KIMBERLY CLARK CORP, 10-K, 1999-03-26

KIMBERLY CLARK CORP
10-K, 1999-03-26
PAPER MILLS

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FORM 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______________ TO _______________

Commission file number 1-225

KIMBERLY-CLARK CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 39-0394230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

P. O. BOX 619100, DALLAS, TEXAS 75261-9100
(Address of principal executive offices) (ZIP CODE)

Registrant's telephone number, including area code: (972) 281-1200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered
------------------------------ -----------------------------------------

Common Stock - $1.25 Par Value New York Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
Pacific Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the 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 19, 1999, 533,724,982 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 $26.7 billion.

<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE

Kimberly-Clark Corporation's 1998 Annual Report to Stockholders and 1999 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
1998 Annual Report to Stockholders and 1999 Proxy Statement. The Items of
this Form 10-K, where applicable, specify which portions of such documents are
incorporated by reference. The portions of such documents that are not
incorporated by reference shall not be deemed to be filed with the Commission
as part of this Form 10-K.

DOCUMENT OF WHICH PORTIONS ITEMS OF THIS FORM 10-K
ARE INCORPORATED BY REFERENCE IN WHICH INCORPORATED
- ------------------------------- --------------------------------

1998 Annual Report to Stockholders PART I
(Year ended December 31, 1998) ITEM 1. Business

PART II
ITEM 5. Market for the Registrant's
Common Stock and Related
Stockholder Matters

ITEM 7. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations

ITEM 7A. Quantitative and Qualitative
Disclosures About Market Risk

ITEM 8. Financial Statements and
Supplementary Data

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

1999 Proxy Statement PART III
ITEM 10. Directors and Executive
Officers of the Registrant

ITEM 11. Executive Compensation

ITEM 12. Security Ownership of Certain
Beneficial Owners and
Management

ITEM 13. Certain Relationships and
Related Transactions

PART I

ITEM 1. BUSINESS

Kimberly-Clark Corporation was incorporated in Delaware in 1928. As used in
Items 1, 2 and 7 of this Form 10-K, the term "Corporation" refers to
Kimberly-Clark Corporation and its consolidated subsidiaries. In the
remainder of this Form 10-K, the terms "Kimberly-Clark" or "Corporation"
refer only to Kimberly-Clark Corporation. Financial information by business
segment and geographic area, and information about principal products and
markets of the Corporation, contained under the caption "Management's
Discussion and Analysis" and in Note 16 to the Financial Statements contained
in the 1998 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. The Corporation also has been seeking opportunities to expand its
health care business. Those businesses that did not, or could not, build on
the Corporation's 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, since 1992, the Corporation has completed over 30 strategic
acquisitions and nearly 20 strategic divestitures, including the following
transactions:

- - On December 12, 1995, Scott Paper Company ("Scott") became a
wholly-owned subsidiary of Kimberly-Clark upon completion of a merger
transaction in which the outstanding Scott common shares were converted into
shares of Kimberly-Clark common stock. The transaction was valued at
approximately $9.4 billion and accounted for as a pooling of interests.
On February 14, 1996, Scott changed its name to Kimberly-Clark Tissue
Company ("KCTC").

- - On June 28, 1996, the Corporation sold the baby and child wipe
businesses previously conducted by Scott, consisting of the Baby Fresh, Wash
a-Bye Baby and Kid Fresh brands and the Dover, Delaware production facility,
to The Procter & Gamble Company. This divestiture was required by the U.S.
Justice Department as part of the Scott merger.

- - On September 16, 1996, the Corporation sold its tissue mill in Prudhoe,
England and certain consumer tissue businesses in the United Kingdom and
Ireland to Svenska Cellulosa Aktiebolaget (SCA) of Sweden. This divestiture
was required by the European Commission as part of the Scott merger.

- - On March 27, 1997, the Corporation sold its Coosa Pines, Alabama pulp
and newsprint operations, and related woodlands, to Alliance Forest Products
Inc., a publicly-held Canadian corporation, for approximately $600 million in
cash.

- - On June 6, 1997, the Corporation sold its 50.1 percent interest in Scott
Paper Limited, a publicly-traded Canadian company to Kruger, Inc., a Canadian
paper and forest products company, for approximately $127 million.

- - On December 18, 1997, the Corporation acquired Tecnol Medical Products,
Inc. ("Tecnol"), a leading maker of disposable face masks and patient care
products, in a merger transaction which involved the conversion of all
outstanding shares of Tecnol common stock into shares of Kimberly-Clark common
stock. The transaction was valued at approximately $428 million and was
accounted for as a purchase.

- - On May 28, 1998, the Corporation purchased a 50 percent equity interest
in Klabin Tissue S.A. (now known as Klabin Kimberly S.A.), the leading tissue
manufacturer in Brazil.

- - On July 21, 1998, the Corporation purchased an additional 10 percent
ownership interest in its Korean affiliate, YuHan-Kimberly, Limited,
increasing its ownership interest to 70 percent.

- - On July 29, 1998, the Corporation purchased a 51 percent ownership
interest in Kimberly Bolivia, S.A., a new joint venture company in Bolivia.

- - On August 19, 1998, the Corporation sold the outstanding shares of K-C
Aviation Inc., a leading provider of business aviation services, to Gulfstream
Aerospace Corporation for $250 million in cash.

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 in 1997 ("1997 Charge") and a
pretax charge of $108.8 million in 1998 ("1998 Charge").

In the fourth quarter of 1998, the Corporation recorded a pretax charge for
facility consolidations of $123.2 million to, among other things, further
align tissue manufacturing capacity with demand in Europe, close a diaper
manufacturing facility in Canada, shut down and dispose of a tissue machine in
Thailand and write down certain excess feminine care production equipment in
North America.

On May 5, 1998, the Corporation announced its intention to shut down its pulp
mill in Mobile, Alabama on September 1, 1999 and to sell the associated
woodlands operations (the "Southeeast Timberlands").
The net effect of this transaction is expected to result
in a gain, which will be recorded upon completion of the sale
of the Southeast Timberlands.

On December 23, 1998, the Corporation announced that it had signed a
definitive agreement to acquire Ballard Medical Products ("Ballard"), a
leading maker of disposable medical devices for respiratory care,
gastroenterology and cardiology. Under the agreement, Ballard shareholders
will receive $25 for each share of Ballard common stock, payable in shares of
the Corporation's common stock. The transaction, which is valued at
approximately $764 million, remains subject to regulatory clearances and
approval by the Ballard shareholders. The transaction is expected to be
completed in the first half of 1999 and will be accounted for as a purchase.

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: Tissue; Personal Care; and Health Care and Other.

The Tissue segment includes facial and bathroom tissue, and paper towels and
wipers for household and away-from-home use; wet wipes; printing, premium
business and correspondence papers; and related products. Products in this
business segment are sold under the Kleenex, Scott, Kimberly-Clark, Kleenex
Cottonelle, Kleenex Viva, Huggies, Kimwipes, Wypall and other brand names.

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

The Health Care and Other segment includes health care products, consisting of
surgical gowns, drapes, infection control products, sterilization wraps,
disposable face masks, cold therapy products, patient restraints and other
disposable medical products; specialty and technical papers; and other
products. Products in this segment are sold under the Kimberly-Clark, Tecnol
and other brand names.

<PAGE>
Products for household use are sold directly and through wholesalers to
supermarkets, mass merchandisers, drugstores, warehouse clubs, home health
care, variety and department stores and other retail outlets. Products for
away-from-home use are sold through distributors and directly to
manufacturing, lodging, office building, food service and health care
establishments and other high volume public facilities. Paper products are
sold directly to users, converters, manufacturers, publishers and printers,
and through paper merchants, brokers, sales agents and other resale agencies.
Health care products are sold to distributors, converters and end-users.

PATENTS AND TRADEMARKS. The Corporation owns various patents and trademarks
registered domestically and in many foreign countries. The Corporation
considers the patents and trademarks which it owns and the
trademarks under which it sells certain of its products to be material to its
business. Consequently, the Corporation seeks patent and trademark protection
by all available means, including registration. A partial list of the
Corporation's trademarks is included under the caption "Trademarks" contained
in the 1998 Annual Report to Stockholders and is incorporated herein by
reference.

RAW MATERIALS. Superabsorbent materials are important components in
disposable diapers, training and youth pants and incontinence care products.
Polypropylene and other synthetics and chemicals are primary raw materials for
manufacturing nonwoven fabrics which are used in disposable diapers, training
and youth pants, feminine pads, incontinence and health care products, and
away-from-home wipers.

Cellulose fiber, in the form of kraft pulp or recycled fiber, is the primary
raw material for the Corporation's tissue and paper products and is an
important component in disposable diapers, training pants, feminine pads and
incontinence care products.

Most recovered paper and all synthetics are purchased from third parties.
Pulp and recycled fiber are produced by the Corporation and purchased from
others. The Corporation considers the supply of such raw materials to be
adequate to meet the needs of its businesses. See "Factors That May Affect
Future Results - Raw Materials."

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
tissue products, and nonwoven materials. Consolidated research and development
expense was $224.8 million in 1998, $211.8 million in 1997 and $207.9 million
in 1996.

ENVIRONMENTAL MATTERS. Total worldwide capital expenditures for environmental
controls to meet legal requirements and otherwise relating to the protection
of the environment at the Corporation's facilities are expected to be about
$107 million in 1999 and $68 million in 2000. Of this amount, approximately
$51 million in 1999 and $34 million in 2000 are expected to be spent at
facilities in the United States. Approximately $9 million and $19 million of
such U.S. expenditures in 1999 and 2000, respectively, relate to compliance
with the Environmental Protection Agency's ("EPA") Cluster Rule for sulfite
pulping operations at the Corporation's Everett, Washington pulp mill. The
remainder of the expected U.S. expenditures, approximately $42 million in
1999 and $15 million in 2000, is expected to be applied at various other
production facilities for other environmental control system improvements.
For facilities outside the U.S., capital expenditures for environmental
controls are expected to be approximately $56 million in 1999 and $34 million
in 2000.

Total worldwide operating expenses for environmental compliance are expected
to be $157 million in 1999 and $160 million in 2000. U.S. operating expenses
are expected to be $91 million in 1999 and $92 million in 2000. Operating
expenses for facilities outside the U.S. are expected to be $67 million in
1999 and $68 million in 2000. Operating expenses include pollution control
equipment operation and maintenance costs, governmental payments, and research
and engineering costs.

Total environmental capital expenditures and operating expenses are not
expected to have a material effect on the Corporation's total capital and
operating expenditures, consolidated earnings or competitive position.
However, current environmental spending estimates could be modified as a
result of changes in the Corporation's plans, changes in legal requirements or
other factors.

In connection with certain divestitures, including those described in "Recent
Developments," the Corporation has agreed to indemnify the purchasers of
certain divested businesses against certain contingent environmental
liabilities. Generally, these indemnification obligations apply only to
environmental liabilities which are actually incurred by the purchaser within
a specified time period after closing and are limited to a specified dollar
amount of coverage. The Corporation does not consider these obligations to be
material and has established appropriate accrued liabilities with respect
thereto.

EMPLOYEES. In its worldwide consolidated operations, the Corporation had
54,700 employees as of December 31, 1998.

Approximately 25 percent of the Corporation's United States workforce and
approximately 40 percent of the Corporation's non-United States workforce are
represented by unions. In the United States, the largest concentration of
union membership is with the Paper, Allied-Industrial, Chemical & Energy
Workers International Union (PACE). Other employees are represented by the
International Brotherhood of Electrical Workers (IBEW), the International
Association of Machinists and Aerospace Workers (IAM), the Association of
Western Pulp and Paper Workers (AWPPW), and various independent unions.

At those facilities where one or more unions represent employees, the
Corporation and the unions generally have good working relationships. The
labor agreements are generally three years or more in duration and contain
wage and fringe benefit programs which management of the Corporation believes
are competitive within the applicable industry segment and geographic region.

Throughout the Corporation, management seeks to establish and maintain an open
and respectful relationship with its employees. Management believes that
communications should flow freely in the organization to provide all employees
the opportunity to maximize the use of their talents in the attainment of the
Corporation's business objectives.

INSURANCE. The Corporation maintains coverage consistent with industry
practice for most risks that are incident to its operations.

<PAGE>
FACTORS THAT MAY AFFECT FUTURE RESULTS

Certain matters discussed in this Form 10-K, or documents, a portion of which
are incorporated herein by reference, concerning, among other things, the
business outlook, anticipated financial and operating results, strategies,
contingencies and contemplated transactions of the Corporation; the adequacy
of the 1998 and 1997 Charges; the adequacy of the 1998 facility consolidations
charge; the anticipated sale of the Southeast Timberlands; 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 widely advertised,
well-known, branded products, as well as private label products which are
typically sold at lower prices. The Corporation has several major competitors
in most of its markets, some of which are larger and more diversified than the
Corporation. The principal methods and elements of competition include brand
recognition and loyalty, product quality and performance, price, marketing and
distribution capabilities. Inherent risks in the Corporation's competitive
strategy include uncertainties concerning trade and consumer acceptance, the
effects of recent consolidations of retailers and distribution channels, and
competitive reaction. Aggressive competitive reaction may lead to increased
advertising and promotional spending by the Corporation in order to maintain
market share. Increased competition with respect to pricing would reduce
revenue and could have an adverse impact on the Corporation's financial
results. In addition, the Corporation relies on the development and
introduction of new products and line extensions as a means of achieving
and/or maintaining category leadership. In order to maintain its competitive
position, the Corporation must develop technological innovation with respect
to its products.

COST SAVING STRATEGY. A significant portion of the Corporation's anticipated
cost savings are expected to result from operating efficiencies, the Announced
Plan and the 1998 facility consolidations. However, such savings will require
the continued consolidation and integration of facilities, functions, systems
and procedures, all of which present significant management challenges. There
can be no assurance that such actions will be successfully accomplished as
rapidly as expected or of the extent to which such cost savings and
efficiencies will be achieved.

RAW MATERIALS. Cellulose fiber, in the form of kraft pulp or recycled fiber,
is used extensively in the Corporation's tissue and paper products and is
subject to significant price fluctuations due to the cyclical nature of the
pulp markets. Recycled fiber accounts for approximately 20 percent of the
Corporation's overall fiber requirements. On a worldwide basis, the
Corporation has reduced its internal supply of pulp to approximately
75 percent of its virgin fiber requirements and has announced its intention to
reduce its level of pulp integration to approximately 20 percent. However,
such a reduction in pulp integration could increase the Corporation's
commodity price risk. Specifically, increases in pulp prices could adversely
affect the Corporation's earnings if selling prices are not adjusted or if
such adjustments significantly trail the increases in pulp prices.
Conversely, if the Corporation does not lower its level of pulp integration
and the market price for pulp declines, thereby possibly causing selling
prices for tissue products to fall, the Corporation's profit margin could
suffer. The Corporation has not used derivative instruments in the management
of these risks.

<PAGE>
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. Furthermore, there can be no
assurance that any such acquired business can or will be successfully
integrated with the Corporation's businesses in order to provide anticipated
synergies and earnings growth.

VOLUME FORECASTING. The Corporation's anticipated financial results reflect
forecasts of future volume increases in the sales of its products. Challenges
in such forecasting include anticipating consumer preferences, estimating
sales of new products, estimating changes in population characteristics (such
as birth rates and changes in per capita income), anticipating changes in
technology and estimating the acceptance of the Corporation's products in new
markets. As a result, there can be no assurance that the Corporation's volume
increases will be as estimated.

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 Asia and Latin America have and may
continue to have an impact on the Corporation's earnings. Also, the extremely
competitive situation in European personal care and tissue markets, and the
challenging economic environments in Mexico and developing countries in
eastern Europe and Latin America, may slow the Corporation's sales growth and
earnings potential. In addition, the Corporation is subject to (i) foreign
exchange translation risk associated with the introduction of the Euro in
certain European countries, and 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" and "- Adoption of the
Euro" contained in the 1998 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.

"YEAR 2000" READINESS. For a discussion of the Corporation's readiness for
the "Year 2000" in terms of its computer systems, see "Management's Discussion
and Analysis - 'Year 2000' Readiness" contained in the 1998 Annual Report to
Stockholders, which is incorporated herein by reference.

<PAGE>

ITEM 2. PROPERTIES

Management believes that the Corporation's production facilities are suitable
for their purpose and adequate to support its businesses. The extent of
utilization of individual facilities varies, but they operate at or near
capacity, except in certain instances such as when new products or technology
are being introduced or when mills are being shut down. Certain facilities of
the Corporation are being expanded. Various facilities contain pollution
control, solid waste disposal and other equipment which have been financed
through the issuance of industrial revenue or similar bonds and are held by
the Corporation under lease or installment purchase agreements.

The principal facilities of the Corporation (including the Corporation's
equity companies) and the products or groups of products made at such
facilities are as follows:

HEADQUARTERS LOCATIONS
Dallas, Texas
Roswell, Georgia
Neenah, Wisconsin
Reigate, United Kingdom
Bangkok, Thailand

ADMINISTRATIVE CENTER
Knoxville, Tennessee

WORLDWIDE PRODUCTION AND SERVICE FACILITIES

UNITED STATES

ALABAMA
Mobile - tissue products and pulp (1)
ARIZONA
Tucson - nonwovens
ARKANSAS
Conway - feminine care, incontinence care, nonwovens
Maumelle - wet wipes, nonwovens
CALIFORNIA
Escondido - printing inks
Fullerton - tissue products
CONNECTICUT
New Milford - diapers, tissue products
GEORGIA
LaGrange - nonwovens
KENTUCKY
Owensboro - tissue products
MICHIGAN
Munising - technical papers
MISSISSIPPI
Corinth - nonwovens, wipers and towels
Hattiesburg - tissue products
NORTH CAROLINA
Hendersonville - nonwovens
Lexington - nonwovens
OKLAHOMA
Jenks - tissue products
PENNSYLVANIA
Chester - tissue products
<PAGE>
SOUTH CAROLINA
Beech Island - diapers, tissue products
TENNESSEE
Loudon - tissue products
TEXAS
Cleburne - tissue products
Del Rio - nonwovens
Fort Worth - nonwovens
Italy - tissue 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
Marinette - tissue products
Neenah - diapers, training and youth pants, feminine care, incontinence
care, business and correspondence papers, nonwovens
Whiting - business and correspondence papers

OUTSIDE THE UNITED STATES

ARGENTINA
*Bernal - tissue products
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
BOLIVIA
La Paz - tissue products
Santa Cruz - diapers, feminine care, tissue products
BRAZIL
*Correia - tissue products
*Cruzeiro - tissue products
*Mendes - feminine care
*Mogi das Cruzes - tissue products
Porto Alegre - diapers, feminine care
*Recife - tissue products
Suzano - diapers, feminine care

CANADA
Huntsville, Ontario - tissue products, wipers
New Glasgow, Nova Scotia - pulp
St. Hyacinthe, Quebec - feminine care
Terrace Bay, Ontario - pulp (2)
CHINA (3)
Beijing - feminine care, diapers
Chengdu - feminine care
Guangzhou - tissue products
Handan - feminine care
Harbin - feminine care
Hong Kong - tissue products (4)
Kunming - feminine care
Nanjing - feminine care
Shanghai - tissue products
Shenyang - feminine care
Wuhan - feminine care
COLOMBIA
Barbosa - tissue products, specialty papers, fine papers, notebooks
Guarne - tissue products
Pereira - tissue products, feminine care, incontinence care, diapers
Tocancipa - diapers
*Villa Rica - diapers, incontinence care
COSTA RICA
Belen - tissue products
Cartago - diapers, feminine care
CZECH REPUBLIC
Jaromer - diapers, incontinence care
Litovel - feminine care
DOMINICAN REPUBLIC
Santo Domingo - tissue products
ECUADOR
Babahoyo - tissue products
Guayaquil - diapers, feminine care
EL SALVADOR
San Salvador - tissue products
Sitio del Nino - tissue products, feminine care
FRANCE
Rouen - tissue products
Villey-Saint-Etienne - tissue products
GERMANY
Flensburg - tissue products (5)
Forchheim - feminine care, incontinence care
Koblenz - tissue products
Reisholz - tissue products
GUATEMALA
Guatemala City - tissue products, feminine care, notebooks
HONDURAS
San Pedro Sula - tissue products, feminine care
Villanueva - nonwovens
INDIA
*Pune - feminine care, diapers
Pune - tissue products
INDONESIA
Jakarta - 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
PERU
Lima - diapers, feminine care, incontinence care, tissue products
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
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
Pathumthani - 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
VENEZUELA
Guacara - diapers, feminine care
Maracay - tissue products
VIETNAM
Hanoi - feminine care
Ho Chi Minh City - feminine care

* Equity company production facility

_________________________________

(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. The Corporation has announced its intention to
close the pulp mill located at this facility in September 1999.

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

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

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

(5) The Corporation has announced its intention to close this facility.

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

<PAGE>

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
to which the Corporation's or any of its subsidiaries' properties is subject:

Litigation
- ----------

A. On May 13, 1997, the State of Florida, acting through its attorney
general, filed a complaint in the Gainesville Division of the United States
District Court for the Northern District of Florida (the "Florida District
Court") alleging that manufacturers of tissue products for away-from-home use,
including the Corporation and Scott, agreed to fix prices by coordinating
price increases for such products. Following Florida's complaint, an action
by the states of Maryland, New York and West Virginia, as well as
approximately 45 class action complaints, have been filed in various federal
and state courts around the United States. These actions contain allegations
similar to those made by the State of Florida in its complaint. The actions
in federal courts have been consolidated for pretrial proceedings in the
Florida District Court. Class certification was granted in the federal
proceedings in July 1998 and will be contested in the state cases. The
foregoing actions seek an unspecified amount of actual and treble damages.

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

B. On January 14, 1999, Mobile Energy Services Company, L.L.C. ("MESC") and
Mobile Energy Services Holdings, Inc. filed an adversary proceeding against
KCTC in the United States Bankruptcy Court in Mobile, Alabama. Plaintiffs,
as debtors-in-possession, own a cogeneration complex that provides energy
services to KCTC's Mobile facility. The complaint alleges that: (i) the sale
of the cogeneration complex by KCTC to MESC in December 1994 was a fraudulent
transfer; (ii) KCTC cannot effect a pulp mill closure while it continues to
operate the wastewater treatment facility and "produce pulp" at the Mobile
facility; (iii) Kimberly-Clark's announced pulp mill closure was a repudiation
of the site operating agreements; (iv) KCTC breached the master operating
agreement by failing to give MESC reasonable assistance in developing new
business opportunities for the energy complex after Kimberly-Clark announced
the pulp mill closure; and (v) KCTC failed to allow the sale of the Mobile
pulp mill. The complaint does not specify the amount of damages demanded. The
Corporation intends to contest these claims vigorously. This action is not
expected to have a material adverse effect on the Corporation's business or
results of operations.

C. The Corporation is subject to routine litigation from time to time, which,
individually or in the aggregate, is not expected to have a material adverse
effect on the Corporation's business or results of operations.

Environmental Matters
- ---------------------

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.

<PAGE>
Notwithstanding its opinion, management believes it appropriate to discuss the
following matters concerning two of these sites where the Corporation's
estimated share of total site remediation costs, if any, cannot be established
on the basis of currently available information:

A. In 1994, Scott received a notice of responsibility from the
Massachusetts Department of Environmental Protection regarding the South
Hadley Site in South Hadley, Massachusetts. The notice implicated Scott
Graphics, Inc., a former Scott subsidiary, as having disposed of hazardous
waste at the site. There have been no significant developments since the date
the Corporation received the notice.

B. In January 1998, the Corporation was notified by the Tennessee
Department of Environment and Conservation of its status as a potentially
liable party at the Bellevue Avenue Landfill in Shelby County, Tennessee. The
Corporation currently lacks adequate information to make a determination as to
the extent of its liability at the site.

<PAGE>

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,
1999, together with certain biographical information, are as follows:

ROBERT E. ABERNATHY, 44, was elected Group President effective January 1,
1997. He is responsible for the global health care business, nonwovens
manufacturing and research, the technical papers business, corporate research
and development, 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.

JUAN ERNESTO DE BEDOUT, 53, was elected President - Latin American Operations
in December 1998. Mr. de Bedout joined the Corporation in 1981 as Managing
Director of Colombiana Kimberly S.A. Additional responsibilities were
assigned to him in 1988 for the management of the Kimberly-Clark companies
in the Central American countries. In 1992, he was named General
Manager - Latin American Operations with responsibility for the Corporation's
business units in Central and South America. He was appointed Vice
President - Latin American Operations in 1994 and President - Latin American
Operations in August 1998.

JOHN W. DONEHOWER, 52, was elected Senior Vice President and Chief Financial
Officer in 1993. Mr. Donehower joined the Corporation in 1974. He was
appointed Director of Finance - Europe in 1978, Vice President, Marketing and
Sales - Nonwovens in 1981, Vice President, Specialty Papers in 1982, Managing
Director, Kimberly-Clark Australia Pty. Limited in 1982, and Vice President,
Professional Health Care, Medical and Nonwoven Fabrics in 1985. He was
appointed President, Specialty Products - U.S. in 1987, and
President - World Support Group in 1990. Mr. Donehower is a director of
Eastman Chemical Co. and Allendale Mutual Insurance Company.

O. GEORGE EVERBACH, 60, 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, 40, was elected Group President - Tissue, Pulp and Paper in
April 1998. He is responsible for the Corporation's global tissue businesses.
He also is responsible for the Wet Wipes and Neenah Paper sectors, Pulp
Operations and Consumer Business Services, Environment and Energy and Human
Resources organizations. Mr. Falk joined the Corporation in 1983. His
responsibilities have included internal audit, finance and strategic analysis,
and operations management. In 1993, he was elected Group President - Infant
and Child Care and has held various senior management positions in the
Corporation's Consumer and Away From Home businesses in North America and
Europe since that time. Mr. Falk is a member of the University of Wisconsin -
Madison School of Business Dean's Advisory Board and serves on the Board of
Directors of Associated Bank - Fox Cities and Newell-Rubbermaid, Inc.

PAUL S. GEISLER, 57, 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 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.

<PAGE>
WAYNE R. SANDERS, 51, has served as Chief Executive Officer of the
Corporation since 1991 and Chairman of the Board of the Corporation since
1992. He previously had been elected President and Chief Operating Officer in
1990. Employed by the Corporation in 1975, Mr. Sanders was appointed Vice
President of Kimberly-Clark Canada Inc., a wholly owned subsidiary of the
Corporation, in 1981 and was appointed Director and President in 1984. Mr.
Sanders was elected Senior Vice President of Kimberly-Clark Corporation in
1985 and was appointed President - Infant Care Sector in 1987, President -
Personal Care Sector in 1988 and President - World Consumer, Nonwovens and
Service and Industrial Operations in 1990. Mr. Sanders is a director of Adolph
Coors Company, Coors Brewing Company, Texas Instruments Incorporated and Chase
Bank of Texas, National Association. He also is a member of the Marquette
University Board of Trustees and is a national trustee of the Boys and Girls
Clubs of America. He has been a director of the Corporation since 1989.

KATHI P. SEIFERT, 49, was elected Group President - Personal Care Products in
April 1998. She is responsible for the Infant Care, Child Care, Feminine
Care, and Adult Care business sectors, the Safety and Quality Assurance team
and the U.S. and Canadian Sales organizations, and leads a team responsible
for the Corporation's global personal care businesses. Ms. Seifert joined
Kimberly-Clark in 1978. Her responsibilities in the Corporation have included
various marketing positions within the Away From Home, Consumer Tissue and
Feminine Care business sectors. She was appointed President - Feminine Care
Sector in 1991, was elected Group President - Feminine and Adult Care in
1994, elected Group President - North American Consumer Products in January
1995, and elected Group President - North American Personal Care Products in
July 1995. Ms. Seifert is a member of the Board of Directors of Eli Lilly and
Company and Aid Association for Lutherans.

<PAGE>
PART II

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

The dividend and market price data included in Note 14 to the Consolidated
Financial Statements, and the information set forth under the captions
"Dividends and Dividend Reinvestment Plan" and "Stock Exchanges" contained in
the 1998 Annual Report to Stockholders are incorporated in this Item 5 by
reference.

As of March 19, 1999, the Corporation had 54,334 holders of record of its
common stock.

<TABLE>

ITEM 6. SELECTED FINANCIAL DATA

(Millions of Dollars, Year Ended December 31
except per share amounts) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales. . . . . . . . $12,297.8 $12,546.6 $13,149.1 $13,373.0 $11,627.9
Restructuring and Other
Unusual Charges . . . . 101.5 481.1 -- 1,440.0 --
Operating Profit . . . . 1,676.1 1,303.2 2,053.7 213.0 1,277.1
Share of Net Income of
Equity Companies. . . . 137.1 157.3 152.4 113.3 110.5
Income from Continuing
Operations Before
Extraordinary Items and
Cumulative Effect of
Accounting Change . . . 1,177.0 884.0 1,403.8 33.2 766.5
Per Share Basis:
Basic . . . . . . . . 2.14 1.59 2.49 .06 1.38
Diluted . . . . . . . 2.13 1.58 2.48 .06 1.37
Net Income 1,165.8 901.5 1,403.8 33.2 753.8
Per Share Basis:
Basic . . . . . . . . 2.12 1.62 2.49 .06 1.35
Diluted . . . . . . . 2.11 1.61 2.48 .06 1.34
Cash Dividends Declared. 1.00 .96 .92 .90 .88
Cash Dividends Paid. . . .99 .95 .92 .90 .88
Total Assets . . . . . . $11,510.3 $11,266.0 $11,845.7 $11,439.2 $12,555.7
Long-Term Debt . . . . . 2,068.2 1,803.9 1,738.6 1,984.7 2,085.4
Stockholders' Equity . . 3,887.2 4,133.3 4,489.4 3,667.3 4,145.9

</TABLE>

NOTES TO SELECTED FINANCIAL DATA

(1) In the fourth quarter 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 conjunction with the Announced
Plan, the Corporation recorded a pretax charge of $701.2 million in 1997
("1997 Charge") and recorded the remaining $108.8 million in 1998 ("1998
Charge") at the time these costs became accruable under appropriate accounting
principles.

(2) The 1998 Charge reduced operating profit, net income and net income
per share by $108.8 million, $86.9 million and $.16, respectively. Of the
1998 Charge, $7.3 million relates to the write-down of certain assets and
inventories and has been charged to cost of products sold, and $101.5 million
has been recorded as restructuring and other unusual charges on the income
statement.

<PAGE>

(3) In 1998, the carrying amounts of trademarks and unamortized goodwill
of certain European businesses were determined to be impaired and written
down. In addition, the Corporation began depreciating the cost of all new
personal computers ("PCs") acquired after September 30, 1998 over two years.
Accordingly, in recognition of the change in estimated useful lives of its
existing PC assets, the remaining book value of all PCs acquired prior to 1997
was written down. These write-downs, along with $8.8 million of charges for
write-downs of other assets and a loss on a pulp contract, reduced operating
profit, net income and net income per share by $95.6 million, $73.6 million
and $.13, respectively. Of the $95.6 million, $11.3 million was charged to
cost of products sold and $84.3 million was charged to general expense.

(4) In 1998, the Corporation recorded a charge for facility
consolidations of $123.2 million to, among other things, further align
tissue-manufacturing capacity with demand in Europe, close a diaper
manufacturing facility in Canada, shut down and dispose of a tissue machine in
Thailand and write down certain excess feminine care production equipment in
North America. These costs, which were charged to cost of products sold,
reduced operating profit, net income and net income per share by $123.2
million, $86.1 million and $.16, respectively.

(5) Net income and net income per share for 1998 includes a gain on the
sale of the Corporation's subsidiary, K-C Aviation Inc., of $78.3 million and
$.14, respectively.

(6) In 1998, the Corporation changed its method of accounting for the
costs of start-up activities effective January 1, 1998, as required by
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities."
The Corporation recorded a net after income tax charge of $11.2 million, or
$.02 per share, as the cumulative effect of this accounting change.

(7) The 1997 Charge reduced operating profit, net income and net income
per share by $701.2 million, $503.1 million and $.91, respectively. Of the
1997 Charge, $220.1 million related to the write-down of certain assets and
inventories and was charged to cost of products sold, and $481.1 million was
recorded as restructuring and other unusual charges on the income statement.

(8) In 1997, the Corporation sold its equity interest in Scott Paper
Limited, 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.

(9) Share of net income of equity companies and net income for 1997
includes a net gain of $16.3 million, or $.03 per share, primarily related to
the sale of a portion of the tissue business of Kimberly-Clark de Mexico, S.A.
de C.V. ("KCM"). The sale was required by the Mexican regulatory authorities
following the merger of KCM and Scott Paper Company's ("Scott") former Mexican
affiliate.

(10) Results for 1996 include a net pretax 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 gain of $.13 per share.

(11) Share of net income of equity companies and net income for 1996
includes a 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.

<PAGE>

(12) Results for 1995 include a pretax charge of $1,440.0 million or
$1,070.9 million after income taxes and minority interests, or $1.92 per
share, for the estimated costs of the merger with Scott, for restructuring the
combined operations, and for other unusual charges.

(13) In 1995, share of net income of equity companies and net income
includes a charge of $38.5 million, or $.07 per share, for foreign currency
losses incurred by KCM on the translation of the net exposure of U.S.
dollar-denominated liabilities into pesos.

(14) In 1994, share of net income of equity companies and net income
includes a charge of $39.2 million, or $.07 per share, for foreign currency
losses incurred by KCM on the translation of the net exposure of U.S.
dollar-denominated liabilities into pesos.

(15) Results for 1994 include income of a discontinued operation, net of
taxes, of $48.4 million, or $.08 per share, related to S.D. Warren Company, a
former printing and publishing papers subsidiary, which was sold in December
1994.

(16) Results for 1994 include an extraordinary loss related to the early
extinguishment of debt of $61.1 million, or $.11 per share.

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 1998 Annual Report to Stockholders is incorporated
in this Item 7 by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the caption "Management's Discussion and
Analysis - Market Risk Sensitivity and Inflation Risks" contained in the 1998
Annual Report to Stockholders is incorporated in this Item 7A by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of the Corporation and its consolidated
subsidiaries and the independent auditors' report thereon contained in the
1998 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>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The section of the 1999 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 1999 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 1999 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 1999 Proxy Statement captioned "Certain
Transactions and Business Relationships" under "Proposal 1. Election of
Directors" is incorporated in this Item 13 by reference.

<PAGE>
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, 1998 and 1997, and the
related Consolidated Statements of Income, Stockholders' Equity and Cash Flow
for the years ended December 31, 1998, 1997 and 1996, 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 1998 Annual Report to Stockholders.
In addition, related reports of Deloitte & Touche LLP are included herein.

2. Financial statement schedule:

The following information is filed as part of this Form 10-K and should be
read in conjunction with the financial statements contained in the 1998 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. 333-17367).

Exhibit No. (4). Copies of instruments defining the rights of holders of
long-term debt will be furnished to the Securities and Exchange Commission on
request.

Exhibit No. (10)a. Management Achievement Award Program, as amended and
restated as of January 1, 1998, incorporated by reference to Exhibit No. (10)a
of the Corporation's Annual Report on Form 10-K for the year ended December
31, 1997.

Exhibit No. (10)b. Executive Severance Plan, as amended and restated as of
December 10, 1998.

Exhibit No. (10)c. Fourth Amended and Restated Deferred Compensation Plan for
Directors, incorporated by reference to Exhibit No. (10)c of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996.

Exhibit No. (10)d. 1986 Equity Participation Plan, as amended effective
November 20, 1997, incorporated by reference to Exhibit No. (10)d of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.

Exhibit No. (10)e. 1992 Equity Participation Plan, as amended effective
November 20, 1997, incorporated by reference to Exhibit No. (10)e of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.

<PAGE>
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)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, as amended
and restated as of August 19, 1998.

Exhibit No. (10)l. 1999 Restricted Stock Plan, effective as of January 1,
1999, incorporated by reference to Exhibit No. 4.5 to the Corporation's
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on February 3, 1999 (File No. 333-71661).

Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 1998.

Exhibit No. (13). Portions of the Corporation's 1998 Annual Report to
Stockholders incorporated by reference in this Form 10-K.

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

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

Exhibit No. (24). Powers of Attorney.

Exhibit No. (27). The Financial Data Schedule required by Item 601(b)(27) of
Regulation S-K has been included with the electronic filing of this Form 10-K.

(B) REPORTS ON FORM 8-K

(i) The Corporation filed a Current Report on Form 8-K, dated January 26,
1999, to report its 1998 fourth quarter earnings.

(ii) The Corporation filed a Current Report on Form 8-K, dated March 12,
1999, to report its 1998 audited financial statements.

(iii) The Corporation filed a Current Report on Form 8-K, dated March 16,
1999, to report the mutual termination of the agreement to sell its Southeast
Timberlands to Southstar Timber Resources, LLC.

<PAGE>
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, 1999

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, 1999
- ------------------------ and Chief Executive Officer
Wayne R. Sanders and Director
(principal executive officer)

/s/ John W. Donehower Senior Vice President and March 26, 1999
- ------------------------- Chief Financial Officer
John W. Donehower (principal financial officer)

/s/ Randy J. Vest Vice President and March 26, 1999
- --------------------- 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, 1999
---------------------------------------
O. George Everbach, Attorney-in-Fact

<PAGE>
INDEPENDENT AUDITORS' REPORT

KIMBERLY-CLARK CORPORATION:

We have audited the consolidated financial statements of Kimberly-Clark
Corporation as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998, and have issued our report thereon
dated January 25, 1999; such consolidated financial statements and report are
included in your Annual Report and are incorporated herein by reference. Our
audits also included the consolidated financial statement schedule of
Kimberly-Clark Corporation, listed in Item 14. This consolidated financial
statement schedule is the responsibility of the Corporation's management. Our
responsibility is to express an opinion on the financial statement schedule
based on our audits. In our opinion, the consolidated financial statement
schedule listed in Item 14, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

/s/DELOITTE & TOUCHE LLP
- ------------------------

DELOITTE & TOUCHE LLP

Dallas, Texas
January 25, 1999

<PAGE>

SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Millions of dollars)

<TABLE>
<CAPTION>
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, 1998
Allowances deducted from
assets to which they apply

Allowances for doubtful
accounts $ 37.8 $ 21.5 $ 3.1 $ 10.9(b) $ 51.5

Allowances for sales
discounts 22.1 182.5 .2 189.0(c) 15.8

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

Allowances for doubtful
accounts $ 33.0 $ 12.3 $ 2.2 $ 9.7(b) $ 37.8

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

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 (.4) 198.4(c) 13.3

<FN>

(a) Includes bad debt recoveries and the effects of changes in foreign currency exchange rates.
1997 includes the balances of Tecnol Medical Products, Inc. acquired in December 1997.

(b) Primarily uncollectible receivables written off.

</TABLE>
<PAGE>

SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Millions of dollars)
<TABLE>
<CAPTION>

Additions Deductions
--------------------------- -------------------
Balance at Charged to Charged to Write-Offs Balance
Beginning Costs and Other and at End of
Description of Period Expenses Accounts(a) Reclassifications(b) Period
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1998 and 1997 Charges

December 31, 1998
Contra assets deducted from
assets to which they apply

Inventory $ 23.8 $ - $ 1.8 $ 17.0 $ 8.6

Property, plant and
equipment 360.2 12.7 6.4 314.1 65.2

Other Assets 12.1 6.1 40.2 17.8 40.6

December 31, 1997
Contra assets deducted from
assets to which they apply

Inventory $ - $ 28.8 $ - $ 5.0 $ 23.8

Property, plant and
equipment - 452.2 - 92.0 360.2

Other Assets - 16.9 - 4.8 12.1

<FN>

(a) Reclassifications from accrued liabilities.

(b) Includes reclassifications of $5.0 million in 1998 to accrued liabilities.

</TABLE>

<PAGE>

SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Millions of dollars)

<TABLE>
<CAPTION>
Additions Deductions
------------------------- ----------------
Balance at Charged to Charged to Write-Offs Balance
Beginning Costs and Other and at End of
Description of Period Expenses Accounts(a) Reclassifications(b) Period
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 Restructuring and Other
Unusual Charges

December 31, 1998
Contra assets deducted from
assets to which they apply

Property, plant and
equipment $ 29.6 $ - $ - $ 29.6 $ -

December 31, 1997
Contra assets deducted from
assets to which they apply

Accounts receivable $ .6 $ - $ 18.4 $ 19.0 $ -

Inventory 12.7 - 9.3 22.0 -

Property, plant and
equipment 109.9 - - 80.3 29.6

Assets held for sale 15.9 - - 15.9 -

Other Assets .3 - 8.7 9.0 -

December 31, 1996
Contra assets deducted from
assets to which they apply

Accounts receivable $ 41.5 $ - $ 68.7 $ 109.6 $ .6

Inventory 51.5 - - 38.8 12.7

Property, plant and
equipment 369.0 - - 259.1 109.9

Assets held for sale 128.3 - - 112.4 15.9

Other Assets 81.5 - - 81.2 0.3

<FN>
(a) Reclassifications from accrued liabilities.

(b) Includes reclassifications to accrued liabilities of $4.4 million in 1998,
$12.9 million in 1997 and $254.9 million in 1996.

</TABLE>

<PAGE>

SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(Millions of dollars)
<TABLE>
<CAPTION>

Additions
---------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End of
Description of Period Expenses Accounts Deductions(a) Period
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

December 31, 1998

Deferred Taxes
Valuation Allowance $ 228.1 $ 61.4 $ - $ (5.5) $ 295.0

December 31, 1997

Deferred Taxes
Valuation Allowance $ 206.6 $ 65.2 $ - $ 43.7 $ 228.1

December 31, 1996

Deferred Taxes
Valuation Allowance $ 260.7 $ 17.6 $ - $ 71.7 (b) $ 206.6

<FN>
(a) Includes the net currency effects of translating valuation allowances at
current rates under SFAS No. 52 of $15.6 million in 1998, $(26.0) million
in 1997 and $(16.7) million in 1996. Included in this column are also expired
income tax loss carryforwards of $15.8 million in 1998, $16.9 million in 1997
and $18.6 million in 1996. Also see note (b). These items offset deferred tax
assets resulting in no effect on the consolidated balance sheet.

(b) Includes $(44.1) million of valuation allowances for a German Holding Company
that was no longer required as net operating losses were eliminated from the
deferred tax asset balance. This entry had no effect on the consolidated balance
sheet.

</TABLE>

<PAGE>

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. (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)b. Executive Severance Plan, as amended and restated as of
December 10, 1998.

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>
INDEX TO DOCUMENTS FILED AS A PART OF THIS REPORT
(Continued)

DESCRIPTION
-----------

Exhibit No. (10)k. Retirement Contribution Excess Benefit Program, as amended
and restated as of August 19, 1998.

Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 1998.

Exhibit No. (13). Portions of the Corporation's 1998 Annual Report to
Stockholders incorporated by reference in this Form 10-K.

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

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

Exhibit No. (24). Powers of Attorney.

Exhibit No. (27). The Financial Data Schedule required by Item 601(b)(27) of
Regulation S-K has been included with the electronic filing of this Form 10-K.

Exhibit No. (10)b
KIMBERLY-CLARK CORPORATION

EXECUTIVE SEVERANCE PLAN
As
Amended and Restated
As of December 10, 1998

1. Preamble and Statement of Purpose. The purpose of this Plan is to
---------------------------------
assure the Corporation that it will have the continued dedication of, and the
availability of objective advice and counsel from, key executives of the
Corporation notwithstanding the possibility, threat or occurrence of a bid to
take over control of the Corporation.

In the event the Corporation receives any proposal from a third person
concerning a possible business combination with the Corporation, or
acquisition of the Corporation's equity securities, the Board of Directors
(the "Board") believes it imperative that the Corporation and the Board be
able to rely upon key executives to continue in their positions and be
available for advice, if requested, without concern that those individuals
might be distracted by the personal uncertainties and risks created by such a
proposal.

Should the Corporation receive any such proposals, in addition to their
regular duties, such key executives may be called upon to assist in the
assessment of proposals, advise management and the Board as to whether such
proposals would be in the best interest of the Corporation and its
stockholders, and to take such other actions as the Board might determine to
be appropriate.

2. Definitions. As used in this Plan, the following terms shall have
-----------
the following respective meanings:

(a) Agreement: An Executive Severance Agreement in
---------
substantially the form approved by the Board and attached hereto as Exhibit A.
(b) Change of Control: A "Change of Control" 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, 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 or any successor to the Corporation.

(d) Eligible Executive: Those key executives of the Corporation
------------------
and its Subsidiaries who are from time to time designated by the Board as, or
who pursuant to criteria established by the Board or its Compensation
Committee are, eligible to receive an Agreement.

(e) Participant: An Eligible Executive who is a party to an
-----------
Agreement which has not been terminated in accordance with the terms of this
Plan prior to the time when the Corporation has knowledge that any third
person has taken steps reasonably calculated to effect a Change of Control of
the Corporation.

(f) Qualified Termination of Employment: The termination of a
-----------------------------------
Participant's employment with the Corporation and/or its Subsidiaries within
the two (2) year period following a Change of Control of the Corporation for
any reason (whether voluntary or involuntary) other than as a consequence of
the death or disability of the Participant, provided that transfers of
--------
employment among the Corporation and its Subsidiaries shall not be deemed
Qualified Termination of Employment.

(g) Subsidiary: Any domestic or foreign corporation at least
----------
twenty percent (20%) of whose shares normally entitled to vote in electing
directors is owned directly or indirectly by the Corporation or by other
Subsidiaries.

3. Participation. Eligible Executives shall be proffered an
-------------
Agreement and upon execution and delivery thereof by the Eligible Executive
evidencing such Eligible Executive's agreement not to voluntarily leave the
employ of the Corporation and its Subsidiaries and to continue to render
services during the pendency of any threatened Change of Control of the
Corporation, such Eligible Executive shall become a Participant. A
Participant shall cease to be a Participant in the Plan when notified by the
Board that it has determined that such Participant has ceased to be a key
executive for purposes of this Plan or upon termination of employment with the
Corporation or its Subsidiaries prior to a Change of Control in which case the
Agreement shall terminate and be of no further force and effect, except that,
------ ----
no such determination that a Participant has ceased to be a key executive
shall be made, and if made shall have no effect, during any period of time
when the Corporation has knowledge that any third person has taken steps
reasonably calculated to effect a Change of Control of the Corporation until,
in the opinion of the Board, the third person has abandoned or terminated his
efforts to effect a Change of Control. Any decision by the Board that the
third person has abandoned or terminated his efforts to effect a Change of
Control shall be conclusive and binding on the Participants.

4. Termination of Employment of Participants. Nothing in this Plan
-----------------------------------------
shall be deemed to entitle a Participant to continued employment with the
Corporation and its Subsidiaries and the rights of the Corporation to
terminate the employment of a Participant shall continue as fully as though
this Plan were not in effect, provided that any such termination of
--------
Participant's employment within two years following a Change of Control shall
constitute a Qualified Termination of Employment. In addition, nothing in this
Plan shall be deemed to entitle a Participant under this Plan to any rights,
or to payments under this Plan, with respect to any plan in which the
Participant was not a participant prior to a Qualified Termination of
Employment.

5. Payments Upon Qualified Termination of Employment. In the event
-------------------------------------------------
of a Qualified Termination of Employment of a Participant, a lump sum cash
payment or payments shall be made to such Participant as compensation for
services rendered, in an amount or amounts (subject to any applicable payroll
or other taxes required to be withheld) equal to the sum of the amounts
specified in subparagraphs (i) through (vi) below, such payments to be made
within 10 days following the last day of employment of the Participant with
the Corporation except to the extent not yet calculable, in which case such
portions shall be paid as soon as practicable following the ability to
calculate the amount.

(i) Salary Plus Incentive Compensation. An amount equal to
----------------------------------
three times the sum of (a) the Participant's annual base salary at the rate in
effect immediately prior to the Change of Control and (b) the maximum award
payable to the Participant for the year in which the Change of Control
occurred (or, if not then established, for the preceding year) under the
Kimberly-Clark Corporation Management Achievement Award Program or any
successor or additional plan;

(ii) Equity Participation Plan - Participation Shares. An
-------------------------------------------------
amount equal to the payment to which the Participant would have been entitled
had all Participation Shares awarded to the Participant under the
Kimberly-Clark Corporation 1992 Equity Participation Plan (or any successor or
additional plan) and which had not matured as of the date of termination of
employment and which will not mature as a result of the termination of
employment, matured, such payment to be the higher of (a) the payment
determined as though such award had matured and its book value at maturity
been determined on the last day of the year preceding the Change of Control,
or (b) the payment determined as though such award had matured and its book
value at maturity been determined on the last day of the calendar quarter
preceding the date of termination of the Participant's employment;

(iii) Equity Participation Plan - Option Shares. With respect
-----------------------------------------
to stock options granted to the Participant under the Kimberly-Clark
Corporation 1992 Equity Participation Plan (or any successor or additional
plan) which are not exercisable on or after the date of the termination of the
Participant's employment or, if exercisable, on the date of termination of
employment, not thereafter exercised, an amount equal to the higher of the
excess of (a) the value on the date preceding the Change of Control of all
shares of common stock of the Corporation optioned to the Participant pursuant
to such options, or (b) such value on the date of termination of employment,
over the option price;

(iv) Restricted Stock. With respect to restricted stock granted
----------------
to the Participant under the Kimberly-Clark Corporation 1999 Restricted Stock
Plan (or any successor or additional plan) which are not vested on the date of
the termination of the Participant's employment, an amount equal to the higher
of (a) the value on the date preceding the Change of Control of an equivalent
number of shares of common stock of the Corporation, or (b) such value on the
date of termination of employment;

(v) Incentive Investment Plan. An amount equal to the excess of
-------------------------
(a) the benefits under the Kimberly-Clark Corporation Salaried Employees
Incentive Investment Plan (or any successor or additional plan) to which the
Participant would be entitled if he were fully vested in all of his benefits
under the Plan at the date of termination of employment, over (b) the value of
the benefits to which the Participant is actually entitled at the date of
termination of employment; and

(vi) Retirement Contribution Plan. An amount equal to (a) the
----------------------------
Participant's annual Retirement Contributions under the Kimberly-Clark
Corporation Retirement Contribution Plan (or any successor or additional
plans) and the Kimberly-Clark Corporation Retirement Contribution Excess
Benefit Program (or any successor or additional plans) (collectively the
"Retirement Contribution Plan") to which the Participant would have been
entitled if he had remained employed by the Corporation for an additional
period of three years at the rate of annual compensation specified in
subparagraph (i) of Paragraph 5 above except that the Management Achievement
Award Program element shall be treated as earned for the year in which
termination occurred and the two subsequent years and no award actually earned
in, and paid for, the year in which termination occurred shall be considered,
plus (b) the excess of (I) the benefits under the Retirement Contribution Plan
to which the Participant would be entitled if he were fully vested in all of
his benefits under the Retirement Contribution Plan at the date of termination
of employment, over (II) the value of the benefits to which the Participant is
actually entitled at the date of termination of employment.

6. Salaried Retirement Plan. In the event of a Qualified Termination
------------------------
of Employment, a Participant shall be paid a monthly retirement benefit, in
addition to any benefits received under the Supplemental Benefit Plan to the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) and the Second Supplemental Benefit Plan to the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) (collectively the "Supplemental Plan") and the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) (the "Salaried Retirement Plan"), such benefit
to commence on the commencement of payment of benefits under the Salaried
Retirement Plan, but not prior to three years following the date of Qualified
Termination of Employment, such benefit to be in the form of a straight life
annuity without level income option and in an amount equal to the excess of
(a) the benefits under the Salaried Retirement Plan and the Supplemental Plan
to which the Participant would have been entitled in the form of a straight
life annuity without level income option if such Participant had remained
employed by the Corporation for an additional period of three years, at the
rate of annual compensation specified in subparagraph (i) of Paragraph 5 above
except that the Management Achievement Award Program element shall be treated
as earned for the year in which termination occurred and the two subsequent
years and no award actually earned in, and paid for, the year in which
termination occurred shall be considered, over (b) the benefits to which the
Participant would actually have been entitled under the Salaried Retirement
Plan and the Supplemental Plan, had such benefit been paid in the form of a
straight life annuity without level income option.

7. Other Terms and Conditions. The Agreement to be entered into
--------------------------
pursuant to this Plan shall contain such other terms, provisions and
conditions not inconsistent with this Plan as shall be determined by the
Board. Where appearing in this Plan or the Agreement, the masculine shall
include the feminine and the plural shall include the singular, unless the
context clearly indicates otherwise.

8. Non-Assignability. Each Participant's rights under this Plan
-----------------
shall be non-transferable except by will or by the laws of descent and
distribution.

9. Unfunded Plan. The Plan shall be unfunded. Neither the
--------------
Corporation nor the Board shall be required to segregate any assets that may
at any time be represented by benefits under the Plan. Neither the
Corporation or the Board shall be deemed to be a trustee of any amounts to be
paid under the Plan. Any liability of the Corporation to any Participant with
respect to any benefit shall be based solely upon any contractual obligations
created by the Plan and the Agreement; no such obligation shall be deemed to
be secured by any pledge or any encumbrance on any property of the
Corporation.

10. Certain Reduction of Payments by the Corporation.
------------------------------------------------------
(a) For purposes of this paragraph 10, (i) a Payment shall mean
any payment or distribution in the nature of compensation to or for the
benefit of a Participant, whether paid or payable pursuant to this Plan or
otherwise; (ii) Separation Payment shall mean a Payment paid or payable
pursuant to this Plan (disregarding this paragraph); (iii) Net After Tax
Receipt shall mean the Present Value of a Payment net of all taxes imposed on
an Participant with respect thereto under Sections 1 and 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), determined by applying the
highest marginal rate under Section 1 of the Code which applied to the
Participant's taxable income for the immediately preceding taxable year; (iv)
"Present Value" shall mean such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the greatest
aggregate amount of Separation Payments which (a) is less than the sum of all
Separation Payments and (b) results in aggregate Net After Tax Receipts which
are equal to or greater than the Net After Tax Receipts which would result if
the Participant were paid the sum of all Separation Payments.

(b) Anything in this Agreement to the contrary notwithstanding,
in the event Deloitte & Touche LLP or such other certified public accounting
firm designated by the Participant (the "Accounting Firm") shall determine
that receipt of all Payments would subject the Participant to tax under
Section 4999 of the Code, it shall determine whether some amount of Separation
Payments would meet the definition of a "Reduced Amount." If said firm
determines that there is a Reduced Amount, the aggregate Separation Payments
shall be reduced to such Reduced Amount. All fees payable to the Accounting
Firm with respect to this paragraph 10 shall be paid solely by the
Corporation.

(c) If Accounting Firm determines that aggregate Separation
Payments should be reduced to the Reduced Amount, the Corporation shall
promptly give the Participant notice to that effect and a copy of the detailed
calculation thereof, and the Participant may then elect, in his sole
discretion, which and how much of the Separation Payments shall be eliminated
or reduced (as long as after such election the present value of the aggregate
Separation Payments equals the Reduced Amount), and shall advise the
Corporation in writing of his election within ten days of his receipt of
notice. If no such election is made by the Participant within such ten-day
period, the Corporation may elect which of such Separation Payments shall be
eliminated or reduced (as long as after such election the present value of the
aggregate Separation Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. All determinations made by Accounting
Firm under this paragraph shall be binding upon the Corporation and the
Participant and shall be made within 60 days of a termination of employment of
the Participant. As promptly as practicable following such determination, the
Corporation shall pay to or distribute for the benefit of the Participant such
Separation Payments as are then due to the Participant under this Plan and
shall promptly pay to or distribute for the benefit of the Participant in the
future such Separation Payments as become due to the Participant under this
Plan.

(d) While it is the intention of the Corporation to reduce the
amounts payable or distributable to the Participants hereunder only if the
aggregate Net After Tax Receipts to a Participant would thereby be increased,
as a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by the Corporation to
or for the benefit of an Participant pursuant to this Plan which should not
have been so paid or distributed ("Overpayment") or that additional amounts
which will have not been paid or distributed by the Corporation to or for the
benefit of a Participant pursuant to this Plan could have been so paid or
distributed ("Underpayment"), in each case, consistent with the calculation of
the Reduced Amount hereunder. In the event that Accounting Firm, based either
upon the assertion of a deficiency by the Internal Revenue Service against the
Corporation or the Participant which Accounting Firm believes has a high
probability of success determines that an Overpayment has been made, any such
benefit of an Participant shall be treated for all purposes as a loan to the
Participant which the Participant shall repay to the Corporation together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that no such loan shall be deemed to have been
made and no amount shall be payable by a Participant to the Corporation if and
to the extent such deemed loan and payment would not either reduce the amount
on which the Participant is subject to tax under Section 1 and Section 4999 of
the Code or generate a refund of such taxes. In the event that Accounting
Firm, based upon controlling precedent or substantial authority, determines
that an Underpayment has occurred, any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Participant together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code.

11. Termination and Amendment of this Plan. The Board shall have
--------------------------------------
power at any time, in its discretion, to amend, abandon or terminate this
Plan, in whole or in part; except that no amendment, abandonment or
------
termination shall impair or abridge the obligations of the Corporation under
any Agreements previously entered into pursuant to this Plan.

12. Effective Date. This amended and restated Plan shall become
--------------
effective on December 10, 1998.

Exhibit No. (10)k
KIMBERLY-CLARK CORPORATION
RETIREMENT CONTRIBUTION EXCESS BENEFIT PROGRAM
----------------------------------------------

AMENDED AND RESTATED EFFECTIVE AUGUST 19, 1998

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.

5.2 K-C Aviation Benefit. Notwithstanding any other provision of the
--------------------
Plan, a Participant shall be fully vested in his Individual Account as of the
date on which he ceases to be an Eligible Employee under the Program, if such
Participant meets all of the following conditions:

(a) immediately prior to the Closing Date, as defined in the Agreement of
Purchase and Sale dated as of July 23, 1998 by and between the Corporation and
Gulfstream Aerospace Corporation (the "Agreement"), he must have been an
Employee employed by the Corporation or K-C Aviation Inc.; and

(b) as of the Closing Date, as defined in the Agreement, he must have
ceased to be an Eligible Employee solely on account of the sale of the stock
of K-C Aviation Inc. pursuant to the Agreement, and he must either (i) be
employed by the Buyer, as defined in the Agreement, immediately after he
ceases to be an Eligible Employee hereunder, or (ii) have been on a long-term
disability leave of absence from K-C Aviation Inc. as of the Closing Date, as
defined in the Agreement.

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.

Exhibit No. (12)

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

<TABLE>

Year Ended December 31
----------------------------------------------
1998(a) 1997(b) 1996 1995(c) 1994
- -------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>

Consolidated Companies
- ------------------------------------
Income before income taxes $ 1,626.1 $1,187.5 $2,002.3 $104.4 $1,147.9
Interest expense 198.7 164.8 186.7 245.5 270.5
Interest factor in rent expense 52.3 49.8 45.7 36.1 41.9
Amortization of capitalized interest 9.4 9.0 8.6 9.7 9.2

Equity Affiliates
- ------------------------------------
Share of 50%-owned:
Income before income taxes 47.6 51.2 49.3 40.6 48.0
Interest expense 9.9 7.1 9.5 18.5 15.3
Interest factor in rent expense 1.2 .7 .7 .8 .7
Amortization of capitalized interest .5 .6 .7 .7 .6
Distributed income of less than
50%-owned 98.1 62.5 48.4 25.1 41.4
-------- -------- -------- ------ --------

Earnings $ 2,043.8 $1,533.2 $2,351.9 $481.4 $1,575.5
======== ======== ======== ====== ========

Consolidated Companies
- ------------------------------------
Interest expense $ 198.7 $164.8 $186.7 $245.5 $270.5
Capitalized interest 12.4 17.0 13.9 8.8 20.6
Interest factor in rent expense 52.3 49.8 45.7 36.1 41.9

Equity Affiliates
- ------------------------------------
Share of 50%-owned:
Interest and capitalized interest 10.0 7.5 9.5 18.9 15.4
Interest factor in rent expense 1.2 .7 .7 .8 .7
-------- -------- -------- ------ --------

Fixed charges $ 274.6 $239.8 $256.5 $310.1 $349.1
======== ======== ======== ====== ========

Ratio of earnings to fixed charges 7.44 6.39 9.17 1.55 4.51
======== ======== ======== ====== ========

</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 Company 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) Income before income taxes for consolidated companies and the ratio of
earnings to fixed charges include pretax charges of $108.8 million for the
1998 Charge, $95.6 million for the write-down of certain intangible and other
assets and $123.2 million for the charge for facility consolidations.
Excluding these charges, the ratio of earnings to fixed charges was 8.64.

(b) Income before income taxes for consolidated companies and the ratio of
earnings to fixed charges include a pretax charge of $701.2 million for the
1997 Charge. Excluding the 1997 Charge, the ratio of earnings to fixed
charges was 9.32.

(c) Income before income taxes for consolidated companies and the ratio of
earnings to fixed charges include $1,440.0 million for restructuring and other
unusual charges. Excluding these charges, the ratio of earnings to fixed
charges was 6.20.

<PAGE>
Exhibit No. (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.

The Corporation is organized into three global business segments, each of
which is headed by a group president who reports to the chief executive
officer. Each of these three group presidents is responsible for development
of global strategies to grow the Corporation's worldwide tissue, personal
care, and health care and other businesses. They are responsible for
developing and managing global plans for branding and product positioning,
cost reductions, technology and research and development programs, and
capacity and capital investment for their respective businesses. Each
business segment is managed separately in view of the substantially different
product lines each manufactures and markets.

The Corporation adopted Statement of Financial Accounting Standards
("SFAS") 131, Disclosures about Segments of an Enterprise and Related
Information, in the fourth quarter of 1998. This discussion and analysis has
been prepared on the basis of these global business segments. Prior year
information has been reclassified to the current year basis of presentation.
The major products manufactured and marketed by each of the Corporation's
business segments are as follows:

- - Tissue - facial and bathroom tissue, and paper towels and wipers for
household and away-from-home use; wet wipes; printing, premium business and
correspondence papers; and related products.

- - Personal Care - disposable diapers, training and youth pants; feminine
and incontinence care products; and related products.

- - Health Care and Other - health care products such as surgical packs and
gowns, sterilization wraps and disposable face masks; specialty and technical
papers and related products; and other products.

BUSINESS IMPROVEMENT AND OTHER PROGRAMS

A number of actions have been taken in recent years to address the
Corporation's ongoing business competitiveness by improving its operating
efficiency and cost structure.

Facility Consolidations

In the fourth quarter of 1998, the Corporation recorded a charge for
facility consolidations of $123.2 million to, among other things, further
align tissue manufacturing capacity with demand in Europe, to close a diaper
manufacturing facility in Canada, shut down and dispose of a tissue
machine in Thailand and write down certain excess feminine
care production equipment in North America. Included in the charge was
$79.6 million for the write-down of tissue manufacturing assets in
Europe and the 1999 closure of a diaper facility in Canada. Because
the diaper facility will be closed rather than sold, the entire book value of
the facility was written off. Employee severance costs of $12.3 million also
were recorded for approximately 450 employees who were notified by December
31, 1998 of the Corporation's plans to terminate their employment. Asset
write-downs to estimated fair value and inventory losses associated with the
facility closing and capacity alignment and the tissue machine shut-down
totaling $31.3 million also were recorded. These costs, which were charged to
cost of products sold, reduced 1998 operating profit $123.2 million, and net
income $86.1 million, or $.16 per share. Approximately 57 percent of the
pretax charge relates to the Tissue segment and 43 percent relates to the
Personal Care segment. The employee severance costs and other cash costs of
closures and consolidations of $11.8 million are included in other accrued
liabilities at December 31, 1998. Management estimates that annual pretax
savings from the facility consolidations will increase to approximately $50
million annually in the year 2001 and that these reduced costs will be
comprised of approximately 48 percent for salaries, wages and employee
benefits, 9 percent for depreciation expense and 43 percent for other cash
costs related to operations.

Write-down of Certain Intangible and Other Assets

During the third quarter of 1998, the Corporation completed a periodic review
of its intangible assets, such as trademarks and goodwill, to determine if
they were impaired. Impairment is deemed to exist whenever the undiscounted
estimated future cash flows are less than the carrying amount of such
intangible assets. Impairment losses are measured by the difference between
the asset carrying amount and the present value of the estimated future cash
flows. As a result of the review, the carrying amounts of trademarks and
unamortized goodwill of certain European businesses were determined to be
impaired and were written down. These write-downs, which were charged to
general expense, reduced 1998 operating profit $70.2 million and net income
$57.1 million, or $.10 per share.

During the third quarter of 1998, the Corporation completed a technology
review of personal computers ("PCs") which demonstrated that (i) PCs have
reduced economic lives as a consequence of rapid technological improvements,
(ii) more sophisticated software applications require more powerful PCs, and
(iii) most of the Corporation's PCs acquired prior to 1997 were
technologically obsolete. Consequently, the Corporation concluded that its
previous practice of capitalizing the costs of PCs and depreciating them over
five years was no longer appropriate. Accordingly, the Corporation began
depreciating the cost of all new PCs acquired after September 30, 1998 over
two years. In addition, in recognition of the change in estimated useful
lives of its existing PC assets, the remaining book value of all PCs acquired
prior to 1997 was written down. This change in estimate, along with $8.8
million of charges for write-downs of other assets and a loss on a pulp
contract, reduced 1998 operating profit $25.4 million and net income $16.5
million, or $.03 per share. Of the $25.4 million, $11.3 million was charged
to cost of products sold and $14.1 million was charged to general expense.

Approximately 15 percent of the write-down of certain intangible and
other assets described above relates to the Tissue segment, 84 percent relates
to the Personal Care segment and 1 percent relates to the Health Care and
Other segment.

Announced Plan

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 conjunction with the Announced
Plan, the Corporation recorded a pretax charge of $701.2 million in 1997
("1997 Charge") and recorded the remaining $108.8 million in 1998 ("1998
Charge") at the time these costs became accruable under appropriate accounting
principles.

<PAGE>
The Announced Plan is expected to reduce the Corporation's operating
costs by approximately $220 million annually in the year 2000. In order to
achieve these anticipated benefits, the Announced Plan required:

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

- - A workforce reduction of approximately 5,000 employees.

- - 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.

- - The elimination of the Corporation's facilities and capacity which
became excessive as a result of the combination of the Corporation's health
care operations with those of Tecnol Medical Products, Inc. ("Tecnol").

- - The write-down of certain assets that became obsolete in 1997 due to
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.

- - Contract terminations, cash costs for mill closures and other
obligations.

The following summarizes the major actions relating to facility disposals
and workforce reductions that were accomplished through December 31, 1998.

- - Of the 18 manufacturing facilities, 12 have been either sold, closed or
downsized through December 31, 1998. Five facilities will be disposed of by
the third quarter of 1999, the largest of which is a tissue manufacturing
facility in Gennep, Netherlands, which will be closed by the end of the second
quarter of 1999. Plans to close a tissue manufacturing facility in North
America were canceled as discussed in the "Adjustments and Reclassifications"
section below.

In addition to the original 18 facilities, other manufacturing facilities
were identified for closure or consolidation with other operations under the
program set forth in the Announced Plan. Two facilities in Nogales, Mexico
were consolidated with other operations in 1998; a facility in China will be
closed in the second quarter of 1999; and a yet to be announced tissue
manufacturing facility will be closed in 2000. This latter closure will
increase the elimination of high-cost production capacity to 230,000 annual
metric tons.

- - A total workforce reduction of 5,000 employees was projected under the
Announced Plan. Through December 31, 1998, a total workforce reduction of
3,700 has been realized. Approximately 1,100 additional employees will be
terminated in 1999. The actual cost of the workforce reduction approximates
the cost that was estimated in the Announced Plan.

<PAGE>
The major categories of the 1998 and 1997 Charges and their subsequent
utilization are summarized below:
<TABLE>
<CAPTION>

Amounts Charged Amounts Amounts to
to Earnings Utilized be Utilized
---------------- Reallocations Through Beyond
(Millions of dollars) in 1998 in 1997 in 1998 1998 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Costs of workforce reduction . . . $ 64.4 $ 57.3 $ (2.5) $(119.2) $ -

Losses on facility disposals . . . - 165.0 9.3 (162.5) 11.8

Write-downs of property, plant and
equipment and other assets . . . 13.5 333.4 (17.6) (214.9) 114.4

Asset impairments. . . . . . . . . 4.5 82.6 (15.3) (71.8) -

Contract terminations, cash
costs for mill closures and
other obligations. . . . . . . . 26.4 62.9 26.1 (64.5) 50.9
------ ------ ------- -------- ------

$108.8 $701.2 $ - $(632.9) $177.1
====== ====== ======= ======== ======

</TABLE>

1998 Charge

The 1998 Charge reduced operating profit, net income and net income per
share by $108.8 million, $86.9 million and $.16, respectively. Of the 1998
Charge, $7.3 million relates to the write-down of certain assets and
inventories and has been charged to cost of products sold, and $101.5 million
has been recorded as restructuring and other unusual charges in the
Consolidated Income Statement. Approximately 76 percent of the 1998 Charge
relates to the Tissue segment, 22 percent relates to the Personal Care segment
and 2 percent relates to the Health Care and Other segment. Approximately
25 percent of the 1998 Charge relates to North American operations and 72
percent relates to European operations.

The principal costs included in the 1998 Charge are as follows:

- - The costs of workforce reduction are primarily composed of severance
payments and other employee-related costs for 1,800 employees at facilities
which have been or are to be sold or closed and other operations that are being
downsized. The employees involved were notified by December 31, 1998 of the
Corporation's plans to terminate their employment, along with their
termination arrangements.

- - 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 and the elimination of excess
manufacturing capacity.

- - Contract terminations, cash costs for mill closures and other
obligations primarily represent the costs of certain lease obligations.

<PAGE>
1997 Charge

The 1997 Charge reduced operating profit, net income and net income per
share by $701.2 million, $503.1 million and $.91, respectively. Of the 1997
Charge, $220.1 million related to the write-down of certain assets and
inventories and was charged to cost of products sold, and $481.1 million was
recorded as restructuring and other unusual charges in the Consolidated Income
Statement. Approximately 71 percent of the 1997 Charge related to the Tissue
segment, 24 percent related to the Personal Care segment and 3 percent related
to the Health Care and Other segment. Approximately 59 percent of the 1997
Charge related to North American operations and 27 percent related to
European operations.

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

- - The costs of workforce reduction were primarily composed of severance
payments and other employee-related costs for 1,900 employees at facilities
which had been or were to be sold or closed and other operations that were
being downsized. The employees involved were notified by December 31, 1997 of
the Corporation's plans to terminate their employment, along with their
termination arrangements.

- - Losses on facility disposals included the write-down to estimated net
realizable value of facilities which had been or were to be disposed of and
related costs of disposition. Three facilities represent nearly all of the
charge. Because these facilities were planned to be closed, rather than sold,
the entire book value of each facility was written off. A tissue
manufacturing facility in Orleans, France was originally planned to be closed
but was sold in 1998 as discussed in the "Adjustments and Reclassifications"
section below. A tissue manufacturing facility in Winslow, Maine was closed
in April 1998. Part of a tissue manufacturing and converting facility in
Marinette, Wisconsin was closed in December 1997.

- - Write-down of property, plant and equipment and other assets represented
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-down of the net book value of assets that
became obsolete due to enacted U.S. environmental air and water emission
rules; and the elimination of the Corporation's existing facilities and
capacity which became excessive as a result of the Tecnol acquisition.

- - Asset impairments represented charges for manufacturing facilities where
the future cash flows from operations and the sale or closure were estimated
to be insufficient to cover the carrying amounts of such facilities.
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.

The income tax benefits of the 1998 and 1997 Charges are estimated at
$21.5 million and $190.2 million, respectively, or 19.8 percent and 27.1
percent of the pretax 1998 and 1997 Charges, respectively. These benefits
are lower than the U.S. statutory income tax rate primarily because no tax
benefits were recorded for certain costs related to operations in countries
where the Corporation has income tax loss carryforwards and realization of
tax benefits is not assured.

The 1997 Charge was based on management's Announced Plan to restructure
the Corporation's worldwide operations and information available at the time
the decision was made to undertake the required actions. As discussed below,
based on subsequent events, certain aspects of the actions contemplated in the
1997 Charge were revised. In addition, the costs of other actions under the
Announced Plan were recorded in 1998. Although certain specific actions
originally included in the Announced Plan have been modified, the overall
Announced Plan is expected to be accomplished at a total cost approximating
the original estimate of $810.0 million.

<PAGE>
Adjustments and Reclassifications

The "Reallocations in 1998" column in the preceding summary reflects the
following adjustments and reclassifications:

- - Included in the 1997 Charge were estimated losses for the planned
closure of a tissue manufacturing facility at Orleans, France and other
related costs. During 1998, the closure plans were abandoned and the facility
was sold. As a result, the Corporation reallocated $17.5 million of the
reserves for facility disposals to requirements under other qualifying
programs identified in the Announced Plan.

- - Management canceled its plans to close a tissue facility in North
America for which it had established an impairment reserve of $15.3 million as
part of the 1997 Charge. As a result of the change in plans, which was caused
by the completion of an internal analysis that demonstrated the viability of a
business that previously was not profitable, and by structural changes in
operations, the Corporation reallocated the $15.3 million of the reserve for
asset impairments to requirements under other qualifying programs identified
in the Announced Plan.

- - Because of the decision to close the Canadian diaper facility which is
part of the $123.2 million fourth quarter charge for facility consolidations,
approximately $16.6 million of reserves for the write-down of excess diaper
assets was determined to be unnecessary and these diaper assets were not
removed from service. The fourth quarter 1998 facility consolidations charge
includes a write-off of the Canadian diaper facility to be closed in 1999,
including the related costs of closure. The decision to close this facility
was a result of the substantial increase in the Corporation's diaper
productivity in North America in the last three years. As a result of this
productivity increase and the effects of expected future productivity gains,
manufacturing capacity was projected to exceed demand. This closure will
balance capacity with demand. Because the facility is expected to be closed
rather than sold, the entire book value of the facility was written off. As a
result of the cancellation of the diaper asset write-downs provided for in the
1997 Charge, the Corporation reallocated the $16.6 million reserve for
write-downs to requirements under other qualifying programs identified in the
Announced Plan.

- - Included in the 1997 Charge was approximately $29.7 million for the
write-down and removal of certain assets at the Corporation's pulp production
operation in Mobile, Alabama. In 1997, the U.S. Government enacted new
environmental air and water emission rules that required reduced emission
levels of certain chemical compounds from the Corporation's pulp production
facilities. These rules would have required the Corporation to spend more
than $250 million to achieve the new emission levels at its Mobile pulp mill.
S.D. Warren Company, a producer of printing and publishing papers, currently
purchases approximately one-third of the pulp mill's output. On May 4, 1998,
S.D. Warren and the Corporation announced an agreement to terminate their pulp
supply contract in September 1999. As a result of the cancellation of the
pulp supply contract and the cost of implementing the new emission rules, on
May 5, 1998, the Corporation announced it would shut down its Mobile pulp mill
on September 1, 1999, sell the associated woodlands and related operations
("Southeast Timberlands") and retain its pulp facility in New Glasgow, Nova
Scotia. On January 5, 1999, the Corporation announced it had agreed to sell
the Southeast Timberlands to an affiliate of a New York-based investment firm.
As a result of these changes in plans, $10.6 million of the reserve for
write-downs was reallocated to requirements under other qualifying programs
identified in the Announced Plan.

- - In 1998, management committed to a plan to close a tissue manufacturing
facility in order to continue to align capacity with demand. The facility,
the name of which has not yet been announced publicly, will be closed by the
end of 2000. Since this facility will be disposed of, its carrying amount was
reduced to zero by reallocation of $26.8 million to the reserve for losses on
facility disposals.

- - Also in 1998, management reallocated reserves to cover other qualifying
programs that had either been underestimated in 1997 or were extensions of
such programs. None of these reallocations was individually material. These
other reallocations changed the individual categories of the reserve as
follows:

- - Costs of workforce reduction decreased $2.5 million.

- - Write-down of property, plant and equipment and other assets increased
$9.6 million.

- - Contract terminations, cash costs for mill closures and other
obligations increased $26.1 million.

During 1998, certain programs were completed at a total cost of $2.5
million less than originally estimated in 1997, and such amount was returned
to earnings in the Consolidated Income Statement. Of this amount, $2.0
million was reflected in the operating profit of the Health Care and Other
segment and $.5 million was unallocated.

At December 31, 1998, there are no reserves remaining to be utilized that
are not specifically identified with a qualifying program under the Announced
Plan.

Other Information

The restructuring activities involved in the Announced Plan did not
affect the Corporation's business operations to any significant extent during
the period that the restructuring was being implemented. The principal
benefits of the Announced Plan stem from facility consolidations, which has
resulted in lower production costs and simplified manufacturing and sourcing
strategies. Management estimates that the Announced Plan will reduce
operating costs by approximately $220 million annually in the year 2000. As
of December 31, 1998, management estimates that the Announced Plan has
resulted in reduced annual operating costs of approximately $145 million and
that it will result in additional annual operating cost savings of $50 million
in 1999. Management estimates that the annual reduced costs of $220 million
will be comprised of approximately 75 percent for salaries, wages and employee
benefits, 14 percent for depreciation expense and 11 percent for other cash
costs such as lease and contract payments.

Set forth below is a summary of the types and amounts of charges that
were recognized as accrued liabilities for the Announced Plan together with
cash payments made against such accruals for the two years ending December 31,
1998.
<TABLE>
<CAPTION>

Charges(a) Charges(a)
in Balance in Balance
(Millions of dollars) 1997 Payments 12/31/97 1998 Payments Other(b) 12/31/98
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Workforce severance . . . . . $ 57.6 $ (5.1) $ 52.5 $43.1 $(47.6) $ - $ 48.0
Facility closure costs. . . . 12.6 (3.3) 9.3 - (4.8) - 4.5
Asset removal costs . . . . . 24.0 (.1) 23.9 .8 (13.2) - 11.5
Environmental costs and lease
and contract terminations . 37.9 (.3) 37.6 22.9 (22.0) 5.0 43.5
Other costs . . . . . . . . . 71.2 (2.7) 68.5 23.2 (4.1) (50.9) 36.7
------ ------- ------ ----- ------- ------- ------

$203.3 $(11.5) $191.8 $90.0 $(91.7) $(45.9) $144.2
====== ======= ====== ===== ======= ======= ======
<FN>

(a) The charges in 1997 and 1998 were included in the restructuring and other
unusual charges in the Consolidated Income Statement.

(b) Includes reclassification of $5.0 million from other accrued liabilities, and
reclassification of $48.4 million from accrued liabilities to other assets for noncash
items, and $2.5 million that was returned to earnings as discussed above.
</TABLE>

Pursuant to the Corporation's accounting policies for business
improvement programs, certain amounts are considered to be utilized prior to
their being paid in cash. For example, charges for severance payments are
considered to be utilized when the liability for such payments becomes fixed
and identified with individual employees. Such amounts remain in accrued
liabilities until paid in cash in accordance with the severance payment
schedules. Likewise, lease termination charges and other cash obligations are
considered to be utilized when they become fixed obligations, but such
liabilities remain in accrued liabilities until paid in accordance with the
contractual arrangements. Included in accrued liabilities for the Announced
Plan are cash payment obligations for severance payments, lease payments and
other cash obligations, totaling $81.5 million which, although utilized,
remain to be paid in accordance with the individual arrangements. At December
31, 1998, the Announced Plan had $177.1 million remaining to be utilized, of
which $114.4 million represents noncash items for the write-down of property,
plant and equipment and other assets.

During 1997 and 1998, in accordance with SFAS 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
depreciation expense was suspended on facilities included in the Announced
Plan that were held for disposal. Depreciation for these facilities would
have been $7.5 million in 1998 and $3.3 million in 1997.

In addition, during 1997 and 1998, in accordance with SFAS 121,
depreciation was suspended on certain pulp producing facilities that were held
for disposal or disposed of. Depreciation for these facilities would have
been $12.6 million in 1998 and $47.3 million in 1997. The reduction in
suspended depreciation in 1998 versus 1997 was a result of the sale of a
noncore pulp and newsprint facility located in Coosa Pines, Alabama ("Coosa")
in March 1997 and the reclassification of the New Glasgow, Nova Scotia and the
Terrace Bay, Ontario pulp manufacturing facilities from assets held for sale
to property during 1998.

Determination of the individual results of operations of the above
facilities during the depreciation suspension period is not meaningful because
of the integration of the operations of these facilities into the overall
consolidated operating results.

1995 Restructuring

In connection with the Corporation's merger with Scott Paper Company
("Scott"), the Corporation recorded a $1,440.0 million pretax charge in 1995
for restructuring the combined organizations and for other unusual items
related to the merger ("1995 Charge"). The following presents the total 1995
Charge and the utilization of the charge for the three years ending December
31, 1998.

(Millions of dollars) Amount
--------------------------------------------------------------

1995 Charge $1,440.0
Amount utilized in 1996 (1,016.9)
Amount utilized in 1997 (351.7)
Amount utilized in 1998 (52.6)
-----------

Amount not utilized at December 31, 1998 $ 18.8
==========

<PAGE>
During 1996, 1997 and 1998, as part of management's process to monitor
completion of the programs related to the 1995 Charge, certain amounts were
identified as being in excess of the current estimate to complete the overall
plan for the merger and restructuring. The differences between the then
current estimate and the remaining accrual balance for the plan were returned
to earnings as credits to cost of products sold in the Consolidated Income
Statement as follows: 1996, $65.0 million; 1997, $57.7 million; and 1998,
$10.3 million. These amounts, which were not material to consolidated
operating profit in any of the three years, were included in the operating
profit of the Tissue segment.

The Corporation is in the process of completing a final review of all of
the approximately 350 programs that comprised the 1995 Charge to ensure that
each of the programs has been completed. At the conclusion of this review,
the $18.8 million not utilized at December 31, 1998 will be reallocated to
requirements under qualifying programs, if appropriate, or will be returned
to earnings in the first quarter of 1999.

Set forth below is a summary of the types and amounts of charges that
were recognized as accrued liabilities for the 1995 Charge together with cash
payments made against such accruals for the two years ending December 31,
1998.
<TABLE>
<CAPTION>

Balance Balance Balance
(Millions of dollars) 12/31/96 Payments Other(a) 12/31/97 Payments Other(a) 12/31/98
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Workforce severance . . . . . . . $ 88.7 $ (59.8) $(15.1) $13.8 $ (4.6) $(7.9) $ 1.3
Asset removal costs . . . . . . . 22.2 (13.7) - 8.5 (8.5) - -
Environmental costs and lease and
contract terminations . . . . . 87.0 (31.3) (24.3) 31.4 (9.9) (6.2) 15.3
Other costs . . . . . . . . . . . 141.8 (77.2) (41.8) 22.8 (12.0) 8.2 19.0
------ -------- ------- ----- ------- ------ -----

$339.7 $(182.0) $(81.2) $76.5 $(35.0) $(5.9) $35.6
====== ======== ======= ===== ======= ====== =====
<FN>

(a) Reclassifications from accrued liabilities to other assets, property, plant and
equipment and inventory for noncash items, and the credits included in cost of products
sold as discussed above.
</TABLE>

The 1995 merger with Scott and the related restructuring of the combined
operations of the two companies was successful. Synergies were achieved and
the Corporation is now a global consumer products company and the world's
largest tissue manufacturing company. The Corporation has a number one or two
market position in many of the markets in which it competes. As expected in
any large merger and significant restructuring to combine two global
organizations, there were temporary problems that arose, but which were
addressed and resolved in the period following the merger. In the U.S., the
away-from-home portion of the Corporation's tissue business experienced
temporarily lower sales volumes and excess production capacity following
implementation of a new pricing structure. In the European tissue business,
the merger caused temporary disruptions of operations, lower efficiency and
customer service and outsourcing of certain finished goods production, during
periods when assets were being relocated and started-up.

At the time of the Scott merger, management estimated that the 1995
Charge would reduce annual operating costs by approximately $250 million in
1996, $400 million in 1997 and $500 million in 1998. Actual savings achieved
in 1996 exceeded the $250 million target. In 1996, management forecasted that
the expected savings to be achieved in 1997 were in line with the original
target of $400 million. The 1997 forecast of cost savings of approximately
$400 million was comprised of approximately 40 percent from lower salaries,
wages and employee benefits from reduced employee headcount,
and the balance of the savings was attributable to other cash and noncash
savings in affected operations. The Corporation did not monitor savings after
1996 because it was not practicable or cost effective to do so.

ANALYSIS OF CONSOLIDATED NET SALES - THREE YEARS ENDED DECEMBER 31, 1998

By Business Segment
Net Sales
----------------------------------
(Millions of dollars) 1998 1997 1996
- -----------------------------------------------------------

<S> <C> <C> <C>
Tissue . . . . . . . . . $ 6,706.2 $ 7,182.7 $ 8,183.6
Personal Care. . . . . . 4,577.8 4,493.8 4,091.8
Health Care and Other. . 1,047.1 908.0 926.7
Intersegment sales - net (33.3) (37.9) (53.0)
---------- ---------- ----------

Consolidated . . . . . . $12,297.8 $12,546.6 $13,149.1
========== ========== ==========
</TABLE>

By Geographic Area
Net Sales
-----------------------------------
(Millions of dollars) 1998 1997 1996
- -----------------------------------------------------------------

<S> <C> <C> <C>
United States. . . . . . . . . $ 8,018.2 $ 7,878.7 $ 8,142.5
Canada . . . . . . . . . . . . 785.1 1,052.5 1,311.0
Intergeographic sales - net. . (409.1) (397.3) (451.7)
---------- ---------- ----------

Total North America. . . . . 8,394.2 8,533.9 9,001.8

Europe . . . . . . . . . . . . 2,471.2 2,548.1 2,881.8
Asia, Latin America and Africa 1,688.4 1,772.2 1,603.5
Intergeographic sales - net. . (256.0) (307.6) (338.0)
---------- ---------- ----------

Consolidated . . . . . . . . . $12,297.8 $12,546.6 $13,149.1
========== ========== ==========
</TABLE>

Commentary:

1998 versus 1997
- ----------------

Consolidated net sales were 2.0 percent lower than in 1997. In 1997, the
Corporation divested Coosa and sold its 50.1 percent interest in Scott
Paper Limited ("SPL"). In 1998, the Corporation sold
its subsidiary, K-C Aviation Inc. ("KCA"). Excluding the
revenues from these divested businesses for both years, consolidated
net sales remained essentially even. Sales volumes, however,
increased more than 2 percent and selling prices were nearly 2 percent higher,
primarily due to improved pricing for consumer tissue products in
the United States. However, changes in foreign currency exchange
rates, primarily in Asia, reduced consolidated net sales slightly more than
3 percent. Although the preceding tables include the divested businesses,
the following net sales commentary excludes their results in order to
facilitate a more meaningful discussion.

- - Worldwide net sales for tissue products declined slightly more than 3
percent primarily due to changes in currency exchange rates in Asia. Sales
volumes declined approximately 1 percent as sales volume increases in Latin
America and for wet wipes products, primarily in North America, were offset by
lower sales volumes in Europe and Asia and lower consumer towel volume in
North America. The decline in sales volumes, however, was more than offset by
an increase of nearly 2 percent in selling prices.

<PAGE>
- - Worldwide net sales of personal care products increased nearly 2 percent.
Sales volumes grew by nearly 5 percent and selling prices increased by about 2
percent; however, changes in foreign currency exchange rates reduced net sales
by approximately 4 percent. Training and youth pants in North America and
sales volume growth in Latin America were the primary factors contributing to
the overall sales volume increase. These increases more than offset lower
diaper sales volumes in North America and Europe which were attributable to
the transition to larger size product packaging, the introduction of unisex
product and increased competition.

- - Net sales for health care and other products increased more than 23
percent due to sales volume growth in health care products, driven, in large
part, by the acquisition of Tecnol in December 1997.

1997 versus 1996
- ----------------

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 Corporation's merger with Scott.
In 1997, the Corporation sold Coosa and its interest in SPL. Excluding
revenues from these businesses and KCA in both years, consolidated net sales
remained essentially even. Sales volumes, however, increased approximately 5
percent. Selling prices were nearly 2 percent lower than in 1996, primarily
due to the lower selling prices for tissue products worldwide. Changes in
currency exchange rates reduced consolidated sales more than 2 percent in
1997. Although the preceding tables include the divested businesses, in order
to facilitate a meaningful discussion, such results have been excluded from
the following sales commentary.

- - Worldwide net sales for the tissue segment decreased approximately 5
percent primarily due to lower selling prices and changes in currency exchange
rates in Europe and Asia. Sales volumes increased about 2 percent, as higher
sales volumes in the U.S., Latin America and Asia more than offset lower
volumes in Europe.

- - Worldwide net sales for personal care products increased slightly more
than 10 percent and sales volumes were more than 14 percent higher. Nearly
all of the businesses in this segment participated in the increased sales
volumes, with the primary contributors being training and youth pants and
incontinence care products in North America and disposable diapers in Europe,
Latin America and Asia. Diaper volume resulting from acquisitions in France,
Spain, Portugal and Brazil accounted for about 35 percent of the sales volume
increase in personal care products.

- - Net sales for health care and other products increased approximately 6
percent primarily due to higher sales volumes in health care products.

For purposes of this Management's Discussion and Analysis, and in order
to facilitate a meaningful discussion of the ongoing operations of the
Corporation, the charges described in the "Business Improvement and Other
Programs" section are considered to be unusual items ("Unusual Items") and
have been excluded from operating profit in the "Excluding Unusual Items"
columns in the following Consolidated Operating Profit tables.

ANALYSIS OF CONSOLIDATED OPERATING PROFIT - THREE YEARS ENDED DECEMBER 31,
1998

By Business Segment

1998 1997
------------------- ------------------
AS EXCLUDING As Excluding
(Millions of dollars) REPORTED UNUSUAL ITEMS Reported Unusual Items 1996
- -------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Tissue. . . . . . . . $ 968.9 $1,136.1 $ 637.1 $1,136.5 $1,346.5
Personal Care . . . . 620.6 778.3 636.6 806.1 666.7
Health Care and Other 188.6 190.6 136.3 160.3 138.0
Unallocated - net . . (102.0) (101.3) (106.8) (98.5) (97.5)
--------- --------- --------- --------- ---------

Consolidated. . . . . $1,676.1 $2,003.7 $1,303.2 $2,004.4 $2,053.7
========= ========= ========= ========= =========
</TABLE>

By Geographic Area

1998 1997
--------------------------- ----------------------------
AS EXCLUDING As Excluding
(Millions of dollars) REPORTED UNUSUAL ITEMS Reported Unusual Items 1996
- ------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
United States. . . . . . . . . $1,573.4 $1,673.4 $1,206.2 $1,609.9 $1,592.3
Canada . . . . . . . . . . . . 96.5 104.8 146.4 154.6 138.4
Europe . . . . . . . . . . . . (81.4) 125.5 (60.0) 129.8 220.4
Asia, Latin America and Africa 189.6 201.3 117.4 208.6 200.1
Unallocated - net. . . . . . . (102.0) (101.3) (106.8) (98.5) (97.5)
--------- --------- --------- --------- ---------

Consolidated . . . . . . . . . $1,676.1 $2,003.7 $1,303.2 $2,004.4 $2,053.7
========= ========= ========= ========= =========

<FN>
Note: Unallocated - net consists of expenses not associated with the
business segments or geographic areas.
</TABLE>

Commentary:

1998 versus 1997
- ----------------

Excluding the Unusual Items, operating profit was essentially even, but
increased to 16.3 percent in 1998 from 16.0 percent in 1997 as a percentage of
net sales. Excluding the divested businesses and the Unusual Items for both
years, operating profit increased approximately 2 percent. The increase in
operating profit was due to the price and sales volume increases partially
offset by higher spending for advertising and promotion, the negative effect
of changes in foreign currency exchange rates and additional goodwill
amortization. The following operating profit commentary excludes the Unusual
Items and the results of divested businesses in both years.

- - Tissue operating profit increased nearly 3 percent principally due to
the selling price increases. Restructuring and other cost savings were
partially offset by changes in currency exchange rates.

- - Operating profit for personal care declined slightly more than 3
percent, as increased advertising and promotion, and product improvement
costs, primarily in North America, and changes in currency exchange rates more
than offset the gains in selling prices and sales volumes.

- - Operating profit for health care and other products increased
approximately 21 percent due, in large part, to the acquisition of Tecnol,
partially offset by increased goodwill amortization.

- - Changes in currency exchange rates reduced consolidated operating profit
by more than 2 percent.

1997 versus 1996
- ----------------

Excluding the Unusual Items, 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 Unusual Items, operating profit increased approximately 2 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 away-from-home
portion of the Corporation's North American tissue business. The following
operating profit commentary excludes the Unusual Items in 1997 and the results
of divested businesses in both years.

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

- - The transitional effects of the strategic changes in the tissue business
had a negative impact on operating profit of approximately $75 million in
1997.

- - 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.

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

- - Changes in currency exchange rates reduced consolidated operating profit
by approximately 1 percent in 1997.

ADDITIONAL INCOME STATEMENT COMMENTARY

1998 versus 1997
- ----------------

- - Interest expense increased primarily due to higher average debt levels.

- - Excluding the extraordinary gains and the cumulative effect of an
accounting change, the Corporation's effective income tax rate was 34.6
percent in 1998 compared with 36.5 percent in 1997. Furthermore, excluding
the charges related to the Announced Plan from both years, the Corporation's
effective income tax rate was 33.6 percent in 1998 compared with 33.0 percent
in 1997.

- - Other income in 1998 includes a gain on the sale of KCA equal to $.14
per share.

- - Other income in 1997 includes a gain on the sale of the Corporation's
interest in Ssangyong Paper Co., Ltd. ("Ssangyong"), of Korea, equal to $.03
per share.

- - The Corporation's 1998 share of net income of equity companies includes
a charge equal to $.02 per share related to the change in the value of the
Mexican peso. In 1997, a 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") to meet Mexican regulatory requirements in connection with
KCM's merger with Scott's former Mexican affiliate, was included in the
Corporation's share of net income of equity companies. Also included in the
Corporation's share of 1997 net income of equity companies was $2.2 million of
the 1997 Charge. Excluding these items in both years, the Corporation's share
of net income of equity companies increased 2.2 percent.

- - For 1997, minority owners' share of subsidiaries' net income includes
$10.1 million attributable to other owners' share of the 1997 Charge. Also
included is $8.7 million of other owners' share of the net income of SPL.
Excluding these items, minority owners' share of subsidiaries' net income
decreased $4.8 million.

- - 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 were aggregated and
reported as extraordinary gains totaling $17.5 million, net of applicable
income taxes of $38.4 million. These extraordinary gains were equal to $.03
per share.

- - 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 were restated to record a pretax 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.

- - Excluding the Unusual Items in 1998 and 1997, the gains on asset
disposals in both years, the change in the value of the Mexican peso, the
cumulative effect of the accounting change in 1998, and the extraordinary
gains in 1997, earnings per share from operations increased to $2.46 from
$2.44 in 1997.

1997 versus 1996
- ----------------

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

- - Excluding the extraordinary gains, the Corporation's effective income
tax rate was 36.5 percent in 1997 compared with 35.0 percent in 1996.
Furthermore, excluding the Unusual Items, the Corporation's effective income
tax rate for 1997 was 33.0 percent. The decline in the effective rate to 33.0
percent from 35.0 percent was primarily due to additional tax planning
opportunities, some of which arose from the Scott merger.

- - Other income in 1996 includes a net pretax 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 gain of $.13 per share.

- - In 1996, a portion of the operations of KCM was restructured to, among
other things, eliminate duplicate capacity and to satisfy regulatory
requirements. The Corporation's share of KCM's after-tax restructuring charge
in 1996 was equal to $.01 per share. Excluding the previously mentioned 1997
equity company items and this 1996 item, the Corporation's share of equity
company net income declined 9.3 percent. The decline was 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 a required change to hyperinflationary
accounting for Mexican operations in 1997.

- - Excluding the previously mentioned minority owners' 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.

- - The effective income tax rate on the extraordinary gains, which are
described in the "1998 versus 1997" narrative, was higher than the normal
effective rate due to income tax loss carryforwards in Spain which precluded
the current recognition of the income tax benefit on the Miranda, Spain
impairment loss and the tax basis in SPL being substantially lower than the
carrying amount of the investment in the financial statements.

- - Excluding the Unusual Items, the gains on asset disposals in both years,
the extraordinary gains in 1997, and the Corporation's share of KCM's 1996
restructuring charge, earnings per share from operations increased to $2.44
from $2.37 in 1996.

SALES OF PRINCIPAL PRODUCTS

(Billions of dollars) 1998 1997 1996 1995
- --------------------------------------------------------

<S> <C> <C> <C> <C>
Tissue-based products $ 5.7 $ 6.1 $ 6.9 $ 6.9
Diapers . . . . . . . 2.6 2.7 2.3 2.1
All other . . . . . . 4.0 3.7 3.9 4.4
----- ----- ----- -----

Consolidated. . . . . $12.3 $12.5 $13.1 $13.4
===== ===== ===== =====
</TABLE>

- - Consolidated net sales have decreased $1.1 billion, or 8.2 percent,
since 1995 primarily due to the divestment of noncore businesses and those
businesses that were sold in connection with the Scott merger.

- - The decrease in sales from 1995 to 1996 is primarily attributable to
the loss of revenues from businesses that were divested in 1995 --
Schweitzer-Mauduit International, Inc. and Midwest Express Airlines, Inc. --
and the businesses that were sold in 1996 in connection with the Scott merger.
Excluding the net sales of these businesses in both years, consolidated net
sales increased 4.6 percent.

LIQUIDITY AND CAPITAL RESOURCES

Year Ended December 31
----------------------
(Millions of dollars) 1998 1997
- --------------------------------------------------------------

<S> <C> <C>
Cash provided by operations. . . . . . . $1,991.3 $1,406.6
Capital spending . . . . . . . . . . . . 669.5 944.3
Acquisitions of businesses . . . . . . . 342.5 82.2
Proceeds from dispositions of businesses 324.9 779.6
Ratio of net debt to capital . . . . . . 36.4% 33.5%
Pretax interest coverage - times . . . . 9.2 8.1
</TABLE>

Cash Flow Commentary:

- - Cash provided by operations increased $584.7 million. Although net
income plus net noncash charges included in net income was approximately $2.0
billion in both 1998 and 1997, the Corporation reduced its investment in
operating working capital in 1998 compared with 1997, which is the principal
reason for the increase in cash flow from operations. Major operating uses of
cash in 1998 were the cash used to reduce trade accounts payable and accrued
expenses partially offset by a reduction in accounts receivable and the timing
of income tax payments.

- - Approximately $92 million and $12 million of cash payments were charged
to the reserves related to the Announced Plan in 1998 and 1997, respectively.

- - Cash proceeds received in 1998 in connection with the sale of KCA and
other asset disposals totaled $324.9 million. 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.

- - In 1998, the Corporation purchased 19.5 million shares of its common
stock in connection with its share repurchase program at a total cost of
approximately $900 million. In October 1998, the Corporation's board of
directors authorized the repurchase of 25 million shares, of which the
remaining authority at December 31, 1998 was 21.0 million shares. 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.

Financing Commentary:

- - At December 31, 1998, total debt was $2.7 billion compared with $2.5
billion at December 31, 1997. Net debt (total debt net of cash, cash
equivalents and $220 million of long-term notes receivable) was $2.3 billion
at December 31, 1998 compared with $2.2 billion at December 31, 1997. The
Corporation's ratio of net debt to capital was 36.4 percent at December 31,
1998 compared with 33.5 percent at December 31, 1997, which is within its
target range of 30 percent to 40 percent.

- - The increase in the pretax interest coverage is due primarily to the
higher level of pretax income. Excluding the effect of the Unusual Items in
1998 and 1997, the pretax interest coverage would have been 10.3 times and
11.9 times, respectively.

- - On January 9, 1998, the Corporation issued $200 million principal amount
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.

- - On July 20, 1998, the Corporation issued $300 million principal amount
of 6 1/4% Debentures due July 15, 2018, and used the proceeds to retire
commercial paper.

- - A shelf registration statement for $200 million of debt securities is on
file with the Securities and Exchange Commission ("SEC"). The registration
provides flexibility to issue debt promptly if the Corporation's needs and
market conditions warrant. The Corporation filed a new shelf registration
statement for an additional $500 million of debt securities which as of
February 28, 1999 had not yet been declared effective by the SEC.

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

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

Other Commentary:

- - On May 5, 1998, the Corporation announced its intention to shut down its
Mobile pulp mill on September 1, 1999 and sell the Southeast Timberlands. On
January 5, 1999, the Corporation announced that it had agreed to sell the
Southeast Timberlands to an affiliate of a New York-based investment firm.
The sale, which is subject to regulatory clearances and completion of
financing, is expected to close in the first half of 1999.

- - On December 23, 1998, the Corporation announced that it had signed a
definitive agreement to acquire Ballard Medical Products ("Ballard"), a
leading maker of disposable medical devices for respiratory care,
gastroenterology and cardiology. Under the agreement, Ballard shareholders
will receive $25 for each share of Ballard common stock, payable in shares of
the Corporation's common stock. The transaction, which is valued at
approximately $764 million, remains subject to regulatory clearances and
approval by the Ballard shareholders. The transaction is expected to be
completed in April 1999 and will be accounted for as a purchase.

- - In May 1998, the Corporation purchased a 50 percent equity interest in
Klabin Tissue, S.A. (now known as Klabin Kimberly S.A.), the leading tissue
manufacturer in Brazil.

- - In July 1998, the Corporation purchased a 51 percent ownership interest
in Kimberly Bolivia, S.A., a new joint venture company in Bolivia.

- - In July 1998, the Corporation purchased an additional 10 percent
ownership interest in its Korean affiliate, YuHan-Kimberly, Limited,
increasing its ownership interest to 70 percent.

- - On December 18, 1997, the Corporation completed the acquisition of
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, which was valued at approximately $428 million, was accounted for
as a purchase.

- - 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.

<PAGE>
MARKET RISK SENSITIVITY AND INFLATION RISKS

As required by Financial Accounting Reporting Release No. 48 issued by
the SEC, the Corporation is disclosing 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 fluctuations 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. The
Corporation's most significant foreign currency risk relates to the Mexican
peso. There have been no significant changes in how foreign currency
transactional exposures were managed during 1998, 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, 1998, a ten
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 pretax loss of
approximately $39 million. Gains or losses on foreign currency contracts and
transactional exposures are defined as the difference between the contract
rates and the hypothetical exchange rates. In the view of management, the
above 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.

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. At December 31, 1998, the Corporation's debt portfolio was
composed of approximately 31 percent variable-rate debt, adjusted for the
effect of variable-rate assets, and 69 percent fixed-rate debt. The strategy
employed by the Corporation to manage its exposure to interest rate
fluctuations did not change significantly during 1998, 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, 1998, a ten percent
change in interest rates would have resulted in no material change in the fair
value of the Corporation's fixed-rate debt. With respect to the Corporation's
commercial paper and other variable-rate debt, a ten percent increase in
interest rates would have had no material effect on the Corporation's pro
forma interest expense for 1998.

<PAGE>

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. Selling prices of the Corporation's tissue
products are influenced by the market price for pulp. On a worldwide basis,
the Corporation has reduced its internal pulp supply to approximately 75
percent of its virgin fiber needs. Closure of the Mobile pulp mill in
September 1999 will reduce the percentage of integration of the Corporation's
pulp requirements to approximately 45 percent. The Corporation has announced
its intention to further reduce its level of pulp integration to approximately
20 percent. However, such a reduction in pulp integration could increase the
Corporation's commodity price risk. Specifically, increases in pulp prices
could adversely affect the Corporation's earnings if selling prices are not
adjusted or if such adjustments significantly trail the increases in pulp
prices. Conversely, if the Corporation does not lower its level of pulp
integration and the market price for pulp declines, thereby possibly causing
selling prices for tissue products to fall, the Corporation's profit margin
could suffer, and if the price of pulp increases, thereby possibly causing the
selling prices of tissue products to rise, the Corporation's profits could
improve. The Corporation has not used derivative instruments in the
management of these risks.

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" READINESS

Since 1995, the Corporation has been involved in a worldwide program to
be "Year 2000" ready. The program involves reviews of major business,
financial and other information systems, including equipment with embedded
microprocessors; development of specific plans for modification or replacement
of date-sensitive software or microprocessors; execution of such plans; and
the testing of such systems to ensure their "Year 2000" readiness. Included
within the scope of the program are contacts with key suppliers and customers
to determine the extent of their "Year 2000" readiness in order to ensure a
steady flow of goods and services to the Corporation and continuity with
respect to customer service.

The Corporation's Crisis Management Program has been expanded, where
necessary, to include contingency plans relating to possible "Year 2000"
issues. This program includes, among other things, contingency plans and
backup procedures to be followed in case of failure of production operations,
the inability of major suppliers to fulfill their commitments, and the
inability of major customers to submit orders and receive product.

The Corporation's "Year 2000" contingency plans are developed and managed
at the individual business and staff levels. Consequently, such plans vary
depending on the requirements of the individual and staff units, and their
customers, vendors and service providers. Examples of contingency plans that
are being considered and may be implemented are as follows: stockpiling
certain critical raw materials; negotiating alternative vendors to use in the
event a primary vendor experiences a "Year 2000" problem; use of manual
processing procedures in the event of computer failure; and on-site visits and
consultation with major customers and suppliers to ensure a continuation of
normal operations from the end of 1999 to early 2000. The Corporation expects
to have the majority of its contingency plans formalized by mid-year 1999.

Progress against the "Year 2000" readiness plan is monitored and reported
to senior management and to the Corporation's board of directors on a regular
basis. As of December 31, 1998, management estimates that it has completed
more than 60 percent of the work involved in modifying, replacing and testing
the Corporation's major systems and microprocessors, and management plans to
have substantially all such work completed by June 30, 1999.

The total cost to ensure "Year 2000" readiness, which is primarily
comprised of staff time and the cost of replacing certain computerized systems
and microprocessors, is estimated to be approximately $80 million. Management
estimates that $39 million has been incurred for this purpose as of
December 31, 1998.

Neither the "Year 2000" issue nor the financial effects of the reviews,
modifications, replacements and testing discussed above are expected to have a
material adverse effect on the Corporation's business or its consolidated
financial position, results of operations or cash flows.

Management believes that its "Year 2000" readiness program has
encompassed all reasonable actions and contingency plans to avoid business
interruptions resulting from "Year 2000" problems. The Corporation has no
information that indicates that a significant vendor may be unable to sell to
the Corporation; that a significant customer may be unable to purchase from
the Corporation; or that a significant service provider may be unable to
provide services to the Corporation. Notwithstanding the above, the effect,
if any, on the Corporation's future results of operations, due to the
Corporation's major customers or suppliers not being "Year 2000" ready, cannot
be reasonably estimated. Management believes that this latter risk is
mitigated somewhat by the Corporation's broad base of customers and suppliers
and the worldwide nature of its operations.

ADOPTION OF THE EURO

In 1997 the Corporation established a task force to address the business
issues raised by the introduction of a European single currency (the "Euro")
for initial implementation on January 1, 1999 and during the transition period
through January 1, 2002. During January 1999, the Corporation's European
operations began processing certain transactions denominated in the Euro.
These transactions have been processed accurately and efficiently. At an
appropriate point during the transition period, the Corporation's financial
systems located in the participating countries will be converted from local
currency denominations to Euros. Management does not expect the introduction
of the Euro to result in any material risk or a material increase in costs to
the Corporation. All costs associated with the introduction of the Euro will
be charged to income as incurred.

CONTINGENCIES AND LEGAL MATTERS

In connection with the Mobile pulp mill closure, and as permitted by the
terms of the governing contract, on May 5, 1998, the Corporation gave notice
to Mobile Energy Services Company, L.L.C. ("MESC") of the Corporation's intent
to terminate MESC's long-term contract for power, steam and liquor processing
services with respect to the pulp mill. The resulting termination penalty
which is specified in the contract will be included in the calculation of the
expected net gain that will be recorded at the time of the closing of the sale
of the Southeast Timberlands. On January 14, 1999, MESC and Mobile Energy
Services Holdings, Inc. filed an action against the Corporation claiming
unspecified damages in connection with the cancellation of the contract. This
action is not expected to have a material adverse effect on the Corporation's
business or results of operations.

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, an action
by the states of Maryland, New York and West Virginia, as well as
approximately 45 class action complaints, have been filed in various federal
and state courts around the United States. These actions contain allegations
similar to those made by the State of Florida in its complaint. The actions
in federal courts have been consolidated for pretrial proceedings in the
Florida District Court. Class certification was granted in the federal
proceedings in July 1998 and will be contested in the state cases. The
foregoing actions seek an unspecified amount of actual and treble damages.
The Corporation has answered the complaints in these actions and has denied
the allegations contained therein as well as any liability. Discovery is
proceeding.

The Corporation intends to contest these claims vigorously. 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.

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.

OUTLOOK

The Corporation encountered difficult challenges in 1998, primarily in
Europe and Asia. In Europe, financial results suffered due to intense
competition in tissue and the costs of expanding diaper manufacturing capacity
and launching improved diapers and feminine care products. In response, a new
management team was formed for the European operations and it has moved
quickly to address the issues in that area. In Asia, despite the economic
turmoil in that region, the Corporation has improved its market share in many
of its product categories.

The Corporation expects to sustain the double-digit growth in earnings
per share from operations that it achieved in the second half of 1998. Among
other things, this expectation is based on the Corporation's strengths in
product brands and technology which are expected to enable the Corporation to
continue to bring product innovation into the marketplace and build its
presence in markets around the world. The Corporation intends to continue to
employ the strategy that it has successfully used in the personal care and
health care businesses and is now applying to the tissue businesses.
Specifically, the Corporation intends to utilize technology to deliver
superior-performing products that are favored in the marketplace. In
addition, the Corporation intends to leverage its technology and cost
advantages in nonwoven fabrics to attain continued growth in the health care
business.

Management believes that as a result of its three-year process of
redesigning and rationalizing the Corporation's asset base - by eliminating
excess, high-cost capacity and consolidating its operations into fewer, larger
and more efficient facilities - the Corporation has realized, and will continue
to realize, significant cost savings. In addition, management believes that
the reconfigured operations give the Corporation the right technologies in the
right locations to support the Corporation's future growth.

Management also believes that the Corporation's new global organizational
structure will drive sales growth, improve efficiency and increase the speed
at which the Corporation brings new products to the marketplace.

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 including, but
not limited to, the adequacy of the 1998 and 1997 Charges, the remaining costs
of the Announced Plan, the adequacy of the 1998 facility consolidations
charge, the sale of the Southeast Timberlands, the "Year 2000" readiness
program, and the adoption of the Euro, 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 1998 facility
consolidations and the Announced Plan, and the ability to achieve intended
facilities consolidations, projected volume increases and projected
divestitures on terms advantageous to the Corporation. Furthermore, the
Corporation has assumed that it will continue to identify suitable acquisition
candidates in those product markets where it intends to grow by acquisition.
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, and 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.

For a description of these and other factors that could cause the
Corporation's future results to differ materially from those expressed in any
such forward-looking statements, see the section of Part I, Item I of the
Corporation's Annual Report on Form 10-K entitled "Factors That May Affect
Future Results."

<PAGE>

CONSOLIDATED INCOME STATEMENT
Kimberly-Clark Corporation and Subsidiaries

Year Ended December 31
----------------------
(Millions of dollars, except per share amounts) 1998 1997 1996
- ---------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
NET SALES $12,297.8 $12,546.6 $13,149.1
Cost of products sold 7,597.8 7,972.6 8,241.4
---------- ---------- ----------

GROSS PROFIT 4,700.0 4,574.0 4,907.7
Advertising, promotion and selling expenses 1,937.4 1,937.2 2,029.7
Research expense 224.8 211.8 207.9
General expense 726.9 623.9 603.0
Goodwill amortization 33.3 16.8 13.4
Restructuring and other unusual charges 101.5 481.1 -
---------- ---------- ----------

OPERATING PROFIT 1,676.1 1,303.2 2,053.7
Interest income 24.3 31.4 28.1
Interest expense (198.7) (164.8) (186.7)
Other income (expense), net 124.4 17.7 107.2
---------- ---------- ----------

INCOME BEFORE INCOME TAXES 1,626.1 1,187.5 2,002.3
Provision for income taxes 561.9 433.1 700.8
---------- ---------- ----------

INCOME BEFORE EQUITY INTERESTS 1,064.2 754.4 1,301.5
Share of net income of equity companies 137.1 157.3 152.4
Minority owners' share of subsidiaries' net income (24.3) (27.7) (50.1)
---------- ---------- ----------

INCOME BEFORE EXTRAORDINARY GAINS AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 1,177.0 884.0 1,403.8
Extraordinary gains, net of income taxes - 17.5 -
Cumulative effect of accounting change, net of income taxes (11.2) - -
---------- ---------- ----------

NET INCOME $ 1,165.8 $ 901.5 $ 1,403.8
========== ========== ==========

PER SHARE BASIS
BASIC
Income before extraordinary gains and cumulative effect
of accounting change $ 2.14 $ 1.59 $ 2.49
========== ========== ==========
Net income $ 2.12 $ 1.62 $ 2.49
========== ========== ==========

DILUTED
Income before extraordinary gains and cumulative effect
of accounting change $ 2.13 $ 1.58 $ 2.48
========== ========== ==========
Net income $ 2.11 $ 1.61 $ 2.48
========== ========== ==========

</TABLE>

See Notes to Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEET
Kimberly-Clark Corporation and Subsidiaries

December 31
-----------
(Millions of dollars) ASSETS 1998 1997
- ----------------------------------------------------------------

<S> <C> <C>
CURRENT ASSETS

Cash and cash equivalents $ 144.0 $ 90.8

Accounts receivable 1,465.2 1,606.3

Inventories 1,283.8 1,319.5

Deferred income taxes 356.4 341.6

Prepaid expenses and other 117.5 130.8
--------- ---------

TOTAL CURRENT ASSETS. . . . . . . . . 3,366.9 3,489.0

PROPERTY

Land and timberlands 159.4 202.0

Buildings 1,670.1 1,472.6

Machinery and equipment 8,454.7 7,715.0

Construction in progress 263.5 366.6
--------- ---------

10,547.7 9,756.2

Less accumulated depreciation 4,702.7 4,155.6
--------- ---------

NET PROPERTY. . . . . . . . . . . . . 5,845.0 5,600.6

INVESTMENTS IN EQUITY COMPANIES 813.1 567.7

ASSETS HELD FOR SALE 109.5 280.0

GOODWILL, NET OF ACCUMULATED AMORTIZATION 588.3 594.8

OTHER ASSETS 787.5 733.9
--------- ---------

$11,510.3 $11,266.0
========= =========

</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE>

December 31
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
- ---------------------------------------------------------------------------------------------------

<S> <C> <C>
CURRENT LIABILITIES

Debt payable within one year $ 635.4 $ 663.1

Trade accounts payable 663.0 747.1

Other payables 340.2 302.3

Accrued expenses 1,453.7 1,445.6

Accrued income taxes 562.9 408.8

Dividends payable 135.5 131.4
---------- ----------

TOTAL CURRENT LIABILITIES 3,790.7 3,698.3

LONG-TERM DEBT 2,068.2 1,803.9

NONCURRENT EMPLOYEE BENEFIT AND OTHER OBLIGATIONS 899.9 887.1

DEFERRED INCOME TAXES 666.3 580.8

MINORITY OWNERS' INTERESTS IN SUBSIDIARIES 198.0 162.6

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, 1998 and 1997 710.8 710.8

Additional paid-in capital 86.3 113.3

Common stock held in treasury, at cost - 30.3 million and 12.3 million
shares at December 31, 1998 and 1997, respectively (1,454.7) (617.1)

Accumulated other comprehensive income (loss) (964.3) (966.6)

Retained earnings 5,509.1 4,892.9
---------- ----------

TOTAL STOCKHOLDERS' EQUITY 3,887.2 4,133.3
---------- ----------

$11,510.3 $11,266.0
========== ==========
</TABLE>

<PAGE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Kimberly-Clark Corporation and Subsidiaries

Common Stock Accumulated
Issued Additional Treasury Stock Other Total
(Millions of dollars ------------------ Paid-In ------------------ Comprehensive Retained Stockholders' Comprehensive
except share amounts) Shares Amount Capital Shares Amount Income(Loss) Earnings Equity Income
- -------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1995 . . 564,560,236 $705.8 $ 66.1 2,959,448 $ (74.9) $(668.6) $3,638.9 $3,667.3
Shares issued for the
exercise of stock
options and awards. . 4,036,574 5.0 70.6 (6,688,178) 209.3 - - 284.9
Shares purchased for
treasury. . . . . . . - - - 8,951,924 (348.8) - - (348.8)
Comprehensive income:
Net income. . . . . . - - - - - - 1,403.8 1,403.8 $1,403.8
Other comprehensive
income (loss):
Unrealized
translation
adjustments . . - - - - - (16.3) - (16.3) (16.3)
Minimum pension
liability
adjustment. . . - - - - - 17.5 - 17.5 17.5
---------
Comprehensive
income - - - - - - - - $1,405.0
=========
Dividends declared on
common shares . . . . - - - - - - (519.0) (519.0)
----------- ------ ------- ----------- -------- -------- --------- ---------
Balance at
December 31, 1996 . . 568,596,810 710.8 136.7 5,223,194 (214.4) (667.4) 4,523.7 4,489.4
Shares issued for the
exercise of stock
options and awards. . - - (18.2) (2,434,504) 88.2 - - 70.0
Shares purchased for
treasury. . . . . . . - - - 18,143,208 (910.6) - - (910.6)
Shares issued for the
acquisition of Tecnol - - (5.2) (8,681,530) 419.7 - - 414.5
Comprehensive income:
Net income. . . . . . - - - - - - 901.5 901.5 $ 901.5
Other comprehensive
income (loss):
Unrealized
translation
adjustments . . - - - - - (296.4) - (296.4) (296.4)
Minimum pension
liability
adjustment. . . - - - - - (2.8) - (2.8) (2.8)
---------
Comprehensive
income - - - - - - - - $ 602.3
=========
Dividends declared on
common shares . . . . - - - - - - (532.3) (532.3)
----------- ------ ------- ----------- -------- -------- --------- ---------
Balance at
December 31, 1997 . . 568,596,810 710.8 113.3 12,250,368 (617.1) (966.6) 4,892.9 4,133.3

Shares issued for the
exercise of stock
options and awards. - - (27.0) (1,643,718) 82.1 - - 55.1
Shares purchased for
treasury. . . . . . - - - 19,732,752 (919.7) - - (919.7)
Comprehensive income:
Net income. . . . . - - - - - - 1,165.8 1,165.8 $1,165.8
Other comprehensive
income (loss):
Unrealized
translation
adjustments . - - - - - 3.1 - 3.1 3.1
Minimum pension
liability
adjustment. . - - - - - (.8) - (.8) (.8)
---------
Comprehensive
income. . . . . . . - - - - - - - - $1,168.1
=========
Dividends declared on
common shares . . . - - - - - - (549.6) (549.6)
----------- ------ ------- ----------- ---------- --------- --------- ---------
Balance at
December 31, 1998 . 568,596,810 $710.8 $ 86.3 30,339,402 $(1,454.7) $(964.3) $5,509.1 $3,887.2
=========== ====== ======= =========== ========== ========= ========= =========

</TABLE>

See Notes to Consolidated Financial Statements.

CONSOLIDATED CASH FLOW STATEMENT
Kimberly-Clark Corporation and Subsidiaries

Year Ended December 31
----------------------
(Millions of dollars) 1998 1997 1996
- -------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
OPERATIONS
Net income $ 1,165.8 $ 901.5 $ 1,403.8
1998 and 1997 Charges 108.8 701.2 -
Charge for facility consolidations 123.2 - -
Write-down of certain intangible and other assets 95.6 - -
Cumulative effect of accounting change, net of income taxes 11.2 - -
Extraordinary gains, net of income taxes - (17.5) -
Depreciation 509.2 490.9 561.0
Amortization of goodwill 33.3 16.8 13.4
Deferred income tax provision 53.3 11.2 40.5
Net gains on asset sales (125.9) (8.4) (75.1)
Equity companies' earnings in excess of dividends paid (15.1) (62.1) (100.2)
Minority owners' share of subsidiaries' net income 24.3 27.7 50.1
Decrease (Increase) in operating working capital 63.6 (588.4) (141.6)
Pension funding in excess of expense (45.9) (10.2) (16.8)
Other (10.1) (56.1) (60.9)
---------- ---------- ----------

CASH PROVIDED BY OPERATIONS 1,991.3 1,406.6 1,674.2
---------- ---------- ----------

INVESTING
Capital spending (669.5) (944.3) (883.7)
Acquisitions of businesses, net of cash acquired (342.5) (82.2) (223.6)
Proceeds from dispositions of property and businesses 324.9 779.6 455.4
Other (11.3) (58.9) 18.9
---------- ---------- ----------

CASH USED FOR INVESTING (698.4) (305.8) (633.0)
---------- ---------- ----------

FINANCING
Cash dividends paid (545.5) (530.6) (461.5)
Net (decrease) increase in short-term debt (2.6) 355.3 (348.8)
Increases in long-term debt 538.3 107.5 75.8
Decreases in long-term debt (319.1) (253.8) (321.2)
Proceeds from exercise of stock options 38.3 49.2 207.9
Acquisitions of common stock for the treasury (919.7) (910.6) (348.8)
Other (29.4) 89.8 17.0
---------- ---------- ----------

CASH USED FOR FINANCING (1,239.7) (1,093.2) (1,179.6)
---------- ---------- ----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 53.2 $ 7.6 $ (138.4)
========== ========== ==========

</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. All significant
intercompany transactions and accounts are eliminated in consolidation.

Certain reclassifications have been made to conform prior year data to
the current year presentation.

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.

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 generally 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. Depreciation is
calculated 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 Other Intangible Assets

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, 1998 and 1997 was $150.8
million and $94.1 million, respectively.

<PAGE>

Advertising Expense

Advertising expense is comprised of media, agency and production
expenses. Advertising expenses are charged to income during the period
incurred, except for expenses related to the development of a major commercial
or media campaign which are charged to income during the period in which the
advertisement or campaign is first presented by the media. The Corporation
uses no direct response advertising. Advertising expenses charged to income
totaled $295.3 million in 1998, $306.6 million in 1997 and $284.9 million in
1996.

Revenue Recognition

Sales revenue is recognized at the time of product shipment to
unaffiliated customers and appropriate provision is made for uncollectible
accounts.

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 as incurred.
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 8 to the Consolidated
Financial Statements.)

Accounting Standards Changes

In 1998, the Corporation adopted the following Statements of Financial
Accounting Standards ("SFAS"):

- - SFAS 130, Reporting Comprehensive Income, which requires the components
of comprehensive income to be disclosed in the financial statements.

- - SFAS 131, Disclosures about Segments of an Enterprise and Related
Information, which requires disclosures of certain information about the
Corporation's operating segments on a basis consistent with the way in which
the Corporation is managed and operated.

- - SFAS 132, Employer's Disclosures about Pensions and Other Postretirement
Benefits, which revises disclosures about pensions and other postretirement
benefits and requires presentation of information about such plans in a
standardized format.

Adoption of these new standards required that the Corporation reclassify
prior years' information and make certain new disclosures in the notes to the
consolidated financial statements.

In 1998, the Accounting Standards Executive Committee ("AcSEC") of the
American Institute of Certified Public Accountants issued Statement of
Position ("SOP") 98-5, Reporting on the Costs of Start-up Activities, which
requires that such costs be expensed as incurred. The Corporation's practice
had been to record the costs of bringing significant new or expanded
facilities into operation as deferred charges and to amortize them over
periods of not more than five years. The Corporation adopted
SOP 98-5 effective January 1, 1998, and restated 1998 first quarter results to
record a pretax charge of $17.8 million, $11.2 million after taxes, or $.02
per share, as the cumulative effect of this accounting change. This change
had no material effect on total costs and expenses for 1998.

New Pronouncements

In 1998, SFAS 133, Accounting for Derivative Instruments and Hedging
Activities, was issued. This standard, which establishes new accounting and
reporting standards for derivative financial instruments, must be adopted no
later than 2000. The Corporation is currently analyzing the effect of this
standard and does not expect it to have a material effect on the Corporation's
consolidated financial position, results of operations or cash flows.

In 1998, AcSEC issued SOP 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. This statement, which
becomes effective in 1999, requires that certain costs of developing or
obtaining software for internal use be capitalized. The Corporation presently
capitalizes most of the required costs, and consequently does not expect the
statement to have a material effect on the Corporation's consolidated
financial position, results of operations or cash flows.

<PAGE>
NOTE 2. BUSINESS IMPROVEMENT AND OTHER PROGRAMS

A number of actions have been taken in recent years to address the
Corporation's ongoing business competitiveness by improving its operating
efficiency and cost structure.

Facility Consolidations

- - In the fourth quarter of 1998, the Corporation recorded a charge for
facility consolidations of $123.2 million to, among other things, further
align tissue manufacturing capacity with demand in Europe, to close a diaper
manufacturing facility in Canada, shut down and dispose of a tissue machine
in Thailand and write down certain excess feminine care production equipment
in North America. Included in the charge was $79.6 million for the write-down
of tissue manufacturing assets in Europe and the 1999 closure of a diaper
facility in Canada. Because the diaper facility will be closed rather than
sold, the entire book value of the facility was written off. Employee
severance costs of $12.3 million also were recorded for approximately 450
employees who were notified by December 31, 1998 of the Corporation's plans
to terminate their employment. Asset write-downs to estimated fair value
and inventory losses associated with the facility closing and capacity
alignment and the tissue machine shut-down totaling $31.3 million also were
recorded. These costs, which were charged to cost of products sold, reduced
1998 operating profit $123.2 million, and net income $86.1 million, or $.16
per share. Approximately 57 percent of the pretax charge relates to the
Tissue segment and 43 percent relates to the Personal Care segment. The
employee severance costs and other cash costs of closures and consolidations
of $11.8 million are included in other accrued liabilities at December 31,
1998.

Write-down of Certain Intangible and Other Assets

- - During the third quarter of 1998, the Corporation completed a periodic
review of its intangible assets, such as trademarks and goodwill, to determine
if they were impaired. Impairment is deemed to exist whenever the
undiscounted estimated future cash flows are less than the carrying amount of
such intangible assets. Impairment losses are measured by the difference
between the asset carrying amount and the present value of the estimated
future cash flows. As a result of the review, the carrying amounts of
trademarks and unamortized goodwill of certain European businesses were
determined to be impaired and were written down. These write-downs, which
were charged to general expense, reduced 1998 operating profit $70.2 million
and net income $57.1 million, or $.10 per share.

- - During the third quarter of 1998, the Corporation completed a technology
review of personal computers ("PCs") which demonstrated that (i) PCs have
reduced economic lives as a consequence of rapid technological improvements,
(ii) more sophisticated software applications require more powerful PCs, and
(iii) most of the Corporation's PCs acquired prior to 1997 were
technologically obsolete. Consequently, the Corporation concluded that its
previous practice of capitalizing the costs of PCs and depreciating them over
five years was no longer appropriate. Accordingly, the Corporation began
depreciating the cost of all new PCs acquired after September 30, 1998 over
two years. In addition, in recognition of the change in estimated useful
lives of its existing PC assets, the remaining book value of all PCs acquired
prior to 1997 was written down. This change in estimate, along with $8.8
million of charges for write-downs of other assets and a loss on a pulp
contract, reduced 1998 operating profit $25.4 million and net income $16.5
million, or $.03 per share. Of the $25.4 million, $11.3 million was charged
to cost of products sold and $14.1 million was charged to general expense.

- - Approximately 15 percent of the write-down of certain intangible and
other assets described above relates to the Tissue segment, 84 percent relates
to the Personal Care segment and 1 percent relates to the Health Care and
Other segment.

Announced Plan

The Announced Plan includes:

- - A workforce reduction of approximately 5,000 employees.

- - Contract terminations, cash costs for mill closures and other
obligations.

The following summarizes the major actions relating to facility disposals
and workforce reductions that were accomplished through December 31, 1998.

<PAGE>

The major categories of the 1998 and 1997 Charges and their subsequent
utilization are summarized below:
<TABLE>
<CAPTION>

<S> <C> <C> <C> <C> <C>
Costs of workforce reduction . . . $ 64.4 $ 57.3 $ (2.5) $(119.2) $ -

Losses on facility disposals . . . - 165.0 9.3 (162.5) 11.8

Write-downs of property, plant and
equipment and other assets . . . 13.5 333.4 (17.6) (214.9) 114.4

Asset impairments. . . . . . . . . 4.5 82.6 (15.3) (71.8) -

Contract terminations, cash
costs for mill closures and
other obligations. . . . . . . . 26.4 62.9 26.1 (64.5) 50.9
------ ------ ------- -------- ------

$108.8 $701.2 $ - $(632.9) $177.1
====== ====== ======= ======== ======

</TABLE>

1998 Charge

The principal costs included in the 1998 Charge are as follows:

- - The costs of workforce reduction are primarily composed of severance
payments and other employee-related costs for 1,800 employees at facilities
which have been or are to be sold or closed and other operations that are
being downsized. The employees involved were notified by
December 31, 1998 of the Corporation's plans to terminate their employment,
along with their termination arrangements.

- - Contract terminations, cash costs for mill closures and other
obligations primarily represent the costs of certain lease obligations.

1997 Charge

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

- - Asset impairments represented charges for manufacturing facilities where
the future cash flows from operations and the sale or closure were
estimated to be insufficient to cover the carrying amounts of such facilities.
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.

The 1997 Charge was based on management's Announced Plan to restructure
the Corporation's worldwide operations and information available at the time
the decision was made to undertake the required actions. As discussed below,
based on subsequent events, certain aspects of the actions contemplated in the
1997 Charge were revised. In addition, the costs of other actions under the
Announced Plan were recorded in 1998. Although certain specific actions
originally included in the Announced Plan have been modified, the overall
Announced Plan is expected to be accomplished at a total cost
approximating the original estimate of $810.0 million.

Adjustments and Reclassifications

The "Reallocations in 1998" column in the preceding summary reflects the
following adjustments and reclassifications:

- - Included in the 1997 Charge was approximately $29.7 million for the
write-down and removal of certain assets at the Corporation's pulp production
operation in Mobile, Alabama. In 1997, the U.S. Government enacted new
environmental air and water emission rules that required reduced emission
levels of certain chemical compounds from the Corporation's pulp production
facilities. These rules would have required the Corporation to spend more
than $250 million to achieve the new emission levels at its Mobile pulp mill.
S.D. Warren Company, a producer of printing and publishing papers, currently
purchases approximately one-third of the pulp mill's output. On May 4, 1998,
S.D. Warren and the Corporation announced an agreement to terminate their pulp
supply contract in September 1999. As a result of the cancellation of the
pulp supply contract and the cost of implementing the new emission rules, on
May 5, 1998, the Corporation announced it would shut down its Mobile pulp mill
on September 1, 1999, sell the associated woodlands and related operations
("Southeast Timberlands") and retain its pulp facility in New Glasgow, Nova
Scotia. On January 5, 1999, the Corporation announced that it had agreed to
sell the Southeast Timberlands to an affiliate of a New York-based investment
firm. As a result of these changes in plans, $10.6 million of the reserve for
write-downs was reallocated to requirements under other qualifying programs
identified in the Announced Plan.

<PAGE>

- - Costs of workforce reduction decreased $2.5 million.

- - Write-down of property, plant and equipment and other assets increased
$9.6 million.

- - Contract terminations, cash costs for mill closures and other
obligations increased $26.1 million.

At December 31, 1998, there are no reserves remaining to be utilized that
are not specifically identified with a qualifying program under the Announced
Plan.

Other Information

<S> <C> <C> <C> <C> <C> <C> <C>
Workforce severance . . . . . $ 57.6 $ (5.1) $ 52.5 $43.1 $(47.6) $ - $ 48.0
Facility closure costs. . . . 12.6 (3.3) 9.3 - (4.8) - 4.5
Asset removal costs . . . . . 24.0 (.1) 23.9 .8 (13.2) - 11.5
Environmental costs and lease
and contract terminations . 37.9 (.3) 37.6 22.9 (22.0) 5.0 43.5
Other costs . . . . . . . . . 71.2 (2.7) 68.5 23.2 (4.1) (50.9) 36.7
------ ------- ------ ----- ------- ------- ------

$203.3 $(11.5) $191.8 $90.0 $(91.7) $(45.9) $144.2
====== ======= ====== ===== ======= ======= ======

<FN>

(a) The charges in 1997 and 1998 were included in the restructuring and other
unusual charges in the Consolidated Income Statement.

</TABLE>

<PAGE>

Pursuant to the Corporation's accounting policies for business
improvement programs, certain amounts are considered to be utilized prior to
their being paid in cash. For example, charges for severance payments are
considered to be utilized when the liability for such payments becomes fixed
and identified with individual employees. Such amounts remain in accrued
liabilities until paid in cash in accordance with the severance payment
schedules. Likewise, lease termination charges and other cash obligations are
considered to be utilized when they become fixed obligations, but such
liabilities remain in accrued liabilities until paid in accordance with the
contractual arrangements. Included in accrued liabilities for the Announced
Plan are cash payment obligations for severance payments, lease payments and
other cash obligations, totaling $81.5 million which, although utilized,
remain to be paid in accordance with the individual arrangements. At December
31, 1998, the Announced Plan had $177.1 million remaining to be utilized,
of which $114.4 million represents noncash items for the write-down of
property, plant and equipment and other assets.

1995 Restructuring

(Millions of dollars) Amount
-------------------------------------------------------------

1995 Charge $1,440.0
Amount utilized in 1996 (1,016.9)
Amount utilized in 1997 (351.7)
Amount utilized in 1998 (52.6)
-----------

Amount not utilized at December 31, 1998 $ 18.8
==========

During 1996, 1997 and 1998, as part of management's process to monitor
completion of the programs related to the 1995 Charge, certain amounts were
identified as being in excess of the current estimate to complete the overall
plan for the merger and restructuring. The differences between the then
current estimate and the remaining accrual balance for the plan were returned
to earnings as credits to cost of products sold in the Consolidated Income
Statement as follows: 1996, $65.0 million; 1997, $57.7 million; and 1998,
$10.3 million. These amounts, which were not material to consolidated
operating profit in any of the three years, were included in the operating
profit of the Tissue segment.

<S> <C> <C> <C> <C> <C> <C> <C>
Workforce severance . . . . . . . $ 88.7 $ (59.8) $(15.1) $13.8 $ (4.6) $(7.9) $ 1.3
Asset removal costs . . . . . . . 22.2 (13.7) - 8.5 (8.5) - -
Environmental costs and lease and
contract terminations . . . . . 87.0 (31.3) (24.3) 31.4 (9.9) (6.2) 15.3
Other costs . . . . . . . . . . . 141.8 (77.2) (41.8) 22.8 (12.0) 8.2 19.0
------ -------- ------- ----- ------- ------ -----

$339.7 $(182.0) $(81.2) $76.5 $(35.0) $(5.9) $35.6
====== ======== ======= ===== ======= ====== =====

<FN>

Accounting Policies for Business Improvement Programs

The Corporation considers amounts included in the business improvement
programs 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 on the occurrence of one of the following
events: management (i) closes such facilities; (ii) sells such facilities; or
(iii) writes down such assets because there are no plans for any future
recovery of carrying amounts. Costs for contract settlements and lease
terminations are considered utilized at the time settlements are negotiated
and agreed upon and the amounts of required payments are fixed.

Provisions for asset impairments are based on discounted cash flow
projections in accordance with SFAS 121, 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.

<PAGE>

NOTE 3. INCOME TAXES

An analysis of the provision for income taxes follows:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
(Millions of dollars) 1998 1997 1996
- -------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Current income taxes:
United States $402.0 $ 423.9 $474.4
State 26.8 96.7 67.6
Other countries 79.8 104.6 118.3
------- -------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 508.6 625.2 660.3
------- -------- -------

Deferred income taxes:
United States 91.6 (82.3) 38.8
State 13.7 (56.5) (10.1)
Other countries (58.6) (14.9) 11.8
------- -------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.7 (153.7) 40.5
------- -------- -------

Total provision for income taxes 555.3 471.5 700.8

Less income taxes related to:

Extraordinary gains . . . . . . . . . . . . . . . . . . . . . - 38.4 -

Cumulative effect of accounting change. . . . . . . . . . . . (6.6) - -
------- -------- -------

Total provision excluding income taxes related to extraordinary
gains and cumulative effect of accounting change $561.9 $ 433.1 $700.8
======= ======== =======

</TABLE>

Income before income taxes is classified in the Consolidated Income
Statement as follows:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Income Before Extraordinary Gains and Cumulative Effect of
Accounting Change:
United States. . . . . . . . . . . . . . . . . . . . . $ 1,612.3 $1,132.6 $1,624.9
Other countries. . . . . . . . . . . . . . . . . . . . 13.8 54.9 377.4
--------------- -------- --------
$ 1,626.1 $1,187.5 $2,002.3
=============== ======== ========
Extraordinary Gains:
United States $ - $ 55.9 $ -
=============== ======== ========

Cumulative Effect of Accounting Change:
United States $ (17.2) $ - $ -
Other countries (.6) - -
--------------- -------- --------
$ (17.8) $ - $ -
=============== ======== ========

</TABLE>

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

December 31
-----------
(Millions of dollars) 1998 1997
- ----------------------------------------------------------------------------------------

<S> <C> <C>
Current deferred income tax assets attributable to:

Advertising and promotion accruals . . . . . . . . . . . . . . . . $ 29.7 $ 37.7
Pension, postretirement and other employee benefits. . . . . . . . 92.0 80.2
Other accrued expenses, including those related to the 1998,
1997 and 1995 Charges. . . . . . . . . . . . . . . . . . . . . . 197.3 192.0
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.0 40.7
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . (10.6) (9.0)
-------- --------

Net current deferred income tax asset $ 356.4 $ 341.6
======== ========

Noncurrent deferred income tax assets (liabilities) attributable to:

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . $(859.3) $(788.7)
Income tax loss carryforwards. . . . . . . . . . . . . . . . . . . 337.8 280.4
Other postretirement benefits. . . . . . . . . . . . . . . . . . 280.2 287.3
Installment sales. . . . . . . . . . . . . . . . . . . . . . . . . (137.9) (137.9)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.7) (2.8)
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . (284.4) (219.1)
-------- --------

Net noncurrent deferred income tax liability . . . . . . . . . . . $(666.3) $(580.8)
======== ========
</TABLE>

Valuation allowances for deferred income tax assets increased by $66.9
million in 1998 and $21.5 million in 1997. Valuation allowances at the end of
1998 relate to the potentially unusable portion of income tax loss
carryforwards of $909.7 million in jurisdictions outside the United States.
If not utilized against taxable income, $310.8 million of the loss
carryforwards will expire from 1999 through 2008. The remaining $598.9
million has no expiration date.

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.

<PAGE>

Presented below is a reconciliation of the income tax provision computed
at the U.S. federal statutory tax rate to the provision for income taxes
excluding income taxes applicable to extraordinary gains and cumulative effect
of an accounting change.

1998 1997 1996
--------------------- ------------------ ---------------
(Millions of dollars) AMOUNT PERCENT Amount Percent Amount Percent
- ------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Income before income taxes:
As reported. . . . . . . . . . . . $1,626.1 $1,187.5 $2,002.3
Add back the 1998 and 1997
Charges. . . . . . . . . . . . . 108.8 701.2 -
--------- --------- ---------
Income before income taxes
excluding the 1998 and 1997
Charges. . . . . . . . . . . $1,734.9 $1,888.7 $2,002.3
========= ========= =========

Tax at U.S. statutory rate(a). . . . $ 607.2 35.0% $ 661.0 35.0% $700.8 35.0%
State income taxes, net of federal
tax benefit. . . . . . . . . . . . 27.8 1.6 37.4 2.0 37.3 1.9
Operating losses for which no tax
benefit was recognized, net of
operating losses realized. . . . . 32.0 1.8 22.0 1.2 10.0 .5
Other - net. . . . . . . . . . . . . (83.6) (4.8) (97.1) (5.2) (47.3) (2.4)
--------- --------- --------- ----- ------- -----

583.4 33.6% 623.3 33.0% 700.8 35.0%
========= ===== =====
Tax benefit of the 1998 and 1997
Charges(b) . . . . . . . . . . . . (21.5) 19.8% (190.2) 27.1% -
--------- ========= --------- ===== -------

Provision for income taxes . . . . . $ 561.9 34.6% $ 433.1 36.5% $700.8 35.0%
========= ========= ========= ===== ======= =====
<FN>

(a) Tax at U.S. statutory rate is based on income before income taxes excluding the 1998
Charge of $108.8 million and the 1997 Charge of $701.2 million. The tax benefits of
such items are shown elsewhere in the table.

(b) The effective rates for the tax benefits attributable to the 1998 and 1997 Charges
are 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.
</TABLE>

At December 31, 1998, 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 invested
indefinitely, 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 $130 million
would be payable upon remittance of all previously unremitted earnings at
December 31, 1998.

<PAGE>

NOTE 4. POSTRETIREMENT AND OTHER BENEFITS

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. Certain other subsidiaries have
defined benefit pension plans or, in certain countries, termination pay plans
covering substantially all regular employees. 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.

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
employees who retired before 1993, and are contributory for most employees who
retire in 1993 or after. Certain U.S. plans limit the Corporation's cost of
future annual per capita retiree medical benefits to no more than
200 percent of the 1992 annual per capita cost. Certain other U.S. plans
limit the Corporation's future cost for retiree medical benefits to a defined
annual per capita medical cost.

Summarized financial information about postretirement plans, excluding
defined contribution retirement plans, is presented below.

<PAGE>

Pension Benefits Other Benefits
------------------- --------------------
Year Ended December 31
--------------------------------------
(Millions of dollars) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year. . . . . . $3,623.2 $3,394.7 $ 638.0 $ 631.8
Service cost . . . . . . . . . . . . . . . . . . . 69.2 72.6 11.8 10.7
Interest cost. . . . . . . . . . . . . . . . . . . 247.1 246.7 44.2 44.9
Participants' contributions. . . . . . . . . . . . 8.3 7.6 4.0 4.8
Amendments . . . . . . . . . . . . . . . . . . . . 9.5 20.4 - -
Actuarial loss . . . . . . . . . . . . . . . . . . 171.8 275.9 27.5 12.2
Acquisitions . . . . . . . . . . . . . . . . . . . 1.5 .8 - -
Divestments. . . . . . . . . . . . . . . . . . . . - (96.6) - (1.6)
Curtailments . . . . . . . . . . . . . . . . . . . (8.4) (.1) (2.6) (7.5)
Special termination benefits . . . . . . . . . . . 5.0 1.7 - -
Currency exchange rate effects . . . . . . . . . . (2.3) (59.2) (2.0) (1.2)
Benefit payments . . . . . . . . . . . . . . . . . (257.4) (241.3) (62.3) (56.1)
--------- --------- -------- --------

Benefit obligation at end of year. . . . . . . . . 3,867.5 3,623.2 658.6 638.0
--------- --------- -------- --------

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year . . 3,619.9 3,343.2 - -
Actual return on plan assets . . . . . . . . . . . 525.7 502.4 - -
Employer contributions . . . . . . . . . . . . . . 24.5 30.7 58.3 51.3
Participants' contributions. . . . . . . . . . . . 8.3 7.6 4.0 4.8
Currency exchange rate effects . . . . . . . . . . (11.3) (31.6) - -
Benefit payments . . . . . . . . . . . . . . . . . (239.9) (232.4) (62.3) (56.1)
--------- --------- -------- --------

Fair value of plan assets at end of year . . . . . 3,927.2 3,619.9 - -
--------- --------- -------- --------

FUNDED STATUS
Funded status at end of year . . . . . . . . . . . 59.7 (3.3) (658.6) (638.0)
Unrecognized net actuarial loss (gain) . . . . . . 9.5 53.1 (68.0) (98.1)
Unrecognized transition amount . . . . . . . . . . (15.3) (16.8) - -
Unrecognized prior service cost. . . . . . . . . . 64.2 52.7 (17.7) (19.8)
--------- --------- -------- --------

Net amount recognized. . . . . . . . . . . . . . . $ 118.1 $ 85.7 $(744.3) $(755.9)
========= ========= ======== ========

AMOUNTS RECOGNIZED IN THE BALANCE SHEET CONSIST OF:
Prepaid benefit cost . . . . . . . . . . . . . . . $ 228.8 $ 178.9 $ - $ -
Accrued benefit cost . . . . . . . . . . . . . . . (139.6) (122.9) (744.3) (755.9)
Intangible asset . . . . . . . . . . . . . . . . . 6.1 8.3 - -
Accumulated other comprehensive income . . . . . . 22.8 21.4 - -
--------- --------- -------- --------

Net amount recognized. . . . . . . . . . . . . . . $ 118.1 $ 85.7 $(744.3) $(755.9)
========= ========= ======== ========
</TABLE>

The above pension benefit information has been presented on an aggregated
basis whereby benefit obligation and plan asset information for plans in which
plan assets exceed accumulated benefit obligations have been combined with
plans where the accumulated benefit obligations exceed plan assets. Summary
disaggregated information about these plans follows:

<PAGE>

Assets Exceed ABO Exceed
ABO Assets
--------------- ---------------
December 31
---------------------------------
(Millions of dollars) 1998 1997 1998 1997
- --------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Projected benefit obligation . . . . $3,757.1 $3,507.0 $110.4 $116.2
Accumulated benefit obligation (ABO) 3,417.3 3,176.9 100.1 94.9
Fair value of plan assets. . . . . . 3,926.2 3,613.9 1.0 6.0
</TABLE>

Pension Benefits Other Benefits
------------------ ------------------
December 31
----------------------------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
WEIGHTED AVERAGE ASSUMPTIONS
Discount rate. . . . . . . . . . . . . . 6.6% 7.1% 6.7% 7.0%
Expected return on plan assets . . . . . 9.3% 9.5% - -
Rate of compensation increase . . . . . 3.9% 4.3% - -
Initial health care cost trend rate(a) . - - 7.8% 8.6%
<FN>

(a) Assumed to decrease gradually to 6% in 2003 and remain at that level
for certain plans and to zero by 2005 and thereafter for others.

</TABLE>

Pension Benefits Other Benefits
-------------------------- ---------------------
Year Ended December 31
----------------------------------------------------
(Millions of dollars) 1998 1997 1996 1998 1997 1996
- ---------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost. . . . . . . . . . . . $ 69.2 $ 72.6 $ 86.0 $11.8 $10.7 $12.0
Interest cost . . . . . . . . . . . 247.1 246.7 243.9 44.2 44.9 48.0
Expected return on plan assets. . . (332.3) (297.8) (283.2) - - -
Amortization of prior service cost. 8.5 7.9 5.9 (2.1) - -
Amortization of transition amount . (5.3) (5.3) (5.0) - - -
Recognized net actuarial loss
(gain). . . . . . . . . . . . . . 2.9 2.9 9.7 (5.3) (8.8) (4.4)
Other . . . . . . . . . . . . . . . 5.8 .5 2.8 - - -
-------- -------- -------- ------ ------ ------

Net periodic benefit (income)
cost. . . . . . . . . . . . . . . $ (4.1) $ 27.5 $ 60.1 $48.6 $46.8 $55.6
======== ======== ======== ====== ====== ======
</TABLE>

Assumed health care cost trend rates affect the amounts reported for
postretirement health care benefit plans. A one-percentage-point change in
assumed health care trend rates would have the following effects:

<TABLE>
<CAPTION>
One-Percentage-Point
--------------------
(Millions of dollars) Increase Decrease
- -------------------------------------------------------------------------
<S> <C> <C>

Effect on total of service and interest cost components $4.4 $3.7
Effect on postretirement benefit obligation 51.9 45.2

</TABLE>

<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, all of which were charged to expense, were $23.8
million, $14.8 million and $8.5 million in 1998, 1997 and 1996, respectively.

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
$26.1 million, $24.9 million and $24.1 million in 1998, 1997 and 1996,
respectively.

<PAGE>

NOTE 5. EARNINGS PER SHARE

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

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

Average Common Shares
Outstanding
------------------
(Millions) 1998 1997 1996
- ---------------------------------------------------------------------------------------

<S> <C> <C> <C>
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550.3 555.9 564.0
Dilutive effect of stock options 2.3 3.1 2.9
Dilutive effect of shares issued for participation share awards .5 .3 .2
----- ----- -----
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553.1 559.3 567.1
===== ===== =====
</TABLE>

Options outstanding during the year ended December 31, 1998 to purchase
9.1 million shares of common stock at a weighted average price of $52.74 were
not included in the computation of diluted EPS because the exercise prices of
the options were greater than the average market price of the common shares.
The options, which expire in 2004, 2007 and 2008, were still outstanding at
December 31, 1998. There were no securities outstanding at December 31, 1997
and 1996 which were excluded from the diluted EPS computations. The number of
common shares outstanding as of December 31, 1998, 1997 and 1996 was 538.3
million, 556.3 million and 563.4 million, respectively.

<PAGE>

NOTE 6. DEBT

The major issues of long-term debt outstanding were:
<TABLE>
<CAPTION>
December 31
-----------
(Millions of dollars) 1998 1997
- ----------------------------------------------------------------------------------------------

<S> <C> <C>
Kimberly-Clark Corporation:
Commercial paper to be refinanced $ - $ 200.0
6 1/4% Debentures due 2018 297.6 -
6 3/8% Debentures due 2028 198.2 -
7 7/8% Debentures due 2023 199.7 199.7
8 5/8% Notes due 2001 199.8 199.8
9% Notes due 2000 99.9 99.9
6 7/8% Debentures due 2014 99.7 99.7
5% Notes maturing to 2002 36.0 45.0
9 1/2% Sinking Fund Debentures due 2018 - 50.0
6.2% to 7.55% Industrial Development Revenue Bonds maturing to 2023 79.7 79.7
Other 3.7 .2
-------- --------
1,214.3 974.0
Subsidiaries:
7% Debentures due 2023 194.0 193.8
11.1% Bonds due 2000 99.6 99.4
8.3% to 11% Debentures maturing to 2022 163.8 156.0
Industrial Development Revenue Bonds at variable rates (average rate
for December 1998 - 4%) due 2015, 2018, 2023 and 2024 286.6 286.6
5 3/4% to 6 3/8% Industrial Development Revenue Bonds maturing
to 2007 22.9 28.3
Bank loans and other financings in various currencies at fixed rates
(weighted-average rate at December 31, 1998 - 10.7%) maturing to 2008 97.9 112.9
Bank loans and other financings in various currencies at variable rates
(weighted-average rate at December 31, 1998 - 8%) maturing to 2015. . 45.6 54.4
-------- --------
2,124.7 1,905.4

Less current portion 56.5 101.5
-------- --------

Total $2,068.2 $1,803.9
======== ========
</TABLE>

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 principal amount of 6 3/8% Debentures due January 1, 2028.

Fair value of long-term debt was $2,256.6 million and $1,972.4 million at
December 31, 1998 and 1997, respectively. Scheduled maturities of long-term
debt are $281.8 million in 2000, $232.0 million in 2001, $19.8 million in 2002
and $7.1 million in 2003.

At December 31, 1998, the Corporation had $1.0 billion of revolving
credit facilities with a group of banks. These facilities, which were unused
at December 31, 1998, 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, approximately $600 million expires in
November 1999 and approximately $400 million expires in November 2003.

<PAGE>

Debt payable within one year:
<TABLE>
<CAPTION>
December 31
-----------
(Millions of dollars) 1998 1997
- ---------------------------------------------------

<S> <C> <C>
Commercial paper $418.0 $392.6
Current portion of long-term debt 56.5 101.5
Other short-term debt 160.9 169.0
------ ------

Total $635.4 $663.1
====== ======
</TABLE>

At December 31, 1998 and 1997, the weighted-average interest rate for
commercial paper was 5.3 percent and 5.9 percent, respectively.

<PAGE>

NOTE 7. RISK MANAGEMENT

Foreign Currency Risk Management

Foreign currency losses included in consolidated net income were $32.8
million, $10.2 million and $2.9 million in 1998, 1997 and 1996, respectively.
Included in foreign currency 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 a charge equal to $.02 per share in 1998 and insignificant in
1997 and 1996.

Prior to 1997, Mexico's economy was deemed to be non-hyperinflationary,
and because KCM had 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. 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 in 1998 and 1997 did not 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.

<PAGE>

The following table presents the aggregate notional principal amounts,
carrying values and fair values of the Corporation's foreign currency forward
contracts outstanding at December 31, 1998 and 1997:

DECEMBER 31, 1998 December 31, 1997
--------------------------- ---------------------------
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. . . . . $848.0 $ 4.1 $(3.0) $1,094.1 $38.9 $47.3
Liabilities . . 964.0 (12.1) (4.4) 350.0 (6.4) (6.4)
</TABLE>

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 translation
adjustments.

The income statements and balance sheets of operations in
hyperinflationary economies 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.
Operations that are deemed to be hyperinflationary are as follows: Brazil
(prior to January 1, 1998), Ecuador, Mexico (effective
January 1, 1997 through December 31, 1998) and Venezuela.

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 strategy employed by the Corporation to manage its exposure
to interest rate fluctuations did not change significantly during 1998.
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.

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. Selling prices of the Corporation's tissue
products are influenced by the market price for pulp. On a worldwide basis,
the Corporation has reduced its internal pulp supply to approximately 75
percent of its virgin fiber needs. Closure of the Mobile pulp mill in
September 1999, as discussed in Note 13 to the Consolidated Financial
Statements, will reduce the percentage of integration of the Corporation's
pulp requirements to approximately 45 percent. The Corporation has announced
its intention to further reduce its level of pulp integration to approximately
20 percent. However, such a reduction in pulp integration could increase the
Corporation's commodity price risk. Specifically, increases in pulp prices
could adversely affect the Corporation's earnings if selling prices are not
adjusted or if such adjustments significantly trail the increases in pulp
prices. Conversely, if the Corporation does not lower its level of pulp
integration and the market price for pulp declines, thereby possibly causing
selling prices for tissue products to fall, the Corporation's profit margin
could suffer, and if the price of pulp increases, thereby possibly causing the
selling prices of tissue products to rise, the Corporation's profits could
improve. The Corporation has not used derivative instruments in the
management of these risks.

NOTE 8. STOCK COMPENSATION PLANS

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.

Data concerning participation and dividend shares follow:
<TABLE>
<CAPTION>

(Thousands of shares) 1998 1997 1996
- ----------------------------------------------------------

<S> <C> <C> <C>
Outstanding - Beginning of year 9,381 7,173 5,994

Awarded 2,145 1,994 1,954

Dividend shares credited - net 883 795 682

Matured (1,925) (500) (1,312)

Forfeited (435) (81) (145)
------- ------ -------

Outstanding - End of year 10,049 9,381 7,173
======= ====== =======
</TABLE>

Amounts expensed related to participation shares were $23.1 million,
$26.8 million and $17.9 million in 1998, 1997 and 1996, 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, 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.

Data concerning stock option activity follows:

<TABLE>
<CAPTION>
1998 1997 1996
--------------------- --------------- ------------------
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
EXERCISE Exercise Exercise
(Options in thousands) OPTIONS PRICE Options Price Options Price
- ------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Outstanding - Beginning of
year. . . . . . . . . . . 16,195 $36.73 12,609 $26.61 20,688 $20.57
Granted 3,076 55.94 6,111 51.12 2,876 39.94
Exercised (1,608) 22.91 (2,401) 20.15 (10,694) 18.49
Canceled or expired (531) 50.86 (124) 38.61 (261) 27.63
--------- ------- --------

Outstanding - End of year 17,132(a) 41.04 16,195 36.73 12,609 26.61
========= ======= ========

Exercisable - End of year 8,429 30.10 7,016 25.57 7,522 22.24
========= ======= ========

<FN>

(a) Data concerning stock options at December 31, 1998 follows (options in
thousands):
</TABLE>

Options Outstanding
--------------------------- Options Exercisable
Weighted- --------------------
Average Remaining Weighted-
Exercise Contractual Average
Exercise Price Range Options Price Life (Years) Options Price
- ---------------------------------------------------------------------------

At December 31, 1998, the number of additional shares of common stock of
the Corporation available for awards under the 1992 Plan was 17.7 million
shares.

Effective January 1, 1999, the Corporation adopted a restricted stock
plan under which key employees may be granted shares of restricted stock (or
awards of restricted stock units). These restricted stock awards will vest
and become unrestricted shares in three to ten years from the date of grant.
No grants have been made and 2.5 million shares of the Corporation's common
stock have been reserved for such grants.

The Corporation has elected to follow APB 25 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:

(Millions of dollars, except per share amounts) 1998 1997 1996
- --------------------------------------------------------------------------------

Net income $31.0 $22.4 $16.1
Basic and diluted net income per share .06 .04 .03

The weighted-average fair value of the individual options granted during
1998, 1997 and 1996 is estimated as $13.36, $12.22 and $8.66, respectively, on
the date of grant. The fair values were determined using a Black-Scholes
option-pricing model with the following assumptions:

1998 1997 1996
------- ------- -------

<S> <C> <C> <C>
Dividend yield 1.79% 1.88% 2.30%
Volatility 17.60% 18.30% 18.30%
Risk-free interest rate 5.59% 5.98% 5.31%
Expected life 5.8 YEARS 5.4 years 5.8 years

</TABLE>

<PAGE>
- ------
NOTE 9. COMMITMENTS

Leases

The future minimum obligations under leases having a noncancelable term
in excess of one year as of December 31, 1998, are as follows:
<TABLE>
<CAPTION>

Operating
(Millions of dollars) Leases
- --------------------- --------

<S> <C>
Year Ending December 31:
1999 . . . . . . . . . . $ 57.1
2000 . . . . . . . . . . 43.2
2001 . . . . . . . . . . 36.6
2002 . . . . . . . . . . 21.6
2003 . . . . . . . . . . 15.8
Thereafter . . . . . . . 71.6
------

Future minimum obligations $245.9
======
</TABLE>

Operating lease obligations have been reduced by approximately $15.0
million for rental income from noncancelable sublease agreements.

Consolidated rental expense under operating leases was $156.9 million,
$150.8 million and $147.9 million in 1998, 1997 and 1996, 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
2006. At current prices, the commitments are approximately $282 million, $251
million and $234 million in 1999, 2000 and 2001, respectively. The commitment
beyond the year 2001 is approximately $278 million in total.

Although the Corporation is primarily liable for rental payments on the
above-mentioned leases and, considering the purchase commitments for raw
materials described above, management believes the Corporation's exposure to
losses, if any, under these arrangements is not material.

<PAGE>
NOTE 10. STOCKHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME

Stockholders' Equity

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

At December 31, 1998, unremitted net income of equity companies included
in consolidated retained earnings was $797.8 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>

Other Comprehensive Income

During 1998, the Corporation adopted SFAS No. 130, Reporting
Comprehensive Income, which establishes standards for reporting and displaying
comprehensive income and its components in a financial statement that is
displayed with the same prominence as other financial statements. The changes
in the components of other comprehensive income (loss) are as follows:

Year Ended December 31
------------------------------------------------------------------------------
1998 1997 1996
------------------------ ----------------------- -------------------------
PRE-TAX TAX EXP. NET Pre-tax Tax Exp. Net Pre-tax Tax Exp. Net
(Millions of dollars) AMOUNT (CREDIT) AMOUNT Amount (Credit) Amount Amount (Credit) Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unrealized translation
adjustments $ 3.1 $ - $ 3.1 $(296.4) $ - $(296.4) $(16.3) $ - $(16.3)
Minimum pension liability
adjustment (1.4) (.6) (.8) (4.5) (1.7) (2.8) 28.1 10.6 17.5
------ ----- ------ -------- ------ -------- ------- ----- -------

Other comprehensive income
(loss). . . . . . . . . . $ 1.7 $(.6) $ 2.3 $(300.9) $(1.7) $(299.2) $ 11.8 $10.6 $ 1.2
====== ===== ====== ======== ====== ======== ======= ===== =======

</TABLE>

Accumulated balances of other comprehensive income (loss), net of
applicable income taxes:
<TABLE>
<CAPTION>
December 31
----------------
(Millions of dollars) 1998 1997
- -----------------------------------------------------------------

<S> <C> <C>
Unrealized translation adjustments $(950.1) $(953.2)
Minimum pension liability adjustment (14.2) (13.4)
-------- --------

Accumulated other comprehensive income (loss) $(964.3) $(966.6)
======== ========
</TABLE>

<PAGE>
NOTE 11. EXTRAORDINARY GAINS

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 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.

In accordance with SFAS 121, depreciation was suspended on facilities
that were sold in 1997. The suspension of depreciation during the period that
these facilities were held for disposal and producing product is discussed in
Note 2 to the Consolidated Financial Statements.

<PAGE>
NOTE 12. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES

Acquisitions

In May 1998, the Corporation acquired a 50 percent equity interest in
Klabin Tissue, S.A., the leading tissue manufacturer in Brazil.

In July 1998, the Corporation purchased a 51 percent ownership interest
in Kimberly Bolivia, S.A., a new joint venture company in Bolivia.

In July 1998, the Corporation purchased an additional 10 percent
ownership interest in its Korean affiliate, YuHan-Kimberly, Limited,
increasing its ownership interest to 70 percent.

In December 1997, the Corporation acquired Tecnol in a purchase
transaction through the exchange of approximately 8.7 million shares of the
Corporation's common stock for all the outstanding shares of Tecnol common
stock. The value of the exchange of stock plus related acquisition costs was
approximately $428 million. In 1997, the Corporation disclosed that the
allocation of the purchase price would result in assigning values to goodwill
and other intangible assets in a range of $320 million to
$340 million. The actual value assigned in 1998 was $336 million.

On December 23, 1998, the Corporation announced that it had signed a
definitive agreement to acquire Ballard Medical Products ("Ballard"), a
leading maker of disposable medical devices for respiratory care,
gastroenterology and cardiology. Under the agreement, Ballard shareholders
will receive $25 for each share of Ballard common stock, payable in shares of
the Corporation's common stock. The transaction, which is valued at
approximately $764 million, remains subject to regulatory clearances and
approval by the Ballard shareholders. The transaction is expected to be
completed in April 1999 and will be accounted for as a purchase.

Dispositions

In August 1998, the Corporation completed the sale of its subsidiary, K-C
Aviation Inc. ("KCA"), for $250 million in cash. The sale resulted in a
pretax gain of $140.0 million, which is included in other income (expense),
net. The transaction resulted in an after-tax gain of $78.3 million, or $.14
per share.

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 1996, the Corporation sold its remaining 20 percent interest in
Midwest Express Airlines, Inc. and recognized a gain of $.04 per share.

<PAGE>

Assets classified as held for sale in the Consolidated Balance Sheet at
December 31, 1998 and 1997 consist of the following facilities:

1998 1997
CARRYING Carrying
(Millions of dollars) AMOUNT Amount Comment
- ----------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Southeast Timberlands -
See Note 13 . . . . . . . . . . . . . $109.5 $ - Disposal - expected to close in the first
half of 1999.

Terrace Bay, Ontario. . . . . . . . . . - 169.4 Sale is unlikely to occur within one year.
Reclassified to property, plant and
equipment - Third quarter 1998.

New Glasgow, Nova Scotia. . . . . . . . - 105.6 Disposal canceled - Second quarter 1998.

Other . . . . . . . . . . . . . . . . . - 5.0 Disposal canceled - Second quarter 1998.
------ ------

$109.5 $280.0
====== ======
</TABLE>

Determination of individual results of operations of the above facilities
during the depreciation suspension period is not meaningful because of the
integration of the operations of these facilities into the overall
consolidated operating results. The effect of suspending depreciation while
these facilities were held for disposal is discussed in Note 2 to the
Consolidated Financial Statements.

<PAGE>
NOTE 13. CONTINGENCIES AND LEGAL MATTERS

Southeast Timberlands Transaction

In 1997, the U.S. Government enacted new environmental air and water
emission rules that required reduced emission levels of certain chemical
compounds from the Corporation's pulp production facilities. These rules
would have required the Corporation to spend more than $250 million to achieve
the new emission levels at its Mobile, Alabama pulp mill. S.D. Warren Company,
a producer of printing and publishing papers, currently purchases
approximately one-third of the pulp mill's output. On May 4, 1998, S.D.
Warren and the Corporation announced an agreement to terminate their pulp
supply contract in September 1999. As a result of the cancellation of the
pulp supply contract and the cost of implementing the new emission rules, on
May 5, 1998, the Corporation announced it would shut down its Mobile pulp mill
on September 1, 1999, sell the Southeast Timberlands and retain its pulp
facility in New Glasgow, Nova Scotia. The effect on consolidated operating
profit from suspending depreciation during the holding period in accordance
with SFAS 121 is disclosed in Note 2 to the Consolidated Financial Statements.
The Corporation will continue to operate its Mobile tissue mill and has plans
to invest approximately $100 million in the facility over the next several
years to install systems that process recycled fiber and that allow the use
of purchased pulp. These actions are expected to improve the long-term
competitiveness of the Mobile tissue operations by reducing fiber costs and
improving the quality of the products made there. The pulp facility, which
has a book value of approximately $150 million, produces pulp from the
Southeast Timberlands for use in the tissue mill. Closure of the pulp mill
will result in the elimination of approximately 450 jobs.

On January 5, 1999, the Corporation announced that it had agreed to sell
the Southeast Timberlands, which include approximately 529,000 acres of
woodlands in Alabama, Mississippi and Tennessee, to an affiliate of Southstar
Timber Resources, LLC ("Southstar"), a company organized by ACI Capital Co.,
Inc., a New York-based investment firm.

The sale, which is subject to regulatory clearances and completion of
financing by Southstar, is expected to close in the first half of 1999.
Because the sale of the Southeast Timberlands is associated with the planned
closure of the Mobile pulp mill in September 1999, the net effect of the
transaction and severance payments to affected employees, which is expected to
be a net gain, will be recorded at the time of the closing of the sale of the
Southeast Timberlands.

In connection with the pulp mill closure, and as permitted by the terms
of the governing contract, on May 5, 1998, the Corporation gave notice to
Mobile Energy Services Company, L.L.C. ("MESC") of the Corporation's intent to
terminate MESC's long-term contract for power, steam and liquor processing
services with respect to the Mobile pulp mill. The resulting termination
penalty which is specified in the contract will be included in the calculation
of the net gain referred to above. On January 14, 1999, MESC and Mobile
Energy Services Holdings, Inc. filed an action against the Corporation
claiming unspecified damages in connection with the cancellation of the
contract. This action is not expected to have a material adverse effect on
the Corporation's business or results of operations.

Litigation

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.

Environmental Matters

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.

<PAGE>
NOTE 14. UNAUDITED QUARTERLY DATA

(Millions of dollars, 1998 1997
except per share ------------------------------------------ ---------------------------------------------
amounts) FOURTH(A) THIRD(B) SECOND(C) FIRST(D) Fourth(f) Third Second(g) First(h)
- --------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 3,108.2 $3,099.7 $3,041.3 $3,048.6 $ 3,089.4 $3,095.3 $3,124.3 $3,237.6
Gross profit 1,137.9 1,203.8 1,193.8 1,164.5 982.5 1,158.3 1,192.2 1,241.0
Operating profit
(loss) 379.8 416.6 435.4 444.3 (202.0) 466.5 494.4 544.3
Income (Loss) before
extraordinary gains
and cumulative
effect of accounting
change 239.3 340.0 300.1 297.6 (147.0) 316.0 350.8 364.2
Per share basis:
Basic .44 .62 .54 .53 (.26) .57 .63 .65
Diluted .44 .62 .54 .53 (.26) .57 .63 .64
Net income (loss) 239.3 340.0 300.1 286.4(E) (147.0) 316.0 363.5 369.0
Per share basis:
Basic .44 .62 .54 .51(E) (.26) .57 .65 .66
Diluted . . . . . .44 .62 .54 .51(E) (.26) .57 .65 .65
Cash dividends
declared per
share .25 .25 .25 .25 .24 .24 .24 .24
Market price:
High 54-15/16 49-7/16 52-7/16 59-7/16 53-15/16 55 56-7/8 55-3/8
Low 39-7/16 35-7/8 44-7/16 46-3/4 47-5/16 43-1/4 46-1/8 46-11/16
Close 54-1/2 40-1/2 45-7/8 50-1/8 49-5/16 48-15/16 49-3/4 49-3/4

</TABLE>

<TABLE>
<CAPTION>
(a) Included in the fourth quarter 1998 are the following items:

Basic and
Diluted
Gross Operating Net Net Income
(Millions, except per share amounts) Profit Profit Income per Share
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 Charge $ 1.0 $ 50.6 $ 48.1 $.09
Charge for facility consolidations 123.2 123.2 86.1 .16
------ ------ ------ ----

Total. . . . . . . . . . . . . $124.2 $173.8 $134.2 $.25
====== ====== ====== ====

</TABLE>

<TABLE>
<CAPTION>
(b) Included in the third quarter 1998 are the following items:

Basic and
Diluted
Gross Operating Net Net Income
(Millions, except per share amounts) Profit Profit Income per Share
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 Charge $ - $ 4.4 $ 3.3 $.01
Write-down of certain intangible and other assets 11.3 95.6 73.6 .13
----- ------ ----- ----

Total . . . . . . . . . . . . . . . . . . . . $11.3 $100.0 $76.9 $.14
===== ====== ===== ====
</TABLE>

<PAGE>

Net income and basic and diluted net income per share includes a gain of
$78.3 million and $.14, respectively, related to the sale of KCA. Basic and
diluted net income per share also include a loss of $.01 per share related to
the change in the value of the Mexican peso.

(c) Gross profit, operating profit, net income and basic and diluted net
income per share includes $6.3 million, $39.6 million, $26.1 million and $.05,
respectively, related to the 1998 Charge.

(d) Operating profit, net income and basic and diluted net income per
share includes $14.2 million, $9.4 million and $.02, respectively, related
to the 1998 Charge. Basic and diluted net income per share also include a loss
of $.01 per share related to the change in the value of the Mexican peso.

(e) In the fourth quarter of 1998, the Corporation changed its method of
accounting for the costs of start-up activities effective January 1, 1998.
The first quarter of 1998 has been restated to reflect the cumulative effect
of this change.

(f) 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 gain of $.03 per share related to
the sale of Ssangyong.

(g) Includes a 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.

(h) 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.

<PAGE>
NOTE 15. SUPPLEMENTAL DATA (Millions of dollars)

Supplemental Balance Sheet Data
December 31
-----------
Summary of Accounts Receivable and Inventories 1998 1997
- ------------------------------------------------------------------------------------------------

<S> <C> <C>
Accounts Receivable:
From customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,396.0 $1,439.7
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136.5 226.5
Less allowance for doubtful accounts and sales discounts . . . . . . . . (67.3) (59.9)
--------- ---------

Total $1,465.2 $1,606.3
========= =========

Inventories by Major Class:
At the lower of cost on the First-In, First-Out (FIFO) method or market:
Raw materials $ 355.4 $ 372.4
Work in process 164.2 228.5
Finished goods 751.3 749.9
Supplies and other 195.5 174.5
--------- ---------
1,466.4 1,525.3

Excess of FIFO cost over Last-In, First-Out (LIFO) cost (182.6) (205.8)
--------- ---------

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,283.8 $1,319.5
========= =========
</TABLE>

Total inventories include $490.2 million and $526.6 million of
inventories valued on the LIFO method at December 31, 1998 and 1997,
respectively.
<TABLE>
<CAPTION>

December 31
-----------
Summary of Accrued Expenses 1998 1997
- --------------------------------------------------------------
<S> <C> <C>
Accruals for the 1998 and 1997 Charges. . $ 144.2 $ 191.8
Accrued advertising and promotion expense 272.6 262.8
Accrued salaries and wages. . . . . . . . 251.7 310.9
Other accrued expenses. . . . . . . . . . 785.2 680.1
-------- --------

Total accrued expenses. . . . . . . $1,453.7 $1,445.6
======== ========
</TABLE>

<PAGE>

Supplemental Cash Flow Statement Data

Summary of Cash Flow Effects Year Ended December 31
of Decrease (Increase) in ---------------------------
Operating Working Capital(a) 1998 1997 1996
- -------------------------------------------------------------------------------

<S> <C> <C> <C>
Accounts receivable $ 87.5 $ 13.4 $ 34.2
Inventories (.4) (43.7) 15.9
Prepaid expenses 14.2 (13.6) 21.6
Trade accounts payable (98.1) (93.9) (55.6)
Other payables 37.9 32.8 54.2
Accrued expenses (116.3) (294.7) (352.5)
Accrued income taxes 130.8 (151.9) 141.0
Currency rate changes 8.0 (36.8) (.4)
-------- -------- --------

Decrease (Increase) in operating working capital $ 63.6 $(588.4) $(141.6)
======== ======== ========
<FN>

(a) Excludes the effects of acquisitions, dispositions and the Unusual
Items discussed in Note 2 to the Consolidated Financial Statements.
</TABLE>

Year Ended December 31
----------------------
Other Cash Flow Data 1998 1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reconciliation of changes in cash and cash equivalents:
Balance, January 1 $ 90.8 $ 83.2 $ 221.6
Increase (Decrease) 53.2 7.6 (138.4)
------ ------- --------

Balance, December 31 $144.0 $ 90.8 $ 83.2
====== ======= ========

Interest paid. . . . . . . . . . . . . . . . . . . . . . $192.1 $173.6 $ 219.8
Income taxes paid 368.6 557.3 503.0
Increase (Decrease) in cash and cash equivalents due to
exchange rate changes 2.4 (17.4) -
</TABLE>

Year Ended December 31
----------------------
Interest Expense 1998 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross interest cost $211.1 $181.8 $200.6
Capitalized interest on major construction projects (12.4) (17.0) (13.9)
------- ------- -------

Interest expense $198.7 $164.8 $186.7
======= ======= =======

</TABLE>

<PAGE>
NOTE 16. BUSINESS SEGMENT AND GEOGRAPHIC DATA INFORMATION

In the fourth quarter of 1998, the Corporation adopted SFAS 131. This
rule requires companies to report information about their business segments on
the basis of how they are managed rather than on the basis of the products
they sell. Business segments under SFAS 131 are components of an enterprise
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and assess performance. The Corporation's operating decision maker
is its chief executive officer. The Corporation is organized into three
global business segments, each of which is headed by a group president who
reports to the chief executive officer. Each of these three group presidents
is responsible for development of global strategies to grow the Corporation's
worldwide tissue, personal care, and health care and other businesses. They
are responsible for developing and managing global plans for branding and
product positioning, cost reductions, technology and research and development
programs, and capacity and capital investment. Each business segment is
managed separately in view of the substantially different product lines each
manufactures and markets.

The Corporation's reportable business segments are Tissue, Personal Care,
and Health Care and Other. Significant changes from prior segment reporting
include the reclassification of wet wipes from Personal Care and premium
business and correspondence papers and related products from Newsprint, Paper
and Other to Tissue; and professional health care and nonwoven fabrics from
Personal Care to Health Care and Other. Prior year information about the
Corporation's reportable business segments has been reclassified to the
current year basis of presentation.

- - The Tissue segment manufactures and markets facial and bathroom tissue,
and paper towels and wipers for household and away-from-home use; wet wipes;
printing, premium business and correspondence papers; and related products.

- - The Personal Care segment manufactures and markets disposable diapers,
training and youth pants; feminine and incontinence care products; and related
products.

- - The Health Care and Other segment manufactures and markets health care
products such as surgical packs and gowns, sterilization wraps and disposable
face masks; specialty and technical papers and related products; and other
products.

<PAGE>

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:

<TABLE>
<CAPTION>
Consolidated Operations by Business Segment

Net Sales Operating Profit
--------------------------------- ------------------------------
(Millions of dollars) 1998 1997 1996 1998(a) 1997(a) 1996
- -------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Tissue $ 6,706.2 $ 7,182.7 $ 8,183.6 $ 968.9 $ 637.1 $1,346.5
Personal Care 4,577.8 4,493.8 4,091.8 620.6 636.6 666.7
Health Care and Other 1,047.1 908.0 926.7 188.6 136.3 138.0
---------- ---------- ---------- --------- --------- ---------
Combined 12,331.1 12,584.5 13,202.1 1,778.1 1,410.0 2,151.2
Intersegment sales (33.3) (37.9) (53.0) - - -
Unallocated items - net - - - (102.0) (106.8) (97.5)
---------- ---------- ---------- --------- --------- ---------

Consolidated $12,297.8 $12,546.6 $13,149.1 $1,676.1 $1,303.2 $2,053.7
========== ========== ========== ========= ========= =========
</TABLE>

Assets Depreciation Capital Spending
---------------------------- ------------------------ ---------------------
(Millions of dollars) 1998 1997 1996 1998 1997 1996 1998 1997 1996
- -------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tissue $ 5,758.9 $ 5,802.2 $ 6,997.1 $301.4 $288.9 $375.6 $345.4 $563.2 $655.2
Personal Care 3,076.5 3,053.9 3,052.6 174.2 174.9 157.8 290.3 326.4 190.3
Health Care
and Other 966.6 1,023.7 555.4 32.4 25.3 25.0 31.5 45.4 35.3
--------- --------- --------- ------ ------ ------ ------ ------ ------
Combined 9,802.0 9,879.8 10,605.1 508.0 489.1 558.4 667.2 935.0 880.8
Unallocated(b)
and
intersegment
assets 1,708.3 1,386.2 1,240.6 1.2 1.8 2.6 2.3 9.3 2.9
--------- --------- --------- ------ ------ ------ ------ ------ ------

Consolidated $11,510.3 $11,266.0 $11,845.7 $509.2 $490.9 $561.0 $669.5 $944.3 $883.7
========= ========= ========= ====== ====== ====== ====== ====== ======

</TABLE>

<TABLE>
<CAPTION>
(a) Included in Business Segment operating profit are the following unusual items:

1998
---------------------------------------------------------
Personal Health Care
(Millions of dollars) Tissue Care and Other Unallocated Total
- ---------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
1998 Charge $ 82.8 $ 23.9 $1.4 $.7 $108.8
Charge for facility consolidations 69.9 53.3 - - 123.2
Write-down of certain intangible and
other assets 14.5 80.5 .6 - 95.6
------ ------ ---- --- ------
Total $167.2 $157.7 $2.0 $.7 $327.6
====== ====== ==== === ======
</TABLE>

1997
---------------------------------------------------------
Personal Health Care
(Millions of dollars) Tissue Care and Other Unallocated Total
- ---------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
1997 Charge $499.4 $169.5 $24.0 $8.3 $701.2
====== ====== ===== ==== ======

<FN>

(b) Assets include investments in equity companies of $813.1 million,
$567.7 million and $551.1 million in 1998, 1997 and 1996, respectively.
</TABLE>

<PAGE>

Consolidated Operations by Geographic Area
<TABLE>
<CAPTION>
Net Sales Operating Profit
--------------------------------- -------------------------------
(Millions of dollars) 1998 1997 1996 1998(A) 1997(a) 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States . . . . . . . . . $ 8,018.2 $ 7,878.7 $ 8,142.5 $1,573.4 $1,206.2 $1,592.3
Canada. . . . . . . . . . . . . 785.1 1,052.5 1,311.0 96.5 146.4 138.4
Intergeographic items(b). . . . (409.1) (397.3) (451.7) - - -
---------- ---------- ---------- --------- --------- ---------

North America . . . . . . . . . 8,394.2 8,533.9 9,001.8 1,669.9 1,352.6 1,730.7
Europe. . . . . . . . . . . . . 2,471.2 2,548.1 2,881.8 (81.4) (60.0) 220.4
Asia, Latin America and Africa. 1,688.4 1,772.2 1,603.5 189.6 117.4 200.1
---------- ---------- ---------- --------- --------- ---------

Combined. . . . . . . . . . . . 12,553.8 12,854.2 13,487.1 1,778.1 1,410.0 2,151.2
Intergeographic items . . . . . (256.0) (307.6) (338.0) - - -
Unallocated items - net . . . . - - - (102.0) (106.8) (97.5)
---------- ---------- ---------- --------- --------- ---------

Consolidated. . . . . . . . . . $12,297.8 $12,546.6 $13,149.1 $1,676.1 $1,303.2 $2,053.7
========== ========== ========== ========= ========= =========
</TABLE>

Assets
---------------------------------
(Millions of dollars) 1998 1997 1996
- -------------------------------------------------------------------

<S> <C> <C> <C>
United States . . . . . . . . . $ 5,758.9 $ 5,771.0 $ 5,771.6
Canada. . . . . . . . . . . . . 451.9 543.6 825.6
Intergeographic items . . . . . (52.6) (65.4) (50.2)
---------- ---------- ----------

North America . . . . . . . . . 6,158.2 6,249.2 6,547.0
Europe. . . . . . . . . . . . . 2,074.5 2,267.4 2,579.0
Asia, Latin America and Africa. 1,682.2 1,505.8 1,610.2
---------- ---------- ----------

Combined. . . . . . . . . . . . 9,914.9 10,022.4 10,736.2
Intergeographic items . . . . . (112.9) (142.6) (131.1)
Unallocated items - net(c). . . 1,708.3 1,386.2 1,240.6
---------- ---------- ----------

Consolidated. . . . . . . . . . $11,510.3 $11,266.0 $11,845.7
========== ========== ==========

</TABLE>

(a) Included in geographic operating profit are the following unusual
items:

1998
--------------------------------------------------------
Asia,
Latin America
(Millions of dollars) U.S. Canada Europe and Africa Unallocated Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 Charge $ 25.3 $1.8 $ 78.0 $ 3.0 $.7 $108.8
Charge for facility
consolidations. . 47.0 5.8 64.2 6.2 - 123.2
Write-down of certain
intangible and
other assets. . . 27.7 .7 64.7 2.5 - 95.6
------ ---- ------ ----- --- ------
Total $100.0 $8.3 $206.9 $11.7 $.7 $327.6
====== ==== ====== ===== === ======
</TABLE>

1997
--------------------------------------------------------
Asia,
Latin America
(Millions of dollars) U.S. Canada Europe and Africa Unallocated Total
- -----------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
1997 Charge $403.7 $8.2 $189.8 $91.2 $8.3 $701.2
====== ==== ====== ===== ==== ======

</TABLE>

(b) Net sales include $255.9 million, $246.0 million and $284.8 million by
operations in Canada to the U.S. in 1998, 1997 and 1996, respectively.

(c) Assets include investments in equity companies of $813.1 million,
$567.7 million and $551.1 million in 1998, 1997 and 1996, respectively.

<PAGE>

Equity Companies' Data by Geographic Area

<TABLE>
<CAPTION>
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, 1998
Latin America(a) $ 1,606.8 $574.4 $388.2 $245.5 $113.5
Asia, Australia and Middle East 666.9 236.6 83.3 49.1 23.6
------------- ------ ------ ------ ------
Total $ 2,273.7 $811.0 $471.5 $294.6 $137.1
============= ====== ====== ======= ======

For the year ended:
December 31, 1997
Latin America(b) $ 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(c) $ 1,380.5 $512.9 $344.3 $291.5 $133.1
North America, Asia, Australia and
Middle East(d). . . . . . . . . . 725.7 253.0 83.8 42.8 19.3
------------- ------ ------ ------ ------
Total . . . . . . . . . . . . . $ 2,106.2 $765.9 $428.1 $334.3 $152.4
============= ====== ====== ====== ======

<FN>

(a) Net income and Kimberly-Clark's share of net income include a loss of $19.8 million and $9.2 million, respectively,
related to the change in the value of the Mexican peso. In May 1998, the Corporation acquired 50 percent of Klabin Tissue,
S.A., the leading tissue manufacturer in Brazil.

(b) Kimberly-Clark's share of net income includes a 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.

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

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

</TABLE>

Equity Companies' Data by Geographic Area

Non- Non- Stock-
Current Current Current Current holders'
(Millions of dollars) Assets Assets Liabilities Liabilities Equity
- ---------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
December 31, 1998
Latin America $ 785.5 $1,170.7 $575.0 $154.0 $1,227.2
Asia, Australia and Middle East 239.2 359.1 129.5 173.8 295.1
-------- -------- ------ ------ --------
Total . . . . . . . . . . . $1,024.7 $1,529.8 $704.5 $327.8 $1,522.3
======== ======== ====== ====== ========

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
======== ======== ====== ====== ========
</TABLE>

Equity companies are principally engaged in operations in the Tissue and
Personal Care businesses.

KCM is partially owned by the public and its stock is publicly traded in
Mexico. At December 31, 1998, the Corporation's investment in this equity
company was $369.3 million, and the estimated fair value was $1.7 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, 1998 and 1997,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1998.
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.

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 provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Kimberly-Clark Corporation
and Subsidiaries at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.

/s/ Deloitte & Touche LLP
- ---------------------------------

Deloitte & Touche LLP
Dallas, Texas
January 25, 1999

<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 1998.

The Audit Committee oversees the financial reporting process on behalf of
the board of directors. As part of that responsibility, the committee
recommends to the board of directors, subject to stockholder approval, the
selection of the Corporation's independent public accountants. The Audit
Committee discusses the overall scope and specific plans for annual audits
with the Corporation's internal auditors and Deloitte & Touche LLP. The
committee also discusses the Corporation's annual consolidated financial
statements and the adequacy of its internal controls. The committee meets
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 are designed to
facilitate any private communication with the committee desired by the
internal auditors or independent public accountants.

/s/ Paul J. Collins
- --------------------------

Paul J. Collins
Chairman, Audit Committee
January 25, 1999

<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.

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, 1998, 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, 1998, 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.

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

January 25, 1999

<PAGE>

ADDITIONAL INFORMATION

TRANSFER AGENT, REGISTRAR AND DIVIDEND DISBURSING AGENT

BankBoston N.A. is the Transfer Agent, Registrar and Dividend Disbursing
Agent for the Company's common stock and is responsible for maintaining
shareholder account records. Inquiries regarding dividend payments, lost
certificates, IRS Form 1099, changes in address, name or ownership, and
information regarding Kimberly-Clark's Dividend Reinvestment and Stock
Purchase Plan should be addressed to:

BankBoston N.A.
c/o EquiServe L.P.
P. O. Box 8040
Boston, Massachusetts 02266-8040
Telephone: 800-730-4001
Internet: http://www.equiserve.com

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 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 11:00 a.m. on
Thursday, April 29, 1999.

INVESTOR RELATIONS

Securities analysts, portfolio managers and representatives of
institutional investors seeking information about the Company should contact
Michael D. Masseth, Vice President - Investor Relations, at 972-281-1478.
Investors may also obtain information about Kimberly-Clark and copies of
documents released by the Company by calling 800-639-1352.

CALENDAR

Kimberly-Clark's fiscal year ends December 31. The annual report is
distributed in March.

<PAGE>
SEC FORM 10-K AND OTHER INFORMATION / COMPANY WEB SITE

Stockholders and others will find the Company's financial information,
press releases and other information on the Company's web site at
www.kimberly-clark.com. There is a direct link from the web site to the
Securities and Exchange Commission (SEC) filings via the EDGAR database,
including Forms 10-K, 10-Q and 8-K. Stockholders may contact Stockholder
Services, P. O. Box 612606, Dallas, Texas 75261-2606 or call 972-281-1521 to
obtain a hard copy of these reports, without charge.

EMPLOYEES AND STOCKHOLDERS

In its worldwide consolidated operations, Kimberly-Clark had 54,700
employees as of December 31, 1998. Equity companies had an additional 14,600
employees. The Corporation had 54,770 stockholders of record and 538.3
million shares of common stock outstanding as of the same date.

TRADEMARKS

The brand names mentioned in this report -- Amiga, Andrex, Ballet,
Bebito, Camelia, Celex, Chiffon, Classic Crest, ColdCare, Comfort & Beauty,
Cottonelle, Depend, Dr. Bel, Environment, Fems, FluidShield, GoodNites,
Gourmet, Huggies, Intima, Intimus, Iris, Joy, Kimberly-Clark, Kimwipes, Kleen
Bebe, Kleenex, Kleenex Expressions, Kleenex EXTRAcare, Klin, Kotex, Kotex
White, Lily, Limpiogar, Little Swimmers, Luggi's, Lys, Mariposa, MicroCool,
Mimex, Mimi, Molett, Monbebe, Monica, Neve, Nice, Noble, Nonito, Page,
Papagayo, Parents, Peaudouce, Petalo, Poise, Popee, Pull-Ups, Sanex,
Sani-Fresh, Scott, Scottex, Scottfold, ShopPro, Slei, Snugglers, Softina,
Sujay, Sunny, Tampona, Tecnol, Thick & Thirsty, Tiss, Titulim, Top, Trebol,
Unicel, Viva, WorkHorse, and WypAll -- are trademarks of Kimberly-Clark
Corporation or its affiliates.

<PAGE>
Exhibit No. (21)

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
Subsidiaries of the Corporation

CONSOLIDATED SUBSIDIARIES AND EQUITY COMPANIES

The following list includes certain companies that were owned directly or
indirectly by Kimberly-Clark Corporation, a Delaware corporation, Dallas,
Texas, as of December 31, 1998. Kimberly-Clark's percentage ownership of
each company is 100% unless otherwise indicated.

This list includes all significant subsidiaries and equity companies.
The place of incorporation or organization is the same as the location of the
company except as shown parenthetically.

CONSOLIDATED SUBSIDIARIES

Avent, Inc. and subsidiaries (Delaware), Tucson, Arizona

Colombiana Kimberly Colpapel S.A., Medellin, Colombia (59%)*

Ecuapel, S.A., Guayaquil, Ecuador (41%)

Housing Horizons, LLC, Dallas, Texas
K-C Vinathai Co. Ltd., Hanoi, Vietnam (51%)

Kimberly Bolivia S.A., Santa Cruz, Bolivia (30%)

Kimberly-Clark Argentina Holdings S.A. and subsidiaries, Buenos Aires,
Argentina

Kimberly-Clark a.s., Czech Republic

Kimberly-Clark B.V., Ede, The Netherlands

Kimberly-Clark CBG Hygienic Products Company Limited, Chengdu, Handan, Kunming
and Nanjing, China

Kimberly-Clark Canada Inc. and subsidiaries, Mississauga, Ontario, Canada

Kimberly-Clark de Centro America, S.A., Sitio del Nino, El Salvador (81%)

Kimberly-Clark Chile, S.A., Santiago, Chile

Kimberly-Clark GmbH, Koblenz, Germany

Kimberly-Clark Holding Ltd. and subsidiaries, Kent, United Kingdom

Kimberly-Clark (Hong Kong) Limited, Kowloon, Hong Kong

Kimberly-Clark International, S.A., Panama City, Panama

Kimberly-Clark Japan Limited, Tokyo, Japan

Kimberly-Clark Kenko Industria e Commercio Ltda., Sao Paulo, Brazil (51%)

Kimberly-Clark Lda., Lisbon, Portugal

Kimberly-Clark Luxembourg S.A.R.L. and subsidiaries, Luxembourg

Kimberly-Clark Malaysia Sendirian Berhad, Petaling Jaya, Malaysia

Kimberly-Clark N.V., Duffel, Belgium

Kimberly-Clark Paper (Guangzhou) Company Ltd., Guangzhou, China

Kimberly-Clark Paper (Shanghai), Ltd., Shanghai, China (56%)

Kimberly-Clark Paraguay, S.A., Asuncion, Paraguay

Kimberly-Clark Personal Hygienic Products Co., Ltd., Beijing, China

Kimberly-Clark Personal Hygienic Products (Nanjing) Co. Ltd., Nanjing, China

Kimberly-Clark Poland Sp.zo.o., Warsaw, Poland

Kimberly-Clark Philippines Inc., Makati, Philippines (87%)

Kimberly-Clark Printing Technology, Inc. (California) and subsidiaries,
Roswell, Georgia

Kimberly-Clark Products (Malaysia) Sdn. Bhd., Kluang, Malaysia

Kimberly-Clark Pudumjee Limited, Pune, India (51%)

Kimberly-Clark Puerto Rico, Inc. (Delaware), San Juan, Puerto Rico

Kimberly-Clark S.A. and subsidiaries, Madrid, Spain

Kimberly-Clark - SID, S.A., Dominican Republic (80%)

Kimberly-Clark (Singapore) Pte. Ltd., Singapore

Kimberly-Clark S.N.C., Saint Cloud, France

Kimberly-Clark Southern Africa (Holdings) (Pty) Ltd. and subsidiaries,

Johannesburg, South Africa (50% plus one share)

Kimberly-Clark S.p.A., Torino, Italy

Kimberly-Clark Technical Paper, Inc. (New Hampshire), East Ryegate, Vermont

Kimberly-Clark Thailand Limited, Bangkok, Thailand

Kimberly-Clark Tissue Company (Pennsylvania), Dallas, Texas

Kimberly-Clark Ukraine LLC, Kiev, Ukraine

Kimberly-Clark Uruguay, S.A., Montevideo, Uruguay

Kimberly-Clark Vietnam Co, Inc., Ho Chi Minh City, Vietnam

Kimberly-Clark Worldwide, Inc. (Delaware), Dallas, Texas

KIMNICA, S.A., Managua, Nicaragua (81%)

MIMO, S.A., Guayaquil, Ecuador (46%)

MIMO, S.A., Lima, Peru (47%)

ooo Kimberly-Clark, Moscow, Russia

Papelera Guaicaipuro, C.A., Maracay, Venezuela (40%)

Papeles Absorbentes, S.A., Guatemala City, Guatemala (54%)

P.T. Scott Paper Indonesia, Jakarta Utara, Indonesia

Scott Paper Company de Costa Rica, S.A. and subsidiaries, San Jose, Costa Rica
(81%)

Scott Paper Company - Honduras, S.A. de C.V., San Pedro, Honduras (81%)

Scott, S.A. and subsidiaries, Saint Cloud, France

Taiwan Scott Paper Corporation, Taipei, Taiwan (67%)

Tecnol Medical Products, Inc. and subsidiaries (Delaware), Fort Worth, Texas

Venekim, C.A., Caracas, Venezuela (59%)

YuHan-Kimberly, Limited, Seoul, Korea (70%)

<PAGE>
EQUITY COMPANIES

Hogla-Kimberly Limited and subsidiaries, Hadera, Israel (49.9%)

KCK Tissue S.A., Buenos Aires, Argentina (50%)

Kimberly-Clark Australia Pty. Limited, Milsons Point, New South Wales,
Australia (50%)

Kimberly-Clark Lever, Ltd., Pune, India (50%)

Kimberly-Clark de Mexico, S.A. de C.V. and subsidiaries, Mexico City, Mexico
(47.2%)

Klabin Kimberly S.A., Sao Paulo, Brazil (50%)

Olayan Kimberly-Clark Arabia Company, Al-Khobar, Kingdom of Saudi Arabia (49%)

Olayan Kimberly-Clark (Bahrain) WLL, Manama, Bahrain (49%)

P.T. Kimsari Paper Indonesia, Medan, Indonesia (50%)

Tecnosur S.A., Columbia (29%)

* Consolidated as of January 1, 1999

Exhibit No. (23)

CONSENT OF DELOITTE & TOUCHE LLP

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,
333-43647 and 333-71661) and on Form S-3 (Nos. 33-52343, 333-45399 and
333-68903) of our reports dated January 25, 1999, 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, 1999

Exhibit No. (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, 1998 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.