FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT: JULY 22, 1999
(Date of earliest event reported)
KIMBERLY-CLARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-225 39-0394230
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
P.O. BOX 619100, DALLAS, TEXAS 75261-9100
(Address of principal executive offices) (Zip Code)
(972) 281-1200
(Registrant's telephone number, including area code)
_____________________________________
<PAGE>
Item 5. Other Events
- -------------------------
Attached hereto as Exhibit 99 is a press release issued by Kimberly-Clark
Corporation in connection with its 1999 second quarter earnings and its
restated earnings for 1996, 1997, 1998 and the first quarter of 1999.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KIMBERLY-CLARK CORPORATION
Date: July 22, 1999 By: /s/ John W. Donehower
---------------------
John W. Donehower
Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
--------------
(99) Press release issued by Kimberly-Clark Corporation in
connection with its 1999 second quarter and its
restated earnings for 1996, 1997, 1998 and the first
quarter of 1999.
Tina Barry
(972) 281-1484
KIMBERLY-CLARK REPORTS SECOND QUARTER EARNINGS OF 73 CENTS PER SHARE, AN
INCREASE OF 55 PERCENT OVER 1998
Company to Restate Financial Statements; Changes Will Have No
Impact on Sales and Will Modestly Increase Earnings for the 1995
Through First Quarter 1999 Period
DALLAS, July 21, 1999 -- Kimberly-Clark Corporation (KMB:NYSE) today announced
that diluted net income per share for the second quarter of 1999 was 73 cents
per share, an increase of 55.3 percent compared with 47 cents per share in the
second quarter of 1998. Second quarter earnings in 1999 included a net credit
of 1 cent per share related to restructuring and other unusual items, while
the 1998 quarter included charges of 11 cents per share. Excluding these
items, earnings per share increased 24.1 percent compared with 1998. All
comparisons reflect the restatements described below.
The overall improvement in results was driven by the company's global
personal care business, as new and improved products propelled sales and
earnings to record levels, with particularly strong increases in North
America. Operating profit in the health care and other segment, excluding
divested operations, continued to grow at a double-digit rate. Additionally,
tissue operating profit rose despite major investments to support growth
initiatives for consumer bathroom tissue and paper towels.
The company also said it will amend previously issued financial
statements for 1995 through the first quarter of 1999 following a review by
the accounting staff of the U.S. Securities and Exchange Commission (SEC).
The restatements primarily relate to the timing of charges for past
restructuring actions and previously announced facility closures and will have
no impact on sales or cash flows.
As a result of the restatements, certain assets are being written off
through additional depreciation instead of through a
- more -
<PAGE>
- 2 -
one-time charge. The company recorded additional depreciation of
approximately 1 cent per share in the second quarter of 1999 and will record
similar charges of approximately 3 cents per share over the balance of 1999
and a like amount for the full year 2000.
Wayne R. Sanders, chairman and chief executive officer of Kimberly-Clark,
said: "I am pleased with our continued progress in the second quarter. We
have delivered improved sales and earnings by focusing on the fundamental
strengths of our brands and proprietary technologies. Our strategies are on
target and our momentum is good, with four consecutive quarters of
double-digit earnings growth. Importantly, we are generating more top-line
growth, while our margins and cash flow remain very strong.
"I am particularly encouraged by the continued excellent performance of
our personal care business - recent improvements to our diaper, feminine care
and incontinence care products are really paying off. We also made
significant progress with our growth initiatives in tissue during the second
quarter. We completed the rollout of new Kleenex Cottonelle bathroom tissue
and launched significantly improved Scott towels in the U.S. on an
aggressive timetable. And the acquisition of the Attisholz tissue business,
finalized in June, marks the beginning of a new stage of growth for
Kimberly-Clark in Europe.
"With the restatement of our prior financial statements, we will
be in a position to move forward with completing our acquisition of Ballard
Medical Products and a shelf registration filing, both of which had been
on hold pending resolution of the SEC review," Mr. Sanders said.
REVIEW OF OPERATING RESULTS
Sales of $3.15 billion for the second quarter were up 3.5 percent
compared with 1998. Sales would have grown 5.4 percent if the revenues of K-C
Aviation Inc., which was sold in the third quarter of 1998, were excluded.
Worldwide sales volumes, excluding the divestiture, were approximately 6
percent higher, while changes in foreign currency exchange rates reduced sales
by 1 percent. A portion of the sales volume increase is attributable to
operations in Colombia, in which the company made
- more -
<PAGE>
- 3 -
an additional investment in late 1998 to gain majority ownership.
The increase in second quarter sales was driven primarily by higher sales
of personal care products, which were 11.0 percent greater than in 1998.
Personal care sales volumes jumped 12 percent, led by increased shipments of
Huggies diapers in North America, Europe and Asia and strong double-digit
growth of Depend and Poise incontinence products in North America. Tissue
sales were up 1.5 percent, on a 2 percent increase in sales volumes, with
gains in North America for both consumer and away-from-home products.
However, sales of tissue products in Europe were somewhat lower primarily due
to competitive conditions and currency effects. Sales of health care and
other products, excluding the revenues of K-C Aviation, rose 4.7 percent,
mainly because of continued growth in professional health care.
Operating profit in the second quarter of 1999 was $541.6 million, 38.0
percent greater than in the prior year. Excluding restructuring charges or
credits and other unusual items, operating profit was $556.4 million in the
second quarter of 1999 compared with $470.6 million in 1998, an increase of
18.2 percent. The increase in sales, along with productivity gains and other
manufacturing cost benefits, contributed to the improved profitability, more
than offsetting the significant incremental investment in production start-up
and marketing costs for new Kleenex Cottonelle bathroom tissue and improved
Scott towels in North America.
Unusual items of $14.8 million in the second quarter of 1999
included severance costs of approximately $9 million, additional depreciation
charges of about $9 million resulting from restatement of previously issued
financial statements and a restructuring credit of $1.4 million. In the
second quarter of 1998, the company recorded restructuring charges of $8.5
million and other unusual charges of $69.6 million, including costs of
approximately $24 million relating to the planned closure of the company's
pulp mill in Mobile, Ala., and $30 million of additional depreciation.
In total, these items reduced second quarter earnings by 2 cents per share in
1999 and 11 cents per share in 1998.
- more -
<PAGE>
- 4 -
Other income and expense in the second quarter of 1999 included
nonoperating credits of $23 million, equivalent to 3 cents per share, of which
approximately $9 million was attributable to a gain on the sale of the
company's pulp mill in Miranda, Spain.
Kimberly-Clark's share of net income of equity companies in the second
quarter was $46.9 million in 1999 compared with $33.6 million in 1998. The
increase was primarily attributable to higher earnings at Kimberly-Clark de
Mexico, S.A. de C.V.
For the first six months of 1999, sales of $6.3 billion were up 3.0
percent from $6.1 billion last year. Excluding the sales of K-C Aviation,
however, sales were about 5 percent higher. Operating profit was $1,095.9
million in 1999 versus $777.2 million in 1998. However, before restructuring
charges and other unusual items, year-to-date operating profit increased 22.2
percent to $1,130.7 million from $925.6 million in 1998. Diluted earnings per
share were $1.43 in 1999, 57.1 percent greater than 91 cents in 1998.
Earnings before unusual items were $1.44 per share in 1999 compared with
$1.13 per share in 1998, an increase of 27.4 percent.
RESTATEMENT OF PRIOR FINANCIAL STATEMENTS
The company said that the restatements will increase its cumulative
earnings from 1995 through the first quarter of 1999 by approximately 20 cents
per share. A summary of the restatements, and the expected impact by year, is
shown in the attached table.
Mr. Sanders said: "These revisions do not alter the positive effects of
the actions we have taken to significantly reduce costs, streamline our
manufacturing operations and improve efficiency; they mainly alter the period
in which the related charges are recorded. Furthermore, the restatements do
not affect the company's favorable business prospects or overall financial
strength."
The company expects to file an amended Form 10-K for 1998 and an amended
Form 10-Q for the first quarter of 1999 with the SEC by mid-August
following completion of an audit of the restated financial statements,
which is currently in process, by its independent auditors.
- more -
<PAGE>
- 5 -
Kimberly-Clark Corporation is a leading global manufacturer of tissue,
personal care and health care products. The company's global brands include
Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott, Kimberly-Clark, Tecnol,
Kimwipes and WypAll. Other brands well known outside the U.S. include Andrex,
Scottex, Page, Popee and Kimbies. Kimberly-Clark also is a major producer of
premium business, correspondence and technical papers. The company has
manufacturing operations in 39 countries and sells its products in more than
150 countries.
Certain matters contained in this news release concerning the business
outlook, anticipated financial and operating results, strategies,
contingencies and transactions of the company constitute forward-looking
statements and are based upon management's expectations and beliefs concerning
future events impacting the company. For a description of certain factors
that could cause the company's future results to differ materially from those
expressed in any such forward-looking statements, see the section of Part I,
Item 1 of the company's Annual Report on Form 10-K for the year ended December
31, 1998 entitled "Factors That May Affect Future Results."
Kimberly-Clark Web Site: www.kimberly-clark.com
----------------------
- more -
<PAGE>
- 6 -
KIMBERLY-CLARK CORPORATION
SECOND QUARTER ENDED JUNE 30
(Millions except per share amounts)
<TABLE>
<CAPTION>
EARNINGS PER SHARE SUMMARY: Second Quarter Six Months
Ended June 30 Ended June 30
----------------- ----------------
1999 1998 1999 1998
------ -------- ------ ------
As As
restated restated
<S> <C> <C> <C> <C>
Net Income Per
Share - Diluted $.73 $.47 $1.43 $.91
Adjusted for:
Restructuring and Other
Unusual Charges .02 .11 .04 .19
Nonoperating Gains (.03) -- (.03) .01
Cumulative Effect of
Accounting Change -- -- -- .02
------- ------- ------- -----
Earnings Per Share
Excluding Restructuring &
Other Unusual Charges $.72 $.58 $1.44 $1.13
======= ======= ======= =====
</TABLE>
<TABLE>
<CAPTION>
OTHER INFORMATION:
1999 1998 Change
------ ------ ------
SIX MONTHS ENDED JUNE 30
<S> <C> <C> <C>
Cash Dividends Declared Per Share $ .52 $ .50 + 4.0%
Capital Spending 359.9 330.6 + 8.9%
Average Number of Common Shares
Outstanding
Basic 534.1 556.4 N.M.
Diluted 537.4 559.5 N.M.
Period-End Number of Common Shares
Outstanding 532.6 554.2 N.M.
TWELVE MONTHS ENDED JUNE 30
Net Income Return on Average
Stockholders' Equity 32.0% 18.5% +73.0%
Operating Profit Return on Average
Assets 17.2% 12.1% +42.1%
</TABLE>
N.M.-Not meaningful
Unaudited
- more -
<PAGE>
- 7 -
KIMBERLY-CLARK CORPORATION
SECOND QUARTER ENDED JUNE 30
(Millions except per share amounts)
<TABLE>
<CAPTION>
1999 1998 Change
-------- -------- ------
As
restated
<S> <C> <C> <C>
Net Sales $3,148.6 $3,041.3 + 3.5%
Cost of products sold 1,852.3 1,915.2 - 3.3%
--------- ---------
Gross Profit 1,296.3 1,126.1 +15.1%
Advertising, promotion
and selling expenses 517.6 491.5 + 5.3%
Research expense 62.2 54.8 +13.5%
General expense 166.1 169.8 - 2.2%
Goodwill amortization 10.2 9.0 +13.3%
Restructuring and other
unusual charges (1.4) 8.5 N.M.
--------- ---------
Operating Profit 541.6 392.5 +38.0%
Interest income 5.2 5.5 - 5.5%
Interest expense (54.6) (48.9) +11.7%
Other income (expense), net 27.7 7.7 N.M.
--------- ---------
Income Before Income Taxes 519.9 356.8 +45.7%
Provision for income taxes 165.8 121.3 +36.7%
--------- ---------
Income Before Equity Interests 354.1 235.5 +50.4%
Share of net income of
equity companies 46.9 33.6 +39.6%
Minority owners' share of
subsidiaries' net income (9.9) (6.1) +62.3%
--------- ---------
Net Income $391.1 263.0 +48.7%
========= =========
Net Income Per Share:
Basic $.73 $.47 +55.3%
========= =========
Diluted $.73 $.47 +55.3%
========= =========
</TABLE>
N.M.-Not meaningful
Unaudited
- more -
<PAGE>
- 8 -
KIMBERLY-CLARK CORPORATION
SIX MONTHS ENDED JUNE 30
(Millions except per share amounts)
<TABLE>
<CAPTION>
1999 1998 Change
------ -------- ------
As restated
<S> <C> <C> <C>
Net Sales $6,273.8 $6,089.9 + 3.0%
Cost of products sold 3,704.9 3,851.1 - 3.8%
--------- ---------
Gross Profit 2,568.9 2,238.8 +14.7%
Advertising, promotion
and selling expenses 1,024.8 986.4 + 3.9%
Research expense 117.0 107.7 + 8.6%
General expense 315.5 320.2 - 1.5%
Goodwill amortization 17.0 16.8 + 1.2%
Restructuring and other
unusual charges (1.3) 30.5 N.M.
--------- ---------
Operating Profit 1,095.9 777.2 +41.0%
Interest income 11.2 14.1 -20.6%
Interest expense (108.1) (97.1) +11.3%
Other income (expense), net 20.8 7.4 N.M.
--------- ---------
Income Before Income Taxes 1,019.8 701.6 +45.4%
Provision for income taxes 328.1 229.9 +42.7%
--------- ---------
Income Before Equity Interests 691.7 471.7 +46.6%
Share of net income of
equity companies 90.5 62.9 +43.9%
Minority owners' share of
subsidiaries' net income (14.8) (12.5) +18.4%
--------- ---------
Income Before Cumulative Effect of
Accounting Change 767.4 522.1 +47.0%
Cumulative effect of accounting
change, net of income taxes -- (11.2) N.M.
--------- ---------
Net Income $767.4 $510.9 +50.2%
========= =========
Per Share Basis:
Basic:
Income Before Cumulative
Effect of Accounting Change $1.44 $.94 +53.2%
Cumulative effect of accounting
change, net of income taxes -- (.02) N.M.
--------- ---------
Net Income $1.44 $.92 +56.5%
========= =========
Diluted:
Income Before Cumulative Effect
of Accounting Change $1.43 $.93 +53.8%
Cumulative effect of accounting
change, net of income taxes -- (.02) N.M.
--------- ---------
Net Income $1.43 $.91 +57.1%
========= =========
</TABLE>
N.M -Not meaningful
Unaudited
- more -
<PAGE>
- 9 -
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
SECOND QUARTER ENDED JUNE 30
(Millions)
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
---------------------------- ---------------------------
1999 1998 Change 1999 1998 Change
------ -------- ------ -------- ------- ------
As As
restated restated
NET SALES:
<S> <C> <C> <C> <C> <C> <C>
Tissue $1,629.9 $1,606.1 + 1.5% $3,337.9 $3,301.1 + 1.1%
Personal Care 1,292.7 1,164.8 +11.0% 2,489.1 2,266.7 + 9.8%
Health Care and
Other 232.2 277.0 -16.2% 460.9 538.3 -14.4%
Intersegment Sales (6.2) (6.6) N.M. (14.1) (16.2) N.M.
--------- --------- --------- ---------
Consolidated $3,148.6 $3,041.3 + 3.5% $6,273.8 $6,089.9 + 3.0%
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT (a):
<S> <C> <C> <C> <C> <C> <C>
Tissue $253.4 $192.6 +31.6% $540.7 $429.7 +25.8%
Personal Care 264.9 179.0 +48.0% 497.2 315.1 +57.8%
Health Care and
Other 47.1 43.7 + 7.8% 93.8 80.8 +16.1%
Unallocated
items - net (23.8) (22.8) N.M. (35.8) (48.4) N.M.
--------- --------- --------- ---------
Consolidated $541.6 $392.5 +38.0% $1,095.9 $777.2 +41.0%
========= ========= ========= =========
</TABLE>
(a) Operating profit includes charges related to restructuring and other
unusual charges as follows:
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
---------------- --------------
1999 1998 1999 1998
----- ------ ----- -----
As As
restated restated
<C> <C> <C> <C>
<S>
Tissue $8.9 $68.8 $18.9 $98.9
Personal Care 5.7 11.6 15.0 46.6
Health Care and Other .2 3.0 1.1 7.3
Unallocated items - net -- (5.3) (.2) (4.4)
----- ------ ------ -------
Consolidated $14.8 $78.1 $34.8 $148.4
===== ====== ====== =======
</TABLE>
- more -
<PAGE>
- 10 -
Description of Business Segments
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.
N.M.-Not meaningful
Unaudited
- more -
<PAGE>
- 11 -
KIMBERLY-CLARK CORPORATION
IMPACT ON EARNINGS PER SHARE
AMENDMENT OF FINANCIAL STATEMENTS
Increase (Decrease)
<TABLE>
<CAPTION>
YEAR
--------------------------------- 1st Qtr.
1995 1996 1997 1998 1999 Cumulative
---- ---- ---- ---- ---- ----------
(Cents per share)
<S> <C> <C> <C> <C> <C> <C>
Diluted Earnings Per
Share, as reported. . $.06 $2.48 $1.61 $2.11 $ .75 $7.01
1995 Charge . . . . . .75 (.56) (.16) (.01) (.02) --
1997 Charge . . . . . -- -- .34 (.17) (.01) .16
1998 Charge . . . . . -- -- -- .11 (.02) .09
Mobile pulp mill fees
and severances. . . -- -- -- (.05) -- (.05)
---- ------ ------ ------ ------ ------
Subtotal. . . . . . .75 (.56) .18 (.12) (.05) .20
Diluted Earnings Per
Share, as restated. . $.81 $1.92 $1.79 $1.99 $ .70 $7.21
==== ====== ====== ====== ====== ======
</TABLE>
Subsequent to the issuance of the Corporation's 1998 financial statements and
the filing of its 1998 Form 10-K with the Securities and Exchange Commission
(the "SEC"), and following extensive discussions with representatives of the
SEC concerning review of the Corporation's financial statements,
Kimberly-Clark management concluded that it would restate its financial
statements to reflect:
Certain merger related costs originally recorded in 1995 at the time of
the Scott merger as costs of the periods when they were
incurred;
Certain employee severance costs originally recorded in 1995 in
connection with the Scott merger as costs of the periods when such
employee severances were appropriately communicated;
The effects of changes in estimates to restructuring and other unusual
charges and facility closure charges in the periods estimates changed.
In prior presentations, the changes in estimates were either reallocated
to other components of such charges or were returned to earnings at the
time aggregate amounts were identified as being in excess of the then
current estimate to complete each overall plan;
Certain assets that were to be disposed of but which were not immediately
removed from operations as being depreciated on an accelerated basis
over their remaining useful life. In prior presentations, these assets
had been written down to estimated fair value as of the date such assets
were expected to be removed from service, assuming continuation of normal
depreciation until the estimated date of removal;
- more -
<PAGE>
- 12 -
Personal computers acquired and capitalized prior to 1997, and which were
written off in 1998, as being depreciated on an accelerated basis over
the estimated period that they remained or will remain in use;
and
An energy contract termination penalty as a cost in the second quarter of
1998 and employee severance costs as a cost in the third quarter of
1998 in connection with the planned closure of the Corporation's pulp
mill in Mobile, Alabama. The Corporation had originally intended to
record these charges in the third quarter of 1999 when the pulp mill
is to be closed and when the Corporation expects to record a gain on
the related sales of the Southeast Timberlands.
As a result of the foregoing and other factors, the Corporation's 1995, 1996,
1997, 1998 and first quarter 1999 financial statements have been restated from
amounts previously reported.
Unaudited - Audit of restated numbers in process
# # #
