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<SEC-DOCUMENT>0000055785-02-000017.txt : 20020415
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ACCESSION NUMBER: 0000055785-02-000017
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 7
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020318
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: KIMBERLY CLARK CORP
CENTRAL INDEX KEY: 0000055785
STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621]
IRS NUMBER: 390394230
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-00225
FILM NUMBER: 02577798
BUSINESS ADDRESS:
STREET 1: P O BOX 619100
STREET 2: DFW AIRPORT STATION
CITY: DALLAS
STATE: TX
ZIP: 75261-9100
BUSINESS PHONE: 9722811200
MAIL ADDRESS:
STREET 1: 351 PHELPS DRIVE
CITY: IRVING
STATE: TX
ZIP: 75038
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>k10k2001.txt
<DESCRIPTION>10K
<TEXT>
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, 2001
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 Securit-ies 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
incor-porated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of March 14, 2002, 519,504,160 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 $33 billion.
(Continued)
<PAGE>
FACING SHEET
(CONTINUED)
DOCUMENTS INCORPORATED BY REFERENCE
Kimberly-Clark Corporation's 2001 Annual Report to Stockholders and 2002 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
2001 Annual Report to Stockholders and 2002 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
- ---------------------------------- ---------------------------------------
2001 Annual Report to Stockholders PART I
(Year ended December 31, 2001) 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
2002 Proxy Statement PART III
ITEM 10. Directors and Executive
Officers of the Registrant
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of
Certain Beneficial Owners and
Management
ITEM 13. Certain Relationships and
Related Transactions
<PAGE>
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 15 to the Consolidated Financial Statements contained in
the 2001 Annual Report to Stockholders, are incorporated in this Item 1 by
reference.
RECENT DEVELOPMENTS. The Corporation is a global consumer products company
based on the strategy of building its personal care, consumer tissue and
business-to-business businesses. Since 1997, the Corporation has completed
about 30 acquisitions in its core businesses and approximately 10 strategic
divestitures, including the following transactions:
- - 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 in which the outstanding Tecnol
shares were converted 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 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 June 10, 1999, the Corporation purchased the European consumer and
away-from-home tissue businesses of Attisholz Holding AG for
approximately $365 million. The acquired businesses are located in Germany,
Switzerland and Austria.
- - On September 23, 1999, the Corporation acquired Ballard Medical
Products, a leading maker of disposable medical devices for respiratory
care, gastroenterology and cardiology, at a cost of approximately
$788 million, including the value of common stock exchanged and
other costs of the transaction. This acquisition was accounted
for as a purchase.
- - On September 30, 1999, the Corporation completed the sale of
approximately 460,000 acres of timberland in Alabama, Mississippi
and Tennessee for notes receivable having a face value of $397 million
(and a fair value of $383 million).
<PAGE>
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
- - On February 8, 2000, the Corporation acquired Safeskin Corporation
("Safeskin"), a leading maker of disposable gloves for health
care, high-technology and scientific industries, in a merger transaction
in which the outstanding Safeskin shares were converted into shares of
Kimberly-Clark common stock. The transaction was valued at approximately
$750 million and was accounted for as a purchase.
- - On July 5, 2000, the Corporation acquired a majority of the shares of
privately held S-K Corporation of Taiwan, which held trademark and
distribution rights in Taiwan for the Corporation's global brands
including Kleenex, Huggies and Kotex. Prior to the acquisition, the
Corporation owned approximately 3 percent of S-K Corporation.
- - On December 20, 2000, the Corporation purchased an additional 33.3
percent ownership interest in its Taiwanese affiliate, Taiwan Scott
Paper Corporation, increasing its ownership interest to 100 percent.
- - On January 31, 2001, the Corporation acquired Linostar S.p.A., a leading
Italian-based diaper manufacturer that produced and marketed Lines,
Italy's second largest diaper brand.
- - On July 1, 2001, the Corporation acquired an additional 5 percent equity
interest in its Australian affiliate, Kimberly-Clark Australia Pty
Ltd., increasing its ownership interest to 55 percent. The Corporation and
the owner of the remaining 45 percent also exchanged options for the
purchase by the Corporation of the remaining 45 percent prior to
June 30, 2005.
On November 21, 1997, the Corporation announced a restructuring plan (the
"1997 Plan"). The 1997 Plan, among other things, resulted in the sale, closure
or downsizing of 16 manufacturing facilities worldwide and a workforce
reduction of approximately 3,740 employees. Costs for the 1997 Plan of $250.8
million and $414.2 million were recorded in 1998 and 1997, respectively, at the
time costs became accruable under appropriate accounting principles. Included
in such costs was accelerated depreciation charged to cost of products
sold related to assets that were to be disposed of but which continued
to be operated during 1997 and 1998. In 1999, the Corporation recorded a net
credit of $16.7 million, which was composed of accelerated depreciation
expense of $23.7 million, reductions in accrued costs of $31.9 million
and lower asset write-offs and higher sales proceeds totaling $8.5 million,
due to changes in estimates.
In the fourth quarter of 1998, the Corporation announced a facilities
consolidation plan (the "1998 Plan"). The 1998 Plan, among other things,
resulted in further alignment of tissue manufacturing capacity with demand in
Europe, closure of a diaper manufacturing facility in Canada, shut down and
disposal of a tissue machine in Thailand, write down of certain excess
feminine care production equipment in North America and a reduction in the
Corporation's workforce of 814 employees. Costs for the 1998 Plan of $18.2
million, $42.6 million and $49.1 million were recorded in 2000, 1999 and 1998,
respectively, and charged to cost of products sold. The year 2000 costs
are composed primarily of certain severance costs and charges for accelerated
depreciation for the Corporation's Larkfield, U.K. tissue manufacturing
facility that remained in use until it was shutdown in October 2000.
<PAGE>
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
The 1997 Plan and the 1998 Plan were completed as of December 31, 2000.
DESCRIPTION OF THE CORPORATION. The Corporation is principally engaged in the
manufacturing and marketing throughout the world of a wide range of consumer
and business-to-business products. The Corporation also produces premium
business correspondence and technical papers. Most of these products are made
from natural and synthetic fibers using advanced technologies in fibers,
nonwovens and absorbency.
Following an internal organization change in late 2001, the Corporation is
organized into three business segments: Personal Care; Consumer Tissue; and
Business-to-Business. The financial information by business segment for
earlier periods which is incorporated in this Item 1 by reference has been
reclassified to conform to the new business segments.
The Personal Care segment manufactures and markets 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,
Lightdays, Depend, Poise and other brand names.
The Consumer Tissue segment manufactures and markets facial and bathroom
tissue, paper towels and napkins for household use; wet wipes; and related
products. Products in this business segment are sold under the Kleenex,
Scott, Cottonelle, Viva, Andrex, Scottex, Page, Huggies and other brand names.
The Business-to-Business segment manufactures and markets facial and bathroom
tissue, paper towels, wipers and napkins for away-from-home use; health care
products such as surgical gowns, drapes, infection control products,
sterilization wraps, disposable face masks and exam gloves, respiratory
products and other disposable medical products; printing, premium business and
correspondence papers; specialty and technical papers; and other products.
Products in this business segment are sold under the Kimberly-Clark, Kleenex,
Scott, Kimwipes, WypAll, Surpass, Safeskin, Tecnol, Ballard, and other brand
names.
Products for household use are sold directly, and through wholesalers, to
supermarkets, mass merchandisers, drugstores, warehouse clubs, 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. Health care products are primarily sold to distributors,
converters and end-users. Paper products are sold directly to users,
converters, manufacturers, publishers and printers, and through paper
merchants, brokers, sales agents and other resale agencies.
In 2001, approximately 10.4% of net sales were to Wal-Mart Stores, Inc.,
primarily in the Personal Care and Consumer Tissue businesses. No single
customer accounted for 10% or more of net sales in 2000 and 1999.
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 "Additional Information - Trademarks"
contained in the 2001 Annual Report to Stockholders and is incorporated herein
by reference.
<PAGE>
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
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 the primary raw materials
for manufacturing nonwoven fabrics, which are used in disposable diapers,
training and youth pants, wet wipes, 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 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 approximately 5.9 million acres of forestland
in Canada, principally as a fiber source for pulp production, which is
consumed internally for tissue products. Approximately 1.0 million acres in
the province of Nova Scotia are owned by the Corporation, and approximately
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, tissue and
health care products and nonwoven materials. Consolidated research and
development expense was $295.3 million in 2001, $277.4 million in 2000, and
$249.8 million in 1999.
ENVIRONMENTAL MATTERS. Total worldwide capital expenditures for voluntary
environmental controls or controls necessary to comply with legal requirements
relating to the protection of the environment at the Corporation's facilities
are expected to be approximately $57 million in 2002 and $53 million in 2003.
Of these amounts, approximately $15 million in 2002, and $28 million in 2003
are expected to be spent at facilities in the U.S. For facilities outside of
the U.S., capital expenditures for environmental controls are expected to be
approximately $42 million in 2002 and $25 million in 2003.
Total worldwide operating expenses for environmental compliance are expected
to be approximately $180 million in 2002 and $182 million in 2003. Operating
expenses for environmental compliance with respect to U.S. facilities are
expected to be approximately $98 million in 2002 and $99 million in 2003.
Operating expenses for environmental compliance with respect to facilities
outside the U.S. are expected to be approximately $82 million in 2002 and $83
million in 2003. 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.
<PAGE>
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
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 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 has established appropriate accrued liabilities
with respect thereto, and does not otherwise consider these obligations to be
material.
EMPLOYEES. In its worldwide consolidated operations, the Corporation had
64,200 employees as of December 31, 2001.
Approximately 22 percent of the Corporation's United States workforce and
approximately 25 percent of the Corporation's workforce outside of the United
States are represented by unions. In the U.S., 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), the United Brotherhood of Carpenters
and Joiners and various independent unions. The Corporation's collective
bargaining agreements in the U.S. typically have a term of 5 to 6 years and
provide for wage and fringe benefit increases during the term. The agreements
have staggered termination dates.
INSURANCE. The Corporation maintains coverage consistent with industry
practice for most risks that are incident to its operations.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain matters discussed in this Form 10-K, or documents a portion of which
are incorporated herein by reference, concerning, among other things, the
business outlook, anticipated financial and operating results, strategies,
contingencies and contemplated transactions of the Corporation 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 SEC 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 innovation, quality and performance, price,
and marketing and distribution capabilities. Inherent risks in the
Corporation's
<PAGE>
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
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 or improved products as a means of achieving and/or
maintaining category leadership. In order to maintain its competitive
position, the Corporation must develop technology to support its products.
COST SAVING STRATEGY. A significant portion of the Corporation's anticipated
cost savings are expected to result from operating efficiencies, including
those anticipated to be derived from the Corporation's Go-To-Market
initiatives that are intended to drive costs out of its supply chain. The
Corporation's information system upgrades are an integral part of that series
of initiatives. There can be no assurance that 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 25 percent of the
Corporation's overall fiber requirements. On a worldwide basis, the
Corporation has reduced its internal supply of pulp to approximately 40
percent of its virgin fiber requirements.
The Corporation still intends to reduce its level of pulp integration, when
market conditions permit, to approximately 20 percent, and such a reduction in
pulp integration, if accomplished, could increase the Corporation's commodity
price risk. Specifically, increases in pulp prices could adversely affect the
Corporation's earnings if selling prices for its finished products are not
adjusted or if such adjustments significantly trail the increases in pulp
prices. Derivative instruments have not been used to manage these risks.
Polymer resins, principally polypropylene, are used extensively in the
Corporation's products, such as diapers, training and youth pants, and
incontinence care products. Polymer resins, which are principally derived
from petroleum, may be subject to price fluctuations. The Corporation
purchases polymer resins from a number of suppliers. Significant increases in
resin prices could adversely affect the Corporation's earnings if selling
prices for its finished products are not adjusted or if adjustments
significantly trail the increases in resin prices.
ENERGY COSTS. The Corporation's manufacturing operations utilize electricity,
natural gas and petroleum-based fuels. To insure that it uses all forms of
energy cost-effectively, the Corporation maintains ongoing energy efficiency
improvement programs at all of its manufacturing sites and also provides
expert staff assistance to operating units in negotiating favorable utility
and other energy supply agreements. The Corporation's contracts with energy
suppliers vary as to price, payment terms, quantities and duration.
Kimberly-Clark's energy costs are also affected by various market factors
including the availability of supplies of particular forms of energy, energy
prices and local and national regulatory decisions. There can be no assurance
that the Corporation will be fully protected against substantial changes in
the price or availability of energy sources. Derivative instruments are used
to hedge natural gas price risk when management deems it prudent to do so.
See also "Item 3. Legal Proceedings" for discussion of Mobile Energy Services
Company, LLC.
<PAGE>
PART I
(Continued)
ITEM 1. BUSINESS (Continued)
ACQUISITION STRATEGY. The Corporation's anticipated financial results and
business outlook are dependent in part upon the availability of suitable
acquisition candidates. 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 occur as estimated.
FOREIGN MARKET RISKS. Because the Corporation and its equity companies have
manufacturing facilities in 42 countries and their products are sold in more
than 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. The extremely competitive
situation in European personal care and tissue markets, and the challenging
economic environments in Argentina, Brazil, Mexico and developing countries in
eastern Europe, Asia and Latin America, may slow the Corporation's sales
growth and earnings potential. In addition, the Corporation is subject to the
strengthening and weakening of various currencies against each other and local
currencies versus the U.S. dollar. Transaction exposure, arising from
transactions and commitments denominated in non-local currency, is selectively
hedged (through foreign currency forward, swap and option contracts). See
"Management's Discussion and Analysis - Risk Sensitivity", contained in the
2001 Annual Report to Stockholders, which is incorporated herein by reference.
Translation exposure for the Corporation with respect to foreign operations is
generally not hedged. 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".
One of the Corporation's North American tissue mills has an agreement to
provide its local utility company a specified amount of electric power per
year for the next 17 years. In the event that the mill was shut down, the
Corporation would be required to continue to operate the power generation
facility on behalf of its owner, the local utility company. The net present
value of the cost to fulfill this agreement as of December 31, 2001 is
estimated to be approximately $85 million. However, management considers the
probability of closure of this mill to be remote.
<PAGE>
PART I
(Continued)
- -----------
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 generally 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 CENTERS
Knoxville, Tennessee
Brighton, United Kingdom
WORLDWIDE PRODUCTION AND SERVICE FACILITIES
UNITED STATES
ALABAMA
Mobile - tissue products
ARIZONA
Tucson - health care products
ARKANSAS
Conway - feminine care and incontinence care products and nonwovens
Maumelle - wet wipes and nonwovens
CALIFORNIA
Fullerton - tissue products
San Diego - health care products
CONNECTICUT
New Milford - diapers and tissue products
GEORGIA
LaGrange - nonwovens
IDAHO
Pocatello - respiratory care and gastroenterology products
KENTUCKY
Owensboro - tissue products
MICHIGAN
Munising - technical papers
<PAGE>
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
MISSISSIPPI
Corinth - nonwovens, wipers and towels
Hattiesburg - tissue products
NORTH CAROLINA
Hendersonville - nonwovens
Lexington - nonwovens
OKLAHOMA
Jenks - tissue products
PENNSYLVANIA
Chester - tissue products
SOUTH CAROLINA
Beech Island - diapers and tissue products
TENNESSEE
Loudon - tissue products
TEXAS
Del Rio - health care products
Fort Worth - health care products
Paris - diapers and training and youth pants
San Antonio - personal cleansing products and systems
UTAH
Draper - respiratory care and gastroenterology products
Ogden - diapers
WASHINGTON
Everett - tissue products and pulp
WISCONSIN
Marinette - tissue products
Neenah - diapers, training and youth pants, feminine care and incontinence
care products, business and correspondence papers and nonwovens
Whiting - business and correspondence papers
OUTSIDE THE UNITED STATES
ARGENTINA
* Bernal - tissue products
Pilar - feminine care and incontinence care products
San Luis - diapers
AUSTRALIA
Albury - nonwovens
Ingleburn - diapers
Lonsdale - diapers and feminine care and incontinence care products
Millicent - pulp and tissue products
Tantanoola - pulp
Warwick Farm - tissue products
BAHRAIN
* East Riffa - tissue products
* Equity company production facility
<PAGE>
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
BELGIUM
Duffel - tissue products
BOLIVIA
La Paz - tissue products
Santa Cruz - diapers and feminine care and tissue products
BRAZIL
* Bahia - tissue products
Barueri - wet wipes
* Correia Pinto - tissue products
* Cruzeiro - tissue products
* Mogi das Cruzes - tissue products
Porto Alegre - feminine care products
* Sao Paulo - tissue products
Suzano - diapers and incontinence care products
CANADA
Huntsville, Ontario - tissue products and wipers
New Glasgow, Nova Scotia - pulp
St. Hyacinthe, Quebec - feminine care and incontinence care products
Terrace Bay, Ontario - pulp
CHILE
Colina - tissue products
Santiago - diapers and feminine care products
CHINA
Beijing - feminine care products and diapers
Chengdu - feminine care products
Guangzhou - tissue products
Nanjing - feminine care products
Shanghai - tissue products
Wuhan - feminine care products
COLOMBIA
Barbosa - notebooks, business and correspondence papers and wipers
Guarne - tissue products
Pereira - tissue products, feminine care and incontinence care products
and diapers
Puerto Tejada - tissue products
Tocancipa - diapers and feminine care products
* Villa Rica - diapers and incontinence care products
COSTA RICA
Belen - tissue products
Cartago - diapers and feminine care and incontinence care products
CZECH REPUBLIC
Jaromer - diapers and incontinence care products
Litovel - feminine care products
DOMINICAN REPUBLIC
Santo Domingo - tissue products
* Equity company production facility
<PAGE>
PART I
(Continued)
ITEM 2. PROPERTIES (Continued)
ECUADOR
Babahoyo - tissue products
Mapasingue - tissue products, diapers and feminine care products
EL SALVADOR
Sitio del Nino - tissue products
FRANCE
Rouen - tissue products
Villey-Saint-Etienne - tissue products
GERMANY
Forchheim - feminine care and incontinence care products
Koblenz - tissue products
Mainz - tissue products
Reisholz - tissue products
GUATEMALA
Poza Verde - tissue products
HONDURAS
Villanueva - health care products
INDIA
* Pune - feminine care products and diapers
INDONESIA
Jakarta - tissue products
* Medan - specialty papers
ISRAEL
Afula - diapers and feminine care and incontinence care products
Hadera - tissue products
ITALY
Alanno - tissue products
Patrica - diapers
Romagnano - tissue products
Villanovetta - tissue products
JAPAN
Shiga - soap
KOREA
Anyang - feminine care products, diapers and tissue products
Kimcheon - tissue products and nonwovens
Taejon - feminine care products, diapers and nonwovens
MALAYSIA
Kluang - tissue products, feminine care products and diapers
* Equity company production facility
<PAGE>
PART I
(Continued)
- -----------
ITEM 2. PROPERTIES (Continued)
MEXICO
Acuna - health care products
* Bajio - tissue products, fine papers and notebooks
* Cuautitlan - feminine care products, diapers and nonwovens
* Ecatepec - tissue products
Empalme - health care products
Magdalena - health care products
* Morelia - tissue products, pulp and fine papers
* Naucalpan - tissue products and specialty papers
Nogales - health care products
* Orizaba - tissue products, fine papers and pulp
* Ramos Arizpe - tissue products and diapers
* San Rafael - fine papers
* Texmelucan - tissue products
* Tlaxcala - diapers, nonwovens and wet wipes
PERU
Puente Piedra - tissue products
Villa - diapers and feminine care and incontinence care products
PHILIPPINES
San Pedro, Laguna - feminine care products, diapers, tissue products and
specialty papers
PUERTO RICO
Toa Alta - diapers
SAUDI ARABIA
* Al-Khobar - diapers and feminine care and tissue products
SLOVAK REPUBLIC
Piestany - health care products
SOUTH AFRICA
Cape Town - tissue, feminine care and incontinence care products
Springs - tissue products and diapers
SPAIN
Aranguren - tissue products
Arceniega - tissue products and personal cleansing products and systems
Calatayud - diapers
Salamanca - tissue products
Telde, Canary Islands - tissue products
SWITZERLAND
Balsthal - tissue products and specialty papers
Niederbipp - tissue products
Reichenburg - tissue products
TAIWAN
Chung Li -tissue products, feminine care products and diapers
Hsin-Ying - tissue products
Neihu - feminine care products and diapers
Ta-Yuan - tissue products
* Equity company production facility
<PAGE>
PART I
(Continued)
- -----------
ITEM 2. PROPERTIES (Continued)
THAILAND
Hat Yai - disposable gloves
Pathumthani - feminine care products, diapers and tissue products
Samut Prakarn - tissue products
TURKEY
Istanbul - diapers
UNITED KINGDOM
Barrow - tissue products
Barton-upon-Humber - diapers
Flint - tissue products and nonwovens
Northfleet - tissue products
VENEZUELA
Maracay - tissue products and diapers
VIETNAM
Binh Duong - feminine care products
Hanoi - feminine care products
<PAGE>
PART I
(Continued)
ITEM 3. LEGAL PROCEEDINGS
The following is a brief description of certain legal and administrative
proceedings to which the Corporation or its subsidiaries is a party or to
which the Corporation's or its subsidiaries' properties are subject. In
management's opinion, none of the legal and administrative proceedings
described below, individually or in the aggregate, is expected to have a
material adverse effect on the Corporation's business, financial condition or
results of operations.
Approximately 300 product liability lawsuits seeking monetary damages, in most
cases of an unspecified amount, are pending in federal and state courts
against Safeskin. Safeskin is typically one of several defendants who
manufacture or sell natural rubber latex gloves. These lawsuits allege
injuries ranging from dermatitis to severe allergic reactions caused by the
residual chemicals or latex proteins in gloves worn by health care workers and
other individuals while performing their duties. Safeskin has referred the
defense of these lawsuits to its insurance carriers.
In 1999, prior to the acquisition of Safeskin, numerous lawsuits
(collectively the "Securities Actions") were filed in the U.S. District Court
for the Southern District of California against Safeskin and certain of its
officers and directors alleging violations of Sections 10(b) and 20(a) of the
Securities and Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
The Securities Actions were brought by plaintiffs in their individual capacity
and on behalf of a purported class of persons who purchased or otherwise
acquired Safeskin publicly traded securities during various periods occurring
prior to the Corporation's acquisition of Safeskin. The suits allege that
plaintiffs purchased Safeskin securities at prices artificially inflated by
defendants' misrepresentations and omissions concerning Safeskin's financial
condition and prospects and seek an unspecified amount of damages.
Defendants' motion to dismiss was denied. A plaintiffs' class has been
certified consisting of those who purchased Safeskin common stock and options
during the period of February 18, 1998 to March 11, 1999. Discovery is
continuing and the Corporation continues to contest liability.
In addition, a shareholder derivative action has been filed against certain of
Safeskin's directors, and Safeskin as a nominal defendant, in the Supreme
Court of the State of California, San Diego County (the "Derivative Action").
The Derivative Action alleges breach of fiduciary duty, waste of corporate
assets and gross negligence in connection with Safeskin's stock repurchase
program and seeks an unspecified amount of damages. The court has continued
discovery in the Derivative Action so that it can be completed following the
resolution of the Securities Actions.
<PAGE>
PART I
(Continued)
- -----------
ITEM 3. LEGAL PROCEEDINGS (Continued)
On April 14, 2000, a complaint was filed by Anne Meader and others against the
Corporation and others in the State of Maine Superior Court. Eighteen
plaintiffs seek compensation for injuries allegedly caused by exposure to
substances allegedly emitted by the defendants' mills, including two mills
formerly owned by the Corporation, and from the Central Maine Disposal
Landfill in Fairfield, Maine. The Corporation is contesting the claims
asserted by the plaintiffs.
Since 1998, the Corporation has been involved in a series of complex legal
disputes between the Corporation and Mobile Energy Services Company, L.L.C.
and related parties ("MESC"). These disputes arose from the closure of the
Corporation's Mobile pulp mill. MESC owns a cogeneration complex that
provides energy services to the Corporation's Mobile mill.
In 1998, the Corporation decided to close its Mobile pulp mill and gave notice
to MESC of its intent to terminate a long-term energy services agreement. In
January 1999, MESC filed for Chapter 11 bankruptcy protection and brought an
adversary proceeding in the United States Bankruptcy Court against the
Corporation claiming unspecified damages arising from the mill closure and
termination of the energy services agreement.
In March 2001, an arbitration ruling was issued. In that ruling, the
arbitrator rejected MESC's claims related to the pulp mill closure finding
that the Corporation had affected a proper pulp mill closure. However, the
arbitrator also ruled that the operation of certain assets by the Corporation
after the pulp mill closure permitted MESC to reinstate the pulp mill energy
services agreement. This reinstatement became subject to binding arbitration
brought by MESC in April 2001. A ruling issued in this arbitration on January
31, 2002 resulted in the Corporation recording a pre-tax charge of
approximately $27 million in its 2001 earnings.
In addition, MESC submitted binding arbitration claims for reimbursement by
the Corporation of certain capital and energy costs incurred by MESC. A
ruling issued in this arbitration on January 21, 2002 resulted in the
Corporation recording a pre-tax charge of approximately $17 million in its
2001 earnings.
Of the numerous allegations made against the Corporation in the 1999 adversary
proceeding, only fraudulent transfer claims remain pending before the
Bankruptcy Court. In addition, MESC subsequently filed three additional
adversary proceedings and one arbitration proceeding against the Corporation.
The Corporation continues to contest vigorously MESC's various claims.
As of March 1, 2002, the Corporation, along with numerous other non-affiliated
companies, was a party to approximately 105 lawsuits in California, Florida,
Georgia, Illinois, Louisiana, Mississippi, Missouri, Pennsylvania and Texas
state courts with allegations of personal injury resulting from asbestos
exposure on the defendants' premises and/or allegations that the defendants
manufactured, sold, distributed or installed products which cause
asbestos-related lung disease. No specific product ever manufactured by the
Corporation or its subsidiaries has been identified by the plaintiffs as
having caused or contributed to any asbestos-related lung disease. The
Corporation has denied the allegations and raised numerous defenses in all of
these asbestos cases. All asbestos cases have been tendered to the
Corporation's insurance carriers for defense and indemnity.
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, financial condition or results of
operations.
<PAGE>
PART I
(Continued)
- -----------
ITEM 3. LEGAL PROCEEDINGS (Continued)
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, financial condition or results of operations.
The Corporation has been named a potentially responsible party under the
provisions of the federal Comprehensive Environmental Response, Compensation
and Liability Act, or analogous state statutes, 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, financial condition or results of operations.
Notwithstanding its opinion, management believes it appropriate to discuss the
following matters concerning two of these sites where the Corporation's
estimated share of total site remediation costs, if any, cannot be
established on the basis of currently available information:
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. There have been no significant developments since
the date the Corporation received the notice.
<PAGE>
PART II
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,
2002, together with certain biographical information, are as follows:
ROBERT E. ABERNATHY, 47, was elected Group President effective January 1,
1997. He is responsible for the global Business-to-Business segment which
includes the Away-From-Home Tissue and Wipes business, the Health Care
business, Nonwovens manufacturing, Research and Sales, the Technical Paper
business, the Neenah Paper business and the Energy and Environment
organization. Mr. Abernathy joined the Corporation in 1982. His past
responsibilities in the Corporation have included operations and major project
management in North America. He was appointed Vice President - North American
Diaper Operations in 1992 and Managing Director of Kimberly-Clark Australia
Pty. Limited in 1994.
JOHN W. DONEHOWER, 55, 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 Factory Mutual Insurance Company.
O. GEORGE EVERBACH, 63, 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, 43, has served as President and Chief Operating Officer of the
Corporation since his election in 1999. He previously had been elected Group
President - Global Tissue, Pulp and Paper in 1998, where he was responsible
for the Corporation's global tissue businesses. He also was 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 and has held other senior management positions
in the Corporation. Mr. Falk is a member of the University of Wisconsin -
Madison School of Business Dean's Advisory Board. He has been a director of
the Corporation since 1999.
STEVEN R. KALMANSON, 49, was elected Group President in January 1996. He is
responsible for the Consumer Tissue Segment, which includes the Family Care
and Wet Wipes sectors, Pulp Operations and North America Supply Chain and
Logistics organizations. Mr. Kalmanson joined the Corporation in 1977. His
past responsibilities have included various marketing positions within the
consumer products sectors. He was appointed President, Adult Care sector in
1990, President of the Child Care sector in 1991, and President of the Family
Care sector in 1995.
<PAGE>
PART II
(Continued)
- -----------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (Continued)
WAYNE R. SANDERS, 54, 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 since 1975, Mr. Sanders also has held various
other senior management positions in the Corporation. Mr. Sanders is a
director of Adolph Coors Company, Coors Brewing Company and Texas Instruments
Incorporated. He also is Chairman of the Marquette University Board of
Trustees and is Chairman of the Southwest Region and a member of the National
Board of Governors of the Boys and Girls Clubs of America. He has been a
director of the Corporation since 1989.
KATHI P. SEIFERT, 52, was elected Executive Vice President in November 1999.
She is responsible for the Personal Care Segment which includes the Infant
Care, Child Care, Feminine Care, and Adult Care business sectors, and the
Safety and Quality Assurance team and the U.S. and Canadian Sales
organizations. Ms. Seifert joined Kimberly-Clark in 1978. Her
responsibilities in the Corporation have included various marketing positions
within the Away From Home, Consumer Tissue and Feminine Care 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, elected Group President - North
American Personal Care Products in July 1995 and elected Group President -
Global Personal Care Products in April 1998. Ms. Seifert is a member of the
Board of Directors of Eli Lilly and Company, Theda Care and Fox Cities
Performing Arts Center.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The dividend and market price data included in Note 13 to the Consolidated
Financial Statements, and the information set forth under the captions
"Additional Information - Dividends and Dividend Reinvestment Plan" and
"Additional Information - Stock Exchanges" contained in the 2001 Annual
Report to Stockholders are incorporated in this Item 5 by reference.
As of March 14, 2002, the Corporation had 45,812 holders of record of its
common stock.
<PAGE>
PART II
(Continued)
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31
(Millions of dollars, -----------------------------------------------------
except per share amounts) 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Net Sales. . . . . . . . . . . . . . . $12,546.6 $12,297.8 $13,006.8 $13,982.0 $14,524.4
Gross Profit . . . . . . . . . . . . . 4,607.6 4,597.6 5,325.2 5,753.5 5,908.9
Operating Profit . . . . . . . . . . . 1,486.1 1,697.7 2,435.4 2,633.8 2,338.2
Share of Net Income of
Equity Companies . . . . . . . . . . 157.3 137.1 189.6 186.4 154.4
Income from Continuing
Operations Before
Extraordinary Items and
Cumulative Effect of
Accounting Change. . . . . . . . . . 985.4 1,114.3 1,668.1 1,800.6 1,609.9
Per Share Basis:
Basic. . . . . . . . . . . . . . . 1.77 2.02 3.11 3.34 3.04
Diluted. . . . . . . . . . . . . . 1.76 2.01 3.09 3.31 3.02
Net Income . . . . . . . . . . . . . . 1,002.9 1,103.1 1,668.1 1,800.6 1,609.9
Per Share Basis:
Basic. . . . . . . . . . . . . . . 1.80 2.00 3.11 3.34 3.04
Diluted. . . . . . . . . . . . . . 1.79 1.99 3.09 3.31 3.02
Cash Dividends Per Share
Declared . . . . . . . . . . . . . . .96 1.00 1.04 1.08 1.12
Paid . . . . . . . . . . . . . . . . .95 .99 1.03 1.07 1.11
Total Assets . . . . . . . . . . . . . $11,417.1 $11,687.8 $12,815.5 $14,479.8 $15,007.6
Long-Term Debt . . . . . . . . . . . . 1,803.9 2,068.2 1,926.6 2,000.6 2,424.0
Stockholders' Equity . . . . . . . . . 4,340.3 4,031.5 5,093.1 5,767.3 5,646.9
</TABLE>
NOTES TO SELECTED FINANCIAL DATA
(1) Included in the selected financial data for 1997 are the following items:
<TABLE>
<CAPTION>
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . $128.8 $478.3 $366.3
Gain on asset disposal . . . . . . . . . . . . - (26.5) (16.8)
Gain on sale of K-C de Mexico's Regio business - - (16.3)
Extraordinary gains, net of income taxes . . . - - (17.5)
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . $128.8 $451.8 $315.7 $.57
====== ====== ====== ====
</TABLE>
<PAGE>
PART II
(Continued)
ITEM 6. SELECTED FINANCIAL DATA (Continued)
(2) Included in the selected financial data for 1998 are the following items:
<TABLE>
<CAPTION>
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . $191.6 $ 377.8 $276.8
Mobile pulp mill fees and related severance. . 42.3 42.3 25.9
Gain on asset disposal . . . . . . . . . . . . - (140.0) (78.3)
Change in value of Mexican peso. . . . . . . . - - 9.2
Cumulative effect of accounting change, net of
income taxes . . . . . . . . . . . . . . . . - - 11.2
------ ------- ------
Total. . . . . . . . . . . . . . . . . . . . $233.9 $ 280.1 $244.8 $.45
====== ======= ====== ====
</TABLE>
(3) Included in the selected financial data for 1999 are the following items:
<TABLE>
<CAPTION>
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Business improvement programs . . . . . . . $69.0 $ 47.8 $ 35.6
Business integration and other costs. . . . 11.2 22.6 14.5
Mobile pulp mill fees and related severance 9.0 9.0 5.6
Gains on asset disposals. . . . . . . . . . - (176.7) (112.3)
----- ------- -------
Total . . . . . . . . . . . . . . . . . . $89.2 $ (97.3) $ (56.6) $(.11)
===== ======= ======= =====
</TABLE>
(4) Included in the selected financial data for 2000 are the following
items:
<TABLE>
<CAPTION>
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Business improvement programs . . . . . . . . $20.2 $ 24.4 $ 16.4
Business integration and other costs. . . . . 10.1 35.1 23.0
Litigation settlements and other. . . . . . . - (60.6) (37.2)
----- ------ ------
Total . . . . . . . . . . . . . . . . . . $30.3 $ (1.1) $ 2.2 $.01
===== ====== ====== ====
</TABLE>
<PAGE>
(5) Included in the selected financial data for 2001 are the following items:
<TABLE>
<CAPTION>
Diluted
Gross Operating Net Net Income
(Millions of dollars, except per share amounts) Profit Profit Income per Share
----------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
North American mill closing and other write-offs . $ 50.1 $ 52.6 $ 32.6
Latin American asset plan. . . . . . . . . . . . . 32.3 32.5 19.8
Business improvement programs. . . . . . . . . . . 54.7 55.5 33.8
Business integration and other costs . . . . . . . 4.6 29.1 19.2
Arbitration settlements. . . . . . . . . . . . . . - 43.2 26.9
----- ----- ------
Total . . . . . . . . . . . . . . . . . . . . . $141.7 $212.9 $132.3 $.25
====== ====== ====== ====
</TABLE>
<PAGE>
PART II
(Continued)
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 2001 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 - Risk Sensitivity" contained in the 2001 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
2001 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 2002 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 2002 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 2002 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 2002 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, 2001 and 2000, and the
related Consolidated Statements of Income, Stockholders' Equity and Cash Flow
for the years ended December 31, 2001, 2000 and 1999, 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 2001 Annual Report to Stockholders.
In addition, a related report of Deloitte & Touche LLP is 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 2001 Annual
Report to Stockholders.
Independent Auditors' Report
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 (3)(a) of the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1999.
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
June 8, 2000, incorporated by reference to Exhibit No. (10)b of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.
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.
<PAGE>
PART IV
(Continued)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(Continued)
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 14, 2000, incorporated by reference to Exhibit No. (10)e of the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.
Exhibit No. (10)f. Deferred Compensation Plan, as amended effective November
14, 2000, incorporated by reference to Exhibit No. (10)f of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2000.
Exhibit No. (10)g. 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)h. 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)i. 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)j. Retirement Contribution Excess Benefit Program, as amended
and restated as of June 29, 2000, incorporated by reference to Exhibit No.
(10)j of the Corporation's Annual Report on Form 10-K for the year ended
December 31, 2000.
Exhibit No. (10)k. 1999 Restricted Stock Plan, as amended effective November
14, 2000, incorporated by reference to Exhibit No. (10)k of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2000.
Exhibit No. (10)l. Outside Directors' Stock Option Plan, effective January 1,
2001, incorporated by reference to Exhibit No. (10)l of the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2000.
Exhibit No. (10)m. 2001 Equity Participation Plan.
Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 2001.
Exhibit No. (13). Portions of the Corporation's 2001 Annual Report to
Stockholders incorporated by reference in this Form 10-K.
Exhibit No. (21). Subsidiaries of the Corporation.
<PAGE>
PART IV
(Continued)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(Continued)
Exhibit No. (23). Independent Auditors' Consent.
Exhibit No. (24). Powers of Attorney.
(B) REPORTS ON FORM 8-K
The Corporation filed the following Current Reports on Form 8-K since October
1, 2001:
1. Current Report on Form 8-K, dated November 30, 2001, to report the
text of a web-casted conference call concerning the Corporation's 2002
outlook and the planning assumptions relating thereto.
2. Current Report on Form 8-K, dated January 17, 2002, to report the
reclassification of business segment sales and operating profit for
1999, 2000 and the first nine months of 2001 to reflect newly defined
business segments of the Corporation.
3. Current Report on Form 8-K, dated January 23, 2002, to report further
reclassification of certain amounts contained in the Form 8-K dated
January 17, 2002.
4. Current Report on Form 8-K, dated February 5, 2002, to report the text
of a press release issued on January 23, 2002 relating to the
Corporation's 2001 fourth quarter earnings and the results of an
arbitration ruling.
<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 18, 2002
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 18, 2002
- ----------------------- and Chief Executive Officer
Wayne R. Sanders and Director
(principal executive officer)
/s/ John W. Donehower Senior Vice President and March 18, 2002
- ------------------------ Chief Financial Officer
John W. Donehower (principal financial officer)
/s/ Randy J. Vest Vice President and March 18, 2002
- -------------------- Controller
Randy J. Vest (principal accounting officer)
Directors
John F. Bergstrom Claudio X. Gonzalez
Pastora San Juan Cafferty Linda Johnson Rice
Paul J. Collins Wolfgang R. Schmitt
Robert W. Decherd Marc J. Shapiro
Thomas J. Falk Randall L. Tobias
William O. Fifield
By: /s/ O. George Everbach March 18, 2002
-------------------------------------
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, 2001 and 2000, and for each of the three years
in the period ended December 31, 2001, and have issued our report thereon
dated February 8, 2002; such consolidated financial statements and report are
included in your 2001 Annual Report to Stockholders 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
February 8, 2002
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Millions of dollars)
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 PERIOD
- ------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
DECEMBER 31, 2001
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . $53.2 $ 18.2 $(3.1) $ 18.5 (B) $49.8
Allowances for sales
discounts. . . . . . . . 19.9 215.9 2.0 217.8 (C) 20.0
DECEMBER 31, 2000
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . $50.9 $ 12.7 $ 3.9 $ 14.3 (b) $53.2
Allowances for sales
discounts. . . . . . . . 20.7 203.7 (.4) 204.1 (c) 19.9
DECEMBER 31, 1999
Allowances deducted from
assets to which they apply
Allowances for doubtful
accounts . . . . . . . . $51.5 $ 13.9 $ 6.8 $ 21.3 (b) $50.9
Allowances for sales
discounts. . . . . . . . 15.8 176.2 (.4) 170.9 (c) 20.7
<FN>
(a) Includes bad debt recoveries and the effects of changes in foreign currency exchange
rates. Also includes the beginning balances resulting from acquisitions made during the year
and from the consolidation of Kimberly-Clark Australia Holding Pty., Ltd, the Corporation's
Australian affiliate, Hogla-Kimberly Limited, the Corporation's Israeli affiliate, and
Colombiana Kimberly Colpapel S.A., its Colombian affiliate, in 2001, 2000 and 1999,
respectively.
(b) Primarily uncollectible receivables written off.
(c) Sales discounts allowed.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1999
(Millions of dollars)
ADDITIONS DEDUCTIONS
----------------------- -----------------
BALANCE AT CHARGED TO CHARGED TO WRITE-OFFS BALANCE
BEGINNING COSTS AND OTHER AND AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS RECLASSIFICATIONS PERIOD
- ------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
1998 AND 1997 PLANS
DECEMBER 31, 1999
Contra assets deducted from
assets to which they apply
Inventory . . . . . . . . $10.9 $(.3) $ - $10.6 $ -
Other Assets. . . . . . . .5 (.5) - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Millions of dollars)
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, 2001
Deferred Taxes
Valuation Allowance. . . . . . $158.8 $ - $ - $(18.4) $177.2
DECEMBER 31, 2000
Deferred Taxes
Valuation Allowance. . . . . . $279.0 $(102.6) $ - $ 17.6 $158.8
DECEMBER 31, 1999
Deferred Taxes
Valuation Allowance. . . . . . $285.6 $ 34.9 $ - $ 41.5 $279.0
<FN>
(a) Includes the net currency effects of translating valuation allowances at current rates under
SFAS No. 52 of $(3.4) million in 2001, $(17.8) million in 2000 and $(39.4) million in 1999. Also,
reflects a valuation allowance of approximately $24 million in 2001 related to a net operating loss
carryforward that had not previously been recorded. This entry had no effect on the consolidated
statement of income or the consolidated balance sheet.
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>epp2001.txt
<DESCRIPTION>EX-10
<TEXT>
Exhibit (10)m
--------------
KIMBERLY-CLARK CORPORATION
2001 EQUITY PARTICIPATION PLAN
(AS ADOPTED EFFECTIVE APRIL 26, 2001)
1. PURPOSE
This 2001 Equity Participation Plan (the "Plan") of Kimberly-Clark
Corporation (the "Corporation") is intended to aid in attracting and retaining
highly qualified personnel and to encourage those employees who materially
contribute, by managerial, scientific or other innovative means to the success
of the Corporation or of an Affiliate, to acquire an ownership interest in the
Corporation, thereby increasing their motivation for and interest in the
Corporation's or Affiliate's long-term success.
2. EFFECTIVE DATE
The Plan is effective as of April 26, 2001 upon (a) approval of the Board
and (b) approval by the stockholders of the Corporation at the 2001 Annual
Meeting of Stockholders.
3. DEFINITIONS
"Affiliate" means any company in which the Corporation owns 20% or more
---------
of the equity interest (collectively, the "Affiliates").
"Award" has the meaning set forth in Section 6 of this Plan.
-----
"Award Agreement" means an agreement entered into between the Corporation
---------------
and a Participant setting forth the terms and conditions applicable to the
Award granted to the Participant.
"Board" means the Board of Directors of the Corporation.
-----
"Cause" means any of the following: (i) the commission by the
-----
Participant of a felony; (ii) the Participant's dishonesty, habitual neglect
or incompetence in the management of the affairs of the Corporation; or (iii)
the refusal or failure by the Participant to act in accordance with any lawful
directive or order of the Corporation, or an act or failure to act by the
Participant which is in bad faith and which is detrimental to the Corporation.
"Change of Control" means an event 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 the
Corporation or any successor to the Corporation.
"Code" means the Internal Revenue Code of 1986 and the regulations
----
thereunder, as amended from time to time.
"Committee" means the Compensation Committee of the Board, provided that
---------
if the requisite number of members of the Compensation Committee are not
Disinterested Persons, the Plan shall be
<PAGE>
administered by a committee, all of whom are Disinterested Persons, appointed
by the Board and consisting of two or more directors with full authority
to act in the matter. The term "Committee" shall mean the Compensation
Committee or the committee appointed by the Board, as the case may be.
Furthermore, the term "Committee" shall include any delegate to the extent
authority is delegated pursuant to Section 4 hereunder.
"Committee Rules" means the interpretative guidelines approved by the
----------------
Committee providing the foundation for administration of this Plan.
"Common Stock" means the common stock, par value $1.25 per share, of the
-------------
Corporation and shall include both treasury shares and authorized but unissued
shares and shall also include any security of the Corporation issued in
substitution, in exchange for, or in lieu of the Common Stock.
"Disinterested Person" means a person who is a "Non-Employee Director"
---------------------
for purposes of rule 16b-3 under the Exchange Act, or any successor provision,
and who is also an "outside director" for purposes of section 162(m) of the
Code or any successor section.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules
-------------
and regulations thereunder, as amended from time to time.
"Fair Market Value" means the reported closing price of the Common Stock,
-----------------
on the relevant date as reported on the composite list used by The Wall Street
---------------
Journal for reporting stock prices, or if no such sale shall have been made on
- -------
that day, on the last preceding day on which there was such a sale.
"Incentive Stock Option" means an Option which is so defined for purposes
----------------------
of section 422 of the Code or any successor section.
"Nonqualified Stock Option" means any Option which is not an Incentive
---------------------------
Stock Option.
"Option" means a right to purchase a specified number of shares of Common
------
Stock at a fixed option price equal to no less than 100% of the Fair Market
Value of the Common Stock on the date the Award is granted.
"Option Price" has the meaning set forth in subsection 7(b) of this Plan.
------------
"Participant" means an employee who the Committee selects to participate
-----------
in and receive Awards under the Plan (collectively, the "Participants").
"Qualified Termination of Employment" means the termination of a
--------------------------------------
Participant's employment with the Corporation and/or its Affiliates within the
two (2) year period following a Change of Control of the Corporation for any
reason (whether voluntary or involuntary) unless such termination is by reason
of death or disability or unless such termination is (i) by the Corporation
for Cause or (ii) by the Participant without Good Reason. Subject to the
definition of "Termination by the Participant for Good Reason," transfers of
employment for administrative purposes among the Corporation and its
Affiliates shall not be deemed a Qualified Termination of Employment.
"Restricted Period" shall mean the period of time during which the
------------------
Transferability Restrictions applicable to Awards will be in force.
"Restricted Share" shall mean a share of Common Stock which may not be
-----------------
traded or sold, until the date the Transferability Restrictions expire.
<PAGE>
"Restricted Share Unit" means the right, as described in Section 9, to
-----------------------
receive an amount, payable in either cash or shares of Common Stock, equal to
the value of a specified number of shares of Common Stock. No certificates
shall be issued with respect to such Restricted Share Unit, except as provided
in subsection 9(d), and the Corporation shall maintain a bookkeeping account
in the name of the Participant to which the Restricted Share Unit shall
relate.
"Retirement" and "Retires" means the termination of employment on or
---------- -------
after the date the Participant is entitled to receive immediate payments under
a qualified retirement plan of the Corporation or an Affiliate; provided,
however, if the Participant is not eligible to participate under a qualified
retirement plan of the Corporation or its Affiliates then such Participant
shall be deemed to have retired if his termination of employment is on or
after the date such Participant has attained age 55.
"Stock Appreciation Right (SAR)" has the meaning set forth in subsection
-------------------------------
7(i)(i) of this Plan.
"Termination by the Participant for Good Reason" shall mean the
----------------------------------------------------
occurrence (without the Participant's express written consent) of any one of
the following acts by the Corporation, or failures by the Corporation to act,
unless, in the case of any act or failure to act described below, such act or
failure to act is corrected prior to the Participant's termination date:
(a) the assignment to the Participant of any duties inconsistent
with the Participant's status with the Corporation or a substantial
adverse alteration in the nature or status of the Participant's
responsibilities from those in effect immediately prior to the Change of
Control other than such alteration primarily attributable to the fact
that the Corporation may no longer be a public company;
(b) a reduction by the Corporation of the Participant's annual
base salary by five percent or more as in effect immediately prior to the
Change of Control, except for across-the-board salary reductions similarly
affecting all similarly situated employees of the Corporation;
(c) the Corporation requiring the Participant to be based at a
location more than 50 miles from the location of the Participant's office
as of the date of the Change of Control except for required travel on the
Corporation's business to an extent substantially consistent with the
Participant's business travel obligations as of the date of the Change of
Control;
(d) the failure of the Corporation to pay as soon as
administratively feasible, after notice from the Participant, any portion
of the Participant's current compensation;
(e) the failure of the Corporation to continue in effect any
compensation plan in which the Participant participates immediately prior
to the Change of Control which is material to the Participant's total
compensation, including but not limited to the Corporation's stock option,
incentive compensation, and bonus plans, or any substitute plans adopted
prior to the Change of Control, unless an equitable arrangement (which is
embodied in an ongoing substitute or alternative plan but which need not
provide the Participant with equity-based incentives) has been made with
respect to such plan, or the failure by the Corporation to continue
the Participant's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable than the
benefits provided to other participants; or
(f) the failure by the Corporation to continue to provide the
Participant with benefits substantially similar to those enjoyed by the
Participant under any of the Corporation's pension, life insurance,
medical, health and accident, or disability plans in which the
Participant was
<PAGE>
participating at the time of the Change of Control, the taking of any
action by the Corporation which would directly or indirectly materially
reduce any of such benefits or deprive the Participant of any material
fringe benefit enjoyed by the Participant at the time of the Change
of Control, or the failure by the Corporation to provide the Participant
with the number of paid vacation days to which the Participant is
entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect
at the time of the Change of Control.
The Participant's right to terminate the Participant's employment for
Good Reason shall not be affected by the Participant's incapacity due to
physical or mental illness. The Participant's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
"Total and Permanent Disability" means Totally and Permanently Disabled
--------------------------------
as defined in the Kimberly-Clark Corporation Pension Plan.
"Transferability Restrictions" means the restrictions on transferability
-----------------------------
imposed on Awards of Restricted Shares or Restricted Share Units.
4. ADMINISTRATION
The Plan and all Awards granted pursuant thereto shall be administered by
the Committee. The Committee, in its absolute discretion, shall have the power
to interpret and construe the Plan and any Award Agreements; provided,
however, that no such action or determination may increase the amount of
compensation payable that would otherwise be due in a manner that would result
in the disallowance of a deduction to the Corporation under section 162(m) of
the Code or any successor section. Any interpretation or construction of any
provisions of this Plan or the Award Agreements by the Committee shall be
final and conclusive upon all persons. No member of the Board or the
Committee shall be liable for any action or determination made in good faith.
Within 60 days following the close of each calendar year that the Plan is
in operation, the Committee shall make a report to the Board. The report
shall specify the employees who received Awards under the Plan during the
prior year, the form and size of the Awards to the individual employees, and
the status of prior Awards.
The Committee shall have the power to promulgate Committee Rules and
other guidelines in connection with the performance of its obligations, powers
and duties under the Plan, including its duty to administer and construe the
Plan and the Award Agreements.
The Committee may authorize persons other than its members to carry out
its policies and directives subject to the limitations and guidelines set by
the Committee, and may delegate its authority under the Plan, provided,
however, the delegation of authority to grant Awards shall be limited to
grants by the Chief Executive Officer to newly hired employees, or to respond
to special recognition or retention needs, and any such grants shall be
limited to eligible Participants who are not subject to section 16 of the
Exchange Act. The delegation of authority shall be limited as follows: (a)
with respect to persons who are subject to section 16 of the Exchange Act, the
authority to grant Awards, the selection for participation, decisions
concerning the timing, pricing and amount of a grant or Award and authority to
administer Awards shall not be delegated by the Committee; (b) the maximum
number of shares of Common Stock covered by Awards which may be granted by the
Chief Executive Officer within any calendar year period shall not exceed
200,000; (c) any delegation shall satisfy all applicable requirements of rule
16b-3 of the Exchange Act, or any successor provision; and (d) no such
delegation shall result in
<PAGE>
the disallowance of a deduction to the Corporation under section 162(m) of the
Code or any successor section. Any person to whom such authority is granted
shall continue to be eligible to receive Awards under the Plan.
5. ELIGIBILITY
The Committee shall from time to time select the Participants from those
employees whom the Committee determines either to be in a position to
contribute materially to the success of the Corporation or Affiliate or to
have in the past so contributed. Only employees (including officers and
directors who are employees) of the Corporation and its Affiliates are
eligible to participate in the Plan.
6. FORM OF GRANTS
All Awards under the Plan shall be made in the form of Options,
Restricted Shares or Restricted Share Units, or any combination thereof.
Notwithstanding anything in this Plan to the contrary, any Awards shall
contain the restriction on assignability in subsection 16(g) of this Plan to
the extent required under rule 16b-3 of the Exchange Act.
7. STOCK OPTIONS
The Committee or its delegate shall determine and designate from time to
time those Participants to whom Options are to be granted and the number of
shares of Common Stock to be optioned to each and the periods the Option shall
be exercisable. Such Options may be in the form of Incentive Stock Options or
in the form of Nonqualified Stock Options. The Committee in its discretion at
the time of grant may establish performance goals that may affect the grant,
exercise and/or settlement of an Option. After granting an Option to a
Participant, the Committee shall cause to be delivered to the Participant an
Award Agreement evidencing the granting of the Option. The Award Agreement
shall be in such form as the Committee shall from time to time approve. The
terms and conditions of all Options granted under the Plan need not be the
same, but all Options must meet the applicable terms and conditions specified
in subsections 7(a) through 7(h).
(a) Period of Option. The Period of each Option shall be no
more than 10 years from the date it is granted.
(b) Option Price. The Option price shall be determined by the
Committee, but shall not in any instance be less than the Fair Market
Value of the Common Stock at the time that the Option is granted (the
"Option Price").
(c) Limitations on Exercise. The Option shall not be
exercisable until at least one year has expired after the granting
of the Option, during which time the Participant shall have been in
the continuous employ of the Corporation or an Affiliate; provided,
however, that the Option shall become exercisable immediately in the
event of a Qualified Termination of Employment of a Participant, without
regard to the limitations set forth below in this subsection 7(c).
Unless otherwise determined by the Committee or its delegate at the
time of grant, at any time during the period of the Option after the
end of the first year, the Participant may purchase up to 30 percent of
the shares covered by the Option; after the end of the second year, an
additional 30 percent; and after the end of the third year, the remaining
40 percent of the total number of shares covered by the Option;
provided, however, that if the Participant's employment is terminated
for any reason other than death, Retirement or Total and Permanent
Disability, the Option shall be exercisable only for three months
following such termination and only for the
<PAGE>
number of shares of Common Stock which were exercisable on the date of
such termination. In no event, however, may an Option be exercised more
than 10 years after the date of its grant.
(d) Exercise after Death, Retirement, or Disability. Unless
otherwise determined by the Committee or its delegate at the time of
grant, if a Participant dies, becomes Totally and Permanently Disabled,
or Retires without having exercised the Option in full, the remaining
portion of such Option may be exercised, without regard to the limitations
in subsection 7(c), as follows. If a Participant dies or becomes Totally
and Permanently Disabled the remaining portion of such Option may be
exercised within (i) three years from the date of any such event or
(ii) the remaining period of the Option, whichever is earlier. Upon a
Participant's death, the Option may be exercised by the person or persons
to whom such Participant's rights under the Option shall pass by will or
by applicable law or, if no such person has such rights, by his executor
or administrator. If a Participant Retires the remaining portion of such
Option may be exercised within (i) five years from the date of any such
event or (ii) the remaining period of the Option, whichever is
earlier.
(e) Non-transferability. During the Participant's lifetime,
Options shall be exercisable only by such Participant. Options shall
not be transferable other than by will or the laws of descent and
distribution upon the Participant's death. Notwithstanding anything in
this subsection 7(e) to the contrary, the Committee may grant to
designated Participants the right to transfer Nonqualified Stock Options,
to the extent allowed under rule 16b-3 of the Exchange Act, subject to
the terms and conditions of the Committee Rules.
(f) Exercise; Notice Thereof. Options shall be exercised by
delivering to the Corporation, at the office of the Treasurer at the
World Headquarters, written notice of the number of shares with respect
to which Option rights are being exercised and by paying in full the
Option Price of the shares at the time being acquired. Payment may be
made in cash, a check payable to the Corporation or in shares of
Common Stock transferable to the Corporation and having a Fair Market
Value on the transfer date equal to the amount payable to the Corporation.
The date of exercise shall be deemed to be the date the Corporation
receives the written notice and payment for the shares being purchased.
A Participant shall have none of the rights of a stockholder with
respect to shares covered by such Option until the Participant
becomes the record holder of such shares.
(g) Purchase for Investment. It is contemplated that the
Corporation will register shares sold to Participants pursuant to
the Plan under the Securities Act of 1933. In the absence of
an effective registration, however, a Participant exercising an
Option hereunder may be required to give a representation that he/she
is acquiring such shares as an investment and not with a view to
distribution thereof.
(h) Limitations on Incentive Stock Option Grants.
(i) An Incentive Stock Option shall be granted only
to an individual who, at the time the Option is granted, does not
own stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Corporation or Affiliates.
(ii) The aggregate Fair Market Value of all shares with
respect to which Incentive Stock Options are exercisable by a
Participant for the first time during any year shall not exceed
$100,000. The aggregate Fair Market Value of such shares shall be
determined at the time the Option is granted.
<PAGE>
(i) Election to Receive Cash Rather than Stock.
(i) At the same time as Nonqualified Stock Options are
granted the Committee may also grant to designated Participants the
right to convert a specified number of shares of Common Stock covered
by such Nonqualified Stock Options to cash, subject to the terms and
conditions of this subsection 7(i). For each such Option so
converted, the Participant shall be entitled to receive cash equal
to the difference between the Participant's Option Price and the Fair
Market Value of the Common Stock on the date of conversion. Such a
right shall be referred to herein as a Stock Appreciation Right
("SAR"). Participants to whom an SAR has been granted shall be
notified of such grant and of the Options to which such SAR pertains.
An SAR may be revoked by the Committee, in its sole discretion, at
any time, provided, however, that no such revocation may be taken
hereunder if such action would result in the disallowance of a
deduction to the Corporation under section 162(m) of the Code or any
successor section.
(ii) A person who has been granted an SAR may exercise
such SAR during such periods as provided for in the rules promulgated
under section 16 of the Exchange Act. The SAR shall expire when the
period of the subject Option expires.
(iii) At the time a Participant converts one or more
shares of Common Stock covered by an Option to cash pursuant to an
SAR, such Participant must exercise one or more Nonqualified Stock
Options, which were granted at the same time as the Option subject to
such SAR, for an equal number of shares of Common Stock. In the event
that the number of shares and the Option Price per share of all shares
of Common Stock subject to outstanding Options is adjusted as provided
in the Plan, the above SARs shall automatically be adjusted in the
same ratio which reflects the adjustment to the number of shares and
the Option Price per share of all shares of Common Stock subject to
outstanding Options.
(j) Deferral of Award Payment. The Committee may establish one
or more programs under the Plan to permit selected Participants the
opportunity to elect to defer receipt of consideration upon exercise of an
Award or other event that absent the election would entitle the
Participant to payment or receipt of Common Stock or other consideration
under an Option. The Committee may establish the election procedures,
the timing of such elections, the mechanisms for payments of, and accrual
of interest or other earnings, if any, on amounts of Common Stock so
deferred, and such other terms, conditions, rules and procedures that the
Committee deems advisable for the administration of any such deferral
program.
8. RESTRICTED SHARES
The Committee or its delegate may from time to time designate those
Participants who shall receive Restricted Share Awards. Each grant of
Restricted Shares under the Plan shall be evidenced by an agreement which
shall be executed by the Corporation and the Participant. The agreement shall
contain such terms and conditions, not inconsistent with the Plan, as shall be
determined by the Committee and shall indicate the number of Restricted Shares
awarded and the following terms and conditions of the award.
(a) Grant of Restricted Shares. The Committee shall determine
the number of Restricted Shares to be included in the grant and the
period or periods during which the Transferability Restrictions
applicable to the Restricted Shares will be in force (the "Restricted
<PAGE>
Period"). Unless otherwise determined by the Committee at the time of
grant, the Restricted Period shall be for a minimum of three years and
shall not exceed ten years from the date of grant, as determined by the
Committee at the time of grant. The Restricted Period may be the same for
all Restricted Shares granted at a particular time to any one
Participant or may be different with respect to different Participants
or with respect to various of the Restricted Shares granted to the
same Participant, all as determined by the Committee at the time of grant.
(b) Transferability Restrictions. During the Restricted Period,
Restricted Shares may not be sold, assigned, transferred or otherwise
disposed of, or mortgaged, pledged or otherwise encumbered. Furthermore,
a Participant's right, if any, to receive Common Stock upon termination
of the Restricted Period may not be assigned or transferred except by will
or by the laws of descent and distribution. In order to enforce the
limitations imposed upon the Restricted Shares the Committee may (i)
cause a legend or legends to be placed on any such certificates, and/or
(ii) issue "stop transfer" instructions as it deems necessary or
appropriate. Holders of Restricted Shares limited as to sale under
this subsection 8(b) shall have rights as a shareholder with respect to
such shares to receive dividends in cash or other property or other
distribution or rights in respect of such shares, and to vote such shares
as the record owner thereof. With respect to each grant of Restricted
Shares, the Committee shall determine the Transferability Restrictions
which will apply to the Restricted Shares for all or part of the
Restricted Period. By way of illustration but not by way of limitation,
the Committee may provide (i) that the Participant will not be entitled to
receive any shares of Common Stock unless he or she is still employed by
the Corporation or its Affiliates at the end of the Restricted Period,
(ii) that the Participant will become vested in Restricted Shares
according to a schedule determined by the Committee, or under other
terms and conditions determined by the Committee, and (iii) how any
Transferability Restrictions will be applied, modified or accelerated
in the case of the Participant's death or Total and Permanent Disability.
(c) Manner of Holding and Delivering Restricted Shares. Each
certificate issued for Restricted Shares shall be registered in the name
of the Participant and deposited with the Corporation or its designee.
These certificates shall remain in the possession of the Corporation or
its designee until the end of the applicable Restricted Period or, if
the Committee has provided for earlier termination of the Transferability
Restrictions following a Participant's death, Total and Permanent
Disability or earlier vesting of the shares of Common Stock, such earlier
termination of the Transferability Restrictions. At whichever time is
applicable, certificates representing the number of shares to which the
Participant is then entitled shall be delivered to the Participant free
and clear of the Transferability Restrictions; provided that in the
case of a Participant who is not entitled to receive the full number of
Shares evidenced by the certificates then being released from escrow
because of the application of the Transferability Restrictions, those
certificates shall be returned to the Corporation and canceled and a new
certificate representing the shares of Common Stock, if any, to which the
Participant is entitled pursuant to the Transferability Restrictions shall
be issued and delivered to the Participant, free and clear of the
Transferability Restrictions.
9. RESTRICTED SHARE UNITS
The Committee or its delegate shall from time to time designate those
Participants who shall receive Restricted Share Unit Awards. The Committee
shall advise such Participants of their Awards by a letter indicating the
number of Restricted Share Units awarded and the following terms and
conditions of the award.
<PAGE>
(a) Restricted Share Units may be granted to Participants as of the
first day of a Restricted Period. The number of Restricted Share Units to be
granted to each Participant and the Restricted Period shall be determined by
the Committee in its sole discretion.
(b) Transferability Restrictions. During the Restricted Period,
Restricted Share Units may not be sold, assigned, transferred or otherwise
disposed of, or mortgaged, pledged or otherwise encumbered. Furthermore, a
Participant's right, if any, to receive cash or Common Stock upon
termination of the Restricted Period may not be assigned or transferred
except by will or by the laws of descent and distribution. With
respect to each grant of Restricted Share Units, the Committee hall
determine the Transferability Restrictions which will apply to the
Restricted Share Units for all or part of the Restricted Period.
By way of illustration but not by way of limitation, the Committee may
provide (i) that the Participant will forfeit any Restricted Share Units
unless he or she is still employed by the Corporation or its
Subsidiaries at the end of the Restricted Period, (ii) that the Participant
will become vested in Restricted Share Units according to a schedule
determined by the Committee, or under other terms and conditions determined
by the Committee, and (iii) how any Transferability Restrictions will be
applied, modified or accelerated in the case of the Participant's death
or Total and Permanent Disability.
(c) During the Restricted Period, Participants will be credited with
dividends, equivalent in value to those declared and paid on shares of
Common Stock, on all Restricted Share Units granted to them. These
dividends will be regarded as having been reinvested in Restricted Share
Units on the date of the Common Stock dividend payments based on the then
Fair Market Value of the Common Stock thereby increasing the number of
Restricted Share Units held by a Participant. Holders of Restricted Share
Units under this subsection 9(c) shall have none of the rights of a
shareholder with respect to such shares. Holders of Restricted Share
Units are not entitled to receive dividends in cash or other property,
nor other distribution of rights in respect of such shares, nor to vote
such shares as the record owner thereof.
(d) Payment of Restricted Share Units. The payment of Restricted
Share Units shall be made in cash or shares of Common Stock, or a
combination of both, as determined by the Committee at the time of grant.
The payment of Restricted Share Units shall be made within 90 days
following the end of the Restricted Period.
10. GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER TERMINATIONS
(a) In the event the Participant's employment with the Corporation
or an Affiliate is terminated by reason of a shutdown or divestiture of
all or a portion of the Corporation's or its Affiliate's business, a
proportion of the Restricted Shares or Restricted Share Unit Award shall
be considered to vest as of the Participant's termination of employment.
The number of shares that shall vest shall be prorated for the number of
full years of employment during the Restricted Period prior to the
Participant's termination of employment.
(b) In the event of a Qualified Termination of Employment of a
Participant, all of the Options, Restricted Shares or Restricted Share
Unit Awards shall be considered to vest immediately.
(c) An authorized leave of absence, or qualified military leave in
accordance with section 414(u) of the Code, shall not be deemed to be a
termination of employment for purposes of the Plan. A termination of
employment with the Corporation or an Affiliate to accept immediate
reemployment with the Corporation or an Affiliate likewise shall not be
deemed to be a termination of employment for purposes of the Plan. A
Participant who is classified as an
<PAGE>
intermittent employee shall be deemed to have a termination of employment
for purposes of the Plan.
11. SHARES SUBJECT TO THE PLAN
The number of shares of Common Stock available with respect to all Awards
granted under this Plan shall not exceed 30,000,000 in the aggregate, of which
not more than 30,000,000 shall be available for option and sale, and of which
not more than 3,000,000 shall be available for grant as Restricted Shares and
Restricted Share Units, subject to the adjustment provision set forth in
Section 13 hereof. The shares of Common Stock subject to the Plan may consist
in whole or in part of authorized but unissued shares or of treasury shares,
as the Board may from time to time determine. Shares subject to Options which
become ineligible for purchase, Restricted Share Units which are retired
through forfeiture or maturity, other than those Restricted Share Units which
are retired through the payment of Common Stock, and Restricted Shares which
are forfeited during the Restricted Period due to any applicable
Transferability Restrictions will be available for Awards under the Plan to
the extent permitted by section 16 of the Exchange Act (or the rules and
regulations promulgated thereunder) and to the extent determined to be
appropriate by the Committee.
12. INDIVIDUAL LIMITS
The maximum number of shares of Common Stock covered by Awards which may
be granted to any Participant within any two consecutive calendar year period
shall not exceed 1,500,000 in the aggregate. If an Option which had been
granted to a Participant is canceled, the shares of Common Stock which had
been subject to such canceled Option shall continue to be counted against the
maximum number of shares for which Options may be granted to the Participant.
In the event that the number of Options which may be granted is adjusted as
provided in the Plan, the above limits shall automatically be adjusted in the
same ratio which reflects the adjustment to the number of Options available
under the Plan.
13. CHANGES IN CAPITALIZATION
In the event there are any changes in the Common Stock or the
capitalization of the Corporation through a corporate transaction, such as any
merger, any acquisition through the issuance of capital stock of the
Corporation, any consolidation, any separation of the Corporation (including a
spin-off or other distribution of stock of the Corporation), any
reorganization of the Corporation (whether or not such reorganization comes
within the definition of such term in section 368 of the Code), or any partial
or complete liquidation by the Corporation, recapitalization, stock dividend,
stock split or other change in the corporate structure, appropriate
adjustments and changes shall be made by the Committee, to the extent
necessary to preserve the benefit to the Participant contemplated hereby, to
reflect such changes in (a) the aggregate number of shares subject to the
Plan, (b) the maximum number of shares subject to the Plan, (c) the maximum
number of shares for which Awards may be granted to any Participant, (d) the
number of shares and the Option Price per share of all shares of Common Stock
subject to outstanding Options, (e) the maximum number of shares of Common
Stock covered by Awards which may be granted by the Chief Executive Officer
within any calendar year period, (f) the maximum number of shares of Common
Stock available for option and sale and available for grant as Restricted
Shares and Restricted Share Units, (g) the number of Restricted Shares and
Restricted Share Units awarded to Participants, and (h) such other provisions
of the Plan as may be necessary and equitable to carry out the foregoing
purposes, provided, however that no such adjustment or change may be made to
the extent that such adjustment or change will result in the disallowance of a
deduction to the Corporation under section 162(m) of the Code or any successor
section.
<PAGE>
14. EFFECT ON OTHER PLANS
All payments and benefits under the Plan shall constitute special
compensation and shall not affect the level of benefits provided to or
received by any Participant (or the Participant's estate or beneficiaries) as
part of any employee benefit plan of the Corporation or an Affiliate. The
Plan shall not be construed to affect in any way a Participant's rights and
obligations under any other plan maintained by the Corporation or an Affiliate
on behalf of employees.
15. TERM OF THE PLAN
The term of the Plan shall be ten years, beginning April 26, 2001, and
ending April 25, 2011, unless the Plan is terminated prior thereto by the
Committee. No Award may be granted or awarded after the termination
date of the Plan, but Awards theretofore granted or awarded shall continue
in force beyond that date pursuant to their terms.
16. GENERAL PROVISIONS
(a) Designated Beneficiary. Each Participant who shall be granted
Restricted Shares and/or Restricted Share Units under the Plan may
designate a beneficiary or beneficiaries with the Committee; provided that
no such designation shall be effective unless so filed prior to the
death of such Participant.
(b) No Right of Continued Employment. Neither the establishment of
the Plan nor the payment of any benefits hereunder nor any action of the
Corporation, its Affiliates, the Board of Directors of the Corporation or
its Affiliates, or the Committee shall be held or construed to confer
upon any person any legal right to be continued in the employ of the
Corporation or its Affiliates, and the Corporation and its Affiliates
expressly reserve the right to discharge any Participant without
liability to the Corporation, its Affiliates, the Board of Directors of
the Corporation or its Affiliates or the Committee, except as to any
rights which may be expressly conferred upon a Participant under the Plan.
(c) Binding Effect. Any decision made or action taken by the
Corporation, the Board or by the Committee arising out of or in
connection with the construction, administration, interpretation and
effect of the Plan shall be conclusive and binding upon all persons.
(d) Modification of Awards. The Committee may in its sole and
absolute discretion, by written notice to a Participant, (i) limit the
period in which an Option may be exercised to a period ending at least
three months following the date of such notice, (ii) limit or
eliminate the number of shares subject to Option after a period ending at
least three months following the date of such notice, and/or (iii)
accelerate the Restricted Period with respect to the Restricted Share and
Restricted Share Unit Awards granted under this Plan. Notwithstanding
anything in this subsection 16(d) to the contrary, the Committee may not
take any action to the extent that such action would result in the
disallowance of a deduction to the Corporation under section 162(m) of the
Code or any successor section.
(e) Nonresident Aliens. In the case of any Award granted to a
Participant who is not a resident of the United States or who is employed
by an Affiliate other than an Affiliate that is incorporated, or whose
place of business is, in a State of the United States, the Committee may
(i) waive or alter the terms and conditions
<PAGE>
of any Awards to the extent that such action is necessary to conform such
Award to applicable foreign law, (ii) determine which Participants,
countries and Affiliates are eligible to participate in the Plan, (iii)
modify the terms and conditions of any Awards granted to Participants
who are employed outside the United States, (iv) establish subplans,
each of which shall be attached as an appendix hereto, modify Option
exercise procedures and other terms and procedures to the extent such
actions may be necessary or advisable, and (v) take any action, either
before or after the Award is made, which is deems advisable to obtain
approval of such Award by an appropriate governmental entity; provided,
however, that no action may be taken hereunder if such action would (i)
materially increase any benefits accruing to any Participants under the
Plan, (ii) increase the number of securities which may be issued under the
Plan, (iii) modify the requirements for eligibility to participate n the
Plan, (iv) result in a failure to comply with applicable provisions of the
Securities Act of 1933, the Exchange Act or the Code or (v) result in
the disallowance of a deduction to the Corporation under section 162(m) of
the Code or any successor section.
(f) No Segregation of Cash or Stock. The Restricted Share Unit
accounts established for Participants are merely a bookkeeping convenience
and neither the Corporation nor its Affiliates shall be required to
segregate any cash or stock which may at any time be represented by
Awards. Nor shall anything provided herein be construed as providing
for such segregation. Neither the Corporation, its Affiliates, the Board
nor the Committee shall, by any provisions of the Plan, be deemed to be a
trustee of any property, and the liability of the Corporation or its
Affiliates to any Participant pursuant to the Plan shall be those of a
debtor pursuant to such contract obligations as are created by the Plan,
and no such obligation of the Corporation or its Affiliates shall be
deemed to be secured by any pledge or other encumbrance on any property
of the Corporation or its Affiliates.
(g) Inalienability of Benefits and Interest. Except as
otherwise provided in this Plan, no benefit payable under or interest in
the Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any such
attempted action shall be void and no such benefit or interest shall
be in any manner liable for or subject to debts, contracts, liabilities,
engagements, or torts of any Participant or beneficiary.
(h) Delaware Law to Govern. All questions pertaining to the
construction, interpretation, regulation, validity and effect of the
provisions of the Plan shall be determined in accordance with the laws of
the State of Delaware.
(i) Purchase of Common Stock. The Corporation and its
Affiliates may purchase from time to time shares of Common Stock in such
amounts as they may determine for purposes of the Plan. The Corporation and
its Affiliates shall have no obligation to etain, and hall have the
unlimited right to sell or otherwise deal with for their own account, any
shares of Common Stock purchased pursuant to this paragraph.
(j) Use of Proceeds. The proceeds received by the Corporation
from the sale of Common Stock pursuant to the exercise of Options shall be
used for general corporate purposes.
(k) Withholding. The Committee shall require the withholding of
all taxes as required by law. In the case of payments of Awards in shares
of Common Stock or other securities, withholding shall be as required by
law and in the Committee Rules. A Participant may elect to have any
portion of the federal, state or local income tax withholding required
with respect to an exercise of a Nonqualified Stock Option satisfied
by tendering to the Corporation shares of Common Stock, which, in the
absence of such an election, would have been issued to such Participant
in connection with such exercise. In the event that the value of the shares
of Common Stock tendered to satisfy the withholding tax required with
respect to an exercise
<PAGE>
exceeds the amount of such tax, the excess of such market value over the
amount of such tax shall be returned to the Participant, to the extent
possible, in whole shares of Common Stock, and the remainder in cash.
The value of a share of Common Stock tendered pursuant to this
subsection shall be the Fair Market Value of the Common Stock on the date
on which such shares are tendered to the Corporation. An election pursuant
to this subsection shall be made in writing and signed by the Participant.
An election pursuant to this subsection is irrevocable. A Participant who
exercises an Option may satisfy the income tax withholding due in respect
of such exercise pursuant to this subsection only to meet required tax
withholding and shares of Common Stock cannot be withheld in excess of the
minimum number required for tax withholding. Notwithstanding any
other provision of the Plan, the number of shares of Common Stock or the
amount of cash to be delivered may, in the discretion of the Corporation,
be net of the number of shares of Common Stock or the amount of cash
required to be withheld to meet all applicable tax withholding
requirements.
(l) Amendments. The Committee may at any time amend, suspend,
or discontinue the Plan or alter or amend any or all Awards and
Award Agreements under the Plan to the extent (1) permitted by law, (2)
permitted by the rules of any stock exchange on which the Common
Stock or any other security of the Corporation is listed, (3)
permitted under applicable provisions of the Securities Act of 1933,
as amended, the Exchange Act (including rule 16b-3 thereof) and (4)
that such action would not result in the disallowance of a deduction to the
Corporation under section 162(m) of the Code or any successor section
(including the rules and regulations promulgated thereunder); provided,
however, that if any of the foregoing requires the approval by
stockholders of any such amendment, suspension or discontinuance, then the
Committee may take such action subject to the approval of the
stockholders. Except as provided in subsections 16(d) and 16(e) no such
amendment, suspension, or termination of the Plan shall, without the
consent of the Participant, adversely alter or change any of the rights or
obligations under any Awards or other rights previously granted
the Participant.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>4
<FILENAME>ex12.txt
<DESCRIPTION>EX-12
<TEXT>
<TABLE>
<CAPTION>
Exhibit No. (12)
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN MILLIONS)
Year Ended December 31
------------------------------------------------
1997(a) 1998(b) 1999(c) 2000(d) 2001(e)
------------------------------------------------
Consolidated Companies
- -----------------------
<s> <c> <c> <c> <c> <c>
Income before income taxes. . . . . . . . $1,352.7 $1,523.3 $2,251.7 $2,436.0 $2,164.4
Interest expense. . . . . . . . . . . . . 164.8 198.7 213.1 221.8 191.6
Interest factor in rent expense . . . . . 49.8 52.3 50.5 48.6 53.5
Amortization of capitalized interest. . . 9.0 9.4 10.0 9.6 10.8
Equity Affiliates
- -----------------
Share of 50%-owned:
Income before income taxes. . . . . . . 51.2 47.6 43.4 43.0 (.6)
Interest expense. . . . . . . . . . . . 7.1 9.9 8.0 7.5 5.5
Interest factor in rent expense . . . . .7 1.2 .9 .9 .8
Amortization of capitalized interest. . .6 .5 .6 .5 .2
Distributed income of less than 50%-owned 62.5 98.1 88.0 96.4 103.8
-------- -------- -------- -------- --------
Earnings. . . . . . . . . . . . . . . . . . $1,698.4 $1,941.0 $2,666.2 $2,864.3 $2,530.0
======== ======== ======== ======== ========
Consolidated Companies
- ----------------------
Interest expense. . . . . . . . . . . . . $ 164.8 $ 198.7 $ 213.1 $ 221.8 $ 191.6
Capitalized interest. . . . . . . . . . . 17.0 12.4 12.9 20.9 19.6
Interest factor in rent expense . . . . . 49.8 52.3 50.5 48.6 53.5
Equity Affiliates
- -----------------
Share of 50%-owned:
Interest and capitalized interest . . . 7.5 10.0 8.1 7.5 5.5
Interest factor in rent expense . . . . .7 1.2 .9 .9 .8
-------- -------- -------- -------- --------
Fixed Charges . . . . . . . . . . . . . . . $ 239.8 $ 274.6 $ 285.5 $ 299.7 $ 271.0
======== ======== ======== ======== ========
Ratio of earnings to fixed charges. . 7.08 7.07 9.34 9.56 9.34
======== ======== ======== ======== ========
<FN>
Note: 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,
which was sold in December 1994. 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 the following pretax items: $478.3 million of charges for
business improvement programs and $(26.5) of a gain on an asset disposal. Excluding
these items, the ratio of earnings to fixed charges was 8.97.
(b) Income before income taxes for consolidated companies and the ratio of earnings to
fixed charges include the following pretax items: $377.8 million of charges for
business improvement programs, $42.3 million of Mobile pulp mill fees and related
severance and $(140.0) of a gain on an asset disposal. Excluding these items,
the ratio of earnings to fixed charges was 8.09.
<PAGE>
(c) Income before income taxes for consolidated companies and the ratio of earnings to
fixed charges include the following pretax items: $47.8 million of charges for
business improvement programs, $22.6 million of business integration and other costs,
$9.0 million of Mobile pulp mill fees and related severance and $(176.7) of
gains on asset disposals. Excluding these items, the ratio of earnings to fixed
charges was 9.00.
(d) Income before income taxes for consolidated companies and the ratio of earnings to
fixed charges include the following pretax items: $24.4 million of charges for
business improvement programs, $35.1 million of business integration and other costs,
$15.2 million of litigation settlements and $(75.8) of patent settlement and
accrued liability reversal. Excluding these items, the ratio of earnings to
fixed charges was 9.55.
(e) Income before income taxes for consolidated companies and the ratio of earnings to
fixed charges include the following pretax items: $52.6 million of charges
for a North American mill closing and other write-offs, $32.5 million of charges
for a Latin American asset plan, $55.5 million of charges for business
improvement programs, $29.1 million of business integration and other costs and
$43.2 million of arbitration settlements. Excluding these items, the ratio of
earnings to fixed charges was 10.12.
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>5
<FILENAME>ex13.txt
<DESCRIPTION>EX-13
<TEXT>
Exhibit No. (13)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Kimberly-Clark Corporation and Subsidiaries
BUSINESS SEGMENTS
As a result of organizational changes announced in November 2001, the
Corporation redefined its business segments. The newly defined segments are
Personal Care, Consumer Tissue and Business-to-Business.
Historical information contained in this Management's Discussion and
Analysis has been reclassified for comparative purposes to be consistent with
the new business segment definitions. Sales and operating profit of K-C
Professional and Neenah Paper have been removed from the former Tissue segment
and are included in the new Business-to-Business segment along with the
Corporation's Health Care, Nonwovens and Technical Paper operations that
formerly constituted the Health Care and Other segment. The now smaller
Tissue segment was renamed Consumer Tissue. The Personal Care segment did not
change.
The Personal Care segment manufactures and markets disposable diapers,
training and youth pants and swimpants; feminine and incontinence care
products; and related products. Products in this 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, Lightdays,
Depend, Poise and other brand names.
The Consumer Tissue segment manufactures and markets facial and bathroom
tissue, paper towels and napkins for household use; wet wipes; and related
products. Products in this segment are sold under the Kleenex, Scott,
Cottonelle, Viva, Andrex, Scottex, Page, Huggies and other brand names.
The Business-to-Business segment manufactures and markets facial and
bathroom tissue, paper towels, wipers and napkins for away-from-home use;
health care products such as surgical gowns, drapes, infection control
products, sterilization wraps, disposable face masks and exam gloves,
respiratory products, and other disposable medical products; printing, premium
business and correspondence papers; specialty and technical papers; and other
products. Products in this segment are sold under the Kimberly-Clark,
Kleenex, Scott, Kimwipes, WypAll, Surpass, Safeskin, Tecnol, Ballard and other
brand names.
<PAGE>
<TABLE>
<CAPTION>
ANALYSIS OF CONSOLIDATED NET SALES - THREE YEARS ENDED DECEMBER 31, 2001
By Business Segment
(Millions of dollars) 2001 2000 1999
- -----------------------------------------------------------------
<s> <c> <c> <c>
Personal Care. . . . . . . . . $ 5,677.6 $ 5,437.6 $ 5,138.1
Consumer Tissue. . . . . . . . 5,383.5 5,061.3 4,855.0
Business-to-Business . . . . . 3,624.8 3,678.9 3,156.6
Intersegment sales . . . . . . (161.5) (195.8) (142.9)
--------- --------- ---------
Consolidated . . . . . . . . $14,524.4 $13,982.0 $13,006.8
========= ========= =========
By Geographic Area
(Millions of dollars) 2001 2000 1999
- -----------------------------------------------------------------
United States. . . . . . . . . $ 9,327.7 $ 9,059.4 $ 8,392.5
Canada . . . . . . . . . . . . 938.3 990.3 843.4
Intergeographic sales. . . . . (694.7) (673.5) (507.4)
--------- --------- ---------
Total North America. . . . . 9,571.3 9,376.2 8,728.5
Europe . . . . . . . . . . . . 2,648.4 2,474.5 2,544.7
Asia, Latin America and other. 2,864.4 2,680.5 2,084.6
Intergeographic sales. . . . . (559.7) (549.2) (351.0)
--------- --------- ---------
Consolidated . . . . . . . . $14,524.4 $13,982.0 $13,006.8
========= ========= =========
</TABLE>
Commentary:
2001 versus 2000
Consolidated net sales increased 3.9 percent above 2000. Excluding
changes in foreign currency exchange rates, primarily in Europe, Korea and
Brazil, net sales increased more than 6 percent. Sales volumes advanced over
4 percent with each business segment contributing to the gain. Acquisitions,
including Linostar S.p.A. ("Linostar") in Italy, S-K Corporation ("S-K"), a
former licensee in Taiwan, and the purchase of an additional 5 percent of its
former equity affiliate, Kimberly-Clark Australia Pty. Ltd. ("KCA") that
increased the Corporation's ownership to 55 percent of that entity,
contributed about 3 percentage points of the increased net sales. Selling
prices increased nearly 2 percent.
- - Worldwide net sales of personal care products increased 4.4 percent.
Sales volume growth of 7 percent was partially offset by a negative 3
percent effect of changes in currency exchange rates. Excluding currency
effects, net sales increased in every geographic region. In North America,
net sales advanced because of 2 percent higher selling prices.
In Europe, sales volumes gained 19 percent driven by strong sales of
Huggies diapers, including an 11 percentage point contribution from
the January 2001 acquisition of Linostar. Strong volume gains in the
Caribbean region of Latin America were partially offset by lower volumes
in Brazil resulting from market contraction in that country. Asia's sales
volume benefited from the acquisitions of KCA and S-K and from growth
in Korea for diapers and feminine care products, partially offset by a
sales volume decline in China.
- - Worldwide net sales of consumer tissue products increased 6.4 percent.
Excluding currency effects, primarily in Europe and Korea, net sales
were nearly 9 percent higher with sales volume and selling price increases
each contributing about equally to the advance. More than half of the
increase in sales volumes was due to higher sales of bathroom tissue,
particularly Scott tissue, and Huggies baby wipes in North America.
This region also contributed over half the gain in selling prices, which
<PAGE>
was attributable to facial tissue and household towel price increases.
Selling price increases in Europe contributed the balance of the gain.
Sales volumes in Latin America grew over 8 percent. Asia produced almost
half the increase in sales volumes, primarily due to KCA and higher
sales in Korea.
- - Net sales for the business-to-business segment declined 1.5 percent.
Excluding currency effects, net sales were about equal to the prior
year. Net sales for health care products expanded 8 percent, principally
due to increased sales volumes. However, net sales in North America for
K-C Professional, Neenah Paper and Technical Paper declined due to
lower sales volumes that reflected the slowdown in market demand
associated with the economic downturn.
2000 versus 1999
Consolidated net sales increased 7.5 percent above 1999. In 1999, the
Corporation closed its integrated pulp operation in Mobile, Ala., sold the
associated timberlands and sold its pulp mill located in Miranda, Spain.
Excluding the revenues of these divested businesses, consolidated net sales
increased more than 8 percent. Sales volumes increased approximately 9
percent, with each business segment contributing to the gain. While selling
prices increased nearly 2 percent, changes in foreign currency exchange rates,
primarily in Europe, reduced consolidated net sales by almost 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 of personal care products were 5.8 percent higher
primarily due to increased sales volumes. Selling price increases of
nearly 2 percent were offset by the negative effect of changes in
foreign currency exchange rates. Net sales were higher in every geographic
region. In North America, a slight decline in overall sales volumes
was more than offset by increased selling prices. In Europe, sales
volumes were 16 percent greater, driven by strong sales of Huggies
diapers. The net sales increase in Latin America was primarily due
to continued expansion in sales volumes. Asia benefited from increased
sales volumes of diapers and feminine care products in Korea and the
acquisition of S-K. On March 31, 2000, the Corporation increased its
ownership interest in Hogla-Kimberly Limited ("Hogla"), its Israeli
affiliate, to 50.1 percent and began to consolidate Hogla's results in
April 2000.
- - Worldwide net sales of consumer tissue products increased nearly 6
percent. Excluding currency effects, net sales increased approximately 9
percent. Sales volumes grew about 8 percent and selling price increases
added the remainder. Excluding currency effects, net sales increased
in each geographic region. The increase in sales volumes was primarily
due to higher sales of Kleenex Cottonelle and Scott bathroom tissue.
Other significant contributors to the increase were household towels and
wet wipes products in North America. Sales volumes in Europe benefited
from the Attisholz Holding AG ("Attisholz") tissue brands acquired in
June 1999. In Latin America, higher sales volumes accounted for the
increase in net sales. The consolidation of Hogla also contributed to
the overall higher sales volumes.
- - Net sales for the business-to-business segment increased approximately
18 percent, primarily due to increased sales volumes for washroom products
in North America and the acquisitions of Ballard Medical Products
("Ballard") in September 1999 and Safeskin Corporation ("Safeskin")
in February 2000.
<PAGE>
UNUSUAL ITEMS
For purposes of this Management's Discussion and Analysis, the items
summarized in the following table are considered to be unusual items ("Unusual
Items").
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------
(Millions of dollars) 2001 2000 1999
- -----------------------------------------------------------------------------------
<s> <c> <c> <c>
Charges (credits) to Operating Profit:
North American mill closing and other write-offs. $ 52.6 $ - $ -
Latin American asset plan . . . . . . . . . . . . 32.5 - -
Arbitration settlements . . . . . . . . . . . . . 43.2 - -
Business integration and other costs. . . . . . . 29.1 35.1 22.6
Business improvement programs . . . . . . . . . . 55.5 24.4 47.8
Patent settlement and accrued liability reversal. - (75.8) -
Litigation settlements. . . . . . . . . . . . . . - 15.2 -
Gains on asset disposals. . . . . . . . . . . . . - - (167.7)
-------- -------- -------
Net charge (credit) for unusual items . . . . . . . 212.9 (1.1) (97.3)
Operating profit as reported. . . . . . . . . . . . 2,338.2 2,633.8 2,435.4
-------- -------- --------
Operating profit before unusual items . . . . . . . $2,551.1 $2,632.7 $2,338.1
======== ======== ========
</TABLE>
- - On November 30, 2001 the Corporation announced plans for the
streamlining of manufacturing operations in Latin America, including
the shutdown of four small, older plants, as well as the closure of a
technical paper mill and the write-off of excess manufacturing
equipment in North America. Also included in those plans was a one-time
payment to settle a vendor contract agreement in North America. Included
in the charges recorded in the fourth quarter 2001 was $2.3 million of
employee severance costs for 243 affected employees who were notified
of their severance and related benefits. As of December 31, 141 of these
individuals were no longer actively employed by the Corporation. The
remaining 102 employees will cease employment with the Corporation
principally in the first quarter 2002. The accrued liability related to
this latter group was $1.5 million as of December 31, 2001. Other cash
charges related to the plans totaled $16.1 million and were recorded in
the fourth quarter. As of December 31, 2001 the accrued liability related
to these other exit costs was $15.2 million, including $11.0 million for
the vendor contract settlement that was paid in early January 2002.
Total noncash costs for the plans recorded in the fourth quarter were
$66.7 million, including the write-off of the assets associated with the
technical paper mill that was closed in December 2001.
It is anticipated that by the end of 2003, approximately $32 million will
be recorded to complete these plans. The estimated cost to complete the
plans includes $14 million of severance for approximately 1,100 employees,
which will be recorded when the employees are notified of their severance,
and $12 million of accelerated depreciation for assets that will be
removed from service, primarily during 2002.
- - Included in the fourth quarter 2001 was a charge of $43.2 million the
Corporation recorded pursuant to arbitration rulings released on January 21
and 31, 2002. The rulings resolved two disputes related to the closure of
the Corporation's Mobile, Ala., pulp mill in 1999 and the supply of energy
to the Corporation's Mobile tissue mill.
- - As part of the integration of acquired businesses, including Linostar,
S-K, Safeskin, Ballard and Attisholz, certain costs related to assimilating
these operations were expensed as incurred in 2001, 2000 and 1999. Also
in 2000, a downward revision in the estimated market value of certain
nonproductive assets was recorded.
<PAGE>
- - The 2001 business improvement charges primarily relate to workforce
severance and asset consolidation programs to streamline personal care
operations in North America and China. The 2000 and 1999 charges were
primarily for accelerated depreciation stemming from business improvement
programs announced in 1999 and 1998.
- - In the first quarter of 2000, the Corporation was compensated for
royalty income related to prior years and recorded this settlement as other
income. Also, certain estimated liabilities related to the 1997 disposition
of a pulp and newsprint business were reversed to other income because no
claims had been made by the buyer and the accrual ceased to be required.
- - In 2000, the Corporation reached agreements to settle certain litigation
and recorded charges related to these settlements.
- - Gains on asset disposals primarily relate to the 1999 sale of the
timberlands associated with the pulp operation in Mobile, Ala.
The items displayed in the preceding table have been excluded from
operating profit in the "Before Unusual Items" columns in the following
Consolidated Operating Profit tables.
<TABLE>
<CAPTION>
ANALYSIS OF CONSOLIDATED OPERATING PROFIT - THREE YEARS ENDED DECEMBER 31, 2001
By Business Segment
2001 2000 1999
------------------ ------------------- ------------------
BEFORE Before Before
AS UNUSUAL As Unusual As Unusual
(Millions of dollars) REPORTED ITEMS Reported Items Reported Items
- ---------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Personal Care. . . . . . . . . $1,042.7 $1,119.5 $1,136.7 $1,141.9 $1,092.8 $1,109.1
Consumer Tissue. . . . . . . . 863.7 902.9 825.1 847.1 689.2 727.8
Business-to-Business . . . . . 599.4 650.8 666.0 698.3 579.2 605.4
Other income (expense), net. . (83.7) (38.2) 104.2 43.6 180.0 3.3
Unallocated - net. . . . . . . (83.9) (83.9) (98.2) (98.2) (105.8) (107.5)
-------- ------- -------- -------- ------- --------
Consolidated . . . . . . . . $2,338.2 $2,551.1 $2,633.8 $2,632.7 $2,435.4 $2,338.1
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
By Geographic Area
2001 2000 1999
------------------ ------------------- ------------------
BEFORE Before Before
AS UNUSUAL As Unusual As Unusual
(Millions of dollars) REPORTED ITEMS Reported Items Reported Items
- ---------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
United States. . . . . . . . . $1,927.5 $2,034.4 $1,937.1 $1,972.0 $1,821.9 $1,868.8
Canada . . . . . . . . . . . . 156.9 159.5 211.3 212.7 105.3 110.9
Europe . . . . . . . . . . . . 176.2 188.8 149.7 172.9 183.3 219.8
Asia, Latin America and other. 245.2 290.5 329.7 329.7 250.7 242.8
Other income (expense), net. . (83.7) (38.2) 104.2 43.6 180.0 3.3
Unallocated - net. . . . . . . (83.9) (83.9) (98.2) (98.2) (105.8) (107.5)
-------- ------- ------- ------- -------- --------
Consolidated . . . . . . . . $2,338.2 $2,551.1 $2,633.8 $2,632.7 $2,435.4 $2,338.1
======== ======== ======== ======== ======== ========
<FN>
Note: Unallocated - net consists of expenses not associated with the business segments or geographic areas.
</TABLE>
<PAGE>
Commentary:
2001 versus 2000
Operating profit before the Unusual Items declined 3.1 percent primarily
due to other income (expense), net. Operating profit as a percentage of net
sales decreased from 18.8 percent in 2000 to 17.6 percent in 2001. The
results of the business segments were affected in North America by higher
energy costs early in 2001, significant start-up costs to support the rollout
of new and improved products, increased fringe benefit costs primarily due to
lower returns on pension assets and lower earnings for most of the
business-to-business operations resulting from the downturn in the economy.
These results were also affected by a decline in earnings from Latin American
operations due to difficult business conditions and overall higher marketing
expenses. These factors offset increased selling prices, higher sales volumes
and lower pulp costs. The following commentary excludes the Unusual Items in
both years.
- - Operating profit for personal care products declined 2.0 percent.
Operating profit benefited from sales volume gains including the
consolidation of KCA. Strong contributors to the volume gains were
diapers in Europe, training pants in North America and diapers and
feminine care products in Korea. However, higher marketing expenses,
particularly in Europe, and the increased fringe benefit costs in North
America more than offset the effect of the higher sales volumes.
- - Operating profit for consumer tissue products increased 6.6 percent.
Selling price increases in North America for facial and bathroom tissue
and towel products and in Europe, primarily for bathroom tissue, combined
with lower pulp costs and the increase in sales volumes were the drivers
behind the increase. Partially offsetting these gains were higher energy,
start-up and fringe benefit costs in North America and higher marketing
costs in North America and Europe.
- - Operating profit for the business-to-business segment decreased 6.8
percent. Health care operating profit increased more than 20 percent on the
strength of the higher sales volumes. As previously stated, the other North
American operations in this segment were adversely affected by the downturn
in the economy. The benefit of lower pulp costs did not offset the impacts
of lower sales volumes and higher energy and fringe benefit costs.
- - Other income (expense), net for 2001 includes a charge of approximately
$33 million in Latin America for sales tax credits that were determined to
have a realizable value lower than originally estimated and currency
transaction losses versus gains in 2000. Also included in 2000 were gains
on minor asset sales.
2000 versus 1999
Operating profit before the Unusual Items increased 12.6 percent, and
operating profit as a percentage of net sales increased from 18.0 percent in
1999 to 18.8 percent in 2000. The increase in operating profit was primarily
driven by the higher sales volumes. In addition, selling price increases and
manufacturing cost improvements combined to more than offset the higher cost
of raw materials, primarily pulp costs, and increased goodwill amortization.
The following commentary excludes the Unusual Items in both years.
- - Operating profit for personal care products increased 3.0 percent as
increased sales volumes and selling prices combined to more than offset
higher raw materials costs and greater marketing expense, which was
incurred to support launches of new products and geographic expansion.
Higher sales volumes for diapers in Europe and diapers and feminine care
products in Korea and selling price increases in North America,
principally for diapers and feminine care products, were major
contributors to the results achieved.
<PAGE>
- - Operating profit for consumer tissue products was greater by 16.4
percent, primarily due to increased selling prices and sales volumes
that combined to more than offset the higher costs of raw materials. In
North America, increased sales volumes and reduced manufacturing costs
for Kleenex Cottonelle and Scott bathroom tissue and higher selling
prices and sales volumes for towel products were the principal
contributors to improved results. In Europe, increased sales volumes
did not offset the negative impact of higher pulp prices and currency
effects.
- - Operating profit for the business-to-business segment increased 15.3
percent, principally due to the additional sales volumes in health
care operations associated with the Ballard and Safeskin acquisitions.
In the other operations in this segment, increased selling prices and
higher sales volumes did not offset the increased cost of pulp.
- - Operating profit in North America benefited from a pension credit,
primarily attributable to favorable returns on pension assets, which more
than offset higher costs for other postretirement benefits.
- - Other income (expense), net increased primarily due to favorable foreign
currency effects and gains on minor asset sales.
ADDITIONAL INCOME STATEMENT COMMENTARY
2001 versus 2000
- - Interest expense decreased primarily due to lower interest rates,
partially offset by a higher average debt level.
- - The Corporation's effective income tax rate was 29.8 percent in 2001
compared with 31.1 percent in 2000. Before the Unusual Items in both
years, the effective tax rate was 30.3 percent in 2001 compared with 31.0
percent in 2000. The lower effective tax rate was primarily due to tax
initiatives and the resolution of prior years' income tax matters, and
because the mix of the Corporation's income continues to shift to
jurisdictions with lower effective tax rates.
- - The Corporation's share of net income of equity companies was $154.4
million in 2001 compared with $186.4 million in 2000. The decrease was
primarily due to the previously mentioned consolidation of KCA and net
losses at the Corporation's affiliates in Brazil and Argentina due to
the unstable and contracting economies of those countries. Argentina's
results were also affected by the devaluation of its currency.
- - Minority owners' share of subsidiaries' net income was even with 2000.
The effect of the consolidation of KCA and the recognition in 2001
of the return on preferred securities to the minority interest in the
Corporation's consolidated foreign financing subsidiary (as described
under Financing Commentary) were offset by the lower earnings in
Latin America.
- - On a diluted basis, net income was $3.02 per share in 2001 compared with
$3.31 per share in 2000, a decrease of 8.8 percent. Earnings before
the Unusual Items were $3.27 per share in 2001 compared with $3.32
per share in 2000, a decrease of 1.5 percent.
2000 versus 1999
- - Interest expense increased due to both higher average debt levels and
increased interest rates.
- - The Corporation's effective income tax rate was 31.1 percent in 2000
compared with 32.4 percent in 1999. Before the Unusual Items in both
years, the Corporation's effective income tax rate was 31.0 percent in
2000 compared with 32.1 percent in 1999. The lower effective tax rate
was primarily due to tax initiatives.
<PAGE>
- - The Corporation's share of net income of equity companies was $186.4
million in 2000 compared with $189.6 million in 1999. The decrease was
primarily due to the previously mentioned consolidation of Hogla in 2000.
- - Minority owners' share of subsidiaries' net income increased in 2000
primarily due to improved results of the Corporation's majority owned
subsidiaries in the Andean region and the consolidation of Hogla.
- - On a diluted basis, net income was $3.31 per share in 2000 compared with
$3.09 per share in 1999, an increase of 7.1 percent. Earnings before
the Unusual Items were $3.32 per share in 2000 compared with $2.98 per
share in 1999, an increase of 11.4 percent.
<TABLE>
<CAPTION>
SALES OF PRINCIPAL PRODUCTS
(Billions of dollars) 2001 2000 1999
- ------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Family care tissue products . . . . . . . . . . . . . . . . . . . . . $ 4.8 $ 4.5 $ 4.2
Diapers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 3.2 3.0
Away-from-home tissue products. . . . . . . . . . . . . . . . . . . . 1.9 1.9 1.7
All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 4.4 4.1
----- ----- -----
Consolidated. . . . . . . . . . . . . . . . . . . . . . . . . . . . $14.5 $14.0 $13.0
===== ===== =====
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
Year Ended December 31
------------------------
(Millions of dollars) 2001 2000
- ---------------------------------------------------------------------------------------------
<s> <c> <c>
Cash provided by operations . . . . . . . . . . . . . . . . . . . . $2,253.8 $2,133.2
Capital spending. . . . . . . . . . . . . . . . . . . . . . . . . . 1,099.5 1,170.3
Acquisitions of businesses, net of cash acquired. . . . . . . . . . 135.0 294.5
Proceeds from dispositions of property, businesses and investments. 67.5 97.6
Proceeds from notes receivable. . . . . . . . . . . . . . . . . . . - 220.0
Proceeds from issuance of preferred securities of subsidiary. . . . 516.5 -
Ratio of net debt and preferred securities to capital . . . . . . . 38.9% 35.2%
Pretax interest coverage - times. . . . . . . . . . . . . . . . . . 11.7 11.4
</TABLE>
Cash Flow Commentary:
- - Cash provided by operations increased by $120.6 million. Net income
plus noncash charges included in net income of $2.5 billion in 2001 was
even with 2000. The Corporation invested $232.6 million in working capital
in 2001 versus $338.3 million in 2000.
- - Capital spending in 2001 decreased by $70.8 million as the Corporation
completed and started up significant projects begun in 2000 including
investments in its proprietary technologies for tissue, Cottonelle Fresh
rollwipes, wet wipes and adult care in North America, and for tissue and
diaper manufacturing outside North America.
Financing Commentary:
- - In 2001, the Corporation repurchased 15.0 million shares of its common
stock in connection with its share repurchase program at a total
cost of approximately $900 million. At December 31, 2001, authority
to repurchase 21.5 million shares remained under November 2000 repurchase
authority from the Corporation's board of directors. In 2000, the
Corporation repurchased 21.0 million shares
<PAGE>
of its common stock at a total cost of nearly $1.2 billion. All share
repurchases by the Corporation were effected through brokers on the New
York Stock Exchange. No shares were repurchased directly from any
officer or director of the Corporation.
- - In February 2001, a newly formed Luxembourg-based consolidated financing
subsidiary of the Corporation issued 1 million shares of preferred
securities (the "Securities") with an aggregate par value of $520
million to a nonaffiliated entity for cash proceeds of $516.5 million.
Approximately 97 percent of the subsidiary's funds are invested in
long-term, variable rate loans to the Corporation or its consolidated
subsidiaries on terms that would be substantially similar to other
borrowings by the Corporation or its consolidated subsidiaries. The
remaining funds are invested in other financial assets. The
Securities pay no dividend but accrue a variable rate of return based on
three-month LIBOR plus 0.764 percent, which at December 31, 2001 equated
to an annual rate of approximately 3.03 percent. The Securities are in
substance perpetual and are callable by the subsidiary at par value
plus any accrued but unpaid return on the Securities in November 2008 and
each 20-year anniversary thereafter. The common equity securities, all
of which are owned by the Corporation, are entitled to all of the residual
equity after satisfaction of the preferred interests. As of December 31,
2001, the authorized, issued and outstanding 1 million shares of preferred
securities had a balance (and a liquidating value) of $538.4 million
which is shown as preferred securities of subsidiary on the consolidated
balance sheet. The increase in the balance of the Securities during 2001
of $21.9 million is the return on the Securities, which was included
in minority owners' share of subsidiaries' net income for 2001 on the
Corporation's consolidated income statement.
- - At December 31, 2001, total debt and preferred securities was $4.2
billion, an increase of $.7 billion above the prior year-end total. Net
debt (total debt net of cash and cash equivalents) and preferred
securities was $3.8 billion at December 31, 2001 compared with $3.3
billion at December 31, 2000. The ratio of net debt and preferred
securities was 38.9 percent, which is within the Corporation's targeted
range of 30 to 40 percent.
- - At December 31, 2001, the Corporation had $1.475 billion of syndicated
revolving credit facilities. These facilities, unused at December 31, 2001,
permit borrowing at competitive interest rates and are available for
general corporate purposes, including backup for commercial paper
borrowings. Of these facilities, $737.5 million expires in October 2002
and the balance expires in November 2006.
- - On February 8, 2002, the Corporation issued $400 million of 5 5/8% Notes
due February 15, 2012 and used the proceeds to retire commercial paper.
This issuance supported the Corporation's classification of $400
million of short-term commercial paper as long-term debt in the
December 31, 2001 Consolidated Balance Sheet.
- - The Corporation's long-term debt securities have a Double-A rating and
its commercial paper is rated in the top category.
Off-Balance Sheet Financing Arrangements:
The Corporation has sold certain non-strategic timberlands and related
assets to nonaffiliated buyers and received long-term notes from the buyers of
these assets. It entered into such transactions in 1999 and 1989. These
transactions qualified for the installment method of accounting for income tax
purposes and met the criteria for immediate profit recognition for financial
reporting purposes. The 1999 sale involved notes receivable having an
aggregate face value of $397 million and a fair value of approximately $383
million at the date of sale. These notes do not require principal payments
before their December 31, 2009 maturity, are extendable at the option of the
note holder in five-year increments to December 31, 2029, and have floating
interest rates of LIBOR less 15 basis points. The 1989 sale involved notes
receivable having an aggregate face value of $220 million and a fair value of
approximately $210 million at the date of sale. These notes do not require
principal payments before
<PAGE>
their July 7, 2011 maturity, are extendable at the option of the note holder
in three-year increments to July 7, 2019, and have floating interest rates of
LIBOR less 12.5 basis points. The notes receivable are backed by irrevocable
standby letters of credit issued by money center banks, which aggregate $617
million at December 31, 2001.
Because the Corporation desired to monetize the $617 million of notes
receivable and continue the deferral of current income taxes on the gains, in
1999 the Corporation transferred the notes received from the 1999 sale to a
non-controlled financing entity, and in 2000 it transferred the notes received
from the 1989 sale to a non-controlled financing entity. The Corporation has
minority voting interests in each of the financing entities, (collectively,
the "Financing Entities") and accounts for these minority ownership interests
using the equity method of accounting. The transfers of the notes and certain
other assets to the Financing Entities were made at fair value, were accounted
for as asset sales and resulted in no gain or loss to the Corporation. A
non-affiliated financial institution has made substantive capital investments
in each of the Financing Entities, has majority voting control over them and
has substantive risks and rewards of ownership of the assets in the Financing
Entities. The Financing Entities became obligated for $617 million in
third-party debt financing. The Corporation also contributed intercompany
notes receivable (guaranteed by the Corporation) aggregating $662 million and
intercompany preferred stock of $50 million to the Financing Entities, which
serve as secondary collateral for the third-party lending arrangements. The
Corporation retains equity interests in the Financing Entities for which the
legal right of offset exists against the intercompany notes. As a result, the
intercompany notes payable have been offset against the Corporation's equity
interests in the Financing Entities for financial reporting purposes. In the
unlikely event of default by the money center banks that provided the
irrevocable standby letters of credit, the Corporation could experience losses
as a result of these arrangements.
In 1988, Scott Paper Company ("Scott"), prior to its merger with the
Corporation, together with Mead Corporation, sold their joint ownership
interests in a pulp and paper manufacturing facility and related timberlands
to Georgia-Pacific Corporation ("G-P") for $665 million, less related debt.
The purchase price consisted of cash and ten-year G-P notes in the principal
amount of $300 million. The G-P transaction qualified for the installment
method of accounting for income tax purposes and met the criteria for
immediate profit recognition for financial reporting purposes. In 1998, G-P
extended the maturity of the notes for an additional five years.
In 1988, in order to monetize the G-P notes and continue the deferral of
current income taxes of $55 million on the gain, Scott and Mead formed a
jointly-owned partnership and each contributed their G-P notes to the
partnership. The partnership borrowed $300 million from a third party under a
ten-year bank loan agreement. Although their respective portions of the loan
are guaranteed by the Corporation and Mead, the loan was based on G-P's credit
rating. The loan is prepayable at any time and can be paid in cash or by the
delivery of the G-P notes. Scott received a cash distribution of $149 million
from the partnership in 1988, thus monetizing its portion of the G-P notes.
In 1998, at the time the G-P notes were extended, a new bank loan for the
partnership was put in place for an additional five years. In recognition of
the G-P credit risk, the Corporation and Mead are required to compensate the
lender for the 95 basis point difference between the interest received on the
G-P notes and the interest that the G-P credit risk would otherwise
require. The Corporation recognizes its portion of the negative spread by a
charge to interest expense on a quarterly basis. Because in the event of
default by G-P, the Corporation can satisfy its guarantee by delivery of the
G-P notes to the lender, it is unlikely that the Corporation would experience
any loss on this arrangement.
If payment of the outstanding notes were to be accelerated in the above
financing arrangements, previously provided deferred income taxes totaling
$254 million at December 31, 2001 may become payable. Because the Corporation
has made no pledges or guarantees as to collateral or asset values of these
financing arrangements, there would be no adverse effect on income or
stockholders' equity. The debt of the entities would not become an obligation
of the Corporation, nor would the Corporation be required to disburse cash to
satisfy the debt obligations of these entities.
<PAGE>
In 1994, the Corporation began participating in the U.S. affordable and
historic renovation real estate markets. Investments in these markets are
encouraged by laws enacted by the United States Congress and related federal
income tax rules and regulations. Accordingly, these investments generate
income tax credits and depreciation deductions that are used to reduce the
Corporation's income tax liabilities. The Corporation has invested in these
markets through (i) a partnership arrangement in which it is a limited
partner, (ii) limited liability companies ("LLCs") in which it is a
non-managing member and (iii) through investments in various funds in which
the Corporation is one of many noncontrolling investors. The partnership,
LLCs and funds borrow money from third parties on a nonrecourse basis and
invest in and own various real estate projects. These entities are not
consolidated because they are not controlled by the Corporation. The
Corporation accounts for its interests in these entities by the equity method
of accounting or by the effective yield method, as appropriate, and accounts
for related income tax credits as a reduction in the income tax provision.
As of December 31, 2001, the Corporation had committed to invest $207
million in these real estate projects. Income tax credits to be generated by
these investments are expected to exceed $152 million, of which approximately
$80 million will be claimed on the Corporation's income tax returns through
December 31, 2001. As of December 31, 2001, total permanent financing debt
for the projects is $277 million. This permanent financing debt is secured
solely by the properties, is nonrecourse to the Corporation and is not
supported or guaranteed by the Corporation. From time to time, temporary
interim financing is guaranteed by the Corporation. In general, the
Corporation's interim financing debt guarantees are eliminated at the time
permanent financing is obtained. At December 31, 2001, $51 million of
temporary interim financing debt is guaranteed by the Corporation. About $30
million of the guarantee is expected to be eliminated in 2002 and the balance
is expected to be eliminated by 2005. The Corporation considers its default
risk from these real estate investments and its temporary interim financing
debt guarantees to be minimal as a result of geographical dispersion of the
projects and because the permanent financing debt of the projects is
nonrecourse to the Corporation.
As of December 31, 2001, the total underlying market value of the
properties is estimated to be comfortably in excess of the total related
permanent financing debt. If the Corporation's investments in these real
estate entities were to be disposed of at their carrying amounts, a portion of
the tax credits and depreciation deductions claimed on the Corporation's
income tax returns may be recaptured and may result in a charge to income. As
of December 31, 2001, this recapture risk is estimated to be at least $33
million. The Corporation has no current intention of disposing of these
investments, nor does it anticipate the need to do so in the foreseeable
future in order to satisfy any anticipated liquidity need. Accordingly, the
Corporation considers its recapture risk to be remote.
No current or former officer or employee of the Corporation, its
subsidiaries or affiliates or any person related to such officer or employee
is a participant in any of the above financing arrangements and therefore
could not personally benefit in any way, financially or otherwise, from any of
these arrangements.
From time to time, the Corporation acquires the use of certain assets,
such as automobiles, fork lifts, trucks, office equipment, warehouses and some
manufacturing equipment through operating leasing arrangements, including
synthetic leases. Synthetic leases are often desirable when they offer
administrative benefits, as would be the case in avoiding the burden of
acquiring and disposing of automobiles, fork lifts and trucks, or when
long-term interest-only financing is available, as is often the case in real
estate synthetic leases. Synthetic leases usually are cost-effective
alternatives to traditional operating leases because of their more favorable
interest rates and treatment under income tax laws. Under applicable
accounting rules for operating leases, rent expense is recorded for financial
reporting purposes and no asset or debt obligation is recorded on the
Corporation's balance sheet.
<PAGE>
In 2001, rental expense under operating leases, including synthetic
leases, totaled $159.4 million. Using a standard rate of eight times annual
rental expense to estimate the fair value of assets under lease would equate
to the Corporation having approximately $1.3 billion of assets financed by
means of operating and synthetic leases. Synthetically leased assets total
about $25 million, or 2 percent, of the total assets leased by the
Corporation.
Many of these operating leases have termination penalties or residual
value guarantees. However, because the assets under operating leases are used
in the conduct of the Corporation's business operations, it is unlikely that
any significant portion of these operating leases would be terminated prior to
the normal expiration of their lease terms. Accordingly, the Corporation
considers its risks related to these termination penalties and residual value
guarantees to be minimal.
Other Commentary:
- - The Corporation purchased an additional 5 percent ownership interest in
KCA for A$77.5 million (approximately $39 million), increasing its
ownership interest to 55 percent. This acquisition is part of the
Corporation's strategy to expand its three business segments within
Australia. The acquisition of the additional 5 percent ownership
of KCA resulted in recognizing goodwill of $32 million reflecting the
Corporation's expectation of continued growth and profitability of KCA.
Effective July 1, 2001, the Corporation began consolidating KCA's net
sales and operating results. The Corporation and its joint venture
partner, Amcor Limited, also exchanged options for the purchase by
the Corporation of the remaining 45 percent ownership interest for
A$697.5 million (approximately $355 million) within the next four years.
- - Management believes that the Corporation's ability to generate cash from
operations, which has exceeded $2 billion in each of the last three years,
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.
RISK SENSITIVITY
As a multinational enterprise, the Corporation is exposed to changes in
foreign currency exchange rates, interest rates and commodity prices. A
variety of practices are employed to manage these market risks, including
operating and financing activities and, where deemed appropriate, the use of
derivative instruments. Derivative instruments are used only for risk
management purposes and not for speculation or trading. All derivative
instruments are either exchange traded or are entered into with major
financial institutions. 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.
Effective January 1, 2001, the Corporation adopted Statement of Financial
Accounting Standards ("SFAS") 133, Accounting for Derivative Instruments and
Hedging Activities, as amended. This accounting standard requires that all
derivative instruments be recognized as assets or liabilities on the balance
sheet at fair value. Changes in the fair value of derivatives are either
recorded in income or other comprehensive income, which is part of
stockholders' equity, depending on whether the derivative has been designated
and qualifies as part of a hedging relationship. The gain or loss on
derivatives designated as fair value hedges and the offsetting loss or gain on
the hedged item attributable to the hedged risk are included in current income
in the period that changes in fair value occur. The gain or loss on
derivatives designated as cash flow hedges is included in other comprehensive
income in the period that changes in fair value occur and is reclassified to
income in the same period that the hedged item affects income. The gain or
loss on derivatives that have not been designated as hedging instruments is
included in current income in the period that changes in fair value occur.
<PAGE>
Upon adoption of SFAS 133, the Corporation recognized a pretax loss of
$.5 million in other (income) expense, net as a cumulative effect of a change
in accounting. It also recorded an after-tax gain of $1.5 million in other
comprehensive income on cash flow hedges of forecasted purchases of pulp,
which was recognized in income in 2001.
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
management of 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.
Management of foreign currency transactional exposures was not changed during
2001, and management does not foresee or expect any significant change 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, 2001, a 10
percent unfavorable change in the exchange rate of the U.S. dollar against the
prevailing market rates of foreign currencies involving transactional
exposures would have resulted in a net pretax loss of approximately $32
million. These hypothetical gains or losses on foreign currency contracts and
transactional exposures are defined as the difference between the December 31,
2001 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, 2001, the debt portfolio was composed of
approximately 50 percent variable-rate debt, adjusted for the effect of
variable-rate assets, and 50 percent fixed-rate debt. The strategy employed
to manage exposure to interest rate fluctuations did not change significantly
during 2001, 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 outstanding interest-bearing instruments are sensitive to changes
in interest rates. Interest rate changes would result in gains or losses in
the market value of fixed-rate debt due to differences between the current
market interest rates and the rates governing these instruments. With respect
to fixed-rate debt outstanding at December 31, 2001, a 10 percent change in
interest rates would have resulted in no material change in the fair value of
fixed-rate debt. With respect to commercial paper and other variable-rate
debt, a 10 percent increase in interest rates would have had no material
effect on the future results of operations.
Commodity Price Risk
The Corporation is subject to commodity price risk, the most significant
of which relates to the price of pulp. Selling prices of tissue products are
influenced, in part, by the market price for pulp, which is determined by
industry supply and demand. On a worldwide basis, the Corporation supplies
approximately 40 percent of its virgin fiber needs from internal pulp
manufacturing operations. Management still intends to reduce its level of
pulp integration, when market conditions permit, to approximately 20 percent,
and such a reduction in pulp integration, if accomplished, could increase the
Corporation's commodity price risk. Specifically, increases in pulp prices
could adversely affect earnings if selling prices are not adjusted or if such
adjustments significantly trail the increases in pulp
<PAGE>
prices. Derivative instruments have not been used to manage these risks.
Management does not believe that commodity price risk is material to the
Corporation's business or its consolidated financial position, results of
operations or cash flows.
Inflation Risk
The Corporation's inflation risk is 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.
OTHER INFORMATION
Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities 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 appropriate period. Estimates are used in
accounting for, among other items, consumer and trade promotion and rebate
accruals, employee benefits, workers compensation claims and certain product
liability risks, excess and obsolete inventory, allowances for doubtful
accounts, deferred tax assets and contingencies.
Among those factors affecting the accruals for promotion and rebate costs
are estimates of the number of consumer coupons that will be redeemed, the
level of support that trade customers have provided to the Corporation and the
quantity of products distributors have sold to specific customers. Generally,
the Corporation bases its estimates on historical patterns of expense,
influenced by judgments about current market conditions.
The accounting model for pension costs under SFAS 87, Employers'
Accounting for Pensions, is based on the delayed recognition of the pension
obligation. For example, changes in the fair market value of pension assets
under SFAS 87 are not recognized as they occur but are recognized in a
systematic and gradual manner over future years. To illustrate application of
the delayed recognition approach, at December 31, 1999, the fair market value
of assets for the Corporation's defined benefit pension plans was
approximately $4.4 billion, and based on the Corporation's expected long-term
rate of return of 9.3 percent, these assets were expected to increase in value
during 2000 by approximately $400 million. However, the value of pension
assets declined by about $50 million in 2000 and after benefit payments of
$255 million, the fair market value of plan assets was approximately $4.1
billion at December 31, 2000. During 2001, the December 31, 2000 fair market
value of pension assets of $4.1 billion was expected to increase by
approximately $370 million. However, pension assets declined in value by
about $130 million in 2001 and after benefit payments of $260 million, the
fair market value of pension assets was approximately $3.7 billion at December
31, 2001. Primarily as a consequence of these factors, the Corporation's net
cost of pensions increased approximately $90 million in 2000 compared to 1999
and approximately $65 million in 2001 compared to 2000.
The Corporation retains selected property and casualty risks, primarily
related to workers compensation and certain product liability. Accrued
liabilities for incurred but not reported events related to these retained
risks are calculated based upon loss development factors provided to the
Corporation by its external insurance brokers. The Corporation's total cost
for property and casualty risks has in recent years been relatively stable and
this trend is expected to continue.
<PAGE>
As of December 31, 2001, the Corporation has recorded deferred tax assets
related to income tax loss carryforwards and income tax credits totaling
$367.6 million and has established valuation allowances against these deferred
tax assets of $177.2 million, thereby resulting in a net deferred tax asset of
$190.4 million. As of December 31, 2000, the net deferred tax asset was
$142.8 million. These income tax losses and credits are in non-U.S. taxing
jurisdictions and in certain states within the U.S. In determining the
valuation allowances to establish against these deferred tax assets, the
Corporation considers many factors, including the specific taxing
jurisdiction, the carryforward period, income tax strategies and
forecasted earnings for the entities in each jurisdiction. A valuation
allowance is recognized if, based on the weight of available evidence,
the Corporation concludes that it is more likely than not that some portion or
all of the deferred tax asset will not be realized.
CONTINGENCIES AND LEGAL MATTERS
LITIGATION
The following is a brief description of certain legal and administrative
proceedings to which the Corporation or its subsidiaries is a party or to
which the Corporation's or its subsidiaries' properties are subject. In
management's opinion, none of the legal and administrative proceedings
described below, individually or in the aggregate, is expected to have a
material adverse effect on the Corporation's business, financial condition or
results of operations.
Approximately 300 product liability lawsuits seeking monetary damages, in
most cases of an unspecified amount, are pending in federal and state courts
against Safeskin. Safeskin is typically one of several defendants who
manufacture or sell natural rubber latex gloves. These lawsuits allege
injuries ranging from dermatitis to severe allergic reactions caused by the
residual chemicals or latex proteins in gloves worn by health care workers and
other individuals while performing their duties. Safeskin has referred the
defense of these lawsuits to its insurance carriers.
In 1999, prior to the acquisition of Safeskin by the Corporation,
numerous lawsuits (collectively the "Securities Actions") were filed in the
U.S. District Court for the Southern District of California against Safeskin
and certain of its officers and directors alleging violations of Sections
10(b) and 20(a) of the Securities and Exchange Act of 1934, and Rule 10b-5
promulgated thereunder. The Securities Actions were brought by plaintiffs in
their individual capacity and on behalf of a purported class of persons who
purchased or otherwise acquired Safeskin publicly traded securities during
various periods occurring prior to the Corporation's acquisition of Safeskin.
The suits allege that plaintiffs purchased Safeskin securities at prices
artificially inflated by defendants' misrepresentations and omissions
concerning Safeskin's financial condition and prospects and seek an
unspecified amount of damages. Defendants' motion to dismiss was denied. A
plaintiffs' class has been certified consisting of those who purchased
Safeskin common stock and options during the period of February 18, 1998
through March 11, 1999. Discovery is continuing and the Corporation
continues to contest liability in this matter.
In addition, a shareholder derivative action has been filed against
certain of Safeskin's directors, and Safeskin as a nominal defendant, in the
Supreme Court of the State of California, San Diego County (the "Derivative
Action"). The Derivative Action alleges breach of fiduciary duty, waste of
corporate assets and gross negligence in connection with Safeskin's stock
repurchase program and seeks an unspecified amount of damages. The court has
continued discovery in the Derivative Action so that it can be completed
following the resolution of the Securities Actions.
On April 14, 2000, a complaint was filed against the Corporation and
others in the State of Maine Superior Court. Eighteen plaintiffs seek
compensation for injuries allegedly caused by exposure to substances emitted
by the defendants' mills, including two mills formerly owned by the
Corporation, and from the Central Maine Disposal Landfill in Fairfield, Maine.
The Corporation is contesting the claims asserted by the plaintiffs.
<PAGE>
Since 1998, the Corporation has been involved in a series of complex
legal disputes between the Corporation and Mobile Energy Services Company,
L.L.C. and related parties ("MESC"). These disputes arose from the closure of
the Corporation's Mobile pulp mill. MESC owns a cogeneration complex that
provides energy services to the Corporation's Mobile mill.
In 1998, the Corporation decided to close its Mobile pulp mill and gave
notice to MESC of its intent to terminate a long-term energy services
agreement. In January 1999, MESC filed for Chapter 11 bankruptcy protection
and brought an adversary proceeding in the United States Bankruptcy Court
against the Corporation claiming unspecified damages arising from the mill
closure and termination of the energy services agreement.
In March 2001, an arbitration ruling was issued. In that ruling, the
arbitrator rejected MESC's claims related to the pulp mill closure finding
that the Corporation had affected a proper pulp mill closure. However, the
arbitrator also ruled that the operation of certain assets by the Corporation
after the pulp mill closure permitted MESC to reinstate the pulp mill energy
services agreement. This reinstatement became subject to binding arbitration
brought by MESC in April 2001. A ruling issued in this arbitration on January
31, 2002 resulted in the Corporation recording a pre-tax charge of
approximately $27 million in its 2001 earnings.
In addition, MESC submitted binding arbitration claims for reimbursement
by the Corporation of certain capital and energy costs incurred by MESC. A
ruling issued in this arbitration on January 21, 2002 resulted in the
Corporation recording a pre-tax charge of approximately $17 million in its
2001 earnings.
Of the numerous allegations made against the Corporation in the 1999
adversary proceeding, only fraudulent transfer claims remain pending before
the Bankruptcy Court. In addition, MESC subsequently filed three additional
adversary proceedings against the Corporation. The Corporation continues to
contest vigorously MESC's various claims in Bankruptcy Court.
As of December 31, 2001, the Corporation, along with approximately 80
other non-affiliated companies, was a party to approximately 142 lawsuits in
Florida, Georgia, Mississippi, Texas, Pennsylvania, Missouri, Illinois and
California state courts with allegations of personal injury resulting from
asbestos exposure on the defendants' premises and allegations that the
defendants manufactured, sold, distributed or installed products which cause
asbestos-related lung disease. No specific product ever manufactured by the
Corporation has been identified by the plaintiffs as having caused or
contributed to any asbestos-related lung disease. The Corporation has denied
the allegations and raised numerous defenses in all of these asbestos cases.
All asbestos claims have been tendered to the Corporation's insurance carriers
for defense and indemnity.
CONTINGENCY
One of the Corporation's North American tissue mills has an agreement to
provide its local utility company a specified amount of electric power per
year for the next 17 years. In the event that the mill was shut down, the
Corporation would be required to continue to operate the power generation
facility on behalf of its owner, the local utility company. The net present
value of the cost to fulfill this agreement as of December 31, 2001 is
estimated to be approximately $85 million. However, management considers the
probability of closure of this mill to be remote.
<PAGE>
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, financial condition or results of operations.
NEW PRONOUNCEMENTS
SFAS 141, Business Combinations, and SFAS 142, Goodwill and Other
Intangible Assets, were issued in June 2001. SFAS 141 was effective July 1,
2001 and SFAS 142 is effective beginning January 1, 2002. Under these new
standards, goodwill and intangible assets having indefinite lives will no
longer be amortized but will be subject to annual impairment tests.
Application of nonamortization provisions of SFAS 142 would have increased
reported net income by approximately $.18 per share in 2001. During 2002, the
Corporation will perform the required impairment tests of goodwill and
intangible assets as of January 1, 2002. The Corporation does not expect any
write-offs upon implementation of this standard.
SFAS 143, Accounting for Asset Retirement Obligations, was issued in June
2001 and is effective beginning January 1, 2003. SFAS 143 requires that any
legal obligation related to the retirement of long-lived assets be quantified
and recorded as a liability and an offsetting asset retirement cost on the
balance sheet in the period it is incurred if a reasonable estimate of the
fair value of the liability can be made.
SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
was issued in August 2001 and is effective beginning January 1, 2002. SFAS
144 provides a single, comprehensive accounting model for impairment and
disposal of long-lived assets and discontinued operations.
SFAS 143 and SFAS 144 will be adopted on their effective dates, and
adoption is not expected to result in any material effects on the
Corporation's financial statements.
In April 2001, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board issued EITF 00-25, Accounting for Consideration
from a Vendor to a Retailer in Connection with the Purchase or Promotion of
the Vendor's Products. Under EITF 00-25, the cost of promotion activities
offered to customers will be classified as a reduction in sales revenue. The
Corporation will adopt EITF 00-25, as required, beginning January 1, 2002.
This reclassification will reduce net sales by approximately $1 billion, $885
million and $900 million for 2001, 2000 and 1999, respectively. Adoption will
not change reported earnings.
Also in April 2001, the EITF delayed implementation of EITF 00-14,
Accounting for Certain Sales Incentives, to coincide with the implementation
date for EITF 00-25. Under EITF 00-14, the estimated redemption value of
consumer coupons must be recorded at the time the coupons are issued and
classified as a reduction in sales revenue. The Corporation will adopt EITF
00-14 effective January 1, 2002 and will reclassify the face value of coupons
and similar discounts ("Discounts") as a reduction in revenue for all
periods presented. Discounts recorded as promotion expense were approximately
$205 million, $190 million and $205 million in 2001, 2000 and 1999,
respectively. Upon adoption of EITF 00-14, the Corporation will report
a cumulative effect of a change in accounting principle resulting from a change
in the period for recognizing the face value of coupons, which at December 31,
2001 was an after-tax charge equal to $.02 per share.
<PAGE>
OUTLOOK
The Corporation believes that the outlook for improvement in the
economies and market conditions in Argentina and Brazil for 2002 remain
uncertain; however, the Corporation should benefit from improved market
conditions for its business-to-business operations in North America as the
economy recovers. Based on its assumptions regarding foreign exchange rates,
the Corporation believes that the impact of exchange rates on earnings will be
far less onerous in 2002 than in 2001. As a result, sales
and operating profit at most of the Corporation's international units should
be stronger.
During 2001, the Corporation introduced a new product, Cottonelle Fresh
rollwipes. The product is currently being distributed in the Southeastern
U.S. and is generating higher levels of consumer trial, but the Corporation is
still in the relatively early stages of gaining in-market experience. The
Corporation remains optimistic about the future of rollwipes and will likely
make a decision mid-2002 about expanding its availability beyond the
Southeastern U.S.
The Corporation believes it is building competitive advantage to grow its
top- and bottom-lines, and it is focused on increasing cash flow to help fund
its growth. In 2002, the Corporation expects to drive sales growth with
volume gains in the mid-single digits.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this report concerning, among other things,
the business outlook, including new product introductions, cost savings and
acquisitions, anticipated financial and operating results, strategies,
contingencies and contemplated transactions of the Corporation, 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 and projected volume increases. 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>
<TABLE>
<CAPTION>
CONSOLIDATED INCOME STATEMENT
Kimberly-Clark Corporation and Subsidiaries
Year Ended December 31
----------------------------------
(Millions of dollars, except per share amounts) 2001 2000 1999
- ------------------------------------------------------------------------------------------
<s> <c> <c> <c>
NET SALES . . . . . . . . . . . . . . . . . . . . . . . $14,524.4 $13,982.0 $13,006.8
Cost of products sold . . . . . . . . . . . . . . . . 8,615.5 8,228.5 7,681.6
--------- --------- ---------
GROSS PROFIT. . . . . . . . . . . . . . . . . . . . . . 5,908.9 5,753.5 5,325.2
Advertising, promotion and selling expenses . . . . . 2,334.4 2,122.7 2,097.8
Research expense. . . . . . . . . . . . . . . . . . . 295.3 277.4 249.8
General expense . . . . . . . . . . . . . . . . . . . 767.9 742.1 707.4
Goodwill amortization . . . . . . . . . . . . . . . . 89.4 81.7 41.8
Other (income) expense, net . . . . . . . . . . . . . 83.7 (104.2) (207.0)
--------- --------- ---------
OPERATING PROFIT. . . . . . . . . . . . . . . . . . . . 2,338.2 2,633.8 2,435.4
Interest income . . . . . . . . . . . . . . . . . . . 17.8 24.0 29.4
Interest expense. . . . . . . . . . . . . . . . . . . (191.6) (221.8) (213.1)
--------- --------- --------
INCOME BEFORE INCOME TAXES. . . . . . . . . . . . . . . 2,164.4 2,436.0 2,251.7
Provision for income taxes. . . . . . . . . . . . . . 645.7 758.5 730.2
--------- --------- --------
INCOME BEFORE EQUITY INTERESTS. . . . . . . . . . . . . 1,518.7 1,677.5 1,521.5
Share of net income of equity companies . . . . . . . 154.4 186.4 189.6
Minority owners' share of subsidiaries' net income. . (63.2) (63.3) (43.0)
--------- --------- --------
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . $ 1,609.9 $ 1,800.6 $1,668.1
========= ========= ========
NET INCOME PER SHARE
Basic . . . . . . . . . . . . . . . . . . . . . . . $ 3.04 $ 3.34 $ 3.11
========= ========= ========
Diluted . . . . . . . . . . . . . . . . . . . . . . $ 3.02 $ 3.31 $ 3.09
========= ========= ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
Kimberly-Clark Corporation and Subsidiaries
December 31
---------------------
(Millions of dollars) ASSETS 2001 2000
- -----------------------------------------------------------------------------------------------------
<s> <c> <c>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . $ 405.2 $ 206.5
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,672.4 1,809.6
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,494.1 1,390.4
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 239.8 287.1
Prepaid expenses and other. . . . . . . . . . . . . . . . . . . . . . . . . 110.7 96.3
--------- --------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,922.2 3,789.9
PROPERTY
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242.5 239.2
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,921.8 1,854.4
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 10,073.0 9,135.1
Construction in progress. . . . . . . . . . . . . . . . . . . . . . . . . . 477.4 786.1
--------- ---------
12,714.7 12,014.8
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . 5,388.2 5,096.3
--------- ---------
NET PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,326.5 6,918.5
INVESTMENTS IN EQUITY COMPANIES . . . . . . . . . . . . . . . . . . . . . . . 705.3 798.8
GOODWILL, NET OF ACCUMULATED AMORTIZATION . . . . . . . . . . . . . . . . . . 1,950.3 1,977.8
OTHER ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,103.3 994.8
--------- ---------
$15,007.6 $14,479.8
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
December 31
---------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 2001 2000
- -----------------------------------------------------------------------------------------------------
<s> <c> <c>
CURRENT LIABILITIES
Debt payable within one year. . . . . . . . . . . . . . . . . . . . . . . . . $ 1,236.1 $ 1,490.5
Trade accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 768.9 901.7
Other payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335.3 274.2
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,225.3 1,239.8
Accrued income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456.2 523.5
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146.5 144.2
--------- --------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 4,168.3 4,573.9
LONG-TERM DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,424.0 2,000.6
NONCURRENT EMPLOYEE BENEFIT AND OTHER OBLIGATIONS . . . . . . . . . . . . . . . 916.0 869.2
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004.6 987.5
MINORITY OWNERS' INTERESTS IN SUBSIDIARIES. . . . . . . . . . . . . . . . . . . 309.4 281.3
PREFERRED SECURITIES OF SUBSIDIARY. . . . . . . . . . . . . . . . . . . . . . . 538.4 -
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, 2001 and 2000 . . . . . . . . . 710.8 710.8
Additional paid-in capital 415.6 412.3
Common stock held in treasury, at cost - 47.6 million and 35.2 million
shares at December 31, 2001 and 2000, respectively. . . . . . . . . . . . . (2,748.2) (1,974.1)
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . . . (1,696.2) (1,337.6)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,999.5 7,982.0
Unearned compensation on restricted stock . . . . . . . . . . . . . . . . . . (34.6) (26.1)
------------ ---------
TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . . . . . . . . . 5,646.9 5,767.3
------------ ---------
$ 15,007.6 $14,479.8
============ =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Kimberly-Clark Corporation and Subsidiaries
Common Stock Accumulated Unearned Total
Issued Additional Treasury Stock Other Compensation Stock- Compre-
(Millions of dollars, ------------------- Paid-In --------------- Comprehensive Retained on Restricted holders' hensive
except share amounts) Shares Amount Capital Shares Amount Income(Loss) Earnings Stock Equity Income
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
Balance at
December 31, 1998 . . . . . .568,596,810 $710.8 $86.3 30,399,403 $(1,454.7) $(964.3) $5,653.4 $ - $4,031.5
Shares issued for the
exercise of stock options
and awards. . . . . . . . . . - - (48.2) (2,189,629) 108.9 - - - 60.7
Stock option income tax
benefits. . . . . . . . . . . - - 28.5 - - - - - 28.5
Shares purchased for
treasury. . . . . . . . . - - - 13,940,653 (779.0) - - - (779.0)
Shares issued for the
acquisition of Ballard - - 100.6 (13,758,610) 686.2 - - - 786.8
Medical Products. . . . .
Stock issued, net of
forfeitures, under restricted
stock plans, less
amortization. . . . . . . . . - - (.8) (362,000) 18.2 - - (13.5) 3.9
Comprehensive income:
Net income. . . . . . . . . . - - - - - - 1,668.1 - 1,668.1 $1,668.1
Other comprehensive
income (loss):
Unrealized translation
adjustment. . . . . . . - - - - - (154.6) - - (154.6) (154.6)
Minimum pension liability
adjustment. . . . . . . - - - - - 4.1 - - 4.1 4.1
--------
Comprehensive income. . . . . . - - - - - - - - - $1,517.6
========
Dividends declared on
common shares . . . . . . . . - - - - - - (556.9) - (556.9)
----------- ------ ------- ----------- --------- -------- -------- ------ --------
Balance at
December 31, 1999 . . . . . .568,596,810 710.8 166.4 27,969,816 (1,420.4)(1,114.8) 6,764.6 (13.5) 5,093.1
Shares issued for the
exercise of stock options
and awards. . . . . . . . . . - - (63.7) (2,900,773) 154.0 - - - 90.3
Stock option income tax
benefits. . . . . . . . . . . - - 25.2 - - - - - 25.2
Shares purchased for
treasury. . . . . . . . . . . - - - 21,216,618 (1,190.7) - - - (1,190.7)
Shares issued for the
acquisition of Safeskin
Corporation . . . . . . . . . - - 282.4 (10,695,002) 464.0 - - - 746.4
Stock issued, net of
forfeitures, under restricted
stock plans, less
amortization. . . . . . . . . - - 2.0 (357,400) 19.0 - - (12.6) 8.4
Comprehensive income:
Net income. . . . . . . . . . - - - - - - 1,800.6 - 1,800.6 $1,800.6
Other comprehensive
income (loss):
Unrealized translation
adjustment. . . . . . . - - - - - (218.8) - - (218.8) (218.8)
Minimum pension liability
adjustment. . . . . . . - - - - - 4.0 - - 4.0 4.0
--------
Comprehensive income. . . . . . - - - - - - - - - $1,577.8
========
Dividends declared on
common shares . . . . . . . . - - - - - - (583.2) - (583.2)
----------- ------ ------- ----------- --------- -------- -------- ------ --------
Balance at
December 31, 2000 . . . . . .568,596,810 710.8 412.3 35,233,259 (1,974.1)(1,337.6) 7,982.0 (26.1) 5,767.3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Continued)
Kimberly-Clark Corporation and Subsidiaries
Common Stock Accumulated Unearned Total
Issued Additional Treasury Stock Other Compensation Stock- Compre-
(Millions of dollars, ------------------- Paid-In --------------- Comprehensive Retained on Restricted holders' hensive
except share amounts) Shares Amount Capital Shares Amount Income(Loss) Earnings Stock Equity Income
- ------------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c> <c>
Balance at
December 31, 2000 . . . . . .568,596,810 710.8 412.3 35,233,259 (1,974.1) (1,337.6) 7,982.0 $(26.1) 5,767.3
Shares issued for the
exercise of stock options
and awards. . . . . . . . . . - - (17.5) (2,432,855) 119.0 - - - 101.5
Stock option income tax
benefits. . . . . . . . . . . - - 17.7 - - - - - 17.7
Shares purchased for
treasury. . . . . . . . . . . - - - 15,140,802 (909.7) - - - (909.7)
Stock issued, net of
forfeitures, under restricted
stock plans, less
amortization. . . . . . . . . - - 3.1 (354,558) 16.6 - - (8.5) 11.2
Comprehensive income:
Net income. . . . . . . . . . - - - - - - 1,609.9 - 1,609.9 $1,609.9
Other comprehensive
income (loss):
Unrealized translation
adjustment. . . . . . . - - - - - (256.7) - - (256.7) (256.7)
Minimum pension liability
adjustment. . . . . . . - - - - - (102.1) - - (102.1) (102.1)
Deferred loses on
cash flow hedges. . . . - - - - - (.1) - - (.1) (.1)
Unrealized holding gains
on securities . . . . . - - - - - .3 - - .3 .3
--------
Comprehensive income. . . . . . - - - - - - - - - $1,251.3
========
Dividends declared on
common shares . . . . . . . . - - - - - - (592.4) - (592.4)
----------- ------ ------- ----------- --------- --------- -------- ------ --------
Balance at
December 31, 2001 . . . . . .568,596,810 $710.8 $415.6 47,586,648 $(2,748.2) $(1,696.2) $8,995.5 $(34.6) $5,646.9
=========== ====== ====== =========== ========= ========= ======== ====== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED CASH FLOW STATEMENT
Kimberly-Clark Corporation and Subsidiaries
Year Ended December 31
--------------------------------
(Millions of dollars) 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
OPERATIONS
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,609.9 $ 1,800.6 $ 1,668.1
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650.2 591.7 586.2
Goodwill amortization. . . . . . . . . . . . . . . . . . . . . . . . . 89.4 81.7 41.8
Deferred income tax provision. . . . . . . . . . . . . . . . . . . . . 39.7 84.1 126.2
Net losses (gains) on asset dispositions . . . . . . . . . . . . . . . 102.0 19.3 (143.9)
Equity companies' earnings in excess of dividends paid . . . . . . . . (39.1) (67.0) (78.7)
Minority owners' share of subsidiaries' net income . . . . . . . . . . 63.2 63.3 43.0
Increase in operating working capital. . . . . . . . . . . . . . . . . (232.6) (338.3) (61.5)
Postretirement benefits. . . . . . . . . . . . . . . . . . . . . . . . (54.7) (121.9) (43.1)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.8 19.7 1.8
-------- --------- ---------
CASH PROVIDED BY OPERATIONS. . . . . . . . . . . . . . . . . . . . 2,253.8 2,133.2 2,139.9
-------- --------- ---------
INVESTING
Capital spending . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,099.5) (1,170.3) (786.4)
Acquisitions of businesses, net of cash acquired (135.0) (294.5) (271.9)
Proceeds from dispositions of property and businesses. . . . . . . . . 34.4 44.5 115.2
Purchases of available-for-sale securities . . . . . . . . . . . . . . (19.7) - -
Proceeds from equity investments . . . . . . . . . . . . . . . . . . . 33.1 53.1 -
Proceeds from notes receivable . . . . . . . . . . . . . . . . . . . . - 220.0 383.0
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64.4) (37.7) (22.3)
-------- --------- ---------
CASH USED FOR INVESTING. . . . . . . . . . . . . . . . . . . . . . (1,251.1) (1,184.9) (582.4)
-------- --------- ---------
FINANCING
Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . (590.1) (580.1) (551.3)
Net (decrease) increase in short-term debt (114.5) 700.7 (163.8)
Increases in long-term debt. . . . . . . . . . . . . . . . . . . . . . 475.9 359.4 117.7
Decreases in long-term debt. . . . . . . . . . . . . . . . . . . . . . (275.1) (446.7) (75.9)
Issuance of preferred securities of subsidiary . . . . . . . . . . . . 516.5 - -
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . 101.5 90.3 60.8
Acquisitions of common stock for the treasury. . . . . . . . . . . . . (891.5) (1,190.7) (779.0)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26.7) 2.5 12.8
-------- --------- ---------
CASH USED FOR FINANCING. . . . . . . . . . . . . . . . . . . . . . (804.0) (1,064.6) (1,378.7)
-------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . $ 198.7 $ (116.3) $ 178.8
======== ========= =========
</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 and controlled (the "Corporation"). 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 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 appropriate period. Estimates are used in
accounting for, among other items, consumer and trade promotion and rebate
accruals, employee benefits, workers compensation claims and certain product
liability risks, excess and obsolete inventory, allowances for doubtful
accounts, deferred tax assets and contingencies.
INVENTORIES AND DISTRIBUTION COSTS
Most U.S. inventories are valued at cost on the Last-In, First-Out (LIFO)
method for U.S. income tax and 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, using either the First-In, First-Out
(FIFO) or weighted average cost methods, or market. Distribution costs are
classified as cost of products sold.
AVAILABLE-FOR-SALE SECURITIES
Available-for-sale securities carried at market value and included in
other assets were approximately $20 million at December 31, 2001. This
balance was held by the Corporation's consolidated foreign financing
subsidiary formed in February 2001 as described in Note 9. These securities
consist of debt securities issued by non-U.S. governments and unaffiliated
corporations with maturity dates of two years or less. Unrealized holding
gains or losses on these securities are recorded in other comprehensive income
until realized. No gains or losses were realized during 2001.
PROPERTY AND DEPRECIATION
Property, plant and equipment are stated at cost and are depreciated over
their estimated useful lives on the straight-line or units-of-production
method for financial reporting purposes and generally on an accelerated method
for income tax purposes. Capitalized costs of purchased and internally
developed software are amortized on the straight-line method over not more
than five years. Estimated useful lives are periodically reviewed and, when
warranted, changes are made that generally result in an acceleration of
depreciation. These long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that their cost may not be
recoverable. An impairment loss would be recognized when estimated future
cash flows from the use of the asset and its eventual disposition are less
than its carrying amount. Measurement of an impairment loss would be based on
discounted future cash flows compared to the carrying amount of the assets.
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.
<PAGE>
NOTE 1. (Continued)
The cost of major maintenance performed on the Corporation's
manufacturing facilities, composed of labor, materials and other incremental
costs, is charged to operations as incurred. Start-up costs for new or
expanded facilities are expensed as incurred.
GOODWILL
Under current accounting requirements, goodwill acquired prior to July 1,
2001 is amortized on the straight-line method over periods ranging from 10
years to 40 years. Accumulated amortization of goodwill at December 31, 2001
and 2000 was $308.1 million and $231.4 million, respectively. The
realizability and period of benefit of goodwill are evaluated periodically
when events or circumstances indicate that nonrecoverability of goodwill is
possible. If it becomes probable that the future undiscounted cash flow
associated with such goodwill is less than its carrying value, an impairment
loss would be recognized. These recoverability evaluations are subjective and
require management assessments and judgments. Historically, acquired
businesses generally have generated sufficient cash flows to recover the cost
of goodwill.
REVENUE RECOGNITION
Sales revenue is recognized at the time of product shipment to
unaffiliated customers and appropriate provision is made for uncollectible
accounts.
ADVERTISING EXPENSE
Advertising costs are expensed in the year the related advertisement is
first presented by the media. Advertising expenses charged to income totaled
$385.2 million in 2001, $349.3 million in 2000 and $336.5 million in 1999.
For interim reporting purposes, advertising expenses are charged to operations
as a percentage of sales based on estimated sales and related advertising
expense for the full year.
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.
<PAGE>
NOTE 1. (Continued)
ACCOUNTING STANDARDS CHANGES AND NEW PRONOUNCEMENTS
On January 1, 2001, the Corporation adopted Statement of Financial
Accounting Standards ("SFAS") 133, Accounting for Derivative Instruments and
Hedging Activities. See Note 6 for further discussion.
SFAS 141, Business Combinations, and SFAS 142, Goodwill and Other
Intangible Assets, were issued in June 2001. SFAS 141 was effective July 1,
2001 and SFAS 142 is effective beginning January 1, 2002. Under these new
standards, goodwill and intangible assets having indefinite lives will no
longer be amortized but will be subject to annual impairment tests.
Application of nonamortization provisions of SFAS 142 would have increased
reported net income by approximately $.18 per share in 2001. During 2002, the
Corporation will perform the required impairment tests of goodwill and
intangible assets as of January 1, 2002. The Corporation does not expect any
write-offs upon implementation of this standard.
SFAS 143, Accounting for Asset Retirement Obligations, was issued in June
2001 and is effective beginning January 1, 2003. SFAS 143 requires that any
legal obligation related to the retirement of long-lived assets be quantified
and recorded as a liability and an offsetting asset retirement cost on the
balance sheet in the period it is incurred if a reasonable estimate of the
fair value of the liability can be made.
SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
was issued in August 2001 and is effective beginning January 1, 2002. SFAS
144 provides a single, comprehensive accounting model for impairment and
disposal of long-lived assets and discontinued operations.
SFAS 143 and SFAS 144 will be adopted on their effective dates, and
adoption is not expected to result in any material effects on the
Corporation's financial statements.
In April 2001, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board issued EITF 00-25, Accounting for Consideration
from a Vendor to a Retailer in Connection with the Purchase or Promotion of
the Vendor's Products. Under EITF 00-25, the cost of promotion activities
offered to customers will be classified as a reduction in sales revenue. The
Corporation will adopt EITF 00-25, as required, beginning January 1, 2002.
This reclassification will reduce net sales by approximately $1 billion, $885
million and $900 million for 2001, 2000 and 1999, respectively. Adoption will
not change reported earnings.
Also in April 2001, the EITF delayed implementation of EITF 00-14,
Accounting for Certain Sales Incentives, to coincide with the implementation
date for EITF 00-25. Under EITF 00-14, the estimated redemption value of
consumer coupons must be recorded at the time the coupons are issued and
classified as a reduction in sales revenue. The Corporation will adopt EITF
00-14 effective January 1, 2002 and will reclassify the face value of coupons
and similar discounts ("Discounts") as a reduction in revenue for all periods
presented. Discounts recorded as promotion expense were approximately $205
million, $190 million and $205 million in 2001, 2000 and 1999, respectively.
Upon adoption of EITF 00-14, the Corporation will report a cumulative effect
of a change in accounting principle resulting from a change in the period for
recognizing the face value of coupons, which at December 31, 2001 was an
after-tax charge equal to $.02 per share.
<PAGE>
NOTE 2. INCOME TAXES
An analysis of the provision for income taxes follows:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------
(Millions of dollars) 2001 2000 1999
- ------------------------------------------------------------------------------------
<s> <c> <c> <c>
Current income taxes:
United States. . . . . . . . . . . . . . . . . . . . . $363.9 $407.3 $386.9
State. . . . . . . . . . . . . . . . . . . . . . . . . 52.5 36.5 69.8
Other countries. . . . . . . . . . . . . . . . . . . . 189.6 230.6 147.3
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . 606.0 674.4 604.0
------ ------ ------
Deferred income taxes:
United States. . . . . . . . . . . . . . . . . . . . . 115.4 91.3 139.2
State. . . . . . . . . . . . . . . . . . . . . . . . . (17.9) 14.0 (18.7)
Other countries. . . . . . . . . . . . . . . . . . . . (57.8) (21.2) 5.7
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . 39.7 84.1 126.2
------ ------ ------
Total provision for income taxes . . . . . . . . . . . . $645.7 $758.5 $730.2
====== ====== ======
</TABLE>
Income before income taxes is classified in the Consolidated Income Statement
as follows:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------
(Millions of dollars) 2001 2000 1999
- ------------------------------------------------------------------------------------
<s> <c> <c> <c>
United States. . . . . . . . . . . . . . . . . . . . . $1,741.8 $1,787.5 $1,782.7
Other countries. . . . . . . . . . . . . . . . . . . . 422.6 648.5 469.0
-------- -------- --------
$2,164.4 $2,436.0 $2,251.7
======== ======== ========
</TABLE>
<PAGE>
NOTE 2. (Continued)
Deferred income tax assets (liabilities) are composed of the following:
<TABLE>
<CAPTION>
December 31
-------------------
(Millions of dollars) 2001 2000
- ---------------------------------------------------------------------------------------------
<s> <c> <c>
Current deferred income tax asset attributable to:
Advertising and promotion accruals . . . . . . . . . . . . . . . . $ 8.7 $ 20.8
Pension, postretirement and other employee benefits. . . . . . . . 112.7 130.4
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . 92.5 100.0
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.0 24.8
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0 14.7
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . (.1) (3.6)
--------- -------
Net current deferred income tax asset. . . . . . . . . . . . . . . . $ 239.8 $ 287.1
========= =======
Noncurrent deferred income tax asset attributable to:
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . $ (42.7) $ (16.7)
Income tax loss carryforwards. . . . . . . . . . . . . . . . . . . 299.9 222.3
Foreign tax credits. . . . . . . . . . . . . . . . . . . . . . . . 51.4 30.0
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.6 22.1
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . (177.1) (155.2)
--------- -------
Net noncurrent deferred income tax asset included in other assets. $ 161.1 $ 102.5
========= =======
Noncurrent deferred income tax liability attributable to:
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . $ (995.2) $(950.1)
Income tax loss carryforwards. . . . . . . . . . . . . . . . . . . 14.1 40.7
Pension and other postretirement benefits. . . . . . . . . . . . . 207.1 157.9
Installment sales. . . . . . . . . . . . . . . . . . . . . . . . . (254.1) (254.1)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.5 18.1
--------- -------
Net noncurrent deferred income tax liability . . . . . . . . . . . . $(1,004.6) $(987.5)
========= =======
</TABLE>
Valuation allowances for deferred income tax assets increased $18.4
million in 2001 and decreased $120.2 million in 2000. Valuation allowances at
the end of 2001 primarily relate to the potentially unusable portion of income
tax loss carryforwards of $869 million in jurisdictions primarily outside the
United States. If not utilized against taxable income, $426 million of the
loss carryforwards will expire from 2001 through 2020. The remaining $443
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>
NOTE 2. (Continued)
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.
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------------------------
2001 2000 1999
----------------- ---------------- -------------------
(Millions of dollars) AMOUNT PERCENT Amount Percent Amount Percent
- ----------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Income before income taxes:
As reported. . . . . . . . . . . . . $2,164.4 $2,436.0 $2,251.7
Charges (credits) for unusual items. 212.9 (1.1) (97.3)
-------- -------- --------
Income before income taxes and
unusual items. . . . . . . . . . $2,377.3 2,434.9 $2,154.4
======== ======== ========
Tax at U.S. statutory rate(a). . . . . $ 832.0 35.0% $ 852.2 35.0% $754.0 35.0%
State income taxes, net of federal
tax benefit. . . . . . . . . . . . . 26.6 1.1 32.5 1.3 29.7 1.4
Net operating losses realized. . . . . (32.6) (1.4) (71.4) (2.9) (12.7) (.6)
Other - net. . . . . . . . . . . . . . (106.3) (4.4) (58.1) (2.4) (79.4) (3.7)
-------- ---- -------- ---- -------- ----
719.7 30.3% 755.2 31.0% 691.6 32.1%
==== ==== ====
Tax effects of unusual items . . . . . (74.0) 34.8% 3.3 - 38.6 39.7%
-------- ==== -------- ==== -------- ----
Provision for income taxes . . . . . . $ 645.7 29.8% $ 758.5 31.1% $ 730.2 32.4%
======== ==== ======== ==== ======== ====
<FN>
(a) Tax at U.S. statutory rate is based on income before income taxes excluding the charges (credits) for unusual items. The
tax effects of the unusual items are shown elsewhere in the table.
</TABLE>
At December 31, 2001, income taxes have not been provided on
approximately $2.7 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. Withholding taxes of approximately $235 million
would be payable upon remittance of all previously unremitted earnings at
December 31, 2001.
<PAGE>
NOTE 3. POSTRETIREMENT AND OTHER BENEFITS
PENSION PLANS
The Corporation and its subsidiaries in North America and the United
Kingdom have defined benefit and/or defined contribution retirement plans
covering substantially all regular employees. Certain other subsidiaries have
defined benefit pension plans or, in certain countries, termination pay plans
covering substantially all regular employees. The funding policy for the
qualified defined benefit plans in North America and the defined benefit
plans in the United Kingdom is to contribute assets to fully fund the
accumulated benefit obligation. Subject to regulatory and tax
deductibility limits, any funding shortfall will be eliminated over a
reasonable number of years. The funding policy for nonqualified U.S.
plans providing pension benefits in excess of limitations imposed by the
U.S. income tax code and for the remaining defined benefit plans outside
North America is based on legal requirements, tax considerations,
investment opportunities, and customary business practices in such countries.
In accordance with SFAS 87, Employers' Accounting for Pensions, the
Corporation has recorded a minimum pension liability for underfunded plans of
$181.2 million at December 31, 2001, representing the excess of the unfunded
accumulated benefit obligation ("ABO") over previously recorded pension cost
liabilities. The minimum pension liability is included in noncurrent employee
benefit and other obligations on the balance sheet. An offsetting charge of
$12.9 million is included as an intangible asset, to the extent of
unrecognized prior service cost, and the balance of $168.3 million is included
in accumulated other comprehensive income, which is part of stockholders'
equity. The principal cause of the accrual for an additional minimum pension
liability in 2001 was the decline in the value of equity securities held by
the United Kingdom pension trusts.
OTHER POSTRETIREMENT BENEFIT PLANS
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. Certain 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.
<PAGE>
NOTE 3. (Continued)
Summarized financial information about postretirement plans, excluding
defined contribution retirement plans, is presented below.
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
------------------- -----------------
Year Ended December 31
---------------------------------------
(Millions of dollars) 2001 2000 2001 2000
--------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year . . . . . . $3,847.1 $3,648.5 $ 661.9 $ 626.9
Service cost. . . . . . . . . . . . . . . . . . . . 65.4 63.4 12.0 10.9
Interest cost . . . . . . . . . . . . . . . . . . . 266.8 263.6 48.2 48.3
Participants' contributions . . . . . . . . . . . . 7.4 8.5 5.3 5.2
Amendments. . . . . . . . . . . . . . . . . . . . . .2 4.5 - -
Actuarial loss. . . . . . . . . . . . . . . . . . . 86.4 181.3 41.8 41.0
Acquisitions. . . . . . . . . . . . . . . . . . . . 37.3 6.6 - -
Curtailments. . . . . . . . . . . . . . . . . . . . (1.4) - - -
Special termination benefits. . . . . . . . . . . . 9.0 1.1 - -
Currency exchange rate effects. . . . . . . . . . . (37.4) (68.9) (1.8) (.9)
Benefit payments. . . . . . . . . . . . . . . . . . (266.2) (261.5) (70.9) (69.5)
-------- -------- ------- -------
Benefit obligation at end of year . . . . . . . . 4,014.6 3,847.1 696.5 661.9
-------- -------- ------- -------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year. . . 4,086.5 4,426.2 - -
Actual loss on plan assets. . . . . . . . . . . . . (130.0) (47.5) - -
Acquisitions. . . . . . . . . . . . . . . . . . . . 36.0 2.7 - -
Employer contributions. . . . . . . . . . . . . . . 16.4 19.3 65.6 64.3
Participants' contributions . . . . . . . . . . . . 7.4 8.5 5.3 5.2
Currency exchange rate effects. . . . . . . . . . . (34.6) (67.7) - -
Benefit payments. . . . . . . . . . . . . . . . . . (260.2) (255.0) (70.9) (69.5)
-------- -------- ------- -------
Fair value of plan assets at end of year. . . . . . 3,721.5 4,086.5 - -
-------- -------- ------- -------
FUNDED STATUS
(Deficiency) excess of plan assets over benefit
obligation . . . . . . . . . . . . . . . . . . (293.1) 239.4 (696.5) (661.9)
Unrecognized net actuarial loss (gain). . . . . . . 544.5 (37.0) (.6) (46.2)
Unrecognized transition amount. . . . . . . . . . . (1.0) (5.4) - -
Unrecognized prior service cost . . . . . . . . . . 53.8 62.5 (11.3) (13.4)
-------- -------- ------- -------
Net amount recognized . . . . . . . . . . . . . . . $ 304.2 $ 259.5 $(708.4) $(721.5)
======== ======== ======= =======
AMOUNTS RECOGNIZED IN THE BALANCE SHEET CONSIST OF:
Prepaid benefit cost. . . . . . . . . . . . . . . . $ 309.4 $ 364.1 $ - $ -
Accrued benefit cost. . . . . . . . . . . . . . . . (186.4) (131.9) (708.4) (721.5)
Intangible asset. . . . . . . . . . . . . . . . . . 12.9 4.6 - -
Accumulated other comprehensive income. . . . . . . 168.3 22.7 - -
-------- -------- ------- -------
Net amount recognized . . . . . . . . . . . . . . . $ 304.2 $ 259.5 $(708.4) $(721.5)
</TABLE>
The above pension benefits 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 ("ABO") have
been combined with plans where the ABO exceeds plan assets.
<PAGE>
NOTE 3. (Continued)
Summary disaggregated information about these pension plans follows:
<TABLE>
<CAPTION>
Assets Exceed ABO Exceeds
ABO Assets
--------------- --------------
December 31
----------------------------------
(Millions of dollars) 2001 2000 2001 2000
- ----------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Projected benefit obligation. . . . . $3,173.0 $3,650.0 $841.6 $197.1
ABO . . . . . . . . . . . . . . . . . 2,906.3 3,364.6 790.6 167.6
Fair value of plan assets . . . . . . 3,114.2 4,037.5 607.3 49.0
Pension Benefits Other Benefits
----------------- ---------------
December 31
-----------------------------------
2001 2000 2001 2000
- -----------------------------------------------------------------------------
<s> <c> <c> <c> <c>
WEIGHTED AVERAGE ASSUMPTIONS
Discount rate . . . . . . . . . . . 7.0% 7.2% 7.2% 7.5%
Expected return on plan assets. . . 9.2% 9.3% - -
Rate of compensation increase . . . 3.9% 4.1% - -
Health care cost trend rate(a). . . - - 10.0% 6.9%
<FN>
(a) Assumed to decrease to 9.3% in 2003 and to zero by 2004 and thereafter.
</TABLE>
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
---------------------------- ---------------------
Year Ended December 31
---------------------------------------------------
(Millions of dollars) 2001 2000 1999 2001 2000 1999
- ------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost. . . . . . . . . . . . $ 65.4 $ 63.4 $ 73.3 $12.0 $10.9 $12.5
Interest cost . . . . . . . . . . . 266.8 263.6 251.1 48.2 48.3 45.2
Expected return on plan assets(a) . (368.1) (397.6) (352.8) - - -
Amortization of prior service cost. 8.6 9.1 9.5 (2.1) (2.1) (2.1)
Amortization of transition amount . (4.4) (4.4) (4.6) - - -
Recognized net actuarial loss
(gain). . . . . . . . . . . . . . 4.5 (20.2) 4.8 (3.8) (4.3) (4.4)
Curtailments. . . . . . . . . . . . (1.4) - 18.0 - - (4.1)
Other . . . . . . . . . . . . . . . 9.0 1.0 6.1 (.1) - -
------- ------- ------- ----- ----- -----
Net periodic benefit cost (credit). $ (19.6) $ (85.1) $ 5.4 $54.2 $52.8 $47.1
======= ======= ======= ===== ===== =====
<FN>
(a) The expected return on plan assets is determined by multiplying the fair value of the plan assets
at the prior year-end (adjusted for estimated current year cash benefit payments and contributions)
by the long-term expected rate of return.
</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. . $ 4.7 $ 3.6
Effect on postretirement benefit obligation. . . . . . . . 41.9 34.5
</TABLE>
<PAGE>
NOTE 3. (Continued)
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 $37.3
million, $29.8 million and $26.1 million in 2001, 2000 and 1999, 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
$27.5 million, $22.6 million and $25.1 million in 2001, 2000 and 1999,
respectively.
<PAGE>
NOTE 4. EARNINGS PER SHARE
A reconciliation of the average number of common shares outstanding used
in the basic and diluted EPS computations follows:
<TABLE>
<CAPTION>
Average Common Shares Outstanding
---------------------------------
(Millions) 2001 2000 1999
- --------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529.6 539.5 536.3
Dilutive effect of stock options 3.4 3.9 3.1
Dilutive effect of deferred compensation plan shares . . . . . . . . .2 .1 .1
Dilutive effect of shares issued for participation share awards. . . - .3 .6
----- ----- -----
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533.2 543.8 540.1
===== ===== =====
</TABLE>
Options outstanding that were not included in the computation of diluted
EPS because their exercise price was greater than the average market price of
the common shares are summarized below:
<TABLE>
<CAPTION>
Description 2001 2000 1999
- --------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Average number of share equivalents (millions) . . . . . . . . . . . 5.1 .5 .1
Weighted-average exercise price(a) . . . . . . . . . . . . . . . . . $71.36 $157.27 $58.10
Expiration date of options . . . . . . . . . . . . . . . . . . . . . 2006 to 2011 2001 to 2010 2009
Options outstanding at year end. . . . . . . . . . . . . . . . . . . 5.8 .5 .1
<FN>
(a) The weighted-average exercise price in 2000 represents converted options from the
Safeskin Corporation acquisition.
</TABLE>
The number of common shares outstanding as of December 31, 2001, 2000 and
1999 was 521.0 million, 533.4 million and 540.6 million, respectively.
<PAGE>
NOTE 5. DEBT
Long-term debt is composed of the following:
<TABLE>
<CAPTION>
Weighted-
Average December 31
Interest ------------------
Rate Maturities 2001 2000
- ---------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Commercial paper to be refinanced . . . . . . . . . . . . - - $ 400.0 $ -
Notes and debentures. . . . . . . . . . . . . . . . . . . 7.1% 2002 - 2028 1,469.8 1,652.8
Industrial development revenue bonds. . . . . . . . . . . 4.7% 2002 - 2034 413.4 414.1
Bank loans and other financings in various currencies . . 8.6% 2002 - 2025 278.5 211.2
-------- --------
Total long-term debt. . . . . . . . . . . . . . . . . . . 2,561.7 2,278.1
Less current portion. . . . . . . . . . . . . . . . . . 137.7 277.5
-------- --------
Long-term portion . . . . . . . . . . . . . . . . . . . . $2,424.0 $2,000.6
======== ========
</TABLE>
At December 31, 2001, $400 million of short-term commercial paper was
classified as long-term debt because on February 8, 2002, the Corporation
issued $400 million of 5 5/8% Notes due February 15, 2012 and used the
proceeds to retire commercial paper.
Fair value of total long-term debt was $2,639.5 million and $2,295.9
million at December 31, 2001 and 2000, respectively. Scheduled maturities of
long-term debt for the next five years are $71.8 million in 2003, $116.7
million in 2004, $60.3 million in 2005 and $6.1 million in 2006.
At December 31, 2001, the Corporation had $1.475 billion of syndicated
revolving credit facilities. These facilities, unused at December 31, 2001,
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, $737.5 million expires in October 2002 and the balance expires in
November 2006.
Debt payable within one year:
<TABLE>
<CAPTION>
December 31
------------------
(Millions of dollars) 2001 2000
- ---------------------------------------------------------------------------------------------------
<s> <c> <c>
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 961.3 $1,046.3
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . . . . 137.7 277.5
Other short-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137.1 166.7
-------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,236.1 $1,490.5
======== ========
</TABLE>
At December 31, 2001 and 2000, the weighted-average interest rate for
commercial paper was 1.9 percent and 6.5 percent, respectively.
<PAGE>
NOTE 6. RISK MANAGEMENT
As a multinational enterprise, the Corporation is exposed to changes
in foreign currency exchange rates, interest rates and commodity prices. A
variety of practices are employed to manage these market risks, including
operating and financing activities and, where deemed appropriate, the use of
derivative instruments. Derivative instruments are used only for risk
management purposes and not for speculation or trading. All derivative
instruments are either exchange traded or are entered into with major
financial institutions. 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.
Effective January 1, 2001, the Corporation adopted SFAS 133 as amended.
This accounting standard requires that all derivative instruments be
recognized as assets or liabilities on the balance sheet at fair value.
Changes in the fair value of derivatives are either recorded in income or
other comprehensive income, which is part of stockholders' equity, depending
on whether the derivative has been designated and qualifies as part of a
hedging relationship. The gain or loss on derivatives designated as fair
value hedges and the offsetting loss or gain on the hedged item attributable
to the hedged risk are included in current income in the period that changes
in fair value occur. The gain or loss on derivatives designated as cash flow
hedges is included in other comprehensive income in the period that changes in
fair value occur and is reclassified to income in the same period that the
hedged item affects income. The gain or loss on derivatives that have not
been designated as hedging instruments is included in current income in the
period that changes in fair value occur.
Upon adoption of SFAS 133, the Corporation recognized a pretax loss of
$.5 million in other (income) expense, net as a cumulative effect of a change
in accounting. It also recorded an after-tax gain of $1.5 million in other
comprehensive income on cash flow hedges of forecasted purchases of pulp,
which was recognized in income in 2001.
Prior to adoption of SFAS 133, and in accordance with generally accepted
accounting principles in effect at that time, gains and losses on instruments
that hedged firm commitments were deferred and included in the basis of the
underlying hedged items. Premiums paid for options were amortized ratably
over the life of the option. Contracts used to hedge recorded foreign
currency transactions generally matured within one year and were 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.
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, 2000:
<TABLE>
<CAPTION>
2000
---------------------------------
NOTIONAL
PRINCIPAL CARRYING FAIR
(Millions of dollars) AMOUNTS VALUES VALUES
- ------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Forward contracts
Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 333.5 $ 12.1 $ 7.3
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 664.3 (20.2) (13.9)
</TABLE>
Foreign Currency Risk Management
Foreign currency risk is managed by the use of foreign currency
forward and swap contracts. The use of these contracts allows management of
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
<PAGE>
NOTE 6. (Continued)
on the underlying foreign currency exposure. Management of foreign currency
transactional exposures was not changed during 2001, and management does not
foresee or expect any significant change in such exposures or in the
strategies it employs to manage them in the near future.
Translation Risk Management
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: Ecuador
(prior to 2000), Russia, Turkey and Venezuela.
Translation exposure generally 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 to manage exposure to interest rate
fluctuations did not change significantly during 2001 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.
The Corporation has entered into interest rate swap agreements that
effectively convert a portion of its floating-rate debt to a fixed-rate basis
for the next year, thus reducing the impact of interest-rate changes on future
interest expense. Approximately $56 million of the Corporation's outstanding
current portion of long-term debt was designated as the hedged items to
interest rate swap agreements at December 31, 2001.
Commodity Price Risk Management
The Corporation is subject to commodity price risk, the most significant
of which relates to the price of pulp. Selling prices of tissue products are
influenced, in part, by the market price for pulp, which is determined by
industry supply and demand. On a worldwide basis, the Corporation supplies
approximately 40 percent of its virgin fiber needs from internal pulp
manufacturing operations. Management still intends to reduce its level of
pulp integration, when market conditions permit, to approximately 20 percent,
and such a reduction in pulp integration, if accomplished, could increase the
Corporation's commodity price risk. Specifically, increases in pulp prices
could adversely affect earnings if selling prices are not adjusted or if such
adjustments significantly trail the increases in pulp prices.
In addition, the Corporation is subject to price risk for the price of
natural gas, which is used in its manufacturing operations. Derivative
instruments are used to hedge this risk when it is deemed prudent to do so by
management.
<PAGE>
NOTE 6. (Continued)
EFFECT OF DERIVATIVE INSTRUMENTS ON RESULTS OF OPERATIONS AND OTHER
COMPREHENSIVE INCOME
Fair Value Hedges
During the year ended December 31, 2001, the fair value hedges were
perfectly effective and consequently they resulted in no net income effect.
In addition, during the year, all of the Corporation's firm commitments
continued to qualify for fair value hedging.
Cash Flow Hedges
During the year ended December 31, 2001, the Corporation's cash flow
hedges were perfectly effective and consequently they resulted in no net
income effect. No cash flow hedges were discontinued during the year.
At December 31, 2001, the Corporation expected to reclassify $.3 million
of losses from accumulated other comprehensive income to earnings during the
next twelve months. The maximum maturity of cash flow derivatives in place at
December 31, 2001 is December 2002.
Other
The Corporation entered into forward contracts to purchase Australian
dollars needed to complete the anticipated acquisition of the remaining 45
percent ownership interest in Kimberly-Clark Australia ("KCA") for A$697.5
million (approximately $355 million). The longest of these contracts matures
in August 2003. These forward contracts do not qualify for hedge accounting
under SFAS 133 and are marked to market each period with the resulting gains
or losses included in current earnings. For the year ended December 31, 2001,
net losses on these contracts of approximately $6.9 million were recorded in
other (income) expense, net.
The net gain on all other derivative instruments not designated as hedges
was $21.0 million in 2001 and has been included in operating profit on the
income statement.
<PAGE>
NOTE 7. STOCK COMPENSATION PLANS
Kimberly-Clark Equity Participation Plans ("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
based on the increase in the book value as defined by the Plans 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 at the maturity of the award. Neither
participation nor dividend shares are shares of common stock. In conjunction
with the restricted stock plan discussed later in this note, no additional
participation shares will be awarded after 1998.
Data concerning participation and dividend shares follow:
<TABLE>
<CAPTION>
(Thousands of shares) 2001 2000 1999
- ---------------------------------------------------------------------
<s> <c> <c> <c>
Outstanding - Beginning of year. . . . . . 6,608 10,229 10,049
Dividend shares credited - net . . . . . . 377 602 808
Matured. . . . . . . . . . . . . . . . . . (2,356) (4,015) (483)
Forfeited. . . . . . . . . . . . . . . . . (154) (208) (145)
------ ------ ------
Outstanding - End of year. . . . . . . . . 4,475 6,608 10,229
====== ====== ======
</TABLE>
Amounts expensed related to participation shares were $15.0 million,
$44.5 million and $34.9 million in 2001, 2000 and 1999, 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 at the date of grant, expire 10 years
after the date of grant and generally 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. Employees were granted options to purchase a fixed number of shares
of common stock, ranging from 25 to 125 shares per employee at a price equal
to the fair market value at the date of grant. The grants generally became
exercisable after the third anniversary of the grant date and have a term of
seven years.
As part of the acquisitions of Safeskin Corporation ("Safeskin") in 2000
and Ballard Medical Products ("Ballard") in 1999, outstanding Safeskin and
Ballard stock options were converted into options to acquire approximately 1.4
million and .5 million shares, respectively, of the Corporation's common stock
at a weighted-average exercise price of $85.22 and $36.13, respectively.
<PAGE>
NOTE 7. (Continued)
Data concerning stock option activity follows:
<TABLE>
<CAPTION>
2001 2000 1999
----------------------- --------------------- ---------------------
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. . . . . . . . . . . . . . 23,941 $ 49.67 20,167 $44.08 17,132 $41.04
Granted . . . . . . . . . . . . . 5,867 69.71 5,799 52.95 5,271 48.46
Exercised . . . . . . . . . . . . (2,428) 41.75 (2,876) 30.88 (2,154) 27.24
Canceled or expired . . . . . . . (715) 126.87 (554) 67.96 (545) 51.46
Converted Safeskin and
Ballard stock options . . . . . - - 1,405 85.22 463 36.13
------ ------ ------
Outstanding - End of year(a). . . 26,665 52.73 23,941 49.67 20,167 44.08
====== ====== ======
Exercisable - End of year . . . . 15,237 46.80 11,330 46.95 9,588 36.59
====== ====== ======
<FN>
(a) Data concerning stock options at December 31, 2001 follows (options in thousands):
</TABLE>
<TABLE>
<CAPTION>
Options Outstanding
----------------------------------
Options Exercisable
Weighted- ------------------------
Average Remaining Weighted-
Exercise Contractual Average
Excercise Price Range Options Price Life (Years) Options Price
- -----------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c>
12.36 - 37.74. . . . 2,088 $ 25.06 2.4 2,088 $ 25.06
39.94 - 50.41. . . . 8,874 46.89 5.7 6,982 46.51
51.82 - 60.08. . . . 9,908 53.61 6.4 6,072 54.01
61.35 - 71.74. . . . 5,745 69.70 9.1 66 68.38
86.28 - 188.53. . . . 50 121.14 6.4 29 120.72
------ ------
26,665 52.73 6.4 15,237 46.80
====== ======
</TABLE>
At December 31, 2001, the number of additional shares of common stock of
the Corporation available for awards under the 2001 Plan was 29.5 million
shares, including both stock option and restricted share awards.
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 employee stock options that have been awarded was equal to the market price
of the underlying stock on the date of grant, no compensation expense was
required to be 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 under
a fair value method. For purposes of pro forma disclosure, the estimated fair
value of such stock options is amortized to expense over the vesting period.
Under the fair value method, the Corporation's net income and net income per
share would have been reduced as follows:
<TABLE>
<CAPTION>
(Millions of dollars, except per share amounts) 2001 2000 1999
- --------------------------------------------------------------------
<s> <c> <c> <c>
Net income. . . . . . . . . . . . . . . . . . . $76.1 $53.3 $41.2
Basic and diluted net income per share. . . . . .14 .10 .08
</TABLE>
<PAGE>
NOTE 7. (Continued)
The weighted-average fair value of the individual options granted during
2001, 2000 and 1999 is estimated as $19.87, $16.24 and $11.77, respectively,
on the date of grant. The fair values were determined using a Black-Scholes
option-pricing model with the following assumptions:
<TABLE>
<CAPTION>
2001 2000 1999
- ------------------------------------------------------------------
<s> <c> <c> <c>
Dividend yield. . . . . . . . . 1.61% 2.04% 2.15%
Volatility. . . . . . . . . . . 25.86% 26.20% 21.40%
Risk-free interest rate . . . . 4.70% 6.50% 5.25%
Expected life . . . . . . . . . 5.8 YEARS 5.8 years 5.8 years
</TABLE>
UNEARNED COMPENSATION ON RESTRICTED STOCK AWARDS
The 2001 Equity Participation Plan replaces the Corporation's 1999
Restricted Stock Plan and provides for restricted share awards not to exceed
3.0 million shares. These restricted stock awards vest and become
unrestricted shares in three to 10 years from the date of grant. Although
plan participants are entitled to cash dividends and may vote such awarded
shares, the sale or transfer of such shares is limited during the restricted
period. During 2001, .5 million shares were awarded at an average share price
of $55.59. During 2000, .5 million shares were awarded at an average share
price of $58.18. During 1999, .4 million shares were awarded at an average
share price of $48.59. As of December 31, 2001, 2.5 million shares of the
Corporation's common stock, under the 2001 plan, remained available for
awards.
The market value of the Corporation's common stock determines the
value of the restricted stock, and such value is recorded at the date of the
award as unearned compensation on restricted stock in a separate component of
stockholders' equity. This unearned compensation is amortized to compensation
expense over the periods of restriction. During 2001, 2000 and 1999, $13.0
million, $10.8 million and $5.0 million, respectively, was charged to
compensation expense under the plan. The tax effect of differences between
compensation expense for financial statement and income tax purposes is
charged or credited to additional paid-in capital.
<PAGE>
NOTE 8. COMMITMENTS
LEASES
The future minimum obligations under leases having a noncancelable term
in excess of one year as of December 31, 2001, are as follows:
<TABLE>
<CAPTION>
Operating
(Millions of dollars) Leases
- ------------------------------------------------------------------------
<s> <c>
Year Ending December 31:
2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61.8
2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.1
2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.9
2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.2
2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8
Thereafter. . . . . . . . . . . . . . . . . . . . . . . . . . . 43.4
------
Future minimum obligations. . . . . . . . . . . . . . . . . . . $246.2
======
</TABLE>
Operating lease obligations have been reduced by approximately $6
million for rental income from noncancelable sublease agreements.
Consolidated rental expense under operating leases was $159.4 million,
$145.9 million and $151.4 million in 2001, 2000 and 1999, respectively.
PURCHASE COMMITMENTS
The Corporation has entered into long-term contracts for the purchase of
raw materials, primarily pulp, and utilities, principally natural gas. The
minimum purchase commitments extend beyond 2007. The commitments are
approximately $688 million, $564 million and $377 million in 2002, 2003 and
2004, respectively. Total commitments beyond the year 2004 are $191 million.
Although the Corporation is primarily liable for rental payments on the
above-mentioned leases and, considering the purchase commitments described
above, management believes the Corporation's exposure to losses, if any, under
these arrangements is not material.
<PAGE>
NOTE 9. PREFERRED SECURITIES OF SUBSIDIARY
In February 2001, a newly formed Luxembourg-based consolidated financing
subsidiary of the Corporation issued 1 million shares of preferred securities
(the "Securities") with an aggregate par value of $520 million to a
nonaffiliated entity for cash proceeds of $516.5 million. Approximately 97
percent of the subsidiary's funds are invested in long-term, variable rate
loans to the Corporation or its consolidated subsidiaries on terms that would
be substantially similar to other borrowings by the Corporation or its
consolidated subsidiaries. The remaining funds are invested in other
financial assets. The Securities pay no dividend but accrue a variable rate
of return based on three-month LIBOR plus 0.764 percent, which at December 31,
2001 equated to an annual rate of approximately 3.03 percent. The Securities
are in substance perpetual and are callable by the subsidiary at par value
plus any accrued but unpaid return on the Securities in November 2008 and each
20-year anniversary thereafter. The common equity securities, all of which
are owned by the Corporation, are entitled to all of the residual equity after
satisfaction of the preferred interests. As of December 31, 2001, the
authorized, issued and outstanding 1 million shares of preferred securities
had a balance (and a liquidating value) of $538.4 million which is shown as
preferred securities of subsidiary on the consolidated balance sheet. The
increase in the balance of the Securities during 2001 of $21.9 million is the
return on the Securities, which was included in minority owners' share of
subsidiaries' net income for 2001 on the Corporation's consolidated income
statement.
<PAGE>
NOTE 10. STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
At December 31, 2001, unremitted net income of equity companies included
in consolidated retained earnings was $774 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.
OTHER COMPREHENSIVE INCOME (LOSS)
The changes in the components of other comprehensive income (loss) are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------------------------------------------
2001 2000 1999
------------------------- --------------------------- --------------------------
PRETAX TAX EXP. NET Pretax Tax Exp. Net Pretax 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
adjustment. . . . . . . . $(256.7) $ - $(256.7) $(218.8) $ - $(218.8) $(154.6) $ - $(154.6)
Minimum pension liability
adjustment. . . . . . . . (145.6) (43.5) (102.1) (6.5) (2.5) (4.0) 6.6 2.5 4.1
Deferred losses on cash
flow hedges . . . . . . . (.1) - (.1) - - - - - -
Unrealized holding gains on
securities. . . . . . . . .3 - .3 - - - - - -
------- ------ ------- ------- ----- ------- ------- ---- -------
Other comprehensive
income (loss) . . . . . . $(402.1) $(43.5) $(358.6) $(225.3) $(2.5) $(222.8) $(148.0) $2.5 $(150.5)
======= ====== ======= ======= ===== ======= ======= ==== =======
</TABLE>
Accumulated balances of other comprehensive income (loss), net of
applicable income taxes:
<TABLE>
<CAPTION>
December 31
-----------------------
(Millions of dollars) 2001 2000
- --------------------------------------------------------------------------------
<s> <c> <c>
Unrealized translation adjustment. . . . . . . . . . . $(1,580.2) $(1,323.5)
Minimum pension liability adjustment . . . . . . . . . (116.2) (14.1)
Deferred losses on cash flow hedges. . . . . . . . . . (.1) -
Unrealized holding gains on securities . . . . . . . . .3 -
--------- ---------
Accumulated other comprehensive income (loss). . . . . $(1,696.2) $(1,337.6)
========= =========
</TABLE>
<PAGE>
NOTE 11. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
ACQUISITIONS
On January 31, 2001, the Corporation acquired Linostar S.p.A., a leading
Italian-based diaper manufacturer that produces and markets Lines, Italy's
second largest diaper brand. The Corporation accounted for this acquisition
using the purchase method which resulted in recognizing goodwill and other
intangible assets of $28 million.
The Corporation purchased an additional 5 percent ownership interest in
KCA for A$77.5 million (approximately $39 million), increasing its ownership
interest to 55 percent. This acquisition is part of the Corporation's
strategy to expand its three business segments within Australia. The
acquisition of the additional 5 percent ownership of KCA resulted in
recognizing goodwill of $32 million reflecting the Corporation's expectation
of continued growth and profitability of KCA. Effective July 1, 2001, the
Corporation began consolidating KCA's net sales and operating results. The
Corporation and its joint venture partner, Amcor Limited, also exchanged
options for the purchase by the Corporation of the remaining 45 percent
ownership interest for A$697.5 million (approximately $355 million) within the
next four years.
In February 2000, the Corporation completed the acquisition of Safeskin
through the exchange of approximately 10.7 million shares of the Corporation's
common stock for all the outstanding shares of Safeskin. The value of the
exchange of stock plus related acquisition costs was approximately $750
million. In June 2000, the Corporation completed the acquisition of S-K
Corporation ("S-K") in Taiwan. These acquisitions were recorded as purchases
and resulted in recognizing goodwill and other intangible assets of $791.1
million.
In June 1999, the Corporation acquired the European consumer and
away-from-home tissue businesses of Attisholz Holding AG for $365 million in
cash. In September 1999, the Corporation completed the acquisition of Ballard
through the exchange of approximately 13.8 million shares of the Corporation's
common stock for all the outstanding shares of Ballard. The value of the
exchange of stock plus related acquisition costs was approximately $788
million. These two acquisitions were both recorded as purchases and resulted
in recognizing goodwill and other intangible assets of $704 million.
The costs of other acquisitions relating primarily to increased ownership
and expansion in Asia and Latin America in 2001, 2000 and 1999 were $78.8
million, $175.5 million and $44.8 million, respectively. The Corporation
recognized goodwill on these other acquisitions of consolidated subsidiaries
of $38.1 million in 2001, $130.0 million in 2000 and $41.4 million in 1999.
<PAGE>
NOTE 11. (Continued)
DISPOSITIONS
In 1999, the Corporation closed its integrated pulp operation in Mobile,
Ala., and sold the associated timberlands. Closure of the pulp mill resulted
in the elimination of approximately 450 jobs, and severance costs of $18.0
million. Approximately 460 thousand acres of the timberlands were sold to a
non-affiliated buyer, Joshua Timberlands LLC ("Joshua"), for notes receivable
having a face value of $397 million (and a fair value of $383 million).
Section 453 of the Internal Revenue Code applies to the sale of timberlands
and permits election of the installment method for income tax purposes, which
the Corporation elected. The transaction also met the criteria for immediate
profit recognition under generally accepted accounting principles. The Joshua
notes, which were recorded at their fair value of approximately $383 million,
bear interest initially at floating rates based on LIBOR less 15 basis points
and are backed by irrevocable standby letters of credit issued by a major
money-center bank, are due September 30, 2009 and are extendable in additional
five-year increments up to September 30, 2029, at the option of the note
holder. Additional acres of such timberland and related equipment were sold
to other buyers prior to September 30, 1999 for $66 million in cash. The
closure of the pulp mill combined with the sale of the related timberlands
resulted in a pretax gain of $153.3 million, which was recorded in other
(income) expense, net. The after-tax effect of the transaction was a gain of
$95.7 million, or $.18 per share.
Because the Corporation desired to monetize the $397 million of notes
receivable and continue the deferral of current income taxes on the gains, in
1999 the Corporation transferred the Joshua notes to a non-controlled
financing entity. The Corporation has minority voting interests in the
financing entity and accounts for its minority ownership interests using the
equity method of accounting. The transfer of the notes and certain other
assets to the financing entity were made at fair value, were accounted for as
asset sales and resulted in no gain or loss to the Corporation.
<PAGE>
NOTE 12. CONTINGENCIES AND LEGAL MATTERS
LITIGATION
The following is a brief description of certain legal and administrative
proceedings to which the Corporation or its subsidiaries is a party or to
which the Corporation's or its subsidiaries' properties are subject. In
management's opinion, none of the legal and administrative proceedings
described below, individually or in the aggregate, is expected to have a
material adverse effect on the Corporation's business, financial condition or
results of operations.
Approximately 300 product liability lawsuits seeking monetary damages, in
most cases of an unspecified amount, are pending in federal and state courts
against Safeskin. Safeskin is typically one of several defendants who
manufacture or sell natural rubber latex gloves. These lawsuits allege
injuries ranging from dermatitis to severe allergic reactions caused by the
residual chemicals or latex proteins in gloves worn by health care workers and
other individuals while performing their duties. Safeskin has referred the
defense of these lawsuits to its insurance carriers.
In 1999, prior to the acquisition of Safeskin by the Corporation,
numerous lawsuits (collectively the "Securities Actions") were filed in the
U.S. District Court for the Southern District of California against Safeskin
and certain of its officers and directors alleging violations of Sections
10(b) and 20(a) of the Securities and Exchange Act of 1934, and Rule 10b-5
promulgated thereunder. The Securities Actions were brought by plaintiffs in
their individual capacity and on behalf of a purported class of persons who
purchased or otherwise acquired Safeskin publicly traded securities during
various periods occurring prior to the Corporation's acquisition of Safeskin.
The suits allege that plaintiffs purchased Safeskin securities at prices
artificially inflated by defendants' misrepresentations and omissions
concerning Safeskin's financial condition and prospects and seek an
unspecified amount of damages. Defendants' motion to dismiss was denied. A
plaintiffs' class has been certified consisting of those who purchased
Safeskin common stock and options during the period of February 18, 1998
through March 11, 1999. Discovery is continuing and the Corporation continues
to contest liability in this matter.
In addition, a shareholder derivative action has been filed against
certain of Safeskin's directors, and Safeskin as a nominal defendant, in the
Supreme Court of the State of California, San Diego County (the "Derivative
Action"). The Derivative Action alleges breach of fiduciary duty, waste of
corporate assets and gross negligence in connection with Safeskin's stock
repurchase program and seeks an unspecified amount of damages. The court has
continued discovery in the Derivative Action so that it can be completed
following the resolution of the Securities Actions.
On April 14, 2000, a complaint was filed against the Corporation and
others in the State of Maine Superior Court. Eighteen plaintiffs seek
compensation for injuries allegedly caused by exposure to substances emitted
by the defendants' mills, including two mills formerly owned by the
Corporation, and from the Central Maine Disposal Landfill in Fairfield, Maine.
The Corporation is contesting the claims asserted by the plaintiffs.
Since 1998, the Corporation has been involved in a series of complex
legal disputes between the Corporation and Mobile Energy Services Company,
L.L.C. and related parties ("MESC"). These disputes arose from the closure of
the Corporation's Mobile pulp mill. MESC owns a cogeneration complex that
provides energy services to the Corporation's Mobile mill.
<PAGE>
NOTE 12. (Continued)
In 1998, the Corporation decided to close its Mobile pulp mill and gave
notice to MESC of its intent to terminate a long-term energy services
agreement. In January 1999, MESC filed for Chapter 11 bankruptcy protection
and brought an adversary proceeding in the United States Bankruptcy Court
against the Corporation claiming unspecified damages arising from the mill
closure and termination of the energy services agreement.
In March 2001, an arbitration ruling was issued. In that ruling, the
arbitrator rejected MESC's claims related to the pulp mill closure finding
that the Corporation had affected a proper pulp mill closure. However, the
arbitrator also ruled that the operation of certain assets by the Corporation
after the pulp mill closure permitted MESC to reinstate the pulp mill energy
services agreement. This reinstatement became subject to binding arbitration
brought by MESC in April 2001. A ruling issued in this arbitration on January
31, 2002 resulted in the Corporation recording a pre-tax charge of
approximately $27 million in its 2001 earnings.
In addition, MESC submitted binding arbitration claims for reimbursement
by the Corporation of certain capital and energy costs incurred by MESC. A
ruling issued in this arbitration on January 21, 2002 resulted in the
Corporation recording a pre-tax charge of approximately $17 million in its
2001 earnings.
Of the numerous allegations made against the Corporation in the 1999
adversary proceeding, only fraudulent transfer claims remain pending before
the Bankruptcy Court. In addition, MESC subsequently filed three additional
adversary proceedings against the Corporation. The Corporation continues to
contest vigorously MESC's various claims in Bankruptcy Court.
As of December 31, 2001, the Corporation, along with approximately 80
other non-affiliated companies, was a party to approximately 142 lawsuits in
Florida, Georgia, Mississippi, Texas, Pennsylvania, Missouri, Illinois and
California state courts with allegations of personal injury resulting from
asbestos exposure on the defendants' premises and allegations that the
defendants manufactured, sold, distributed or installed products which cause
asbestos-related lung disease. No specific product ever manufactured by the
Corporation has been identified by the plaintiffs as having caused or
contributed to any asbestos-related lung disease. The Corporation has denied
the allegations and raised numerous defenses in all of these asbestos cases.
All asbestos claims have been tendered to the Corporation's insurance carriers
for defense and indemnity.
CONTINGENCY
One of the Corporation's North American tissue mills has an agreement to
provide its local utility company a specified amount of electric power per
year for the next 17 years. In the event that the mill was shut down, the
Corporation would be required to continue to operate the power generation
facility on behalf of its owner, the local utility company. The net present
value of the cost to fulfill this agreement as of December 31, 2001 is
estimated to be approximately $85 million. However, management considers the
probability of closure of this mill to be remote.
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, financial condition or results of operations.
<PAGE>
NOTE 13. UNAUDITED QUARTERLY DATA
<TABLE>
<CAPTION>
2001 2000
(Millions of dollars, -------------------------------------------------------------------------------------
except per share amounts) FOURTH(A) THIRD(B) SECOND(C) FIRST(D) Fourth(e) Third(f) Second(g) First(h)
- --------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Net sales. . . . . . . . . . $3,671.8 $3,710.0 $3,534.2 $3,608.4 $3,600.8 $3,529.5 $3,464.5 $3,387.2
Gross profit . . . . . . . . 1,472.8 1,548.2 1,430.5 1,457.4 1,483.4 1,431.4 1,432.4 1,406.3
Operating profit . . . . . . 487.4 629.1 590.6 631.1 674.7 642.1 638.3 678.7
Net income 341.7 419.4 415.4 433.4 455.7 440.4 434.3 470.2
Per share basis:
Basic. . . . . . . . . . .65 .79 .78 .81 .85 .82 .80 .86
Diluted. . . . . . . . . .65 .79 .78 .81 .85 .81 .79 .86
Cash dividends declared
per share. . . . . . . . . .28 .28 .28 .28 .27 .27 .27 .27
Market price per share:
High . . . . . . . . . . . 62.22 65.10 68.69 72.19 73.25 61.81 62.94 68.13
Low. . . . . . . . . . . . 52.06 53.30 55.15 60.50 53.63 49.94 53.00 42.00
Close. . . . . . . . . . . 59.80 62.00 55.90 67.83 70.69 55.81 57.56 56.06
<FN>
(a) Included in the fourth quarter 2001 are the following unusual items:
</TABLE>
<TABLE>
<CAPTION>
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
North American mill closing and other write-offs . . . . $50.1 $ 52.6 $32.6
Latin American asset plan. . . . . . . . . . . . . . . . 32.3 32.5 19.8
Business improvement programs. . . . . . . . . . . . . . 6.7 6.7 2.7
Business integration and other costs . . . . . . . . . . 1.8 9.7 6.6
Arbitration settlements. . . . . . . . . . . . . . . . . - 43.2 26.9
----- ------ -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $90.9 $144.7 $88.6 $.17 $.17
===== ====== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
(b) Included in the third quarter 2001 are the following unusual items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . . . . . . $6.3 $ 6.5 $4.3
Business integration and other costs . . . . . . . . . . .7 5.1 2.6
---- ----- ----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $7.0 $11.6 $6.9 $.02 $.01
==== ===== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
(c) Included in the second quarter 2001 are the following unusual items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . . . . . . $20.5 $21.1 $13.6
Business integration and other costs . . . . . . . . . . 1.7 7.4 5.7
----- ----- -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $22.2 $28.5 $19.3 $.04 $.03
===== ===== ===== ==== ====
</TABLE>
<PAGE>
NOTE 13. (Continued)
<TABLE>
<CAPTION>
(d) Included in the first quarter 2001 are the following unusual items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . . . . . . $21.2 $21.2 $13.2
Business integration and other costs . . . . . . . . . . .4 6.9 4.3
----- ----- -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $21.6 $28.1 $17.5 $.04 $.03
===== ===== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
(e) Included in the fourth quarter 2000 are the following unusual items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . . . . . . $5.8 $ 5.8 $ 4.0
Business integration and other costs . . . . . . . . . . 1.2 9.6 7.0
Litigation settlements . . . . . . . . . . . . . . . . . - .6 .3
---- ----- -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $7.0 $16.0 $11.3 $.03 $.02
==== ===== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
(f) Included in the third quarter 2000 are the following unusual items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . . . . . . $4.1 $ 5.5 $ 3.6
Business integration and other costs . . . . . . . . . . .2 5.7 3.5
Litigation settlements . . . . . . . . . . . . . . . . . - 14.6 9.0
---- ----- -----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $4.3 $25.8 $16.1 $.03 $.03
==== ===== ===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
(g) Included in the second quarter 2000 are the following unusual items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . . . . . . $4.2 $ 5.6 $3.8
Business integration and other costs . . . . . . . . . . .5 5.6 3.5
---- ----- ----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $4.7 $11.2 $7.3 $.01 $.02
==== ===== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
(h) Included in the first quarter 2000 are the following unusual items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
-------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs. . . . . . . . . . . . . . $ 6.1 $ 7.5 $ 5.0
Business integration and other costs . . . . . . . . . . 8.2 14.2 9.0
Patent settlement and accrued liability reversal . . . . - (75.8) (46.5)
----- ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . $14.3 $(54.1) $(32.5) $(.06) $(.06)
===== ====== ====== ===== =====
</TABLE>
<PAGE>
NOTE 14. SUPPLEMENTAL DATA (Millions of dollars)
SUPPLEMENTAL BALANCE SHEET DATA
<TABLE>
<CAPTION>
December 31
-------------------
Summary of Accounts Receivable 2001 2000
- -------------------------------------------------------------------------------------------------------------------
<s> <c> <c>
Accounts Receivable:
From customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,543.9 $1,683.9
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198.3 198.8
Less allowance for doubtful accounts and sales discounts . . . . . . . . . . . . . . . . . . (69.8) (73.1)
-------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,672.4 $1,809.6
======== ========
</TABLE>
Accounts receivable are carried at amounts that approximate fair value.
<TABLE>
<CAPTION>
December 31
-------------------
Summary of Inventories 2001 2000
- -------------------------------------------------------------------------------------------------------------------
<s> <c> <c>
Inventories by Major Class:
At the lower of cost on the FIFO method, weighted-average cost
method or market:
Raw materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 366.1 $ 387.2
Work in process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179.5 159.1
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 898.4 840.1
Supplies and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.5 220.0
-------- --------
1,661.5 1,606.4
Excess of FIFO cost over LIFO cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (167.4) (216.0)
-------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,494.1 $1,390.4
======== ========
</TABLE>
FIFO value of total inventories valued on the LIFO method were $715.2
million and $660.1 million at December 31, 2001 and December 31, 2000,
respectively.
<TABLE>
<CAPTION>
December 31
-------------------
Summary of Accrued Expenses 2001 2000
- -------------------------------------------------------------------------------------------------------------------
<s> <c> <c>
Accrued advertising and promotion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 213.7 $ 214.1
Accrued salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351.2 428.7
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660.4 597.0
-------- --------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,225.3 $1,239.8
======== ========
</TABLE>
<PAGE>
NOTE 14. (Continued)
<TABLE>
<CAPTION>
Summary of Accrued Consumer Coupon Redemption Costs 2001 2000
- ------------------------------------------------------------------------------------------------------------------
<s> <c> <c>
Balance, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54.0 $ 58.7
Additions charged to expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149.4 158.8
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (152.6) (136.1)
Changes in estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19.1) (26.6)
Currency rate changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (.5) (.8)
------- -------
Balance, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 31.2 $ 54.0
======= =======
</TABLE>
SUPPLEMENTAL CASH FLOW STATEMENT DATA
<TABLE>
<CAPTION>
Summary of Cash Flow Effects of (Increase) Decrease in Year Ended December 31
---------------------------
Operating Working Capital(a) 2001 2000 1999
- ----------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . $ 202.5 $ (88.8) $ (10.3)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37.7) (49.0) 111.2
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.9) 10.4 28.0
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . (162.9) 26.5 41.1
Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 (4.4) (98.4)
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . (81.3) (116.3) (147.3)
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . (125.4) (77.4) 34.9
Currency rate changes. . . . . . . . . . . . . . . . . . . . . . . . . (30.1) (39.3) (20.7)
------- ------- -------
Increase in operating working capital. . . . . . . . . . . . . . . . . $(232.6) $(338.3) $ (61.5)
======= ======= =======
<FN>
(a) Excludes the effects of acquisitions and dispositions.
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------
Other Cash Flow Data 2001 2000 1999
- ----------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Reconciliation of changes in cash and cash equivalents:
Balance, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . $ 206.5 $ 322.8 $ 144.0
Increase (Decrease). . . . . . . . . . . . . . . . . . . . . . . . . 198.7 (116.3) 178.8
------- ------- ------
Balance, December 31 . . . . . . . . . . . . . . . . . . . . . . . . $ 405.2 $ 206.5 $ 322.8
======= ======= =======
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 230.8 $ 233.1 $ 227.1
Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . . . . 719.2 783.2 557.8
Decrease in cash and cash equivalents due to
currency rate changes. . . . . . . . . . . . . . . . . . . . . . . . 24.9 11.4 .1
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------
Interest Expense 2001 2000 1999
- ----------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Gross interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . $211.2 $242.7 $226.0
Capitalized interest on major construction projects . . . . . . . . . . (19.6) (20.9) (12.9)
------ ------ ------
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . $191.6 $221.8 $213.1
====== ====== ======
</TABLE>
<PAGE>
NOTE 15. BUSINESS SEGMENT AND GEOGRAPHIC DATA INFORMATION
As a result of organizational changes announced in November 2001, the
Corporation redefined its business segments. The newly defined segments are
Personal Care, Consumer Tissue and Business-to-Business.
Historical information has been reclassified for comparative purposes to
be consistent with the new business segment definitions. Sales and operating
profit of K-C Professional and Neenah Paper have been removed from the former
Tissue segment and are included in the new Business-to-Business segment along
with the Corporation's Health Care, Nonwovens and Technical Paper operations
that formerly constituted the Health Care and Other segment. The now smaller
Tissue segment was renamed Consumer Tissue. The Personal Care segment did not
change.
- - The Personal Care segment manufactures and markets disposable diapers,
training and youth pants and swimpants; feminine and incontinence
care products; and related products. Products in this 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, Lightdays, Depend, Poise and other brand names.
- - The Consumer Tissue segment manufactures and markets facial and bathroom
tissue, paper towels and napkins for household use; wet wipes; and
related products. Products in this segment are sold under the
Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Page, Huggies
and other brand names.
- - The Business-to-Business segment manufactures and markets facial and
bathroom tissue, paper towels, wipers and napkins for away-from-home
use; health care products such as surgical gowns, drapes, infection
control products, sterilization wraps, disposable face masks and
exam gloves, respiratory products, and other disposable medical products;
printing, premium business and correspondence papers; specialty and
technical papers; and other products. Products in this segment are
sold under the Kimberly-Clark, Kleenex, Scott, Kimwipes, WypAll, Surpass,
Safeskin, Tecnol, Ballard and other brand names.
In 2001, approximately 10.4% of net sales were to Wal-Mart Stores, Inc.,
primarily in the Personal Care and Consumer Tissue businesses. No single
customer accounted for 10% or more of net sales in 2000 and 1999.
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(a)
--------------------------------- -----------------------------
(Millions of dollars) 2001 2000 1999 2001 2000 1999
- ---------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Personal Care. . . . . . $ 5,677.6 $ 5,437.6 $ 5,138.1 $1,042.7 $1,136.7 $1,092.8
Consumer Tissue. . . . . 5,383.5 5,061.3 4,855.0 863.7 825.1 689.2
Business-to-Business . . 3,624.8 3,678.9 3,156.6 599.4 666.0 579.2
--------- --------- --------- -------- -------- --------
Combined . . . . . . . . 14,685.9 14,177.8 13,149.7 2,505.8 2,627.8 2,361.2
Intersegment sales . . . (161.5) (195.8) (142.9) - - -
Unallocated - net(b) . . - - - (167.6) 6.0 74.2
--------- --------- --------- -------- -------- --------
Consolidated . . . . $14,524.4 $13,982.0 $13,006.8 $2,338.2 $2,633.8 $2,435.4
========= ========= ========= ======== ======== ========
</TABLE>
<PAGE>
NOTE 15. (Continued)
<TABLE>
<CAPTION>
Assets Depreciation Capital Spending
------------------------------- ---------------------- --------------------------
(Millions of dollars) 2001 2000 1999 2001 2000 1999 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c>
Personal Care. . . . . $ 3,819.5 $ 3,667.7 $ 3,234.8 $225.1 $200.9 $195.8 $ 381.0 $ 410.7 $260.7
Consumer
Tissue . . . . . . . 5,064.5 4,732.4 4,191.9 259.8 239.1 243.9 419.6 500.7 312.1
Business-to-
Business . . . . . . 4,611.3 4,624.2 3,583.7 164.2 150.5 145.5 260.4 256.3 213.1
-------- -------- --------- ------ ------ ------ -------- ------- ------
Combined . . . . . . . 13,495.3 13,024.3 11,010.4 649.1 590.5 585.2 1,061.0 1,167.7 785.9
Unallocated
assets(c). . . . . . 1,512.3 1,455.5 1,805.1 1.1 1.2 1.0 38.5 2.6 .5
-------- -------- --------- ------ ------ ------ -------- ------- ------
Consolidated . . . . $15,007.6 $14,479.8 $12,815.5 $650.2 $591.7 $586.2 $1,099.5 $1,170.3 $786.4
========= ========= ========= ====== ====== ====== ======== ======== ======
<FN>
(a) Included in Business Segment operating profit are the following unusual
items:
</TABLE>
<TABLE>
<CAPTION>
2001
--------------------------------------------------------
Personal Consumer Business-
(Millions of dollars) Care Tissue to-Business Unallocated Total
- -----------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
North American mill closing and other write-offs. $ 6.8 $19.0 $26.8 $ - $ 52.6
Latin American asset plan . . . . . . . . . . . . 23.1 9.4 - - 32.5
Business improvement programs . . . . . . . . . . 41.0 5.6 8.9 - 55.5
Business integration and other costs. . . . . . . 5.9 5.2 15.7 2.3 29.1
Arbitration settlements . . . . . . . . . . . . . - - - 43.2 43.2
----- ----- ----- ----- ------
Total . . . . . . . . . . . . . . . . . . . . . $76.8 $39.2 $51.4 $45.5 $212.9
===== ===== ===== ===== ======
</TABLE>
<TABLE>
<CAPTION>
2000
--------------------------------------------------------
Personal Consumer Business-
(Millions of dollars) Care Tissue to-Business Unallocated Total
- -----------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs . . . . . . . . . . $4.2 $16.9 $ 3.3 $ - $ 24.4
Business integration and other costs. . . . . . . 1.0 5.1 29.0 - 35.1
Litigation settlements and other. . . . . . . . . - - - (60.6) (60.6)
---- ----- ----- ------ ------
Total . . . . . . . . . . . . . . . . . . . . . $5.2 $22.0 $32.3 $ (60.6) $ (1.1)
==== ===== ===== ======= ======
</TABLE>
<TABLE>
<CAPTION>
1999
---------------------------------------------------------
Personal Consumer Business-
(Millions of dollars) Care Tissue to-Business Unallocated Total
- ------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Business improvement programs . . . . . . . . . . $16.3 $30.3 $ 2.9 $ (1.7) $ 47.8
Business integration and other costs. . . . . . . - 4.5 18.1 - 22.6
Mobile pulp mill fees and related severance . . . - 3.8 5.2 - 9.0
Gains on asset disposals. . . . . . . . . . . . . - - - (176.7) (176.7)
----- ----- ----- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . $16.3 $38.6 $26.2 $(178.4) $ (97.3)
===== ===== ===== ======= =======
</TABLE>
(b) Consists of other income (expense), net and expenses not associated with
the business segments.
(c) Includes investments in equity companies of $705.3 million, $798.8
million and $863.1 million in 2001, 2000 and 1999, respectively.
<PAGE>
NOTE 15. (Continued)
CONSOLIDATED OPERATIONS BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
Net Sales Operating Profit(a)
--------------------------------- ----------------------------
(Millions of dollars) 2001 2000 1999 2001 2000 1999
- --------------------------- ------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
United States. . . . . . . . .$ 9,327.7 $ 9,059.4 $ 8,392.5 $1,927.5 $1,937.1 $1,821.9
Canada . . . . . . . . . . . . 938.3 990.3 843.4 156.9 211.3 105.3
Intergeographic items(b) . . . (694.7) (673.5) (507.4) - - -
--------- -------- --------- -------- -------- --------
North America. . . . . . . . . 9,571.3 9,376.2 8,728.5 2,084.4 2,148.4 1,927.2
Europe . . . . . . . . . . . . 2,648.4 2,474.5 2,544.7 176.2 149.7 183.3
Asia, Latin America and other. 2,864.4 2,680.5 2,084.6 245.2 329.7 250.7
--------- -------- --------- -------- -------- --------
Combined . . . . . . . . . . . 15,084.1 14,531.2 13,357.8 2,505.8 2,627.8 2,361.2
Intergeographic items. . . . . (559.7) (549.2) (351.0) - - -
Unallocated - net(c) . . . . . - - - (167.6) 6.0 74.2
--------- -------- --------- -------- -------- --------
Consolidated . . . . . . . .$14,524.4 $13,982.0 $13,006.8 $2,338.2 $2,633.8 $2,435.4
========= ========= ========= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Assets
----------------------------------
(Millions of dollars) 2001 2000 1999
- --------------------------------------------------------------------------------
<s> <c> <c> <c>
United States. . . . . . . . . . . . . . . . $ 7,691.4 $ 7,599.9 $ 6,363.1
Canada . . . . . . . . . . . . . . . . . . . 538.2 517.0 497.5
Intergeographic items. . . . . . . . . . . . (70.8) (79.4) (79.0)
--------- --------- ---------
North America. . . . . . . . . . . . . . . . 8,158.8 8,037.5 6,781.6
Europe . . . . . . . . . . . . . . . . . . . 2,474.6 2,447.3 2,404.1
Asia, Latin America and other. . . . . . . . 3,134.3 2,676.0 1,960.7
--------- --------- ---------
Combined . . . . . . . . . . . . . . . . . . 13,767.7 13,160.8 11,146.4
Intergeographic items. . . . . . . . . . . . (272.4) (136.5) (136.0)
Unallocated assets - net(d). . . . . . . . . 1,512.3 1,455.5 1,805.1
--------- --------- ---------
Consolidated . . . . . . . . . . . . . . . $15,007.6 $14,479.8 $12,815.5
========= ========= =========
<FN>
(a) Included in geographic operating profit are the following unusual items:
</TABLE>
<TABLE>
<CAPTION>
2001
-------------------------------------------------------------------
Asia,
Latin America
(Millions of dollars) U.S. Canada Europe and other Unallocated Total
- ----------------------- -------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
North American mill closing and
other write-offs. . . . . . . . $ 52.6 $ - $ - $ - $ - $ 52.6
Latin American asset plan . . . . - - - 32.5 - 32.5
Business improvement programs . . 38.9 2.6 2.5 11.5 - 55.5
Business integration and other
costs . . . . . . . . . . . . . 15.4 - 10.1 1.3 2.3 29.1
Arbitration settlements . . . . . - - - - 43.2 43.2
------ ---- ----- ----- ----- ------
Total . . . . . . . . . . . . . . $106.9 $2.6 $12.6 $45.3 $45.5 $212.9
====== ==== ===== ===== ===== ======
</TABLE>
<PAGE>
NOTE 15. (Continued)
<TABLE>
<CAPTION>
2000
-------------------------------------------------------------------
Asia,
Latin America
(Millions of dollars) U.S. Canada Europe and other Unallocated Total
- ----------------------- -------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Business improvement programs . . .$ 6.1 $1.1 $17.2 $ - $ - $ 24.4
Business integration and other
costs . . . . . . . . . . . . . . 28.8 .3 6.0 - - 35.1
Litigation settlements and other. . - - - - (60.6) (60.6)
----- ---- ----- ----- ------- ------
Total . . . . . . . . . . . . . . .$34.9 $1.4 $23.2 $ - $ (60.6) $ (1.1)
===== ==== ===== ===== ======= ======
</TABLE>
<TABLE>
<CAPTION>
1999
-------------------------------------------------------------------
Asia,
Latin America
(Millions of dollars) U.S. Canada Europe and other Unallocated Total
- ----------------------- -------------------------------------------------------------------
<s> <c> <c> <c> <c> <c> <c>
Business improvement programs . . .$20.5 $5.6 $31.3 $(7.9) $ (1.7) $ 47.8
Business integration and other
costs . . . . . . . . . . . . . . 17.4 - 5.2 - - 22.6
Mobile pulp mill fees and related
severance . . . . . . . . . . . . 9.0 - - - - 9.0
Gains on asset disposals. . . . . . - - - - (176.7) (176.7)
----- ---- ----- ----- ------- ------
Total . . . . . . . . . . . . . . .$46.9 $5.6 $36.5 $(7.9) $(178.4) $ (97.3)
===== ==== ===== ===== ======= =======
</TABLE>
(b) Net sales include $431.1 million, $409.2 million and $287.6 million by
operations in Canada to the U.S. in 2001, 2000 and 1999, respectively.
(c) Consists of other income (expense), net and expenses not associated with
geographic areas.
(d) Includes investments in equity companies of $705.3 million, $798.8
million and $863.1 million in 2001, 2000 and 1999, respectively.
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, 2001
Latin America. . . . . . . . . . . $1,872.3 $721.7 $490.3 $304.0 $140.6
Asia, Australia and Middle East(a) 281.4 110.4 40.7 28.3 13.8
-------- ------ ------ ------ ------
Total. . . . . . . . . . . . . $2,153.7 $832.1 $531.0 $332.3 $154.4
======== ====== ====== ====== ======
For the year ended:
December 31, 2000
Latin America. . . . . . . . . . . $1,902.5 $730.2 $514.7 $339.1 $158.5
Asia, Australia and Middle East(b) 602.1 242.1 88.9 56.9 27.9
-------- ------ ------ ------ ------
Total. . . . . . . . . . . . . $2,504.6 $972.3 $603.6 $396.0 $186.4
======== ====== ====== ====== ======
</TABLE>
<PAGE>
NOTE 15. (Continued)
<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, 1999
Latin America . . . . . . . . . . . $1,611.6 $638.9 $477.7 $334.1 $154.0
Asia, Australia and Middle East . . 714.0 263.1 98.6 73.4 35.6
-------- ------ ------ ------ ------
Total . . . . . . . . . . . . . $2,325.6 $902.0 $576.3 $407.5 $189.6
======== ====== ====== ====== ======
<FN>
(a) As of July 1, 2001, the Corporation consolidated K-C Australia Pty., its
Australian affiliate, in which the Corporation made an additional
investment to gain majority ownership.
(b) As of March 31, 2000, the Corporation consolidated Hogla-Kimberly Limited,
its Israeli affiliate, in which the Corporation made an additional
investment to gain majority ownership.
</TABLE>
<TABLE>
<CAPTION>
Non- Non- Stock-
Current Current Current Current holders'
(Millions of dollars) Assets Assets Liabilities Liabilities Equity
- -----------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
December 31, 2001
Latin America. . . . . . . . . . $ 892.3 $1,291.2 $551.7 $482.6 $1,149.2
Asia and Middle East . . . . . . 25.5 29.3 21.1 .6 33.1
-------- -------- ------ ------ --------
Total. . . . . . . . . . . . $ 917.8 $1,320.5 $572.8 $483.2 $1,182.3
======== ======== ====== ====== ========
December 31, 2000
Latin America. . . . . . . . . . $ 846.6 $1,172.0 $496.7 $382.7 $1,139.2
Asia, Australia and Middle East. 163.9 270.7 92.7 151.1 190.8
-------- -------- ------ ------ --------
Total. . . . . . . . . . . . $1,010.5 $1,442.7 $589.4 $533.8 $1,330.0
======== ======== ====== ======= ========
December 31, 1999
Latin America. . . . . . . . . . $ 860.6 $1,076.4 $428.8 $400.9 $1,107.3
Asia, Australia and Middle East. 254.0 391.7 143.3 194.1 308.3
-------- -------- ------ ------ --------
Total. . . . . . . . . . . . $1,114.6 $1,468.1 $572.1 $595.0 $1,415.6
======== ======== ====== ====== ========
</TABLE>
Equity companies are principally engaged in operations in the Personal
Care and Consumer Tissue businesses.
Kimberly-Clark de Mexico, S.A. de C.V. is partially owned by the public
and its stock is publicly traded in Mexico. At December 31, 2001, the
Corporation's investment in this equity company was $488.1 million, and the
estimated fair value of the investment was $1.8 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, 2001 and 2000,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 2001.
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 auditing standards generally
accepted in the United States of America. 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, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
Dallas, Texas
February 8, 2002
<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 also has adopted a code of conduct that, among other
things, contains policies for conducting business affairs in a lawful and
ethical manner everyplace 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,
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.
<PAGE>
The Corporation has assessed its internal control system as of December 31,
2001, 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, 2001,
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/ Thomas J. Falk /s/ John W. Donehower
- -------------------- ------------------ ---------------------
Wayne R. Sanders Thomas J. Falk John W. Donehower
Chairman of the Board and President and Senior Vice President and
Chief Executive Officer Chief Operating Officer Chief Financial Officer
February 8, 2002
<PAGE>
ADDITIONAL INFORMATION
TRANSFER AGENT, REGISTRAR AND DIVIDEND DISBURSING AGENT
EquiServe Trust Company, 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 certicates, IRS Form 1099, changes in address, name or
ownership, or information regarding Kimberly-Clark's Dividend Reinvestment and
Stock Purchase Plan should be addressed to:
EquiServe Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-3010
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 Trust Company, N.A. 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 Pacic stock exchanges.
The ticker symbol is KMB.
ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders will be held at the Company's World
Headquarters, 351 Phelps Drive, Irving, Texas, at 11:00 a.m. on Thursday,
April 25, 2002.
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.
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 64,200 employees
as of December 31, 2001. Equity companies had an additional 9,800 employees.
The Corporation had 46,373 stockholders of record and 521.0 million shares of
common stock outstanding as of the same date.
TRADEMARKS
The brand names mentioned in this report - Andrex, Ballard, Classic Crest,
Cottonelle, Cottonelle Fresh, Depend, Depend Plenitud, GoodNites, Huggies,
Joy, Kimberly-Clark, Kleenex, Kotex, Lightdays, Little Swimmers, Page, Poise,
Pull-Ups, Safeskin, Scott, Scottex, Scottfold, Surpass, Tecnol, Viva and
WypAll - are trademarks of Kimberly-Clark Corporation or its affliates.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>6
<FILENAME>ex21.txt
<DESCRIPTION>EX-21
<TEXT>
Exhibit No. (21)
KIMBERLY-CLARK CORPORATION
CONSOLIDATED SUBSIDIARIES
This list includes all subsidiaries as of December 31, 2001. The place
of incorporation or organization is next to the name of the company.
Andrex Limited, United Kingdom
Avent, Inc., Delaware
Avent de Honduras, S.A. de C.V., Honduras
Avent, S.A. de C.V., Mexico
Avent Slovakia, Inc., Delaware
Avent Slovakia s.r.o., Slovakia
Ballard Medical Products, Utah
Ballard Medical Products (Canada) Inc., Ontario, Canada
Ballard Medical Sales, Ltd., Utah
Ballard Purchase Corporation, Utah
Ballard Real Estate Holdings, Inc., Utah
Balmoral Participacoes Ltda., Brazil
Beco, Inc., Wisconsin
BMCO One, Inc., Utah
BMCO Two, Inc., Utah
Cabin Bluff Partners, Delaware
Cape Chignecto Lands Limited, Nova Scotia, Canada
Cardiotronics Systems, Inc., Colorado
*Carlkim (Proprietary) Limited, South Africa
*Carlton Paper Products (Proprietary) Limited, South Africa
*Carlton Paper of South Africa (Proprietary) Limited, South Africa
Celulosa de Turrialba, S.A., Costa Rica
*City Land Corporation (Proprietary) Limited, South Africa
*Colombiana Kimberly Colpapel S.A., Colombia
Delaware Overseas Finance, Inc., Delaware
Discott II, Inc., Delaware
Durafab, Inc., Texas
ELF 1 Papier GmbH, Germany
Excell Paper Sales Co., Pennsylvania
Excell Paper Sales LLC, Delaware
Financo Limited, Cayman Islands
*Fisbra Industria e Comecio Ltd., Brazil
*Gerinconfort Industria e Comercio de Productus Higienicos Ltd., Brazil
Hakle Hygiene Papiervertriebs GmbH, Austria
Hakle Kimberly Deutschland GmbH, Germany
Hakle-Kimberly Switzerland GmbH, Switzerland
*H-K Overseas Holland B.V., Netherlands
<PAGE>
*Hogla Kimberly, Limited, Israel
*Hogla Kimberly Marketing Limited, Israel
Hopewell International Insurance Ltd. (Inactive), Bermuda
Housing Horizons, LLC, Texas
Hykopa AG, Switzerland
*Industrial Helvetia S.A., Chile
Industrial Mimosa S.A., Uruguay
K-C Advertising, Inc., Delaware
K-C Comercio e Servicios Ltda., Brazil
K-C Enterprise Venezuela C.A., Venezuela
K-C Equipment Finance L.P., United Kingdom
K-C Guernsey I Ltd., Isle of Guernsey
K-C Guernsey II Ltd., Isle of Guernsey
K-C Nevada, Inc., Nevada
*KCA Nominees Pty. Limited, Australia
*KCA Retirement Fund Pty. Limited, Australia
KCC Comercial Ltda., Sao Paulo, Brazil
*KCK Wipes Industria e Comercio Ltda., Brazil
*K.C.S.A. Holdings (Proprietary) Limited, South Africa
*Kimberly Bolivia S.A., Bolivia
Kimberly-Clark (Barbados) Holding Ltd., Barbados
Kimberly-Clark (China) Investment Co., Ltd., People's Republic of China
Kimberly-Clark Argentina S.A., Argentina
Kimberly-Clark Argentina Holdings S.A., Argentina
Kimberly-Clark AB, Sweden
Kimberly-Clark a.s., Czech Republic
Kimberly-Clark Australia Finance Pty. Limited, Australia
Kimberly-Clark Australia Holdings Pty. Limited, Australia
*Kimberly-Clark Australia Pty. Limited, Australia
Kimberly-Clark Benelux Holdings B.V., Netherlands
Kimberly-Clark B.V., Netherlands
Kimberly-Clark Canada Inc., Ontario, Canada
Kimberly-Clark Canada Finance Incorporated, Nova Scotia, Canada
Kimberly-Clark Canada Investment Incorporated, Nova Scotia, Canada
Kimberly-Clark Canada Services Corporation, Ontario, Canada
Kimberly-Clark Cayman Islands Company, Cayman Islands
Kimberly-Clark Cayman Islands Finance Company, Cayman Islands
Kimberly-Clark Cayman Islands Holding Company, Cayman Islands
Kimberly-Clark Cyprus Ltd., Cyprus
Kimberly-Clark CBG (Handan) Hygienic Products Co., Ltd., People's
Republic of China
Kimberly-Clark CBG Hygienic Products Co. Ltd., Nanjing, People's Republic
of China
Kimberly-Clark CBG Hygienic Products Company Limited, Chengdu, People's
Republic of China
Kimberly-Clark CBG Hygienic Products Company Limited, Kunming, People's
Republic of China
*Kimberly-Clark Central American Holdings, S.A., Panama
Kimberly-Clark Chengdu Hygienic Products Services Company Ltd., People's
Republic of China
<PAGE>
*Kimberly-Clark Chile S.A., Chile
Kimberly-Clark Colombia Limitada, Colombia
Kimberly-Clark Costa Rica, S.A., Costa Rica
*Kimberly-Clark de Centro America, S.A., El Salvador
Kimberly-Clark do Brasil Limitada, Brazil
Kimberly-Clark Denmark Holdings ApS, Denmark
*Kimberly-Clark Dominicana, S.A., Dominican Republic
*Kimberly-Clark Ecuador, S.A., Ecuador
Kimberly-Clark Europe Limited, United Kingdom
Kimberly-Clark European Investment B.V., Netherlands
Kimberly-Clark European Services Limited, United Kingdom
Kimberly-Clark Far East Pte. Limited, Singapore
Kimberly-Clark Finance Ltd., United Kingdom
Kimberly-Clark Financial Services, Inc., Tennessee
Kimberly-Clark Forestal S.A., Spain
Kimberly-Clark Foundation, Inc., Wisconsin
Kimberly-Clark France Finance SNC, France
Kimberly-Clark France Holdings SARL, France
Kimberly-Clark France Operations, France
Kimberly-Clark Global Finance, Bermuda
*Kimberly-Clark Guatemala S.A., Guatemala
Kimberly-Clark HmbH, Austria
Kimberly-Clark Holding Limited, United Kingdom
Kimberly-Clark Holdings Brasil Limitada, Brazil
Kimberly-Clark Holland Holdings B.V., Netherlands
Kimberly-Clark Honduras S. de R.L., Honduras
Kimberly-Clark (Hong Kong) Ltd., Hong Kong
Kimberly-Clark Inc., Ontario, Canada
Kimberly-Clark Integrated Services Corporation, Delaware
Kimberly-Clark International Services Corporation, Delaware
Kimberly-Clark International, S.A., Panama
Kimberly-Clark Investment Corporation, Panama
Kimberly-Clark Irish Finance Corporation Ltd., United Kingdom
Kimberly-Clark Japan Ltd., Japan
*Kimberly-Clark Kenko Industria e Comercio Ltda., Sao Paulo, Brazil
Kimberly-Clark Latin America, Inc., Delaware
Kimberly-Clark Lda., Portugal
Kimberly-Clark Limited, United Kingdom
Kimberly-Clark Luxembourg S.a.r.l., Luxembourg
Kimberly-Clark Luxembourg Holdings S.a.r.l., Luxembourg
Kimberly-Clark Malaysia Sendirian Berhad, Malaysia
Kimberly-Clark Manufacturing (Thailand) Limited, Thailand
Kimberly-Clark Mediterranean Finance Company Ltd., Malta
Kimberly-Clark N.V., Belgium
Kimberly-Clark Netherlands Holdings B.V., Netherlands
<PAGE>
Kimberly-Clark 000, Russia
Kimberly-Clark Pacific Finance Company, Cayman Islands
Kimberly-Clark Pacific Holdings Pty Limited, Australia
Kimberly-Clark Paper (Guangzhou) Company Limited, People's Republic of
China
Kimberly-Clark Paper (Shanghai) Company Limited, People's Republic of
China
Kimberly-Clark Paraguay S.A., Paraguay
Kimberly-Clark Pension Trusts Ltd., United Kingdom
Kimberly-Clark Personal Hygienic Products (Nanjing) Co. Ltd., People's
Republic of China
Kimberly-Clark Personal Hygienic Products Company Limited, Beijing,
People's Republic of China
*Kimberly-Clark Peru S.A., Peru
Kimberly-Clark PHC International, Inc., Delaware
*Kimberly-Clark Philippines Inc., Philippines
Kimberly-Clark Poland Sp. z.o.o., Poland
Kimberly-Clark Products (Malaysia) Sdn. Bdh., Malaysia
*Kimberly-Clark Pudumjee Limited, India
Kimberly-Clark Puerto Rico, Inc., Delaware
Kimberly-Clark Pulp, Inc., Delaware
Kimberly-Clark S.L., Spain
Kimberly-Clark Sales Corporation B.V., Netherlands
Kimberly-Clark Scandinavia A/S, Denmark
Kimberly-Clark Services Asia-Pacific, Australia
*Kimberly-Clark - SID, S.A., Dominican Republic
Kimberly-Clark Singapore Pte. Ltd., Singapore
Kimberly-Clark S.N.C., France
*Kimberly-Clark of South Africa (Pty.) Limited, South Africa
*Kimberly-Clark Southern African (Holdings) (Pty) Ltd., South Africa
Kimberly-Clark S.p.A., Italy
Kimberly-Clark s.r.l., Italy
Kimberly-Clark SUD, S.p.A., Italy
Kimberly-Clark Taiwan, Cayman Islands
Kimberly-Clark Technical Paper, Inc., New Hampshire
Kimberly-Clark Technical Products, Inc., Delaware
Kimberly-Clark Thailand Limited, Thailand
Kimberly-Clark Tissue do Brasil Limitada, Brazil
Kimberly-Clark Trading Limited Liability Company, Hungary
Kimberly-Clark Trading (Malaysia) Sdn. Bdh., Malaysia
Kimberly-Clark Treasury Asia-Pacific, Australia
Kimberly-Clark Ukraine LLC, Ukraine
Kimberly-Clark Uruguay S.A., Uruguay
*Kimberly-Clark Venezuela, C.A., Venezuela
Kimberly-Clark Ventures, LLC, Delaware
Kimberly-Clark Vietnam Co., Ltd., Vietnam
Kimberly-Clark West Indies Finance Company, Cayman Islands
Kimberly-Clark Worldwide Australia Holdings Pty. Limited, Australia
Kimberly-Clark Worldwide Taiwan Investment Ltd., Taiwan, Republic of
China
<PAGE>
Kimberly-Clark Worldwide, Inc., Delaware
*Kimberly-Clark Zimbabwe (Private) Limited, South Africa
*KIMNICA, S.A., Nicaragua
Kookaburra Paper Products Private Limited, Singapore
*KS&J Industria e Comecio Ltda., Brazil
La Ada de Acuna, S.A. de C.V., Mexico
La Compania Que Innova, S.A. de C.V., Mexico
*Larrylind Land Corporation (Pty.) Limited, South Africa
*Leslie D. Frankel (Pty.) Limited, South Africa
Linostar S.p.A., Italy
*Manlak Investments (Pty.) Limited, South Africa
Medical Innovations Corporation, California
Menominee Company, Wisconsin and Michigan
Mimo Argentina S.A., Argentina
Mimo Brasil Limitada, Brazil
*Mimo Chile S.A., Chile
Mimo Uraguay S.A., Uraguay
*Mimobliaria S.A., Ecuador
Minnetonka Limitada, Brazil
Minnetonka Overseas Investments Limited, Cayman Islands
Mistassist, Inc., Delaware
*Molett Marketing Limited, Israel
Mountain Tree Farm Company, Washington
*Neenah and Menasha Water Power Company, Wisconsin
Northfleet Terminal Limited, United Kingdom
Nueva Arizona, S.A., Argentina
1194127 Ontario Inc., Ontario, Canada
*Ovisan Syhhi Bez Sanay Ve Ticaret a.s., Turkey
*Papeles Absorbentes, S.A., Guatemala
*Papeles del Cauca S.A., Colombia
Plastic Engineered Products Company, Ohio
Portola S.L., Spain
*Productos Industriales Diversos, Costa Rica
P.T. Kimberly-Lever Indonesia, Indonesia
R2 Medical Systems, Inc., California
*Reforpel Cia Limitada, Ecuador
*Rakefet Marketing & Trading Services Ltd., Israel
Ridgeway Insurance Company Limited, Bermuda
*S.A. Paper Processing (1956) (Pty.) Limited, South Africa
Safeskin (B.V.I.) Limited, British Virgin Islands
Safeskin Corporation, Florida
Safeskin Corporation (Malaysia) Sdn. Bhd., Malaysia
Safeskin Corporation (Thailand) Limited, Thailand
Safeskin Healthcare (Thailand) Limited, Thailand
Safeskin Industries (Thailand) Limited, Thailand
<PAGE>
Safeskin Insurance Management, California
Safeskin Latex (Thailand) Limited, Thailand
Safeskin (Malaysia) Engineering & Machinery Sdn. Bhd., Malaysia
Safeskin Management & Technical Services (Malaysia) Sdn. Bhd., Malaysia
Safeskin Medical & Scientific (Thailand) Limited, Thailand
Safeskin Real Estate, Inc., Delaware
Safeskin Sensicon Corporation, California
Safeskin Scientific Corporation, California
Safeskin Scientific Corporation (Malaysia) Sdn. Bhd., Malaysia
Scott CB Holding Company, Delaware
Scott S.A., France
Scottcom, Inc., Pennsylvania
Scott Paper Company, Delaware
*Scott Paper Co. de Costa Rica S.A., Costa Rica
*Scott Paper Co. - Honduras S.A. de C.V., Honduras
Scott Paper Eastern China Inc., Delaware
Scott Janitorial Supplies Pte. Ltd., Singapore
Scott Paper Overseas Finance Ltd., Cayman Islands
Scott Trading Ltd., Thailand
Servicios Administrativos Y Comerciales, S.A., Mexico
*Shikma Improvement of Individual Life Limited, Israel
S-K Corporation, Taiwan
Syzygy, Inc., Delaware
Tactyl Technologies, Inc., Delaware
Taiwan Scott Paper Corporation, Taiwan
Tawneydown-ALFA BmbH (Inactive), Germany
Tecnol, Inc., Delaware
TELA-Kimberly Papiervertriebs GmbH, Switzerland
TELA-Kimberly Deutschland GmbH, Germany
TELA-Kimberly Switzerland GmbH, Switzerland
Three Rivers Timber Company, Washington
Tri-Med Specialties, Inc., Kansas
Value Select Corporation, Delaware
*YuHan-Kimberly, Limited, Korea
* Indicates a company that is not wholly owned directly or indirectly by the
Corporation.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>7
<FILENAME>ex23.txt
<DESCRIPTION>EX-23
<TEXT>
Exhibit No. (23)
INDEPENDENT AUDITORS' CONSENT
KIMBERLY-CLARK CORPORATION:
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, 333-71661, 333-94139, 333-85099, 333-51922, 333-61010 and
333-62358) and on Form S-3 (Nos. 33-52343, 333-45399 and 333-68903) of
our reports dated February 8, 2002 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 15, 2002
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24
<SEQUENCE>8
<FILENAME>power.txt
<DESCRIPTION>EX-24
<TEXT>
Exhibit 24
----------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
constitute and appoint John W. Donehower, Randy J. Vest and O. George
Everbach, and each of them, with full power to act alone, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign Kimberly-Clark Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ John F. Bergstrom
---------------------
John F. Bergstrom
<PAGE>
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, her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for her and in her 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, 2001, 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
she 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Pastora San Juan Cafferty
-----------------------------
Pastora San Juan Cafferty
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Paul J. Collins
-------------------
Paul J. Collins
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Robert W. Decherd
---------------------
Robert W. Decherd
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Thomas J. Falk
------------------
Thomas J. Falk
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ William O. Fifield
----------------------
William O. Fifield
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Claudio X. Gonzalez
-----------------------
Claudio X. Gonzalez
<PAGE>
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, her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for her and in her 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, 2001, 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
she 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Linda Johnson Rice
------------------------
Linda Johnson Rice
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Wayne R. Sanders
--------------------
Wayne R. Sanders
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Wolfgang R. Schmitt
-----------------------
Wolfgang R. Schmitt
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Marc J. Shapiro
-------------------
Marc J. Shapiro
<PAGE>
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, 2001, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 19th day of
February, 2002.
/s/ Randall L. Tobias
---------------------
Randall L. Tobias
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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