FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1999
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)
(972) 281-1200
(Registrant's telephone number, including area code)
NO CHANGE
(Former name, former address and former fiscal year, if changed since last
report)
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 .
------- -------
AS OF AUGUST 9, 1999, 532,778,476 SHARES OF THE CORPORATION'S COMMON STOCK
WERE OUTSTANDING.
<PAGE>
SIGNIFICANT FINANCIAL AND ACCOUNTING DEVELOPMENTS
On December 15, 1998, Kimberly-Clark Corporation ("Kimberly-Clark" or the
"Corporation") filed a Registration Statement on Form S-3 (the "Form S-3")
with the Securities and Exchange Commission (the "SEC"). The Form S-3 related
to the shelf registration of $500 million of debt securities to be issued by
Kimberly-Clark from time to time.
On January 29, 1999 and February 2, 1999, Kimberly-Clark received from the
SEC's Division of Corporation Finance (the "Division") a number of legal and
accounting comments, respectively, with respect to the Form S-3. On March 12,
1999, Kimberly-Clark responded to each set of comments and filed a Current
Report on Form 8-K to report its audited consolidated financial statements for
the year ended December 31, 1998, the related notes and management's
discussion and analysis with respect thereto.
On March 26, 1999, Kimberly-Clark filed its Annual Report on Form 10-K for the
year ended December 31, 1998. On May 12, 1999, Kimberly-Clark filed its
Quarterly Report on Form 10-Q for the three months ended March 31, 1999
(the "1999 First Quarter Form 10-Q").
From April through early July 1999, representatives of Kimberly-Clark and the
Division engaged in an extensive dialogue concerning specific accounting
comments that the Division had raised. The primary focus of the comments
related to the restructuring and other charges that Kimberly-Clark had
previously recorded in connection with its 1995 merger with Scott Paper
Company ("Scott"), its 1997 restructuring plan and its 1998 facilities
consolidation plan.
Following these discussions, Kimberly-Clark management concluded that it would
recommend to the Board of Directors that there should be a restatement of the
Corporation's 1995, 1996, 1997, 1998 and first quarter 1999 financial
statements and related disclosures (the "Restatement"). On July 20, 1999, the
Kimberly-Clark Board of Directors authorized the Restatement and, on July 21,
1999, the Corporation issued a press release to that effect. On August 5,
1999, the Board of Directors approved the restated financial statements
reflected in the Corporation's Annual Report on Form 10-K/A for the year ended
December 31, 1998 and the related Quarterly Report on Form 10-Q/A for the
period ended March 31, 1999. On August 6, 1999, the Corporation filed the
Form 10-K/A and Form 10-Q/A referred to above.
This Form 10-Q contains the Corporation's restated financial statements for
the second quarter and six months ended June 30, 1998 which reflect, among
other things and to the extent applicable, the following changes:
- - The effects of changes in estimates to restructuring and other unusual
charges and facility closure charges have been recorded in the periods
when estimates for individual programs included in the applicable plan
changed. In prior presentations, on an aggregate basis, the changes in
estimates were either reallocated to other components of each such plan or
were returned to earnings at the time aggregate amounts were identified as
being in excess of the then current estimate to complete each plan;
- - Certain assets that were to be disposed of but which were not
immediately removed from operations have been 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; and
<PAGE>
- - An energy contract termination penalty of $24.3 million has been recorded in
the second 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 this charge in the third quarter of 1999 when the entire
integrated pulp operation is to be disposed of, including the related sale
of the associated woodlands operations, with a net gain resulting from the
overall transaction. The Corporation continues to expect a net gain on the
overall transaction.
The principal effects of these items on the accompanying income statements are
presented in Note 8 to the Consolidated Financial Statements.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENT
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
Three Months Six Months
Ended June 30 Ended June 30
-------------------- --------------------
(Millions of dollars, except per share amounts) 1999 1998 1999 1998
- ----------------------------------------------------- -------- -------- ------- --------
(As (As
Restated - Restated -
See Note 8) See Note 8)
<S> <C> <C> <C> <C>
NET SALES. . . . . . . . . . . . . . . . . . . . . . . $3,148.6 $3,041.3 $6,273.8 $6,089.9
Cost of products sold. . . . . . . . . . . . . . . . 1,851.6 1,915.2 3,703.5 3,851.2
--------- --------- --------- ---------
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . . 1,297.0 1,126.1 2,570.3 2,238.7
Advertising, promotion and selling expenses. . . . . 517.6 491.5 1,024.8 986.4
Research expense . . . . . . . . . . . . . . . . . . 62.2 54.8 117.0 107.7
General expense. . . . . . . . . . . . . . . . . . . 166.8 169.8 316.9 320.2
Goodwill amortization. . . . . . . . . . . . . . . . 10.2 9.0 17.0 16.8
Restructuring and other unusual charges. . . . . . . (1.4) 8.6 1.5 32.0
--------- --------- --------- ---------
OPERATING PROFIT . . . . . . . . . . . . . . . . . . . 541.6 392.4 1,093.1 775.6
Interest income. . . . . . . . . . . . . . . . . . . 5.2 5.5 11.2 14.1
Interest expense . . . . . . . . . . . . . . . . . . (54.6) (48.9) (108.1) (97.1)
Other income (expense), net. . . . . . . . . . . . . 27.7 7.7 20.8 7.4
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . 519.9 356.7 1,017.0 700.0
Provision for income taxes . . . . . . . . . . . . . 165.8 121.3 327.0 229.6
--------- --------- --------- ---------
INCOME BEFORE EQUITY INTERESTS . . . . . . . . . . . . 354.1 235.4 690.0 470.4
Share of net income of equity companies. . . . . . . 46.9 33.6 90.5 62.9
Minority owners' share of subsidiaries' net income . (9.9) (6.1) (14.8) (12.5)
--------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE.. 391.1 262.9 765.7 520.8
Cumulative effect of accounting change,
net of income taxes. . . . . . . . . . . . . . . . - - - (11.2)
--------- --------- --------- ---------
NET INCOME $ 391.1 $ 262.9 $ 765.7 $ 509.6
========= ========= ========= =========
PER SHARE BASIS:
BASIC:
Income before cumulative effect of accounting change $ .73 $ .47 $ 1.43 $ .94
Cumulative effect of accounting change,
net of income taxes. . . . . . . . . . . . . . . . - - - (.02)
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . $ .73 $ .47 $ 1.43 $ .92
========= ========= ========= =========
DILUTED:
Income before cumulative effect of accounting change $ .73 $ .47 $ 1.42 $ .93
Cumulative effect of accounting change,
net of income taxes. . . . . . . . . . . . . . . . - - - (.02)
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . $ .73 $ .47 $ 1.42 $ .91
========= ========= ========= =========
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . . $ .26 $ .25 $ .52 $ .50
========= ========= ========= =========
</TABLE>
Unaudited
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEET
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
JUNE 30, December 31,
(Millions of dollars) 1999 1998
- ----------------------- -------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . $ 174.5 $ 144.0
Accounts receivable . . . . . . . . . . . . . . 1,501.5 1,465.2
Inventories . . . . . . . . . . . . . . . . . . 1,257.5 1,283.8
Other current assets. . . . . . . . . . . . . . 400.4 492.8
--------- ---------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . 3,333.9 3,385.8
PROPERTY. . . . . . . . . . . . . . . . . . . . . 10,780.2 10,560.0
Less accumulated depreciation . . . . . . . . . 4,586.8 4,561.9
--------- ---------
NET PROPERTY. . . . . . . . . . . . . . . . . 6,193.4 5,998.1
INVESTMENTS IN EQUITY COMPANIES . . . . . . . . . 842.5 813.1
ASSETS HELD FOR SALE. . . . . . . . . . . . . . . 96.1 109.5
GOODWILL, DEFERRED CHARGES AND OTHER ASSETS . . . 1,622.4 1,381.3
--------- ---------
$12,088.3 $11,687.8
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Debt payable within one year. . . . . . . . . . $ 1,092.8 $ 635.4
Accounts payable. . . . . . . . . . . . . . . . 833.6 1,003.2
Accrued expenses. . . . . . . . . . . . . . . . 1,394.7 1,419.1
Other current liabilities . . . . . . . . . . . 659.6 706.4
--------- ---------
TOTAL CURRENT LIABILITIES . . . . . . . . . . 3,980.7 3,764.1
LONG-TERM DEBT. . . . . . . . . . . . . . . . . . 2,110.9 2,068.2
NONCURRENT EMPLOYEE BENEFIT AND OTHER OBLIGATIONS. 902.6 899.9
DEFERRED INCOME TAXES . . . . . . . . . . . . . . 794.1 721.6
MINORITY OWNERS' INTERESTS IN SUBSIDIARIES. . . . 223.9 202.5
STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . 4,076.1 4,031.5
--------- ---------
$12,088.3 $11,687.8
========= =========
</TABLE>
Unaudited
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CASH FLOW STATEMENT
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
Six Months
Ended June 30
-----------------
(Millions of dollars) 1999 1998
- ----------------------- -------- --------
(As
Restated -
See
Note 8)
<S> <C> <C>
OPERATIONS
Net income. . . . . . . . . . . . . . . . . . . . . . . . . $ 765.7 $ 509.6
Cumulative effect of accounting change, net of income taxes - 11.2
Charges for business improvement and other programs:
Restructuring and other unusual charges . . . . . . . . . 1.5 32.0
Other charges . . . . . . . . . . . . . . . . . . . . . . - 35.6
Mobile pulp mill fees and severances. . . . . . . . . . . . 9.0 24.3
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . 285.1 306.4
Goodwill amortization . . . . . . . . . . . . . . . . . . . 17.0 16.8
Changes in operating working capital. . . . . . . . . . . . (144.0) (37.9)
Pension funding in excess of expense. . . . . . . . . . . . (15.7) (23.6)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9 30.2
-------- --------
CASH PROVIDED BY OPERATIONS . . . . . . . . . . . . . . . 938.5 904.6
-------- --------
INVESTING
Capital spending. . . . . . . . . . . . . . . . . . . . . . (359.9) (330.6)
Acquisitions of businesses, net of cash acquired. . . . . . (351.4) (269.8)
Disposals of property and businesses. . . . . . . . . . . . 29.8 32.9
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . (28.4) (17.8)
-------- --------
CASH USED FOR INVESTING . . . . . . . . . . . . . . . . . (709.9) (585.3)
-------- --------
FINANCING
Cash dividends paid . . . . . . . . . . . . . . . . . . . . (274.6) (270.7)
Changes in debt payable within one year . . . . . . . . . . 404.4 147.1
Increases in long-term debt . . . . . . . . . . . . . . . . 23.6 228.8
Decreases in long-term debt . . . . . . . . . . . . . . . . (40.0) (288.3)
Proceeds from exercise of stock options . . . . . . . . . . 37.0 24.6
Acquisitions of common stock for the treasury . . . . . . . (359.5) (160.9)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 (11.8)
-------- --------
CASH USED FOR FINANCING . . . . . . . . . . . . . . . . . (198.1) (331.2)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. . . . . . . $ 30.5 $ (11.9)
======== ========
</TABLE>
Unaudited
See Notes to Consolidated Financial Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
1. The unaudited consolidated financial statements of Kimberly-Clark
Corporation (the "Corporation") have been prepared on the same basis as
those in the Annual Report on Form 10-K/A for the year ended December 31,
1998, and include all adjustments necessary to present fairly the
condensed consolidated balance sheet, consolidated results of operations
and condensed consolidated cash flow statements for the periods
indicated.
2. The Corporation has undertaken a number of actions in recent years to
address ongoing business competitiveness by improving its operating
efficiency and cost structure. Certain of these programs affect the
financial statements for the second quarter and six months ended June 30,
1999 and 1998 as follows.
- In the fourth quarter of 1998, the Corporation announced a facilities
consolidation plan 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. Certain assets, primarily a
tissue manufacturing facility in the United Kingdom, which will remain
in use until its expected shutdown in October 2000, became subject
to accelerated depreciation, some of which was recorded in the second
quarter and six months ended June 30, 1999.
- In the fourth quarter of 1997, the Corporation announced a plan to
restructure its worldwide operations. Certain assets that were to be
disposed of, but remained or will remain in use until disposed of in
1999 and 2000, became subject to accelerated depreciation, some of
which was recorded in the second quarter and six months ended
June 30, 1999 and 1998.
- An energy contract termination penalty of $24.3 million has been
recorded in the second quarter of 1998 in connection with the planned
closure of the Corporation's pulp mill in Mobile, Alabama. In the
second quarter of 1999, the Corporation recorded employee severance
costs of $9.0 million for employee terminations related to the
associated woodlands operations when such employee severances and
benefits were appropriately communicated. The Corporation had
originally intended to record these charges in the third quarter
of 1999 when the entire integrated pulp operation is to be disposed
of, including the related sale of the associated woodlands operations,
with a net gain resulting from the overall transaction. The Corporation
continues to expect a net gain on the overall transactions.
The accelerated depreciation adjustments, the Mobile pulp mill fees and the
associated employee severance costs described above, and other less
significant adjustments related to the described plans, were charged to
earnings in the following income statement categories for the periods
indicated.
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
--------------- ---------------
(Millions of dollars) 1999 1998 1999 1998
- ----------------------- ------ ----- ------ ------
<S> <C> <C> <C> <C>
Cost of products sold . . . . . . . . . $14.8 $69.6 $33.3 $118.0
General expense . . . . . . . . . . . . 1.4 - 2.8 -
Restructuring and other unusual charges (1.4) 8.6 1.5 32.0
------ ----- ----- ------
Total charges . . . . . . . . . . . . $14.8 $78.2 $37.6 $150.0
====== ===== ===== ======
</TABLE>
<PAGE>
3. There are no adjustments required to be made to Income Before
Extraordinary Gains 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
---------------------------------
Second Quarter Six Months
Ended June 30 Ended June 30
---------------- ---------------
(Millions) 1999 1998 1999 1998
---------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . 532.3 556.2 534.1 556.4
Dilutive effect of stock options . . . . . . . . . . . 3.5 2.5 2.8 2.7
Dilutive effect of deferred compensation plan shares . .1 - .1 -
Dilutive effect of shares issued for participation
share awards . . . . . . . . . . . . . . . . . . . . . .4 .4 .4 .4
----- ----- ----- -----
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . 536.3 559.1 537.4 559.5
===== ===== ===== =====
</TABLE>
There were no options outstanding during the second quarter ended June 30,
1999 which were not included in the computation of diluted EPS. Options
outstanding during the six months ended June 30, 1999 to purchase 2.9 million
shares of common stock at a weighted average price of $55.94 per share 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 2008, were still outstanding at June 30, 1999.
Options outstanding during the second quarter and six months ended June 30,
1998 to purchase 9.3 million and 6.4 million shares of common stock,
respectively, at a weighted average price of $52.73 and $53.93 per share,
respectively, were not included in the computation of diluted EPS because the
exercise price of the options were greater than the average market price of
the common shares.
The number of common shares outstanding at June 30, 1999 and 1998 was 532.6
million and 554.2 million, respectively.
4. The following schedule details inventories by major class as of June 30,
1999 and December 31, 1998:
<TABLE>
<CAPTION>
JUNE 30, December 31,
(Millions of dollars) 1999 1998
----------------------- ---- ----
<S> <C> <C>
At lower of cost on the First-In, First-Out (FIFO) method or market:
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . $ 333.3 $ 355.4
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . 161.9 164.2
Finished goods. . . . . . . . . . . . . . . . . . . . . . . . . . 738.4 751.3
Supplies and other. . . . . . . . . . . . . . . . . . . . . . . . 206.5 195.5
--------- ---------
1,440.1 1,466.4
--------- ---------
Excess of FIFO over Last-In, First-Out (LIFO) cost . . . . . . . . . (182.6) (182.6)
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,257.5 $1,283.8
========= =========
</TABLE>
<PAGE>
5. The following schedule provides the detail of comprehensive income:
<TABLE>
<CAPTION>
Six Months Ended June 30
----------------------------
(Millions of dollars) 1999 1998
----------------------- ---- ----
<S> <C> <C>
Net Income. . . . . . . . . . . . . . . . . $ 765.7 $509.6
Unrealized currency translation adjustments (135.3) (44.1)
-------- -------
Comprehensive income. . . . . . . . . . . . $ 630.4 $465.5
======== =======
</TABLE>
6. The following schedule presents information concerning consolidated
operations by business segment:
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
-------------------- --------------------
(Millions of dollars) 1999 1998 1999 1998
----------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES:
Tissue . . . . . . . . . . . . . . . . . . . . . . . . . . $1,629.9 $1,606.1 $3,337.9 $3,301.1
Personal Care. . . . . . . . . . . . . . . . . . . . . . . 1,292.7 1,164.8 2,489.1 2,266.7
Health Care and Other. . . . . . . . . . . . . . . . . . . 232.2 277.0 460.9 538.3
Intersegment sales . . . . . . . . . . . . . . . . . . . . (6.2) (6.6) (14.1) (16.2)
--------- --------- --------- ---------
Consolidated . . . . . . . . . . . . . . . . . . . . . . . $3,148.6 $3,041.3 $6,273.8 $6,089.9
========= ========= ========= =========
OPERATING PROFIT (reconciled to income before income taxes):
Tissue . . . . . . . . . . . . . . . . . . . . . . . . . . $ 253.4 $ 192.5 $ 537.9 $ 428.0
Personal Care. . . . . . . . . . . . . . . . . . . . . . . 264.9 179.0 497.2 315.1
Health Care and Other. . . . . . . . . . . . . . . . . . . 47.1 43.7 93.8 80.8
Unallocated items - net. . . . . . . . . . . . . . . . . . (23.8) (22.8) (35.8) (48.3)
--------- --------- --------- ---------
Total Operating Profit . . . . . . . . . . . . . . . . . . 541.6 392.4 1,093.1 775.6
Interest income. . . . . . . . . . . . . . . . . . . . . . 5.2 5.5 11.2 14.1
Interest expense . . . . . . . . . . . . . . . . . . . . . (54.6) (48.9) (108.1) (97.1)
Other income (expense), net. . . . . . . . . . . . . . . . 27.7 7.7 20.8 7.4
--------- --------- --------- ---------
Income Before Income Taxes . . . . . . . . . . . . . . . . $ 519.9 $ 356.7 $1,017.0 $ 700.0
========= ========= ========= =========
</TABLE>
Description of Business Segments:
The Tissue segment manufactures and markets facial and bathroom tissue,
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>
7. Other income and expense in the second quarter of 1999 included
nonoperating credits of $23 million, equivalent to $.03 per share,
of which approximately $9 million was attributable to a gain on
the sale of the Corporation's pulp mill in Miranda, Spain.
8. Restatement
Subsequent to the issuance of the Corporation's 1998 financial statements
and the filing of its 1998 Form 10-K with the SEC, and following extensive
discussions with representatives of the Division concerning its review of
the Corporation's financial statements, Kimberly-Clark concluded that
it would restate its 1995, 1996, 1997, 1998 and first quarter 1999
financial statements and related disclosures. The accompanying
consolidated income statements for the second quarter and six months ended
June 30, 1998 present restated results to reflect, among other things and
to the extent applicable, the following changes:
- The effects of changes in estimates to restructuring and other unusual
charges and facility closure charges have been recorded in the periods
when estimates for individual programs included in the applicable plan
changed. In prior presentations, on an aggregate basis, the changes
in estimates were either reallocated to other components of each
such plan or were returned to earnings at the time aggregate amounts
were identified as being in excess of the then current estimate to
complete each plan.
- Certain assets that were to be disposed of but which were not
immediately removed from operations have been 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.
- An energy contract termination penalty of $24.3 million has been
recorded in the second 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 this charge in the
third quarter of 1999 when the entire integrated pulp operation is
to be disposed of, including the related sale of the associated
woodlands operations, with a net gain resulting from the overall
transaction. The Corporation continues to expect a net gain on the
overall transaction.
A comparison of the restated and previously reported income statements for the
second quarter and six months ended June 30, 1998 follows:
<PAGE>
<TABLE>
<CAPTION>
Consolidated Income Statements
---------------------------------------------
Three Months Six Months
Ended June 30, 1998 Ended June 30, 1998
-------------------- ------------------------
As As
As Previously As Previously
(Millions of dollars, except per share amounts) Restated Reported Restated Reported
- ----------------------------------------------------- -------- -------- -------- ---------
<S> <C> <C> <C> <C>
NET SALES. . . . . . . . . . . . . . . . . . . . . . $3,041.3 $3,041.3 $6,089.9 $6,089.9
Cost of products sold. . . . . . . . . . . . . . . 1,915.2 1,847.5 3,851.2 3,731.6
--------- --------- --------- ---------
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . 1,126.1 1,193.8 2,238.7 2,358.3
Advertising, promotion and selling expenses. . . . 491.5 491.5 986.4 986.4
Research expense . . . . . . . . . . . . . . . . . 54.8 54.8 107.7 107.7
General expense. . . . . . . . . . . . . . . . . . 169.8 169.8 320.2 320.2
Goodwill amortization. . . . . . . . . . . . . . . 9.0 9.0 16.8 16.8
Restructuring and other unusual charges. . . . . . 8.6 33.3 32.0 47.5
--------- --------- --------- ---------
OPERATING PROFIT . . . . . . . . . . . . . . . . . . 392.4 435.4 775.6 879.7
Interest income. . . . . . . . . . . . . . . . . . 5.5 5.5 14.1 14.1
Interest expense . . . . . . . . . . . . . . . . . (48.9) (48.9) (97.1) (97.1)
Other income (expense), net. . . . . . . . . . . . 7.7 7.7 7.4 7.4
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . 356.7 399.7 700.0 804.1
Provision for income taxes . . . . . . . . . . . . 121.3 127.0 229.6 256.6
--------- --------- --------- ---------
INCOME BEFORE EQUITY INTERESTS . . . . . . . . . . . 235.4 272.7 470.4 547.5
Share of net income of equity companies. . . . . . 33.6 33.6 62.9 62.9
Minority owners' share of subsidiaries' net income (6.1) (6.2) (12.5) (12.7)
--------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE . . . . . . . . . . . . . . . . . . . . . . 262.9 300.1 520.8 597.7
Cumulative effect of accounting change, net of
income taxes . . . . . . . . . . . . . . . . . . - - (11.2) (11.2)
--------- --------- --------- ---------
NET INCOME . . . . . . . . . . . . . . . . . . . . . $ 262.9 $ 300.1 $ 509.6 $ 586.5
========= ========= ========= =========
PER SHARE BASIS:
BASIC:
Income before cumulative effect of accounting
change . . . . . . . . . . . . . . . . . . . . . $ .47 $ .54 $ .94 $ 1.07
Cumulative effect of accounting change, net of
income taxes . . . . . . . . . . . . . . . . . . - - (.02) (.02)
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . $ .47 $ .54 $ .92 $ 1.05
========= ========= ========= =========
DILUTED:
Income before cumulative effect of accounting
change . . . . . . . . . . . . . . . . . . . . . $ .47 $ .54 $ .93 $ 1.07
Cumulative effect of accounting change, net of
income taxes . . . . . . . . . . . . . . . . . . - - (.02) (.02)
--------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . . . $ .47 $ .54 $ .91 $ 1.05
========= ========= ========= =========
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . $ .25 $ .25 $ .50 $ .50
========= ========= ========= =========
</TABLE>
Unaudited
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
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.
Restatement
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's Division of Corporation Finance concerning its review of the
Corporation's financial statements, Kimberly-Clark concluded that it would
restate its 1995, 1996, 1997, 1998 and first quarter 1999 financial statements
and related disclosures (the "Restatement"). Additional information
concerning the Restatement is contained in "Significant Financial and
Accounting Developments" contained elsewhere in this Form 10-Q.
The following discussion should be read in conjunction with the accompanying
condensed consolidated financial statements as of and for the three months and
six months ended June 30, 1999 and 1998.
Business Improvement and Other Programs
The Corporation has undertaken a number of actions in recent years to address
ongoing business competitiveness by improving its operating efficiency and
cost structure. Certain of these programs affect the financial statements for
the second quarter and six months ended June 30, 1999 and 1998 as follows.
- In the fourth quarter of 1998, the Corporation announced a facilities
consolidation plan 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. Certain assets, primarily a tissue
manufacturing facility in the United Kingdom, which will remain in use
until its expected shutdown in October 2000, became subject to accelerated
depreciation, some of which was recorded in the second quarter and six
months ended June 30, 1999.
- - In the fourth quarter of 1997, the Corporation announced a plan to
restructure its worldwide operations. Certain assets that were to be
disposed of, but remained or will remain in use until disposed of in 1999
and 2000, became subject to accelerated depreciation, some of which was
recorded in the second quarter and six months ended June 30, 1999
and 1998.
- - An energy contract termination penalty of $24.3 million has been
recorded in the second quarter of 1998 in connection with the planned
closure of the Corporation's pulp mill in Mobile, Alabama. In the second
quarter of 1999, the Corporation recorded employee severance costs of
$9.0 million for employee terminations in the associated woodlands
operations when such employee severances and benefits were
appropriately communicated. The Corporation had originally intended
to record these charges in the third quarter of 1999 when the entire
integrated pulp operation is to be disposed of, including the related
sale of the associated woodlands operations, with a net gain resulting
from the overall transaction. The Corporation continues to expect a net
gain on the overall transaction.
The accelerated depreciation adjustments, the Mobile pulp mill fees and the
associated employee severance costs described above, and other less
significant adjustments related to the described plans, were charged to
earnings in the following income statement categories for the periods
indicated.
<PAGE>
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
---------------- -----------------
(Millions of dollars) 1999 1998 1999 1998
- ----------------------- ---- ----- ----- -----
<S> <C> <C> <C> <C>
Cost of products sold . . . . . . . . . $14.8 $69.6 $33.3 $118.0
General expense . . . . . . . . . . . . 1.4 - 2.8 -
Restructuring and other unusual charges (1.4) 8.6 1.5 32.0
------ ----- ----- ------
Total charges . . . . . . . . . . . . $14.8 $78.2 $37.6 $150.0
====== ===== ===== ======
</TABLE>
RESULTS OF OPERATIONS:
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 above are considered to be unusual items ("Unusual Items")
and have been excluded from operating profit in the "Excluding Unusual Items"
columns in the following Operating Profit tables.
<TABLE>
<CAPTION>
SECOND QUARTER OF 1999 COMPARED WITH SECOND QUARTER OF 1998
By Business Segment
(Millions of dollars)
NET SALES 1999 1998
- ---------- -------- ---------
<S> <C> <C>
Tissue. . . . . . . . $1,629.9 $1,606.1
Personal Care . . . . 1,292.7 1,164.8
Health Care and Other 232.2 277.0
Intersegment Sales. . (6.2) (6.6)
--------- ---------
Consolidated. . . . . $3,148.6 $3,041.3
========= =========
</TABLE>
<TABLE>
<CAPTION>
1999 1998
--------------------------- --------------------------
AS EXCLUDING As Excluding
OPERATING PROFIT REPORTED UNUSUAL ITEMS Restated Unusual Items
- ---------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Tissue. . . . . . . . . $253.4 $262.3 $192.5 $261.4
Personal Care . . . . . 264.9 270.6 179.0 190.6
Health Care and Other . 47.1 47.3 43.7 46.7
Unallocated items - net (23.8) (23.8) (22.8) (28.1)
------- ------- ------- -------
Consolidated. . . . . . $541.6 $556.4 $392.4 $470.6
======= ======= ======= =======
</TABLE>
Note: Unallocated items - net, consists of expenses not associated with
the business segments.
Commentary:
Consolidated net sales for the quarter were 3.5 percent higher than in 1998;
however, excluding the revenues of K-C Aviation Inc. ("KCA"), which was sold
in the third quarter of 1998, net sales increased 5.4 percent. Excluding the
net sales of KCA, worldwide sales volumes were approximately 6 percent higher,
while changes in foreign currency exchange rates reduced net sales by
approximately 1 percent.
<PAGE>
- - Worldwide sales of tissue products for the quarter increased 1.5
percent, on a 2 percent increase in sales volumes, with gains
in North America for both consumer and away-from-home products. A
portion of the sales gain is attributable to operations in Colombia,
in which the Corporation made an additional investment in late 1998
to gain majority ownership of certain equity companies (the "Colombian
Investment"). Sales of tissue products in Europe were somewhat lower
primarily due to competitive conditions and currency effects.
- - Worldwide sales of personal care products increased 11.0 percent from
the second quarter of 1998. Personal care product sales volumes
were approximately 12 percent higher, 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. A portion of
the increased sales and volumes in Latin America is attributable to
the Colombian Investment.
- - Excluding the revenues of KCA, worldwide sales of health care and other
products rose 4.7 percent primarily because of continued growth in sales
of professional health care products.
Excluding the Unusual Items, second quarter operating profit was 18.2 percent
higher in 1999, and operating profit as a percentage of sales increased from
15.5 percent in 1998 to 17.7 percent in 1999. The increase in sales, along
with productivity gains and other manufacturing cost benefits, contributed to
the improved profitability, more than offsetting significant incremental
investment in production start-up and marketing costs for new Kleenex
Cottonelle bathroom tissue and improved Scott towels in North America.
- - The increase in operating profit for the worldwide personal care segment
was primarily due to the increase in unit sales volumes, selling price
increases and manufacturing cost reductions.
- - Excluding the operating results of KCA, operating profit for the health
care and other segment increased 15.6 percent primarily due to the
increased sales volumes and productivity gains in professional health
care.
<TABLE>
<CAPTION>
By Geography
(Millions of dollars)
NET SALES 1999 1998
- ---------- --------- ---------
<S> <C> <C>
North America . . . . $2,145.1 $2,084.4
Outside North America 1,077.4 1,025.3
Intergeographic Sales (73.9) (68.4)
--------- ---------
Consolidated. . . . . $3,148.6 $3,041.3
========= =========
</TABLE>
<TABLE>
<CAPTION>
1999 1998
---------------------------- --------------------------
AS EXCLUDING As Excluding
OPERATING PROFIT REPORTED UNUSUAL ITEMS Restated Unusual Items
- ---------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C>
North America . . . . . $470.6 $480.7 $381.7 $426.8
Outside North America . 94.8 99.5 33.5 71.9
Unallocated items - net (23.8) (23.8) (22.8) (28.1)
------- ------- ------- -------
Consolidated. . . . . . $541.6 $556.4 $392.4 $470.6
======= ======= ======= =======
</TABLE>
Note: Unallocated items - net, consists of expenses not associated with the
geographic areas.
<PAGE>
Commentary:
- - Excluding the revenues of KCA, net sales in North America increased 5.7
percent due to the increased sales volumes for personal care
products.
- - Net sales outside North America increased due, in part, to the Colombian
Investment and higher sales in Asia.
- - Excluding the Unusual Items, operating profit in North America increased
12.6 percent, due primarily to the increased sales volumes and
manufacturing cost benefits for personal care products.
- - Excluding the Unusual Items, operating profit outside North America
increased 38.4 percent. This increase was due to improvement in Europe
from lower manufacturing and marketing costs and improvements in
Asia.
Additional Income Statement Commentary:
- - The increase in interest expense was primarily due to an increase in the
level of debt.
- - Other income and expense in the second quarter of 1999 includes
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.
- - The effective income tax rate was 31.9 percent compared to 34.0 percent
last year. Excluding the Unusual Items and the nonoperating credits,
the effective income tax rate was 32.0 percent compared to 31.9 percent last
year. The effective tax rate, excluding the Unusual Items and the
nonoperating credits, is expected to be between 32.0 percent and 32.5
percent for 1999.
- - The Corporation's share of net income of equity companies increased 39.6
percent from 1998. This increase was primarily attributable to higher
earnings of Kimberly-Clark de Mexico, S.A. de C.V. due to increased
selling prices and higher sales volumes.
- - Net income was $.73 per share in 1999 compared with $.47 per share in
1998, an increase of 55.3 percent. Excluding the Unusual Items and the
nonoperating credits, earnings per share from operations were $.72 per
share in 1999 compared with $.58 per share in 1998,
an increase of 24.1 percent.
FIRST SIX MONTHS OF 1999 COMPARED WITH FIRST SIX MONTHS OF 1998
<TABLE>
<CAPTION>
By Business Segment
(Millions of dollars)
NET SALES 1999 1998
- ---------- --------- ---------
<S> <C> <C>
Tissue. . . . . . . . $3,337.9 $3,301.1
Personal Care . . . . 2,489.1 2,266.7
Health Care and Other 460.9 538.3
Intersegment Sales. . (14.1) (16.2)
--------- ---------
Consolidated. . . . . $6,273.8 $6,089.9
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999 1998
--------------------------- --------------------------
AS EXCLUDING As Excluding
OPERATING PROFIT REPORTED UNUSUAL ITEMS Restated Unusual Items
- ---------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Tissue. . . . . . . . . $ 537.9 $ 559.6 $428.0 $528.6
Personal Care . . . . . 497.2 512.2 315.1 361.7
Health Care and Other . 93.8 94.9 80.8 88.1
Unallocated items - net (35.8) (36.0) (48.3) (52.8)
--------- --------- ------- -------
Consolidated. . . . . . $1,093.1 $1,130.7 $775.6 $925.6
========= ========= ======= =======
</TABLE>
Note: Unallocated items - net, consists of expenses not associated with the
business segments.
Commentary:
Consolidated net sales for the first six months were 3.0 percent higher than
in 1998; however, excluding the revenues of KCA, net sales increased 4.7
percent. Excluding the net sales of KCA, worldwide sales volumes were 5
percent higher.
- - Worldwide sales of personal care products increased 9.8 percent from the
first six months of 1998. Personal care products sales volumes were nearly
11 percent higher, with increases in all product categories in North
America, and improvement in Latin America and Asia. Nearly all of the
volume increase in Latin America is attributable to the Colombian
Investment.
- - Excluding the revenues of KCA, worldwide sales of health care and other
products were 4.9 percent higher primarily because of continued growth
in sales of professional health care products.
Excluding the Unusual Items, the first six months operating profit was 22.2
percent higher in 1999, and operating profit as a percentage of sales
increased from 15.2 percent in 1998 to 18.0 percent in 1999.
- - The increase in operating profit for the worldwide tissue segment was
primarily due to productivity gains, increased sales volumes and
manufacturing cost benefits more than offsetting an increase in marketing
expenses.
- - The increase in operating profit for the worldwide personal care segment
was primarily due to the increase in unit sales volumes and manufacturing
cost reductions.
- - Excluding the operating results of KCA, operating profit for the health
care and other segment increased 19.4 percent primarily due to the
increased sales volumes and productivity gains in professional
health care.
<TABLE>
<CAPTION>
By Geography
(Millions of dollars)
NET SALES 1999 1998
- ---------- --------- ----------
<S> <C> <C>
North America . . . . $4,242.7 $4,184.7
Outside North America 2,166.2 2,044.1
Intergeographic Sales (135.1) (138.9)
--------- ---------
Consolidated. . . . . $6,273.8 $6,089.9
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999 1998
----------------------------- ---------------------------
AS EXCLUDING As Excluding
OPERATING PROFIT REPORTED UNUSUAL ITEMS Restated Unusual Items
- ---------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C>
North America . . . . . $ 939.5 $ 965.7 $740.7 $839.9
Outside North America . 189.4 201.0 83.2 138.5
Unallocated items - net (35.8) (36.0) (48.3) (52.8)
--------- --------- ------- -------
Consolidated. . . . . . $1,093.1 $1,130.7 $775.6 $925.6
========= ========= ======= =======
</TABLE>
Note: Unallocated items - net, consists of expenses not associated with the
geographic areas.
- - Excluding the revenues of KCA, 1999 net sales for North America
increased 3.8 percent compared with the prior year.
- - The increase in net sales outside North America is primarily
attributable to higher sales volumes in Asia and Latin America, which
benefited from the Colombian Investment.
Additional Income Statement Commentary:
- - The increase in interest expense is attributable to higher average debt
levels.
- - The Corporation's share of net income of equity companies increased 43.9
percent. The increase was primarily attributable to higher earnings of
Kimberly-Clark de Mexico, S.A. de C.V. due to increased selling prices and
higher sales volumes. In 1998, a charge of $3.8 million, or $.01 per share,
related to the change in value of the Mexican peso was recorded against the
first six months earnings.
- - The Corporation adopted Statement of Position 98-5, Reporting on the
Costs of Start-up Activities, effective January 1, 1998, and recorded 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.
- - Net income was $1.43 per share in 1999 compared with $.92 per share in
1998, an increase of 55.4 percent. Excluding the Unusual Items, the
nonoperating credits, the charge for the devaluation of the peso
and the cumulative effect of the accounting change for start-up costs,
earnings from operations were $1.45 per share for the first six months
of 1999 compared with $1.14 per share in 1998, an increase of
27.2 percent.
LIQUIDITY AND CAPITAL RESOURCES
- - Cash provided by operations in the first six months of 1999 increased by
$33.9 million compared with the first six months of 1998. A higher level of
net income plus net noncash charges included in net income more than offset
an increase in working capital.
- - Accrued expenses associated with the Corporation's restructuring program
announced in 1997 (the "1997 Plan") are summarized below:
<TABLE>
<CAPTION>
First Six Months of 1999
------------------------
Balance at Charges Balance at
(Millions of dollars) December 31, 1998 (Credits) Payments June 30, 1999
- ----------------------- ----------------- ---------- -------- ---------------
<S> <C> <C> <C> <C>
1997 Plan. . . . . . . $111.0 $(3.0) $(54.2) $53.8
</TABLE>
<PAGE>
The balance at June 30, 1999 is estimated to be adequate to complete the
actions contemplated in the 1997 Plan. The activities involved in the 1997
Plan have not disrupted the Corporation's business operations to any
significant extent. The principal benefits of the 1997 Plan have resulted in
lower production costs and simplified manufacturing and sourcing strategies.
- - At June 30, 1999, total debt was $3.2 billion compared with $2.7
billion at December 31, 1998. Net debt (total debt net of cash,
cash equivalents and $220 million of long-term notes receivable) was $2.8
billion at June 30, 1999 compared with $2.3 billion at December 31,
1998. The Corporation's ratio of net debt to capital was 39.5 percent at
June 30, 1999 compared with 35.6 percent at December 31, 1998.
- - 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.
- - On June 10, 1999, the Corporation purchased the European consumer and
away-from-home tissue businesses of Attisholz Holding AG for
approximately $365 million. Such businesses are located in Germany,
Switzerland and Austria.
ENVIRONMENTAL MATTERS
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 its
business or results of operations. Notwithstanding its opinion, management
believes it appropriate to discuss the following matter concerning a site
where the Corporation's estimated share of total site remediation costs, if
any, cannot be established on the basis of currently available information:
- - On June 28, 1999, the Corporation was notified by the State of Michigan
Department of Environmental Quality of its status as a potentially
liable party at the Sunrise Landfill in Wayland, Allegan County,
Michigan. The Corporation currently lacks adequate information to make a
determination as to the extent of its liability at the site.
"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.
Progress against the "Year 2000" readiness plan is monitored and reported to
senior management and to the Corporation's board of directors or audit
committee on a regular basis. As of June 30, 1999, management estimates that
it has completed almost 90 percent of the work involved in modifying,
replacing and testing the Corporation's major systems and microprocessors.
Management has plans to have substantially all such work completed by
September 30, 1999.
<PAGE>
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 $67 million has been incurred for this purpose as of June 30,
1999.
Neither the "Year 2000" issue nor the financial effects of the reviews,
modifications, replacements and testing are expected to have a material
adverse effect on the Corporation's business or its consolidated financial
position, results of operations, or cash flow.
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 effect, if any, on the Corporation's
future results of operations from the Corporation's major customers or
suppliers not being "Year 2000" ready cannot be reasonably estimated. This
latter risk is mitigated somewhat by the Corporation's broad base of customers
and suppliers and the worldwide nature of the Corporation's operations.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain information contained in this report is forward looking and is based
on various assumptions. Such information includes, without limitation,
anticipated financial and operating results, strategies, contingencies and
contemplated transactions of the Corporation, including, but not limited to,
the adequacy of the 1997 Plan, the anticipated sale of the Mobile woodlands
operations, the Corporation's estimated effective tax rate for 1999, and the
success of its "Year 2000" readiness program. These forward-looking
statements are based upon management's expectations and beliefs concerning
future events impacting the Corporation. There can be no assurance that such
events will occur or that their effects on the Corporation will be as
currently expected. For a description of certain 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 1 of the
Corporation's Annual Report on Form 10-K/A for the year ended December 31,
1998 entitled "Factors That May Affect Future Results."
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(3)a Restated Certificate of Incorporation, dated June 12, 1997,
incorporated by reference to Exhibit No. (3)a of the
Corporation's Quarterly Report on Form 10-Q for the period
ended June 30, 1997.
(3)b By-Laws, as amended November 22, 1996, incorporated by reference
to Exhibit No. 4.2 of the Corporation's Registration
Statement on Form S-8 filed with the Securities and Exchange
Commission on December 6, 1996 (File No. 33-17367).
(4) Copies of instruments defining the rights of holders of long-term
debt will be furnished to the Securities and Exchange Commission
upon request.
(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-Q.
(b) Reports on Form 8-K
Previously reported.
<PAGE>
SIGNATURES
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 thereunto duly authorized.
KIMBERLY-CLARK CORPORATION
(Registrant)
By: /s/ John W. Donehower
------------------------
John W. Donehower
Senior Vice President and
Chief Financial Officer
(principal financial officer)
By: /s/ Randy J. Vest
--------------------
Randy J. Vest
Vice President and Controller
(principal accounting officer)
August 11, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 174500
<SECURITIES> 0
<RECEIVABLES> 1501500
<ALLOWANCES> 0<F1>
<INVENTORY> 1257500
<CURRENT-ASSETS> 3333900
<PP&E> 10780200
<DEPRECIATION> 4586800
<TOTAL-ASSETS> 12088300
<CURRENT-LIABILITIES> 3980700
<BONDS> 2110900
0
0
<COMMON> 0
<OTHER-SE> 0<F1>
<TOTAL-LIABILITY-AND-EQUITY> 12088300
<SALES> 6273800
<TOTAL-REVENUES> 6273800
<CGS> 3703500
<TOTAL-COSTS> 5180700
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 108100
<INCOME-PRETAX> 1017000
<INCOME-TAX> 327000
<INCOME-CONTINUING> 765700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 765700
<EPS-BASIC> 1.43
<EPS-DILUTED> 1.42
<FN>
<F1>Items not disclosed since they are not required for interim reporting under
regulation S-X, Article 10
</FN>
</TABLE>
