FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT: JANUARY 26, 1999
(Date of earliest event reported)
KIMBERLY-CLARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-225 39-0394230
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
P.O. BOX 619100, DALLAS, TEXAS 75261-9100
(Address of principal executive offices) (Zip Code)
(972) 281-1200
(Registrant's telephone number, including area code)
_____________________________________
<PAGE> 2
Item 5. Other Events
- -------------------------
Attached hereto as Exhibit 99 is a press release issued by Kimberly-Clark
Corporation in connection with its 1999 fourth quarter and annual earnings.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KIMBERLY-CLARK CORPORATION
Date: January 28, 1999 By: /s/ John W. Donehower
----------------------
John W. Donehower
Senior Vice President and
Chief Financial Officer
<PAGE> 3
EXHIBIT INDEX
--------------
(99) Press release issued by Kimberly-Clark Corporation in connection
with its 1999 fourth quarter and annual earnings.
Tina Barry
(972) 281-1484
Kimberly-Clark Reports Fourth Quarter Earnings
Excluding Nonoperating Items, Fourth Quarter 1998
Earnings Were a Record 69 Cents Per Share, an Increase
of 11.3 Percent From 1997;
Pretax Savings of $50 Million Expected From Additional
Facility Consolidations
DALLAS, January 26, 1999 -- Kimberly-Clark Corporation
(KMB:NYSE) today announced that earnings from
operations for the fourth quarter of 1998 were 69 cents
per share, an all-time quarterly record and an increase
of 11.3 percent compared with 62 cents per share in the
fourth quarter of 1997. The increase was driven by
improved results in Europe, higher earnings in the
company's tissue businesses in North America, and
continued strong growth in Latin America and
professional health care.
Including nonoperating charges for facility
consolidations of 16 cents per share and costs to
complete the 1997 restructuring plan of 9 cents per
share, the company reported net income of 44 cents per
share in the fourth quarter of 1998.
Wayne R. Sanders, chairman and chief executive
officer of Kimberly-Clark, said: "We showed solid
financial improvement in the fourth quarter, wrapping
up 1998 with operating profit margins, excluding
restructuring plan costs and other nonoperating
charges, at the highest level in the company's history.
Cash flow remained very strong. And I am particularly
encouraged by our progress in Europe, where each of our
major businesses turned in better results - clearly,
our plan to improve earnings in that region is working.
At the same time, successful product introductions,
such as new Kleenex Cottonelle bathroom tissue and
Kleenex Scottfold hand towels, along with good cost
savings, propelled earnings growth in our North
American tissue business. In addition, our
professional health care business and Latin American
region continued to deliver strong double-digit
increases in sales and earnings.
"During the fourth quarter, we also began to
implement plans for additional facility consolidations
-- some of which have already been announced. With
these moves, we will have completed a three-year
process of redesigning and rationalizing our asset base
-- eliminating excess, high-cost capacity and
consolidating our operations into fewer, larger and
more efficient facilities. We have realized significant
savings through this process, with more savings to
come. Equally important, our reconfigured operations
give us the right technologies in the right locations
to support the future growth of our businesses."
<PAGE> 2
Sales of $3.1 billion for the fourth quarter were
up 0.6 percent compared with 1997. However, sales
would have risen more than 3 percent had foreign
exchange rates remained constant and if the revenues of
K-C Aviation Inc., which was sold in the third quarter
of 1998, were excluded. Worldwide sales volumes were 2
percent higher. Selling prices also increased 2
percent, but were partially offset by a shift in the
mix of products sold.
The company reported operating profit of $379.8
million in the fourth quarter of 1998 and an operating
loss of $202.0 million in the fourth quarter of 1997.
Excluding the costs of the 1997 restructuring plan and
other nonoperating charges described below, fourth
quarter operating profit was $553.6 million in 1998
compared with $499.2 million in 1997, an increase of
10.9 percent.
In the fourth quarter of 1997, the company
announced a restructuring plan with a total pretax cost
of $810 million. The company previously recorded
pretax costs of $701.2 million in the fourth quarter of
1997 and $58.2 million in the first nine months of
1998, of which $220.1 million and $6.3 million,
respectively, were included in cost of products sold.
The final $50.6 million of costs to complete the plan
were recorded in the fourth quarter of 1998, of which
$1.0 million was included in cost of products sold.
The company realized greater than expected savings from
this plan in 1998 and now estimates pretax savings in
the year 2000 will approximate $220 million as compared
to its original estimate of $200 million. Restructuring
plan costs reduced fourth quarter net income by $48.1
million, or 9 cents per share, in 1998 and $503.1 million,
or 91 cents per share, in 1997.
Additionally, in the fourth quarter of 1998, the
company recorded nonoperating pretax charges of $123.2
million primarily to further align tissue manufacturing
capacity with demand in Europe, to close a diaper
manufacturing facility in North America and to shut
down and dispose of a tissue machine in Thailand. The
charges, which are mainly noncash write-offs, were
included in cost of products sold and reduced net
income by $86.1 million, or 16 cents per share. Annual
pretax savings from these actions are expected to
increase to approximately $50 million in 2001.
The key factors affecting fourth quarter results
for the company's business segments are summarized
below (operating profit comparisons exclude
restructuring plan costs and nonoperating charges).
The business segments - tissue; personal care; and
health care and other - reflect the company's new
global organization structure. Financial information
for all prior periods has been reclassified for
consistency.
Tissue - Fourth quarter sales of tissue products
declined 2 percent from 1997. Selling prices were
higher for consumer tissue products in North
America and sales volumes improved in Latin
America. However, lower sales of tissue products
in Asia, due to economic turmoil in the region and
changes in currency exchange rates, and a decline
in sales of private label products in Europe more
than offset the gains in North America and Latin
America. Fourth quarter 1998 operating profit for
tissue products rose 2 percent compared with 1997,
despite the overall decline in sales. The main
factors accounting for the improvement were the
higher selling prices in North America, along with
restructuring and other cost savings. Lower costs
boosted fourth quarter profits of the company's
European tissue operations to the highest level
since the fourth quarter of 1996.
<PAGE>3
Personal Care - Sales of personal care products in
the fourth quarter were 4 percent greater than in
1997. Sales volumes increased 5 percent and
selling prices were up over 2 percent, while
foreign currency effects, mainly in Asia and Russia,
reduced sales by 3 percent. Strong volume growth
continued in Latin America, and product improvements
led to higher sales volumes of diapers, training and
youth pants, and feminine care and incontinence care
products in North America. However, diaper sales
volumes in Europe were below last year's levels as the
company completed the transition to new unisex
products. Personal care operating profit
increased 15 percent, mainly attributable to the
gain in sales and lower costs for the diaper and
feminine care businesses in Europe.
Health Care and Other - Sales of health care and
other products declined 2 percent from the fourth
quarter of 1997. However, excluding the revenues
of K-C Aviation, sales climbed 22 percent, due
primarily to continued growth in professional
health care, driven, in large part, by the
December 1997 acquisition of Tecnol Medical
Products, Inc. Segment operating profit moved
sharply higher, up 44 percent, as cost savings and
merger synergies from the Tecnol acquisition
supplemented the sales improvement.
Interest expense in the fourth quarter of 1998
increased $4.4 million from the prior year primarily
due to an increase in the level of debt. As of the end
of the year, net debt was $2.3 billion in 1998,
compared with $2.2 billion in 1997. During the year,
the company repurchased 19.5 million shares of common
stock, including 4.0 million shares during the fourth
quarter, at a cost of approximately $900 million.
Other income and expense, net, in the fourth
quarter was an expense of $17.6 million in 1998,
consisting principally of charges related to changes in
the value of foreign currencies, compared with income
of $22.6 million in 1997, which was mainly attributable
to a nonoperating gain on the sale of the company's
interest in Ssangyong Paper Co., Ltd. of Korea.
The company's effective income tax rate in the
fourth quarter, excluding restructuring plan costs and
nonoperating charges, was 32.0 percent in 1998 and 33.0
percent in 1997.
Excluding restructuring plan costs in 1997,
Kimberly-Clark's share of net income of equity
companies in the quarter was $45.0 million in 1998
compared with $36.7 million in 1997. The increase was
primarily attributable to higher earnings at the
company's equity affiliates in Latin America and
Kimberly-Clark de Mexico, S.A. de C.V.
<PAGE>4
For the year, sales of $12.3 billion in 1998 were
down 2.0 percent from $12.5 billion in the prior year.
Excluding the sales of divested businesses, however,
sales increased slightly. Changes in currency exchange
rates reduced sales by approximately 3 percent.
Operating profit, before restructuring plan costs and
nonoperating charges, of $2,003.7 million in 1998 was
essentially even compared with $2,004.4 million in
1997. Diluted earnings per share were $2.11 in 1998
versus $1.61 in 1997. Excluding extraordinary gains in
1997, a one-time charge to net income of 2 cents per
share in 1998 to write off the accumulated balance of
deferred preoperating and start-up costs in accordance
with new accounting requirements, and other
nonoperating items in both years, earnings per share
from operations were $2.46 in 1998 compared to $2.44 in
1997, an increase of .8 percent.
Mr. Sanders said: "1998 was a difficult year for
Kimberly-Clark, with well-documented challenges in
Europe and Asia. I am proud of the way our
organization responded to these challenges with a
singular focus on improving earnings and increasing
shareholder value. In the second half of the year, we
achieved double-digit growth in earnings per share from
operations. As a result, we have emerged from the year
stronger and better able to capitalize on the core
strengths of our well-known brands and proprietary
technologies. Our excellent margins and cash
generation allow us to invest in growth - funding
acquisitions as well as the technology and marketing
support behind our increasingly strong brands - which,
in turn, will drive increased earnings for our
shareholders.
"We are committed to improving top-line growth
and sustaining double-digit growth in earnings per
share from operations. I believe we are superbly
positioned to achieve this objective and deliver outstanding
shareholder returns in the future."
Kimberly-Clark Corporation is a leading global
manufacturer of tissue, personal care and health care
products. The company's global brands include Huggies,
Pull-Ups, Kotex, Depend, Kleenex, Scott, Kimberly-
Clark, Kimwipes, WypAll and Tecnol. Other brands well
known outside the U.S. include Andrex, Scottex, Page,
Popee and Kimbies. Kimberly-Clark also is a major
producer of premium business, correspondence and
technical papers. The company has manufacturing
operations in 39 countries and sells its products in
more than 150 countries.
Certain matters contained in this news release
concerning the business outlook, anticipated financial
and operating results, strategies, contingencies and
transactions of the company constitute forward-looking
statements and are based upon management's expectations
and beliefs concerning future events impacting the
company. For a description of certain factors that
could cause the company's future results to differ
materially from those expressed in any such forward-
looking statements, see the section of Part I, Item 1
of the company's Annual Report on Form 10-K for the
year ended December 31, 1997 entitled "Factors That
May Affect Future Results."
Kimberly-Clark Web Site: www.kimberly-clark.com
<PAGE> 5
KIMBERLY-CLARK CORPORATION
(Millions except per share amounts)
EARNINGS PER SHARE SUMMARY: Fourth Quarter Year
Ended December 31 Ended December 31
----------------- -----------------
1998 1997 1998 1997
------ ------ ------ -------
Net Income Per Share - Basic $.44 $(.26) $2.12 $1.62
Adjusted for nonoperating
items:
Restructuring and other
unusual charges...... .09 .91 .16 .91
Charge for facility
consolidations....... .16 -- .16 --
Write-off of intangible
and other assets..... -- -- .13 --
Gain on sale of
K-C Aviation Inc..... -- -- (.14) --
Asset disposals ....... -- (.03) -- (.09)
Change in the value of
the Mexican peso..... -- -- .02 --
Cumulative effect of
accounting change, net
of income taxes...... -- -- .02 --
Rounding .............. -- -- (.01) --
----- ------ ----- -----
Earnings Per Share
- Operations .......... $.69 $ .62 $2.46 $2.44
===== ====== ===== =====
OTHER INFORMATION: 1998 1997 Change
------- ------- --------
Net Debt to Capital .......... 36.4% 33.5% + 8.7%
TWELVE MONTHS ENDED DECEMBER 31
Cash Dividends Declared Per Share $ 1.00 $ .96 + 4.2%
Capital Spending.............. 669.5 944.3 -29.1%
See Notes to Financial Summaries
Unaudited
<PAGE> 6
KIMBERLY-CLARK CORPORATION
FOURTH QUARTER ENDED DECEMBER 31
(Millions except per share amounts)
1998 1997 Change
-------- -------- ------
Net Sales .......................... $3,108.2 $3,089.4 + 0.6%
Cost of products sold ............ 1,970.3 2,106.9 - 6.5%
Gross Profit ....................... 1,137.9 982.5 +15.8%
Advertising, promotion and
selling expenses ............... 476.1 471.4 + 1.0%
Research expense ................. 62.9 61.8 + 1.8%
General expense .................. 161.3 165.4 - 2.5%
Goodwill amortization ............ 8.2 4.8 +70.8%
Restructuring and other
unusual charges ................ 49.6 481.1 N.M.
-------- -------
Operating Profit (Loss)............. 379.8 (202.0) N.M.
Interest income .................. 5.3 6.9 -23.2%
Interest expense ................. (50.9) (46.5) + 9.5%
Other income (expense), net ....... (17.6) 22.6 N.M.
-------- -------
Income (Loss) Before Income Taxes .. 316.6 (219.0) N.M.
Provision (Credit) for income taxes 117.3 (31.0) N.M.
-------- -------
Income (Loss) Before Equity Interest 199.3 (188.0) N.M.
Share of net income of
equity companies ............... 45.0 34.5 +30.4%
Minority owners' share of
subsidiaries' net (income) loss . (5.0) 6.5 N.M.
-------- -------
Net Income (Loss)................... $ 239.3 $ (147.0) N.M.
======== ========
Net Income (Loss) Per Share:
Basic ........................... $ 0.44 $ (0.26) N.M.
======== ========
Diluted ........................ $ 0.44 $ (0.26) N.M.
======== ========
See Notes to Financial Summaries
N.M.-Not meaningful
Unaudited
<PAGE> 7
KIMBERLY-CLARK CORPORATION
TWELVE MONTHS ENDED DECEMBER 31
(Millions except per share amounts)
1998 1997 Change
--------- --------- ------
Net Sales.......................... $12,297.8 $12,546.6 - 2.0%
Cost of products sold ........... 7,597.8 7,972.6 - 4.7%
--------- ---------
Gross Profit....................... 4,700.0 4,574.0 + 2.8%
Advertising, promotion and selling
expenses ....................... 1,937.4 1,937.2 + 0.0%
Research expense ................ 224.8 211.8 + 6.1%
General expense ................. 726.9 623.9 +16.5%
Goodwill amortization ........... 33.3 16.8 +98.2%
Restructuring and other
unusual charges ............... 101.5 481.1 N.M.
--------- ---------
Operating Profit................... 1,676.1 1,303.2 +28.6%
Interest income ................. 24.3 31.4 -22.6%
Interest expense ................ (198.7) (164.8) +20.6%
Other income (expense), net ..... 124.4 17.7 N.M.
--------- ---------
Income Before Income Taxes......... 1,626.1 1,187.5 +36.9%
Provision for income taxes ....... 561.9 433.1 +29.7%
--------- ---------
Income Before Equity Interests..... 1,064.2 754.4 +41.1%
Share of net income of
equity companies ............... 137.1 157.3 -12.8%
Minority owners' share of
subsidiaries' net income ....... (24.3) (27.7) -12.3%
--------- ---------
Income Before Extraordinary Gains
and Cumulative Effect of
Accounting Change .............. 1,177.0 884.0 +33.1%
Extraordinary gains, net of
income taxes ................... -- 17.5 N.M.
Cumulative effect of accounting
change, net of income taxes .... (11.2) -- N.M.
--------- ---------
Net Income......................... $ 1,165.8 $ 901.5 +29.3%
========= =========
Per Share Basis:
Basic:
Income before extraordinary gains
and cumulative effect of
accounting change............. $ 2.14 $ 1.59 +34.6%
Extraordinary gains, net of
income taxes ................. -- .03 N.M.
Cumulative effect of accounting
change, net of income taxes... (.02) -- N.M.
--------- ---------
Net Income .................... $ 2.12 $ 1.62 +30.9%
========= =========
Diluted:
Income before extraordinary gains
and cumulative effect of
accounting change ............ $ 2.13 $ 1.58 +34.8%
Extraordinary gains, net of
income taxes ................. -- .03 N.M.
Cumulative effect of accounting
change, net of income taxes... (.02) -- N.M.
--------- ---------
Net Income .................... $ 2.11 $ 1.61 +31.1%
========= =========
See Notes to Financial Summaries
N.M.-Not meaningful
Unaudited
<PAGE> 8
KIMBERLY-CLARK CORPORATION
NOTES TO FINANCIAL SUMMARIES
(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 was estimated at
$810.0 million. In 1997 the Corporation recorded a pretax
charge of $701.2 million ("1997 Charge"). The 1997 Charge
increased cost of products sold $220.1 million and reduced
operating profit, net income and net income per share by
$701.2 million, $503.1 million and $.91, respectively.
In 1998 the Corporation recorded the remaining costs ("1998
Charge") related to the Announced Plan. During the fourth
quarter, the 1998 Charge increased cost of products sold $1.0
million and reduced operating profit, net income and net
income per share by $50.6 million, $48.1 million and $.09,
respectively. For the year, the 1998 Charge increased cost of
products sold $7.3 million and reduced operating profit, net
income and net income per share $108.8 million, $86.9 million
and $.16, respectively.
(2)During the fourth quarter of 1998, the Corporation began
plans to further align tissue manufacturing capacity with
demand in Europe, and to close a diaper manufacturing
facility in North America and shut down and dispose of a
tissue machine in Thailand. For the fourth quarter and year
1998, these costs increased cost of products sold $123.2
million and reduced operating profit, net income and net
income per share $123.2 million, $86.1 million and $.16,
respectively.
(3)In the third quarter of 1998, the carrying amounts of
trademarks and unamortized goodwill of certain European
businesses were determined to be impaired and were written
off. In addition, the Corporation began depreciating the
cost of new personal computers (PCs) acquired after September
30, 1998 over two years and, in recognition of obsolescence
of its current PCs, wrote off the remaining book value of all
PCs acquired prior to 1997. For the year 1998, these write-
offs and other nonoperating charges increased cost of
products sold and general expense $11.3 million and $84.3
million, respectively, and reduced operating profit, net
income and net income per share by $95.6 million, $73.6
million and $.13, respectively.
(4)Other income (expense), net, for the year 1998 includes a
gain on the sale of K-C Aviation Inc. equal to $.14 per
share.
Other income (expense), net, for the year 1997 includes a gain
equal to $.03 per share on the sale of the Corporation's 17
percent interest in Ssangyong Paper Co., Ltd., a Korean tissue
company.
(5)Share of net income of equity companies for the year 1998
includes a charge equal to $.02 per share related to the
change in the value of the Mexican peso.
Share of net income of equity companies for the year 1997
includes a net nonoperating gain equal to $.03 per share
primarily related to the sale of a portion of the tissue
business of Kimberly-Clark de Mexico, S.A. de C.V. ("KCM").
The sale was required by the Mexican regulatory authorities
following the 1996 merger of KCM and Scott Paper Company's
former Mexican affiliate.
<PAGE> 9
KIMBERLY-CLARK CORPORATION
NOTES TO FINANCIAL SUMMARIES
(Continued)
(6)In June 1997, the Corporation sold Scott Paper Limited, a
50.1 percent-owned Canadian tissue subsidiary. In March
1997, the Corporation sold its Coosa Pines, Alabama,
newsprint and pulp manufacturing mill, together with related
woodlands. Also in March, the Corporation recorded
impairment losses on the planned sales of a pulp
manufacturing mill in Miranda, Spain; a recycled fiber
facility in Oconto Falls, Wisconsin; a tissue converting
facility in Yucca, Arizona; and on an integrated pulp making
facility in Everett, Washington. These 1997 transactions
were aggregated and reported as extraordinary gains totaling
$17.5 million, or $.03 per share, for the year ended December
31, 1997.
(7)Effective January 1, 1998, the Corporation changed its method
of accounting for preoperating and start-up costs to expense
these costs as incurred in accordance with new accounting
requirements. Previously, these costs on major projects were
capitalized and amortized over five years. As required, 1998
first quarter results have been restated to record a charge
of $17.8 million for the write-off of deferred preoperating
and start-up costs. The cumulative effect of this accounting
change is presented on the income statement net of income
taxes. This charge reduced reported net income for the first
quarter and the year by $.02 per share.
(8)The average number of common shares outstanding for the year
ended December 31, 1998 and 1997 was 550.3 million and 555.9
million, respectively. The number of common shares
outstanding as of December 31, 1998 and 1997 was 538.3
million and 556.3 million, respectively.
Unaudited
<PAGE> 10
KIMBERLY-CLARK CORPORATION
SELECTED SEGMENT DATA
(Millions)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
-------- -------- -------- -------- --------
1998 NET SALES:
Tissue................ $1,695.0 $1,606.1 $1,686.8 $1,718.3 $ 6,706.2
Personal Care......... 1,101.9 1,164.8 1,141.3 1,169.8 4,577.8
Health Care and Other. 261.3 277.0 281.9 226.9 1,047.1
Intersegment Sales.... (9.6) (6.6) (10.3) (6.8) (33.3)
-------- -------- -------- -------- --------
Consolidated.......... $3,048.6 $3,041.3 $3,099.7 $3,108.2 $12,297.8
======== ======== ======== ======== =========
1998 OPERATING PROFIT(a,b,c):
Tissue................ $ 261.6 $ 234.6 $ 280.5 $ 192.2 $ 968.9
Personal Care......... 166.3 183.1 112.2 159.0 620.6
Health Care and Other. 41.1 45.8 49.4 52.3 188.6
Unallocated items - net (24.7) (28.1) (25.5) (23.7) (102.0)
-------- -------- -------- -------- --------
Consolidated.......... $ 444.3 $ 435.4 $ 416.6 $ 379.8 $ 1,676.1
======== ======== ======== ======== =========
1997 NET SALES:
Tissue................ $1,949.1 $1,761.2 $1,726.5 $1,745.9 $ 7,182.7
Personal Care......... 1,080.6 1,144.5 1,144.7 1,124.0 4,493.8
Health Care and Other. 217.0 226.9 233.6 230.5 908.0
Intersegment Sales.... (9.1) (8.3) (9.5) (11.0) (37.9)
-------- -------- -------- -------- --------
Consolidated.......... $3,237.6 $3,124.3 $3,095.3 $3,089.4 $12,546.6
======== ======== ======== ======== =========
1997 OPERATING PROFIT (d):
Tissue................ $ 311.5 $ 268.6 $ 258.6 $ (201.6)$ 637.1
Personal Care......... 212.0 210.3 191.6 22.7 636.6
Health Care and Other. 40.3 40.1 43.6 12.3 136.3
Unallocated items - net (19.5) (24.6) (27.3) (35.4) (106.8)
-------- -------- -------- -------- --------
Consolidated.......... $ 544.3 $ 494.4 $ 466.5 $ (202.0)$ 1,303.2
======== ======== ======== ======== =========
(a) Operating profit for 1998 includes the following charges,
related to the Announced Plan described in Note 1:
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
-------- -------- -------- -------- --------
Tissue................ $ 9.1 $ 31.2 $ 1.9 $ 40.6 $ 82.8
Personal Care......... 4.8 7.5 2.3 9.3 23.9
Health Care and Other. 0.3 0.9 0.2 - 1.4
Unallocated items - net - - - 0.7 0.7
-------- -------- -------- -------- --------
Consolidated.......... $ 14.2 $ 39.6 $ 4.4 $ 50.6 $ 108.8
======== ======== ======== ======== =========
<PAGE> 11
KIMBERLY-CLARK CORPORATION
SELECTED SEGMENT DATA
(continued)
(b) Operating profit for the third quarter and year 1998 for
Tissue, Personal Care and Health Care and Other includes $14.5
million, $80.5 million and $0.6 million, respectively, of the
write-off of intangible and other assets as described in Note 3.
(c) Operating profit for the fourth quarter and year 1998 for
Tissue and Personal Care includes $69.9 million and $53.3 million,
respectively, of the charge for facility consolidations as
described in Note 2.
(d) Operating profit for the fourth quarter and year 1997 for
Tissue, Personal Care, Health Care and Other and Unallocated
includes $499.4 million, $169.5 million, $24.0 million and $8.3
million, respectively, of the charge related to the Announced Plan
described in Note 1.
Redefined Business Segments
---------------------------
In the fourth quarter of 1998, the Corporation adopted Statement of
Financial Accounting Standards 131 "Disclosure About Segments of an
Enterprise and Related Information." This new rule requires companies
to report their business segments on the basis of how they are managed
rather than on the basis of the products they sell. The Corporation
now reports its business in three segments - Tissue, Personal Care and
Health Care and Other. Significant changes from prior reporting include
the reclassification of wet wipes from Personal Care and premium
business and correspondence papers from Newsprint, Paper and Other to
the Tissue segment; and professional health care and nonwovens from
Personal Care to the Health Care and Other segment. Prior year data
has been reclassified to the new reporting basis.
Description of Business Segments
--------------------------------
The Tissue segment manufactures and markets tissue and wipers for
household and away-from-home use; wet wipes; printing papers, premium
business and correspondence papers; and related products.
The Personal Care segment manufactures and markets infant, child,
feminine and incontinence care products; and related products.
The Health Care and Other segment manufactures and markets health care
products, specialty papers, technical papers, and related products; and
other products and services. This segment included the operations of
K-C Aviation Inc. up to the date of its disposal in August 1998.
Unaudited
# # #
