establishment of
the Plan nor the payment of any benefits hereunder nor any action of
the Corporation, the Subsidiaries, the Board of Directors of the
Corporation or its Subsidiaries, or the Committee shall be held or
construed to confer upon any person any legal right to be continued in
the employ of the Corporation or its Subsidiaries, and the Corporation
and its Subsidiaries expressly reserve the right to discharge any
Participant without liability to the Corporation, its Subsidiaries, the
Board of Directors of the Corporation or its Subsidiaries or the
Committee, except as to any rights which may be expressly conferred
upon a Participant under the Plan.

(c) Discretion of the Corporation, Board of Directors and the
Committee. Any decision made or action taken by the Corporation, the
Board of Directors of the Corporation or by the Committee arising out
of or in connection with the construction, administration,
interpretation and effect of the Plan shall be within the absolute
discretion of the Corporation, the Board of Directors or the Committee,
as the case may be, and shall be conclusive and binding upon all
persons. Except as provided in the sentence immediately below, the
Committee shall determine in its sole discretion whether a termination
of employment for purposes of the Plan is caused by disability,
retirement or for other reasons. Any Participant who is entitled to
receive immediate payments under a qualified retirement plan of the
Corporation or a Subsidiary upon the termination of his employment
shall be deemed to be retired under the Plan; provided, however, that
any Participant who is employed by a competitor of the Corporation or a
Subsidiary within one year after leaving the employ of the Corporation
or a Subsidiary shall not be considered, in the discretion of the
Committee, to be retired under the Plan.

(d) Modification of Awards. The Committee may in its sole and
absolute discretion, by written notice to a Participant, (i) limit or
eliminate the ability of the Participant's Participation and Dividend
Shares to generate additional Dividend Shares, and/or (ii) fix the Book
Value of all or any portion of the Participant's existing Participation
and Dividend Shares for the purposes of any payments that might be made
under subsection 6(c) at their Book Value as of the end of the fiscal
year of the Corporation in which such notice is dated, and/or (iii)
limit the period in which an Option may be exercised to a period ending
at least three months following the date of such notice, and/or (iv)
limit or eliminate the number of shares subject to Option after a
period ending at least three months following the date of such notice.
The Committee may credit Participation and Dividend Shares which are
affected under this subsection 14(d)(i) or (ii), with interest at a
rate and in a manner determined from time to time by the Committee.

(e) No Segregation of Cash or Stock. The Accounts established for
Participants are merely a bookkeeping convenience and neither the
Corporation nor its Subsidiaries shall be required to segregate any
cash or stock which may at any time be represented by awards. Nor
shall anything provided herein be construed as providing for such
segregation. Neither the Corporation, its Subsidiaries, the Board of
Directors nor the Committee shall, by any provisions of the Plan, be
deemed to be a trustee of any property, and the liability of the
Corporation or its Subsidiaries to any Participant pursuant to the Plan
shall be those of a debtor pursuant to such contract obligations as are
created by the Plan, and no such obligation of the Corporation or its
Subsidiaries shall be deemed to be secured by any pledge or other
encumbrance on any property of the Corporation or its Subsidiaries.

(f) Inalienability of Benefits and Interest. Except as provided in
subsection 14(a), no benefit payable under or interest in the Plan
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any such
attempted action shall be void and no such benefit or interest shall be
in any manner liable for or subject to debts, contracts, liabilities,
engagements, or torts of any Participant or beneficiary.

(g) Delaware Law to Govern. All questions pertaining to the
construction, regulation, validity and effect of the provisions of the
Plan shall be determined in accordance with the laws of the State of
Delaware.

(h) Change in Conditions of Federal Income Tax Laws. In the event of
relevant changes in the Federal income tax laws, regulations and
rulings or other factors affecting the continued appropriateness of
Participation Share awards or Options under the Plan, the Committee
may, in its sole discretion, accelerate or change the form of payment,
distribution or exercise of such awards or Options. In addition, the
Committee shall have the power to take such action as it deems
necessary and desirable to amend the Plan and any Options granted
hereunder, for the purpose of permitting the Participant to obtain
favorable Federal income tax treatment in connection with the Options
or the disposition of shares obtained through exercise of Options.

(i) Election to Receive Cash Rather than Stock. The Committee, in
its sole and absolute discretion, may allow selected Participants the
right to convert their unexercised Options to a cash payment. For each
such Option so converted, the Participant shall be entitled to receive
cash equal to the difference between the Participant's Option Price and
the fair market value of the Common Stock on the date of conversion.
In order to make such a conversion, however, the Participant must at
the time of such conversion also elect to exercise an equivalent number
of Option shares for Common Stock on the same date. Fair market value
at the date of conversion shall be defined as the reported closing
price of Common Stock on the day of conversion as reported on the
composite list used by The Wall Street Journal for reporting stock
prices, or if no such sale shall have been made on that day, on the
last preceding day on which there was such a sale.

(j) Election to Defer Receipt. Under rules established by the
Committee in its sole and absolute discretion, the Committee may permit
a Participant to elect to defer the receipt of all or any portion of
amounts which may otherwise become payable under subsection 6(c). This
election shall be evidenced by a letter from the Participant to the
Committee, which letter shall be signed by the Participant, received by
the Company prior to the Participant's termination of employment, and
accepted by the Committee before the Maturity Date. The period of
deferral specified in the letter shall be set forth in accordance with
the rules of the Committee and may extend to a period following
retirement. If accepted by the Committee, such letter may provide that
the amount otherwise payable to the Participant shall be valued at the
Maturity Date and earn interest from that date at a rate and in a
manner determined from time to time by the Committee. After adjustment
for any resulting interest, the deferred amount shall be paid at the
date or dates specified in the Participant's letter, and such adjusted
amount shall not be subject to forfeiture as otherwise provided in
subsection 6(h). In the discretion of the Committee, the balance of a
Participant's deferred amount may be paid earlier than the date or
dates specified in the Participant's letter, but only in the case of
severe financial hardship. Notwithstanding the foregoing, with the
consent of the Committee, an election made prior to January 1, 1998
pursuant to this paragraph may be irrevocably modified by a Participant
prior to the earliest of January 1, 1999, (ii) such Participant's
termination of employment or (iii) the payment of the first installment
pursuant to Committee rules.

(k) Purchase of Common Stock. The Corporation and its Subsidiaries
may purchase from time to time shares of Common Stock in such amounts
as they may determine for purposes of the Plan. The Corporation and
its Subsidiaries shall have no obligation to retain, and shall have the
unlimited right to sell or otherwise deal with for their own account,
any shares of Common Stock purchased pursuant to this paragraph.

(l) Use of Proceeds. The proceeds received by the Corporation from
the sale of Common Stock pursuant to the exercise of Options shall be
used for general corporate purposes.

(m) Amendments. The Committee shall have the power to amend the Plan
and any Options or Participation Share awards granted hereunder (i) for
the purposes described in subsection 14(h) and (ii) to make
administrative changes in the Plan which are not material either
individually or in the aggregate and which do not increase the cost of
the Plan to the Corporation or alter the allocation of benefits as
between the Participants.

<PAGE>
Exhibit 10.5

KIMBERLY-CLARK CORPORATION
1992 EQUITY PARTICIPATION PLAN
(AS AMENDED EFFECTIVE NOVEMBER 20, 1997)

1. PURPOSE

This 1992 Equity Participation Plan (the "Plan") of Kimberly-Clark
Corporation (the "Corporation") is intended to aid in attracting and
retaining highly qualified personnel and to encourage those employees
who materially contribute, by managerial, scientific or other innovative
means, to the success of the Corporation or of an Affiliate, to acquire
an ownership interest in the Corporation, thereby increasing their
motivation for and interest in the Corporation's or Affiliate's long-term
success.

2. EFFECTIVE DATE

The Plan was originally adopted effective as of April 24, 1992, upon
approval by the stockholders of the Corporation at the 1992 Annual
Meeting. The Plan as hereby amended and restated is adopted effective as
of November 1, 1996, upon approval by the stockholders of the Corporation
at the 1997 Annual Meeting.

3. DEFINITIONS

"Account" has the meaning set forth in subsection 7(a) of this Plan.

"Affiliate" means any company in which the Corporation owns 20% or
more of the equity interest (collectively, the "Affiliates").

"Award" has the meaning set forth in section 6 of this Plan.

"Award Agreement" means an agreement entered into between the
Corporation and a Participant setting forth the terms and conditions
applicable to the Award granted to the Participant.

"Base Value" has the meaning set forth in subsection 7(a) of this
Plan.

"Board" means the Board of Directors of the Corporation.

"Book Value" has the meaning set forth in subsection 7(a) of this
Plan.

"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.

"Committee" means the Compensation Committee of the Board, provided

that if the requisite number of members of the Compensation Committee are
not Disinterested Persons, the Plan shall be administered by a committee,
all of whom are Disinterested Persons, appointed by the Board and
consisting of two or more directors with full authority to act in the
matter. The term "Committee" shall mean the Compensation Committee or
the committee appointed by the Board, as the case may be.

"Committee Rules" means the interpretative guidelines approved by
the Committee providing the foundation for administration of this Plan.

"Common Stock" means the common stock, par value $1.25 per share, of
the Corporation and shall include both treasury shares and authorized but
unissued shares and shall also include any security of the Corporation
issued in substitution, in exchange for, or in lieu of the Common Stock.

"Disinterested Person" means a person who is a "Non-Employee
Director" for purposes of rule 16b-3 under the Exchange Act, or any
successor provision, and who is also an "outside director" for purposes
of section 162(m) of the Code or any successor section.

"Dividend Shares" has the meaning set forth in subsection 7(c) of
this Plan.

"Dividend Share Value" means Dividend Share Value as defined in
subsection 7(c) of this Plan.

"Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations thereunder, as amended from time to time.

"Fair Market Value" means the reported closing price of the Common
Stock, on the relevant date as reported on the composite list used by The
Wall Street Journal for reporting stock prices, or if no such sale shall
have been made on that day, on the last preceding day on which there was
such a sale.

"Incentive Stock Option" means an Option which is so defined for
purposes of section 422 of the Code or any successor section.

"Insider" has the meaning set forth in subsection 15(k) of this
Plan.

"Maturity Date" has the meaning set forth in subsection 7(b) of this
Plan.

"Maturity Value" has the meaning set forth in subsection 7(c) of
this Plan.

"Nonqualified Stock Option" means any Option which is not an
Incentive Stock Option.

"Option" means a right to purchase a specified number of shares of
Common Stock at a fixed option price equal to no less than 100% of the
Fair Market Value of the Common Stock on the date the Award is granted.

"Option Price" has the meaning set forth in subsection 8(b) of this
Plan.

"Participant" means an employee who the Committee selects to
participate in and receive Awards under the Plan (collectively, the
"Participants").

"Participation Shares" means the right, as described in section 7,
to receive an amount equal to the increase in Book Value on a specified
number of shares of Common Stock.

"Retirement" and "Retires" means the termination of employment on or
after the date the Participant is entitled to receive immediate payments
under a qualified retirement plan of the Corporation or an Affiliate;
provided, however, if the Participant is not eligible to participate
under a qualified retirement plan of the Corporation or its Affiliates
then such Participant shall be deemed to have retired if his termination
of employment is on or after the date such Participant has attained age
55.

"Severe Financial Hardship" means a severe financial hardship as
defined in subsection 15(h) of this Plan.

"Stock Appreciation Right (SAR)" has the meaning set forth in
subsection 8(j)(i) of this Plan.

"Total and Permanent Disability" means Totally and Permanently
Disabled as defined in the Kimberly-Clark Corporation Salaried Employees'
Retirement Plan.

4. ADMINISTRATION

The Plan and all Awards granted pursuant thereto shall be
administered by the Committee. The Committee, in its absolute discretion,
shall have the power to interpret and construe the Plan and any Award
Agreements; provided, however, that no such action or determination may
increase the amount of compensation payable that would otherwise be due
in a manner that would result in the disallowance of a deduction to the
Corporation under section 162(m) of the Code or any successor section.
Any interpretation or construction of any provisions of this Plan or the
Award Agreements by the Committee shall be final and conclusive upon all
persons. No member of the Board or the Committee shall be liable for any
action or determination made in good faith.

Within 60 days following the close of each calendar year that the
Plan is in operation, the Committee shall make a report to the Board.
The report shall specify the employees who received Awards under the Plan
during the prior year, the form and size of the Awards to the individual
employees, and the status of prior Awards.

The Committee shall have the power to promulgate Committee Rules and
other guidelines in connection with the performance of its obligations,
powers and duties under the Plan, including its duty to administer and
construe the Plan and the Award Agreements.

The Committee may authorize persons other than its members to carry
out its policies and directives subject to the limitations and guidelines
set by the Committee, except that: (a) the authority to grant Awards,
the selection of officers and directors for participation and decisions
concerning the timing, pricing and amount of a grant or Award shall not
be delegated by the Committee; (b) the authority to administer Awards
with respect to persons who are subject to section 16 of the Exchange Act
shall not be delegated by the Committee; (c) any delegation shall satisfy
all applicable requirements of rule 16b-3 of the Exchange Act, or any
successor provision; and (d) no such delegation shall result in the
disallowance of a deduction to the Corporation under section 162(m) of
the Code or any successor section. Any person to whom such authority is
granted shall continue to be eligible to receive Awards under the Plan.

5. ELIGIBILITY

The Committee shall from time to time select the Plan Participants
from those employees whom the Committee determines either to be in a
position to contribute materially to the success of the Corporation or
Affiliate or to have in the past so contributed. Only employees
(including officers and directors who are employees) of the Corporation
and its Affiliates are eligible to participate in the Plan.

6. FORMS OF AWARDS

All Awards under the Plan shall be made in the form of Participation
Shares or Options. The Committee may make Awards solely in Options or
Participation Shares, or in any combination of the two. Notwithstanding
anything in this Plan to the contrary, any Awards shall contain the
restriction on assignability in subsection 15(f) of this Plan to the
extent required under rule 16b-3 of the Exchange Act.

7. PARTICIPATION SHARES

The Committee shall from time to time designate those Participants
who shall receive Participation Share awards. The Committee shall advise
such Participants of their Participation Share awards by a letter
indicating the number of Participation Shares awarded and the following
terms and conditions of the award.

(a) Base Value of Participation Shares. The number of
Participation Shares awarded to a Participant shall be entered in
such Participant's memorandum account (the "Account") established
for this purpose as of the date of the award. Each Participation
Share shall be assigned a base value equal to the book value of one
share of Common Stock as of the close of the fiscal year of the
Corporation preceding the date of the award (the "Base Value").
Book value per share shall be defined for purposes of the Plan as
common stockholders' equity, as reported in the year-end audited
consolidated financial statements, or in the quarter-end unaudited
consolidated financial statements, of the Corporation (as the case
may be), divided by the number of shares of Common Stock outstanding
as of the date of such financial statements, as adjusted pursuant to
the provisions of the Plan (the "Book Value"). The term "book
value", when used without initial capital letters, shall be defined
as in the preceding sentence without the adjustments.

(b) Maturation of Participation Shares. An Award of
Participation Shares shall reach maturity at the close of the fiscal
year (i) in which either the fifth or seventh anniversary, as
determined by the Committee when the Award is granted, of the date
the Award occurs, (ii) the Participant who holds such Award dies,
Retires, or becomes Totally and Permanently Disabled, or (iii) the
events described in subsection 9(a) occur, whichever is earlier (the
"Maturity Date"). The Book Value at the Maturity Date shall be the
Book Value as of the close of the fiscal year of the Corporation in
which such Maturity Date occurs.

(c) Participation Share Payments. Each Participant shall be
entitled to receive a payment equal to the sum of the Maturity Value
and the Dividend Share Value for his or her Participation Share
award, payable as provided in subsection 7(g). Such payment shall
be payable either in cash, or partly in cash and up to 50% in Common
Stock, as determined by the Committee when the Award is granted.
Such payment in Common Stock shall be payable in the number of
shares of Common Stock that could have been purchased with the
amount equal to the sum of the Maturity Value and the Dividend Share
Value for that portion of his or her Participation Share award which
is payable in Common Stock, at the average of the Fair Market Value
of shares of Common Stock on each business day during the month
immediately preceding the month of such payment. A Participation
Share award shall only be paid in Common Stock as provided above to
the extent shares of Common Stock are available under section 10
hereof, with the remainder settled in cash. To the extent shares of
Common Stock are not fully available under section 10 hereof to
fully pay such portion of the Award in shares of Common Stock then
the available shares of Common Stock shall be paid on a pro rata
basis, with the remainder settled in cash.

The "Maturity Value" of an Award of Participation Shares shall
be equal to the Book Value of the Participation Shares subject to
such Award at the Maturity Date less the Base Value of such
Participation Shares.

Participants are not entitled to receive current dividends on
their Participation Shares, but in lieu thereof their Accounts shall
be credited with dividend shares (the "Dividend Shares"). The
"Dividend Share Value" of an award shall be equal to the product of
(A) the number of Dividend Shares credited to a Participant's
Account and (B) the Book Value per share of the Common Stock at the
Maturity Date. The amount available for the acquisition of Dividend
Shares for a Participant's Account at the end of each fiscal quarter
of the Corporation shall be determined by multiplying the total cash
dividend declared per share of Common Stock during such quarter (but
subsequent to the date of the award in the case of Participation
Shares and subsequent to the date of crediting in the case of
Dividend Shares) by the total of the Participation Shares and
Dividend Shares in the Participant's Account. The amount so
determined shall be divided by the Book Value of one share of Common
Stock as of the close of such fiscal quarter, and the quotient shall
represent the number of full and fractional Dividend Shares credited
to the Participant's Account for that quarter.

(d) Dividend Maintenance. No Dividend Shares shall be
credited to a Participant's Account in any quarter (i) in which the
total cash dividends declared per share of Common Stock are less
than $.205 or (ii) in which the total cash dividends declared per
share of Common Stock are less than the total cash dividends
declared per share of Common Stock in the same quarter of the
immediately preceding year, except that the determination of whether
the total cash dividends per share of Common Stock are less than in
the immediately preceding year shall be made after adjustment for
the two-for-one stock split which occurred in 1992 and the two-for-
one stock split which was declared on February 20, 1997, in
accordance with generally accepted accounting principles. When
total cash dividends declared per share of Common Stock are less
than total cash dividends declared per share of Common Stock in the
same quarter of the immediately preceding year as described above,
the book value of each Participation Share held by a Participant
shall be reduced by an amount equal to the difference between the
cash dividend declared in such immediately preceding quarter less
the cash dividend declared in the quarter the cash dividend is
reduced.

(e) Adjustments. To preserve the benefit to the Participant
and the Corporation contemplated hereby, stock repurchases (other
than Common Stock transferred to the Corporation upon the exercise
of an Option pursuant to subsection 8(f)) or changes in the
Corporation's accounting policies during any fiscal year shall be
automatically excluded for purposes of determining Book Value for
purposes of this Plan for such fiscal year and for all future years
with respect to any outstanding Participation Share Awards;
provided, however, that the Committee shall have the discretion to
waive any such exclusion that would have the effect of increasing
Book Value (to the extent that such discretion does not result in
the disallowance of a deduction to the Corporation under section
162(m) of the Code or any successor section). To further preserve
the benefit to the Participant and the Corporation contemplated
hereby, if a cash dividend is declared in any quarter and the
payment date for such cash dividend is later than the immediately
subsequent quarter, then such cash dividend will be deemed to be
declared in the quarter immediately preceding the payment date for
all purposes of this Plan, as of the first date the Board meets in
such quarter, or if the Board does not meet in such quarter, on the
first business day of such quarter, including, but not limited to,
the determination of (i) Book Value in subsection 7(a), (ii)
Dividend Shares in subsection 7(c) and (iii) whether the total cash
dividends declared per share of Common Stock in a quarter is less
than $.205 or whether the total cash dividends declared per share of
Common Stock are less than the total cash dividends declared per
share of Common Stock in the same quarter of the immediately
preceding year in subsection 7(d).

(f) Absence of Rights as a Stockholder. A Participant shall
not be entitled, on the basis of a Participation Share award, to any
of the rights of a stockholder of the Corporation, including the
right to vote and receive dividends on Common Stock.

(g) Date of Payment. Except as provided in subsection 15(h),
the payment provided for in subsection 7(c) shall be payable within
90 days following the Maturity Date.

(h) Termination of Employment. Except as provided in
subsection 9(a), any Participation Shares or Dividend Shares
credited to a Participant's Account shall be forfeited if the
Participant is dismissed or leaves the service of the Corporation or
Affiliate prior to the Maturity Date of the award for any reason
other than death, Retirement or Total and Permanent Disability.

(i) Termination of Award. After the Corporation makes the
cash payment provided for in subsection 7(c), any rights of the
Participant (or the Participant's estate or beneficiaries) in the
Participation Share award shall end.
8. STOCK OPTIONS

The Committee shall determine and designate from time to time those
Participants to whom Options are to be granted and the number of shares
of Common Stock to be optioned to each. Such Options may be in the form
of Incentive Stock Options or in the form of Nonqualified Stock Options.
After granting an Option to a Participant, the Committee shall cause to
be delivered to the Participant an Award Agreement evidencing the
granting of the Option. The Award Agreement shall be in such form as the
Committee shall from time to time approve. The terms and conditions of
all Options granted under the Plan need not be the same, but all Options
must meet the applicable terms and conditions specified in subsections
8(a) through 8(h).

(a) Period of Option. The Period of each Option shall be no
more than 10 years from the date it is granted.

(c) Limitations on Exercise. The Option shall not be
exercisable until at least one year has expired after the granting
of the Option, during which time the Participant shall have been in
the continuous employ of the Corporation or an Affiliate. At any
time during the period of the Option after the end of the first
year, the Participant may purchase up to 30 percent of the shares
covered by the Option; after the end of the second year, an
additional 30 percent; and after the end of the third year, the
remaining 40 percent of the total number of shares covered by the
Option; provided, however, that if the Participant's employment is
terminated for any reason other than death, Retirement or Total and
Permanent Disability, the Option shall be exercisable only for three
months following such termination and only for the number of shares
of Common Stock which were exercisable on the date of such
termination. In no event, however, may an Option be exercised more
than 10 years after the date of its grant.

(d) Exercise after Death, Retirement, or Disability. If a
Participant dies or becomes Totally and Permanently Disabled,
without having exercised the Option in full, the remaining portion
of such Option may be exercised, without regard to the limitations
in subsection 8(c), within (i) three years from the date of any such
event or (ii) the remaining period of the Option, whichever is
earlier. Upon a Participant's death, the Option may be exercised by
the person or persons to whom such Participant's rights under the
Option shall pass by will or by applicable law or, if no such person
has such rights, by his executor or administrator. If a Participant
Retires without having exercised the Option in full, the remaining
portion of such Option may be exercised, without regard to the
limitations in subsection 8(c), within the remaining period of the
Option.

(e) Non-transferability. During the Participant's lifetime,
Options shall be exercisable only by such Participant. Options
shall not be transferable other than by will or the laws of descent
and distribution upon the Participant's death. Notwithstanding
anything in this subsection 8(e) to the contrary, at the same time
as Nonqualified Stock Options are granted the Committee may also
grant to designated Participants the right to transfer such Options,
to the extent allowed under rule 16b-3 of the Exchange Act, subject
to the terms and conditions of the Committee Rules on the date of
grant.
(f) Exercise; Notice Thereof. Options shall be exercised by
delivering to the Corporation, at the office of the Treasurer at the
World Headquarters, written notice of the number of shares with
respect to which Option rights are being exercised and by paying in
full the Option Price of the shares at the time being acquired.
Payment may be made in cash, a check payable to the Corporation or
in shares of Common Stock transferable to the Corporation and having
a Fair Market Value on the transfer date equal to the amount payable
to the Corporation. The date of exercise shall be deemed to be the
date the Corporation receives the written notice and payment for the
shares being purchased. A Participant shall have none of the rights
of a stockholder with respect to shares covered by such Option until
the Participant becomes the record holder of such shares.

(g) Purchase for Investment. It is contemplated that the
Corporation will register shares sold to Participants pursuant to
the Plan under the Securities Act of 1933. In the absence of an
effective registration, however, a Participant exercising an Option
hereunder may be required to give a representation that he/she is
acquiring such shares as an investment and not with a view to
distribution thereof.

(h) Limitations on Incentive Stock Option Grants.

(ii) The aggregate Fair Market Value of all shares
with respect to which Incentive Stock Options are exercisable
by a Participant for the first time during any year shall not
exceed $100,000. The aggregate Fair Market Value of such
shares shall be determined at the time the Option is granted.

(i) Options for Nonresident Aliens. In the case of any Option
awarded to a Participant who is not a resident of the United States
or who is employed by an Affiliate other than an Affiliate that is
incorporated, or whose place of business is, in a State of the
United States, the Committee may (i) waive or alter the conditions
set forth in subsections 8(a) through 8(h) to the extent that such
action is necessary to conform such Option to applicable foreign
law, or (ii) take any action, either before or after the award of
such Option, which it deems advisable to obtain approval of such
Option by an appropriate governmental entity; provided, however,
that no action may be taken hereunder if such action would (1)
increase any benefits accruing to any Participants under the Plan,
(2) increase the number of securities which may be issued under the
Plan, (3) modify the requirements for eligibility to participate in
the Plan, (4) result in a failure to comply with applicable
provisions of the Securities Act of 1933, the Exchange Act or the
Code or (5) result in the disallowance of a deduction to the
Corporation under section 162(m) of the Code or any successor
section.

(j) Election to Receive Cash Rather than Stock.

(i) At the same time as Nonqualified Stock Options
are granted the Committee may also grant to designated
Participants the right to convert a specified number of shares
of Common Stock covered by such Nonqualified Stock Options to
cash, subject to the terms and conditions of this subsection
8(j). For each such Option so converted, the Participant shall
be entitled to receive cash equal to the difference between the
Participant's Option Price and the Fair Market Value of the
Common Stock on the date of conversion. Such a right shall be
referred to herein as a Stock Appreciation Right ("SAR").
Participants to which an SAR has been granted shall be notified
of such grant and of the Options to which such SAR pertains.
An SAR may be revoked by the Committee, in its sole discretion,
at any time, provided, however, that no such revocation may be
taken hereunder if such action would result in the disallowance
of a deduction to the Corporation under section 162(m) of the
Code or any successor section.

(ii) A person who has been granted an SAR may
exercise such SAR during such periods as provided for in the
rules promulgated under section 16 of the Exchange Act. The
SAR shall expire when the period of the subject Option expires.

(iii) At the time a Participant converts one or
more shares of Common Stock covered by an Option to cash
pursuant to an SAR, such Participant must exercise one or more
Nonqualified Stock Options, which were granted at the same time
as the Option subject to such SAR, for an equal number of
shares of Common Stock. In the event that the number of shares
and the Option Price per share of all shares of Common Stock
subject to outstanding Options is adjusted as provided in the
Plan, the above SARs shall automatically be adjusted in the
same ratio which reflects the adjustment to the number of
shares and the Option Price per share of all shares of Common
Stock subject to outstanding Options.

9. GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER TERMINATIONS

(a) A Participation Share award shall be considered to reach
maturity as of the close of the fiscal year in which (i) a
Participant's employment terminates because such Participant enters
governmental service or (ii) the Participant's employment with the
Corporation or an Affiliate is terminated by reason of a shutdown or
divestiture of all or a portion of the Corporation's or its
Affiliate's business.

(b) An authorized leave of absence, or qualified military
leave in accordance with section 414(u) of the Code, shall not be
deemed to be a termination of employment for purposes of the Plan.
A termination of employment with the Corporation or an Affiliate to
accept immediate reemployment with the Corporation or an Affiliate
likewise shall not be deemed to be a termination of employment for
purposes of the Plan.

10. SHARES SUBJECT TO THE PLAN

The number of shares of Common Stock available with respect to all
Awards granted under this Plan shall not exceed 40,000,000 in the
aggregate, of which not more than 40,000,000 shall be available for
option and sale, subject to the adjustment provision set forth in section
12 hereof. The shares of Common Stock subject to the Plan may consist in
whole or in part of authorized but unissued shares or of treasury shares,
as the Board may from time to time determine. Participation Shares which
are retired through forfeiture or maturity, other than those
Participation Shares which are retired through the payment of Common
Stock, and shares subject to Options which become ineligible for purchase
will be available for Awards under the Plan to the extent permitted by
section 16 of the Exchange Act (or the rules and regulations promulgated
thereunder) and to the extent determined to be appropriate by the
Committee. Shares of Common Stock which are distributed through the
payment of Participation Share Awards pursuant to subsection 7(c) will
not be available for Awards under the Plan.

11. INDIVIDUAL LIMITS

The maximum number of Participation Shares or shares of Common Stock
covered by Options which may be granted to any Participant within any 2
consecutive calendar year period shall not exceed 1,000,000 in the
aggregate. If an Option which had been granted to a Participant is
canceled, the shares of Common Stock which had been subject to such
canceled Option shall continue to be counted against the maximum number
of shares for which Options may be granted to the Participant. In the
event that the number of Participation Shares which may be awarded or
Options which may be granted is adjusted as provided in the Plan, the
above limits shall automatically be adjusted in the same ratio which
reflects the adjustment to the number of Participation Shares or Options
available under the Plan.

12. CHANGES IN CAPITALIZATION

In the event there are any changes in the Common Stock or the
capitalization of the Corporation through a corporate transaction, such
as any merger, any acquisition through the issuance of capital stock of
the Corporation, any consolidation, any separation of the Corporation
(including a spin-off or other distribution of stock of the Corporation),
any reorganization of the Corporation (whether or not such reorganization
comes within the definition of such term in section 368 of the Code), or
any partial or complete liquidation by the Corporation, recapitalization,
stock dividend, stock split or other change in the corporate structure,
appropriate adjustments and changes shall be made by the Committee, to
the extent necessary to preserve the benefit to the Participant
contemplated hereby, to reflect such changes in (a) the aggregate number
of shares subject to the Plan, (b) the maximum number of shares for which
Options or Participation Shares may be granted or awarded to any
Participant, (c) the number of shares and the Option Price per share of
all shares of Common Stock subject to outstanding Options, (d) the number
of Participation Shares, the Base Value per Participation Share awarded
to Participants, and the number of Dividend Shares credited to
Participants' Accounts, and (e) such other provisions of the Plan as may
be necessary and equitable to carry out the foregoing purposes, provided,
however that no such adjustment or change may be made to the extent that
such adjustment or change will result in the disallowance of a deduction
to the Corporation under section 162(m) of the Code or any successor
section.

13. EFFECT ON OTHER PLANS

All payments and benefits under the Plan shall constitute special
compensation and shall not affect the level of benefits provided to or
received by any Participant (or the Participant's estate or
beneficiaries) as part of any employee benefit plan of the Corporation or
an Affiliate. The Plan shall not be construed to affect in any way a
Participant's rights and obligations under any other plan maintained by
the Corporation or an Affiliate on behalf of employees.

14. TERM OF THE PLAN

The term of the Plan shall be ten years, beginning April 24, 1992,
and ending April 23, 2002, unless the Plan is terminated prior thereto by
the Committee. No Option may be granted or Participation Share awarded
after the termination date of the Plan, but Options and Participation
Shares theretofore granted or awarded shall continue in force beyond that
date pursuant to their terms.

15. GENERAL PROVISIONS

(a) Designated Beneficiary. Each Participant who shall be
granted a Participation Share award under the Plan may designate a
beneficiary or beneficiaries with the Committee on a form to be
prescribed by it; provided that no such designation shall be
effective unless so filed prior to the death of such Participant.

(b) No Right of Continued Employment. Neither the
establishment of the Plan nor the payment of any benefits hereunder
nor any action of the Corporation, its Affiliates, the Board of
Directors of the Corporation or its Affiliates, or the Committee
shall be held or construed to confer upon any person any legal right
to be continued in the employ of the Corporation or its Affiliates,
and the Corporation and its Affiliates expressly reserve the right
to discharge any Participant without liability to the Corporation,
its Affiliates, the Board of Directors of the Corporation or its
Affiliates or the Committee, except as to any rights which may be
expressly conferred upon a Participant under the Plan.

(c) Binding Effect. Any decision made or action taken by the
Corporation, the Board or by the Committee arising out of or in
connection with the construction, administration, interpretation and
effect of the Plan shall be conclusive and binding upon all persons.

(d) Modification of Awards.

(1) The Committee may in its sole and absolute
discretion, by written notice to a Participant, (i) limit
or eliminate the ability of the Participant's
Participation and Dividend Shares to generate additional
Dividend Shares, and/or (ii) fix the Book Value of all or
any portion of the Participant's existing Participation
and existing or future Dividend Shares for the purposes of
any payments that might be made under subsection 7(c) at
their Book Value as of the end of the fiscal year of the
Corporation in which such notice is dated so that no
further appreciation occurs in such Book Value, and/or
(iii) limit the period in which an Option may be exercised
to a period ending at least three months following the
date of such notice, and/or (iv) limit or eliminate the
number of shares subject to Option after a period ending
at least three months following the date of such notice.
Notwithstanding anything in this subsection 15(d) to the
contrary, the Committee may not take any action to the
extent that such action would result in the disallowance
of a deduction to the Corporation under section 162(m) of
the Code or any successor section.

(2) A Participant's Participation Share or Dividend
Share which has had its ability to generate additional
Dividend Shares limited or eliminated and for which the
Book Value is fixed pursuant to subsection 15(d)(1)(i) of
the Plan shall be credited with interest equal to the
product of (i) the number of Interest Credits (determined
pursuant to subsection 15(d)(3) below) credited to such
Participant's Account as of the Maturity Date and (ii) the
Book Value at which such Participation Share or Dividend
Share has been fixed.

(3) The number of Interest Credits to be credited to
a Participant's Account for each fiscal quarter of the
Corporation ending after the date as of which the Book
Value of such Participant's Participation Shares or
Dividend Shares is fixed shall be determined as follows.
The total cash dividend declared per share of Common Stock
during such quarter (but subsequent to the date of the
award in the case of Participation Shares and subsequent
to the date of crediting in the case of Dividend Shares)
shall be multiplied by the total of the Participation
Shares, Dividend Shares and Interest Credits in the
Participant's Account. The amount so determined shall be
divided by the Book Value of one share of Common Stock as
of the close of such fiscal quarter. The quotient shall
represent the number of full and fractional Interest
Credits credited to such Participant's Account for that
quarter.

(e) No Segregation of Cash or Stock. The Accounts established
for Participants are merely a bookkeeping convenience and neither
the Corporation nor its Affiliates shall be required to segregate
any cash or stock which may at any time be represented by Awards.
Nor shall anything provided herein be construed as providing for
such segregation. Neither the Corporation, its Affiliates, the
Board nor the Committee shall, by any provisions of the Plan, be
deemed to be a trustee of any property, and the liability of the
Corporation or its Affiliates to any Participant pursuant to the
Plan shall be those of a debtor pursuant to such contract
obligations as are created by the Plan, and no such obligation of
the Corporation or its Affiliates shall be deemed to be secured by
any pledge or other encumbrance on any property of the Corporation
or its Affiliates.

(f) Inalienability of Benefits and Interest. Except as
provided in subsections 8(e) and 15(a), no benefit payable under or
interest in the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any such attempted action shall be void and no such
benefit or interest shall be in any manner liable for or subject to
debts, contracts, liabilities, engagements, or torts of any
Participant or beneficiary.

(g) Delaware Law to Govern. All questions pertaining to the
construction, interpretation, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the
laws of the State of Delaware.

(h) Election to Defer Receipt.

(1) A Participant may, with the consent of the
Committee, elect to defer the receipt of all or any portion of
amounts which may otherwise become payable under subsection
7(c). A Participant's receipt of any portion of the amount
payable with respect to one or more outstanding Participation
Share awards shall be deferred if, prior to the Maturity Date
of any such award, or if earlier, such Participant's
termination of employment, such Participant irrevocably elects
such deferral by written notice to the Committee signed by the
Participant and delivered to the Committee, and the Committee
consents to such deferral. Such notice must clearly specify
the manner of distribution described in paragraph (2) below
which shall apply with respect to such deferred amounts. After
adjustment for any resulting interest, the deferred amount
shall be paid at the date or dates specified in the
Participant's letter, and such adjusted amount shall not be
subject to forfeiture as otherwise provided in subsection 7(h).
Notwithstanding the foregoing, with the consent of the
Committee, an election made prior to January 1, 1999 pursuant
to this paragraph may be irrevocably modified by a Participant
prior to the earlier of (i) January 1, 1999, (ii) such
Participant's termination of employment or (iii) the payment of
the first installment pursuant to subsection 15(h)(2) below.

(2) Amounts deferred pursuant to this subsection
15(h) shall be distributed in accordance with clause (i), (ii),
or (iii), below, as elected by the Participant: (i) up to 20
annual installments commencing in the year after the
termination of employment by reason of retirement; (ii) up to
five annual installments, commencing 13 months after the
Participant's repatriation to his home country following a
foreign assignment; or (iii) up to five annual installments,
commencing as of a date requested by the Participant; provided,
however, that such date shall not be more than 20 years after
the Maturity Date. The amount of each installment under clause
(i), (ii) or (iii) above shall be equal to the product of the
amount which has not been distributed immediately prior to such
installment and a fraction, the numerator of which is one and
the denominator of which is the number of installments yet to
be paid.

(3) (i) Notwithstanding any other
provision of this Plan to the contrary, deferred
amounts shall be paid in one lump sum as soon as
practicable after the death of the Participant or the
termination of employment of the Participant with the
Corporation for reasons other than Retirement or
Total and Permanent Disability; however, if a
Participant is or has been on foreign assignment in
the 12 months immediately prior to the date of his
termination of employment, and if the termination of
employment is for any reason other than Retirement or
Total and Permanent Disability, any remaining amounts
shall be paid in one lump sum 13 months following the
earlier of (A) the date of the Participant's
repatriation to his home country following the
foreign assignment or (B) the date of such
termination of employment.

(ii) Upon written application by a
Participant or his legal representative stating that
severe financial hardship will result from continued
deferral, the Committee in its sole discretion may
authorize payment of such Participant's deferred
amounts prior to the date specified in the written
notice described in subparagraph (h)(1) above. For
purposes of this Plan, a "severe financial hardship"
is an unanticipated emergency that is caused by an
event beyond the control of the Participant and that
would result in severe financial hardship to the
individual if the emergency distribution were not
permitted. Cash needs arising from foreseeable
events, such as the purchase of a residence or
education expenses for children shall not be
considered the result of a severe financial hardship.
For purposes of this Plan, a "severe financial
hardship" is limited to an event described in
Treasury Regulation section 1.401(k)-
1(d)(2)(iv)(A)(1) or (4). For purposes of this Plan,
a distribution is in "the amount necessary to satisfy
the emergency" only if the requirements of Treasury
Regulation section 1.401(k)-1(d)(2)(iv)(B) are
satisfied. A Participant must provide the Committee
with substantiation of any such claim of severe
financial hardship.

(4) Amounts deferred hereunder shall be credited
with interest, compounded quarterly, from the date such amount
otherwise would have been paid at a rate yielding interest
equivalent to the per annum market discount rate for six-month
U.S. Treasury Bills as published by the Federal Reserve Board
for the seven calendar days prior to January 1 (for interest to
be credited for the subsequent fiscal quarters ending March 31
and June 30) and prior to July 1 (for interest to be credited
for the subsequent fiscal quarters ending on September 30 and
December 31).

(i) Purchase of Common Stock. The Corporation and its
Affiliates may purchase from time to time shares of Common Stock in
such amounts as they may determine for purposes of the Plan. The
Corporation and its Affiliates shall have no obligation to retain,
and shall have the unlimited right to sell or otherwise deal with
for their own account, any shares of Common Stock purchased pursuant
to this paragraph.

(j) Use of Proceeds. The proceeds received by the Corporation
from the sale of Common Stock pursuant to the exercise of Options
shall be used for general corporate purposes.

(k) Withholding. The Committee shall require the withholding
of all taxes as required by law. In the case of payments of Awards
in shares of Common Stock or other securities, withholding shall be
as required by law and in the Committee Rules. A Participant may
elect to have any portion of the federal, state or local income tax
withholding required with respect to an exercise of a Nonqualified
Stock Option satisfied by tendering to the Corporation shares of
Common Stock, which, in the absence of such an election, would have
been issued to such Participant in connection with such exercise.
In the event that the value of the shares of Common Stock tendered
to satisfy the withholding tax required with respect to an exercise
exceeds the amount of such tax, the excess of such market value over
the amount of such tax shall be returned to the Participant, to the
extent possible, in whole shares of Common Stock, and the remainder
in cash. The value of a share of Common Stock tendered pursuant to
this subsection 15(k) shall be the Fair Market Value of the Common
Stock on the date on which such shares are tendered to the
Corporation. An election pursuant to this subsection 15(k) shall be
made in writing and signed by the Participant. An election pursuant
to this subsection 15(k) is irrevocable. A Participant who
exercises an option and who is required to report to the Securities
and Exchange Commission under section 16(a) of the Exchange Act (an
"Insider") may satisfy the income tax withholding due in respect of
such exercise pursuant to this subsection 15(k) only if the Insider
also satisfies an exemption under section 16(a) of the Exchange Act
(or the rules or regulations promulgated thereunder) for such
withholding.

(l) Amendments. The Committee may at any time amend, suspend,
or discontinue the Plan or alter or amend any or all Awards and
Award Agreements under the Plan to the extent (1) permitted by law,
(2) permitted by the rules of any stock exchange on which the Common
Stock or any other security of the Corporation is listed, (3)
permitted under applicable provisions of the Securities Act of 1933,
as amended, the Exchange Act (including rule 16b-3 thereof) and (4)
that such action would not result in the disallowance of a deduction
to the Corporation under section 162(m) of the Code or any successor
section (including the rules and regulations promulgated
thereunder); provided, however, that if any of the foregoing
requires the approval by stockholders of any such amendment,
suspension or discontinuance, then the Committee may take such
action subject to the approval of the stockholders. Except as
provided in subsections 8(i) and 15(d) no such amendment,
suspension, or termination of the Plan shall, without the consent of
the Participant, adversely alter or change any of the rights or
obligations under any Awards or other rights previously granted the
Participant under the Plan.

<PAGE>
Exhibit 10.11

KIMBERLY-CLARK CORPORATION
RETIREMENT CONTRIBUTION EXCESS BENEFIT PROGRAM

In recognition of the valuable services provided to Kimberly-
Clark Corporation (the "Corporation"), and its subsidiaries, by its
employees, the Board of Directors of the Corporation (the "Board")
wishes to provide additional retirement benefits to those individuals
whose benefits under the Kimberly-Clark Corporation Retirement
Contribution Plan (the "RCP") are restricted by the operation of the
provisions of the Internal Revenue Code of 1986, as amended. It is
the intent of the Corporation to provide these benefits under the
terms and conditions hereinafter set forth. This Program is intended
to encompass two plans, (i) an "excess benefit plan" within the
meaning of Section 3(36) of Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and, as such, to be exempt from all of the
provisions of ERISA pursuant to Section 4(b)(5) thereof and (ii) a
non-qualified supplemental retirement plan which is unfunded and
maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees of the Corporation, pursuant to Sections 201, 301 and 401 of
ERISA and, as such, exempt from the provisions of Parts II, III and IV
of Title I of ERISA.

ARTICLE 1

Definitions

Each term which is used in this Program and also used in the RCP shall
have the same meaning herein as the RCP.
Notwithstanding the above, for purposes of this Program, where the
following words and phrases appear in this Program they shall have the
respective meanings set forth below unless the context clearly
indicates otherwise:

1.1 "Beneficiary" means the person or persons who under this Program
becomes entitled to receive a Participant's interest in the event of
the Participant's death. The Beneficiary need not be the same as the
beneficiary under the RCP.

1.2 A "Change of Control" of the Corporation shall be deemed to have
taken place if: (i) a third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
acquires shares of the Corporation having 20% or more of the total
number of votes that may be cast for the election of Directors of the
Corporation; or (ii) as the result of any cash tender or exchange
offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Corporation
before the Transaction shall cease to constitute a majority of the
Board of Directors of the Corporation of any successor to the
Corporation.

1.3 "Code" means the Internal Revenue Code for 1986, as amended and
any lawful regulations or other pronouncements promulgated thereunder.

1.4 "Committee" means the Incentive Investment Plan Committee named
under the Kimberly-Clark Corporation Salaried Employees Incentive
Investment Plan.

1.5 "Earnings" means remuneration when paid, or would have been paid
but for an Employee's deferral election, to a Participant from a
Participating Unit for personal services rendered to such
Participating Unit (before any withholding required by law or
authorized by the person to whom such remuneration is payable),
including overtime, bonuses, incentive compensation, vacation pay,
deducted military pay, state disability payments received, workers
compensation payments received and, to the extent such deductions
decrease the individual's base pay, Before-Tax deferrals under the
Kimberly-Clark Corporation Salaried Employee Incentive Investment
Plan, contributions under the Kimberly-Clark Corporation Flexible
Benefits Plan or any other plan described under Section 125 of the
Code, and deferrals under the Kimberly-Clark Corporation Deferred
Compensation Plan. Earnings shall exclude any severance payments
(except as provided in Section 4.3 of the RCP), payments made under
the Kimberly-Clark Corporation Equity Participation Plans, pay in lieu
of vacation, compensation paid in a form other than cash (such as
goods, services and, except as otherwise provided herein,
contributions to employee benefit programs), service or suggestion
awards, and all other special or unusual compensation of any kind;
provided, however that the limitations on Earnings provided for
pursuant to Code Sections 401(a)(17) shall not apply under this
Program. Notwithstanding the foregoing, Earnings shall not include
any remuneration paid to a Participant after payment of such
individual's Individual Account commences in accordance with Section
4.9 following the Participant's Termination of Service.

1.6 "Effective Date" means January 1, 1997.

1.7 "Excess Plan" means the plan established as part of the Program
for Participants whose Retirement Contributions to the RCP are limited
solely by Code Section 415.

1.8 "Individual Account" means the account established pursuant to
Section 3.

1.9 "Investment Funds" means the phantom investment funds established
under this Program which will accrue earnings as if the Participant's
Individual Account held actual assets which were invested in the
appropriate Investment Fund as defined under the RCP.

1.10 "Participant" means any Employee who satisfies the eligibility
requirements set forth in Section 2. In the event of the death or
incompetency of a Participant, the term shall mean the Participant's
personal representative or guardian.

1.11 "Program" means the Kimberly-Clark Corporation Retirement
Contribution Excess Benefit Program as set forth herein and as the
same may be amended from time to time; provided, however, that the
term "Excess Plan" or "SRP" may be used to refer to only one of the
two plans encompassed within the Program.

1.12 "Retirement Date" means the date of Termination of Service of the
Participant on or after he attains age 55 and has 5 Years of Service
with the Corporation.

1.13 "RCP" means the Kimberly-Clark Corporation Retirement
Contribution Plan, as in effect from time to time.

1.14 "SRP" means the plan established as part of the Program for
Participants whose Retirement Contributions to the RCP are limited by
the application of the rules, or regulations, of Code Section
401(a)(4) or the limitations of Code Section 401(a)(17), in either
case alone or in conjunction with the limitations of Code Section 415
or whose Earnings are not fully taken into account in determining the
Employee's Retirement Contributions to the RCP.

1.15 "Termination of Service" means the Participant's cessation of his
service with the Corporation for any reason whatsoever, whether
voluntarily or involuntarily, including by reasons of retirement or
death.

ARTICLE 2

Eligibility

2.1 Any Employee who is a Participant in the RCP on or after the
Effective Date and whose Retirement Contributions to the RCP are
limited solely by Code Section 415 shall participate in the Excess
Plan. Any other Employee who is a Participant in the RCP on or after
the Effective Date and whose Retirement Contributions to the RCP are
limited by the application of the rules, or regulations, of Code
Section 401(a)(4) or the limitations of Code Section 401(a)(17), in
either case alone or in conjunction with the limitations of Code
Section 415 or whose Earnings are not fully taken into account in
determining the Employee's Retirement Contributions to the RCP shall
participate in the SRP; provided, however, that no Employee shall
become a Participant in the SRP unless such Employee is a member of a
select group of management or highly compensated Employees of the
Corporation so that the SRP is maintained as a plan described in
Section 201(2) of ERISA.

2.2 Notwithstanding any of the foregoing provisions of Article 2 to
the contrary, any Employee who on the Effective Date is both an active
employee of the Corporation or its subsidiaries and is a Participant
in the Kimberly-Clark Tissue Company Defined Contribution Excess
Benefit Program (the "KCTC Plan") must elect to participate in this
Program and shall, pursuant to this election, as of the Effective
Date, have the amount credited to the Participant's Individual Account
under the KCTC Plan transferred to this Program. "Active employee"
shall not include employees who are in transition assignments or who
are on Limited Service as defined under the Scott Paper Company
Termination Pay Plan for Salaried Employees.

ARTICLE 3

Individual Account

3.1 The Corporation shall create and maintain an unfunded Individual
Account under the Excess Plan or the SRP, as applicable, for each
Participant to which it shall credit the amounts described in this
Article 3. Participants entitled to receive Retirement Contributions
under the RCP shall receive Retirement Contributions under the Excess
Plan in an amount as would have been contributed for such Participant
under the RCP without regard to the limitation on benefits imposed by
Section 415 of the Code, and calculated using Earnings as defined in
this Program, but only to the extent that such amount exceeds such
limitations. In addition, each Participant shall receive Retirement
Contributions under the SRP as would have been contributed for such
Participant under the RCP without regard to the limitations on
benefits imposed by Sections 401(a)(17) and 401(a)(4) of the Code, and
calculated using Earnings as defined in this Program, but only to the
extent that such amount exceeds the Retirement Contributions under the
RCP. Such Retirement Contributions shall be made for each Participant
on the same terms and conditions, at the same times, and pursuant to
the same elections made by the Participant as they would have been if
paid under the RCP, were not for such limitations on benefits or
Earnings.

3.2 For the period prior to July 1, 1997, as of the last day of each
calendar month, the Corporation shall credit each Participant's
Individual Account with deemed interest with respect to the then
balance of the Participant's Individual Account equal to 1% plus the
rate shown for U.S. Treasury Notes with a remaining maturity closest
to, but not exceeded, 7 years, in the "representative mid-afternoon
over the counter quotations supplied by the Federal Reserve Bank of
New York City, based on transactions of $1 million or more," as
reported in The Wall Street Journal published on the last business day
of each calendar month; provided, however, the Committee may change
this crediting rating at any time for deemed interest not yet credited
to an Individual Account.

3.3 After June 30, 1997, each Participant's Retirement Contributions
under this Program shall be considered allocated to the Investment
Funds in the same proportion as the Participant has elected under the
RCP pursuant to Section 6.1 thereof.

3.4 After June 30, 1997, reallocations between Investment Funds shall
be considered made at the same time, in the same proportionate amount,
and to and from the same Investment Funds under this Program as those
made by the Participant under Section 6.3 of the RCP; provided,
however, that if such Participant has no account balance under the
RCP, the Participant may make separate reallocation elections
hereunder in a manner prescribed by the Committee.

3.5 After June 30, 1997, the Corporation shall credit each
Participant's Individual Account with earnings, gains and losses as if
such accounts held actual assets and such assets were invested among
such Investment Funds, in the same proportion as the Participant has
invested in the RCP; provided, however, that if such Participant has
no account balance under the RCP, the Participant may make separate
investment elections hereunder in the manner prescribed by the
Committee.

ARTICLE 4
Distributions of Benefit Supplement

4.1 Retirement Benefit. Subject to Section 4.5 below, upon a
Participant's Retirement Date, he shall be entitled to receive the
amount of his Individual Account. The form of benefit payment, and
the time of commencement of such benefit, shall be as provided in
Section 4.4.

4.2 Termination Benefit. Upon the Termination of Service of a
Participant prior to his Retirement Date, for reasons other than
death, the Corporation shall pay to the Participant, a benefit equal
to his Individual Account.

Unless otherwise directed by the Committee, the termination benefit
shall be payable in a lump sum as set forth in Section 4.9 following
the Participant's Termination of Service. Upon payment following a
Termination of Service, the Participant shall immediately cease to be
eligible for any other benefit provided under this Program.

4.3 Death Benefits. Upon the death of a Participant or a retired
Participant, the Beneficiary of such Participant shall receive the
Participant's remaining Individual Account. Payment of a
Participant's remaining Individual Account shall be made in accordance
with Section 4.4.

4.4 Form of Benefit Payment.

(a) Upon the happening of an event described in Sections 4.1,
4.2 or 4.3, the Corporation shall pay to the Participant the
amount specified therein in a lump sum.

(b) In the event that a Participant retires as described in
Section 4.1, the Participant may, with the consent of the
Committee, elect an installment form of benefit payments. The
written request must be made prior to December 31 of the calendar
year preceding the Participant's Retirement Date. The Committee
may, in its sole discretion, grant the Participant's request.

(c) In the event of the death of the Participant, the
Participant's Beneficiary may, with the consent of the Committee,
elect an installment form of benefit payment. This written
request must be made no later than thirty (30) days after the
Participant's date of death. The Committee may, in its sole
discretion, grant such Beneficiary's request.

(d) In the event that installment payments are to be made
pursuant to Subsections 4.4(b) or (c), such payments shall be in
annual installments, payable on a monthly basis. Such annual
installments shall be payable using a declining balance method
over a period, no less than two (2) calendar years and no more
than twenty (20) calendar years.

Initially, the amount of any installments under the installment
form of payment described in this Subsection 4.4(d) shall be
equal to the balance of the Participant's Individual Account to
be distributed divided by the number of annual installments to be
paid. The amount of the installment payments shall be recomputed
annually and the installment payments shall be increased or
decreased to reflect any changes in the Participant's Individual
Account due to fluctuations in earnings, gains and losses on the
remaining balance and the number of remaining annual
installments. Monthly installment payments will be made on the
last business day of each calendar month.

4.5 Limitations on the Annual Amount Paid to a Participant.
Notwithstanding any other provisions of this Program to the contrary,
in the event that a portion of the payments due a Participant pursuant
to Sections 4.1, 4.2, 4.3 or 4.4 would not be deductible by the
Corporation pursuant to Section 162(m) of the Code, the Corporation,
at its discretion, may postpone payment of such amounts to the
Participant until such time that the payments would be deductible by
the Corporation; provided, however, that no payment postponed pursuant
to this Section 4.5 shall be postponed beyond the first anniversary of
such Participant's Termination of Service.

4.6 Change of Control and Lump Sum Payments

(a) If there is a Change of Control, notwithstanding any other
provision of this Program, any Participant who has an Individual
Account hereunder may, at any time during a twenty-four (24)
month period immediately following a Change of Control, elect to
receive an immediate lump sum payment of the balance of his
Individual Account, reduced by a penalty equal to ten percent
(10%) of the Participant's Individual Account as of the last
business day of the month preceding the date of the election.
The ten percent (10%) penalty shall be permanently forfeited and
shall not be paid to, or in respect of, the Participant.

(b) If there is a Change of Control, notwithstanding any other
provision of this Program, any retired Participant, or
Beneficiary, who has an Individual Account hereunder may, at any
time during a twenty-four (24) month period immediately following
a Change of Control, elect to receive an immediate lump sum
payment of the balance of his Individual Account, reduced by a
penalty equal to five percent (5%) of the Participant's
Individual Account as of the last business day of the month
preceding the date of the election. The five percent (5%)
penalty of the retired Participant's or Beneficiary's Individual
Account shall be permanently forfeited and shall not be paid to,
or in respect of, the retired Participant or Beneficiary.

(c) In the event no such request is made by a Participant, a
retired Participant or Beneficiary, the Program shall remain in
full force and effect.

4.7 Change in Credit Rating and Lump Sum Payments.

In the event the Corporation's financial rating falls below Investment
Grade, a Participant, retired Participant, or Beneficiary may at any
time during a six (6) month period following the reduction in the
Corporation's financial rating, elect to receive an immediate lump sum
payment of the balance of his Individual Account reduced by a penalty
equal to ten percent (10%) of the Participant's Individual Account or
five percent (5%) of the retired Participant's or Beneficiary's
Individual Account as of the last business day of the month preceding
the election. The penalties accrued hereunder shall be permanently
forfeited and shall not be paid to, or in respect of, the Participant,
retired Participant or Beneficiary.

In the event no such request is made by a Participant, retired
Participant or Beneficiary, the Program shall remain in full force and
effect.

4.8 Tax Withholding. To the extent required by law, the Corporation
shall withhold any taxes required to be withheld by any Federal, State
or local government.

4.9 Commencement of Payments. Unless otherwise provided,
commencement of payments under Section 4.6 or 4.7 of this Program
shall be as soon as administratively feasible on or after the last
business day of the month following receipt of notice and approval by
the Committee of an event which entitles a Participant or a
Beneficiary to payments under this Program. Unless otherwise
provided, commencement of payments under Section 4.1, 4.2 or 4.3 of
this Program shall be payable in the first calendar quarter of the
year following the Plan year in which the Participant terminates
employment from the Corporation for any reason; provided, however,
that such a termination shall not be deemed to occur until immediately
following the receipt of all payment due to the Employee under the
Scott Paper Company Termination Pay Plan for Salaried Employees.

4.10 Recipients of Payments; Designation of Beneficiary. All payments
to be made by the Corporation under the Program shall be made to the
Participant during his lifetime, provided that if the Participant dies
prior to the completion of such payments, then all subsequent payments
under the Program shall be made by the Corporation to the Beneficiary
determined in accordance with this Section. The Participant may
designate a Beneficiary by filing a written notice of such designation
with the Committee in such form as the Committee requires and may
include contingent Beneficiaries. The Participant may from time-to-
time change the designated Beneficiary by filing a new designation in
writing with the Committee. If a married Participant designates a
Beneficiary or Beneficiaries other than his spouse at the time of such
designation, such designation shall not be effective (and the
Participant's spouse shall be the Beneficiary) unless:

(a)the spouse consents in writing to such designation;

(b)the spouse's consent acknowledges the effect of such designation,
which consent shall be irrevocable; and

(c)the spouse executes the consent in the presence of either a Plan
representative designated by the Committee or a notary public.

Notwithstanding the foregoing, such consent shall not be required if
the Participant establishes to the satisfaction of the Committee that
such consent cannot be obtained because (i) there is no spouse; (ii)
the spouse cannot be located after reasonable efforts have been made;
or (iii) other circumstances exist to excuse spousal consent as
determined by the Committee. If no designation is in effect at the
time when any benefits payable under this Plan shall become due, the
Beneficiary shall be the spouse of the Participant, or if no spouse is
then living, the representatives of the Participant's estate.

ARTICLE 5

Vesting

5.1 The balance of a Participant's Individual Account shall be 100%
vested at the same time as if the amounts had been credited to the
Participant's Account under the RCP.

ARTICLE 6

Funding

6.1 The Board may, but shall not be required to, authorize the
establishment of a trust by the Corporation to serve as the funding
vehicle for the benefits described herein. In any event, the
Corporation's obligations hereunder shall constitute a general,
unsecured obligation, payable solely out of its general assets, and no
Participant shall have any right to any specific assets of the
Corporation.

ARTICLE 7

Administration

7.1 The Committee shall administer this Program and shall have the
same powers and duties, and shall be subject to the same limitations
as are set forth in the Kimberly-Clark Corporation Salaried Employees
Incentive Investment Plan.

ARTICLE 8

Amendment and Termination

8.1 The Corporation, by action of the Board, or the Compensation
Committee as designated by the Board, shall have the right at any time
to amend this Program in any respect, or to terminate this Program;
provided, however, that no such amendment or termination shall operate
to reduce the benefit that has accrued for any Participant who is
participating in the Program nor the payment due to a terminated
Participant at the time the amendment or termination is adopted.
Continuance of the Program is completely voluntary and is not assumed
as a contractual obligation of the Corporation. Notwithstanding the
foregoing, this Program shall terminate when the RCP terminates.

Any action permitted to be taken by the Board, or the Compensation
Committee as designated by the Board, under the foregoing provision
regarding the modification, alteration or amendment of the Program may
be taken by the Committee, using its prescribed procedures, if such
action

(a) is required by law, or

(b) is estimated not to increase the annual cost of the Program
by more than $1,000,000.

Any action taken by the Board, the Compensation Committee as
designated by the Board, or Committee shall be made by or pursuant to
a resolution duly adopted by the Board, the Compensation Committee as
designated by the Board, or Committee and shall be evidenced by such
resolution or by a written instrument executed by such persons as the
Board, the Compensation Committee as designated by the Board, or
Committee shall authorize for such purpose.

The Committee shall report to the Chief Executive Officer of the
Corporation before January 31 of each year all action taken by it
hereunder during the preceding calendar year.

ARTICLE 9

Miscellaneous

9.1 Nothing contained herein (a) shall be deemed to exclude a
Participant from any compensation, bonus, pension, insurance,
termination pay or other benefit to which he otherwise is or might
become entitle to as an Employee or (b) shall be construed a
conferring upon an Employee the right to continue in the employ of the
Corporation as an executive or in any other capacity; provided,
however, that if, at the time payments or installments of payments are
to be made hereunder, the Participant or the Beneficiary are indebted
or obligated to the Corporation, then the payments remaining to be
made to the Participant or the Beneficiary may, at the discretion of
the Corporation, be reduced by the amount of such indebtedness or
obligation, provided, however, that an election by the Corporation not
to reduce any such payment or payments shall not constitute a waiver
of its claim for such indebtedness or obligation.

9.2 Any amounts payable by the Corporation hereunder shall not be
deemed salary or other compensation to a Participant for the purposes
of computing benefits to which the Participant may be entitled under
any other arrangement established by the Corporation for the benefit
of its Employees.

9.3 The rights and obligations created hereunder shall be binding on
a Participant's heirs, executors and administrators and on the
successors and assigns of the Corporation.

9.4 The Program shall be construed and governed by the laws of the
State of Wisconsin.

9.5 The rights of any Participant under this Program are personal and
may not be assigned, transferred, pledged or encumbered. Any attempt
to do so shall be void.

9.6 Neither the Corporation, its Employees, agents, any member of the
Board, the Plan Administrator nor the Committee shall be responsible
or liable in any manner to any Participant, Beneficiary, or any person
claiming through them for any benefit or action taken or omitted in
connection with the granting of benefits, the continuation of benefits
or the interpretation and administration of this Program.
9.7 An application or claim for a benefit under the RCP shall
constitute a claim for a benefit under this Program.

9.8 The Corporation is the plan sponsor. All actions shall be taken
by the Corporation in its sole discretion, not as a fiduciary, and
need not be applied uniformly to similarly situated individuals.

IN WITNESS WHEREOF, the Corporation has adopted this Kimberly-Clark
Corporation Retirement Contribution Excess Benefit Program effective
as of January 1, 1997.

KIMBERLY-CLARK CORPORATION

By:__________________________________
Wayne R. Sanders
Chairman of the Board and
Chief Executive Officer

<PAGE>
Exhibit 12

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
<TABLE><CAPTION>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN MILLIONS)

Year Ended December 31
----------------------------------------------------------------------
1997 1996 1995 1994 1993
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Consolidated Companies

Income before taxes (a) .................... $ 1,187.5 $ 2,002.3 $ 104.4 $ 1,147.9 $ 492.4
Interest expense ........................... 164.8 186.7 245.5 270.5 249.5
Interest factor in rent expense............. 49.8 45.7 36.1 41.9 42.7
Amortization of capitalized interest........ 9.0 8.6 9.7 9.2 8.1

Equity Affiliates

Share of 50%-owned:
Income before income taxes ............... 51.2 49.3 40.6 48.0 35.0
Interest expense.......................... 7.1 9.5 18.5 15.3 13.7
Interest factor in rent expense........... .7 .7 .8 .7 .8
Amortization of capitalized interest...... .6 .7 .7 .6 .6
Distributed income of less than
50%-owned ................................ 62.5 48.4 25.1 41.4 41.4
----------- ---------- -------- ----------- ---------

Earnings ..................................... $ 1,533.2 $ 2,351.9 $ 481.4 $ 1,575.5 $ 884.2
=========== ========== ======== =========== =========

Consolidated Companies

Interest expense ........................... $ 164.8 $ 186.7 $ 245.5 $ 270.5 $ 249.5
Capitalized interest ....................... 17.0 13.9 8.8 20.6 28.4
Interest factor in rent expense ............ 49.8 45.7 36.1 41.9 42.7
Equity Affiliates

Share of 50%-owned:
Interest and capitalized interest......... 7.5 9.5 18.9 15.4 13.8
Interest factor in rent expense .......... .7 .7 .8 .7 .8
----------- ---------- -------- ----------- ---------

Fixed charges ................................ $ 239.8 $ 256.5 $ 310.1 $ 349.1 $ 335.2
=========== ========== ======== =========== =========

Ratio of earnings to fixed charges(a) 6.39 9.17 1.55 4.51 2.64
=========== ========== ======== =========== =========

</TABLE>

Note: The Corporation has provided Midwest Express Airlines, Inc., its
former commercial airline subsidiary, with a five-year $20
million secondary revolving credit facility for use in the event
Midwest Express does not have amounts available for borrowing
under its revolving bank credit facility. No drawings have been
made on these facilities. S.D. Warren was sold on December 20,
1994, and is reflected as a discontinued operation in the
consolidated income statement. The Corporation is contingently
liable as guarantor, or directly liable as the original obligor,
for certain debt and lease obligations of S.D. Warren Company.
The buyer provided the Corporation with a letter of credit from
a major financial institution guaranteeing repayment of these
obligations. No losses are expected from these arrangements and
they have not been included in the computation of earnings to
fixed charges.

(a) The ratio of earnings to fixed charges includes pretax charges of
$701.2 million in 1997, $1,440.0 million in 1995 and $378.9
million in 1993 for the 1997 Charge and restructuring and other
unusual charges in 1995 and 1993. Excluding these charges, the
ratio of earnings to fixed charges was 9.32 in 1997, 6.20 in 1995
and 3.77 in 1993.

<PAGE>
Exhibit 13

MANAGEMENT'S DISCUSSION AND ANALYSIS
Kimberly-Clark Corporation and Subsidiaries

Management believes that the following commentary and tables
appropriately discuss and analyze the comparative results of
operations and the financial condition of the Corporation for the
periods covered.

Certain matters that have occurred in two of the last three
years represent unusual items. These matters and their effect on
the comparability of financial data presented in this
Management's Discussion and Analysis are discussed below.

1997 Restructuring and Other Unusual Charges

o In the fourth quarter of 1997, the Corporation announced a
plan to restructure its worldwide operations ("Announced
Plan"), the total pretax cost of which is approximately
$810.0 million. The Announced Plan is expected to reduce
the Corporation's operating costs by approximately $200
million annually in the year 2000. In order to achieve
these anticipated benefits, the Announced Plan requires the
sale, closure or downsizing of 18 manufacturing facilities
worldwide and a workforce reduction of approximately
5,000 employees. These actions will result in the
consolidation of the Corporation's manufacturing operations
into fewer, larger and more efficient facilities and in the
elimination of excess production capacity, including more
than 200,000 metric tons of high-cost tissue manufacturing
capacity in North America and Europe. Excluding the
eliminated facilities, the Corporation believes that it has
sufficient productive capacity to support its existing
operations and expects to add low-cost capacity as needed to
support future growth.

o In conjunction with the Announced Plan, the Corporation
recorded a 1997 pretax charge of $701.2 million ("1997
Charge"). The remaining $108.8 million of costs related to
the Announced Plan will be recorded in 1998 when
notification is made to employees whose employment will be
terminated or at the time other costs result in accruable
expenses. Of the 1997 Charge, $220.1 million relates to the
write-down of certain assets and inventories and has been
charged to cost of products sold, and $481.1 million has
been recorded as restructuring and other unusual charges in
the Consolidated Income Statement. Of the $220.1 million
charged to cost of products sold, approximately 31 percent
relates to Personal Care Products and approximately 67
percent relates to Tissue-Based Products. Approximately 66
percent relates to North American operations and
approximately 15 percent relates to European operations.

Additional information concerning the 1997 Charge is contained
in Note 2 to the Consolidated Financial Statements. The effect of
the 1997 Charge on cash flow is discussed under "Liquidity and
Capital Resources" elsewhere in this Management's Discussion and
Analysis.

Of the 1997 Charge, $119.1 million has been utilized through
December 31, 1997, and the balance of $582.1 million is expected
to be substantially utilized in 1998. At December 31, 1997, the
remaining reserves related to the 1997 Charge and the $108.8
million of related reserves to be recorded in 1998 are estimated
to be adequate to cover the remaining costs of the Announced
Plan.

The 1997 Charge decreased 1997 business segment and geographic
operating profit as follows:

1997 CHARGE
Outside
North North
($ Millions) America America Total
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Personal Care Products .............................................. $ (134.4) $ (60.9) $ (195.3)
Tissue-Based Products .............................................. (276.8) (220.1) (496.9)
Newsprint, Paper and Other .......................................... (.7) - (.7)
-------- --------- ---------
$ (411.9) $ (281.0) (692.9)

Unallocated ........................................................ (8.3)
---------
Total ............................................................ $ (701.2)
=========

</TABLE>

The income tax benefit of the 1997 Charge is estimated at
$190.2 million, or 27.1 percent of the pretax charge. This tax
rate is lower than the U.S. statutory income tax rate primarily
because no tax benefits were provided for certain costs related
to operations in countries where the Corporation has income tax
loss carryforwards for which valuation allowances have been
provided. The 1997 Charge, net of applicable income taxes,
equity company effects and minority interests, reduced 1997 net
income by $503.1 million, or $.91 per share.

1995 Business Combination, Worldwide Integration Plan and
Restructuring and Other Unusual Charges

o On December 12, 1995, the Corporation merged with Scott Paper
Company ("Scott"), a worldwide producer of sanitary tissue
products, in a $9.4 billion tax-free reorganization accounted
for as a pooling of interests. At the time of the merger,
the Corporation implemented a comprehensive plan to integrate
its operations with those of Scott. In conjunction with the
integration plan, a pretax charge of $1,440.0 million was
recorded in the fourth quarter of 1995 for the estimated costs
of the merger, for restructuring the combined operations and
for other unusual charges ("1995 Charge"). Additional
information concerning the 1995 Charge is contained in Note 2
to the Consolidated Financial Statements. The 1995 Charge has
been substantially utilized as of December 31, 1997.

o The income tax benefit of the 1995 Charge was $360.0 million,
or 25 percent of the pretax charge. This tax rate is lower
than the U.S. statutory income tax rate because no tax
benefits were provided for certain costs and fees that are not
deductible and other costs related to operations in countries
where the Corporation has income tax loss carryforwards for
which valuation allowances have been provided. The 1995
Charge, net of applicable income taxes and minority interests,
reduced 1995 net income by $1,070.9 million, or $1.92 per
share.

For a description of the Corporation's business segments and a
summary of the business segment and geographic data that include
the 1997 and 1995 Charges, see Note 17 to the Consolidated
Financial Statements. However, for purposes of this Management's
Discussion and Analysis, the 1997 Charge is shown separately in
the following business segment and geographic presentations to
facilitate a meaningful discussion of ongoing operations. In
addition, the 1995 Charge has been excluded from all
presentations involving comparison of 1996 versus 1995 data.

ANALYSIS OF CONSOLIDATED OPERATING RESULTS - 1997 COMPARED WITH 1996
By Business Segment

Net Sales Operating Profit
------------------------------------------------- ------------------------------------------------------
% Change % OF 1997 % Change % Return on Sales
--------------------
($ Millions) 1997 1996 vs. 1996 CONSOLIDATED 1997 1996 vs. 1996 1997 1996
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Care
Products ........ $ 5,234.8 $ 4,837.8 + 8.2% 41.7% $ 969.1 $ 791.3 +22.5% 18.5% 16.4%
Tissue-Based
Products ........ 6,611.5 7,372.8 - 10.3 52.7 904.4 1,085.2 -16.7 13.7 14.7
Newsprint, Paper
and Other ....... 753.5 1,015.4 - 25.8 6.0 168.7 211.8 -20.3 22.4 20.9
1997 Charge ....... - - - (701.2) -
Adjustments ....... (53.2) (76.9) (.4) (37.8) (34.6)
----------- ---------- ----- --------- ---------

Consolidated....... $ 12,546.6 $ 13,149.1 - 4.6% 100.0% $ 1,303.2 $ 2,053.7 -36.5% 10.4% 15.6%
=========== ========== ===== ========= =========

</TABLE>

<TABLE><CAPTION>
By Geography

Net Sales Operating Profit
------------------------------------------------- -----------------------------------------------------
% Change % OF 1997 % Change % Return on Sales
-----------------
($ Millions) 1997 1996 vs. 1996 CONSOLIDATED 1997 1996 vs. 1996 1997 1996
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
North America ..... $ 8,533.9 $ 9,001.8 -5.2% 68.0% $1,762.1 $1,736.0 + 1.5% 20.6% 19.3%
Outside North
America ......... 4,320.3 4,485.3 -3.7 34.4 280.1 352.3 - 20.5 6.5 7.9
1997 Charge ....... - - - (701.2) -
Adjustments ....... (307.6) (338.0) (2.4) (37.8) (34.6)
---------- ---------- ----- --------- ---------

Consolidated ...... $ 12,546.6 $ 13,149.1 -4.6% 100.0% $ 1,303.2 $ 2,053.7 - 36.5% 10.4% 15.6%
========== ========== ===== ========= =========

</TABLE>

Notes:

Certain 1996 data has been reclassified in the geographic
presentation to conform to the 1997 presentation.

Adjustments to net sales shown in the preceding tables consist
of intercompany sales of products between business segments or
geographic areas. Adjustments to operating profit consist of
expenses not associated with business segments or geographic
areas.

Commentary:

Consolidated net sales were 4.6 percent lower than in 1996.
In 1996, the Corporation divested certain businesses to satisfy
U.S. and European regulatory requirements associated with the
Scott merger, and in 1997, it divested a noncore pulp and
newsprint facility located in Coosa Pines, Alabama ("Coosa") and
sold its interest in Scott Paper Limited ("SPL"). Excluding
revenues from these businesses in both years, consolidated net
sales remained essentially flat. Sales volumes, however,
increased nearly 5 percent. Although the preceding tables
include results of divested businesses, in order to facilitate a
meaningful discussion, such results have been excluded from the
following sales commentary.

o Worldwide sales of personal care products increased more than
10 percent, and sales volumes grew more than 14 percent, with
nearly all businesses in this segment participating in the
improved sales volumes. Important contributors to the
improved sales volumes were training and youth pants,
professional health care products, wet wipes, adult care
products, disposable diapers and feminine care products in
North America and disposable diapers in Europe, Latin America
and the Asia/Pacific region. Diaper volume resulting from
acquisitions in France, Spain, Portugal and Brazil accounted
for about 30 percent of the sales volume increase in personal
care products.

o Worldwide sales of tissue-based products declined 6 percent,
primarily due to lower selling prices and changes in currency
exchange rates in Europe and the Far East. Sales volumes
declined less than 1 percent. Increased sales volumes in the
U.S., Latin America and the Asia/Pacific region were offset by
lower sales volumes in Europe.

o On an overall basis, selling prices were 1.6 percent lower
than in 1996, primarily due to lower prices for tissue-based
products worldwide.

o Changes in currency exchange rates reduced consolidated net
sales 2.4 percent in 1997.

Excluding the 1997 Charge, operating profit declined 2.4
percent in absolute terms, but increased to 16.0 percent from
15.6 percent in 1996 as a percentage of net sales. Excluding the
divested businesses in both years and the 1997 Charge, operating
profit increased 2.6 percent. The operating profit increase was
attributable to the sales volume increases, manufacturing
efficiencies and lower pulp costs. These improvements were
partially offset by the lower selling prices, heightened
competition in Europe and the transitional effects of strategic
changes made in the Corporation's North American away-from-home
business. The following operating profit commentary excludes the
results of divested businesses in both years.

o Cost reductions and manufacturing efficiencies were achieved
in the North American personal care and consumer tissue
businesses.

o Operating profit was adversely affected by the transitional
effects of strategic changes related to the combination of
Kimberly-Clark's and Scott's away-from-home businesses in
North America, which are expected to improve the ongoing
profitability of this business. The transition resulted in
higher costs in 1997 and a negative impact on operating profit
of approximately $75 million.

o Marketing costs were lower in the North American personal care
and consumer tissue businesses, but were higher in Latin
America, primarily to support business expansions.

o General expenses were higher principally as a result of
business expansions outside North America.

o Changes in currency exchange rates reduced consolidated
operating profit by approximately $8 million in 1997.

Additional Income Statement Commentary:

o Interest expense declined primarily as a result of lower
average debt levels.

o The Corporation's effective income tax rate was 36.5 percent
in 1997 compared with 35.0 percent in 1996. Excluding the
1997 Charge, the Corporation's effective income tax rate for
1997 was 33.0 percent. The lower effective tax rate is
primarily due to additional tax planning opportunities, some
of which arose from the Scott merger.

o Other income in 1997 includes a pretax nonoperating gain on
the sale of the Corporation's interest in Ssangyong Paper Co.,
Ltd. ("Ssangyong") of Korea. This transaction resulted in an
after-tax gain of
$.03 per share.

o Other income in 1996 includes a net pretax nonoperating gain
from regulatory divestitures required in connection with the
Scott merger and from the sale of the Corporation's remaining
interest in Midwest Express Holdings, Inc. These transactions
resulted in a net after-tax gain of $.13 per share.

o The Corporation's 1997 share of equity company net income
includes a net nonoperating gain of $16.3 million, or $.03 per
share, relating to the sale of a portion of the tissue
business of Kimberly-Clark de Mexico, S.A. de C.V. ("KCM") to
meet Mexican regulatory requirements in connection with KCM's
merger with Scott's former Mexican affiliate, Compania
Industrial de San Cristobal S.A. de C.V. ("Cristobal"). Also
included in the Corporation's share of 1997 equity company net
income is $2.2 million of the 1997 Charge. In 1996, the
operations of Cristobal were restructured to eliminate, among
other things, duplicate capacity and to satisfy regulatory
requirements. The Corporation's share of KCM's after-tax
restructuring charge in 1996 was $5.5 million, or $.01 per
share. Excluding these unusual items in both years, the
Corporation's share of equity company net income declined 9.3
percent. The decline is attributable to KCM. Although KCM's
sales and operating profit showed year-to-year increases of
more than 5 and 8 percent, respectively, the year-to-year
comparison of the Corporation's share of KCM's net income was
adversely affected by an unusually low effective tax rate in
1996 and by the required change to hyperinflationary
accounting for Mexican operations in 1997. This accounting
change had a negative effect on net earnings reported by KCM
in 1997, the Corporation's share of which was approximately
$12 million.

o In 1997, minority owners' share of subsidiaries' net income
includes $10.1 million attributable to other owners' share of
the 1997 Charge. Excluding this share of the 1997 Charge,
minority owners' share of subsidiaries' net income declined
about 25 percent. The decline is primarily due to the sale of
the Corporation's interest in SPL and increased ownership in
certain subsidiaries in Central America in 1997.

o In March 1997, the Corporation sold Coosa for approximately
$600 million in cash. Also, in the first quarter of 1997, the
Corporation recorded impairment losses on the planned disposal
of a pulp manufacturing mill in Miranda, Spain; a recycled
fiber facility in Oconto Falls, Wisconsin; and a tissue
converting facility in Yucca, Arizona; and on an integrated
pulp making facility in Everett, Washington. These impairment
losses totaled $111.5 million before income tax benefits. In
June 1997, the Corporation completed the sale of its interest
in SPL for approximately $127 million. Accounting regulations
require that certain transactions following a business
combination that was accounted for as a pooling of interests
be reported as extraordinary items. Accordingly, the above
described transactions have been aggregated and reported as
extraordinary gains totaling $17.5 million, net of applicable
income taxes of $38.4 million. The high effective income tax
rate on the extraordinary gains is due to income tax loss
carryforwards in Spain which precluded the current recognition
of the income tax benefit on the Miranda impairment loss and
the tax basis in SPL being substantially lower than the
carrying amount of the investment in the financial statements.
The extraordinary gains were equal to $.03 per share.

o Excluding the 1997 Charge, the nonoperating gains in both
years, the extraordinary gains in 1997, and the Corporation's
share of KCM's 1996 restructuring charge, earnings per share
increased 3.0 percent to $2.44 from $2.37 in 1996.

CHANGES IN 1996 NET SALES AND EARNINGS VERSUS 1995 (EXCLUDING THE 1995 CHARGE)

% Change
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Net sales ................................................................................................. - 1.7%
Gross profit .............................................................................................. + 8.0
Operating profit .......................................................................................... +24.2
Net income................................................................................................. +27.1
Basic net income per share................................................................................. +25.8
Diluted net income per share............................................................................... +26.5

</TABLE>

o The net sales decline in 1996 was principally the result of
the loss of revenues from businesses that were sold in 1996 to
satisfy U.S. and European regulatory requirements associated
with the Scott merger and other businesses that were divested
in 1995. Excluding the net sales of these businesses in both
years, consolidated net sales increased 4.6 percent and sales
volumes increased 6.0 percent.

o Despite the loss of earnings of divested businesses, gross
profit improved primarily because of higher sales volumes,
merger synergies, manufacturing efficiencies for personal care
products and lower pulp costs worldwide.

o Operating profit improved due to the higher gross margin
coupled with merger synergies.

o Net income improved more than operating profit as a percentage
of sales primarily because of reduced interest expense due to
lower average debt levels, partially offset by a higher
effective income tax rate in 1996 versus 1995 that resulted
primarily from a reduction in 1996 taxable income in
jurisdictions in which net operating loss carryforwards were
available.

NET SALES TRENDS IN RECENT YEARS

($ Billions) 1997 1996 1995 1994
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Principal products:
Tissue ................................................................ $ 6.1 $ 6.9 $ 6.9 $ 5.9
Diapers ............................................................... 2.7 2.3 2.1 1.7
All other ............................................................. 3.7 3.9 4.4 4.0
------- ------ ------ ------
Consolidated ............................................................ $ 12.5 $ 13.1 $ 13.4 $ 11.6
======= ====== ====== ======

</TABLE>

o Consolidated net sales have grown $900 million, or 7.8 percent, since
1994.

o The increase in sales from 1994 to 1995 is attributable primarily to
improved selling prices for tissue products, pulp and newsprint, a
better product mix and the effects of currency translation.

ANALYSIS OF OPERATING PROFIT AS A PERCENTAGE OF NET SALES

1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales ........................................................................ 100.0% 100.0% 100.0%
Less:
Cost of products sold .......................................................... 63.5 62.7 66.0
Marketing expense .............................................................. 15.4 15.4 15.6
Research expense ............................................................... 1.7 1.6 1.5
General expense ................................................................ 5.1 4.7 4.5
Restructuring and other unusual charges......................................... 3.9 - 10.8
----- ----- -----
Operating profit ................................................................. 10.4% 15.6% 1.6%
===== ===== =====

</TABLE>

o Excluding the portion of the 1997 Charge recorded in cost of
products sold would reduce the cost of products sold as a
percentage of net sales to 61.8 percent.

o Excluding the 1997 and 1995 Charges, operating profit margins
have improved during each of the last two years.

o The 1996 improvement in operating profit margin was caused
principally by higher sales volumes, merger synergies,
manufacturing efficiencies for personal care products and
lower pulp costs worldwide.

LIQUIDITY AND CAPITAL RESOURCES

Year Ended
December 31
-------------------------
($ Millions) 1997 1996
- - ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash provided by operations ................................................................ $1,406.6 $1,674.2
Capital spending ........................................................................... 944.3 883.7
Proceeds from disposition of property and businesses ....................................... 779.6 455.4
Ratio of total debt to capital ............................................................. 36.5% 32.9%
Pretax interest coverage - times ........................................................... 8.1 11.2

</TABLE>

Commentary:

o Cash provided by operations decreased $267.6 million in 1997
compared with 1996. Net income plus non-cash charges included
in net income increased to $2.0 billion in 1997 compared with
$1.8 billion in 1996. The Corporation invested $576.9 million
in operating working capital in 1997 compared with $141.6
million in 1996. Major operating uses of cash in 1997
compared with 1996 were higher tax payments arising, in part,
from the Coosa and SPL sales and lower accounts payable.

o During 1997, approximately $233 million was charged to the
reserves related to the 1995 Charge and approximately $12
million was recorded against reserves related to the 1997
Charge.

o Cash proceeds received in 1997 in connection with the Coosa
and SPL disposals, the sale of Ssangyong and other asset sales
totaled $779.6 million.

o In 1997, the Corporation purchased 17.9 million shares of its
common stock in connection with its share repurchase program
at a total cost of approximately $900 million. In September
1997, the board of directors authorized the repurchase of 20
million additional shares, of which the remaining authority at
December 31, 1997, was 15.5 million shares.

o On December 18, 1997, the Corporation completed the
acquisition of Tecnol Medical Products, Inc. ("Tecnol"), a
leading maker of disposable face masks and patient care
products, through the exchange of approximately 8.7 million
shares of the Corporation's common stock for all outstanding
shares of Tecnol common stock. The transaction has been
accounted for as a purchase.

o Although the Corporation generated significant cash flow from
opertions and from the sales of Coosa and SPL, outstanding
debt at the end of 1997 increased to $2.5 billion from $2.3
billion at year-end 1996, due primarily to the Corporation's
share repurchase program.

o The ratio of total debt to capital increased in 1997
principally as a consequence of the 1997 Charge and the higher
debt level at the end of 1997. Excluding the effect of the
1997 Charge, the ratio of total debt to capital would have
been 34.0 percent. The Corporation's target total debt to
capital ratio is 30 to 40 percent.

o The decline in the pretax interest coverage is due primarily
to the higher year-end debt levels and the effect of the 1997
Charge. Excluding the effect of the 1997 Charge, the 1997
pretax interest coverage would have been 11.9 times.

o On January 9, 1998, the Corporation issued $200 million of 6
3/8% Debentures due January 1, 2028. This issuance supported
the Corporation's classification of $200 million of short-term
commercial paper as long-term debt in the December 31, 1997
Consolidated Balance Sheet.

o A shelf registration statement for $500 million of debt
securities is on file with the Securities and Exchange
Commission. The registration provides flexibility to issue
debt promptly if the Corporation's needs and market conditions
warrant.

o Revolving credit facilities of $1.0 billion are in place for
general corporate purposes and to back up commercial paper
borrowings.

o The Corporation's long-term debt securities have a Double-A
rating, and its commercial paper is rated in the top category.

o Management believes that the Corporation's ability to generate
cash from operations and its capacity to issue short-term and
long-term debt are adequate to fund working capital, capital
spending and other needs in the foreseeable future.

MARKET RISK SENSITIVITY AND INFLATION RISKS

Pursuant to Financial Accounting Reporting Release No. 48
issued by the Securities and Exchange Commission in January 1997,
the Corporation is required to disclose information concerning
market risk with respect to foreign exchange rates, interest
rates and commodity prices. The Corporation has elected to make
such disclosures utilizing a sensitivity analysis approach based
on hypothetical changes in foreign exchange rates, interest rates
and commodity prices.

As a multinational enterprise, the Corporation is exposed to
changes in foreign currency exchange rates, interest rates and
commodity prices. The Corporation employs a variety of practices
to manage these market risks, including its operating and
financing activities and, where deemed appropriate, the use of
derivative financial instruments. The Corporation uses
derivative financial instruments only for risk management
purposes and does not use them for speculation or for trading.
All derivative instruments are either exchange traded or are
entered into with major financial institutions for the purpose of
reducing the Corporation's credit risk and the risk of
nonperformance by third parties.

Foreign Currency Risk

Foreign currency risk is managed by the use of foreign
currency forward, swap and option contracts. The use of these
contracts allows the Corporation to manage its transactional
exposure to exchange rate changes because the gains or losses
incurred on the derivative instruments will offset in whole, or
in part, losses or gains on the underlying foreign currency
exposure. As of December 31, 1997, the Corporation's only major
foreign currency transactional exposure was the Mexican peso.
There have been no significant changes in how foreign currency
transactional exposures were managed during 1997, and management
does not foresee or expect any significant changes in such
exposures or in the strategies it employs to manage them in the
near future.

Foreign currency contracts and transactional exposures are
sensitive to changes in foreign currency exchange rates. As of
December 31, 1997, a 10 percent unfavorable change in the
exchange rate of the U.S. dollar against the prevailing market
rates of the foreign currencies in which the Corporation has
transactional exposures would have resulted in a net unrealized
loss of approximately $25 million. Unrealized gains or losses on
foreign currency contracts and transactional exposures are
defined as the difference between the actual contract rates and
the hypothetical exchange rates. In the view of management, the
above unrealized losses resulting from the hypothetical changes
in foreign currency exchange rates are not material to the
Corporation's consolidated financial position, results of
operations or cash flows.

Additional information concerning the Corporation's foreign
currency risks and hedging activities is contained in Note 8 to
the Consolidated Financial Statements.

Interest Rate Risk

Interest rate risk is managed through the maintenance of a
portfolio of variable- and fixed-rate debt composed of short- and
long-term instruments. The objective is to maintain a cost-
effective mix that management deems appropriate. The Corporation
utilizes interest rate swaps when deemed appropriate to manage
interest rate risk over time. These arrangements permit the
Corporation to exchange fixed- for variable-rate interest or
variable- for fixed-rate interest in a cost-effective manner
based on agreed-upon notional amounts exchanged. At December 31,
1997, the Corporation had no interest rate swaps outstanding and
its debt portfolio was composed of approximately 28 percent
variable-rate debt, adjusted for the effect of variable-rate
assets, and 72 percent fixed-rate debt. The strategy employed by
the Corporation to manage its exposure to interest rate
fluctuations did not change significantly during 1997, and
management does not foresee or expect any significant changes in
its exposure to interest rate fluctuations or in how such
exposure is managed in the near future.

Various financial instruments issued by the Corporation and
its subsidiaries are sensitive to changes in interest rates.
Interest rate changes would result in gains or losses in the
market value of the Corporation's fixed-rate debt due to
differences between the current market interest rates and the
rates governing these instruments. With respect to the
Corporation's fixed-rate debt outstanding at December 31, 1997, a
100 basis- point decline in interest rates would have resulted in
no material effect on the Corporation's consolidated financial
position, results of operations or cash flows. With respect to
the Corporation's commercial paper and other floating-rate debt,
a 100 basis-point increase in interest rates would have had no
material effect on the Corporation's pro forma interest expense
for 1997.

Commodity Price Risk

The Corporation is subject to commodity price risk arising
from price movement for purchased pulp, the market price of which
is determined by industry supply and demand. Increased pulp
costs may or may not be recoverable through higher selling prices
for products made from such raw materials. The Corporation has
not used derivative instruments in the management of these risks.
Because the Corporation is approximately 70 percent integrated
with respect to its current pulp requirements and because a
portion of its pulp purchases are made under long-term contracts
priced using formulas that result in relatively stable year-to-
year pulp prices, management does not deem commodity price risk
to be material to the Corporation's consolidated financial
position, results of operations or cash flows.

Inflation Risk

The Corporation's inflation risks are managed on an entity-by-
entity basis through selective price increases, productivity
increases and cost-containment measures. Management does not
believe that inflation risk is material to the Corporation's
business or its consolidated financial position, results of
operations or cash flows.

"YEAR 2000" CAPABILITIES

The Corporation has been in the process of modifying computer
systems to be "Year 2000" compliant since 1995. The process
involves system reviews, testing and modification or replacement
of date-sensitive software. Plans call for completion of the
majority of the process by the end of 1998 and the balance by
mid-1999. Neither the "Year 2000" issue nor the financial
effects of the reviews, testing and modifications are expected to
have a material adverse effect on the Corporation's business or
its consolidated financial position, results of operations or
cash flows. At this time, the Corporation is unable to determine
the effect of the "Year 2000" issue on its customers or
suppliers.

CONTINGENCIES

See Note 14 to the Consolidated Financial Statements for a
discussion of pending litigation and other contingencies
affecting the Corporation.

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 or results of operations. The Corporation has been
named as a potentially responsible party 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 or results of operations.
See Note 14 to the Consolidated Financial Statements.

OUTLOOK

The Corporation enjoyed successes in a number of areas in
1997, with Personal Care businesses having an outstanding year.
However, the Corporation's overall earnings fell short of
management's expectations because of lower selling prices
worldwide, particularly for tissue products; transitional issues
in the Corporation's North American away-from-home business; and
heightened competition in Europe. Selling prices alone were
approximately $240 million lower than in 1996, which is
equivalent to 29 cents per share. The Corporation has recently
announced or implemented price increases for consumer and away-
from-home tissue products in the United States, and management is
encouraged that going forward these actions will help offset a
portion of the price reductions.

In recognition that the Corporation's financial performance in
1997 did not represent sufficient progress toward the
Corporation's long-term goal of doubling earnings per share from
operations from 1995 to the year 2000, management has commenced
implementation of the previously described Announced Plan in an
effort to reduce costs. The Announced Plan is expected to make
the Corporation stronger, whatever the competitive environment,
and help the Corporation deliver the returns its shareholders
have come to expect. In total, management expects the
Corporation will realize a savings of $100 million in 1998,
growing to $200 million annually in the year 2000, as a result of
the Announced Plan.

As previously disclosed, the Corporation's U.S. away-from-home
business underwent extensive strategic changes in 1997 that
management believes will provide long-lasting benefits that
should far outweigh the short-term loss in volume experienced by
that business early in the year. The transition has been
accomplished, and volume levels began increasing in the second
half of 1997. Costs are being reduced, and management expects
this business to return to its historic position of delivering
financial margins greater than the corporate average by the
second quarter of 1998.

Management believes that the Corporation's businesses in North
America and Latin America are very strong and expects to see good
growth and solid returns in those areas in 1998.

In Europe, intense competition has created significant
uncertainty. While the situation has not worsened over the past
few months, it is difficult for management to predict when things
will improve. In the meantime, management will continue its
efforts to reduce costs, improve products and pursue its long-
term strategy of building market share. To support the growth of
the Corporation's European diaper business, capacity is being
expanded at the Corporation's state-of-the-art plant at Barton-
upon-Humber in the United Kingdom. A continued high rate of
growth is expected in Central and Eastern Europe, where sales of
the Corporation's diapers, tissue and other products in 21
countries have increased tenfold in the past three years.

In Mexico, home of the Corporation's largest business in the
Latin American region, the economy is showing signs of recovery,
which are being reflected in increased sales volumes and improved
prices at KCM, the Corporation's equity affiliate.

In the Asia/Pacific region, although the Corporation's sales
volumes increased 11 percent in 1997, that region's currency
crisis resulted in a sales decline of 4 percent after translating
to U.S. dollars. Asia represents 7 percent of the Corporation's
overall sales, and a smaller percentage of its operating profit,
so that region's problems did not have a substantial effect on
the Corporation's financial performance. Notwithstanding these
1997 effects, management believes that the economic difficulties
in Asia may actually allow the Corporation to accelerate its pace
of business expansion in the region and increase its market
shares. As a result, management believes that the Corporation is
well positioned to enjoy the prosperity that management believes
will eventually return to the region.

Management believes that the purchase of Tecnol increases the
Corporation's potential for sales and earnings growth, both in
the United States and abroad, and positions the Corporation's
Professional Health Care Sector as a possible fourth core
business in the future.

The Corporation has previously announced its intention to
reduce its dependence on internally produced pulp from the 80
percent level of 1996 to approximately 30 percent. Toward that
end, the Corporation completed the sale of Coosa to Alliance
Forest Products in March 1997 for $600 million in cash. In
addition, the Corporation had an agreement to sell its mills in
Terrace Bay, Ontario, and New Glasgow, Nova Scotia, to Vancouver-
based Harmac Pacific Inc. However, that sale was not completed,
and management is evaluating other options for these facilities.

In summary, despite the near-term uncertainties in Europe and
Asia, management believes that the Corporation is better
positioned than ever to take advantage of the strengths inherent
in its brands and to meet its ambitious goals for the year 2000
and beyond.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report concerning, among
other things, the business outlook, anticipated financial and
operating results, strategies, contingencies and contemplated
transactions of the Corporation, the adequacy of the 1997 and
1995 Charges, and the remaining costs of the Announced 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 assumptions used as a basis for the forward-looking
statements include many estimates that, among other things,
depend on the achievement of future cost savings, including cost
savings as a result of the Announced Plan, the achievement of
projected volume increases, the consummation of projected
divestitures on terms advantageous to the Corporation and the
availability of suitable acquisition candidates. In addition,
many factors outside the control of the Corporation, including
the prices of the Corporation's raw materials, potential
competitive pressures on selling prices or advertising and
promotion expenses for the Corporation's products, fluctuations
in foreign currency exchange rates, as well as general economic
conditions in the markets in which the Corporation does business,
also could impact the realization of such estimates.

<TABLE>

CONSOLIDATED INCOME STATEMENT
Kimberly-Clark Corporation and Subsidiaries

Year Ended December 31
--------------------------------------
(Millions of dollars, except per share amounts) 1997 1996 1995
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES ..................................................................... $12,546.6 $13,149.1 $13,373.0
Cost of products sold........................................................ 7,972.6 8,241.4 8,828.1
--------- --------- ---------

GROSS PROFIT .................................................................. 4,574.0 4,907.7 4,544.9
Advertising, promotion and selling expenses ................................. 1,937.2 2,029.7 2,080.9
Research expense ............................................................ 211.8 207.9 207.2
General expense ............................................................. 640.7 616.4 603.8
Restructuring and other unusual charges ..................................... 481.1 - 1,440.0
--------- --------- ---------

OPERATING PROFIT .............................................................. 1,303.2 2,053.7 213.0
Interest income ............................................................. 31.4 28.1 33.3
Interest expense ............................................................ (164.8) (186.7) (245.5)
Other income (expense), net ................................................. 17.7 107.2 103.6
--------- --------- ---------

INCOME BEFORE INCOME TAXES .................................................... 1,187.5 2,002.3 104.4
Provision for income taxes .................................................. 433.1 700.8 153.5
--------- --------- ---------

INCOME (LOSS) BEFORE EQUITY INTERESTS ......................................... 754.4 1,301.5 (49.1)
Share of net income of equity companies ..................................... 157.3 152.4 113.3
Minority owners' share of subsidiaries' net income .......................... (27.7) (50.1) (31.0)
--------- --------- ---------

INCOME BEFORE EXTRAORDINARY GAINS ............................................. 884.0 1,403.8 33.2
Extraordinary gains, net of income taxes .................................... 17.5 - -
--------- --------- ---------

NET INCOME .................................................................... $ 901.5 $ 1,403.8 $ 33.2
========= ========= =========

PER SHARE BASIS
BASIC
Income before extraordinary gains ......................................... $ 1.59 $ 2.49 $ .06
========= ========= =========

Net income ................................................................ $ 1.62 $ 2.49 $ .06
========= ========= =========

DILUTED
Income before extraordinary gains.......................................... $ 1.58 $ 2.48 $ .06
========= ========= =========

Net income................................................................. $ 1.61 $ 2.48 $ .06
========= ========= =========

</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>

<TABLE>

CONSOLIDATED BALANCE SHEET
Kimberly-Clark Corporation and Subsidiaries

December 31
----------------------------
(Millions of dollars) ASSETS 1997 1996
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS

Cash and cash equivalents ............................................................... $ 90.8 $ 83.2

Accounts receivable ..................................................................... 1,606.3 1,660.9

Inventories ............................................................................. 1,319.5 1,348.3

Deferred income tax benefits ............................................................ 341.6 327.4

Prepaid expenses and other .............................................................. 130.8 119.4
----------- -----------

TOTAL CURRENT ASSETS .................................................................. 3,489.0 3,539.2

PROPERTY

Land and timberlands .................................................................... 202.0 291.9

Buildings ............................................................................... 1,472.6 1,807.8

Machinery and equipment ................................................................. 7,715.0 9,234.0

Construction in progress ................................................................ 366.6 593.5
----------- -----------

9,756.2 11,927.2

Less accumulated depreciation ........................................................... 4,155.6 5,113.9
----------- -----------

NET PROPERTY .......................................................................... 5,600.6 6,813.3

INVESTMENTS IN EQUITY COMPANIES ........................................................... 567.7 551.1

ASSETS HELD FOR SALE....................................................................... 280.0 -

GOODWILL, NET OF ACCUMULATED AMORTIZATION.................................................. 594.8 262.0

DEFERRED CHARGES AND OTHER ASSETS ......................................................... 733.9 680.1
----------- -----------

$ 11,266.0 $ 11,845.7
=========== ===========

</TABLE>

See Notes to Consolidated Financial Statements.
<PAGE>

<TABLE>

<CAPTION>
December 31
------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES

Debt payable within one year ............................................................ $ 663.1 $ 576.5

Trade accounts payable .................................................................. 747.1 849.8

Other payables .......................................................................... 302.3 269.5

Accrued expenses ........................................................................ 1,445.6 1,460.1

Accrued income taxes .................................................................... 416.8 401.3

Dividends payable ....................................................................... 131.4 129.7
----------- -----------

TOTAL CURRENT LIABILITIES ............................................................. 3,706.3 3,686.9

LONG-TERM DEBT ............................................................................ 1,803.9 1,738.6

NONCURRENT EMPLOYEE BENEFIT AND OTHER OBLIGATIONS ......................................... 887.1 926.1

DEFERRED INCOME TAXES ..................................................................... 580.8 762.3

MINORITY OWNERS' INTERESTS IN SUBSIDIARIES ................................................ 162.6 248.7

STOCKHOLDERS' EQUITY

Preferred stock - no par value - authorized 20.0 million shares,
none issued ........................................................................... - -

Common stock - $1.25 par value - authorized 1.2 billion shares;
issued 568.6 million shares at December 31, 1997 and 1996.............................. 710.8 710.8

Additional paid-in capital .............................................................. 113.3 136.7

Common stock held in treasury, at cost - 12.3 million and 5.2 million
shares at December 31, 1997 and 1996, respectively .................................... (617.1) (214.4)

Unrealized currency translation adjustments ............................................. (953.2) (656.8)

Retained earnings ....................................................................... 4,871.5 4,506.8
----------- -----------

TOTAL STOCKHOLDERS' EQUITY ............................................................ 4,125.3 4,483.1
----------- -----------

$ 11,266.0 $ 11,845.7
=========== ===========

</TABLE>

<PAGE>

<TABLE>

CONSOLIDATED CASH FLOW STATEMENT
Kimberly-Clark Corporation and Subsidiaries

Year Ended December 31
-----------------------------------------
(Millions of dollars) 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net income ................................................................ $ 901.5 $1,403.8 $ 33.2
1997 and 1995 Charges, net of cash expended................................ 689.7 - 1,353.8
Extraordinary gains, net of income taxes .................................. (17.5) - -
Depreciation .............................................................. 490.9 561.0 581.7
Deferred income tax provision (benefit) ................................... 11.2 40.5 (330.0)
Gains on asset sales ...................................................... (8.4) (75.1) (118.5)
Equity companies' earnings in excess of dividends paid .................... (62.1) (100.2) (57.6)
Minority owners' share of subsidiaries' net income ........................ 27.7 50.1 31.0
Increase in operating working capital ..................................... (576.9) (141.6) (527.9)
Pension funding in excess of expense ...................................... (34.2) (28.2) (89.0)
Other ..................................................................... (15.3) (36.1) 54.9
--------- -------- ----------

CASH PROVIDED BY OPERATIONS .......................................... 1,406.6 1,674.2 931.6
--------- -------- ----------

INVESTING
Capital spending .......................................................... (944.3) (883.7) (817.6)
Acquisitions of businesses, net of cash acquired........................... (82.2) (223.6) (76.1)
Proceeds from disposition of property and businesses ...................... 779.6 455.4 336.1
Other ..................................................................... (58.9) 18.9 3.8
--------- -------- ----------

CASH USED FOR INVESTING .............................................. (305.8) (633.0) (553.8)
--------- -------- ----------

FINANCING
Cash dividends paid ....................................................... (530.6) (461.5) (348.2)
Net increase (decrease) in short-term debt................................. 355.3 (348.8) (25.2)
Increases in long-term debt ............................................... 107.5 75.8 80.7
Decreases in long-term debt ............................................... (253.8) (321.2) (944.0)
Proceeds from exercise of stock options ................................... 49.2 207.9 121.4
Acquisition of common stock for the treasury .............................. (910.6) (348.8) (137.8)
Other ..................................................................... 89.8 17.0 (40.9)
--------- -------- ----------

CASH USED FOR FINANCING .............................................. (1,093.2) (1,179.6) (1,294.0)
--------- -------- ----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................ $ 7.6 $ (138.4) $ (916.2)
========= ======== ==========

</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kimberly-Clark Corporation and Subsidiaries

NOTE 1. ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of
Kimberly-Clark Corporation and all subsidiaries that are more
than 50 percent owned. Investments in nonconsolidated companies
that are at least 20 percent owned are stated at cost plus equity
in undistributed net income. These latter companies are referred
to as equity companies.

The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingencies at the
date of the financial statements and the reported amounts of net
sales and expenses during the reporting period. Differences from
those estimates are recorded in the period they become known.

PER SHARE DATA

The number of common shares and per share data for all periods
reflects the two-for-one common stock split that became effective
April 2, 1997. (See Note 11.)

INVENTORIES

Most U.S. inventories are valued at cost on the Last-In,
First-Out (LIFO) method for U.S. income tax purposes and for
financial reporting purposes. The balance of the U.S.
inventories and inventories of consolidated operations outside
the U.S. are valued at the lower of cost, generally using the
First-In, First-Out (FIFO) method, or market.

PROPERTY AND DEPRECIATION

Property, plant and equipment are stated at cost. Depreciable
property is depreciated on the straight-line or units-of-
production method for financial reporting purposes and generally
on an accelerated method for income tax purposes. When property
is sold or retired, the cost of the property and the related
accumulated depreciation are removed from the balance sheet and
any gain or loss on the transaction is included in income.

GOODWILL AND DEFERRED CHARGES
Goodwill is amortized on the straight-line method over various
periods not exceeding 40 years. The realizability and period of
benefit of goodwill is evaluated periodically to assess
recoverability and, if warranted, impairment or adjustment of the
period benefited would be recognized. Accumulated amortization
of goodwill at December 31, 1997 and 1996 was $94.1 and $75.3
million, respectively.

Costs of bringing significant new or expanded facilities into
operation are recorded as deferred charges and amortized over
periods of not more than five years.

ENVIRONMENTAL EXPENDITURES

Environmental expenditures related to current operations that
qualify as property, plant and equipment or which substantially
increase the economic value or extend the useful life of an asset
are capitalized, and all other expenditures are expensed as
incurred. Environmental expenditures that relate to an existing
condition caused by past operations are expensed. Liabilities
are recorded when environmental assessments and/or remedial
efforts are probable and the costs can be reasonably estimated.
Generally, the timing of these accruals coincides with completion
of a feasibility study or a commitment to a formal plan of
action.

STOCK-BASED COMPENSATION
Compensation cost for stock options and awards is measured
based on intrinsic value under Accounting Principles Board
Opinion ("APB") 25, "Accounting for Stock Issued to Employees."
(See Note 9.)

<PAGE>

ACCOUNTING STANDARDS CHANGES

In 1997, the Corporation adopted Statement of Financial
Accounting Standards ("SFAS") 128, "Earnings Per Share." (See
Note 6.)

In 1997, SFAS 130, "Reporting Comprehensive Income" and SFAS
131, "Disclosures About Segments of an Enterprise and Related
Information" were issued. These standards, which will become
effective in 1998, expand or modify disclosures and, accordingly,
will have no effect on the Corporation's consolidated financial
position, results of operations or cash flows.

NOTE 2. RESTRUCTURING AND OTHER UNUSUAL CHARGES

1997 CHARGE

In the fourth quarter of 1997, the Corporation announced a
plan to restructure its worldwide operations ("Announced Plan"),
the total pretax 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"), $503.1
million after income taxes, equity company effects and minority
interests, or $.91 per share. The remaining $108.8 million of
costs related to the Announced Plan will be recorded in 1998 when
notification is made to employees whose employment will be
terminated or at the time other costs result in accruable
expenses. Of the 1997 Charge, $220.1 million relates to the
write-down of certain assets and inventories and has been charged
to cost of products sold, and $481.1 million has been recorded as
restructuring and other unusual charges in the Consolidated
Income Statement. Approximately 71 percent of the 1997 Charge
relates to Tissue-Based Products and 28 percent relates to
Personal Care Products. Approximately 59 percent of the 1997
Charge relates to North American operations and approximately 27
percent relates to Europe.

<PAGE>

The Announced Plan includes:

o The sale, closure or downsizing of 18 manufacturing
facilities worldwide and a workforce reduction of
approximately 5,000 employees. These actions will result in
the consolidation of the Corporation's manufacturing
operations into fewer, larger and more efficient facilities.
They also will eliminate excess production capacity,
including more than 200,000 metric tons of high-cost tissue
manufacturing capacity in North America and Europe.

o The write-down of property, plant and equipment and other
assets not needed in the restructured manufacturing
operations; the elimination of excess manufacturing
capacity; and the write-down of certain inventories in
restructured operations and other assets.

o The elimination of duplicate overhead and productive
capacity resulting from the combination of the Corporation's
Professional Health Care operations with those of Tecnol
Medical Products, Inc. ("Tecnol").

o The write-off of certain assets that became obsolete in 1997
due to recently enacted U.S. environmental air and water
emission rules that require reduced emission levels of
certain chemical compounds from the Corporation's pulp
production operations.

o Impaired asset charges.

<PAGE>

The major categories of the 1997 Charge and their subsequent
utilization are summarized below:

<TABLE>

Amounts
Charged Amounts Amounts to
to Earnings Utilized be Utilized
(Millions of dollars) in 1997 in 1997 Beyond 1997
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Costs of workforce reduction.......................................... $ 57.3 $ 5.5 $ 51.8
Losses on facility disposals.......................................... 165.0 5.8 159.2
Write-down of property, plant and equipment
and other assets................................................... 333.4 19.2 314.2
Asset impairments..................................................... 82.6 82.6 -
Contract terminations and other....................................... 62.9 6.0 56.9
------- -------- -------

$ 701.2 $ 119.1 $ 582.1
======= ======== =======

</TABLE>

The principal costs included in the 1997 Charge are as
follows:

o The costs of workforce reduction are primarily composed of
severance payments and other employee-related costs for
1,900 employees at facilities to be sold or closed and other
operations that are being downsized. The employees involved
were notified by December 31, 1997. The remainder of the
5,000 employees involved in the Announced Plan will be
notified in 1998, and the costs of their severance payments
and other costs will be accrued at that time.

o Losses on facility disposals include the write-down to
estimated net realizable value of six facilities to be sold
or closed and related costs of sale or closure. The sale or
closure of these facilities is expected to occur in 1998,
resulting in the elimination of excess production capacity.

o Write-down of property, plant and equipment and other assets
represents the net book value of older, less efficient
machinery and equipment not needed in the restructured
manufacturing operations; the elimination of excess
manufacturing capacity; the write-off of the net book value
of assets that became obsolete due to recently enacted U.S.
environmental air and water emission rules; and the
elimination of duplicate facilities and excess capacity
resulting from the Tecnol acquisition.

o Asset impairments represent charges for five manufacturing
facilities, the future cash flows from operations and the
sale or closure of which are estimated to be insufficient to
cover their carrying amounts. Each facility was written
down to its estimated fair value based on the Corporation's
assessment of expected future cash flows from operations and
disposal, discounted at a rate commensurate with the risk
involved.

o Contract terminations primarily represent the costs of
terminating certain supplier/distribution arrangements.

<PAGE>

The 1997 Charge included in accrued expenses on the
Consolidated Balance Sheet was $191.8 million at December 31,
1997. Substantially all of this amount is expected to be paid in
1998 and the balance, primarily related to workforce reductions,
is expected to be paid in accordance with negotiated agreements
in 1999 and beyond.

1995 CHARGE

In the fourth quarter of 1995, the Corporation recorded a
pretax charge of $1,440.0 million ("1995 Charge"), $1,070.9
million after income taxes and minority interests, or $1.92 per
share, for the estimated costs of the 1995 merger with Scott
Paper Company ("Scott"), for restructuring the combined
operations and for other unusual charges. The charges included:
(i) the costs of plant rationalizations and employee terminations
to eliminate duplicate facilities and excess capacity; (ii)
losses in connection with compliance with the merger related
decrees of the U.S. Justice Department and the European
Commission; (iii) costs of terminating leases, contracts and
other long-term agreements; (iv) the direct costs of the merger,
including fees of investment bankers, outside legal counsel and
accountants; (v) impaired asset charges; and (vi) other unusual
charges.

The 1995 Charge was based on management's announced plans and
information available at the time the decision was made to
undertake the restructuring and other planned actions. Based on
events occurring subsequent to 1995, certain aspects of the
Corporation's original plans for integrating the two
organizations and accomplishing the objectives of the merger
were, of necessity, revised. Although certain specific actions
originally contemplated in the 1995 Charge were modified, the
overall plan for restructuring the Corporation following the
merger and accomplishing the other matters included in the 1995
Charge should be completed at a total cost approximating the
original provision.

Major categories of the 1995 Charge and their subsequent
utilization are summarized below:

Amounts Amounts to
Charged Amounts Utilized be Utilized
---------------------------
to Earnings through in Beyond
(Millions of dollars) in 1995 1996 1997 1997
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Workforce related................................. $ 220.2 $ 142.0 $ 78.2 $ -
Facility disposals................................ 293.6 293.6 - -
Excess capacity, restructured
facilities and other assets..................... 449.1 289.9 129.6 29.6
Contract settlements, lease
terminations, merger fees and
expenses and other.............................. 318.8 133.1 143.9 41.8
Asset impairments................................. 158.3 158.3 - -
--------- --------- ------- --------

$ 1,440.0 $ 1,016.9 $ 351.7 $ 71.4
========= ========= ======= ========

</TABLE>

<PAGE>

ACCOUNTING POLICIES FOR RESTRUCTURING AND OTHER UNUSUAL CHARGES

The Corporation considers amounts included in the 1997 and
1995 Charges to be utilized when the following specific criteria
are met. Workforce related reserves are considered utilized when
contractual termination liabilities are fixed. The reserves for
facility disposals are considered utilized when a formal
agreement has been reached to sell such facilities. Reserves for
excess capacity, restructured facilities and other assets are
considered utilized at the occurrence of one of the following
events: management (i) closes such facilities; (ii) sells such
facilities; or (iii) writes off such assets because there are no
plans for any future recovery of carrying amounts. Costs for
contract settlements, lease terminations, and merger fees and
expenses are considered utilized at the time settlements are
negotiated and agreed upon and the amount of required payments
are fixed.

Provisions for asset impairments are based on discounted cash
flow projections in accordance with SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," and such assets are written down to their estimated
fair values.

The operating costs of facilities to be sold or closed are
charged to operating profit during the period such facilities
remain in use. Salaries, wages and benefits of employees at such
locations are charged to operations during the time such
employees are actively employed.

NOTE 3. ACQUISITION

On December 18, 1997, the Corporation completed the
acquisition of Tecnol through the exchange of approximately 8.7
million shares of the Corporation's common stock for all
outstanding shares of Tecnol common stock. The value of the
exchange of stock plus related acquisition costs was
approximately $428 million. The acquisition was accounted for as
a purchase. Accordingly, the assets and liabilities of Tecnol
are included in the Consolidated Balance Sheet as of December 31,
1997. The results of Tecnol's operations from the date of the
acquisition to December 31, 1997, were not significant.

The Corporation has engaged an independent appraiser to assist
in the determination of the fair market value of the acquired
assets and, while the appraisal is not yet complete, the
Corporation believes that the allocation of the purchase price
will result in assigning values to intangible assets in a range
of $320 million to $340 million. These intangible assets will be
amortized on the straight-line method over periods ranging up to
20 years.

The unaudited pro forma combined historical results, as if the
Tecnol business had been acquired at the beginning of fiscal 1997
and 1996, respectively, are estimated to be:

<PAGE>

<TABLE>

(Millions of dollars, except per share amounts) 1997 1996
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net sales............................................................................... $12,701.5 $13,293.5
Income before extraordinary gains....................................................... 868.1 1,385.0
Net income.............................................................................. 885.6 1,385.0
Basic net income per share.............................................................. 1.57 2.42
Diluted net income per share............................................................ 1.56 2.41

</TABLE>

The pro forma results include amortization of the intangibles
discussed above and interest expense on debt assumed issued to
finance the acquisition of the treasury stock exchanged in the
purchase. The pro forma results are not necessarily indicative
of what actually would have occurred if the acquisition had been
completed as of the beginning of each of the fiscal periods
presented, nor are they necessarily indicative of future
consolidated results.

NOTE 4. INCOME TAXES

An analysis of the provision for income taxes follows:

<TABLE>

<CAPTION>
Year Ended December 31
--------------------------------------
(Millions of dollars) 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current income taxes:
United States ................................................................. $423.9 $474.4 $280.3
State ......................................................................... 96.7 67.6 43.7
Other countries ............................................................... 104.6 118.3 159.5
------ ------ ------
Total ....................................................................... 625.2 660.3 483.5
------ ------ ------

Deferred income taxes:
United States ................................................................. (82.3) 38.8 (133.2)
State ......................................................................... (56.5) (10.1) (48.2)
Other countries ............................................................... (14.9) 11.8 (148.6)
------ ------ ------
Total ....................................................................... (153.7) 40.5 (330.0)
------ ------ ------

Total provision for income taxes................................................. 471.5 700.8 153.5

Less income taxes related to extraordinary gains ................................ 38.4 - -
------ ------ ------

Total provision excluding income taxes related
to extraordinary gains.................................................... $433.1 $700.8 $153.5
====== ====== ======

</TABLE>

<PAGE>

Income before income taxes is classified in the Consolidated Income Statement
as follows:

<TABLE>

<CAPTION>
Year Ended December 31
----------------------------------------
(Millions of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income Before Extraordinary Gains:
United States ................................................................. $1,132.6 $1,624.9 $ 42.5
Other countries ............................................................... 54.9 377.4 61.9
-------- -------- --------

$1,187.5 $2,002.3 $ 104.4
======== ======== ========

Extraordinary Gains:
United States ................................................................. $ 55.9 $ - $ -
======== ======== ========

</TABLE>

<PAGE>

Deferred income tax assets (liabilities) are composed of the
following:

<TABLE>

<CAPTION>
December 31
------------------------------
(Millions of dollars) 1997 1996
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current deferred income tax assets attributable to:

Advertising and promotion accruals....................................................... $ 37.7 $ 41.4
Pension, postretirement and other employee benefits ..................................... 80.2 83.4
Other accrued expenses, including those related to the 1997 and
1995 Charges........................................................................... 192.0 186.3
Other ................................................................................... 40.7 33.2
Valuation allowances .................................................................... (9.0) (16.9)
-------- ---------

Net current deferred income tax asset ................................................. $ 341.6 $ 327.4
======== =========

Noncurrent deferred income tax assets (liabilities) attributable to:

Accumulated depreciation ................................................................ $(788.7) $(1,016.2)
Operating loss carryforwards ............................................................ 280.4 260.7
Other postretirement benefits ........................................................... 287.3 320.8
Installment sales ....................................................................... (137.9) (137.9)
Other ................................................................................... (2.8) -
Valuation allowances .................................................................... (219.1) (189.7)
------- ---------

Net noncurrent deferred income tax liability .......................................... $(580.8) $ (762.3)
======= =========

</TABLE>

The valuation allowances for deferred income tax assets
increased by $21.5 million in 1997 and decreased by $54.1 million
in 1996. Valuation allowances at the end of 1997 relate to the
potentially unusable portion of tax loss carryforwards of $737.6
million that are in jurisdictions outside the United States. If
not utilized against taxable income, $288.4 million of this
amount will expire from 1998 through 2005. The remaining $449.2
million has no expiration date.

<PAGE>

Realization of deferred tax assets is dependent on generating
sufficient taxable income prior to expiration of the loss
carryforwards. Although realization is not assured, management
believes it is more likely than not that all of the deferred tax
assets, net of applicable valuation allowances, will be realized.
The amount of the deferred tax assets considered realizable could
be reduced or increased if estimates of future taxable income
during the carryforward period are reduced or increased.

A reconciliation of the income tax provision computed at the
U.S. federal statutory tax rate to the provision before income
taxes related to extraordinary gains is as follows:

<TABLE>

<CAPTION>
1997 1996 1995
---------------------- ----------------------- ------------------------
(Millions of dollars) AMOUNT PERCENT Amount Percent Amount Percent
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income before income taxes:
As reported ................................. $1,187.5 $2,002.3 $ 104.4
Add back the 1997 and 1995
Charges.................................... 701.2 - 1,440.0
-------- -------- ---------
Income before income taxes
excluding the 1997 and 1995
Charges .............................. $1,888.7 $2,002.3 $ 1,544.4
======== ======== =========

Tax at U.S. statutory rate(a) ................. $ 661.0 35.0% $ 700.8 35.0% $ 540.5 35.0%
State income taxes, net of federal
tax benefit.................................. 37.4 2.0 37.3 1.9 34.2 2.2
Operating losses for which no tax
benefit was recognized....................... 26.7 1.4 22.6 1.1 10.9 .7
Net operating losses realized ................. (4.7) (.2) (12.6) (.6) (70.6) (4.6)
Other - net ................................... (97.1) (5.2) (47.3) (2.4) (1.5) (.1)
-------- ---- -------- ---- --------- -----

623.3 33.0% 700.8 35.0% 513.5 33.2%
==== ==== =====

Tax benefit of the 1997 and 1995
Charges(b) .................................. (190.2) 27.1% - (360.0) 25.0%
-------- ==== -------- --------- =====

Provision for income taxes................... $ 433.1 36.5% $ 700.8 35.0% $ 153.5 147.0%
======== ==== ======== ==== ========= =====

</TABLE>
<PAGE>

(a) Tax at U.S. statutory rate is based on income before income
taxes excluding the 1997 Charge of $701.2 million and the
1995 Charge of $1,440.0 million. The tax benefit of such
items is shown elsewhere in the table.

(b) The effective rate for the tax benefit attributable to the
1997 Charge is lower than the U.S. statutory rate of 35.0
percent primarily because no tax benefits were provided for
certain costs related to operations in countries in which
the Corporation has income tax loss carryforwards for which
valuation allowances have been provided. The effective rate
for the tax benefit attributable to the 1995 Charge is lower
than the U.S. statutory rate of 35.0 percent because no tax
benefits were provided for certain costs and fees that are
not deductible and others related to operations in countries
in which the Corporation has income tax loss carryforwards
for which valuation allowances have been provided.

At December 31, 1997, income taxes have not been provided on
approximately $1.6 billion of unremitted earnings of subsidiaries
operating outside the U.S. These earnings, which are considered
to be indefinitely invested, would become subject to income tax
if they were remitted as dividends, were lent to the Corporation
or a U.S. affiliate, or if the Corporation were to sell its stock
in the subsidiaries. Determination of the amount of unrecognized
deferred U.S. income tax liability on these unremitted earnings
is not practicable because of the complexities associated with
its hypothetical calculation. Withholding taxes of
approximately $100 million would be payable upon remittance of
all previously unremitted earnings at December 31, 1997.

<PAGE>

NOTE 5. POSTRETIREMENT AND OTHER BENEFITS

RETIREMENT PLANS

The Corporation and its subsidiaries in North America and the
United Kingdom have defined benefit and/or defined contribution
retirement plans covering substantially all regular employees.
Most other subsidiaries outside the U.S. have pension plans or,
in certain countries, termination pay plans covering
substantially all regular employees. Obligations under such
plans are provided for by contributing to trusts, purchasing
insurance policies, or recording liabilities.

DEFINED BENEFIT RETIREMENT PLANS

Defined benefit plans covering salaried employees generally
provide pension benefits based on years of service and
compensation during the final years of employment. Defined
benefit plans covering hourly employees generally provide
benefits of stated amounts for each year of service or benefits
based on years of service and compensation during the final years
of employment. For plans in North America and the United
Kingdom, the funding policy is to contribute assets that, at a
minimum, fully fund the accumulated benefit obligation, subject
to regulatory and tax deductibility limits. The policy for the
remaining defined benefit plans, which are composed primarily of
pension or termination pay plans outside North America and
nonqualified U.S. plans providing pension benefits in excess of
limitations imposed by the U.S. income tax code, is to fund them
based on legal requirements, tax considerations, customary
business practices in such countries and investment
opportunities. Assets held in the pension trusts are composed
principally of common stocks, high-grade corporate and government
bonds, real estate funds and various short-term investments.

The components of net pension cost were as follows:

<TABLE>

Year Ended December 31
-----------------------------------
(Millions of dollars) 1997 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned ..................................................................... $ 72.6 $ 86.0 $ 78.0
Interest on projected benefit obligation (PBO)....................................... 246.7 243.9 249.8
Amortization and other .............................................................. 6.0 13.4 4.0
------- ------- -------

325.3 343.3 331.8
Less expected return on plan assets (actual returns on plan assets
were gains of $622.1 million, $446.1 million and $521.7 million in
1997, 1996 and 1995, respectively) ................................................ 297.8 283.2 276.1
------- ------- -------

Net pension cost .................................................................... $ 27.5 $ 60.1 $ 55.7
======= ======= =======

</TABLE>

<PAGE>

The weighted-average assumptions used to determine net pension
costs were as follows:

<TABLE>

Year Ended December 31
----------------------------------
1997 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expected long-term rate of return on plan assets..................................... 9.6% 9.6% 10.2%

Discount rate ....................................................................... 7.9% 7.5% 8.7%

Assumed rate of increase in compensation ............................................ 4.9% 4.4% 5.4%

</TABLE>

Transition adjustments are being amortized on the straight-
line method over 14 to 23 years. Prior service cost is being
amortized on a straight-line basis over the participants' average
remaining service period for plans with compensation-related
benefit formulas and over seven years for certain other plans.

The funded status of the defined benefit plans is presented
below as of December 31:

<TABLE>

1997 PLANS WHERE 1996 Plans Where
-------------------------- ---------------------------
ASSETS ABO Assets ABO
EXCEED EXCEEDS Exceed Exceeds
(Millions of dollars) ABO ASSETS(a) ABO Assets(a)
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of plan benefits:
Accumulated benefit obligation (ABO):
Vested ..................................................... $3,114.1 $ 90.7 $2,834.5 $ 132.7
Nonvested .................................................. 62.8 4.2 48.4 3.4
-------- -------- -------- -------

Total ................................................... $3,176.9 $ 94.9 $2,882.9 $ 136.1
======== ======== ======== =======

PBO ......................................................... $3,507.0 $ 116.2 $3,233.7 $ 161.0
Plan assets at fair value ...................................... 3,613.9 6.0 3,318.7 24.5
-------- ------- -------- -------

PBO less than (in excess of) plan assets ....................... $ 106.9 $(110.2) $ 85.0 $(136.5)
======== ======= ======== =======

Consisting of:
Unfavorable actuarial experience ........................... $ (16.2) $ (36.8) $ (48.8) $ (32.9)
Unamortized transition adjustments ......................... 20.5 (3.8) 26.6 (4.2)
Unamortized prior service costs ............................ (45.9) (6.8) (42.9) (7.3)
Net prepaid (accrued) pension costs ........................ 148.5 (92.5) 150.1 (119.4)
Adjustment for minimum liability ........................... - 29.7 - 27.3
-------- ------- -------- -------

Total ................................................... $ 106.9 $(110.2) $ 85.0 $(136.5)
======== ======= ======== =======

</TABLE>

<PAGE>

(a) Plans with accumulated benefit obligations that exceed plan
assets are composed primarily of pension or termination pay
plans outside North America and nonqualified U.S. plans
providing pension benefits in excess of limitations imposed
by the U.S. income tax code. Benefits under these
arrangements are paid directly by the sponsoring entity. In
addition, in the case of the nonqualified U.S. benefit
plans, assets held in Rabbi trusts are available to pay a
portion of such benefits.

The weighted-average assumptions used to determine the PBO
were as follows:

<TABLE>

December 31
------------------------------
1997 1996
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Discount rate(a) .................................................................... 7.1% 7.9%

Assumed rate of increase in compensation ............................................ 4.3% 4.9%

</TABLE>

(a) Weighted-average discount rates for U.S. plans were 7.0% and
7.75% at December 31, 1997 and 1996, respectively.

In connection with certain business dispositions occurring in
the last two years, the Corporation transferred certain pension
obligations to the respective buyers. These dispositions
resulted in immediate recognition of gains of $.5 million and
$2.1 million in 1997 and 1996, respectively.

<PAGE>

DEFINED CONTRIBUTION RETIREMENT PLANS

The Corporation's contributions to the defined contribution
retirement plans are based on the age and compensation of covered
employees. The Corporation's contributions charged to expense
were $14.8 million, $8.5 million and $9.7 million in 1997, 1996
and 1995, respectively.

POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS

Substantially all retired employees of the Corporation and its
North American subsidiaries and certain international employees
are covered by health care and life insurance benefit plans.
Benefits are based on years of service and age at retirement.
The plans are principally noncontributory for retirees prior to
1993, and are contributory for most employees retiring after
1993. Certain U.S. plans place a limit on the Corporation's cost
of future annual per capita retiree medical benefits at no more
than 200 percent of the 1992 annual per capita cost. Certain
other U.S. plans place a limit on the Corporation's future cost
for retiree medical benefits to a defined annual per capita
medical cost.

The components of postretirement health care and life
insurance benefit cost were as follows:

<TABLE>

Year Ended December 31
----------------------------------
(Millions of dollars) 1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned ...................................................................... $10.7 $12.0 $10.3
Interest on accumulated postretirement benefit obligation ............................ 44.9 48.0 54.6
Amortization and other................................................................ (8.8) (4.4) (.8)
----- ----- -----

Net postretirement benefit cost (of which $52.4 million, $54.3 million
and $49.9 million were paid in 1997, 1996 and 1995, respectively) .................. $46.8 $55.6 $64.1
===== ===== =====

</TABLE>
<PAGE>

The components of the postretirement health care and life
insurance benefit obligation are presented below:

<TABLE>

December 31
-----------------------
(Millions of dollars) 1997 1996
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees ........................................................................................ $426.3 $438.7
Fully eligible active plan participants ......................................................... 50.5 62.2
Other active plan participants .................................................................. 161.2 130.9
------ ------

Total ......................................................................................... 638.0 631.8

Unrecognized actuarial gain........................................................................ 98.1 119.0
Unrecognized prior service gain.................................................................... 19.8 22.3
------ ------

Total accrued postretirement benefit liability .................................................... 755.9 773.1
Less current portion .............................................................................. 56.6 56.5
------ ------

Noncurrent portion ................................................................................ $699.3 $716.6
====== ======

</TABLE>

<PAGE>

Weighted-average discount rates used to determine the
accumulated postretirement benefit obligation for all plans were
7.0% and 7.8% at December 31, 1997 and 1996, respectively. The
rates used for the U.S. plans were 7.0% and 7.75% at December 31,
1997 and 1996, respectively.

The December 31, 1997 accumulated postretirement benefit
obligation for the U.S. plans was determined using an assumed
health care cost trend rate of 8.6% in 1998, declining gradually
to an ultimate rate of 6.0% for certain plans and to zero by 2009
and thereafter for others, which reflects the previously
described limit on the Corporation's cost of annual per capita
retiree medical benefits for certain plans. The December 31,
1996, accumulated postretirement benefit obligation was
determined using an assumed health care cost trend rate of 9.2%
in 1997, declining gradually to an ultimate rate of 6.0% for
certain plans and to zero by 2007 and thereafter for others.

A one-percentage point increase in the health care cost trend
rate would increase the accumulated postretirement benefit
obligation by $22.5 million at December 31, 1997, and expense by
$1.8 million for the year then ended.

In connection with certain business dispositions occurring in
the last three years, the Corporation transferred certain
postretirement benefit obligations to the respective buyers.
These dispositions resulted in immediate recognition of gains of
$7.5 million and $2.1 million in 1997 and 1996, respectively, and
a loss of $14.9 million in 1995.

INVESTMENT PLANS

Voluntary contribution investment plans are provided to
substantially all North American employees. Under the plans, the
Corporation matches a portion of employee contributions. Costs
charged to expense under the plans were $24.9 million, $24.1
million and $26.0 million in 1997, 1996 and 1995, respectively.

NOTE 6. EARNINGS PER SHARE

There are no adjustments required to be made to Income Before
Extraordinary Gains for purposes of computing basic and diluted
earnings per share ("EPS").

<PAGE>

A reconciliation of the average number of common shares
outstanding used in the basic and diluted EPS computations is as
follows:

<TABLE>

Average Common Shares Outstanding
------------------------------------------
(Millions) 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic .................................................................... 555.9 564.0 559.0
Dilutive effect of stock options........................................... 3.1 2.9 4.7
Dilutive effect of shares issued for participation share awards............ 0.3 0.2 -
----- ----- -----

Diluted .................................................................... 559.3 567.1 563.7
===== ===== =====

</TABLE>

There were no securities outstanding at December 31, 1997,
which were excluded from the EPS computations. The number of
common shares outstanding as of December 31, 1997 and 1996 was
556.3 million and 563.4 million, respectively.

<PAGE>

NOTE 7. DEBT

The major issues of long-term debt outstanding were:

<TABLE>

December 31
----------------------------
(Millions of dollars) 1997 1996
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Kimberly-Clark Corporation:
Commercial paper to be refinanced........................................................... $ 200.0 $ -
7 7/8% Debentures due 2023 ................................................................. 199.7 199.7
8 5/8% Notes due 2001 ...................................................................... 199.8 199.7
9 1/8% Notes due 1997 ...................................................................... - 100.0
9% Notes due 2000 .......................................................................... 99.9 99.9
6 7/8% Debentures due 2014 ................................................................. 99.7 99.7
5% Notes maturing to 2002 .................................................................. 45.0 54.0
9 1/2% Sinking Fund Debentures due 2018 .................................................... 50.0 50.0
6.2% to 7.55% Industrial Development Revenue Bonds maturing to 2023 ........................ 79.7 79.6
Other ..................................................................................... .2 .5
--------- ----------

974.0 883.1
Subsidiaries:
7% Debentures due 2023 ..................................................................... 193.8 193.5
11.1% Bonds due 2000 ....................................................................... 99.4 99.3
8.3% to 13% Debentures maturing to 2022 .................................................... 156.0 174.7
Industrial Development Revenue Bonds at variable rates (average rate
for December 1997 - 4.4%) due 2015, 2018, 2023 and 2024 .................................. 286.6 250.0
5.7% to 6 3/8% Industrial Development Revenue Bonds maturing to 2007 ....................... 28.3 60.5
Bank loans and other financings in various currencies at fixed rates
(weighted-average rate at December 31, 1997 - 10.3%) maturing to 2008 .................... 112.9 139.1
Bank loans and other financings in various currencies at variable rates
(weighted-average rate at December 31, 1997 - 7.8%) maturing to 2005 ..................... 54.4 103.6
--------- ----------

1,905.4 1,903.8

Less current portion ......................................................................... 101.5 165.2
--------- ----------

Total ..................................................................................... $ 1,803.9 $ 1,738.6
========= ==========

</TABLE>

<PAGE>

At December 31, 1997, $200 million of short-term commercial
paper was classified as long-term debt. On January 9, 1998, the
Corporation issued $200 million of 6 3/8% Debentures due January
1, 2028, and used the proceeds to retire commercial paper.

Fair value of long-term debt was $1,972.4 million and $1,956.8
million at December 31, 1997 and 1996, respectively. Scheduled
maturities of long-term debt are $50.0 million in 1999, $260.9
million in 2000, $231.6 million in 2001 and $49.3 million in
2002.

At December 31, 1997, the Corporation had $1.0 billion of
revolving credit facilities with a group of banks. These
facilities, which were unused at December 31, 1997, permit
borrowing at competitive interest rates and are available for
general corporate purposes, including backup for commercial paper
borrowings. The Corporation pays commitment fees on the unused
portion but may cancel the facilities without penalty at any time
prior to their expiration. Of these facilities, $500 million
expires in November 1998 and $500 million expires in November
2002.

Debt payable within one year:

<TABLE>

December 31
-----------------------------
(Millions of dollars) 1997 1996
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial paper.............................................................................. $392.6 $274.0
Current portion of long-term debt ............................................................ 101.5 165.2
Other short-term debt ....................................................................... 169.0 137.3
------ ------

Total ..................................................................................... $663.1 $576.5
====== ======

</TABLE>

<PAGE>

At December 31, 1997 and 1996, the weighted-average interest
rate for commercial paper was 5.9 percent and 5.5 percent,
respectively.

NOTE 8. RISK MANAGEMENT

Foreign Currency Risk Management

Foreign currency losses included in consolidated net income
were $10.2 million, $2.9 million and $46.4 million for 1997, 1996
and 1995, respectively. The 1997 loss is attributable to
weakening currencies in the Asia/Pacific region. Also included
in these losses were the Corporation's share of foreign currency
gains and losses at the Corporation's Mexican affiliate,
Kimberly-Clark de Mexico, S.A. de C.V. ("KCM"), attributable to
changes in the value of the Mexican peso. The Corporation's share
of the peso currency effects was insignificant in 1997 and 1996
compared with a loss of $38.5 million in 1995.

<PAGE>

Prior to 1997, Mexico's economy was deemed to be non-
hyperinflationary, and because KCM has financed a portion of its
operations with U.S. dollar obligations, KCM experienced foreign
currency losses on these obligations as the value of the peso
declined. Beginning in 1997, the Mexican economy was determined
to be hyperinflationary because that country's cumulative
inflation rate for the last three years had exceeded 100 percent.
For accounting purposes, the functional currency of KCM became
the U.S. dollar rather than the Mexican peso. Accordingly,
changes in the value of the peso no longer result in foreign
currency gains or losses attributable to the U.S. dollar
obligations. However, changes in the value of the peso have
resulted in gains or losses attributable to peso-denominated
monetary assets held by KCM.

Gains and losses on instruments that hedge firm commitments
are deferred and included in the basis of the underlying hedged
items. Premiums paid for options are amortized ratably over the
life of the option. Contracts used to hedge recorded foreign
currency transactions generally mature within
one year and are marked-to-market with the resulting gains or
losses included in current income. These gains and losses offset
foreign exchange gains and losses on the underlying transactions.
Notwithstanding the sizable notional principal amounts involved,
the Corporation's credit exposure under these arrangements is
limited to the fair value of the agreements with a positive fair
value at the reporting date. Additionally, credit risk with
respect to the counterparties is considered minimal in view of
the financial strength of the counterparties.

The following table presents the aggregate notional principal
amounts, carrying values and fair values of the Corporation's
foreign currency financial instruments outstanding at December
31, 1997 and 1996:

<TABLE>

DECEMBER 31, 1997 December 31, 1996
---------------------------------------- ------------------------------------------
NOTIONAL Notional
PRINCIPAL CARRYING FAIR Principal Carrying Fair
(Millions of dollars) AMOUNTS VALUES VALUES Amounts Values Values
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Forward contracts
Assets .......................... $1,094.1 $38.9 $47.3 $480.1 $ 8.2 $ 6.5
Liabilities ..................... 350.0 (6.4) (6.4) 543.0 (.8) (3.6)
Currency swaps
Assets .......................... - - - 28.1 .1 (1.6)
Option contracts
Assets .......................... 10.0 - - 10.0 .2 .1

</TABLE>

<PAGE>

Translation Risk

The income statements of foreign operations, other than those
in hyperinflationary economies, are translated into U.S. dollars
at rates of exchange in effect each month. The balance sheets of
these operations are translated at period-end exchange rates, and
the differences from historical exchange rates are reflected in
stockholders' equity as unrealized currency translation
adjustments.

The income statements and balance sheets of operations in
hyperinflationary economies, i.e., Brazil, Mexico (effective
January 1,1997) and Venezuela, are translated into U.S. dollars
using both current and historical rates of exchange. For balance
sheet accounts translated at current exchange rates, such as cash
and accounts receivable, the differences from historical exchange
rates are reflected in income.

Translation exposure is not hedged. The risk to any
particular entity's net assets is minimized to the extent that
the entity is financed with local currency borrowing. In
addition, many of the Corporation's non-U.S. operations buy the
majority of their inputs and sell the majority of their outputs
in their local currency, thereby minimizing the effect of
currency rate changes on their local operating profit margins.

Interest Rate Risk Management

Interest rate risk is managed through the maintenance of a
portfolio of variable- and fixed-rate debt composed of short- and
long-term instruments. The objective is to maintain a cost-
effective mix that management deems appropriate. The Corporation
utilizes interest rate swaps when deemed appropriate to manage
interest rate risk over time. These arrangements permit the
Corporation to exchange fixed- for variable-rate interest or
variable- for fixed-rate interest in a cost-effective manner
based on agreed-upon notional amounts exchanged. At December 31,
1997, the Corporation had no material amount of interest rate
swaps outstanding. The strategy employed by the Corporation to
manage its exposure to interest rate fluctuations did not change
significantly during 1997. Management does not foresee or expect
any significant changes in its exposure to interest rate
fluctuations or in how such exposure is managed in the near
future.

<PAGE>

Commodity Price Risk Management

The Corporation is subject to commodity price risk arising
from price movement for purchased pulp, the market price of which
is determined by industry supply and demand. Increased pulp
costs may or may not be recoverable through higher selling prices
for products produced from such raw materials. The Corporation
has not used derivative instruments in the management of these
risks. Because the Corporation is approximately 70 percent
integrated with respect to its current pulp requirements and
because a portion of its pulp purchases are made under long-term
contracts priced using a formula that results in relatively
stable year-to-year pulp prices, management does not deem
commodity price risk to be material to the Corporation's
consolidated financial position, results of operations or cash
flows.

NOTE 9. EQUITY PARTICIPATION PLANS AND STOCK OPTIONS

Kimberly-Clark Equity Participation Plans provide for awards
of participation shares and stock options to key employees of the
Corporation and its subsidiaries. Upon maturity, participation
share awards are paid in cash or cash and shares of the
Corporation's stock based on the increase in the book value of
the Corporation's common stock during the award period.
Participants do not receive dividends on the participation
shares, but their accounts are credited with dividend shares
payable in cash or cash and shares of the Corporation's stock at
the maturity of the award. Neither participation nor dividend
shares are shares of common stock.

<PAGE>

Data concerning participation and dividend shares follow:

<TABLE>

1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding - Beginning of year........................................... 7,173,172 5,993,700 7,591,356

Awarded ................................................................. 1,993,800 1,954,000 2,105,300

Dividend shares credited - net ........................................... 795,360 682,500 864,390

Matured ................................................................. (500,161) (1,311,928) (4,398,546)

Forfeited ................................................................ (80,800) (145,100) (168,800)
--------- --------- ---------

Outstanding - End of year ................................................ 9,381,371 7,173,172 5,993,700
========= ========= =========

</TABLE>

Amounts expensed related to participation shares were $26.8
million, $17.9 million and $15.2 million in 1997, 1996 and 1995,
respectively.

The Corporation also has stock option plans under which
executives and key employees may be granted awards. Under these
plans, all stock options are granted at not less than market
value and expire 10 years after the date of grant and become
exercisable over three years.

In October 1997, approximately 57,000 employees worldwide were
granted approximately 3.2 million stock options and .2 million
stock appreciation rights under the Corporation's Global Stock
Option Plan. Employees were granted options to purchase a fixed
number of shares, ranging from 25 to 125 shares per employee, of
common stock at a price equal to the fair market value of the
Corporation's stock at the date of grant. The grants generally
become exercisable after the third anniversary of the grant date
and have a term of seven years.

<PAGE>

Data concerning stock option activity follows:

<TABLE>

1997 1996 1995
-------------------------- ------------------------- --------------------------
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
OPTIONS EXERCISE Options Exercise Options Exercise
(000) PRICE (000) Price (000) Price
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding - Beginning of
year................................ 12,609 $26.61 20,688 $20.57 27,702 $17.53
Granted............................... 6,111 51.12 2,876 39.94 4,254 24.91
Exercised............................. (2,401) 20.15 (10,694) 18.49 (8,384) 14.70
Rescinded options..................... - - (2,432) 13.55
Canceled or expired................... (124) 38.61 (261) 27.63 (452) 10.89
------ ------ ------

Outstanding - End of year............. 16,195(a) 36.73 12,609 26.61 20,688 20.57
====== ====== ======

Exercisable - End of year............. 7,016 25.57 7,522 22.24 16,078 19.16
====== ====== ======

</TABLE>

(a) At December 31, 1997, exercise prices, number of options
outstanding and weighted-average expiration dates are shown
in the following table:

<PAGE>

<TABLE>

Options Outstanding
-----------------------------------------------
Remaining Options Exercisable
--------------------------------
Number Weighted-Average Contractual Number Weighted-Average
Exercise Price Range (000) Exercise Price Life (Years) (000) Price
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10.98 - $14.725........... 570 $13.74 2.5 570 $13.74
18.15 - 22.36........... 1,752 19.92 3.6 1,752 19.92
24.65 - 28.34........... 5,063 26.09 6.0 3,800 26.57
39.93 - 52.125.......... 8,810 47.67 7.9 894 39.98
------ -----
16,195 7,016
====== =====

</TABLE>

At December 31, 1997, the number of additional shares of
common stock of the Corporation available for option and sale
under the 1992 Plan or for award as participation shares at such
date under the 1992 Plan was 21.0 million shares.

The Corporation has elected to follow APB 25, "Accounting for
Stock Issued to Employees" and related interpretations in
accounting for its stock options. Under APB 25, because the
exercise price of the Corporation's employee stock options equals
the market price of the underlying stock on the date of grant, no
compensation expense is recognized. However, SFAS 123,
"Accounting for Stock-Based Compensation," requires presentation
of pro forma net income and earnings per share as if the
Corporation had accounted for its employee stock options granted
subsequent to December 31, 1994, under the fair value method of
that statement. For purposes of pro forma disclosure, the
estimated fair value of the options is amortized to expense over
the vesting period. Under the fair value method, the
Corporation's net income and net income per share would have been
reduced as follows:

<TABLE>

(Millions of dollars, except per share amounts) 1997 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income................................................................................ $22.4 $16.1 $9.4
Basic and diluted net income per share.................................................... .04 .03 .02

</TABLE>

<PAGE>

The weighted-average fair value of the individual options
granted during 1997, 1996 and 1995 is estimated as $12.22, $8.66
and $5.73, respectively, on the date of grant. The fair values
were determined using a Black-Scholes option-pricing model with
the following assumptions:

<TABLE>

1997 1996 1995
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dividend yield............................................................... 1.88% 2.30% 3.50%
Volatility................................................................... 18.30% 18.30% 18.90%
Risk-free interest rate...................................................... 5.98% 5.31% 7.51%
Expected life................................................................ 5.4 YEARS 5.8 years 5.8 years

</TABLE>

NOTE 10. COMMITMENTS

LEASES

The future minimum obligations under leases having a
noncancelable term in excess of one year as of December 31, 1997,
are as follows:

<PAGE>

<TABLE>

Operating
(Millions of dollars) Leases
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Year Ending December 31:
1998 .................................................................................................... $ 56.9
1999 .................................................................................................... 40.0
2000 .................................................................................................... 31.8
2001 .................................................................................................... 28.2
2002 .................................................................................................... 21.6
Thereafter ................................................................................................ 106.6
------
Future minimum obligations .................................................................................. $285.1
======

</TABLE>

Operating lease obligations have been reduced by $19.6 million
for rental income from noncancelable sublease agreements.

Consolidated rental expense under operating leases was $150.8
million, $147.9 million and $157.0 million in 1997, 1996 and
1995, respectively.

RAW MATERIALS

The Corporation has entered into long-term contracts for the
purchase of raw materials, primarily pulp. The minimum purchase
commitments extend to 2004. At current prices, the commitments
are approximately $383 million, $244 million and $172 million in
1998, 1999 and 2000, respectively. The commitment beyond the
year 2000 is approximately $259 million in total.

ENERGY

The Corporation has a long-term contract with Mobile Energy
Services Co. for power, steam and liquid processing at the
Corporation's Mobile, Alabama, pulp and tissue mill. The
Corporation's commitments under the agreement are reset every two
years based on peak energy usage in the prior two years. As of
December 31, 1997, the Corporation's annual commitment is
approximately $55 million per year until December 31, 1999.

Although the Corporation is primarily liable for rental
payments on the above-mentioned leases and, considering the
purchase commitments for raw materials and energy described
above, management believes the Corporation's exposure to losses,
if any, under these arrangements is minimal.

<PAGE>

NOTE 11. STOCKHOLDERS' EQUITY

Changes in common stock issued, treasury stock, additional
paid-in capital, retained earnings and unrealized currency
translation adjustments ("UTA") are shown below:

<TABLE>

Common Stock Issued Additional
(Millions of dollars, ------------------------ Treasury Stock Paid-In Retained
----------------------
except share amounts) Shares Amount Shares Amount Capital Earnings UTA
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1994 .......................... 561,093,674 $701.4 4,851,648 $(88.0) $34.1 $4,045.3 $(565.0)
Shares issued for the exercise
of stock options, stock awards
and restricted stock ........... 7,791,174 9.6 (872,582) 12.7 145.6 - -
Conversion of Scott options
and restricted shares payable
upon change of control .......... 1,664,938 2.2 - - 17.2 - -
Cancellation of Scott treasury
shares .......................... (5,989,550) (7.4) (5,989,550) 138.2 (130.8) - -
Distribution of net assets
of Schweitzer-Mauduit
International, Inc. ............ - - - - - (119.0) (13.3)
Purchased for treasury ............ - - 4,969,932 (137.8) - - -
Translation adjustments ........... - - - - - - (62.2)
Minimum pension liability
adjustment ...................... - - - - - (15.8) -
Net income ........................ - - - - - 33.2 -
Dividends declared on:
Common shares ................... - - - - - (349.5) -
Preferred shares ................ - - - - - (.3) -
----------- ------ ---------- ----- ----- -------- ------
Balance at December 31,
1995 .......................... 564,560,236 705.8 2,959,448 (74.9) 66.1 3,593.9 (640.5)
Shares issued for the exercise
of stock options and stock
awards .......................... 4,036,574 5.0 (6,688,178) 209.3 70.6 - -
Purchased for treasury ............ - - 8,951,924 (348.8) - - -
Translation adjustments ........... - - - - - - (16.3)
Minimum pension liability
adjustment ...................... - - - - - 28.1 -
Net income ........................ - - - - - 1,403.8 -
Dividends declared on
common shares ................... - - - - - (519.0) -
----------- ------ ---------- ------ ----- -------- ------
Balance at December 31,
1996 .......................... 568,596,810 710.8 5,223,194 (214.4) 136.7 4,506.8 (656.8)
Shares issued for the exercise
of stock options and stock
awards .......................... - - (2,434,504) 88.2 (18.2) - -
Purchased for treasury ............ - - 18,143,208 (910.6) - - -
Translation adjustments ........... - - - - - - (296.4)
Shares issued for the
acquisition of Tecnol............ - - (8,681,530) 419.7 (5.2) - -
Minimum pension liability
adjustment ...................... - - - - - (4.5) -
Net income ........................ - - - - - 901.5 -
Dividends declared on
common shares ................... - - - - - (532.3) -
----------- ------ ---------- -------- ------- ---------- ----------
Balance at December 31,
1997 .......................... 568,596,810 $710.8 12,250,368 $ (617.1) $ 113.3 $ 4,871.5 $ (953.2)
=========== ====== ========== ======== ======= ========== ==========

</TABLE>

<PAGE>

The Corporation has 20 million shares of authorized preferred
stock with no par value, none of which has been issued.

On February 20, 1997, the Corporation's board of directors
declared a two-for-one common stock split payable in the form of
a 100 percent stock dividend that was distributed on April 2,
1997, to stockholders of record on March 7, 1997. An amount
equal to the par value of the shares issued was transferred from
additional paid-in capital to the common stock account for all
periods presented. Accordingly, all numbers of common shares, per
share data and the amounts of the stockholders' equity accounts
for all periods presented in these consolidated financial
statements have been restated to reflect the stock split.

At December 31, 1997, unremitted net income of equity
companies included in consolidated retained earnings was $780.2
million.

On June 21, 1988, the board of directors of the Corporation
declared a distribution of one preferred share purchase right for
each outstanding share of the Corporation's common stock. On
June 8, 1995, the board amended the plan governing such rights.
The rights are intended to protect the stockholders against
abusive takeover tactics.

A right will entitle its holder to purchase one two-hundredth
of a share of Series A Junior Participating Preferred Stock at an
exercise price of $225, but will not become exercisable until 10
days after a person or group acquires or announces a tender offer
that would result in the ownership of 20 percent or more of the
Corporation's outstanding common shares.

Under certain circumstances, a right will entitle its holder
to acquire either shares of the Corporation's stock or shares of
an acquiring company's common stock, in either event having a
market value of twice the exercise price of the right. At any
time after the acquisition by a person or group of 20 percent or
more, but fewer than 50 percent, of the Corporation's common
shares, the Corporation may exchange the rights, except for
rights held by the acquiring person or group, in whole or in
part, at a rate of one right for one share of the Corporation's
common stock or for one two-hundredth of a share of Series A
Junior Participating Preferred Stock.

The rights may be redeemed at $.005 per right prior to the
acquisition by a person or group of 20 percent or more of the
common stock. Unless redeemed earlier, the rights expire on June
8, 2005.

<PAGE>

NOTE 12. EXTRAORDINARY GAINS

In March 1997, the Corporation sold its noncore pulp and
newsprint facility located in Coosa Pines, Alabama ("Coosa") for
approximately $600 million in cash. Also, in the first quarter
of 1997, the Corporation recorded impairment losses on the
planned disposal of a pulp manufacturing mill in Miranda, Spain;
a recycled fiber facility in Oconto Falls, Wisconsin; and a
tissue converting facility in Yucca, Arizona; and on an
integrated pulp making facility in Everett, Washington. These
impairment losses totaled $111.5 million before income tax
benefits. In June 1997, the Corporation completed the sale of
its interest in Scott Paper Limited ("SPL") for approximately
$127 million. Accounting regulations require that certain
transactions following a business combination that was accounted
for as a pooling of interests be reported as extraordinary items.
Accordingly, the above described transactions have been
aggregated and reported as extraordinary gains totaling $17.5
million, net of applicable income taxes of $38.4 million. The
high effective income tax rate on the extraordinary gains is due
to income tax loss carryforwards in Spain that precluded the
current recognition of the income tax benefit on the Miranda
impairment loss and the tax basis in SPL being substantially
lower than the carrying amount of the investment in the financial
statements. The extraordinary gains were equal to $.03 per share
for both basic and diluted EPS.

NOTE 13. OTHER DISPOSITIONS OF BUSINESSES

In December 1997, the Corporation sold its 17 percent interest
in Ssangyong Paper Co., Ltd. ("Ssangyong") of Korea. The sale
resulted in a gain of $.03 per share.

In 1996, to meet regulatory requirements associated with the
merger with Scott, the Corporation sold the former Scott baby
wipes business and certain tissue businesses in the U.S. and the
U.K. The regulatory disposals resulted in a net gain of $.09 per
share.

In 1995, the Corporation sold 80 percent of its investment in
Midwest Express Airlines, Inc. ("Midwest") through an initial
public offering and recognized a gain of $.07 per share, and in
1996, the Corporation sold its remaining 20 percent interest and
recognized a gain of $.04 per share. During 1995, the
Corporation spun off its tobacco-related business operations in
the United States, Canada and France in a tax-free transaction.

<PAGE>

NOTE 14. CONTINGENCIES

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, approximately 45 class action complaints
have been filed in various federal and state courts around the
United States that 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. The foregoing actions seek an
unspecified amount of actual and treble damages. The Corporation
has answered the complaints in these actions and has denied the
allegations contained therein as well as any liability.
Discovery with respect to class certification and the merits of
the claims has commenced. The Corporation intends to
contest these claims vigorously. Management does not expect
these actions to have a material adverse effect on the
Corporation's business or results of operations.

The Corporation also 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 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 or results of operations.

Capital expenditures for compliance with the U.S.
Environmental Protection Agency's Cluster Rule for kraft and
sulfite pulping operations are expected to be $87.0 million,
$138.6 million and $52.8 million in 1998, 1999 and 2000,
respectively. The Corporation is presently evaluating options
for reducing its dependence on internally produced pulp, and the
results of this evaluation may have an effect on the amount of
Cluster Rule spending required.

<PAGE>

NOTE 15. SUPPLEMENTAL DATA (Millions of dollars)

SUPPLEMENTAL BALANCE SHEET DATA

<TABLE>

December 31
----------------------
Summary of Accounts Receivable and Inventories 1997 1996
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accounts Receivable:
From customers ............................................................................... $1,439.7 $1,481.5
Other ....................................................................................... 226.5 225.7
Less allowance for doubtful accounts and sales discounts ..................................... (59.9) (46.3)
-------- --------

Total ................................................................................... $1,606.3 $1,660.9
======== ========

Inventories by Major Class:
At the lower of cost on the First-In, First-Out (FIFO) method or market:
Raw materials .............................................................................. $ 372.4 $ 363.7
Work in process ............................................................................ 228.5 219.7
Finished goods ............................................................................. 749.9 803.6
Supplies and other ......................................................................... 174.5 201.7
-------- --------
1,525.3 1,588.7

Excess of FIFO cost over Last-In, First-Out (LIFO) cost ...................................... (205.8) (240.4)
-------- --------

Total ................................................................................... $1,319.5 $1,348.3
======== ========

</TABLE>

Total inventories include $526.6 million and $493.8 million of
inventories valued on the LIFO method at December 31, 1997 and
1996, respectively.

<TABLE>

December 31
------------------------
Summary of Accrued Expenses 1997 1996
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accruals for the 1997 and 1995 Charges ......................................................... $ 268.3 $ 339.7
Accrued advertising and promotion expense ...................................................... 262.8 264.1
Accrued salaries and wages ..................................................................... 310.9 293.8
Other accrued expenses ......................................................................... 603.6 562.5
---------- ----------

Total accrued expenses .................................................................. $ 1,445.6 $ 1,460.1
========== ==========

</TABLE>

<PAGE>

SUPPLEMENTAL CASH FLOW STATEMENT DATA

<TABLE>

Summary of Cash Flow Effects of Increase in Year Ended December 31
-----------------------------------
Operating Working Capital(a) 1997 1996 1995
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accounts receivable .............................................................. $ 13.4 $ 34.2 $ (264.5)
Inventories ...................................................................... (43.7) 15.9 (191.3)
Prepaid expenses ................................................................. (13.6) 21.6 (56.7)
Trade accounts payable ........................................................... (93.9) (55.6) 148.8
Other payables ................................................................... 32.8 54.2 10.8
Accrued expenses ................................................................. (283.2) (352.5) (111.8)
Accrued income taxes ............................................................. (151.9) 141.0 (63.0)
Currency rate changes ............................................................ (36.8) (.4) (.2)
--------- -------- --------

Increase in operating working capital ............................................ $ (576.9) $ (141.6) $ (527.9)
========= ======== ========

</TABLE>

(a) Excludes the effects of acquisitions, dispositions and the
1997 and 1995 Charges.

<TABLE>

Year Ended December 31
------------------------------------
Other Cash Flow Data(a) 1997 1996 1995
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid .................................................................... $ 173.6 $ 219.8 $ 259.9
Income taxes paid ................................................................ 557.3 503.0 570.1
Decrease in cash and cash equivalents due to exchange
rate changes ................................................................... (17.4) - (.7)

Reconciliation of changes in cash and cash equivalents:
Balance, January 1 ............................................................. $ 83.2 $ 221.6 $ 1,137.8
Increase (decrease) ............................................................ 7.6 (138.4) (916.2)
-------- -------- ---------

Balance, December 31 ........................................................... $ 90.8 $ 83.2 $ 221.6
======== ======== =========

</TABLE>

(a) See Note 3 for information concerning the Tecnol acquisition
for common stock.

<TABLE>

Year Ended December 31
-------------------------------------
Interest Expense 1997 1996 1995
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross interest cost .............................................................. $ 181.8 $ 200.6 $ 254.3
Capitalized interest on major construction projects............................... (17.0) (13.9) (8.8)
-------- -------- ---------

Interest expense ................................................................. $ 164.8 $ 186.7 $ 245.5
======== ======== =========

</TABLE>

<PAGE>

NOTE 16. UNAUDITED QUARTERLY DATA

<TABLE>

(Millions of dollars,
except per share 1997 1996
---------------------------------------------- -----------------------------------------------
amounts) FOURTH(a) THIRD SECOND(b) FIRST (c) Fourth(d) Third (e) Second(f) First
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales ................ $3,089.4 $3,095.3 $3,124.3 $3,237.6 $3,323.6 $3,275.7 $3,347.7 $3,202.1
Gross profit ............. 982.5 1,158.3 1,192.2 1,241.0 1,229.3 1,256.0 1,254.3 1,168.1
Operating profit
(loss) ................. (202.0) 466.5 494.4 544.3 526.4 545.8 488.2 493.3
Income (Loss) before
extraordinary gains..... (147.0) 316.0 350.8 364.2 347.1 377.2 364.7 314.8
Net income (loss)......... (147.0) 316.0 363.5 369.0 347.1 377.2 364.7 314.8
Per share basis:
Basic
Income (Loss)
before
extraordinary
gains............... (.26) .57 .63 .65 .62 .67 .64 .56
Net income (loss)..... (.26) .57 .65 .66 .62 .67 .64 .56
Diluted
Income (Loss)
before
extraordinary
gains............... (.26) .57 .63 .64 .61 .66 .64 .55
Net income (loss)..... (.26) .57 .65 .65 .61 .66 .64 .55
Cash dividends
declared per
share ................. .24 .24 .24 .24 .23 .23 .23 .23
Market price:
High ................... 53-15/16 55 56-7/8 55-3/8 49-13/16 44-3/8 38-15/16 41-1/2
Low .................... 47-5/16 43-1/4 46-1/8 46-11/16 42-3/16 35-11/16 34-5/16 37
Close .................. 49-5/16 48-15/16 49-3/4 49-3/4 47-5/8 44-1/16 38-5/8 37-3/16

</TABLE>

(a) Gross profit, operating loss, net loss, basic net loss per
share and diluted net loss per share includes $220.1
million, $701.2 million, $503.1 million, $.91 and $.90,
respectively, related to the 1997 Charge. Basic and diluted
net loss per share also include a nonoperating gain of $.03
per share related to the sale of Ssangyong.

(b) Includes a nonoperating gain recorded by KCM primarily
related to the sale of a portion of its tissue business.
The Corporation's share of the after-tax effect of this gain
was $16.3 million, or $.03 per share. Also includes an
extraordinary gain, net of income taxes, of $12.7 million,
or $.02 per share, resulting from the sale of the
Corporation's interest in SPL.

<PAGE>

(c) Includes an extraordinary gain, net of income taxes, of $4.8
million, or $.01 per share, resulting from the sale of
Coosa, net of impairment losses on certain other facilities.

(d) Includes a nonoperating charge recorded by KCM for
restructuring costs related to its merger with Scott's
former Mexican affiliate. The Corporation's share of the
after-tax charge was $5.5 million, or $.01 per share.

(e) Includes a net gain of $.05 per share related to the sale of
certain tissue businesses to satisfy U.S. and European
regulatory requirements associated with the Scott merger.

(f) Includes a net gain of $.08 per share related to the
divestiture of the former Scott baby wipes and certain
facial tissue businesses in the U.S. and the sale of the
Corporation's remaining interest in Midwest.

NOTE 17. BUSINESS SEGMENT AND GEOGRAPHIC DATA

For financial reporting purposes, the Corporation's businesses
are separated into three segments.

o Personal Care Products includes infant, child, feminine and
incontinence care products; wet wipes; health care products;
and related products.

o Tissue-Based Products includes tissue and wipers for
household and away-from-home use; pulp; and related
products.

o 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.

Information concerning consolidated operations by business
segment and geographic area, as well as data for equity
companies, is presented in the tables below and on the following
pages:

<PAGE>

CONSOLIDATED OPERATIONS BY BUSINESS SEGMENT

<TABLE>

Net Sales Operating Profit
------------------------------------------ -----------------------------------------
(Millions of dollars) 1997 1996 1995 1997(a) 1996 1995(b)
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Personal Care Products ............ $ 5,234.8 $ 4,837.8 $ 4,384.2 $ 773.8 $ 791.3 $ 339.8
Tissue-Based Products ............. 6,611.5 7,372.8 7,524.3 407.5 1,085.2 (38.4)
Newsprint, Paper
and Other ....................... 753.5 1,015.4 1,584.3 168.0 211.8 224.6
---------- ---------- ---------- --------- --------- ----------
Combined .......................... 12,599.8 13,226.0 13,492.8 1,349.3 2,088.3 526.0
Intersegment sales ................ (53.2) (76.9) (119.8) - - -
Unallocated items - net ........... - - - (46.1) (34.6) (313.0)
---------- ---------- ---------- --------- --------- ----------

Consolidated ...................... $ 12,546.6 $ 13,149.1 $ 13,373.0 $ 1,303.2 $ 2,053.7 $ 213.0
========== ========== ========== ========= ========= ==========

</TABLE>

<TABLE>

<CAPTION>
Assets Depreciation Capital Spending
----------------------------------- ----------------------------- -----------------------------
(Millions of dollars) 1997 1996 1995 1997 1996 1995 1997 1996 1995
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Personal Care
Products ....... $ 3,870.2 $ 3,376.1 $ 3,369.7 $191.5 $174.9 $193.1 $353.8 $227.2 $237.4
Tissue-Based
Products ....... 5,545.0 6,512.8 5,982.2 270.3 343.1 323.6 532.8 608.5 485.5
.........
Newsprint,
Paper
and Other ...... 435.3 655.6 682.2 17.7 32.6 51.0 30.6 37.8 76.4
---------- ---------- ---------- ------ ------ ------ ------ ------ ------

Combined ......... 9,850.5 10,544.5 10,034.1 479.5 550.6 567.7 917.2 873.5 799.3
.........
Unallocated(c)
and
intersegment
assets ......... 1,415.5 1,301.2 1,405.1 11.4 10.4 14.0 27.1 10.2 18.3
---------- ---------- ---------- ------ ------ ------ ------ ------ ------

Consolidated ..... $ 11,266.0 $ 11,845.7 $ 11,439.2 $490.9 $561.0 $581.7 $944.3 $883.7 $817.6
========== ========== ========== ====== ====== ====== ====== ====== ======

</TABLE>

<PAGE>

(a) Operating profit in 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 2.

(b) Operating profit in 1995 for Personal Care Products; Tissue-
Based Products; Newsprint, Paper and Other; and Unallocated
includes $230.3 million, $981.2 million, $35.0 million and
$193.5 million, respectively, of the 1995 Charge described
in Note 2.

(c) Assets include investments in equity companies of $567.7
million, $551.1 million and $413.4 million in 1997, 1996 and
1995, respectively.

CONSOLIDATED OPERATIONS BY GEOGRAPHIC AREA

<TABLE>

Net Sales Operating Profit(a)
----------------------------------------- -----------------------------------------
(Millions of dollars) 1997 1996 1995 1997(b) 1996 1995(c)
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States...................... $ 7,878.7 $ 8,142.5 $ 8,642.3 $1,229.2 $1,626.6 $669.1
Canada............................. 1,052.5 1,311.0 1,250.1 121.0 109.4 21.9
Intergeographic items(d)........... (397.3) (451.7) (452.6) - - -
---------- ---------- ---------- -------- -------- ------

North America...................... 8,533.9 9,001.8 9,439.8 1,350.2 1,736.0 691.0
Europe............................. 2,548.1 2,881.8 2,862.5 (105.4) 164.8 (277.5)
Asia, Latin America and Africa..... 1,772.2 1,603.5 1,342.5 104.5 187.5 112.5
---------- ---------- ---------- -------- -------- ------

Combined........................... 12,854.2 13,487.1 13,644.8 1,349.3 2,088.3 526.0
Intergeographic items.............. (307.6) (338.0) (271.8) - - -
Unallocated items - net............ - - - (46.1) (34.6) (313.0)
---------- ---------- ---------- -------- -------- ------

Consolidated....................... $ 12,546.6 $ 13,149.1 $ 13,373.0 $1,303.2 $2,053.7 $213.0
========== ========== ========== ======== ======== ======

</TABLE>

<PAGE>

Assets
----------------------------------------
(Millions of dollars) 1997 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United States.................................................................... $ 5,713.2 $ 5,703.6 $ 5,728.0
Canada........................................................................... 543.6 825.6 609.1
Intergeographic items............................................................ (65.4) (50.2) (47.3)
---------- ---------- ----------

North America.................................................................... 6,191.4 6,479.0 6,289.8
Europe........................................................................... 2,297.1 2,579.0 2,592.7
Asia, Latin America and Africa................................................... 1,502.6 1,610.2 1,240.1
---------- ---------- ----------

Combined......................................................................... 9,991.1 10,668.2 10,122.6
Intergeographic items............................................................ (142.4) (131.1) (99.2)
Unallocated items - net(e)....................................................... 1,417.3 1,308.6 1,415.8
---------- ---------- ----------

Consolidated..................................................................... $ 11,266.0 $ 11,845.7 $ 11,439.2
========== ========== ==========

</TABLE>

(a) Certain reclassifications have been made to conform prior
year's data to the current year presentation.

(b) Operating profit in 1997 for the U.S.; Canada; Europe;
Asia, Latin America and Africa; and Unallocated includes
$403.7 million; $8.2 million; $189.8 million; $91.2 million
and $8.3 million, respectively, of the 1997 Charge
described in Note 2.

(c) Operating profit in 1995 for the U.S.; Canada; Europe; Asia,
Latin America and Africa; and Unallocated includes $575.6
million, $161.5 million, $464.1 million, $45.3 million and
$193.5 million, respectively, of the 1995 Charge described
in Note 2.

(d) Net sales include $246.0 million, $284.8 million and $310.3
million by operations in Canada to the U.S. in 1997, 1996
and 1995, respectively.

(e) Assets include investments in equity companies of $567.7
million, $551.1 million and $413.4 million in 1997, 1996
and 1995, respectively.

<PAGE>

EQUITY COMPANIES' DATA BY GEOGRAPHIC AREA

<TABLE>

Kimberly-
Clark's
Share
Net Gross Operating Net of Net
(Millions of dollars) Sales Profit Profit Income Income
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended:
December 31, 1997
Latin America(a) ............................. $1,464.3 $ 528.6 $ 382.5 $ 283.1 $ 130.8
Asia, Australia and Middle East................ 698.1 253.6 93.6 55.0 26.5
-------- --------- --------- --------- ---------
Total .................................... $2,162.4 $ 782.2 $ 476.1 $ 338.1 $ 157.3
======== ========= ========= ========= =========

For the year ended:
December 31, 1996
Latin America(b)............................... $1,380.5 $ 512.9 $ 344.3 $ 291.5 $ 133.1
North America, Asia, Australia and
Middle East(c)(b) .......................... 725.7 253.0 83.8 42.8 19.3
-------- --------- --------- --------- ---------
Total .................................... $2,106.2 $ 765.9 $ 428.1 $ 334.3 $ 152.4
======== ========= ========= ========= =========

For the year ended:
December 31, 1995
Latin America(d,e)............................. $1,465.2 $ 551.0 $ 399.8 $ 222.1 $ 104.8
North America, Asia, Australia, Africa(e)
and Middle East............................. 567.6 196.0 56.5 19.5 8.5
-------- --------- --------- --------- ---------
Total .................................... $2,032.8 $ 747.0 $ 456.3 $ 241.6 $ 113.3
======== ========= ========= ========= =========

</TABLE>

(a) Kimberly-Clark's share of net income includes a nonoperating
gain of $16.3 million, primarily related to the sale of a
portion of the tissue business of KCM. Additionally,
operating profit, net income and Kimberly-Clark's share of
net income includes $6.7 million, $4.4 million and $2.2
million, respectively, related to the 1997 Charge.

(b) Kimberly-Clark's share of net income includes a nonoperating
charge of $5.5 million, recorded by KCM for restructuring
costs related to its merger with Scott's former Mexican
affiliate.

(c) In June 1996, the Corporation acquired 49.9 percent of
Hogla, Ltd., and formed a consumer products joint venture in
Israel.

(d) Net income and Kimberly-Clark's share of net income includes
a nonoperating charge of $89.4 million and $38.5 million,
respectively, for foreign currency losses incurred by KCM on
the translation of the net exposure of U.S. dollar-
denominated liabilities into pesos resulting from the
fluctuation of the Mexican peso. In 1996, this charge was
not significant. Effective January 1, 1997, the Mexican
economy was determined to be hyperinflationary and the 1997
U.S. dollar-denominated liabilities were translated using
historical exchange rates. (See Note 8.)

(e) In the first quarter of 1995, the Corporation purchased
additional shares of its subsidiaries in Argentina and South
Africa, resulting in their consolidation.

<PAGE>

<TABLE>

Non- Non- Stock-
Current Current Current Current holders'
(Millions of dollars) Assets Assets Liabilities Liabilities Equity
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 31, 1997
Latin America.................................... $752.8 $ 624.6 $336.0 $278.4 $ 763.0
Asia, Australia and Middle East ................. 226.8 386.9 128.0 185.5 300.2
------ -------- ------ ------ --------
Total ...................................... $979.6 $1,011.5 $464.0 $463.9 $1,063.2
====== ======== ====== ====== ========

December 31, 1996
Latin America.................................... $661.3 $ 606.3 $321.0 $267.5 $ 679.2
Asia, Australia and Middle East ................. 272.5 463.8 168.9 225.3 342.0
------ -------- ------ ------ --------
Total ...................................... $933.8 $1,070.1 $489.9 $492.8 $1,021.2
====== ======== ====== ====== ========

December 31, 1995
Latin America.................................... $722.6 $ 599.2 $404.7 $339.1 $ 578.0
North America, Asia, Australia and
Middle East ................................... 168.3 465.5 153.0 229.5 251.3
------ -------- ------ ------ --------
Total ...................................... $890.9 $1,064.7 $557.7 $568.6 $ 829.3
====== ======== ====== ====== ========

</TABLE>

Equity companies are principally engaged in Personal Care
Products and Tissue-Based Products operations.

KCM is partially owned by the public and its stock is publicly
traded in Mexico. At December 31, 1997, the Corporation's
investment in this equity company was $365.3 million, and the
estimated fair value was $2.9 billion based on the market price
of publicly traded shares.

<PAGE>

INDEPENDENT AUDITORS' REPORT
Kimberly-Clark Corporation and Subsidiaries

Kimberly-Clark Corporation, Its Directors and Stockholders:

We have audited the accompanying consolidated balance sheets
of Kimberly-Clark Corporation and Subsidiaries as of December 31,
1997 and 1996, and the related consolidated income and cash flow
statements for each of the three years in the period ended
December 31, 1997. These financial statements are the
responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial
statements give retroactive effect to the merger of Kimberly-
Clark Corporation and Scott Paper Company, which has been
accounted for as a pooling of interests. We did not audit the
financial statements of Scott Paper Company for the year ended
December 31, 1995 (before the effects of the conforming
adjustments that were applied to restate such statements) which
statements reflect total net sales (in millions) of $4,131.6 for
the year ended December 31, 1995. Those financial statements
were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts
included for Scott Paper Company for 1995, is based solely on the
report of such other auditors. We audited the conforming
adjustments that were applied to restate the 1995 financial
statements of Scott Paper Company.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits and the report of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the report of other
auditors referred to above, such consolidated financial
statements present fairly, in all material respects, the
financial position of Kimberly-Clark Corporation and Subsidiaries
at December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally
accepted accounting principles.

/s/ Deloitte & Touche LLP
- - ---------------------------
Deloitte & Touche LLP
Dallas, Texas
January 26, 1998

<PAGE>

AUDIT COMMITTEE CHAIRMAN'S LETTER
Kimberly-Clark Corporation and Subsidiaries

The members of the Audit Committee are selected by the board
of directors. The committee consists of six outside directors
and met three times during 1997.

The Audit Committee oversees the financial reporting process
on behalf of the board of directors. As part of that
responsibility, the committee recommended to the board of
directors, subject to stockholder approval, the selection of the
Corporation's independent public accountants. The Audit
Committee discussed the overall scope and specific plans for
annual audits with the Corporation's internal auditors and
Deloitte & Touche LLP. The committee also discussed the
Corporation's annual consolidated financial statements and the
adequacy of its internal controls. The committee met regularly
with the internal auditors and Deloitte & Touche LLP, without
management present, to discuss the results of their audits, their
evaluations of the Corporation's internal controls, and the
overall quality of the Corporation's financial reporting. The
meetings also were designed to facilitate any private
communication with the committee desired by the internal auditors
or independent public accountants.

Paul J. Collins
Chairman, Audit Committee
January 26, 1998

<PAGE>

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
Kimberly-Clark Corporation and Subsidiaries

The management of Kimberly-Clark Corporation is responsible
for conducting all aspects of the business, including the
preparation of the consolidated financial statements in this
annual report. The consolidated financial statements have been
prepared using generally accepted accounting principles
considered appropriate in the circumstances to present fairly the
Corporation's consolidated financial position, results of
operations and cash flows on a consistent basis. Management also
has prepared the other information in this annual report and is
responsible for its accuracy and consistency with the
consolidated financial statements.

As can be expected in a complex and dynamic business
environment, some financial statement amounts are based on
management's estimates and judgments. Even though estimates and
judgments are used, measures have been taken to provide
reasonable assurance of the integrity and reliability of the
financial information contained in this annual report. These
measures include an effective control-oriented environment in
which the internal audit function plays an important role, an
Audit Committee of the board of directors that oversees the
financial reporting process, and independent audits.

One characteristic of a control-oriented environment is a
system of internal control over financial reporting and over
safeguarding of assets against unauthorized acquisition, use or
disposition, designed to provide reasonable assurance to
management and the board of directors regarding preparation of
reliable published financial statements and such asset
safeguarding. The system is supported with written policies and
procedures, contains self-monitoring mechanisms and is audited by
the internal audit function. Appropriate actions are taken by
management to correct deficiencies as they are identified. All
internal control systems have inherent limitations, including the
possibility of circumvention and overriding of controls, and,
therefore, can provide only reasonable assurance as to financial
statement preparation and such asset safeguarding.

The Corporation has also adopted a code of conduct that, among
other things, contains policies for conducting business affairs
in a lawful and ethical manner in each country in which it does
business, for avoiding potential conflicts of interest and for
preserving confidentiality of information and business ideas.
Internal controls have been implemented to provide reasonable
assurance that the code of conduct is followed.

The consolidated financial statements have been audited by the
independent accounting firm, Deloitte & Touche LLP. During their
audits, the independent auditors were given unrestricted access
to all financial records and related data, including minutes of
all meetings of stockholders and the board of directors and all
committees of the board. Management believes that all
representations made to the independent auditors during their
audits were valid and appropriate. The financial statements of
Scott Paper Company for 1995 were audited by other auditors.

During the audits conducted by both the independent auditors
and the internal audit function, management received
recommendations to strengthen or modify internal controls in
response to developments and changes. Management has adopted, or
is in the process of adopting, all recommendations that are cost
effective.

The Corporation has assessed its internal control system as of
December 31, 1997, in relation to criteria for effective
internal control over financial reporting described in "Internal
Control - Integrated Framework" issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on
this assessment, management believes that, as of December 31,
1997, its system of internal control over the preparation of its
published interim and annual consolidated financial statements
and over safeguarding of assets against unauthorized acquisition,
use or disposition met those criteria.

Wayne R. Sanders John W. Donehower
Chairman of the Board Senior Vice President and
and Chief Executive Officer Chief Financial Officer

January 26, 1998

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ADDITIONAL INFORMATION

TRANSFER AND DIVIDEND DISBURSING AGENT AND REGISTRAR

Stockholders may contact BankBoston N.A., c/o Boston EquiServe L.P., P.O.
Box 8040, Boston, Massachusetts 02266-8040, 800-730-4001. Stock certificates
may be hand delivered in Boston and New York for transfer.

DIVIDENDS AND DIVIDEND REINVESTMENT PLAN

Quarterly dividends have been paid continually since 1935. Dividends are
paid on or about the second day of January, April, July and October. The
Automatic Dividend Reinvestment service of Boston EquiServe L.P. is available
to Kimberly-Clark stockholders of record. The service makes it possible for
Kimberly-Clark stockholders of record to have their dividends automatically
reinvested in common stock and to make additional cash investments up to
$3,000 per quarter.

STOCK EXCHANGES

Kimberly-Clark common stock is listed on the New York, Chicago and
Pacific stock exchanges. The ticker symbol is KMB.

ANNUAL MEETING OF STOCKHOLDERS

The Annual Meeting of Stockholders will be held at the Corporation's
World Headquarters, 351 Phelps Drive, Irving, Texas, at 11 a.m. on Thursday,
April 30, 1998.

INVESTOR RELATIONS

Shareholders, registered representatives, security analysts, portfolio
managers and other investors desiring further information about the company
should contact Michael D. Masseth, Vice President-Investor Relations at
972-281-1478. Investor information may also be obtained by calling
800-639-1352.

CALENDAR, SEC FORM 10-K AND OTHER INFORMATION

The fiscal year ends December 31. The annual report is distributed in
March. Stockholders and others may obtain additional information about
Kimberly-Clark, including the Corporation's annual report to the Securities
and Exchange Commission on Form 10-K (which will be filed in late March),
without charge, on request to Stockholder Services, P.O. Box 612606, Dallas,
Texas 75261-2606.

EMPLOYEES AND STOCKHOLDERS

In its worldwide consolidated operations, Kimberly-Clark had 57,000
employees as of December 31, 1997. Equity companies had an additional 12,700
employees. The Corporation had 56,475 stockholders of record and 556.3
million shares of common stock outstanding as of the same date.

TRADEMARKS

The brand names mentioned in this report - Andrex(R), Camelia(R), Classic
Crest(R), Depend(R), Environment(R), GoodNites(R), Huggies(R), Kimbies(R),
Kleenex(R), Cottonelle(R), Kleenex Super Saugtuch(R), Kotex(R), Kotex(R)
White, Little Swimmers(R), Monbebe(R), Monica(R), Poise(R), Pull-Ups(R),
Scott(R), Scotties(R), ScotTissue(R) and Waldorf(R) - are trademarks of
Kimberly-Clark Corporation or its affiliates.
Cellucotton was formerly a trademark of Kimberly-Clark.

The 1997 Annual Report is printed on new Classic Crest avon brilliant
white super smooth cover and text and on Environment woodstock text with 100
percent recycled fiber. These papers are produced by Kimberly-Clark's Neenah
Paper Sector.

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Exhibit No. (21)

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
SIGNIFICANT SUBSIDIARIES OF THE CORPORATION

The following list includes the significant subsidiaries which were owned
directly or indirectly by Kimberly-Clark Corporation, a Delaware
corporation, Dallas, Texas, as of December 31, 1997. Kimberly-Clark's
percentage ownership of each company is 100 percent unless otherwise
indicated. The place of incorporation is the same as the location of the
company except as shown parenthetically.

CONSOLIDATED SUBSIDIARIES:

Kimberly-Clark Canada Inc. and subsidiaries, Mississauga, Ontario, Canada
Kimberly-Clark Tissue Company (Pennsylvania), Dallas, Texas
Kimberly-Clark Worldwide, Inc. (Delaware), Dallas Texas

EQUITY COMPANY:

Kimberly-Clark de Mexico, S.A. de C.V. and subsidiaries, Mexico City,
Mexico (46.4%)

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Exhibit No. (23)a

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Kimberly-Clark
Corporation's Registration Statements on Form S-8 (Nos. 33-5299, 33-
49050, 33-58402, 33-64063, 33-64689, 33-64931, 333-02607, 333-06996,
333-17367, 333-38385 and 333-43647) and on Form S-3 (Nos. 33-52343
and 333-45399) of our reports dated January 26, 1998 and January 27,
1997, appearing in and incorporated by reference in this Annual
Report on Form 10-K of Kimberly-Clark Corporation.

/S/ DELOITTE & TOUCHE LLP
- - ---------------------------

DELOITTE & TOUCHE LLP

Dallas, Texas
March 26, 1998

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Exhibit No. (23)b

INDEPENDENT AUDITORS' CONSENT

We hereby consent to the incorporation by reference in Kimberly-
Clark Corporation's Registration Statements on Form S-8 (Nos. 33-
5299, 33-49050, 33-58402, 33-64063, 33-64689, 33-64931, 333-02607,
333-06996, 333-17367, 333-38385 and 333-43647) and on Form S-3 (Nos.
33-52343 and 333-45399) of our report dated January 30, 1996, which
makes reference to the Company adopting the provisions of Statement
of Financial Accounting Standards No. 121 in 1995 and that our
audits did not include the 1995 provisions for restructuring and
other unusual charges which were audited by other auditors, on our
audits of the consolidated financial statements and financial
statement schedule of Scott Paper Company and subsidiaries as of
December 30, 1995 and for the year then ended, which report is
included in this Annual Report on Form 10-K of Kimberly-Clark
Corporation.

/S/ COOPERS & LYBRAND L.L.P.
- - ------------------------------

COOPERS & LYBRAND L.L.P.

2400 Eleven Penn Center
Philadelphia, PA
March 26, 1998

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Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned does
hereby constitute and appoint John W. Donehower, Randy J. Vest and
O. George Everbach, and each of them, with full power to act alone,
his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign Kimberly-Clark
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934,
as amended, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents
or any one of them, or his substitute or their substitutes, lawfully
do or cause to be done by virtue hereof.