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, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO _______________ Commission file number 1-225 KIMBERLY-CLARK CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 39-0394230 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. BOX 619100, DALLAS, TEXAS 75261-9100 (Address of principal executive offices) (ZIP CODE) 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 incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of March 17, 2000, 546,361,849 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 $29.5 billion. (Continued) FACING SHEET (CONTINUED) DOCUMENTS INCORPORATED BY REFERENCE Kimberly-Clark Corporation's 1999 Annual Report to Stockholders and 2000 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 1999 Annual Report to Stockholders and 2000 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 - ---------------------------------------- ----------------------- 1999 Annual Report to Stockholders PART I (Year ended December 31, 1999) 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 2000 Proxy Statement PART III ITEM 10. Directors and Executive Officers of the Registrant ITEM 11. Executive Compensation ITEM 12. Security Ownership of Certain Beneficial Owners and Management ITEM 13. Certain Relationships and Related Transactions PART I ITEM 1. BUSINESS Kimberly-Clark Corporation was incorporated in Delaware in 1928. As used in Items 1, 2 and 7 of this Form 10-K, the term "Corporation" refers to Kimberly-Clark Corporation and its consolidated subsidiaries. In the remainder of this Form 10-K, the terms "Kimberly-Clark" or "Corporation" refer only to Kimberly-Clark Corporation. Financial information by business segment and geographic area, and information about principal products and markets of the Corporation, contained under the caption "Management's Discussion and Analysis" and in Note 16 to the Consolidated Financial Statements contained in the 1999 Annual Report to Stockholders, are incorporated in this Item 1 by reference. RECENT DEVELOPMENTS. Historically, the Corporation has been engaged in a wide variety of diversified businesses, including the manufacture and sale of consumer products, paper and forest products, airline services and various other businesses. In recent years, the Corporation has been undergoing a transition to a global consumer products company based on the strategy of building its tissue, personal care and health care businesses. Businesses that did not, or could not, build on the Corporation's strengths were candidates for divestiture. Businesses that fit into the Corporation's strategy were candidates for further investment and support. Outside businesses that were perceived as opportunities consistent with the strategy were candidates for acquisition. As a result, since 1992, the Corporation has completed over 30 strategic acquisitions and approximately 20 strategic divestitures, including the following transactions: - - On December 12, 1995, Scott Paper Company ("Scott") became a wholly-owned subsidiary of Kimberly-Clark upon completion of a merger transaction in which the outstanding Scott common shares were converted into shares of Kimberly-Clark common stock. The transaction was valued at approximately $9.4 billion and accounted for as a pooling of interests. On February 14, 1996, Scott changed its name to Kimberly-Clark Tissue Company ("KCTC"). - - On June 28, 1996, the Corporation sold the baby and child wipe businesses previously conducted by Scott, consisting of the Baby Fresh, Wash a-Bye Baby and Kid Fresh brands and the Dover, Delaware production facility, to The Procter & Gamble Company. This divestiture was required by the U.S. Department of Justice as part of the Scott merger. - - On September 16, 1996, the Corporation sold its tissue mill in Prudhoe, England and certain consumer tissue businesses in the United Kingdom and Ireland to Svenska Cellulosa Aktiebolaget (SCA) of Sweden. This divestiture was required by the European Commission as part of the Scott merger. - - On March 27, 1997, the Corporation sold its Coosa Pines, Alabama pulp and newsprint operations, and related woodlands ("Coosa"), 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 ("SPL"), a publicly-traded Canadian company to Kruger, Inc., a Canadian paper and forest products company, for approximately $127 million. PART I (Continued) ITEM 1. BUSINESS (Continued) - - On December 18, 1997, the Corporation acquired Tecnol Medical Products, Inc. ("Tecnol"), a leading maker of disposable face masks and patient care products, in a merger transaction which involved the conversion of all outstanding shares of Tecnol common stock into shares of Kimberly-Clark common stock. The transaction was valued at approximately $428 million and was accounted for as a purchase. - - On May 28, 1998, the Corporation purchased a 50 percent equity interest in Klabin Tissue S.A. (now known as Klabin Kimberly S.A.), the leading tissue manufacturer in Brazil. - - On July 21, 1998, the Corporation purchased an additional 10 percent ownership interest in its Korean affiliate, YuHan-Kimberly, Limited, increasing its ownership interest to 70 percent. - - On July 29, 1998, the Corporation purchased a 51 percent ownership interest in Kimberly Bolivia, S.A., a new joint venture company in Bolivia. - - On August 19, 1998, the Corporation sold the outstanding shares of K-C Aviation Inc. ("KCA"), 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 has been 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 to Joshua Timberlands, LLC for notes receivable with a fair value of approximately $383 million. Also, as part of its previously announced intention to exit the entire integrated pulp operation in Mobile, Alabama, the Corporation shut down the pulp mill facility in August 1999. - - 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 pursuant to which Safeskin shareholders received .1956 of a share of the Corporation's common stock for each share Safeskin common stock. The transaction is valued at approximately $800 million and will be accounted for as a purchase. PART I (Continued) ITEM 1. BUSINESS (Continued) In the fourth quarter of 1995, in connection with the Scott merger, the Corporation announced a plan to restructure the combined operations and to accomplish other business improvement objectives (the "1995 Plan"). The original estimated pretax cost of the 1995 Plan was $1,440 million. The plan was completed in 1998 at a pretax cost of $1,305 million. Costs of the 1995 Plan were charged to earnings as follows: $814.3 million in 1995, $429.9 million in 1996 and $64.1 million in 1997. A credit of $3.3 million was recorded in 1998. On November 21, 1997, the Corporation announced a restructuring plan (the "1997 Plan"). The plan included the sale, closure or downsizing of 17 manufacturing facilities worldwide and a workforce reduction of approximately 4,800 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 comprised 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") to, among other things, further align tissue manufacturing capacity with demand in Europe, close a diaper manufacturing facility in Canada, shut down and dispose of a tissue machine in Thailand, write down certain excess feminine care production equipment in North America and reduce the Corporation's workforce by approximately 830 employees. Costs for the 1998 Plan of $42.6 million and $49.1 million were recorded in 1999 and 1998, respectively, and charged to cost of products sold. Costs of approximately $20 million will be charged to cost of products sold in 2000. These costs are comprised primarily of certain severance costs and charges for accelerated depreciation for the Corporation's Larkfield, U.K. tissue manufacturing facility that will remain in use until its expected shutdown in October 2000. Pursuant to the 1998 Plan, through December 31, 1999, 800 employees have been notified of the Corporation's plans to terminate their employment, and the costs of this workforce reduction were charged to earnings in the period in which such employee severance benefits were appropriately communicated. Of the employees that have been notified, 530 employees have been terminated and 270 additional employees will be terminated in 2000. Approximately 50 additional employees will be notified in 2000 of the Corporation's plans to terminate their employment. Their severance costs, which are included in the $20 million discussed above, will be accrued and charged to cost of products sold at that time. DESCRIPTION OF THE CORPORATION. The Corporation is principally engaged in the manufacturing and marketing throughout the world of a wide range of products for personal, business and industrial uses. Most of these products are made from natural and synthetic fibers using advanced technologies in fibers, nonwovens and absorbency. The Corporation is organized into three global business segments: Tissue; Personal Care; and Health Care and Other. PART I (Continued) ITEM 1. BUSINESS (Continued) The Tissue segment includes facial and bathroom tissue, paper towels and wipers and napkins for household and away-from-home use; wet wipes; printing, premium business and correspondence papers; and related products. Products in this business segment are sold under the Kleenex, Scott, Kimberly-Clark, Kleenex Cottonelle, Kleenex Viva, Huggies, Kimwipes, Wypall, Surpass and other brand names. The Personal Care segment includes disposable diapers, training and youth pants and swimpants; feminine and incontinence care products; and related products. Products in this business segment are primarily for household use and are sold under a variety of well-known brand names, including Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend, Poise and other brand names. The Health Care and Other segment includes health care products, consisting of surgical gowns, drapes, infection control products, sterilization wraps, disposable face masks, respiratory products and other disposable medical products; specialty and technical papers; and other products. Products in this segment are sold under the Kimberly-Clark, Tecnol, Ballard and other brand names. Products for household use are sold directly, and through wholesalers, to supermarkets, mass merchandisers, drugstores, warehouse clubs, home health care, variety and department stores and other retail outlets. Products for away-from-home use are sold through distributors and directly to manufacturing, lodging, office building, food service and health care establishments and other high volume public facilities. Paper products are sold directly to users, converters, manufacturers, publishers and printers, and through paper merchants, brokers, sales agents and other resale agencies. Health care products are sold to distributors, converters and end-users. PATENTS AND TRADEMARKS. The Corporation owns various patents and trademarks registered domestically and in many foreign countries. The Corporation considers the patents and trademarks which it owns and the trademarks under which it sells certain of its products to be material to its business. Consequently, the Corporation seeks patent and trademark protection by all available means, including registration. A partial list of the Corporation's trademarks is included under the caption "Trademarks" contained in the 1999 Annual Report to Stockholders and is incorporated herein by reference. RAW MATERIALS. Superabsorbent materials are important components in disposable diapers, training and youth pants and incontinence care products. Polypropylene and other synthetics and chemicals are primary raw materials for manufacturing nonwoven fabrics which are used in disposable diapers, training and youth pants, 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 all synthetics are purchased from third parties. Pulp and recycled fiber are produced by the Corporation and purchased from others. The Corporation considers the supply of such raw materials to be adequate to meet the needs of its businesses. See "Factors That May Affect Future Results - Raw Materials." PART I (Continued) ITEM 1. BUSINESS (Continued) The Corporation owns or controls approximately 5.7 million acres of forestland in Canada, principally as a fiber source for pulp production which is consumed internally within the tissue business. Approximately 1.0 million acres in the province of Nova Scotia are owned by the Corporation, and approximately 4.7 million acres, principally in the province of Ontario, are held under long-term Crown rights or leases. The Corporation closed its Mobile, Alabama pulp mill in August of 1999 and during 1999 sold approximately 530,000 acres of timberlands it owned or held under long term leases in North America. COMPETITION. For a discussion of the competitive environment in which the Corporation conducts its business, see "Factors That May Affect Future Results - - Competitive Environment." RESEARCH AND DEVELOPMENT. A major portion of total research and development expenditures is directed toward new or improved personal care, health care and tissue products, and nonwoven materials. Consolidated research and development expense was $249.8 million in 1999, $224.8 million in 1998 and $211.8 million in 1997. ENVIRONMENTAL MATTERS. Total worldwide capital expenditures for environmental controls to meet legal requirements or otherwise relating to the protection of the environment at the Corporation's facilities are expected to be approximately $72 million in 2000 and $44 million in 2001. Of this amount, approximately $27 million in 2000, and $18 million in 2001 are expected to be spent at facilities in the United States. Approximately $15 million of U.S. expenditures in 2000 relate to compliance with the U. S. Environmental Protection Agency's ("EPA") Cluster Rule for sulfite pulping operations at the Corporation's Everett, Washington pulp mill. The remainder of the expected expenditures in the U. S., approximately $12 million in 2000, will be applied at various other production facilities of the Corporation for other environmental control system improvements. For facilities outside of the U. S., capital expenditures for environmental controls are expected to e $45 million in 2000 and $26 million in 2001. Total worldwide operating expenses for environmental compliance are expected to be $167 million in 2000 and $172 million in 2001. U. S. operating expenses are expected to be $89 million in 2000 and $89 million in 2001. Operating expenses for facilities outside the U. S. are expected to be $78 million in 2000 and $83 million in 2001. Operating expenses include pollution control equipment operation and maintenance costs, governmental payments, and research and engineering costs. Total environmental capital expenditures and operating expenses are not expected to have a material effect on the Corporation's total capital and operating expenditures, consolidated earnings or competitive position. However, current environmental spending estimates could be modified as a result of changes in the Corporation's plans, changes in legal requirements or other factors. In connection with certain divestitures, including those described in "Recent Developments," the Corporation has agreed to indemnify the purchasers of certain divested businesses against certain contingent environmental liabilities. Generally, these indemnification obligations apply only to environmental liabilities which are actually incurred by the purchaser within a specified time period after closing and are limited to a specified dollar amount of coverage. The Corporation does not consider these obligations to be material and has established appropriate accrued liabilities with respect thereto. PART I (Continued) ITEM 1. BUSINESS (Continued) EMPLOYEES. In its worldwide consolidated operations, the Corporation had 54,800 employees as of December 31, 1999. Approximately 22 percent of the Corporation's United States workforce and approximately 34 percent of the Corporation's non-United States workforce are represented by unions. In the United States, the largest concentration of union membership is with the Paper, Allied-Industrial, Chemical & Energy Workers International Union (PACE). Other employees are represented by the International Brotherhood of Electrical Workers (IBEW), the International Association of Machinists and Aerospace Workers (IAM), the Association of Western Pulp and Paper Workers (AWPPW), and various independent unions. Throughout the Corporation, management seeks to establish and maintain an open and respectful relationship with its employees. Management believes that communications should flow freely in the organization to provide all employees the opportunity to maximize the use of their talents in the attainment of the Corporation's business objectives. INSURANCE. The Corporation maintains coverage consistent with industry practice for most risks that are incident to its operations. 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, including, but not limited to, the adequacy of the 1997 Plan and the 1998 Plan constitute forward-looking statements and are based upon management's expectations and beliefs concerning future events impacting the Corporation. There can be no assurance that these events will occur or that the Corporation's results will be as estimated. The following factors, as well as factors described elsewhere in this Form 10-K, or in other 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 quality and performance, price, marketing and distribution capabilities. Inherent risks in the Corporation's competitive strategy include uncertainties concerning trade and consumer acceptance, the effects of recent consolidations of retailers and distribution channels, PART I (Continued) ITEM 1. BUSINESS (Continued) and competitive reaction. Aggressive competitive reaction may lead to increased advertising and promotional spending by the Corporation in order to maintain market share. Increased competition with respect to pricing would reduce revenue and could have an adverse impact on the Corporation's financial results. In addition, the Corporation relies on the development and introduction of new products and line extensions as a means of achieving and/or maintaining category leadership. In order to maintain its competitive position, the Corporation must develop technological innovation with respect to its products. COST SAVING STRATEGY. A significant portion of the Corporation's anticipated cost savings are expected to result from operating efficiencies, the 1997 Plan and the 1998 Plan. However, such savings will require the continued consolidation and integration of facilities, functions, systems and procedures, all of which present significant management challenges. There can be no assurance that such actions will be successfully accomplished as rapidly as expected or of the extent to which such cost savings and efficiencies will be achieved. RAW MATERIALS. Cellulose fiber, in the form of kraft pulp or recycled fiber, is used extensively in the Corporation's tissue and paper products and is subject to significant price fluctuations due to the cyclical nature of the pulp markets. Recycled fiber accounts for approximately 20 percent of the Corporation's overall fiber requirements. On a worldwide basis, the Corporation has reduced its internal supply of pulp to approximately 40 percent of its virgin fiber requirements. The Corporation has announced its intention to reduce its level of pulp integration to approximately 20 percent. However, such a reduction in pulp integration could increase the Corporation's commodity price risk. Specifically, increases in pulp prices could adversely affect the Corporation's earnings if selling prices for its finished products are not adjusted or if such adjustments significantly trail the increases in pulp prices. The Corporation has not used derivative instruments in the management of these risks. ACQUISITION AND DIVESTITURE STRATEGY. The Corporation's anticipated financial results and business outlook are dependent in part upon the consummation of a proposed divestiture on terms advantageous to the Corporation and the availability of suitable acquisition candidates. There can be no assurance that such divestiture will be consummated, or, if consummated, that the terms of such divestiture will be advantageous to the Corporation. In addition, the Corporation could encounter significant challenges in locating suitable acquisition candidates that are consistent with its strategic objectives and will contribute to its long-term success. Furthermore, there can be no assurance that any such acquired business can or will be successfully integrated with the Corporation's businesses in order to provide anticipated synergies and earnings growth. VOLUME FORECASTING. The Corporation's anticipated financial results reflect forecasts of future volume increases in the sales of its products. Challenges in such forecasting include anticipating consumer preferences, estimating sales of new products, estimating changes in population characteristics (such as birth rates and changes in per capita income), anticipating changes in technology and estimating the acceptance of the Corporation's products in new markets. As a result, there can be no assurance that the Corporation's volume increases will occur as estimated. PART I (Continued) ITEM 1. BUSINESS (Continued) FOREIGN MARKET RISKS. Because the Corporation and its equity companies have manufacturing facilities in 40 countries and its 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 Mexico and developing countries in eastern Europe and Latin America, may slow the Corporation's sales growth and earnings potential. In addition, the Corporation is subject to the strengthening or weakening of various currencies against each other and local currencies versus the U.S. dollar, and foreign currency risk arising from transactions and commitments denominated in non-local currencies. See "Management's Discussion and Analysis - Market Risk Sensitivity and Inflation Risks", contained in the 1999 Annual Report to Stockholders, which is incorporated herein by reference. Translation exposure for the Corporation's balance sheet with respect to foreign operations is not hedged. Although the Corporation uses instruments to hedge its foreign currency risks (through foreign currency forward, swap and option contracts), these instruments are used selectively to manage risk and there can be no assurance that the Corporation will be fully protected against substantial foreign currency fluctuations. CONTINGENCIES. The costs and other effects of pending litigation and administrative actions against the Corporation cannot be determined with certainty. Although management believes that no such proceedings will have a material adverse effect on the Corporation, there can be no assurance that the outcome of such proceedings will be as expected. See "Item 3. Legal Proceedings." "YEAR 2000". For a discussion regarding "Year 2000" compliance in terms of its computer systems, see "Management's Discussion and Analysis - 'Year 2000 Readiness' contained in the 1999 Annual Report to Stockholders, which is incorporated herein by reference. PART I (Continued) ITEM 2. PROPERTIES Management believes that the Corporation's production facilities are suitable for their purpose and adequate to support its busi-nesses. The extent of utilization of individual facilities varies, but they operate at or near capacity, except in certain instances such as when new products or technology are being introduced or when mills are being shut down. Certain facilities of the Corporation are being expanded. Various facilities contain pollution control, solid waste disposal and other equipment which have been financed through the issuance of industrial revenue or similar bonds and are held by the Corporation under lease or installment purchase agreements. The principal facilities of the Corporation (including the Corporation's equity companies) and the products or groups of products made at such facilities are as follows: HEADQUARTERS LOCATIONS Dallas, Texas Roswell, Georgia Neenah, Wisconsin Reigate, United Kingdom Bangkok, Thailand ADMINISTRATIVE CENTER Knoxville, Tennessee WORLDWIDE PRODUCTION AND SERVICE FACILITIES UNITED STATES ALABAMA Mobile - tissue products ARIZONA Tucson - health care products ARKANSAS Conway - feminine care, incontinence care and nonwovens Maumelle - wet wipes and nonwovens CALIFORNIA Escondido - printing inks Fullerton - tissue 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 PART I (Continued) ITEM 2. PROPERTIES (Continued) MISSISSIPPI Corinth - nonwovens, wipers and towels Hattiesburg - tissue products NORTH CAROLINA Hendersonville - nonwovens Lexington - nonwovens OHIO Piqua - printing inks OKLAHOMA Jenks - tissue products PENNSYLVANIA Chester - tissue products SOUTH CAROLINA Beech Island - diapers and tissue products TENNESSEE Loudon - tissue products TEXAS Cleburne - apparel products (1) Del Rio - health care products Fort Worth - health care products Paris - diapers, training and youth pants San Antonio - personal cleansing products and systems UTAH Draper - respiratory care and gastroenterology products Ogden - diapers VERMONT East Ryegate - technical papers WASHINGTON Everett - tissue products and pulp WISCONSIN Marinette - tissue products Neenah - diapers, training and youth pants, feminine care, incontinence care, 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 San Luis - diapers * Equity company production facility PART I (Continued) ITEM 2. PROPERTIES (Continued) AUSTRALIA *Albury - nonwovens *Ingleburn - diapers *Lonsdale - diapers, incontinence care and feminine care *Millicent - pulp and tissue products *Tantanoola - pulp *Warwick Farm - tissue products BAHRAIN *East Riffa - tissue products BELGIUM Duffel - tissue products BOLIVIA La Paz - tissue products Santa Cruz - diapers, feminine care and tissue products BRAZIL *Bahia - tissue products Barueri - wet wipes *Correia Pinto - tissue products *Cruzeiro - tissue products *Mendes - tissue products *Mogi das Cruzes - tissue products Porto Alegre - feminine care *Recife - tissue products Rio de Janeiro - diapers, feminine care and incontinence care *Sao Paulo - tissue products Suzano - diapers CANADA Huntsville, Ontario - tissue products and wipers New Glasgow, Nova Scotia - pulp St. Hyacinthe, Quebec - feminine care Terrace Bay, Ontario - pulp (2) CHINA (3) Beijing - feminine care and diapers Chengdu - feminine care Guangzhou - tissue products Handan - feminine care Nanjing - feminine care Shanghai - tissue products Shenyang - feminine care Wuhan - feminine care * Equity company production facility PART I (Continued) ITEM 2. PROPERTIES (Continued) COLOMBIA Barbosa - business, notebooks and correspondence papers Guarne - tissue products Pereira - tissue products, feminine care, incontinence care and diapers Tocancipa - diapers *Villa Rica - diapers and incontinence care COSTA RICA Belen - tissue products Cartago - diapers and feminine care CZECH REPUBLIC Jaromer - diapers and incontinence care Litovel - feminine care DOMINICAN REPUBLIC Santo Domingo - tissue products ECUADOR Babahoyo - tissue products Duran - diapers and feminine care Mapasingue - tissue products and notebooks EL SALVADOR San Salvador - tissue products Sitio del Nino - tissue products and feminine care FRANCE Rouen - tissue products Villey-Saint-Etienne - tissue products GERMANY Forchheim - feminine care and incontinence care Koblenz - tissue products Mainz - tissue products Reisholz - tissue products GUATEMALA Poza Verde - tissue products, feminine care and notebooks HONDURAS San Pedro Sula - tissue products Villanueva - health care products INDIA *Pune - feminine care and diapers INDONESIA Jakarta - tissue products *Medan - specialty papers ISRAEL *Afula - diapers, feminine care and incontinence care *Hadera - tissue products * Equity company production facility PART I (Continued) ITEM 2. PROPERTIES (Continued) ITALY Alanno - tissue products Romagnano - tissue products Villanovetta - tissue products JAPAN Shinga - soap KOREA Anyang - feminine care, diapers and tissue products Kimcheon - tissue products and nonwovens Taejon - feminine care and diapers MALAYSIA Kluang - tissue products, feminine care and diapers MEXICO Acuna - health care products *Bajio - tissue products, fine papers and notebooks *Cuautitlan - feminine care, diapers and nonwovens *Ecatepec - tissue products Empalme - health care products Magdalena - health care products *Morelia - tissue products, pulp and fine papers *Naucalpan - tissue products, diapers and feminine care Nogales - health care products *Orizaba - tissue products, fine papers and pulp *Ramos Arizpe - tissue products and diapers *San Rafael - tissue products and fine papers Texmelucan - tissue products Tijuana - printing inks *Tlaxcala - diapers PERU Ate - tissue products Santa Clara - tissue products Villa Corrillos - diapers, feminine care and incontinence care PHILIPPINES San Pedro, Laguna - feminine care, diapers, tissue products and specialty papers SAUDI ARABIA *Al-Khobar - diapers, feminine care and tissue products SLOVAK REPUBLIC Piestany - health care products SOUTH AFRICA Cape Town - tissue products, feminine care and incontinence care Springs - tissue products and diapers * Equity company production facility PART I (Continued) ITEM 2. PROPERTIES (Continued) SPAIN Aranguren - tissue products Arceniega - tissue products, personal cleansing products and systems Calatayud - diapers Canary Islands - tissue products Salamanca - tissue products SWITZERLAND Balsthal - tissue products and specialty papers Niederbipp - tissue products Reichenburg - tissue products TAIWAN Hsin-Ying - tissue products (4) Ta-Yuan - tissue products THAILAND Pathumthani - feminine care, 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 Larkfield - tissue products (1) Northfleet - tissue products VENEZUELA Guacara - diapers and feminine care Maracay - tissue products VIETNAM Binh Duong - feminine care Hanoi - feminine care * Equity company production facility _________________________________ (1) The Corporation has announced its intention to close this facility. (2) The Corporation has announced its intention to sell this facility. (3) The land on which these facilities are located is held under long-term leases. (4) The land and a portion of this facility are subject to a mortgage. 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 is subject: Litigation - ---------- A. On May 13, 1997, the State of Florida, acting through its attorney general, filed a complaint in the Gainesville Division of the United States District Court for the Northern District of Florida (the "Florida District Court") alleging that manufacturers of tissue products for away-from-home use, including the Corporation and Scott, agreed to fix prices by coordinating price increases for such products. Following Florida's complaint, actions by the States of Maryland, New York and West Virginia, as well as approximately 45 class action complaints, have been filed in various federal and state courts around the United States. These actions contain allegations similar to those made by the State of Florida in its complaint. The actions in federal courts have been consolidated for pretrial proceedings in the Florida District Court. Class certification was granted in the federal proceedings in July 1998 and will be contested in the state cases. The foregoing actions seek an unspecified amount of actual and treble damages. In February 2000, the State of Florida agreed to dismiss its complaint with prejudice pursuant to a settlement with defendants. With respect to the remaining actions, the Corporation has answered the complaints in these actions and has denied the allegations contained therein as well as any liability. Discovery is proceeding. The Corporation intends to contest these claims vigorously. These actions are not expected to have a material adverse effect on the Corporation's business, financial condition or results of operations. B. On January 14, 1999, Mobile Energy Services Company, L.L.C. ("MESC") and Mobile Energy Services Holdings, Inc. filed an adversary proceeding against Kimberly-Clark Tissue Company in the United States Bankruptcy Court in Mobile, Alabama. Plaintiffs, as debtors-in-possession, own a cogeneration complex that provides energy services to KCTC's Mobile facility. The complaint alleges that: (i) the sale of the cogeneration complex by KCTC to MESC in December 1994 was a fraudulent transfer; (ii) KCTC cannot effect a pulp mill closure while it continues to operate the wastewater treatment facility and "produce pulp" at the Mobile facility; (iii) Kimberly-Clark's announced pulp mill closure was a repudiation of the site operating agreements; (iv) KCTC breached the master operating agreement by failing to give MESC reasonable assistance in developing new business opportunities for the energy complex after Kimberly-Clark announced the pulp mill closure; and (v) KCTC failed to allow the sale of the Mobile pulp mill. The complaint does not specify the amount of damages demanded. On December 31, 1999, a joint motion of the debtors and the MESC bondholders' steering committee (the "Motion") was filed with the U.S. Bankruptcy Court seeking approval of a settlement and compromise of claims against KCTC arising from the closure of the Mobile pulp mill and termination of the pulp mill's energy services agreement. The Motion, which was granted by the U.S. Bankruptcy Court by order dated January 24, 2000, outlines the terms of settlement for various litigation matters between KCTC and MESC. Under the proposed settlement, KCTC agreed to pay MESC at closing approximately $30 million, in addition to amounts previously paid pursuant to contractual obligations, subject to certain adjustments. Closing of the settlement is subject to, among other PART I (Continued) ITEM 3. LEGAL PROCEEDINGS (CONTINUED) conditions, MESC filing a plan of reorganization from bankruptcy and the ultimate approval of that plan by the U.S. Bankruptcy Court. In addition, the proposed settlement provides MESC with an option to purchase the Mobile pulp mill at a nominal price; a settlement of all pending litigation and arbitration between the KCTC and MESC; mutual releases by KCTC, MESC and its affiliate (the Southern Company and affiliates), and the representatives of the MESC bondholders; and an agreement by MESC to terminate the existing tissue mill energy services agreement and to provide the Mobile tissue mill energy at market rates. This action is not expected to have a material adverse effect on the Corporation's business, financial condition or results of operations. C. The Corporation is subject to routine litigation from time to time, which, individually or in the aggregate, is not expected to have a material adverse effect on the Corporation's business, financial condition or results of operations. Environmental Matters - ---------------------- The Corporation is subject to federal, state and local environmental protection laws and regulations with respect to its business operations and is operating in compliance with, or taking action aimed at ensuring compliance with, such laws and regulations. Compliance with these laws and regulations is not expected to have a material adverse effect on the Corporation's business, 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 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. Notwithstanding its opinion, management believes it appropriate to discuss the following matters concerning three of these sites where the Corporation's estimated share of total site remediation costs, if any, cannot be established on the basis of currently available information: A. In 1994, Scott received a notice of responsibility from the Massachusetts Department of Environmental Protection regarding the South Hadley Site in South Hadley, Massachusetts. The notice implicated Scott Graphics, Inc., a former Scott subsidiary, as having disposed of hazardous waste at the site. There have been no significant developments since the date the Corporation received the notice. B. In January 1998, the Corporation was notified by the Tennessee Department of Environment and Conservation of its status as a potentially liable party at the Bellevue Avenue Landfill in Shelby County, Tennessee. The Corporation currently lacks adequate information to make a determination as to the extent of its liability at the site. PART I (Continued) C. In June 1999, the Corporation was notified that S.D. Warren, a former division of Scott, had been named as a potentially responsible party at the Sunrise Landfill in Wayland, Allegan County, Michigan. Scott agreed to be responsible for S.D. Warren's liability at the site pursuant to an indemnification agreement between Scott and S.D. Warren. The Corporation currently lacks adequate information to make a determination as to the extent of its liability at the site. PART I (Continued) 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, 2000, together with certain biographical information, are as follows: ROBERT E. ABERNATHY, 45, was elected Group President effective January 1, 1997. He is responsible for the global health care business, nonwovens manufacturing and research, the technical paper business and corporate research and development. 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, 53, 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, 61, 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, 41, has served as President and Chief Operating Officer of the Corporation since his election on November 16, 1999. He previously had been elected Group President - 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. His prior responsibilities have included internal audit, finance and strategic analysis, and operations management. In 1993, he was elected Group President - Infant and Child Care and has held various senior management positions in the Corporation's Consumer and Away From Home businesses in North America and Europe since that time. Mr. Falk is a member of the University of Wisconsin - Madison School of Business Dean's Advisory Board and serves on the Board of Directors of Newell Rubbermaid Inc. He has been a director of the Corporation since November 1999. PART I (Continued) EXECUTIVE OFFICERS OF THE REGISTRANT (Continued) WAYNE R. SANDERS, 52, has served as Chief Executive Officer of the Corporation since 1991 and Chairman of the Board of the Corporation since 1992. He previously had been elected President and Chief Operating Officer in 1990. Employed by the Corporation in 1975, Mr. Sanders was appointed Vice President of Kimberly-Clark Canada Inc., a wholly owned subsidiary of the Corporation, in 1981 and was appointed Director and President in 1984. Mr. Sanders was elected Senior Vice President of Kimberly-Clark Corporation in 1985 and was appointed President - Infant Care Sector in 1987, President - Personal Care Sector in 1988 and President - World Consumer, Nonwovens and Service and Industrial Operations in 1990. Mr. Sanders is a director of Adolph Coors Company, Coors Brewing Company, Texas Instruments Incorporated and Chase Bank of Texas, National Association. He also is a member of the Marquette University Board of Trustees and is a national trustee of the Boys and Girls Clubs of America. He has been a director of the Corporation since 1989. KATHI P. SEIFERT, 50, was elected Executive Vice President in November 1999. She is responsible for the Infant Care, Child Care, Feminine Care, and Adult Care business sectors, the Safety and Quality Assurance team and the U.S. and Canadian Sales organizations, and leads a team responsible for the Corporation's global personal care businesses. Ms. Seifert joined Kimberly-Clark in 1978. Her responsibilities in the Corporation have included various marketing positions within the Away From Home, Consumer Tissue and Feminine Care business sectors. She was appointed President - Feminine Care Sector in 1991, was elected Group President - Feminine and Adult Care in 1994, elected Group President - North American Consumer Products in January 1995, 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 and Aid Association for Lutherans. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The dividend and market price data included in Note 14 to the Consolidated Financial Statements, and the information set forth under the captions "Dividends and Dividend Reinvestment Plan" and "Stock Exchanges" contained in the 1999 Annual Report to Stockholders are incorporated in this Item 5 by reference. As of March 17, 2000, the Corporation had 52,331 holders of record of its common stock. PART II ITEM 6. SELECTED FINANCIAL DATA Year Ended December 31 (Millions of dollars, ----------------------------------------------------- except per share amounts) 1995 1996 1997 1998 1999 - ------------------------------------------------------------------------------- Net Sales . . . . . . . . $13,373.0 $13,149.1 $12,546.6 $12,297.8 $13,006.8 Gross Profit. . . . . . . 4,544.9 4,688.5 4,607.6 4,597.6 5,325.2 Operating Profit. . . . . 942.3 1,666.0 1,486.1 1,697.7 2,435.4 Share of Net Income of Equity Companies . . . 113.3 152.4 157.3 137.1 189.6 Income from Continuing Operations Before Extraordinary Items and Cumulative Effect of Accounting Change. . . 507.2 1,035.4 985.4 1,114.3 1,668.1 Per Share Basis: Basic . . . . . . . .91 1.84 1.77 2.02 3.11 Diluted . . . . . . .90 1.83 1.76 2.01 3.09 Net Income. . . . . . . . 507.2 1,035.4 1,002.9 1,103.1 1,668.1 Per Share Basis: Basic . . . . . . . .91 1.84 1.80 2.00 3.11 Diluted . . . . . . .90 1.83 1.79 1.99 3.09 Cash Dividends Per Share Declared . . . . . . . .90 .92 .96 1.00 1.04 Paid . . . . . . . . . .90 .92 .95 .99 1.03 Total Assets. . . . . . . $11,561.0 $11,820.4 $11,417.1 $11,687.8 $12,815.5 Long-Term Debt. . . . . . 1,984.7 1,738.6 1,803.9 2,068.2 1,926.6 Stockholders' Equity. . . 4,141.3 4,595.0 4,340.3 4,031.5 5,093.1 NOTES TO SELECTED FINANCIAL DATA (1) Included in the selected financial data for 1995 are the following items: Diluted Operating Net Net Income (Millions of dollars, except per share amounts) Profit Income per Share - ----------------------------------------------------- ---------- ------ ---------- Charges for business improvement and other programs. . . $814.3 $596.9 Unusual charges, net . . . . . . . . . . . . . . . . . . 21.7 14.8 Net gains on asset disposals . . . . . . . . . . . . . . (126.6) (78.9) Change in value of Mexican peso. . . . . . . . . . . . . - 38.5 ------ ------ Total. . . . . . . . . . . . . . . . . . . . . . . . . . $709.4 $571.3 $1.01 ====== ====== ===== PART II ITEM 6. SELECTED FINANCIAL DATA (Continued) NOTES TO SELECTED FINANCIAL DATA (2) Included in the selected financial data for 1996 are the following items: Diluted Gross Operating Net Net Income (Millions of dollars, except per share amounts) Profit Profit Income per Share - --------------------------------------------------- -------- ---------- ------ ---------- Charges for business improvement and other programs . . . . . . . . . . . . . . . . . . . . . $154.2 $429.9 $328.6 Gains on asset disposals . . . . . . . . . . . . . . - (93.6) (72.6) Change in value of Mexican peso. . . . . . . . . . . - - 2.3 Restructuring of Mexican operations. . . . . . . . . - - 5.5 ------ ------ ------ Total. . . . . . . . . . . . . . . . . . . . . . . . $154.2 $336.3 $263.8 $.46 ====== ====== ====== ==== (3) Included in the selected financial data for 1997 are the following items: Diluted Gross Operating Net Net Income (Millions of dollars, except per share amounts) Profit Profit Income per Share - --------------------------------------------------- -------- ---------- ------ ---------- Charges for business improvement and other 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 ====== ====== ====== ==== (4) Included in the selected financial data for 1998 are the following items: Diluted Gross Operating Net Net Income (Millions of dollars, except per share amounts) Profit Profit Income per Share - --------------------------------------------------- -------- ---------- ------ ---------- Charges for business improvement and other programs . . . . . . . . . . . . . . . . . . . . . $191.6 $377.8 $276.8 Mobile pulp mill fees and related severances . . . . 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 ====== ====== ====== ==== PART II ITEM 6. SELECTED FINANCIAL DATA (Continued) NOTES TO SELECTED FINANCIAL DATA (5) Included in the selected financial data for 1999 are the following items: Diluted Gross Operating Net Net Income (Millions of dollars, except per share amounts) Profit Profit Income per Share - --------------------------------------------------- -------- ---------- ------ ---------- Charges for business improvement and other programs. . . . . . . . . . . . . . . . . . . . . $69.0 $47.8 $35.6 Business integration and other costs. . . . . . . . 11.2 22.6 14.5 Mobile pulp mill fees and related severances. . . . 9.0 9.0 5.6 Gains on asset disposals. . . . . . . . . . . . . . - (176.7) (112.3) ----- ------ ------ Total . . . . . . . . . . . . . . . . . . . . . . . $89.2 $(97.3) $(56.6) $(.11) ===== ====== ====== ===== 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 1999 Annual Report to Stockholders is incorporated in this Item 7 by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information set forth under the caption "Management's Discussion and Analysis - Market Risk Sensitivity and Inflation Risks" contained in the 1999 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 1999 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. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The section of the 2000 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 incorpor-ated 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 2000 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 2000 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 2000 Proxy Statement captioned "Certain Transactions and Business Relationships" under "Proposal 1. Election of Directors" is incorporated in this Item 13 by reference. 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, 1999 and 1998, and the related Consolidated Statements of Income, Stockholders' Equity and Cash Flow for the years ended December 31, 1999, 1998 and 1997, and the related Notes thereto, and the Indepen-dent 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 1999 Annual Report to Stockholders. In addition, related reports of Deloitte & Touche LLP are included herein. 2. Financial statement schedule: The following information is filed as part of this Form 10-K and should be read in conjunction with the financial statements contained in the 1999 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. Exhibit No. (3)b. By-Laws, as amended November 22, 1996, incorporated by reference to Exhibit No. 4.2 of the Corporation's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on December 6, 1996 (File No. 333-17367). Exhibit No. (4). Copies of instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission on request. Exhibit No. (10)a. Management Achievement Award Program, as amended and restated as of January 1, 1998, incorporated by reference to Exhibit No. (10)a of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1997. Exhibit No. (10)b. Executive Severance Plan, as amended and restated as of December 10, 1998, incorporated by reference to Exhibit No. (10)b to the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998. Exhibit No. (10)c. Fourth Amended and Restated Deferred Compensation Plan for Directors, incorporated by reference to Exhibit No. (10)c of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1996. 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 15, 1999. Exhibit No. (10)f. Deferred Compensation Plan, as amended effective June 9, 1999. 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 August 19, 1998, incorporated by reference to Exhibit (10)k of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998. Exhibit No. (10)k. 1999 Restricted Stock Plan, effective as of January 1, 1999, incorporated by reference to Exhibit No. 4.5 to the Corporation's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on February 3, 1999 (File No. 333-71661). Exhibit No. (12). Computation of ratio of earnings to fixed charges for the five years ended December 31, 1999. Exhibit No. (13). Portions of the Corporation's 1999 Annual Report to Stockholders incorporated by reference in this Form 10-K. Exhibit No. (21). Subsidiaries of the Corporation. Exhibit No. (23). Independent Auditors' Consent of Deloitte & Touche LLP. PART IV (Continued) ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (Continued) Exhibit No. (24). Powers of Attorney. Exhibit No. (27). The Financial Data Schedule required by Item 601(b)(27) of Regulation S-K has been included with the electronic filing of this Form 10-K. (B) REPORTS ON FORM 8-K The Corporation filed on December 3, 1999 a Current Report on Form 8-K, dated November 30, 1999, in connection with an improved product, the Corporation's outlook and other matters. 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 24, 2000 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 24, 2000 Wayne R. Sanders and Chief Executive Officer and Director (principal executive officer) /s/ John W. Donehower - --------------------------------- Senior Vice President and March 24, 2000 John W. Donehower Chief Financial Officer (principal financial officer) /s/ Randy J. Vest - --------------------------------- Vice President and March 24, 2000 Randy J. Vest Controller (principal accounting officer) Directors John F. Bergstrom Claudio X. Gonzalez Pastora San Juan Cafferty Louis E. Levy Paul J. Collins Frank A. McPherson Robert W. Decherd Linda Johnson Rice Thomas J. Falk Wolfgang R. Schmitt William O. Fifield Randall L. Tobias By: /s/ O. George Everbach --------------------------------------- March 24, 2000 O. George Everbach, Attorney-in-Fact INDEPENDENT AUDITORS' REPORT KIMBERLY-CLARK CORPORATION: We have audited the consolidated financial statements of Kimberly-Clark Corporation as of December 31, 1999 and 1998, and for each of the three years in the period ended December 31, 1999, and have issued our report thereon dated January 24, 2000; such consolidated financial statements and report are included in your Annual Report and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Kimberly-Clark Corporation, listed in Item 14. This consolidated financial statement schedule is the responsibility of the Corporation's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits. In our opinion, the consolidated financial statement schedule listed in Item 14, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ DELOITTE & TOUCHE LLP - --------------------------- DELOITTE & TOUCHE LLP Dallas, Texas January 24, 2000 SCHEDULE II Kimberly-Clark Corporation and Subsidiaries VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (Millions of dollars) ADDITIONS DEDUCTIONS ------------------------- --------------- BALANCE AT CHARGED TO CHARGED TO WRITE-OFFS BALANCE BEGINNING COSTS AND OTHER AND DISCOUNTS AT END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(A) ALLOWED PERIOD - ------------------- ----------- ----------- ----------- -------------- --------- DECEMBER 31, 1999 Allowances deducted from assets to which they apply Allowances for doubtful accounts . . . . . . . . . . . . $51.5 $ 23.8 $(3.1) $ 21.3 (b) $50.9 Allowances for sales discounts. . . . . . . . . . . . 15.8 176.4 (.6) 170.9 (c) 20.7 DECEMBER 31, 1998 Allowances deducted from assets to which they apply Allowances for doubtful accounts . . . . . . . . . . . . $37.8 $ 21.5 $3.1 $ 10.9 (b) $51.5 Allowances for sales discounts. . . . . . . . . . . . 22.1 182.5 .2 189.0 (c) 15.8 DECEMBER 31, 1997 Allowances deducted from assets to which they apply Allowances for doubtful accounts . . . . . . . . . . . . $33.0 $ 12.3 $ 2.2 $ 9.7 (b) $37.8 Allowances for sales discounts. . . . . . . . . . . . 13.3 174.5 7.8 173.5 (c) 22.1 (a) Includes bad debt recoveries and the effects of changes in foreign currency exchange rates. 1997 includes the balances of Tecnol Medical Products, Inc. acquired in December 1997. (b) Primarily uncollectible receivables written off. (c) Sales discounts allowed. SCHEDULE II Kimberly-Clark Corporation and Subsidiaries VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (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 - ------------------- ----------- ----------- ----------- ----------------- --------- 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) - - - DECEMBER 31, 1998 Contra assets deducted from assets to which they apply Inventory . . . . . . . . . . . . $23.8 $4.1 $ - $17.0 $10.9 Other Assets. . . . . . . . . . . 12.1 .2 - 11.8 .5 DECEMBER 31, 1997 Contra assets deducted from assets to which they apply Inventory . . . . . . . . . . . . $ - $28.8 $ - $5.0 $23.8 Other Assets. . . . . . . . . . . - 15.1 - 3.0 12.1 SCHEDULE II Kimberly-Clark Corporation and Subsidiaries VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (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 - ------------------- ----------- ----------- ----------- ----------------- --------- 1995 PLAN DECEMBER 31, 1998 Contra assets deducted from assets to which they apply Inventory. . . . . . . . . . . . . $.6 $- $- $.6 $- DECEMBER 31, 1997 Contra assets deducted from assets to which they apply Accounts receivable. . . . . . . . $.6 $- $- $.6 $- Inventory. . . . . . . . . . . . . 14.1 (3.1) - 10.4 .6 Other assets . . . . . . . . . . . .5 (.5) - - - SCHEDULE II Kimberly-Clark Corporation and Subsidiaries VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (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 - ------------------- ----------- ----------- ----------- ------------- --------- DECEMBER 31, 1999 Deferred Taxes Valuation Allowance. . . . . . . $271.9 $25.7 $- $ 41.5 $256.1 DECEMBER 31, 1998 Deferred Taxes Valuation Allowance. . . . . . . $203.0 $63.4 $- $(5.5) $271.9 DECEMBER 31, 1997 Deferred Taxes Valuation Allowance. . . . . . . $174.3 $72.4 $- $43.7 $203.0 (a) Includes the net currency effects of translating valuation allowances at current rates under SFAS No. 52 of $(39.4) million in 1999, $15.6 million in 1998 and $(26.0) million in 1997. Included in this column are also expired income tax loss carryforwards of $15.8 million in 1998 and $16.9 million in 1997. These items offset deferred tax assets resulting in no effect on the consolidated balance sheet. INDEX TO DOCUMENTS FILED AS PART OF THIS REPORT. ________________________________________________________________ DESCRIPTION ----------- Consolidated financial statements, incorporated by reference Independent Auditors' Reports, incorporated by reference Independent Auditors' Reports Schedule for Kimberly-Clark Corporation and Subsidiaries: Schedule II Valuation and Qualifying Accounts Exhibit No. (3)a. Restated Certificate of Incorporation, dated June 12, 1997. Exhibit No. (3)b. By-Laws, as amended November 22, 1996, incorporated by reference to Exhibit No. 4.2 of the Corporation's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on December 6, 1996 (File No. 333-17367). Exhibit No. (4). Copies of instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission on request. Exhibit No. (10)a. Management Achievement Award Program, as amended and restated as of January 1, 1998, incorporated by reference to Exhibit No. (10)a of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1997. Exhibit No. (10)b. Executive Severance Plan, as amended and restated as of December 10, 1998, incorporated by reference to Exhibit No. (10)b to the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998. Exhibit No. (10)c. Fourth Amended and Restated Deferred Compensation Plan for Directors, incorporated by reference to Exhibit No. (10)c of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1996. Exhibit No. (10)d. 1986 Equity Participation Plan, as amended effective November 20, 1997, incorporated by reference to Exhibit No. (10)d of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1997. Exhibit No. (10)e. 1992 Equity Participation Plan, as amended effective November 15, 1999. Exhibit No. (10)f. Deferred Compensation Plan, as amended effective June 9, 1999. 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). INDEX TO DOCUMENTS FILED AS PART OF THIS REPORT. (continued) _________________________________________________________________ DESCRIPTION ----------- 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 August 19, 1998, incorporated by reference to Exhibit (10)k of the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998. Exhibit No. (10)k. 1999 Restricted Stock Plan, effective as of January 1, 1999, incorporated by reference to Exhibit No. 4.5 to the Corporation's Registration Statement on Form S-8 filed with the Securities and Exchange Commission on February 3, 1999 (File No. 333-71661). Exhibit No. (12). Computation of ratio of earnings to fixed charges for the five years ended December 31, 1999. Exhibit No. (13). Portions of the Corporation's 1999 Annual Report to Stockholders incorporated by reference in this Form 10-K. Exhibit No. (21). Subsidiaries of the Corporation. Exhibit No. (23). Independent Auditors' Consent of Deloitte & Touche LLP. Exhibit No. (24). Powers of Attorney. Exhibit No. (27). The Financial Data Schedule required by Item 601(b)(27) of Regulation S-K has been included with the electronic filing of this Form 10-K.