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, 2000
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
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Common Stock - $1.25 Par Value New York Stock Exchange
Preferred Stock Purchase Rights Chicago Stock Exchange
Pacific Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X. No .
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of March 16, 2001, 533,036,154 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 $36 billion.
(Continued)
FACING SHEET
(CONTINUED)
DOCUMENTS INCORPORATED BY REFERENCE
Kimberly-Clark Corporation's 2000 Annual Report to Stockholders and 2001 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
2000 Annual Report to Stockholders and 2001 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
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2000 Annual Report to Stockholders PART I
(Year ended December 31, 2000) 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
2001 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
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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 2000 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 made the transition to
a global consumer products company based on the strategy of building its
tissue, personal care and health care businesses. Since 1992, the Corporation
has completed about 35 acquisitions in its core businesses 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 July 1, 1996, the Corporation purchased a 51 percent ownership
interest in a personal care products joint venture, Kenko de Brasil.
- - 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, a publicly-traded Canadian company to Kruger, Inc., a Canadian
paper and forest products company, for approximately $127 million.
- - On December 18, 1997, the Corporation acquired Tecnol Medical Products,
Inc. ("Tecnol"), a leading maker of disposable face masks and patient care
products, in a merger transaction which involved the conversion of all
outstanding shares of Tecnol common stock into shares of Kimberly-Clark
common stock. The transaction was valued at approximately $428 million
and was accounted for as a purchase.
PART I
(Continued)
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ITEM 1. BUSINESS (Continued)
- - 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.
- - 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 of Safeskin common stock.
The transaction was valued at approximately $750 million and was accounted
for as a purchase.
- - On July 5, 2000, the Corporation acquired majority shares of privately
held S-K Corporation of Taiwan, which holds 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 produces and markets Lines, Italy's
second largest diaper brand.
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 and it was
completed in 1998 at a pretax cost of $1,305 million.
On November 21, 1997, the Corporation announced a restructuring plan (the
"1997 Plan"). The 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
PART I
(Continued)
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ITEM 1. BUSINESS (Continued)
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") 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 $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.
Pursuant to the 1998 Plan, through December 31, 2000, 814 employees were
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.
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
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.
The Corporation is organized into three global business segments: Tissue;
Personal Care; and Health Care and Other.
The Tissue segment includes facial and bathroom tissue, paper towels, 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. In January 2001, the Corporation announced the launch of Cottonelle
Fresh rollwipes, a dispersible pre-moistened wipe on a roll, which will be
available Summer 2001.
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, exam gloves, 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, Safeskin, Tecnol,
Ballard, and other brand names.
PART I
(Continued)
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ITEM 1. BUSINESS (Continued)
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 2000
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 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 all synthetics are purchased from third parties.
Pulp and recycled fiber are produced by the Corporation and purchased from
others. The Corporation considers the supply of such raw materials to be
adequate to meet the needs of its businesses. See "Factors That May Affect
Future Results - Raw Materials."
The Corporation owns or controls 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.
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 $277.4 million in 2000, $249.8 million in 1999, and
$224.8 million in 1998.
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 $78 million in 2001
and $35 million in 2002. Of
PART I
(Continued)
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ITEM 1. BUSINESS (Continued)
these amounts, approximately $18 million in 2001, and $9 million in 2002 are
expected to be spent at facilities in the U.S. Approximately $.4 million of such
expenditures in 2001 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. 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 be $60 million in 2001 and $26 million
in 2002.
Total worldwide operating expenses for environmental compliance are expected
to be approximately $184 million in 2001 and $189 million in 2002. U.S.
operating expenses are expected to be approximately $98 million in 2001 and
$100 million in 2002. Operating expenses for facilities outside the U.S. are
expected to be approximately $86 million in 2001 and $89 million in 2002.
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 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
66,300 employees as of December 31, 2000.
Approximately 22 percent of the Corporation's United States workforce and
approximately 25 percent of the Corporation's non-United States workforce 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), and various independent unions. The
Corporation's collective bargaining agreements 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.
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.
PART I
(Continued)
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ITEM 1. BUSINESS (Continued)
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 quality and performance, price, marketing and
distribution capabilities. Inherent risks in the Corporation's competitive
strategy include uncertainties concerning trade and consumer acceptance, the
effects of recent consolidations of retailers and distribution channels, and
competitive reaction. Aggressive competitive reaction may lead to increased
advertising and promotional spending by the Corporation in order to maintain
market share. Increased competition with respect to pricing would reduce
revenue and could have an adverse impact on the Corporation's financial
results. In addition, the Corporation relies on the development and
introduction of new 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. 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 25 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.
PART I
(Continued)
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ITEM 1. BUSINESS (Continued)
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, especially in light of recent
instability in energy markets. See also Item 3. Legal Proceedings for
discussion of Mobile Energy Services Company, LLC.
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 41 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 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 - Market Risk Sensitivity and Inflation Risks",
contained in the 2000 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."
PART I
(Continued)
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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 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
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
MISSISSIPPI
Corinth - nonwovens, wipers and towels
Hattiesburg - tissue products
PART I
(Continued)
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ITEM 2. PROPERTIES (Continued)
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
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
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
* Equity company production facility
PART I
(Continued)
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ITEM 2. PROPERTIES (Continued)
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
*Mogi das Cruzes - tissue products
Porto Alegre - feminine care
*Sao Paulo - tissue products
Suzano - diapers, incontinence care
CANADA
Huntsville, Ontario - tissue products and wipers
New Glasgow, Nova Scotia - pulp
St. Hyacinthe, Quebec - feminine care
Terrace Bay, Ontario - pulp
CHILE
Colina - tissue products
Santiago - diapers, feminine care
CHINA
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
COLOMBIA
Barbosa - tissue products, 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
* Equity company production facility
PART I
(Continued)
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ITEM 2. PROPERTIES (Continued)
ECUADOR
Babahoyo - tissue products
Mapasingue - tissue products, diapers and feminine care
EL SALVADOR
Sitio del Nino - tissue products
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
HONDURAS
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
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
* Equity company production facility
PART I
(Continued)
- -------------------------------------------------------------------------------
ITEM 2. PROPERTIES (Continued)
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
Puente Piedra - tissue products
Santa Clara - tissue products
Villa Chorrillos - 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
SPAIN
Aranguren - tissue products
Arceniega - tissue products, personal cleansing products and systems
Calatayud - diapers
Telde, Canary Islands - tissue products
Salamanca - tissue products
SWITZERLAND
Balsthal - tissue products and specialty papers
Niederbipp - tissue products
Reichenburg - tissue products
TAIWAN
Chung Li - tissue products, feminine care and diapers
Hsin-Ying - tissue products
Neihu - feminine care, diapers
Ta-Yuan - tissue products
* Equity company production facility
PART I
(Continued)
- -------------------------------------------------------------------------------
ITEM 2. PROPERTIES (Continued)
THAILAND
Hat Yai - disposable gloves
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
Northfleet - tissue products
VENEZUELA
Maracay - tissue products and diapers
VIETNAM
Binh Duong - feminine care
Hanoi - feminine care
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:
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 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, similar actions by the States of Maryland, New
York and West Virginia, as well as approximately 45 class action complaints,
were filed in various federal and state courts around the United States.
The actions by the States of Florida, Maryland, New York and West Virginia,
the private plaintiffs in Minnesota and the federal private class action
plaintiffs were dismissed with prejudice pursuant to settlements with
defendants. A settlement was reached in the California class action
litigation and was preliminarily approved by the judge in December 2000. With
respect to the only remaining litigation, filed in Tennessee on behalf of a
purported class of indirect purchasers of commercial products, the Corporation
has answered the complaint and has denied the allegations contained therein as
well as any liability.
On February 8, 2000, the Corporation completed the acquisition of Safeskin.
Approximately 300 product liability lawsuits seeking monetary damages, in most
cases of an unspecified amount, were 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.
Since March 11, 1999, numerous lawsuits (collectively the "Securities
Actions") have been 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 capacities 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 and discovery is proceeding.
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 stayed
discovery in the Derivative Action so that it can be coordinated with
discovery in the Securities Actions. Safeskin has referred the defense of the
Derivative Action and the Securities Actions to its insurance carriers.
PART I
(Continued)
- -------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS (Continued)
On April 14, 2000, a complaint was filed by Anne Meader and others against
KCTC and others in the State of Maine Superior Court. Nineteen plaintiffs
seek compensation for injuries allegedly caused by exposure to substances
emitted by the defendants' mills, including two former KCTC mills, and from
the Central Maine Disposal Landfill in Fairfield, Maine.
The Corporation intends to contest the foregoing claims vigorously and, in
management's opinion, they are not, individually or in the aggregate, expected
to have a material adverse effect on the Corporation's business, financial
condition or results of operations.
In connection with the Mobile pulp mill closure, on May 5, 1998, the
Corporation gave notice to Mobile Energy Services Company, L.L.C. ("MESC") of
its intent to terminate a long-term energy services contract. On January 14,
1999, MESC and related parties (the "Debtors") filed for Chapter 11 bankruptcy
protection and instituted an action in the United States Bankruptcy Court in
Mobile, Alabama against KCTC claiming unspecified damages in connection with
the pulp mill closure. The Debtors, 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; (v)
KCTC failed to allow the sale of the Mobile pulp mill; and (vii) K-C's
announcement of the pulp mill closure in May 1998 was a fraudulent transfer.
The complaint does not specify the amount of damages demanded.
On December 31, 1999, a joint motion ("the Motion") was filed with the U.S.
Bankruptcy Court ("the Court") seeking approval of a settlement agreement
and compromise of claims and pending litigation against KCTC arising from the
closure of the pulp mill and termination of the energy services contract.
Under the proposed settlement agreement, KCTC agreed to pay MESC at closing
approximately $30 million, subject to certain adjustments. The Court granted
the Motion on January 24, 2000. Closing of the settlement would be subject
to, among other conditions, the Debtors filing a plan of reorganization from
bankruptcy and the ultimate approval of that plan by the Court. The
approximate $30 million payment, which will be accrued when the conditions for
settlement are met, is in addition to $24.3 million previously accrued by the
Corporation. In addition, the proposed settlement provides, among other
things, an agreement by MESC to provide energy to the Corporation's Mobile
tissue mill at market rates.
In August 2000, the Debtors filed a plan of reorganization with the Court that
would implement the settlement agreement. During the fourth quarter of 2000,
several crucial elements of the Debtors' plan became no longer viable. As a
result, the Debtors have sought and received from the Court and the
Corporation several extensions of deadlines contained in the settlement
agreement.
Because of uncertainty involving the Debtors' business prospects, the
Corporation has developed contingency plans seeking to minimize disruption to
its Mobile operations in the event that MESC is unable or unwilling to supply
energy to the Mobile tissue mill. In the absence of the settlement agreement,
the litigation and arbitration proceedings between the Corporation and Debtors
could resume. The outcome of the MESC litigation, arbitration and settlement
is not expected to have a material adverse effect on the Corporation's
business, financial condition or results of operations.
PART I
(Continued)
- -------------------------------------------------------------------------------
ITEM 3. LEGAL PROCEEDINGS (Continued)
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 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.
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,
2001, together with certain biographical information, are as follows:
ROBERT E. ABERNATHY, 46, 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, 54, 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, 62, 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, 42, 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 - 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.
WAYNE R. SANDERS, 53, 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 a member of the Marquette University Board of
Trustees and is Chairman of the Southwest Region, and a member of the Board of
Governors, of the Boys and Girls Clubs of America. He has been a director of
the Corporation since 1989.
PART I
(Continued)
- -------------------------------------------------------------------------------
EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
KATHI P. SEIFERT, 51, 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,
Aid Association for Lutherans and Fox Cities Performing Arts Center.
PART II
- -------------------------------------------------------------------------------
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
"Dividends and Dividend Reinvestment Plan" and "Stock Exchanges" contained in
the 2000 Annual Report to Stockholders are incorporated in this Item 5 by
reference.
As of March 16, 2001, the Corporation had 48,090 holders of record of its common
stock.
PART II
(Continued)
- -------------------------------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31
(Millions of dollars, -----------------------------------------------------
except per share amounts) 1996 1997 1998 1999 2000
- -----------------------------------------------------------------------------------------------
Net Sales. . . . . . . . . . . . . . . $13,149.1 $12,546.6 $12,297.8 $13,006.8 $13,982.0
Gross Profit . . . . . . . . . . . . . 4,688.5 4,607.6 4,597.6 5,325.2 5,753.5
Operating Profit . . . . . . . . . . . 1,666.0 1,486.1 1,697.7 2,435.4 2,633.8
Share of Net Income of
Equity Companies . . . . . . . . . . 152.4 157.3 137.1 189.6 186.4
Income from Continuing
Operations Before
Extraordinary Items and
Cumulative Effect of
Accounting Change. . . . . . . . . . 1,035.4 985.4 1,114.3 1,668.1 1,800.6
Per Share Basis:
Basic. . . . . . . . . . . . . . . 1.84 1.77 2.02 3.11 3.34
Diluted. . . . . . . . . . . . . . 1.83 1.76 2.01 3.09 3.31
Net Income . . . . . . . . . . . . . . 1,035.4 1,002.9 1,103.1 1,668.1 1,800.6
Per Share Basis:
Basic. . . . . . . . . . . . . . . 1.84 1.80 2.00 3.11 3.34
Diluted. . . . . . . . . . . . . . 1.83 1.79 1.99 3.09 3.31
Cash Dividends Per Share
Declared . . . . . . . . . . . . . . .92 .96 1.00 1.04 1.08
Paid . . . . . . . . . . . . . . . . .92 .95 .99 1.03 1.07
Total Assets . . . . . . . . . . . . . $11,820.4 $11,417.1 $11,687.8 $12,815.5 $14,479.8
Long-Term Debt . . . . . . . . . . . . 1,738.6 1,803.9 2,068.2 1,926.6 2,000.6
Stockholders' Equity . . . . . . . . . 4,595.0 4,340.3 4,031.5 5,093.1 5,767.3
NOTES TO SELECTED FINANCIAL DATA
(1) 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
====== ======= ======= ====
PART II
ITEM 6. SELECTED FINANCIAL DATA (Continued)
- -------------------------------------------------------------------------------
NOTES TO SELECTED FINANCIAL DATA
(2) 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
====== ======= ======= ====
(3) 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 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
====== ======= ====== ====
(4) 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 severance 9.0 9.0 5.6
Gains on asset disposals. . . . . . . . . . - (176.7) (112.3)
------ ------- -------
Total . . . . . . . . . . . . . . . . . . $ 89.2 $ (97.3) $ (56.6) $(.11)
====== ======= ======= =====
PART II
ITEM 6. SELECTED FINANCIAL DATA (Continued)
- -------------------------------------------------------------------------------
NOTES TO SELECTED FINANCIAL DATA
(5) Included in the selected financial data for 2000 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 . . . . . . . . . . . . . . . . . . . $ 20.2 $ 24.4 $ 16.4
Business integration and other costs . . . . . . 10.1 35.1 23.0
Patent settlement and accrued liability reversal - (75.8) (46.5)
Litigation settlements . . . . . . . . . . . . . - 15.2 9.3
------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . $ 30.3 $ (1.1) $ 2.2 $.01
====== ====== ====== ====
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 2000 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 2000
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
2000 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 2001 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 2001 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 2001 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 2001 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, 2000 and 1999, and the
related Consolidated Statements of Income, Stockholders' Equity and Cash Flow
for the years ended December 31, 2000, 1999 and 1998, 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 2000 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 2000 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.
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 14, 2000.
Exhibit No. (10)f. Deferred Compensation Plan, as amended effective November
14, 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.
Exhibit No. (10)k. 1999 Restricted Stock Plan, as amended effective November
14, 2000.
Exhibit No. (10)l. Outside Directors' Stock Option Plan, effective January 1,
2001.
Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 2000.
Exhibit No. (13). Portions of the Corporation's 2000 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.
PART IV
(Continued)
- -------------------------------------------------------------------------------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(Continued)
(b) REPORTS ON FORM 8-K
The Corporation filed a Current Report on Form 8-K, dated November 14, 2000,
to report that the Board of Directors of the Corporation authorized the
repurchase of an additional 25 million shares of the Corporation's Common
Stock.
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 23, 2001
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 23, 2001
- ----------------------- and Chief Executive Officer
Wayne R. Sanders and Director
(principal executive officer)
/s/ John W. Donehower Senior Vice President and March 23, 2001
- ------------------------ Chief Financial Officer
John W. Donehower (principal financial officer)
/s/ Randy J. Vest Vice President and March 23, 2001
- -------------------- Controller
Randy J. Vest (principal accounting officer)
Directors
John F. Bergstrom Claudio X. Gonzalez
Pastora San Juan Cafferty Frank A. McPherson
Paul J. Collins Linda Johnson Rice
Robert W. Decherd Wolfgang R. Schmitt
Thomas J. Falk Marc J. Shapiro
William O. Fifield Randall L. Tobias
By: /s/ O. George Everbach March 23, 2001
-----------------------------------------
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, 2000 and 1999, and for each of the three years
in the period ended December 31, 2000, and have issued our report thereon
dated January 23, 2001; 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 23, 2001
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(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
- ------------------- ---------- ---------- ----------- ----------------- ---------
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
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
(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
Hogla-Kimberly Limited, the Corporation's Israeli affiliate, and
Colombiana Kimberly Colpapel S.A., its Colombian affiliate, in 2000
and 1999, respectively.
(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 AND 1998
(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
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1998
(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 $-
SCHEDULE II Kimberly-Clark Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(Millions of dollars)
ADDITIONS
------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ------------------- ---------- ---------- ----------- ----------------- ---------
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
DECEMBER 31, 1998
Deferred Taxes
Valuation Allowance . . . . . . $209.0 $ 71.1 $- $(5.5) $285.6
(a) Includes the net currency effects of translating valuation allowances
at current rates under SFAS No. 52 of $(17.8) million in 2000, $(39.4)
million in 1999 and $15.6 million in 1998. Included in this column are
expired income tax loss carryforwards of $15.8 million in 1998. 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' Report, incorporated by reference
Independent Auditors' Report
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,
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.
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 14, 2000.
Exhibit No. (10)f. Deferred Compensation Plan, as amended effective November
14, 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.
Exhibit No. (10)k. 1999 Restricted Stock Plan, as amended effective November
14, 2000.
Exhibit No. (10)l. Outside Directors' Stock Option Plan, effective January 1,
2001.
Exhibit No. (12). Computation of ratio of earnings to fixed charges for the
five years ended December 31, 2000.
Exhibit No. (13). Portions of the Corporation's 2000 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 (10)b
KIMBERLY-CLARK CORPORATION
EXECUTIVE SEVERANCE PLAN
As
Amended and Restated
As of June 8, 2000
1. Preamble and Statement of Purpose. The purpose of this Plan is to
---------------------------------
assure the Corporation that it will have the continued dedication of, and the
availability of objective advice and counsel from, key executives of the
Corporation notwithstanding the possibility, threat or occurrence of a bid to
take over control of the Corporation.
In the event the Corporation receives any proposal from a third person
concerning a possible business combination with the Corporation, or
acquisition of the Corporation's equity securities, the Board of Directors
(the "Board") believes it imperative that the Corporation and the Board be
able to rely upon key executives to continue in their positions and be
available for advice, if requested, without concern that those individuals
might be distracted by the personal uncertainties and risks created by such a
proposal.
Should the Corporation receive any such proposals, in addition to their
regular duties, such key executives may be called upon to assist in the
assessment of proposals, advise management and the Board as to whether such
proposals would be in the best interest of the Corporation and its
stockholders, and to take such other actions as the Board might determine to
be appropriate.
2. Definitions. As used in this Plan, the following terms shall have
-----------
the following respective meanings:
(a) Agreement: An Executive Severance Agreement in
---------
substantially the form approved by the Board and attached hereto as Exhibit A.
(b) Cause: The term "Cause" shall mean any of the
-----
following:
(i) the commission by he 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.
(c) Change of Control: A "Change of Control" shall be
-----------------
deemed to have taken place if: (i) a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires
shares of the Corporation having 20% or more of the total number of votes
that may be cast for the election of Directors of the Corporation; or (ii)
as the result of any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of
the foregoing transactions (a "Transaction"), the persons who were directors
of the Corporation before the Transaction shall cease to constitute a majority
of the Board of Directors of the Corporation or any successor to the
Corporation.
(d) Corporation: Kimberly-Clark Corporation.
-----------
(e) Eligible Executive: Those key executives of the
------------------
Corporation and its Subsidiaries who are from time to time designated by the
Board as, or who pursuant to criteria established by the Board or its
Compensation Committee are, eligible to receive an Agreement.
(f) Good Reason: 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:
(i) the assignment to the Participant of any
duties inconsistent with the Participant's status as a key executive officer
of 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;
(ii) 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 key executives of the Corporation;
(iii) 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;
(iv) 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;
(v) 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, but 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
(vi) 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
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.
(g) Participant: An Eligible Executive who is a party to an
-----------
Agreement which has not been terminated in accordance with the terms of this
Plan prior to the time when the Corporation has knowledge that any third
person has taken steps reasonably calculated to effect a Change of Control of
the Corporation.
(h) Qualified Termination of Employment: The termination of
-----------------------------------
a Participant's employment with the Corporation and/or its Subsidiaries within
the two (2) year period following a Change of Control of the Corporation for
any reason (whether voluntary or involuntary) unless such termination is by
reason of death or disability or, to the extent specifically provided in the
Participant's Agreement, unless such termination is (i) by the Corporation for
Cause or (ii) by the Participant without Good Reason. Subject to subparagraph
2(f), transfers of employment for administrative purposes among the
Corporation and its Subsidiaries shall not be deemed a Qualified Termination
of Employment.
(i) Subsidiary: Any domestic or foreign corporation at
----------
least twenty percent (20%) of whose shares normally entitled to vote in
electing directors is owned directly or indirectly by the Corporation or
by other Subsidiaries.
3. Participation. Eligible Executives shall be proffered an
-------------
Agreement and upon execution and delivery thereof by the Eligible Executive
evidencing such Eligible Executive's agreement not to voluntarily leave the
employ of the Corporation and its Subsidiaries and to continue to render
services during the pendency of any threatened Change of Control of the
Corporation, such Eligible Executive shall become a Participant. A
Participant shall cease to be a Participant in the Plan when notified by the
Board that it has determined that such Participant has ceased to be a key
executive for purposes of this Plan or upon termination of employment with the
Corporation or its Subsidiaries prior to a Change of Control in which case the
Agreement shall terminate and be of no further force and effect, except that,
no such determination that a Participant has ceased to be a key executive
shall be made, and if made shall have no effect, during any period of time
when the Corporation has knowledge that any third person has taken steps
reasonably calculated to effect a Change of Control of the Corporation until,
in the opinion of the Board, the third person has abandoned or terminated his
efforts to effect a Change of Control. Any decision by the Board that the
third person has abandoned or terminated his efforts to effect a Change of
Control shall be conclusive and binding on the Participants.
4. Termination of Employment of Participants. Nothing in this Plan
-----------------------------------------
shall be deemed to entitle a Participant to continued employment with the
Corporation and its Subsidiaries and the rights of the Corporation to
terminate the employment of a Participant shall continue as fully as though
this Plan were not in effect, provided that any Qualified Termination of
Employment within two years following a Change of Control shall entitle the
Participant to the benefits herein provided. In addition, nothing in this
Plan shall be deemed to entitle a Participant under this Plan to any rights,
or to payments under this Plan, with respect to any plan in which the
Participant was not a participant prior to a Qualified Termination of
Employment.
5. Payments Upon Qualified Termination of Employment. In the event of
-------------------------------------------------
a Qualified Termination of Employment of a Participant, a lump sum cash
payment or payments shall be made to such Participant as compensation for
services rendered, in an amount or amounts (subject to any applicable
payroll or other taxes required to be withheld) equal to the sum of the
amounts specified in subparagraphs (i) through (vi) below, such payments to
be made within 10 days following the last day of employment of the Participant
with the Corporation except to the extent not yet calculable, in which case
such portions shall be paid as soon as practicable following the ability to
calculate the amount.
(i) Salary Plus Incentive Compensation. An amount
----------------------------------
equal to three times the sum of (a) the Participant's annual base salary at the
rate in effect immediately prior to the Change of Control and (b) the maximum
award payable to the Participant for the year in which the Change of Control
occurred (or, if not then established, for the preceding year) under the
Kimberly-Clark Corporation Management Achievement Award Program or any
successor or additional plan;
(ii) Equity Participation Plan - Participation
------------------------------------------
Shares.
- ------
An amount equal to the payment to which the Participant would have been
entitled had all Participation Shares awarded to the Participant under the
Kimberly-Clark Corporation 1992 Equity Participation Plan (or any successor or
additional plan) and which had not matured as of the date of termination of
employment and which will not mature as a result of the termination of
employment, matured, such payment to be the higher of (a) the payment
determined as though such award had matured and its book value at maturity
been determined on the last day of the year preceding the Change of Control,
or (b) the payment determined as though such award had matured and its book
value at maturity been determined on the last day of the calendar quarter
preceding the date of termination of the Participant's employment;
(iii) Equity Participation Plan - Option Shares.
-----------------------------------------
With respect to stock options granted to the Participant under the
Kimberly-Clark Corporation 1992 Equity Participation Plan (or any successor
or additional plan) which are not exercisable on or after the date of the
termination of the Participant's employment or, if exercisable, on the date
of termination of employment, not thereafter exercised, an amount equal to
the higher of the excess of (a) the value on the date preceding the Change
of Control of all shares of common stock of the Corporation optioned to the
Participant pursuant to such options, or (b) such value on the date of
termination of employment, over the option price;
(iv) Restricted Stock. With respect to restricted
----------------
stock granted to the Participant under the Kimberly-Clark Corporation 1999
Restricted Stock Plan (or any successor or additional plan) which are not
vested on the date of the termination of the Participant's employment, an
amount equal to the higher of (a) the value on the date preceding the
Change of Control of an equivalent number of shares of common stock of the
Corporation, or (b) such value on the date of termination of employment;
(v) Incentive Investment Plan. An amount equal to
-------------------------
the excess of (a) the benefits under the Kimberly-Clark orporation Salaried
Employees Incentive Investment Plan (or any successor or additional plan) to
which the Participant would be entitled if he were fully vested in all of his
benefits under the Plan at the date of termination of employment, over (b) the
value of the benefits to which the Participant is actually entitled at the
date of termination of employment; and
(vi) Retirement Contribution Plan. An amount equal to
----------------------------
(a) the Participant's annual Retirement Contributions under the Kimberly-Clark
Corporation Retirement Contribution Plan (or any successor or additional
plans) and the Kimberly-Clark Corporation Retirement Contribution Excess
Benefit Program (or any successor or additional plans) (collectively the
"Retirement Contribution Plan") to which the Participant would have been
entitled if he had remained employed by the Corporation for an additional
period of three years at the rate of annual compensation specified in
subparagraph (i) of Paragraph 5 above except that the Management Achievement
Award Program element shall be treated as earned for the year in which
termination occurred and the two subsequent years and no award actually earned
in, and paid for, the year in which termination occurred shall be considered,
plus (b) the excess of (I) the benefits under the Retirement Contribution Plan
to which the Participant would be entitled if he were fully vested in all of
his benefits under the Retirement Contribution Plan at the date of termination
of employment, over (II) the value of the benefits to which the Participant is
actually entitled at the date of termination of employment.
(vii) Successor or Additional Stock Option, Stock
-------------------------------------------
Appreciation Right, Incentive Compensation, and Bonus Plan. An amount equal
- --------------------------------------------------------------
to the payment to which the Executive would have been entitled had all
amounts awarded or granted to the Executive, vested or matured, under any
stock option, stock appreciation right, incentive compensation, and bonus plans
which are adopted after the effective date of the Executive's Agreement
and in which the Executive participates immediately prior to the Change of
Control, which is material to the Executive's total compensation, but including
any substitute plans adopted prior to the Change of Control, (or any successor
or additional plan), which had not vested or matured as of the date of
termination of employment and will not vest or mature as a result of the
termination of the Executive's employment, such payment to be the higher
of (a) the payment determined as though such award or grant had vested or
matured on the day of the Change of Control, or (b) the payment determined as
though such award or grant had vested or matured on the date of termination
of the Executive's employment;
6. Salaried Retirement Plan. In the event of a Qualified Termination
------------------------
of Employment, a Participant shall be paid a monthly retirement benefit, in
addition to any benefits received under the Supplemental Benefit Plan to the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) and the Second Supplemental Benefit Plan to the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) (collectively the "Supplemental Plan") and the
Kimberly-Clark Corporation Salaried Employees' Retirement Plan (or any
successor or additional plans) (the "Salaried Retirement Plan"), such benefit
to commence on the commencement of payment of benefits under the Salaried
Retirement Plan, but not prior to three years following the date of Qualified
Termination of Employment, such benefit to be in the form of a straight life
annuity without level income option and in an amount equal to the excess of
(a) the benefits under the Salaried Retirement Plan and the Supplemental Plan
to which the Participant would have been entitled in the form of a straight
life annuity without level income option if such Participant had remained
employed by the Corporation for an additional period of three years, at the
rate of annual compensation specified in subparagraph (i) of Paragraph 5 above
except that the Management Achievement Award Program element shall be treated
as earned for the year in which termination occurred and the two subsequent
years and no award actually earned in, and paid for, the year in which
termination occurred shall be considered, over (b) the benefits to which the
Participant would actually have been entitled under the Salaried Retirement
Plan and the Supplemental Plan, had such benefit been paid in the form of a
straight life annuity without level income option.
7. Other Terms and Conditions. The Agreement to be entered into
--------------------------
pursuant to this Plan shall contain such other terms, provisions and
conditions not inconsistent with this Plan as shall be determined by the
Board. Where appearing in this Plan or the Agreement, the masculine shall
include the feminine and the plural shall include the singular, unless the
context clearly indicates otherwise.
8. Non-Assignability. Each Participant's rights under this Plan
-----------------
shall be non-transferable except by will or by the laws of descent and
distribution.
9. Unfunded Plan. The Plan shall be unfunded. Neither the
--------------
Corporation nor the Board shall be required to segregate any assets that may
at any time be represented by benefits under the Plan. Neither the
Corporation or the Board shall be deemed to be a trustee of any amounts to be
paid under the Plan. Any liability of the Corporation to any Participant with
respect to any benefit shall be based solely upon any contractual obligations
created by the Plan and the Agreement; no such obligation shall be deemed to
be secured by any pledge or any encumbrance on any property of the
Corporation.
10. Certain Reduction of Payments by the Corporation.
------------------------------------------------------
(a) For purposes of this paragraph 10, (i) a Payment shall mean
any payment or distribution in the nature of compensation to or for the
benefit of a Participant, whether paid or payable pursuant to this Plan or
otherwise; (ii) Separation Payment shall mean a Payment paid or payable
pursuant to this Plan (disregarding this paragraph); (iii) Net After Tax
Receipt shall mean the Present Value of a Payment net of all taxes imposed on
an Participant with respect thereto under Sections 1 and 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), determined by applying the
highest marginal rate under Section 1 of the Code which applied to the
Participant's taxable income for the immediately preceding taxable year; (iv)
"Present Value" shall mean such value determined in accordance with Section
280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the greatest
aggregate amount of Separation Payments which (a) is less than the sum of all
Separation Payments and (b) results in aggregate Net After Tax Receipts which
are equal to or greater than the Net After Tax Receipts which would result if
the Participant were paid the sum of all Separation Payments.
(b) Anything in this Agreement to the contrary notwithstanding,
in the event Deloitte & Touche LLP or such other certified public accounting
firm designated by the Participant (the "Accounting Firm") shall determine
that receipt of all Payments would subject the Participant to tax under
Section 4999 of the Code, it shall determine whether some amount of Separation
Payments would meet the definition of a "Reduced Amount." If said firm
determines that there is a Reduced Amount, the aggregate Separation Payments
shall be reduced to such Reduced Amount. All fees payable to the Accounting
Firm with respect to this paragraph 10 shall be paid solely by the
Corporation.
(c) If Accounting Firm determines that aggregate Separation
Payments should be reduced to the Reduced Amount, the Corporation shall
promptly give the Participant notice to that effect and a copy of the detailed
calculation thereof, and the Participant may then elect, in his sole
discretion, which and how much of the Separation Payments shall be eliminated
or reduced (as long as after such election the present value of the aggregate
Separation Payments equals the Reduced Amount), and shall advise the
Corporation in writing of his election within ten days of his receipt of
notice. If no such election is made by the Participant within such ten-day
period, the Corporation may elect which of such Separation Payments shall be
eliminated or reduced (as long as after such election the present value of the
aggregate Separation Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. All determinations made by Accounting
Firm under this paragraph shall be binding upon the Corporation and the
Participant and shall be made within 60 days of a termination of employment of
the Participant. As promptly as practicable following such determination, the
Corporation shall pay to or distribute for the benefit of the Participant such
Separation Payments as are then due to the Participant under this Plan and
shall promptly pay to or distribute for the benefit of the Participant in the
future such Separation Payments as become due to the Participant under this
Plan.
(d) While it is the intention of the Corporation to reduce the
amounts payable or distributable to the Participants hereunder only if the
aggregate Net After Tax Receipts to a Participant would thereby be increased,
as a result of the uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by Accounting Firm hereunder, it is
possible that amounts will have been paid or distributed by the Corporation to
or for the benefit of an Participant pursuant to this Plan which should not
have been so paid or distributed ("Overpayment") or that additional amounts
which will have not been paid or distributed by the Corporation to or for the
benefit of a Participant pursuant to this Plan could have been so paid or
distributed ("Underpayment"), in each case, consistent with the calculation of
the Reduced Amount hereunder. In the event that Accounting Firm, based either
upon the assertion of a deficiency by the Internal Revenue Service against the
Corporation or the Participant which Accounting Firm believes has a high
probability of success determines that an Overpayment has been made, any such
benefit of an Participant shall be treated for all purposes as a loan to the
Participant which the Participant shall repay to the Corporation together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that no such loan shall be deemed to have been
made and no amount shall be payable by a Participant to the Corporation if and
to the extent such deemed loan and payment would not either reduce the amount
on which the Participant is subject to tax under Section 1 and Section 4999 of
the Code or generate a refund of such taxes. In the event that Accounting
Firm, based upon controlling precedent or substantial authority, determines
that an Underpayment has occurred, any such Underpayment shall be promptly
paid by the Corporation to or for the benefit of the Participant together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code.
11. Termination and Amendment of this Plan. The Board shall have
--------------------------------------
power at any time, in its discretion, to amend, abandon or terminate this
Plan, in whole or in part; except that no amendment, abandonment or
termination shall impair or abridge the obligations of the Corporation under
any Agreements previously entered into pursuant to this Plan.
12. Effective Date. This amended and restated Plan shall become
--------------
effective on June 8, 2000.
Exhibit (10)e
KIMBERLY-CLARK CORPORATION
1992 EQUITY PARTICIPATION PLAN
(AS AMENDED EFFECTIVE NOVEMBER 14, 2000)
1. PURPOSE
This 1992 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 was originally adopted effective as of April 24, 1992, upon
approval by the stockholders of the Corporation at the 1992 Annual Meeting.
The Plan as hereby amended and restated is effective as of November 14, 2000.
3. DEFINITIONS
"Account" has the meaning set forth in subsection 7(a) of this Plan.
-------
"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.
"Base Value" has the meaning set forth in subsection 7(a) of this Plan.
-----------
"Board" means the Board of Directors of the Corporation.
-----
"Book Value" has the meaning set forth in subsection 7(a) of this Plan.
-----------
"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 Directors 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 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.
"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.
"Dividend Shares" has the meaning set forth in subsection 7(c) of this
----------------
Plan.
"Dividend Share Value" means Dividend Share Value as defined in
----------------------
subsection 7(c) of this Plan.
"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.
"Insider" has the meaning set forth in subsection 15(k) of this Plan.
-------
"Maturity Date" has the meaning set forth in subsection 7(b) of this
--------------
Plan.
"Maturity Value" has the meaning set forth in subsection 7(c) of this
---------------
Plan.
"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 8(b) of this Plan.
------------
"Participant" means an employee who the Committee selects to participate
-----------
in and receive Awards under the Plan (collectively, the "Participants").
"Participation Shares" means the right, as described in section 7, to
---------------------
receive an amount equal to the increase in Book Value on a specified number of
shares of Common Stock.
"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.
"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.
"Severe Financial Hardship" means a severe financial hardship as defined
---------------------------
in subsection 15(h) of this Plan.
"Stock Appreciation Right (SAR)" has the meaning set forth in subsection
-------------------------------
8(j)(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:
(i) 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;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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
(vi) 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
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 Salaried Employees' Retirement
Plan.
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, except that: (a) the authority to grant Awards, the selection
of officers and directors for participation and decisions concerning the
timing, pricing and amount of a grant or Award shall not be delegated by the
Committee; (b) the authority to administer Awards with respect to persons who
are subject to section 16 of the Exchange Act shall not be delegated by the
Committee; (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 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 Plan 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. FORMS OF AWARDS
All Awards under the Plan shall be made in the form of Participation
Shares or Options. The Committee may make Awards solely in Options or
Participation Shares, or in any combination of the two. Notwithstanding
anything in this Plan to the contrary, any Awards shall contain the
restriction on assignability in subsection 15(f) of this Plan to the extent
required under rule 16b-3 of the Exchange Act.
7. PARTICIPATION SHARES
The Committee shall from time to time designate those Participants who
shall receive Participation Share awards. The Committee shall advise such
Participants of their Participation Share awards by a letter indicating the
number of Participation Shares awarded and the following terms and conditions
of the award.
(a) Base Value of Participation Shares. The number of
Participation Shares awarded to a Participant shall be entered in such
Participant's memorandum account (the "Account") established for this purpose
as of the date of the award. Each Participation Share shall be assigned a
base value equal to the book value of one share of Common Stock as of the
close of the fiscal year of the Corporation preceding the date of the award
(the "Base Value"). Book value per share shall be defined for purposes of the
Plan as common stockholders' equity, as reported in the year-end audited
consolidated financial statements, or in the quarter-end unaudited
consolidated financial statements, of the Corporation (as the case may be),
divided by the number of shares of Common Stock outstanding as of the date of
such financial statements, as adjusted pursuant to the provisions of the Plan
(the "Book Value"). The term "book value", when used without initial capital
letters, shall be defined as in the preceding sentence without the
adjustments.
(b) Maturation of Participation Shares. An Award of
Participation Shares shall reach maturity at the close of the fiscal year (i)
in which either the fifth or seventh anniversary, as determined by the
Committee when the Award is granted, of the date the Award occurs, (ii) the
Participant who holds such Award dies, Retires, or becomes Totally and
Permanently Disabled, or (iii) the events described in subsection 9(a) occur,
whichever is earlier (the "Maturity Date"). The Book Value at the Maturity
Date shall be the Book Value as of the close of the fiscal year of the
Corporation in which such Maturity Date occurs.
(c) Participation Share Payments. Each Participant shall be
entitled to receive a payment equal to the sum of the Maturity Value and the
Dividend Share Value for his or her Participation Share award, payable as
provided in subsection 7(g). Any such payment after June 8, 2000 shall be
payable solely in cash. Any such payment on or before June 8, 2000 shall be
payable either in cash, or partly in cash and up to 50 percent in Common
Stock, as determined by the Committee when the Award is granted. Such payment
in Common Stock shall be payable in the number of shares of Common Stock that
could have been purchased with the amount equal to the sum of the Maturity
Value and the Dividend Share Value for that portion of his or her
Participation Share award which is payable in Common Stock, at the average of
the Fair Market Value of shares of Common Stock on each business day during
the month immediately preceding the month of such payment. A Participation
Share award only shall be paid in Common Stock as provided above to the extent
shares of Common Stock are available under section 10 hereof, with the
remainder settled in cash. To the extent shares of Common Stock are not fully
available under section 10 hereof to fully pay such portion of the Award in
shares of Common Stock then the available shares of Common Stock shall be paid
on a pro rata basis, with the remainder settled in cash.
The "Maturity Value" of an Award of Participation Shares shall be
equal to the Book Value of the Participation Shares subject to such Award at
the Maturity Date less the Base Value of such Participation Shares.
Participants are not entitled to receive current dividends on their
Participation Shares, but in lieu thereof their Accounts shall be credited
with dividend shares (the "Dividend Shares"). The "Dividend Share Value" of
an award shall be equal to the product of (A) the number of Dividend Shares
credited to a Participant's Account and (B) the Book Value per share of the
Common Stock at the Maturity Date. The amount available for the acquisition
of Dividend Shares for a Participant's Account at the end of each fiscal
quarter of the Corporation shall be determined by multiplying the total cash
dividend declared per share of Common Stock during such quarter (but
subsequent to the date of the award in the case of Participation Shares and
subsequent to the date of crediting in the case of Dividend Shares) by the
total of the Participation Shares and Dividend Shares in the Participant's
Account. The amount so determined shall be divided by the Book Value of one
share of Common Stock as of the close of such fiscal quarter, and the quotient
shall represent the number of full and fractional Dividend Shares credited to
the Participant's Account for that quarter.
(d) Dividend Maintenance. No Dividend Shares shall be credited to a
Participant's Account in any quarter (i) in which the total cash dividends
declared per share of Common Stock are less than $.205 or (ii) in which the
total cash dividends declared per share of Common Stock are less than the
total cash dividends declared per share of Common Stock in the same quarter of
the immediately preceding year, except that the determination of whether the
total cash dividends per share of Common Stock are less than in the
immediately preceding year shall be made after adjustment for the two-for-one
stock split which occurred in 1992 and the two-for-one stock split which was
declared on February 20, 1997, in accordance with generally accepted
accounting principles. When total cash dividends declared per share of Common
Stock are less than total cash dividends declared per share of Common Stock in
the same quarter of the immediately preceding year as described above, the
book value of each Participation Share held by a Participant shall be reduced
by an amount equal to the difference between the cash dividend declared in
such immediately preceding quarter less the cash dividend declared in the
quarter the cash dividend is reduced.
(e) Adjustments. To preserve the benefit to the Participant and
the Corporation contemplated hereby, stock repurchases (other than Common
Stock transferred to the Corporation upon the exercise of an Option pursuant
to subsection 8(f)) or changes in the Corporation's accounting policies during
any fiscal year shall be automatically excluded for purposes of determining
Book Value for purposes of this Plan for such fiscal year and for all future
years with respect to any outstanding Participation Share Awards; provided,
however, that the Committee shall have the discretion to waive any such
exclusion that would have the effect of increasing Book Value (to the extent
that such discretion does not result in the disallowance of a deduction to the
Corporation under section 162(m) of the Code or any successor section). To
further preserve the benefit to the Participant and the Corporation
contemplated hereby, if a cash dividend is declared in any quarter and the
payment date for such cash dividend is later than the immediately subsequent
quarter, then such cash dividend will be deemed to be declared in the quarter
immediately preceding the payment date for all purposes of this Plan, as of
the first date the Board meets in such quarter, or if the Board does not meet
in such quarter, on the first business day of such quarter, including, but not
limited to, the determination of (i) Book Value in subsection 7(a), (ii)
Dividend Shares in subsection 7(c) and (iii) whether the total cash dividends
declared per share of Common Stock in a quarter is less than $.205 or whether
the total cash dividends declared per share of Common Stock are less than the
total cash dividends declared per share of Common Stock in the same quarter of
the immediately preceding year in subsection 7(d).
(f) Absence of Rights as a Stockholder. A Participant shall not
be entitled, on the basis of a Participation Share award, to any of the rights
of a stockholder of the Corporation, including the right to vote and receive
dividends on Common Stock.
(g) Date of Payment. Except as provided in subsection 15(h),
the payment provided for in subsection 7(c) shall be payable within 90 days
following the Maturity Date.
(h) Termination of Employment. Except as provided in subsection
9(a), any Participation Shares or Dividend Shares credited to a Participant's
Account shall be forfeited if the Participant is dismissed or leaves the
service of the Corporation or Affiliate prior to the Maturity Date of the
award for any reason other than death, Retirement or Total and Permanent
Disability.
(i) Termination of Award. After the Corporation makes the cash
payment provided for in subsection 7(c), any rights of the Participant (or the
Participant's estate or beneficiaries) in the Participation Share award shall
end.
8. STOCK OPTIONS
The Committee 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. Such Options may be in the form of
Incentive Stock Options or in the form of Nonqualified Stock Options. 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 8(a) through 8(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 8(c). 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 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. If a
Participant dies or becomes Totally and Permanently Disabled, without having
exercised the Option in full, the remaining portion of such Option may be
exercised, without regard to the limitations in subsection 8(c), 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
without having exercised the Option in full, the remaining portion of such
Option may be exercised, without regard to the limitations in subsection 8(c),
within the remaining period of the Option.
(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 8(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.
(i) Options for Nonresident Aliens. In the case of any Option
awarded 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 conditions set forth in subsections 8(a) through 8(h)
to the extent that such action is necessary to conform such Option to
applicable foreign law, or (ii) take any action, either before or after the
award of such Option, which it deems advisable to obtain approval of such
Option by an appropriate governmental entity; provided, however, that no
action may be taken hereunder if such action would (1) increase any benefits
accruing to any Participants under the Plan, (2) increase the number of
securities which may be issued under the Plan, (3) modify the requirements for
eligibility to participate in the Plan, (4) result in a failure to comply with
applicable provisions of the Securities Act of 1933, the Exchange Act or the
Code or (5) result in the disallowance of a deduction to the Corporation under
section 162(m) of the Code or any successor section.
(j) 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 8(j). 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 which 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.
9. GOVERNMENT SERVICE, LEAVES OF ABSENCE AND OTHER TERMINATIONS
(a) A Participation Share award shall be considered to reach
maturity as of the close of the fiscal year in which (i) a
Participant's employment terminates because such Participant enters
governmental service or (ii) 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.
(b) 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.
10. 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 40,000,000 in the aggregate, of which
not more than 40,000,000 shall be available for option and sale, subject to
the adjustment provision set forth in section 12 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. Participation Shares which are retired through forfeiture or
maturity, other than those Participation Shares which are retired through the
payment of Common Stock, and shares subject to Options which become ineligible
for purchase 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. Shares of Common Stock which are distributed through the payment
of Participation Share Awards pursuant to subsection 7(c) will not be
available for Awards under the Plan.
11. INDIVIDUAL LIMITS
The maximum number of Participation Shares or shares of Common Stock
covered by Options which may be granted to any Participant within any 2
consecutive calendar year period shall not exceed 1,000,000 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 Participation
Shares which may be awarded or 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 Participation Shares
or Options available under the Plan.
12. 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 for which Options or Participation
Shares may be granted or awarded to any Participant, (c) the number of shares
and the Option Price per share of all shares of Common Stock subject to
outstanding Options, (d) the number of Participation Shares, the Base Value
per Participation Share awarded to Participants, and the number of Dividend
Shares credited to Participants' Accounts, and (e) 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.
13. 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.
14. TERM OF THE PLAN
The term of the Plan shall be ten years, beginning April 24, 1992, and
ending April 23, 2002, unless the Plan is terminated prior thereto by the
Committee. No Option may be granted or Participation Share awarded after the
termination date of the Plan, but Options and Participation Shares theretofore
granted or awarded shall continue in force beyond that date pursuant to their
terms.
15. GENERAL PROVISIONS
(a) Designated Beneficiary. Each Participant who shall be
granted a Participation Share award under the Plan may designate a beneficiary
or beneficiaries with the Committee on a form to be prescribed by it; 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.
(1) The Committee may in its sole and absolute discretion,
by written notice to a Participant, (i) limit or eliminate the
ability of the Participant's Participation and Dividend Shares
to generate additional Dividend Shares, and/or (ii) fix the Book
Value of all or any portion of the Participant's existing
Participation and existing or future Dividend Shares for the
purposes of any payments that might be made under subsection (c) at
their Book Value as of the end of the fiscal year of the Corporation
in which such notice is dated so that no further appreciation
occurs in such Book Value, and/or (iii) limit the period in which an
Option may be exercised to a period ending at least three months
following the date of such notice, and/or (iv) limit or eliminate the
number of shares subject to Option after a period ending at least
three months following the date of such notice. Notwithstanding
anything in this subsection 15(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.
(2) A Participant's Participation Share or Dividend Share
which has had its ability to generate additional Dividend Shares
limited or eliminated and for which the Book Value is fixed
pursuant to subsection 15(d)(1)(i) of the Plan shall be credited
with interest equal to the product of (i) the number of Interest
Credits (determined pursuant to subsection 15(d)(3) below) credited
to such Participant's Account as of the Maturity Date and (ii) the
Book Value at which such Participation Share or Dividend Share has
been fixed.
(3) The number of Interest Credits to be credited to a
Participant's Account for each fiscal quarter of the Corporation
ending after the date as of which the Book Value of such Participant's
Participation Shares or Dividend Shares is fixed shall be determined
as follows. The total cash dividend declared per share of Common
Stock during such quarter (but subsequent to the date of the
award in the case of Participation Shares and subsequent to the date
of crediting in the case of Dividend Shares) shall be multiplied by
the total of the Participation Shares, Dividend Shares and Interest
Credits in the Participant's Account. The amount so determined shall
be divided by the Book Value of one share of Common Stock as of the
close of such fiscal quarter. The quotient shall represent the
number of full and fractional Interest Credits credited to such
Participant's Account for that quarter.
(e) No Segregation of Cash or Stock. The 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.
(f) Inalienability of Benefits and Interest. Except as provided
in subsections 8(e) and 15(a), 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.
(g) 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.
(h) Election to Defer Receipt.
(1) A Participant may, with the consent of the Committee,
elect to defer the receipt of all or any portion of amounts which may
otherwise become payable under subsection 7(c). A Participant's receipt of
any portion of the amount payable with respect to one or more outstanding
Participation Share awards shall be deferred if, prior to the Maturity Date of
any such award, or if earlier, such Participant's termination of employment,
such Participant irrevocably elects such deferral by written notice to the
Committee signed by the Participant and delivered to the Committee, and the
Committee consents to such deferral. Such notice must clearly specify the
manner of distribution described in paragraph (2) below which shall apply with
respect to such deferred amounts. After adjustment for any resulting
interest, the deferred amount shall be paid at the date or dates specified in
the Participant's letter, and such adjusted amount shall not be subject to
forfeiture as otherwise provided in subsection 7(h). Notwithstanding the
foregoing, with the consent of the Committee, an election made prior to
January 1, 1999 pursuant to this paragraph may be irrevocably modified by a
Participant prior to the earlier of (i) January 1, 1999, (ii) such
Participant's termination of employment or (iii) the payment of the first
installment pursuant to subsection 15(h)(2) below.
(2) Amounts deferred pursuant to this subsection 15(h)
shall be distributed in accordance with clause (i), (ii), or (iii), below, as
elected by the Participant: (i) up to 20 annual installments commencing in
the year after the termination of employment by reason of retirement; (ii) up
to five annual installments, commencing 13 months after the Participant's
repatriation to his home country following a foreign assignment; or (iii) up
to five annual installments, commencing as of a date requested by the
Participant; provided, however, that such date shall not be more than 20 years
after the Maturity Date. The amount of each installment under clause (i),
(ii) or (iii) above shall be equal to the product of the amount which has not
been distributed immediately prior to such installment and a fraction, the
numerator of which is one and the denominator of which is the number of
installments yet to be paid.
(3) (i) Notwithstanding any other provision of this
Plan to the contrary, deferred amounts shall be paid in one lump sum as soon
as practicable after the death of the Participant or the termination of
employment of the Participant with the Corporation for reasons other than
Retirement or Total and Permanent Disability; however, if a Participant is or
has been on foreign assignment in the 12 months immediately prior to the date
of his termination of employment, and if the termination of employment is for
any reason other than Retirement or Total and Permanent Disability, any
remaining amounts shall be paid in one lump sum 13 months following the
earlier of (A) the date of the Participant's repatriation to his home country
following the foreign assignment or (B) the date of such termination of
employment.
(ii) Upon written application by a Participant or
his legal representative stating that severe financial hardship will result from
continued deferral, the Committee in its sole discretion may authorize payment
of such Participant's deferred amounts prior to the date specified in the
written notice described in subparagraph (h)(1) above. For purposes of this
Plan, a "severe financial hardship" is an unanticipated emergency that is
caused by an event beyond the control of the Participant and that would result
in severe financial hardship to the individual if the emergency distribution
were not permitted. Cash needs arising from foreseeable events, such as the
purchase of a residence or education expenses for children shall not be
considered the result of a severe financial hardship. For purposes of this
Plan, a "severe financial hardship" is limited to an event described in
Treasury Regulation section 1.401(k)-1(d)(2)(iv)(A)(1) or (4). For purposes
of this Plan, a distribution is in "the amount necessary to satisfy the
emergency" only if the requirements of Treasury Regulation section
1.401(k)-1(d)(2)(iv)(B) are satisfied. A Participant must provide the
Committee with substantiation of any such claim of severe financial hardship.
(4) Amounts deferred hereunder shall be credited with
interest, compounded quarterly, from the date such amount otherwise would
have been paid at a rate yielding interest equivalent to the per
annum market discount rate for six-month U.S. Treasury Bills as
published by the Federal Reserve Board for the seven calendar days prior
to January 1 (for interest to be credited for the subsequent fiscal
quarters ending March 31 and June 30) and prior to July 1 (for
interest to be credited for the subsequent fiscal quarters ending on
September 30 and December 31).
(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 retain, and shall 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 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 15(k) 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 15(k) shall be made in
writing and signed by the Participant. An election pursuant to this
subsection 15(k) is irrevocable. A Participant who exercises an option may
satisfy the income tax withholding due in respect of such exercise pursuant to
this subsection 15(k) only to meet required tax withholding. Shares of Common
Stock cannot be withheld in excess of the minimum number required for tax
withholding.
(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 8(i) and 15(d) 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 under the
Plan.
Exhibit (10)f
KIMBERLY-CLARK CORPORATION
DEFERRED COMPENSATION PLAN
EFFECTIVE AS OF OCTOBER 1, 1994
AMENDED AND RESTATED
AS OF NOVEMBER 14, 2000
KIMBERLY-CLARK CORPORATION
DEFERRED COMPENSATION PLAN
KIMBERLY-CLARK CORPORATION HEREBY AMENDS AND RESTATES IN ITS ENTIRETY,THE
KIMBERLY-CLARK CORPORATION DEFERRED COMPENSATION PLAN, EFFECTIVE NOVEMBER
14, 2000.
I. PURPOSE
The purpose of this Kimberly-Clark Corporation Deferred Compensation Plan
is to permit a select group of management or highly compensated employees
of Kimberly-Clark Corporation and its subsidiaries to defer income which
would otherwise become payable to them.
II. DEFINITIONS AND CERTAIN PROVISIONS
2.1 "Agreement" means the Plan Agreement(s) executed between a
Participant and the Company, whereby a Participant agrees to
defer a portion of his or her Salary or Bonus, or both, pursuant
to the provisions of the Plan, and the Company agrees to make
benefit payments in accordance with the provisions of the Plan.
In the event the terms of the Agreement conflict with the terms
of the Plan, the terms of the Plan shall be controlling.
2.2 "Beneficiary" means the person or persons who under this Plan
becomes entitled to receive a Participant's interest in the
event of the Participant's death.
2.3 "Board of Directors" means the Board of Directors of the Company.
2.4 "Bonus" means any amount(s) paid during a calendar year to the
Participant under the Company's Management Achievement Award
Program or any successor program.
2.5 A "Change of Control" of the Company shall be deemed to have
taken place if: (i) a third person, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, acquires shares of the Company having 20% or more of the
total number of votes that may be cast for the election of
Directors of the Company; 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 Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company
or any successor to the Company.
2.6 "Code" means the Internal Revenue Code for 1986, as amended and
any lawful regulations or other pronouncements promulgated
thereunder.
2.7 "Committee" means the Retirement Trust Committee named under the
Kimberly-Clark Corporation Salaried Employers' Retirement Plan.
2.8 "Company" means Kimberly-Clark Corporation, a Delaware
corporation, and its subsidiaries and any successor in interest.
For purposes of the Plan, a subsidiary is a corporation, 50% or
more of the voting shares of which are owned directly or
indirectly by the Company, which is incorporated under the laws
of one of the states of the United States.
2.9 "Compensation Committee" means the Compensation Committee of the
Board of Directors.
2.10 "Deferral Year" means any calendar year1995 through 2006. For
purposes of 1994, Deferral Year means the Effective Date of the
Plan through December 31, 1994. For purposes of 1994, Deferral Year
means the Effective Date of the Plan through December 31, 1994
2.11 "Deferred Benefit Account" means the cumulative total dollar
amount that a Participant elects to defer in the Agreement,
including gains and losses pursuant to Section 3 as maintained on
the books of the Company for a Participant under this Plan. A
Participant's Deferred Benefit Account shall not constitute or be
treated as a trust fund of any kind.
2.12 "Determination Date" means the date on which the amount of a
Participant's Deferred Benefit Account is determined as provided
in Article III hereof.
2.13 "Disability" shall have the same meaning as the phrase "Totally
and Permanently Disabled" under the Kimberly-Clark Corporation
Salaried Employees' Retirement Plan. The determination of a
Participant's having become Disabled shall be made by the
Retirement Committee of the Kimberly-Clark Corporation Salaried
Employees' Retirement Plan.
2.14 "Effective Date" means October 1, 1994.
2.15 "Investment Grade" means a bond rating of BBB minus, or its
equivalent, by one of the nationally recognized rating agencies.
2.16 "Participant" means an employee of the Company, or its
subsidiaries or affiliated companies, who is eligible to
participate in the Plan pursuant to Article III, who has executed
an Agreement with the Company, and who has commenced Salary or
Bonus, or both Salary and Bonus, reductions pursuant to such
Agreement.
2.17 "Plan" means the Kimberly-Clark Corporation Deferred
Compensation Plan as amended from time to time.
2.18 "Retirement Date" means the date of Termination of Service of the
Participant on or after he or she attains age 55 and has 5 Years
of Service with the Company.
2.19 "Salary" means the Participant's base salary which would be
received during a calendar year if no election to defer were
made, including any 401(k) Contributions under the Company
Incentive Investment Plan or pre-tax contributions under the
Company's Flexible Benefit Plan." For purposes of this Plan,
Salary shall not include severance or other payments made in
connection with a Participant's Termination of Service.
2.20 "Termination of Service" means the Participant's cessation of
his or her service with the Company for any reason
whatsoever, whether voluntarily or involuntarily, including by
reason of retirement, death, or Disability.
2.21 "Valuation Date" means, for purposes of crediting earnings under
Section 3.6 and determining a Participant's Deferred Benefit
Account under Section 3.7, any business day on which securities
are traded on the New York Stock Exchange.
2.22 "Years of Service" shall have the same meaning as defined under
the Kimberly-Clark Corporation Salaried Employees' Retirement Plan.
III. PARTICIPATION AND COMPENSATION REDUCTION
3.1 Participation. Participation in the Plan shall be limited to the
-------------
Chief Executive Officer, elected officers and all eligible
officers and/or employees of the Company, approved to
participate by the Chief Executive Officer in his sole discretion,
and who elect to participate in the Plan. A Participant must file
an Agreement with the Committee, at such time and in such form as
the Committee may require or permit, prior to the first day of the
deferral period in which a Participant's participation commences
in the Plan. The election to participate shall be effective
upon receipt by the Committee of the Agreement that is properly
completed and executed in conformity with the Plan.
3.2 Minimum and Maximum Deferral and Length of Participation. A
----------------------------------------------------------
Participant may elect to defer any amount of his or her Salary
or Bonus, or both, to the extent that any portion of such amounts
would not be deductible by the Company pursuant to Section 162(m)
of the Code. In addition, a Participant may elect to defer
from 10% to 100% of his or her Bonus paid during a Deferral Year
in 1% increments.
In the event a Participant elects to defer an amount of his or
her Salary and/or Bonus that would not allow for the full payment
of all FICA, federal, state and/or local income tax liabilities,
the Company may withhold all or a portion of any applicable taxes
from the Participant's Salary to the extent required by law.
In no event may the amount of a Participant's deferral election
related to his or her Bonus paid during a Deferral Year be less
than $5,000. The deferral opportunity shall extend through
December 31, 2006. A Participant shall make an annual
election for the upcoming Deferral Year in the year preceding
the Deferral Year for which the election is being made. Except as
provided in Section 3.5, "Emergency Benefit: Waiver of Deferral,"
any election so made shall be irrevocable with respect to Salary
and Bonus applicable to that Deferral Year.
Notwithstanding anything in this Plan to the contrary, a
Participant may not elect to defer any amount under this Plan
unless the Participant files a statement with the Committee that
the Participant had individual income in excess of $200,000 in
each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and
has a reasonable expectation of reaching the same income level in
the current year.
3.3 Timing of Deferral Credits. The amount of Salary or Bonus, or both
--------------------------
that a Participant elects to defer in the Agreement shall cause an
equivalent reduction in the Participant's Salary and Bonus,
respectively. Deferrals shall be credited throughout each Deferral
Year as the Participant is paid the non-deferred portion of Salary
and Bonus for such Deferral Year.
3.4 New Participants. An individual who is hired into a position
-----------------
which satisfies the requirements of a Participant shall be
eligible to participate in the Plan thirty (30) days after
satisfying the criteria for participation. The eligible employee
shall be bound by all terms and conditions of the Plan, provided,
however, that his Agreement must be filed no later than thirty
(30) days following his eligibility to participate.
Employees who satisfy the criteria of a Participant as a result of
a promotion or Salary increase will be eligible to participate in
the Plan beginning on January 1st of the calendar year
following eligibility.
3.5 Emergency Benefit: Waiver of Deferral. In the event that the
--------------------------------------
Committee, upon written petition of the Participant or his or her
Beneficiary, determines in its sole discretion, that the
Participant or his or her Beneficiary has suffered an
unforeseeable financial emergency, the Company shall pay to the
Participant or his or her Beneficiary as soon as possible
following such determination, an amount from the Participant's
Deferred Benefit Account not in excess of the amount necessary
to satisfy the emergency. For purposes of this Plan, an
"unforeseeable financial emergency" is an unanticipated emergency
that is caused by an event beyond the control of the Participant
or Beneficiary and that would result in severe financial
hardship to the individual if the emergency distribution were not
permitted. Cash needs arising from foreseeable events, such
as the purchase of a residence or education expenses for
children shall not be considered the result of an unforeseeable
financial emergency. For purposes of this Plan, an "unforeseeable
financial emergency" is limited to an event described in
Treasury Regulation section 1.401(k)-1(d)(2)(iv)(A)(1) or (4).
For purposes of this Plan, a distribution is in "the amount
necessary to satisfy the emergency" only if the requirements
of Treasury Regulation section 1.401(k)-1(d)(2)(iv)(B) are
satisfied. The Committee shall also grant a waiver of the
Participant's agreement to defer a stated amount of Salary and
Bonus upon finding that the Participant has suffered an
unforeseeable financial emergency. The waiver shall be for
such period of time as the Committee deems necessary under the
circumstances to relieve the hardship.
3.6 Crediting of Earnings - As of the close of business on each
---------------------
Valuation Date the designated Deferred Benefit Account of each
Participant shall be capable of being valued and adjusted to
preserve for each Participant his or her proportionate interest in
the related funds as if such account held actual assets and such
assets were among such investment funds as the Participant,
retired Participant or Beneficiary elected pursuant to Section
3.8. As of each Valuation Date the Deferred Benefit Account of
each Participant shall be capable of being adjusted to reflect
the effect of income, collected and accrued, realized and
unrealized profits and losses, expenses which would have been
incurred in connection with the sale, investment and reinvestment
of the investment funds (such as brokerage, postage, express
and insurance charges and transfer taxes), and all other
transactions with respect to the related fund. The effect
of such transactions shall be determined by the Committee in
accordance with generally accepted valuation principles applied
on a consistent basis. Each Participant's Deferred Benefit
Account shall then be appropriately credited with his or her
deferred amounts as set forth in Section 3.7.
3.7 Determination of Account. The balance of each Participant's
-------------------------
Deferred Benefit Account as of each Valuation Date shall be
calculated, in a manner determined by the Committee in
accordance with generally accepted valuation principles applied on
a consistent basis, as follows: the beginning balance of each
Participant's Deferred Benefit Account; less distributions
----
payable pursuant to Section 4.11 as of the Valuation Date
coincident with the Determination Date set forth in Section 4.11
or, if none, the Valuation Date immediately following such
Determination Date; plus investment earnings, gains and losses
----
determined pursuant to Section 3.6 credited to each Participant's
Deferred Benefit Account; plus Participant deferrals credited
----
to each Participant's Deferred Benefit Account pursuant to Section
3.3.
3.8 Investment Funds and Elections. - Participants, retired
---------------------------------
Participants, and Beneficiaries may elect that their Deferred
Benefit Account be credited with earnings, gains and losses as
if such accounts held actual assets and such assets were among
such investment funds as the Company may designate. Any such
direction of investment shall be subject to such rules as the
Company and the Committee may prescribe, including, without
limitation, rules concerning the manner of providing investment
directions, the frequency of changing such investment directions,
and method of crediting earnings, gains and losses for any portion
of a Deferred Benefit Account which is not covered by any valid
investment directions. Participants, retired Participants, and
Beneficiaries shall allocate their Deferred Benefit Account among
the deemed investment options by making an election online or filing
an election with the Committee at such time and in such form as the
Committee may require or permit. A Participant, retired
Participant or Beneficiary may elect to allocate his or her
Deferred Benefit Account in 1% increments (minimum of 5% per
investment option), among as many of the investment options which
are offered by the Company. The investment funds which the Company
may designate shall include but not be limited to the following
types of funds, which can be managed on an individual basis or as
part of a mutual fund, as the Company shall determine:
(a) money market funds;
(b) common stock funds;
(c) bond funds;
(d) balanced funds;
(e) investment funds which are primarily invested in insurance
contracts; and
(f) investment funds which are provided for under insurance
contracts.
The Company shall have the sole discretion to determine the number
of investment funds to be designated hereunder and the nature of the
funds and may change or eliminate the investment funds provided
hereunder from time to time. The Committee shall determine the rate
of earnings, gains and losses to be credited to Participant's
Deferred Benefit Accounts under this Plan with respect to any such
investment fund for any period, taking into account the return, net
of any expenses which would have been incurred in connection with
the sale, investment and reinvestment of the investment funds
(such as brokerage, postage, express and insurance charges and
transfer taxes), of such investment funds for such period.
3.9 Reallocations. Prior to January 1, 2001, a Participant may elect
-------------
to reallocate all or any whole percentage portion of his Deferred
Benefit Account effective as of the last Valuation Date of
any calendar month.
Effective January 1, 2001, a Participant may elect as of any
day on which securities are traded on the New York Stock Exchange
to change the manner in which his or her Deferred Benefit Account
and his or her future deferrals are deemed invested among the
available investment fund options. Any change of investment
allocation received will be effective as of the close of business
on that business day if received by 3:00 p.m. Central Time (or,
if earlier, the closing time of the New York Stock Exchange or
such other time and under such other conditions as may be imposed
by the recordkeeper or the Committee under the Company Incentive
Investment Plan). The determination of a Participant's having
timely elected a change of investment allocation shall be made
under the same terms and conditions as are applicable to "Timely
Notice" of elections to reallocate under the terms of the Company
Incentive Investment Plan.
3.10 Vesting of Deferred Benefit Account. A Participant shall be 100
-----------------------------------
percent vested in his or her Deferred Benefit Account equal to
the amount of Salary and Bonus he or she deferred into the
Deferred Benefit Account and the earnings, gains or losses
credited thereon.
IV. BENEFITS
--------
4.1 Inservice Distribution. At the time a Participant executes an
----------------------
Agreement, he or she may elect to receive a return of his or her
deferrals. The amount of the return of deferral shall be equal
to the lesser of the amount deferred in a specific year or the
Participant's Deferred Benefit Account. Each such return of
deferral shall be made in a lump sum as soon as administratively
feasible on or after the last business day of October, which
shall be no less than five (5) Deferral Years following the year
in which the deferral was originally made, provided that the
Participant continues in the employ of the Company, its
subsidiary or affiliated company until such date. Once the
Participant elects to receive his or her return of deferral,
the election shall be irrevocable. A return of deferral pursuant
to this Section 4.1 shall only be paid prior to a Participant's
Termination of Service. Any return of deferral paid shall be
deemed a distribution, and shall be deducted from the
Participant's Deferred Benefit Account. A separate return of
deferrals election shall be made for each Deferral Year.
4.2 Retirement Benefit. Subject to Section 4.6 below, upon a
-------------------
Participant's Retirement Date, he or she shall be entitled to
receive the amount of his or her Deferred Benefit Account. The
form of benefit payment, and the commencement of such benefit,
shall be as provided in Section 4.6.
4.3 Termination Benefit. Upon the Termination of Service of a
--------------------
Participant prior to his or her Retirement Date, for reasons other
than death or Disability, the Company shall pay to the Participant,
a benefit equal to his or her Deferred Benefit Account.
Unless otherwise directed by the Committee, the termination benefit
shall be payable in a lump sum as set forth in Section 4.11
following the Participant's Termination of Service. Upon a
Termination of Service, the Participant shall immediately cease
to be eligible for any other benefit provided under this Plan.
4.4 Death Benefit. Upon the death of a Participant or a retired
-------------
Participant, the Beneficiary of such Participant shall receive
the Participant's remaining Deferred Benefit Account. Payment of
a Participant's remaining Deferred Benefit Account shall be in
accordance with Section 4.6.
4.5 Disability. In the event of a Termination of Service due to
----------
Disability prior to his or her Retirement Date, a disabled
Participant shall receive his or her remaining Deferred Benefit
Account. Payment of a Participant's remaining Deferred Benefit
Account shall be in accordance with Section 4.6.
4.6 Form of Benefit Payment.
--------------------------
(a) Upon the happening of an event described in Sections 4.1, 4.2,
4.3, 4.4, or 4.5, the Company shall pay to the Participant
the amount specified therein in a lump sum.
(b) In the event that a Participant retires as described in
Section 4.2, the Participant may, with the consent of the
Committee, elect an installment form of benefit payments.
The written request must be made prior to December 31 of
the calendar year preceding prior to December 31 of the
calendar year preceding the Participant's Retirement Date.
The Committee may, in its sole and absolute discretion, grant
the Participant's request. If, upon a Participant's Retirement
Date, the balance of a Participant's Deferred Benefit
Account is less than $25,000, the Participant will be paid his
or her Deferred Benefit Account balance as of the Participant's
Retirement Date, in a final lump sum payment.
(c) In the event of the death of the Participant, as described
in Section 4.4, the Participant's Beneficiary may, with the
consent of the Committee, elect an installment benefit payment.
This written request must be made no later than thirty (30)
days after the Participant's date of death. The Committee may,
in its sole discretion, grant such Beneficiary's request.
(d) In the event that a Participant terminates service due to a
Disability as described in Section 4.5, the Participant may,
with the consent of the Committee, elect an installment form
of benefit payment. The written request must be made no
later than thirty (30) days after the date the Participant
is determined to be disabled by the Retirement Committee of
the Kimberly-Clark Salaried Employees' Retirement Plan. The
Committee may, in its sole discretion, grant the
Participant's request.
(e) In the event that installment payments are to be made
pursuant to Subsections 4.6(b), (c) or (d), such payments
shall be in quarterly installments commencing as soon as
administratively feasible after the Committee grants the request
for an installment form of benefit payment. Such quarterly
installments shall be payable in approximately equal amounts
over a period, no less than two (2) calendar years and no more
than twenty (20) calendar years. In addition, if, at the time a
Participant is scheduled to receive an installment payment, the
balance of his or her Deferred Benefit Account is less than $5,000,
the Participant will be paid his or her remaining Deferred Benefit
Account balance in a final lump sum payment.
Initially, the amount of any installments under the installment
form of payment described in this Subsection 4.6(e) shall be equal
to the balance of the Participant's Deferred Benefit Account
to be distributed divided by the number of installments to be
paid. The amount of the installment payments shall be recomputed
annually and the installment payments shall be increased or
decreased to reflect any changes in the Participant's Deferred
Benefit Account due to fluctuations in earnings, gains and losses
on the remaining balance and the number of remaining installments.
Quarterly installments payments will be made on the last business
day of January, April, July and October.
4.7 Limitations on the Annual Amount Paid to a Participant.
-----------------------------------------------------------
Notwithstanding any other provisions of this Plan to the contrary,
in the event that a portion of the payments due a Participant
pursuant to Sections 3.5, 4.1, 4.2, 4.3, 4.4, 4.5, or 4.6 would
not be deductible by the Company pursuant to Section 162(m) of the
Code, the Company, at its sole discretion, may postpone payment of
such amounts to the Participant until such time that the payments
would be deductible by the Company. Provided, however, that no
payment postponed pursuant to this Section 4.7 shall be postponed
beyond the first anniversary of such Participant's Termination
of Service.
4.8 Change of Control and Lump Sum Payments.
---------------------------------------------
(a) If there is a Change of Control, notwithstanding any other
provision of this Plan, any Participant who has a Deferred
Benefit Account hereunder may, at any time during a twenty-four
(24) month period immediately following a Change of Control,
elect to receive an immediate lump sum payment
of the balance of his or her Deferred Benefit Account,
reduced by a penalty equal to ten percent (10%) of the
Participant's Deferred Benefit Account as of the Determination
Date. The ten percent (10%) penalty shall be permanently
forfeited and shall not be paid to, or in respect of,
the Participant.
(b) If there is a Change of Control, notwithstanding any other
provision of this Plan, any retired or disabled Participant,
or Beneficiary, who has a Deferred Benefit Account
hereunder may, at any time during a twenty-four (24) month
period immediately following a Change of Control, elect to
receive an immediate lump sum payment of the balance of his or
her Deferred Benefit Account, reduced by a penalty equal
to five percent (5%) of the Participant's Deferred Benefit
Account as of the Determination Date. The five percent (5%)
penalty of the retired or disabled Participant's or
Beneficiary's Deferred Benefit Account shall be permanently
forfeited and shall not be paid to, or in respect of, the
retired or disabled Participant or Beneficiary.
(c) In the event no such request is made by a Participant, a
retired or disabled Participant or Beneficiary, the Plan and
Agreement shall remain in full force and effect.
4.9 Change In Credit Rating and Lump Sum Payments.
----------------------------------------------------
In the event the Company's financial rating falls below Investment
Grade, a Participant, retired or disabled Participant, or
Beneficiary may at any time during a six (6) month period
following the reduction in the Company's financial rating, elect to
receive an immediate lump sum payment of the balance of his or her
Deferred Benefit Account reduced by a penalty equal to ten percent
(10%) of the Participant's Deferred Benefit Account or five percent
(5%) of the retired or disabled Participant's or Beneficiary's
Deferred Benefit Account. The penalties accrued hereunder shall be
permanently forfeited and shall not be paid to, or in respect of,
the Participant, retired or disabled Participant or Beneficiary.
In the event no such request is made by a Participant, retired or
disabled Participant or Beneficiary, the Plan and Agreement shall
remain in full force and effect.
4.10 Tax Withholding. To the extent required by law in effect at the
---------------
time payments are made, the Company shall withhold any taxes
required to be withheld by any Federal, State or local government.
4.11 Commencement of Payments. Unless otherwise provided,
--------------------------
commencement of payments under this Plan shall be as soon as
administratively feasible on or after the Determination Date
after receipt of notice by the Committee of an event which
entitles a Participant or a Beneficiary to payments under this Plan.
4.12 Recipients of Payments: Designation of Beneficiary. All
-----------------------------------------------------
payments to be made by the Company under the Plan shall be
made to the Participant during his or her lifetime, provided that if
the Participant dies prior to the completion of such payments,
then all subsequent payments under the Plan shall be made by
the Company to the Beneficiary determined in accordance with this
Section. The Participant may designate a Beneficiary by filing a
written notice of such designation with the Committee in such form
as the Committee requires and may include contingent
Beneficiaries. The Participant may from time-to-time change the
designated Beneficiary by filing a new designation in writing
with the Committee. If no designation is in effect at the time when
any benefits payable under this Plan shall become due, the
Beneficiary shall be the spouse of the Participant, or if no
spouse is then living, the representatives of the Participant's
estate.
V. CLAIMS FOR BENEFITS PROCEDURE
--------------------------------
5.1 Claim for Benefits. Any claim for benefits under the Plan shall
------------------
be made in writing to any member of the Committee. If such claim is
wholly or partially denied by the Committee, the Committee shall,
within a reasonable period of time, but not later than sixty (60)
days after receipt of the claim, notify the claimant of the denial
of the claim. Such notice of denial shall be in writing and shall
contain:
(a) The specific reason or reasons for denial of the claim;
(b) A reference to the relevant Plan provisions upon which the
denial is based;
(c) A description of any additional material or information
necessary for the claimant to perfect the claim, together with
an explanation of why such material or information is
necessary; and
(d) An explanation of the Plan's claim review procedure.
If no such notice is provided, the claim shall be deemed to have
been denied.
5.2 Request for Review of a Denial of a Claim for Benefits. Upon the
------------------------------------------------------
receipt by the claimant of written notice of denial of the claim,
the claimant may file a written request to the Committee, requesting
a review of the denial of the claim, which review shall include a
hearing if deemed necessary by the Committee. In connection with
the claimant's appeal of the denial of his or her claim, he or she
may review relevant documents and may submit issues and comments in
writing.
5.3 Decision Upon Review of Denial of Claim for Benefits. The
-------------------------------------------------------
Committee shall render a decision on the claim review promptly,
but no more than sixty (60) days after the receipt of the claimant's
request for review, unless special circumstances (such as the need
to hold a hearing) require an extension of time, in which case the
sixty (60) day period shall be extended to 120 days. Such decision
shall:
(a) Include specific reasons for the decision;
(b) Be written in a manner calculated to be understood by the
claimant; and
(c) Contain specific references to the relevant Plan provisions
upon which the decision is based.
The decision of the Committee shall be final and binding in all
respects on both the Company and the claimant.
VI. ADMINISTRATION
--------------
6.1 Committee. The Plan shall be administered by the Committee. The
---------
Committee shall elect one of its members as chairman.
Members of the Committee shall not receive compensation for
their services. Committee expenses shall be paid by the Company.
Members of the Committee or agents of the Committee may be
Participants under the Plan. No member of the Committee who
is also a Participant shall be involved in the decisions of the
Committee regarding any determination of any claim for benefit with
respect to himself or herself.
6.2 General Rights, Powers, and Duties of Committee. The Committee
-----------------------------------------------
shall be responsible for the management, operation, and
administration of the Plan. The Committee may designate a
Committee member or an officer of the Company as Plan Administrator.
Absent such delegation, the Committee shall be the Plan
Administrator. The Plan Administrator shall perform duties as
designated by the Committee. In addition to any powers, rights and
duties set forth elsewhere in the Plan, it shall have the following
powers and duties:
(a) To adopt such rules and regulations consistent with the
provisions of the Plan as t deems necessary for the proper and
efficient administration of the Plan;
(b) To administer the Plan in accordance with its terms and any
rules and regulations it establishes;
(c) To maintain records concerning the Plan sufficient to
prepare reports, returns and other information required by the
Plan or by law;
(d) To construe and interpret the Plan including any doubtful or
contested terms and resolve all questions arising under the
Plan;
(e) To direct the Company to pay benefits under the Plan, and to
give such other directions and instructions as may be necessary
for the proper administration of the Plan;
(f) To employ or retain agents, attorneys, actuaries,
accountants or other persons, who may also be Participants in
the Plan or be employed by or represent the Company, as it
deems necessary for the effective exercise of its duties, and
may delegate to such agents any power and duties, both
ministerial and discretionary, as it may deem necessary and
appropriate; and
(g) To be responsible for the preparation, filing and disclosure
on behalf of the Plan of such documents and reports as are
required by any applicable Federal or State law.
6.3 Information to be Furnished to Committee. The Company shall furnish
-----------------------------------------
the Committee such data and information as it may require. The
records of the Company shall be determinative of each
Participant's period of employment, termination of employment
and the reason therefor, leave of absence, reemployment, Years
of Service, personal data, and Salary and Bonus reductions.
Participants and their Beneficiaries shall furnish to the
Committee such evidence, data, or information, and execute such
documents as the Committee requests.
6.4 Responsibility. No member of the Committee, the Compensation
--------------
Committee or the Board of Directors of the Company shall be
liable to any person for any action taken or omitted in connection
with the administration of this Plan.
6.5 Committee Review. Any action on matters within the discretion of
----------------
the Committee shall be final and conclusive as to all Participants,
retired Participants, disabled Participants, Beneficiaries and other
persons claiming rights under the Plan. The Committee shall exercise
all of the powers, duties and responsibilities set forth hereunder
in its sole discretion.
VII. AMENDMENT AND TERMINATION
---------------------------
7.1 Amendment. The Plan may be amended in whole or in part by either
---------
the Board of Directors or the Compensation Committee at any time.
Notice of any such amendment shall be given in writing to the
Committee and to each Participant and each Beneficiary. No amendment
shall decrease the value of a Participant's Deferred Benefit
Account.
7.2 Company's Right to Terminate. The Board of Directors may
-------------------------------
terminate the Plan and may terminate any Agreements pertaining
to the Participant at any time after the Effective Date of the Plan.
In the event of any such termination, the Participant shall be
entitled to the amount of his or her Deferred Benefit Account
determined under Section 3.7 as of the date of any such termination.
Such benefit shall be paid to the Participant in quarterly
installments over a period of no more than ten (10) years, except
that the Company, in its sole discretion, may pay out such benefit
in a lump sum or in installments over a period shorter than
ten (10) years.
VII. MISCELLANEOUS
-------------
8.1 No Implied Rights; Rights on Termination of Service. Neither the
---------------------------------------------------
establishment of the Plan nor any amendment thereof shall be
construed as giving any Participant, retired Participant,
disabled Participant, Beneficiary, or any other person any
legal or equitable right unless such right shall be specifically
provided for in the Plan or conferred by specific action of the
Company in accordance with the terms and provisions of the Plan.
Except as expressly provided in this Plan, the Company shall not
be required or be liable to make any payment under the Plan.
8.2 No Right to Company Assets. Neither the Participant nor any other
--------------------------
person shall acquire by reason of the Plan any right in or
title to any assets, funds or property of the Company
whatsoever including, without limiting the generality of the
foregoing, any specific funds, assets, or other property which the
Company, in its sole discretion, may set aside. Any benefits
which become payable hereunder shall be paid from the general
assets of the Company. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder
unsecured by any asset of the Company. Nothing contained in the
Plan constitutes a guarantee by the Company that the assets of
the Company shall be sufficient to pay any benefit to any person.
8.3 No Employment Rights. Nothing herein shall constitute a contract
--------------------
of employment or of continuing service or in any manner obligate
the Company to continue the services of the Participant, or
obligate the Participant to continue in the service of the Company,
or as a limitation of the right of the Company to discharge any
of its employees, with or without cause. Nothing herein shall be
construed as fixing or regulating the Salary and Bonus payable to
the Participant.
8.4 Offset. If, at the time payments or installments of payments are
------
to be made hereunder, the Participant, retired Participant,
disabled Participant, or the Beneficiary are indebted or obligated
to the Company, then the payments remaining to be made to the
Participant, retired Participant, disabled Participant, or the
Beneficiary may, at the sole discretion of the Company, be reduced
by the amount of such indebtedness or obligation, provided,
however, that an election by the Company not to reduce any such
payment or payments shall not constitute a waiver of its claim for
such indebtedness or obligation.
8.5 Non-assignability. Neither the Participant nor any other person
-----------------
shall have any voluntary or involuntary right to commute,
sell, assign, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which
are expressly declared to be unassignable and non-transferable.
No part of the amounts payable shall be, prior to actual payment,
subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by the
Participant or any other person, or be transferable by operation
of law in the event of the Participant's or any other person's
bankruptcy or insolvency.
8.6 Successors, Mergers, and Consolidations. The Plan and any
-----------------------------------------
Agreement thereunder shall inure to the benefit of and be binding
upon (i) the Company and its successors and assigns, including
without limitation, any corporation into which the Company may
be merged or consolidated, or which acquires all or substantially
all of the assets and business of the Company and (ii) the
Participant and his or her heirs, executors, administrators and
legal representatives.
8.7 Notice. Any notice required or permitted to be given under the
------
Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, and if given to the
Company, delivered to the principal office of the Company,
directed to the attention of the Committee. Such notice shall be
deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark or the receipt for
registration or certification.
8.8 Governing Laws. The Plan shall be construed and administered
--------------
according to the laws of the State of Wisconsin.
Exhibit (10)j
KIMBERLY-CLARK CORPORATION
RETIREMENT CONTRIBUTION EXCESS BENEFIT PROGRAM
----------------------------------------------
AMENDED AND RESTATED EFFECTIVE JUNE 29, 2000
In recognition of the valuable services provided to Kimberly-Clark
Corporation (the "Corporation"), and its subsidiaries, by its employees, the
Board of Directors of the Corporation (the "Board") wishes to provide
additional retirement benefits to those individuals whose benefits under the
Kimberly-Clark Corporation Retirement Contribution Plan (the "RCP") are
restricted by the operation of the provisions of the Internal Revenue Code of
1986, as amended. It is the intent of the Corporation to provide these
benefits under the terms and conditions hereinafter set forth. This Program
is intended to encompass two plans, (i) an "excess benefit plan" within the
meaning of Section 3(36) of Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and, as such, to be exempt from all of the provisions of
ERISA pursuant to Section 4(b)(5) thereof and (ii) a non-qualified
supplemental retirement plan which is unfunded and maintained primarily for
the purpose of providing deferred compensation for a select group of
management or highly compensated employees of the Corporation, pursuant to
Sections 201, 301 and 401 of ERISA and, as such, exempt from the provisions of
Parts II, III and IV of Title I of ERISA.
ARTICLE 1
Definitions
-----------
Each term which is used in this Program and also used in the RCP shall have
the same meaning herein as the RCP.
Notwithstanding the above, for purposes of this Program, where the following
words and phrases appear in this Program they shall have the respective
meanings set forth below unless the context clearly indicates otherwise:
1.1 "Beneficiary" means the person or persons who under this Program
becomes entitled to receive a Participant's interest in the event of the
Participant's death. The Beneficiary need not be the same as the beneficiary
under the RCP.
1.2 A "Change of Control" of the Corporation shall be deemed to have taken
place if: (i) a third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires shares
of the Corporation having 20% or more of the total number of votes that may be
cast for the election of Directors of the Corporation; or (ii) as the result
of any cash tender or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were directors of the
Corporation before the Transaction shall cease to constitute a majority of the
Board of Directors of the Corporation of any successor to the Corporation.
1.3 "Code" means the Internal Revenue Code for 1986, as amended and any
lawful regulations or other pronouncements promulgated thereunder.
1.4 "Committee" means the Incentive Investment Plan Committee named under
the Kimberly-Clark Corporation Salaried Employees Incentive Investment Plan.
1.5 "Earnings" means remuneration when paid, or would have been paid but
for an Employee's deferral election, to a Participant from a Participating
Unit for personal services rendered to such Participating Unit (before any
withholding required by law or authorized by the person to whom such
remuneration is payable), including overtime, bonuses, incentive compensation,
vacation pay, deducted military pay, state disability payments received,
workers compensation payments received and, to the extent such deductions
decrease the individual's base pay, Before-Tax deferrals under the
Kimberly-Clark Corporation Salaried Employee Incentive Investment Plan,
contributions under the Kimberly-Clark Corporation Flexible Benefits Plan or
any other plan described under Section 125 of the Code, and deferrals under
the Kimberly-Clark Corporation Deferred Compensation Plan. Earnings shall
exclude any severance payments (except as provided in Section 4.3 of the RCP),
payments made under the Kimberly-Clark Corporation Equity Participation Plans,
pay in lieu of vacation, compensation paid in a form other than cash (such as
goods, services and, except as otherwise provided herein, contributions to
employee benefit programs), service or suggestion awards, and all other
special or unusual compensation of any kind; provided, however that the
limitations on Earnings provided for pursuant to Code Sections 401(a)(17)
shall not apply under this Program. Notwithstanding the foregoing, Earnings
shall not include any remuneration paid to a Participant after payment of such
individual's Individual Account commences in accordance with Section 4.9
following the Participant's Termination of Service.
1.6 "Effective Date" means January 1, 1997.
1.7 "Excess Plan" means the plan established as part of the Program for
Participants whose Retirement Contributions to the RCP are limited solely by
Code Section 415.
1.8 "Individual Account" means the account established pursuant to Section
3.
1.9 "Investment Funds" means the phantom investment funds established
under this Program which will accrue earnings as if the Participant's
Individual Account held actual assets which were invested in the appropriate
Investment Fund as defined under the RCP.
1.10 "Participant" means any Employee who satisfies the eligibility
requirements set forth in Section 2. In the event of the death or
incompetency of a Participant, the term shall mean the Participant's personal
representative or guardian.
1.11 "Program" means the Kimberly-Clark Corporation Retirement
Contribution Excess Benefit Program as set forth herein and as the same may be
amended from time to time; provided, however, that the term "Excess Plan" or
"SRP" may be used to refer to only one of the two plans encompassed within the
Program.
1.12 "Retirement Date" means the date of Termination of Service of the
Participant on or after he attains age 55 and has 5 Years of Service with the
Corporation.
1.13 "RCP" means the Kimberly-Clark Corporation Retirement Contribution
Plan, as in effect from time to time.
1.14 "SRP" means the plan established as part of the Program for
Participants whose Retirement Contributions to the RCP are limited by the
application of the rules, or regulations, of Code Section 401(a)(4) or the
limitations of Code Section 401(a)(17), in either case alone or in conjunction
with the limitations of Code Section 415 or whose Earnings are not fully taken
into account in determining the Employee's Retirement Contributions to the
RCP.
1.15 "Termination of Service" means the Participant's cessation of his
service with the Corporation for any reason whatsoever, whether voluntarily or
involuntarily, including by reasons of retirement or death.
ARTICLE 2
Eligibility
-----------
2.1 Any Employee who is a Participant in the RCP on or after the Effective
Date and whose Retirement Contributions to the RCP are limited solely by Code
Section 415 shall participate in the Excess Plan. Any other Employee who is a
Participant in the RCP on or after the Effective Date and whose Retirement
Contributions to the RCP are limited by the application of the rules, or
regulations, of Code Section 401(a)(4) or the limitations of Code Section
401(a)(17), in either case alone or in conjunction with the limitations of
Code Section 415 or whose Earnings are not fully taken into account in
determining the Employee's Retirement Contributions to the RCP shall
participate in the SRP; provided, however, that no Employee shall become a
Participant in the SRP unless such Employee is a member of a select group of
management or highly compensated Employees of the Corporation so that the SRP
is maintained as a plan described in Section 201(2) of ERISA.
2.2 Notwithstanding any of the foregoing provisions of Article 2 to the
contrary, any Employee who on the Effective Date is both an active employee of
the Corporation or its subsidiaries and is a Participant in the Kimberly-Clark
Tissue Company Defined Contribution Excess Benefit Program (the "KCTC Plan")
must elect to participate in this Program and shall, pursuant to this
election, as of the Effective Date, have the amount credited to the
Participant's Individual Account under the KCTC Plan transferred to this
Program. "Active employee" shall not include employees who are in transition
assignments or who are on Limited Service as defined under the Scott Paper
Company Termination Pay Plan for Salaried Employees.
ARTICLE 3
Individual Account
------------------
3.1 The Corporation shall create and maintain an unfunded Individual
Account under the Excess Plan or the SRP, as applicable, for each Participant
to which it shall credit the amounts described in this Article 3.
Participants entitled to receive Retirement Contributions under the RCP shall
receive Retirement Contributions under the Excess Plan in an amount as would
have been contributed for such Participant under the RCP without regard to the
limitation on benefits imposed by Section 415 of the Code, and calculated
using Earnings as defined in this Program, but only to the extent that such
amount exceeds such limitations. In addition, each Participant shall receive
Retirement Contributions under the SRP as would have been contributed for such
Participant under the RCP without regard to the limitations on benefits
imposed by Sections 401(a)(17) and 401(a)(4) of the Code, and calculated using
Earnings as defined in this Program, but only to the extent that such amount
exceeds the Retirement Contributions under the RCP. Such Retirement
Contributions shall be made for each Participant on the same terms and
conditions, at the same times, and pursuant to the same elections made by the
Participant as they would have been if paid under the RCP, were not for such
limitations on benefits or Earnings.
3.2 For the period prior to July 1, 1997, as of the last day of each
calendar month, the Corporation shall credit each Participant's Individual
Account with deemed interest with respect to the then balance of the
Participant's Individual Account equal to 1% plus the rate shown for U.S.
Treasury Notes with a remaining maturity closest to, but not exceeded, 7
years, in the "representative mid-afternoon over the counter quotations
supplied by the Federal Reserve Bank of New York City, based on transactions
of $1 million or more," as reported in The Wall Street Journal published on
-----------------------
the last business day of each calendar month; provided, however, the Committee
may change this crediting rating at any time for deemed interest not yet
credited to an Individual Account.
3.3 After June 30, 1997 and prior to June 29, 2000, each Participant's
Retirement Contributions under this Program shall be considered allocated to
the Investment Funds in the same proportion as the Participant has elected
under the RCP pursuant to Section 6.1 thereof. Effective June 29, 2000, each
Participant's Retirement Contributions under this Program shall be considered
allocated to the Investment Funds according to the Participant's elections
under this Program, independent of the Participant's elections under the RCP,
provided that (i) such Participant's elections under this Program shall be
made in the same or similar manner prescribed by the Committee for the RCP,
and (ii) such Participant's elections under the RCP as of June 29, 2000 shall
be carried over to this Program until such time as the Participant changes
them hereunder.
3.4 After June 30, 1997 and prior to June 29, 2000, reallocations between
Investment Funds shall be considered made at the same time, in the same
proportionate amount, and to and from the same Investment Funds under this
Program as those made by the Participant under Section 6.3 of the RCP;
provided, however, that if such Participant has no account balance under the
RCP, the Participant may make separate reallocation elections hereunder in a
manner prescribed by the Committee. Effective June 29, 2000, reallocations
between Investment Funds shall be considered made according to the
Participant's elections under this Program, independent of the Participant's
elections under the RCP, provided that (i) such Participant's elections under
this Program shall be made in the same or similar manner prescribed by the
Committee for the RCP, and (ii) such Participant's elections under the RCP as
of June 29, 2000 shall be carried over to this Program until such time as the
Participant changes them hereunder.
3.5 After June 30, 1997 and before June 29, 2000, the Corporation shall
credit each Participant's Individual Account with earnings, gains and losses
as if such accounts held actual assets and such assets were invested among
such Investment Funds, in the same proportion as the Participant has invested
in the RCP; provided, however, that if such Participant has no account balance
under the RCP, the Participant may make separate investment elections
hereunder in the manner prescribed by the Committee. Effective June 29,
2000, the Corporation shall credit each Participant's Individual Account with
earnings, gains and losses as if such accounts were invested among the
Investment Funds according to the Participant's elections under this Program,
independent of the Participant's elections under the RCP, provided that (i)
such Participant's elections under this Program shall be made in the same or
similar manner prescribed by the Committee for the RCP, and (ii) such
Participant's elections under the RCP as of June 29, 2000 shall be carried
over to this Program until such time as the Participant changes them
hereunder.
ARTICLE 4
Distributions of Benefit Supplement
-----------------------------------
4.1 Retirement Benefit. Subject to Section 4.5 below, upon a
-------------------
Participant's Retirement Date, he shall be entitled to receive the amount of
his Individual Account. The form of benefit payment, and the time of
commencement of such benefit, shall be as provided in Section 4.4.
4.2 Termination Benefit. Upon the Termination of Service of a Participant
-------------------
prior to his Retirement Date, for reasons other than death, the Corporation
shall pay to the Participant, a benefit equal to his Individual Account.
Unless otherwise directed by the Committee, the termination benefit shall be
payable in a lump sum as set forth in Section 4.9 following the Participant's
Termination of Service. Upon payment following a Termination of Service, the
Participant shall immediately cease to be eligible for any other benefit
provided under this Program.
4.3 Death Benefits. Upon the death of a Participant or a retired
---------------
Participant, the Beneficiary of such Participant shall receive the
Participant's remaining Individual Account. Payment of a Participant's
remaining Individual Account shall be made in accordance with Section 4.4.
4.4 Form of Benefit Payment.
--------------------------
(a) Upon the happening of an event described in Sections 4.1, 4.2 or
4.3, the Corporation shall pay to the Participant the amount specified
therein in a lump sum.
(b) In the event that a Participant retires as described in Section
4.1, the Participant may, with the consent of the Committee, elect an
installment form of benefit payments. The written request must be made
prior to December 31 of the calendar year preceding the Participant's
Retirement Date. The Committee may, in its sole discretion, grant
the Participant's request.
(c) In the event of the death of the Participant, the Participant's
Beneficiary may, with the consent of the Committee, elect an installment
form of benefit payment. This written request must be made no later
than thirty (30) days after the Participant's date of death. The
Committee may, in its sole discretion, grant such Beneficiary's request.
(d) In the event that installment payments are to be made pursuant to
Subsections 4.4(b) or (c), such payments shall be in annual installments,
payable on a monthly basis. Such annual installments shall be payable
using a declining balance method over a period, no less than two (2)
calendar years and no more than twenty (20) calendar years.
Initially, the amount of any installments under the installment
form of payment described in this Subsection 4.4(d) shall be equal to
the balance of the Participant's Individual Account to be distributed
divided by the number of annual installments to be paid. The amount
of the installment payments shall be recomputed annually and the
installment payments shall be increased or decreased to reflect any
changes in the Participant's Individual Account due to fluctuations in
earnings, gains and losses on the remaining balance and the number of
remaining annual installments. Monthly installment payments will be
made on the last business day of each calendar month.
4.5 Limitations on the Annual Amount Paid to a Participant.
--------------------------------------------------------------
Notwithstanding any other provisions of this Program to the contrary, in the
event that a portion of the payments due a Participant pursuant to Sections
4.1, 4.2, 4.3 or 4.4 would not be deductible by the Corporation pursuant to
Section 162(m) of the Code, the Corporation, at its discretion, may postpone
payment of such amounts to the Participant until such time that the payments
would be deductible by the Corporation; provided, however, that no payment
postponed pursuant to this Section 4.5 shall be postponed beyond the first
anniversary of such Participant's Termination of Service.
4.6 Change of Control and Lump Sum Payments
---------------------------------------------
(a) If there is a Change of Control, notwithstanding any other
provision of this Program, any Participant who has an Individual Account
hereunder may, at any time during a twenty-four (24) month period
immediately following a Change of Control, elect to receive an
immediate lump sum payment of the balance of his Individual Account,
reduced by a penalty equal to ten percent (10%) of the Participant's
Individual Account as of the last business day of the month preceding
the date of the election. The ten percent (10%) penalty shall be
permanently forfeited and shall not be paid to, or in respect of, the
Participant.
(b) If there is a Change of Control, notwithstanding any other
provision of this Program, any retired Participant, or Beneficiary,
who has an Individual Account hereunder may, at any time during a
twenty-four (24) month period immediately following a Change of
Control, elect to receive an immediate lump sum payment of the
balance of his Individual Account, reduced by a penalty equal to
five percent (5%) of the Participant's Individual Account as of the
last business day of the month preceding the date of the election. The
five percent (5%) penalty of the retired Participant's or
Beneficiary's Individual Account shall be permanently forfeited and
shall not be paid to, or in respect of, the retired Participant or
Beneficiary.
(c) In the event no such request is made by a Participant, a retired
Participant or Beneficiary, the Program shall remain in full force and
effect.
4.7 Change in Credit Rating and Lump Sum Payments.
----------------------------------------------------
In the event the Corporation's financial rating falls below Investment Grade,
a Participant, retired Participant, or Beneficiary may at any time during a
six (6) month period following the reduction in the Corporation's financial
rating, elect to receive an immediate lump sum payment of the balance of his
Individual Account reduced by a penalty equal to ten percent (10%) of the
Participant's Individual Account or five percent (5%) of the retired
Participant's or Beneficiary's Individual Account as of the last business day
of the month preceding the election. The penalties accrued hereunder shall be
permanently forfeited and shall not be paid to, or in respect of, the
Participant, retired Participant or Beneficiary.
In the event no such request is made by a Participant, retired Participant or
Beneficiary, the Program shall remain in full force and effect.
4.8 Tax Withholding. To the extent required by law, the Corporation shall
---------------
withhold any taxes required to be withheld by any Federal, State or local
government.
4.9 Commencement of Payments. Unless otherwise provided, commencement of
------------------------
payments under Section 4.6 or 4.7 of this Program shall be as soon as
administratively feasible on or after the last business day of the month
following receipt of notice and approval by the Committee of an event which
entitles a Participant or a Beneficiary to payments under this Program.
Unless otherwise provided, commencement of payments under Section 4.1, 4.2 or
4.3 of this Program shall be payable in the first calendar quarter of the year
following the Plan year in which the Participant terminates employment from
the Corporation for any reason; provided, however, that such a termination
shall not be deemed to occur until immediately following the receipt of all
payment due to the Employee under the Scott Paper Company Termination Pay Plan
for Salaried Employees.
4.10 Recipients of Payments; Designation of Beneficiary. All payments to
--------------------------------------------------
be made by the Corporation under the Program shall be made to the Participant
during his lifetime, provided that if the Participant dies prior to the
completion of such payments, then all subsequent payments under the Program
shall be made by the Corporation to the Beneficiary determined in accordance
with this Section. The Participant may designate a Beneficiary by filing a
written notice of such designation with the Committee in such form as the
Committee requires and may include contingent Beneficiaries. The Participant
may from time-to-time change the designated Beneficiary by filing a new
designation in writing with the Committee. If a married Participant
designates a Beneficiary or Beneficiaries other than his spouse at the time of
such designation, such designation shall not be effective (and the
Participant's spouse shall be the Beneficiary) unless:
(a) the spouse consents in writing to such designation;
(b) the spouse's consent acknowledges the effect of such designation,
which consent shall be irrevocable; and
(c) the spouse executes the consent in the presence of either a Plan
representative designated by the Committee or a notary public.
Notwithstanding the foregoing, such consent shall not be required if the
Participant establishes to the satisfaction of the Committee that such consent
cannot be obtained because (i) there is no spouse; (ii) the spouse cannot be
located after reasonable efforts have been made; or (iii) other circumstances
exist to excuse spousal consent as determined by the Committee. If no
designation is in effect at the time when any benefits payable under this Plan
shall become due, the Beneficiary shall be the spouse of the Participant, or
if no spouse is then living, the representatives of the Participant's estate.
ARTICLE 5
Vesting
-------
5.1 The balance of a Participant's Individual Account shall be 100% vested
at the same time as if the amounts had been credited to the Participant's
Account under the RCP.
5.2 K-C Aviation Benefit. Notwithstanding any other provision of the
--------------------
Plan, a Participant shall be fully vested in his Individual Account as of the
date on which he ceases to be an Eligible Employee under the Program, if such
Participant meets all of the following conditions:
(a) immediately prior to the Closing Date, as defined in the Agreement
of Purchase and Sale dated as of July 23, 1998 by and between the
Corporation and Gulfstream Aerospace Corporation
(the "A greement"), he must have been an Employee employed by
the Corporation or K-C Aviation Inc.; and
(b) as of the Closing Date, as defined in the Agreement, he must have
ceased to be an Eligible Employee solely on account of the sale
of the stock of K-C Aviation Inc. pursuant to the Agreement,
and he must either (i) be employed by the Buyer, as defined
in the Agreement, immediately after he ceases to be an Eligible
Employee hereunder, or (ii) have been on a long-term disability
leave of absence from K-C Aviation Inc. as of the Closing Date, as
defined in the Agreement.
ARTICLE 6
Funding
-------
6.1 The Board may, but shall not be required to, authorize the
establishment of a trust by the Corporation to serve as the funding vehicle
for the benefits described herein. In any event, the Corporation's
obligations hereunder shall constitute a general, unsecured obligation,
payable solely out of its general assets, and no Participant shall have any
right to any specific assets of the Corporation.
ARTICLE 7
Administration
--------------
7.1 The Committee shall administer this Program and shall have the same
powers and duties, and shall be subject to the same limitations as are set
forth in the Kimberly-Clark Corporation Salaried Employees Incentive
Investment Plan.
ARTICLE 8
Amendment and Termination
-------------------------
8.1 The Corporation, by action of the Board, or the Compensation Committee
as designated by the Board, shall have the right at any time to amend this
Program in any respect, or to terminate this Program; provided, however, that
no such amendment or termination shall operate to reduce the benefit that has
accrued for any Participant who is participating in the Program nor the
payment due to a terminated Participant at the time the amendment or
termination is adopted. Continuance of the Program is completely voluntary
and is not assumed as a contractual obligation of the Corporation.
Notwithstanding the foregoing, this Program shall terminate when the RCP
terminates.
Any action permitted to be taken by the Board, or the Compensation Committee
as designated by the Board, under the foregoing provision regarding the
modification, alteration or amendment of the Program may be taken by the
Committee, using its prescribed procedures, if such action
(a) is required by law, or
(b) is estimated not to increase the annual cost of the Program by more
than $1,000,000.
Any action taken by the Board, the Compensation Committee as designated by the
Board, or Committee shall be made by or pursuant to a resolution duly adopted
by the Board, the Compensation Committee as designated by the Board, or
-----
Committee and shall be evidenced by such resolution or by a written instrument
executed by such persons as the Board, the Compensation Committee as
-----
designated by the Board, or Committee shall authorize for such purpose.
---------
The Committee shall report to the Chief Executive Officer of the Corporation
-----------
before January 31 of each year all action taken by it hereunder during the
preceding calendar year.
ARTICLE 9
Miscellaneous
-------------
9.1 Nothing contained herein (a) shall be deemed to exclude a Participant
from any compensation, bonus, pension, insurance, termination pay or other
benefit to which he otherwise is or might become entitle to as an Employee or
(b) shall be construed a conferring upon an Employee the right to continue in
the employ of the Corporation as an executive or in any other capacity;
provided, however, that if, at the time payments or installments of payments
are to be made hereunder, the Participant or the Beneficiary are indebted or
obligated to the Corporation, then the payments remaining to be made to the
Participant or the Beneficiary may, at the discretion of the Corporation, be
reduced by the amount of such indebtedness or obligation, provided, however,
that an election by the Corporation not to reduce any such payment or payments
shall not constitute a waiver of its claim for such indebtedness or
obligation.
9.2 Any amounts payable by the Corporation hereunder shall not be deemed
salary or other compensation to a Participant for the purposes of computing
benefits to which the Participant may be entitled under any other arrangement
established by the Corporation for the benefit of its Employees.
9.3 The rights and obligations created hereunder shall be binding on a
Participant's heirs, executors and administrators and on the successors and
assigns of the Corporation.
9.4 The Program shall be construed and governed by the laws of the State
of Wisconsin.
9.5 The rights of any Participant under this Program are personal and may
not be assigned, transferred, pledged or encumbered. Any attempt to do so
shall be void.
9.6 Neither the Corporation, its Employees, agents, any member of the
Board, the Plan Administrator nor the Committee shall be responsible or liable
in any manner to any Participant, Beneficiary, or any person claiming through
them for any benefit or action taken or omitted in connection with the
granting of benefits, the continuation of benefits or the interpretation and
administration of this Program.
9.7 An application or claim for a benefit under the RCP shall constitute a
claim for a benefit under this Program.
9.8 The Corporation is the plan sponsor. All actions shall be taken by
the Corporation in its sole discretion, not as a fiduciary, and need not be
applied uniformly to similarly situated individuals.
Exhibit (10)k
KIMBERLY-CLARK CORPORATION
1999 RESTRICTED STOCK PLAN
(AMENDED AS OF NOVEMBER 14, 2000)
1. PURPOSE
This Restricted Stock Plan (the "Plan") of Kimberly-Clark Corporation
(the "Corporation") is intended to aid in 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, and to
provide such employees with this incentive and reward opportunity and thereby
increase their motivation to continue to make such contributions in the future.
2. EFFECTIVE DATE
The Plan is effective as of January 1, 1999.
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.
-----
"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 Directors 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 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.
"Committee Rules" means the interpretative guidelines, if any, 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.
"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 mployment.
"Restricted Period" shall mean the period of time during which the
------------------
Transferability Restrictions applicable to Awards will be inforce.
"Restricted Share" shall mean a share of Common Stock which may not be
-----------------
traded or sold, until the date the Transferability Restrictions expire.
"Restricted Share Unit" means the right, as described in section 8, 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 8(d), and the Corporation shall maintain a bookkeeping account
in the name of the Participant to which the Restricted Share Unit shall
relate.
"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:
(i) 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;
(ii) 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;
(iii) 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;
(iv) 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;
(v) 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
(vi) 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
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 Salaried Employees' Retirement
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. Any interpretation or construction of any
provisions of this Plan 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.
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, except that: (a) the authority to grant Awards, the selection
of officers and directors for participation and decisions concerning the
timing, pricing and amount of a grant or Award shall not be delegated by the
Committee; (b) the authority to administer Awards with respect to persons who
are subject to section 16 of the Exchange Act shall not be delegated by the
Committee; and (c) any delegation shall satisfy all applicable requirements of
rule 16b-3 of the Exchange Act, or any successor provision. 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 Plan 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, and it is desired to motivate them to
continue to make such contributions in the future. Only employees (including
officers and directors who are employees) of the Corporation and its
Affiliates are eligible to participate in the Plan.
6. FORMS OF AWARDS
All Awards under the Plan shall be made in the form of Restricted Shares
or Restricted Share Units. The Committee may make Awards solely in Restricted
Shares or Restricted Share Units, or in any combination of the two.
Notwithstanding anything in this Plan to the contrary, any Restricted Shares
shall contain the restriction on assignability in subsection 14(f) of this
Plan to the extent required under rule 16b-3 of the Exchange Act.
7. RESTRICTED SHARES
The Committee 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 Grantee. 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 Period"). The Restricted
Period shall be for a minimum of three years and shall not exceed ten years
from the date of grants, 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 or to any one Grantee or may be different with respect to
different Grantees or with respect to various of the Restricted Shares granted
to the same Grantee, 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 Grantee's
right, if any, to receive Shares upon termination of the Restricted Period may
not be assigned or transferred except by will or by the laws of decent 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 7(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 Grantee will not be entitled to receive any Shares unless he or
she is still employed by the Corporation or its Subsidiaries at the end of the
Restricted Period, (ii) that the Grantee 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 Grantee'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 Grantee
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 Grantee's death,
Total and Permanent Disability or earlier vesting of the Shares, such earlier
termination of the Transferability Restrictions. At whichever time is
applicable, certificates representing the number of Shares to which the
Grantee is then entitled shall be delivered to the Grantee free and clear of
the Transferability Restrictions; provided that in the case of a Grantee 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, if
any, to which the Grantee is entitled pursuant to the Transferability
Restrictions shall be issued and delivered to the Grantee, free and clear of
the Transferability Restrictions.
8. RESTRICTED SHARE UNITS
The Committee shall from time to time designate those Participants who
shall receive 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.
(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. With respect to each grant of
Restricted Share Units, the Committee shall 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 Grantee 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 Grantee 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 Grantee'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 8(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.
9. 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 Share or Restricted Share Unit Award shall be considered to vest as
of the close of the fiscal year 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 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.
10. 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 2,500,000 in the aggregate, subject
to the adjustment provision set forth in section 11 hereof. The shares of
Common Stock subject to the Plan shall consist only of treasury shares.
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 appropriate by the Committee. Shares of Common Stock which
are distributed through the payment of Restricted Share Units pursuant to
subsection 8(d) will not be available for Awards under the Plan.
11. 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 number of
Restricted Shares and Restricted Share Units awarded to Participants, and (d)
such other provisions of the Plan as may be necessary and equitable to carry
out the foregoing purposes.
12. 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.
13. TERM OF THE PLAN
The term of the Plan shall be four years, beginning January 1, 1999, and
ending December 31, 2002, unless the Plan is terminated prior thereto by the
Committee. No Restricted Shares or Restricted Share Units may be awarded
after the termination date of the Plan, but Restricted Shares and Restricted
Share Units theretofore granted or awarded shall continue in force beyond that
date pursuant to their terms.
14. GENERAL PROVISIONS
(a) Designated Beneficiary. Each Participant who shall be
granted Restricted Shares and 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, accelerate the
Restricted Period with respect to the Awards granted under this Plan. 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) determine which Participants, countries and Affiliates
are eligible to participate in the Plan, (ii) modify the terms and conditions
of any Awards granted to Participants who are employed outside the United
States, (iii) establish subplans, each of which shall be attached as an
appendix hereto, modify Award exercise procedures and other terms and
procedures to the extent such actions may be necessary or advisable, and (iv)
take any action, either before or after the Award is made, which it 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 (1) materially increase any benefits accruing to any Participants
under the Plan, (2) increase the number of securities which may be issued
under the Plan, or (3) result in a failure to comply with applicable
provisions of the Securities Act of 1933, the Exchange Act or the Code.
(e) 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.
(f) Inalienability of Benefits and Interest. Except as provided
in subsection 14(a), 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.
(g) 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.
(h) 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 retain, and shall have the
unlimited right to sell or otherwise deal with for their own account, any
shares of Common Stock purchased pursuant to this paragraph.
(i) Withholding. The Committee shall require the withholding of
all taxes as required by law. 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.
(j) Amendments. The Committee may at any time amend, suspend,
or discontinue the Plan or alter or amend any or all Awards 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 subsection 14(d) 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 under the Plan.
Exhibit 10(l)
KIMBERLY-CLARK CORPORATION
OUTSIDE DIRECTORS'
STOCK OPTION PLAN
(EFFECTIVE JANUARY 1, 2001)
1. INTRODUCTION
The Kimberly-Clark Corporation Outside Directors' Stock Option Plan (the
"Plan") specifies the compensation to be paid by Kimberly-Clark Corporation
(the "Company") in the form of options to purchase shares of common stock, par
value $1.25 per share, of the Company ("Stock") for services performed by
Outside Directors (as hereinafter defined).
The Plan is intended to promote the interests of the Company and its
stockholders by enhancing the Company's ability to attract, motivate and
retain as Outside Directors persons of training, experience and ability, and
to encourage the highest level of Outside Director performance by aligning the
Outside Directors' economic interests more closely with those of the Company's
stockholders.
2. DEFINITIONS
Unless otherwise defined in the text of the Plan, capitalized terms
herein shall have the meanings set forth in this Section 2.
"Affiliate" means any company in which the Company owns 20 percent or
---------
more of the equity interest (collectively, the "Affiliates").
"Board" means the Board of Directors of the Company.
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"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 Company having 20
percent or more of the total number of votes that may be cast for the election
of Directors of the Company; 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 Company before
the Transaction shall cease to constitute a majority of the Board of
Directors of the Company or any successor to the Company.
"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.
---------
"Committee Rules" means the Committee Rules for the Kimberly-Clark Corporation
---------------
1992 Equity Participation Plan or any successor plan.
"Director" means a member of the Board.
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"Effective Date" means January 1, 2001.
---------------
"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 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.
"Option" means a right to purchase a specified number of shares of Stock at a
------
fixed option price equal to no less than 100 percent of the Fair Market Value
of the Stock on the date the Option is granted. For purposes of this Plan,
Options shall be issued either as "Annual Options," as described in subsection
--------------
7(a), or "Additional Options," as described in subsection 7(b).
-------------------
"Outside Director" means a Director who is not on the date of grant of an
-----------------
Option pursuant to the Plan, or within one year prior to the date of such
grant, an employee of the Company or any of its Affiliates.
"Retainer" means the annual retainer payable to an Outside Director for
--------
services rendered as a Director. As of the Effective Date, the amount of the
cash portion of such Retainer shall be $50,000 per year, payable in quarterly
installments in advance.
"Rule 16b-3" means Rule 16b-3 under the Securities Exchange Act of 1934, as
-----------
amended.
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"Retirement" and "Retires" means the termination of service as a Director on
---------- -------
or after the date the Director has attained age 55.
"Stock" means the shares of the Company's common stock, par value $1.25 per
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share.
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3. PARTICIPATION
Participation in the Plan is limited to Outside Directors. It is
intended that all Outside Directors will be participants in the Plan.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board, which shall have sole and
complete discretion and authority with respect thereto, except as expressly
limited by the Plan. All action taken by the Board in the administration and
interpretation of the Plan shall be final and binding on all matters relating
to the Plan. All questions of interpretation, administration and application
of the Plan shall be determined by a majority of the members of the Board,
except that the Board may authorize any Directors, officers or employees of
the Company to assist the Board in the administration of the Plan and to
execute documents on behalf of the Board. The Board also may delegate to the
Compensation Committee of the Board, or such Directors, officers or employees,
such other ministerial and discretionary duties as it sees fit.
The Company or the Board may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan, and may
rely upon any advice or opinion received from any such counsel or consultant
and any computation received from any such consultant or agent. No member of
the Board shall be liable for any act done or omitted to be done by such
member, or by any other member of the Board, in connection with the Plan,
except for such member's own willful misconduct or as otherwise expressly
provided by statute.
The Board shall have the power to promulgate 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
Option Agreements.
All expenses of administering the Plan shall be paid by the Company.
5. TERM OF PLAN
The Plan shall become effective as the Effective Date. The Plan shall
remain in effect until December 31, 2011, unless the Plan is terminated prior
thereto by the Board. No Option may be granted after the termination date of
the Plan, but Options theretofore granted shall continue in force beyond that
date pursuant to their terms.
6. SHARES SUBJECT TO THE PLAN; ADJUSTMENTS
(a) Shares Subject to the Plan. The aggregate maximum number of
shares of Stock available for grant under the Plan shall be 1,000,000 shares,
subject to the adjustment provision set forth in subsection 6(b) below.
Shares of Stock subject to the Plan will be shares that were once issued and
subsequently reacquired by the Company in the form of treasury stock. Shares
subject to Options which become ineligible for purchase will be available for
Options 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 Board. Notwithstanding anything in this
Plan to the contrary, each grant of Options under this Plan shall be subject
to the availability of shares under this subsection 6(a).
(b) Adjustments. In the event there are any changes in the Stock or
the capitalization of the Company through a corporate transaction, such as any
merger, any acquisition through the issuance of capital stock of the Company,
any consolidation, any separation of the Company (including a spin-off or
other distribution of stock of the Company), any reorganization of the Company
(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
Company, recapitalization, stock dividend, stock split or other change in the
corporate structure, appropriate adjustments and changes shall be made by the
Board, to the extent necessary to preserve the benefit to the Outside Director
contemplated hereby, to reflect such changes in (a) the aggregate number of
shares subject to the Plan, (b) the maximum number of shares for which an
Option may be granted or awarded to any Outside Director, (c) the number of
shares and the Option Price per share of all shares of Stock subject to
outstanding Options, and (d) 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 dilution or enlargement of any rights
of any Outside Director.
7. TERMS OF THE GRANTS
(a) Annual Grant. As part of his or her annual Retainer each Outside
Director during the calendar year shall be granted an Option to purchase 2,500
shares. In addition, each Outside Director who during the calendar year is
designated to serve as the Chair of the Audit or Compensation Committee, or
both, of the Board, shall be granted an Option to purchase an additional 300
shares for each Chair. Each Outside Director who during the calendar year is
designated to serve as the Chair of the Nominating or Corporate Governance
Committee, or both, of the Board, shall be granted an Option to purchase an
additional 200 shares for each Chair. A grant of Options as payment of either
the annual retainer or for each applicable Chair of a Committee are referred
to herein as "Annual Options." Each Outside Director, and each Chair of the
Audit, Compensation, Nominating or Corporate Governance Committees, as of
January 1 of the calendar year, shall be automatically granted the Options
hereunder, without further action by the Board or the stockholders of the
Company, on the earlier of the date of the first regular meeting during the
calendar year of either the Board or Committee. Each Outside Director who
first becomes eligible for a grant after January 1 of the calendar year, and
each Chair of the Audit, Compensation, Nominating or Corporate Governance
Committee, who is appointed after January 1 of the calendar year, shall be
automatically granted the Options hereunder, without further action by the
Board or the stockholders of the Company, on the earlier of the date of the
first regular meeting during the calendar year of either the Board or the
Committee after the date such Outside Director first becomes eligible for the
grant of Options under this subsection 7(a).
(b) Election of Additional Option. Each Outside Director may elect
to receive the cash portion of his or her annual Retainer in the form of an
additional option (hereinafter referred to as an "Additional Option"), in
increments of 50 percent of such cash portion of the Retainer. Except as
otherwise provided below, such election must be made prior to the date that
services are rendered in the calendar year in which such Retainer otherwise
would be paid and shall be irrevocable thereafter for such calendar year;
provided, however, that an election by an Outside Director pursuant to this
subsection for a calendar year (or portion thereof) shall be valid and
effective for all purposes for all succeeding calendar years, unless and until
such election is revoked or modified by such Outside Director prior to the
date that services are rendered in such succeeding calendar year(s); and,
provided further, that no such election, revocation or modification may be
made within six months of another such election, revocation or modification if
the exemption afforded by Rule 16b-3 would not be available as a result
thereof.
Notwithstanding the preceding, an individual who is elected as an Outside
Director during a calendar year shall be permitted to make an election to
receive the cash portion of his or her annual Retainer in the form of an
Additional Option, in increments of 50 percent of such cash portion of the
Retainer, during the thirty day period following his or her election date. An
election under this paragraph shall be subject to the terms and conditions of
this Section.
The number of shares subject to this Additional Option shall be based on
85 percent of the Black-Scholes valuation of the cash portion of the Retainer
elected to be received as an Additional Option as of the date of grant. Each
Outside Director as of January 1 of the calendar year, shall be automatically
granted the Additional Options elected hereunder, without further action by
the Board or the stockholders of the Company, on the earlier of the date of
the first regular meeting during the calendar year of either the Board or the
Committee. Each Outside Director who first becomes eligible for a grant after
January 1 of the calendar year, shall be automatically granted the Additional
Options elected hereunder, without further action by the Board or the
stockholders of the Company, on the earlier of the date of the first regular
meeting during the calendar year of either the Board or the Committee after
the date such Outside Director first becomes eligible and elects the grant of
Additional Options under this subsection 7(b).
(c) Form of Additional Option Election. An election by an Outside
Director to receive some or all of the cash portion of his or her Retainer as
an Additional Option shall (i) be in writing, (ii) be delivered to the
Secretary of the Company, and (iii) be irrevocable in all respects with
respect to the calendar year(s) to which the election relates. If no election
has ever been made by the Outside Director pursuant to subsection 7(b) above,
he or she shall be deemed to have made an election to receive the entire cash
portion of the Retainer in cash.
(d) Option Agreement. After granting an Option to an Outside Director,
the Board shall cause to be delivered to the Outside Director an agreement
evidencing the granting of the Option. The agreement shall be in such form as
the Board shall from time to time approve.
(e) Period of Option. The period of each Option shall be 10 years
from the date it is granted.
(f) Option Price. The exercise price of an Option shall be the Fair
Market Value of the Stock at the time the Option is granted.
(g) Limitations on Exercise. Each Option shall not be exercisable
until at least one year has expired after the granting of the Option, during
which time the Outside Director shall have been in the continuous service as a
Director of the Company; provided, however, that the provisions of this
subsection 7(g) shall not apply and all Options outstanding under the Plan
shall be exercisable in full if a Change in Control occurs. One year after
the date the Option was granted, the Outside Director may purchase the total
number of shares covered by the Option; provided, however, that if the
Director's service is terminated for any reason other than death, Retirement,
a voluntary decision by the Director not to stand for reelection to the Board
or total and permanent disability, the Option shall be exercisable only for
the number of shares of 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.
(h) Exercise; Notice Thereof. Options shall be exercised by
delivering to the Company, 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 Company or in shares of Common Stock transferable to the
Company and having a Fair Market Value on the transfer date equal to the
amount payable to the Company. The date of exercise shall be deemed to be the
date the Company receives the written notice and payment for the shares being
purchased. A Director shall have none of the rights of a stockholder with
respect to shares covered by an Option until the Director becomes the record
holder of such shares.
(i) Exercise after Death, Retirement, or Disability. If a Director
dies, retires or becomes totally and permanently disabled, without having
exercised an Option in full, the remaining portion of such Option may be
exercised, without regard to the limitations in subsection 7(g), within the
remaining period of the Option. Upon a Director's death, the Option may be
exercised by the person or persons to whom such Director's rights under the
Option shall pass by will or the laws of descent and distribution or, if no
such person has such rights, by his executor or administrator.
(j) Non-transferability. During the Director's lifetime, Options
shall be exercisable only by such Director. Options shall not be transferable
other than by will or the laws of descent and distribution upon the Director's
death. Notwithstanding anything in this subsection 7(j) to the contrary,
Directors shall have the right to transfer Options, to the extent allowed
under rule 16b-3 of the Exchange Act, subject to the same terms and conditions
applicable to options granted to the Chief Executive Officer of the Company
under Committee Rules.
(k) Purchase for Investment. It is contemplated that the Company
will register shares sold to Directors pursuant to the Plan under the
Securities Act of 1933. In the absence of an effective registration, however,
a Director 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.
(l) Options for Nonresident Aliens. In the case of any Option
awarded to a Director who is not a resident of the United States, the Board
may (i) waive or alter the conditions set forth in subsections 7(a) through
7(k) to the extent that such action is necessary to conform such Option to
applicable foreign law, or (ii) take any action, either before or after the
award of such Option, which it deems advisable to obtain approval of such
Option by an appropriate governmental entity; provided, however, that no
action may be taken hereunder if such action would (1) increase any benefits
accruing to any Directors under the Plan, (2) increase the number of
securities which may be issued under the Plan, (3) modify the requirements for
eligibility to participate in the Plan, or (4) result in a failure to comply
with applicable provisions of the Securities Act of 1933, the Exchange Act or
the Code.
8. NOTICES; DELIVERY OF STOCK CERTIFICATES
Any notice required or permitted to be given by the Company or the Board
pursuant to the Plan shall be deemed given when personally delivered or
deposited in the United States mail, registered or certified, postage prepaid,
addressed to the Outside Director at the last address shown for the Outside
Director on the records of the Company.
9. AMENDMENT AND TERMINATION
The Board may at any time amend, suspend, or discontinue the Plan or
alter or amend any or all Options and Option Agreements under the Plan to the
extent (i) permitted by law, (ii) permitted by the rules of any stock exchange
on which the Stock or any other security of the Company is listed, and (iii)
permitted under applicable provisions of the Securities Act of 1933, as
amended, the Exchange Act (including Rule 16b-3 thereof); provided, however,
that if any of the foregoing requires the approval by the stockholders of any
such amendment, suspension or discontinuance, then the Board may take such
action subject to the approval of the stockholders. Except as provided in
subsection 6(b), no such amendment, suspension or termination of the Plan
shall, without the consent of the Director, adversely alter or change any of
the rights or obligations under any Option granted to the Director. The Board
may in its sole and absolute discretion, by written notice to a Director, (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, and/or (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. Except as provided in
subsection 7(l) and this Section 9, no such amendment, suspension, or
termination of the Plan shall, without the consent of the Director, adversely
alter or change any of the rights or obligations under any Options or other
rights previously granted the Director under the Plan.
10. TAXES
The Company shall require the withholding of all taxes as required by
law.
11. GOVERNING LAW
The terms of the Plan shall be governed, construed, administered and
regulated in accordance with the laws of the state of Delaware and applicable
federal law. In the event any provision of the Plan shall be determined to be
illegal or invalid for any reason, the other provisions of the Plan shall
continue in full force and effect as if such illegal or invalid provision had
never been included herein.
12. DIRECTOR'S SERVICE
Nothing contained in the Plan, or with respect to any grant hereunder,
shall interfere with or limit in any way the right of stockholders of the
Company to remove any Director from the Board, nor confer upon any Director
any right to continue to serve on the Board as a Director.
Exhibit No. (12)
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN MILLIONS)
Year Ended December 31
-----------------------------------------------------
1996(a) 1997(b) 1998(c) 1999(d) 2000(e)
--------- --------- --------- --------- ---------
Consolidated Companies
- -------------------------------------------
Income before income taxes. . . . . . . . . . . . . . . $ 1,507.4 $ 1,352.7 $ 1,523.3 $ 2,251.7 $ 2,436.0
Interest expense. . . . . . . . . . . . . . . . . . . . 186.7 164.8 198.7 213.1 221.8
Interest factor in rent expense . . . . . . . . . . . . 45.7 49.8 52.3 50.5 48.6
Amortization of capitalized interest. . . . . . . . . . 8.6 9.0 9.4 10.0 9.6
Equity Affiliates
- -------------------------------------------
Share of 50%-owned:
Income before income taxes. . . . . . . . . . . . . . 49.3 51.2 47.6 43.4 43.0
Interest expense. . . . . . . . . . . . . . . . . . . 9.5 7.1 9.9 8.0 7.5
Interest factor in rent expense . . . . . . . . . . . .7 .7 1.2 .9 .9
Amortization of capitalized interest. . . . . . . . . .7 .6 .5 .6 .5
Distributed income of less than 50%-owned . . . . . . . 48.4 62.5 98.1 88.0 96.4
--------- --------- --------- --------- ---------
Earnings. . . . . . . . . . . . . . . . . . . . . . . . . $ 1,857.0 $ 1,698.4 $ 1,941.0 $ 2,666.2 $ 2,864.3
========= ========= ========= ========= =========
Consolidated Companies
- -------------------------------------------
Interest expense. . . . . . . . . . . . . . . . . . . . $ 186.7 $ 164.8 $ 198.7 $ 213.1 $ 221.8
Capitalized interest. . . . . . . . . . . . . . . . . . 13.9 17.0 12.4 12.9 20.9
Interest factor in rent expense . . . . . . . . . . . . 45.7 49.8 52.3 50.5 48.6
Equity Affiliates
- -------------------------------------------
Share of 50%-owned:
Interest and capitalized interest . . . . . . . . . . 9.5 7.5 10.0 8.1 7.5
Interest factor in rent expense . . . . . . . . . . . .7 .7 1.2 .9 .9
--------- --------- --------- --------- ---------
Fixed Charges . . . . . . . . . . . . . . . . . . . . . . $ 256.5 $ 239.8 $ 274.6 $ 285.5 $ 299.7
========= ========= ========= ========= =========
Ratio of earnings to fixed charges. . . . . . . . . 7.24 7.08 7.07 9.34 9.56
========= ========= ========= ========= =========
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: $429.9
million of charges for business improvement and other programs and
$(93.6) of gains on asset disposals. Excluding these items, the
ratio of earnings to fixed charges was 8.55.
(b) 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 and other programs and
$(26.5) of a gain on an asset disposal. Excluding these items, the
ratio of earnings to fixed charges was 8.97.
(c) 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 and other 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.
(d) 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 and other 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.
(e) 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 and other 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.
Exhibit No. (13)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Kimberly-Clark Corporation and Subsidiaries
GLOBAL BUSINESS SEGMENTS
The Corporation is organized into three global business segments. The
major products manufactured and marketed by each of the Corporation's business
segments are as follows:
- - Tissue - facial and bathroom tissue, paper towels, wipers and napkins
for household and away-from-home use; wet wipes; printing, premium
business and correspondence papers; and related products. Products in this
segment are sold under the Kleenex, Scott, Kimberly-Clark, Kleenex
Cottonelle, Kleenex Viva, Huggies, Kimwipes, WypAll, Surpass and other
brand names.
- - Personal Care - 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.
- - Health Care and Other - 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; specialty and technical papers; and other products. Products
in this segment are sold under the Kimberly-Clark, Safeskin, Tecnol,
Ballard and other brand names.
BUSINESS IMPROVEMENT AND OTHER PROGRAMS
The Corporation announced business improvement programs in 1998 and 1997
to address its ongoing competitiveness and improve its operating efficiency
and cost structure. A summary of these programs together with cost and other
information is presented below.
1998 Plan
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 $18.2 million, $42.6 million and $49.1
million were recorded in 2000, 1999 and 1998, respectively. 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 shut down in October 2000. Through
December 31, 2000, the Corporation had notified and subsequently terminated 814
employees. The costs of this workforce reduction were charged to earnings in the
period in which such employee severance benefits were appropriately
communicated.
1997 Plan
On November 21, 1997, the Corporation announced a restructuring plan (the
"1997 Plan"). The 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. In 1998, the Corporation determined that its
Villanovetta, Italy tissue manufacturing facility was an impaired asset because
its cash flows from use and disposal were insufficient to cover the carrying
amount of the asset. In 1998, other less significant modifications were made to
the 1997 Plan, the largest of which was a charge for losses on European feminine
care equipment removed from service. Costs for the 1997 Plan of $250.8 million
were recorded in 1998 at the time costs became accruable under appropriate
accounting principles. Included in such costs was an asset impairment charge for
the Villanovetta facility of $26.8 million, losses on the European feminine care
equipment of $12.1 million and accelerated depreciation related to assets that
were to be disposed of but which continued to be operated during 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.
Charges (credits) under these two plans for the three years ended
December 31, 2000 are summarized below:
Amounts Charged to Earnings
---------------------------
(Millions of dollars) 2000 1999 1998
- ----------------------------------------------------------------------------------------------
Workforce severance . . . . . . . . . . . . . . . . . . . . . . . $ 5.5 $ 11.2 $ 64.3
Write-downs of property, plant and equipment and other assets . . - (11.5) 91.4
Contract settlements,lease terminations and other costs . . . . . - (27.1) 31.3
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . - - 31.3
Accelerated depreciation. . . . . . . . . . . . . . . . . . . . . 12.7 53.3 81.6
----- ------ ------
Total pretax charge . . . . . . . . . . . . . . . . . . . . $18.2 $ 25.9 $299.9
===== ====== ======
Income statement classification:
Cost of products sold . . . . . . . . . . . . . . . . . . . . . $18.2 $ 52.9 $183.1
Restructuring and other unusual charges . . . . . . . . . . . . - (27.0) 116.8
----- ------ ------
Total pretax charge . . . . . . . . . . . . . . . . . . . . $18.2 $ 25.9 $299.9
===== ====== ======
The effects of these two plans were included in operating profit by business
segment and geography as follows:
Year Ended December 31
--------------------------
(Millions of dollars) 2000 1999 1998
- ---------------------------------------------------------------------------------------------
By Business Segment
Tissue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17.1 $19.9 $164.2
Personal Care . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 13.4 121.8
Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . - (1.3) 13.2
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . - (6.1) .7
----- ----- ------
Total pretax charge . . . . . . . . . . . . . . . . . . . . $18.2 $25.9 $299.9
===== ====== ======
By Geography
North America . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.0 $ 6.4 $194.9
Outside North America . . . . . . . . . . . . . . . . . . . . . 17.2 25.6 104.3
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . . . - (6.1) .7
----- ------ ------
Total pretax charge . . . . . . . . . . . . . . . . . . . . $18.2 $25.9 $299.9
===== ====== ======
These two plans decreased operating profit and net income as follows:
Year Ended December 31
---------------------------
(Millions of dollars) 2000 1999 1998
- ---------------------------------------------------------------------------------------------
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . $18.2 $25.9 $299.9
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8 21.1 213.0
Set forth below is a summary of the types and amounts recognized as accrued
expenses for these two plans together with cash payments made against such
accruals for the two years ended December 31, 2000.
2000
---------------------
Balance Balance
(Millions of dollars) 12/31/99 Additions Payments 12/31/00
- -----------------------------------------------------------------------------------------------------
Workforce severance . . . . . . . . . . . . . . . . . . . $16.5 $5.5 $(18.7) $3.3
Environmental costs and lease contract terminations . . . 8.0 - (3.0) 5.0
----- ---- ------- ----
$24.5 $5.5 $(21.7) $8.3
===== ==== ======= ====
1999
---------------------
Balance Additions Balance
(Millions of dollars) 12/31/98 (Reductions) Payments 12/31/99
- -----------------------------------------------------------------------------------------------------
Workforce severance . . . . . . . . . . . . . . . . . . $ 53.3 $ 11.2 $(48.0) $16.5
Asset removal costs . . . . . . . . . . . . . . . . . . 15.2 (8.9) (6.3) -
Environmental costs and lease contract terminations . . 41.2 (9.1) (24.1) 8.0
Other costs . . . . . . . . . . . . . . . . . . . . . . 20.1 (12.1) (8.0) -
------ ------- ------- -----
$129.8 $(18.9) $(86.4) $24.5
====== ======= ======= =====
These two plans were completed as of December 31, 2000. The accrued expense
balance of $8.3 million will be paid in accordance with the terms of the
applicable employee severance and other agreements.
OTHER INFORMATION
1999 Unusual Charges
In 1999, the Corporation incurred $13.6 million of unusual business
improvement costs that were not related to the business improvement plans
discussed above. The costs, which primarily were for employee severance and
write off of assets removed from service, were charged to cost of products sold
when incurred.
Write-down of Certain Intangible and Other Assets
In 1998, the carrying amounts of trademarks and unamortized goodwill of
certain European businesses were determined to be impaired and written down. In
addition, the Corporation began depreciating the cost of all newly acquired
personal computers ("PCs") over two years. In recognition of the change in
estimated useful lives, PC assets with a remaining net book value of $16.6
million became subject to accelerated depreciation charges. These charges, along
with $8.8 million of charges for write-downs of other assets and a loss on a
pulp contract, reduced 1998 operating profit $81.2 million and net income $64.7
million. Of the $81.2 million, $6.8 million was charged to cost of products sold
and $74.4 million was charged to general expense. In 1999, accelerated
depreciation on PCs reduced operating profit $8.3 million, $2.7 million of which
was charged to cost of products sold and $5.6 million was charged to general
expense. In 2000, accelerated depreciation on PCs reduced operating profit
$6.2 million, $2.0 million of which was charged to cost of products sold and
$4.2 million was charged to general expense. At September 30, 2000, these PCs
were fully depreciated.
Approximately 91 percent of the 1998 write-down of certain intangible and
other assets and accelerated depreciation on PCs described above related to the
Personal Care segment and 9 percent related to the Tissue segment. In 2000 and
1999, 50 percent of $6.2 million and $8.3 million, respectively, of accelerated
depreciation was charged to each of the Personal Care and Tissue segments.
ANALYSIS OF CONSOLIDATED NET SALES - THREE YEARS ENDED DECEMBER 31, 2000
By Business Segment
Net Sales
-----------------------------------
(Millions of dollars) 2000 1999 1998
- ----------------------------------------------------------------------------------------
Tissue. . . . . . . . . . . . . . . . . . . . . . . $ 7,303.2 $ 6,968.8 $ 6,733.1
Personal Care . . . . . . . . . . . . . . . . . . . 5,437.6 5,138.1 4,596.5
Health Care and Other . . . . . . . . . . . . . . . 1,291.0 936.4 1,001.5
Intersegment sales. . . . . . . . . . . . . . . . . (49.8) (36.5) (33.3)
--------- --------- ---------
Consolidated. . . . . . . . . . . . . . . . . . . $13,982.0 $13,006.8 $12,297.8
========= ========= =========
By Geographic Area
Net Sales
-----------------------------------
(Millions of dollars) 2000 1999 1998
- ----------------------------------------------------------------------------------------
United States . . . . . . . . . . . . . . . . . . . $ 9,059.4 $ 8,392.5 $ 7,992.8
Canada. . . . . . . . . . . . . . . . . . . . . . . 990.3 843.4 785.1
Intergeographic sales . . . . . . . . . . . . . . . (673.5) (507.4) (408.9)
--------- --------- ---------
Total North America . . . . . . . . . . . . . . . 9,376.2 8,728.5 8,369.0
Europe. . . . . . . . . . . . . . . . . . . . . . . 2,474.5 2,544.7 2,471.2
Asia, Latin America, Africa and Middle East . . . . 2,680.5 2,084.6 1,766.2
Intergeographic sales . . . . . . . . . . . . . . . (549.2) (351.0) (308.6)
------- --------- ---------
Consolidated. . . . . . . . . . . . . . . . . . . $13,982.0 $13,006.8 $12,297.8
========= ========= =========
Commentary:
2000 versus 1999
Consolidated net sales increased 7.5 percent above 1999. In 1999, the
Corporation closed its Mobile, Alabama pulp mill and sold its Southeast
Timberlands ("SET") and 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 tissue products increased by more than 6 percent.
Sales volumes grew 7 percent and selling price increases added 2 percent,
while unfavorable currency exchange rate effects reduced net sales by 3
percent. 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 and washroom systems in North
America. 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. 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 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 Corporation, a
former licensee, in Taiwan. The consolidation of Hogla also contributed to
the overall higher sales volumes.
- - Net sales for health care and other products increased 37.9 percent
principally due to the acquisitions of Ballard Medical Products ("Ballard")
in September 1999 and Safeskin Corporation ("Safeskin") in February 2000.
1999 versus 1998
Consolidated net sales increased 5.8 percent above 1998. In 1998, the
Corporation sold K-C Aviation Inc. ("KCA"). Excluding the revenues of the
divested businesses for both years, consolidated net sales increased about 8
percent. Sales volumes increased approximately 9 percent, with each of the
business segments contributing to the gain. However, changes in foreign currency
exchange rates reduced consolidated net sales by about 1 percent, with favorable
effects in Korea being more than offset by unfavorable changes in Brazil and
Europe. 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 tissue products increased 5 percent. Sales volumes
grew by nearly 6 percent, while slightly lower prices and unfavorable
foreign currency exchange rate effects, primarily in Europe, reduced net
sales by approximately 1 percent. The increase in sales volumes was
primarily attributable to the contribution from the Attisholz tissue brands
in Europe and improved sales of Kleenex Cottonelle and Scott bathroom
tissue in North America. Other significant contributors to the increase
were Kleenex facial tissue, washroom systems and wet wipes products, which
more than offset a decline in sales volumes for household towels in North
America. A portion of the tissue sales volume increase was due to
operations in Colombia, in which the Corporation made an additional
investment in late 1998 to gain majority ownership of certain Latin
American equity companies (the "Colombian Investment").
- - Worldwide net sales of personal care products were 11.8 percent greater
primarily due to a 13 percent increase in sales volumes. A selling price
increase of approximately 1 percent was more than offset by the negative
effect of changes in foreign currency exchange rates of slightly more than
2 percent. Net sales were higher in every geographic region. In North
America, net sales increased across all brands, led by higher volumes for
Huggies diapers. There was improvement in diaper sales in Europe and
notably increased sales of personal care products in Korea. In addition, a
portion of the increase in net sales was attributable to the Colombian
Investment.
- - Net sales for health care and other products increased 11 percent primarily
due to sales volume growth for professional health care products, including
the contribution from the acquisition of Ballard.
UNUSUAL ITEMS
For purposes of this Management's Discussion and Analysis, and in order to
facilitate a meaningful discussion of the ongoing operations of the Corporation,
the items summarized in the following table are considered to be unusual items
("Unusual Items").
Year Ended December 31
-----------------------------------
(Millions of dollars) 2000 1999 1998
- ---------------------------------------------------------------------------------------------------
Charges (credits) to Operating Profit:
Business Improvement and Other Programs:
1998 and 1997 Plans . . . . . . . . . . . . . . . . . . . . $ 18.2 $ 25.9 $ 299.9
1999 unusual charges. . . . . . . . . . . . . . . . . . . . - 13.6 -
Write-down of certain intangible and other assets . . . . . . 6.2 8.3 81.2
Gains on disposals of assets . . . . . . . . . . . . . . . . . - (176.7) (140.0)
Patent settlement and accrued liability reversal . . . . . . . (75.8) - -
Litigation settlements . . . . . . . . . . . . . . . . . . . . 15.2 - -
Mobile pulp mill fees and related severance . . . . . . . . . - 9.0 42.3
Business integration and other costs . . . . . . . . . . . . . 35.1 22.6 (3.3)
------ -------- --------
Net(credit) charge for unusual items . . . . . . . . . . . . . (1.1) (97.3) 280.1
Operating profit as reported . . . . . . . . . . . . . . . . . . 2,633.8 2,435.4 1,697.7
-------- -------- --------
Operating profit excluding unusual items . . . . . . . . . . . . $2,632.7 $2,338.1 $1,977.8
======== ======== ========
- - A description of the items included in the 1998 and 1997 Plans, the 1999
unusual charges and the write-down of certain intangible and other assets
is contained in the Business Improvement and Other Programs section above.
- - Gains on disposals of assets are primarily related to the sale of SET in
1999 and the sale of KCA in 1998.
- - In the first quarter of 2000, as part of settlement of a patent dispute,
the Corporation was compensated for royalty income related to prior years.
This settlement was recorded as other income. Also, certain estimated
liabilities accrued under the terms of the agreement for the 1997 sale 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 the third and fourth quarters of 2000, the Corporation reached
agreements to settle certain litigation and accordingly recorded charges
related to these settlements.
- - In 1999, the Corporation recorded workforce severance costs related to the
sale of SET. In 1998, a contract cancellation fee and workforce severance
costs related to the closure of the Mobile pulp mill were recorded.
- - As part of the integration of acquired businesses, Attisholz, Ballard and
Safeskin, certain costs related to assimilating these operations were
expensed as incurred in 1999 and 2000. In addition, the Corporation has
incurred certain costs related to the reorganizations of its North American
professional health care and European away-from-home sales forces, which
were recorded in 2000.
The items displayed in the preceding table have been excluded from
operating profit in the "Excluding Unusual Items" columns in the following
Consolidated Operating Profit tables.
ANALYSIS OF CONSOLIDATED OPERATING PROFIT - THREE YEARS ENDED
DECEMBER 31, 2000
By Business Segment
2000 1999 1998
----------------------- ----------------------- --------------------
EXCLUDING Excluding Excluding
AS UNUSUAL As Unusual As Unusual
(Millions of dollars) REPORTED ITEMS Reported Items Reported Items
- --------------------------------------------------------------------------------------------------------
Tissue. . . . . . . . . . . . . $1,305.0 $1,339.8 $1,114.1 $1,171.3 $ 921.3 $1,135.7
Personal Care . . . . . . . . . 1,136.7 1,141.9 1,092.8 1,109.1 588.7 785.3
Health Care and Other . . . . . 186.1 205.6 154.3 161.9 161.2 173.7
Other income (expense), net . . 104.2 43.6 180.0 3.3 124.4 (15.6)
Unallocated - net . . . . . . . (98.2) (98.2) (105.8) (107.5) (97.9) (101.3)
-------- -------- ------- -------- -------- --------
Consolidated. . . . . . . . . $2,633.8 $2,632.7 $2,435.4 $2,338.1 $1,697.7 $1,977.8
======== ======== ======== ======== ======== ========
By Geographic Area
2000 1999 1998
----------------------- ----------------------- --------------------
EXCLUDING Excluding Excluding
AS UNUSUAL As Unusual As Unusual
(Millions of dollars) REPORTED ITEMS Reported Items Reported Items
- --------------------------------------------------------------------------------------------------------
United States . . . . . . . . . $1,937.1 $1,972.0 $1,821.9 $1,868.8 $1,407.2 $1,663.4
Canada. . . . . . . . . . . . . 211.3 212.7 105.3 110.9 112.7 104.8
Europe. . . . . . . . . . . . . 149.7 172.9 183.3 219.8 (39.7) 123.1
Asia, Latin America, Africa and
Middle East . . . . . . . . . 329.7 329.7 250.7 242.8 191.0 203.4
Other income (expense), net . . 104.2 43.6 180.0 3.3 124.4 (15.6)
Unallocated - net . . . . . . . (98.2) (98.2) (105.8) (107.5) (97.9) (101.3)
--------- --------- --------- --------- --------- ---------
Consolidated. . . . . . . . . $2,633.8 $2,632.7 $2,435.4 $2,338.1 $1,697.7 $1,977.8
======== ======== ======== ======== ======== ========
Note: Unallocated - net consists of expenses not associated with the business
segments or geographic areas.
Commentary:
2000 versus 1999
Excluding the Unusual Items, operating profit 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 tissue products was greater by 14.4 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 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 advertising and promotion 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.
- - Operating profit for the health care and other segment increased 27.0
percent principally due to the additional sales volumes associated with the
Ballard and Safeskin acquisitions.
- - 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.
1999 versus 1998
Excluding the Unusual Items, operating profit increased 18.2 percent, and
operating profit as a percentage of net sales increased to 18.0 percent in 1999
from 16.1 percent in 1998. Excluding the divested businesses and the Unusual
Items for both years, operating profit increased 20.0 percent. The increase in
operating profit was driven by the higher sales volumes, with productivity
improvements and other manufacturing cost efficiencies contributing to the gain.
The benefits of these improvements more than offset the additional investments
in marketing and product improvement initiatives. The following commentary
excludes the Unusual Items and the results of divested businesses in both years.
- - Operating profit for tissue products increased slightly more than 4 percent
primarily due to higher sales volumes for facial and bathroom tissue and
wet wipes products in North America, the Attisholz acquisition in Europe
and the Colombian Investment. The sales growth along with manufacturing
efficiencies more than offset the increased marketing costs for new Kleenex
Cottonelle bathroom tissue and improved Scott towels and bathroom tissue in
North America.
- - Operating profit for personal care products increased 41.2 percent, led by
results in North America where the higher sales volumes, manufacturing cost
reductions and selling price increases more than offset increased marketing
costs. Operating profit also benefited from contributions by Europe due to
the increased diaper sales volume, other cost savings and lower marketing
expense and the Colombian Investment.
- - Operating profit for the health care and other segment increased nearly
3 percent primarily due to increased sales volumes for professional health
care products, which benefited from the Ballard acquisition.
- - Other income (expense), net increased due to lower adverse currency
effects.
ADDITIONAL INCOME STATEMENT COMMENTARY
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. Excluding the Unusual Items from 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.
- - 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 share basis, net income was $3.31 per share in 2000 compared
with $3.09 per share in 1999, an increase of 7.1 percent. Excluding the
Unusual Items in both years, earnings from operations were $3.32 per share
in 2000 compared with $2.98 per share in 1999, an increase of 11.4 percent.
1999 versus 1998
- - Interest expense increased primarily due to higher average debt levels.
- - The Corporation's effective income tax rate was 32.4 percent in 1999
compared with 34.3 percent in 1998. Excluding the Unusual Items from both
years, the Corporation's effective income tax rate was 32.1 percent in 1999
compared with 32.0 percent in 1998.
- - The Corporation's share of net income of equity companies was $189.6
million in 1999 compared with $146.3 million in 1998, excluding a charge
related to the change in value of the Mexican peso in 1998. The increase
was primarily due to the results of Kimberly-Clark de Mexico, S.A. de C.V.,
which benefited from higher selling prices and increased sales volumes.
- - Minority owners' share of subsidiaries' net income increased in 1999
primarily due to the previously mentioned Colombian Investment and the
improved results of the Corporation's majority owned subsidiary in Korea.
- - On a diluted share basis, net income was $3.09 per share in 1999 compared
with $1.99 per share in 1998, an increase of 55.3 percent. Excluding the
Unusual Items in both years, the charge for the devaluation of the Mexican
peso and the cumulative effect of the accounting change for start-up costs
in 1998, earnings from operations were $2.98 per share in 1999 compared
with $2.44 per share in 1998, an increase of 22.1 percent.
SALES OF PRINCIPAL PRODUCTS
(Billions of dollars) 2000 1999 1998
- ------------------------------------------------------------------------------
Tissue-based products . . . . . . . . $ 6.4 $ 5.9 $ 5.7
Diapers . . . . . . . . . . . . . . . 3.2 3.0 2.6
All other . . . . . . . . . . . . . . 4.4 4.1 4.0
----- ----- -----
Consolidated. . . . . . . . . . . . $14.0 $13.0 $12.3
===== ===== =====
LIQUIDITY AND CAPITAL RESOURCES
Year Ended December 31
-----------------------------
(Millions of dollars) 2000 1999
- ------------------------------------------------------------------------------------------------------
Cash provided by operations. . . . . . . . . . . . . . . . . . . . . . . . $2,133.2 $2,139.9
Capital spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,170.3 786.4
Acquisitions of businesses, net of cash acquired . . . . . . . . . . . . . 294.5 271.9
Proceeds from dispositions of property, businesses and investments . . . . 97.6 115.2
Proceeds from notes receivable . . . . . . . . . . . . . . . . . . . . . . 220.0 383.0
Ratio of net debt to capital . . . . . . . . . . . . . . . . . . . . . . . 35.2% 28.9%
Pretax interest coverage - times . . . . . . . . . . . . . . . . . . . . . 11.4 11.4
Cash Flow Commentary:
- - Cash provided by operations was essentially even with last year. Net income
plus noncash charges included in net income increased to $2.5 billion in
2000 compared with $2.2 billion in 1999. The Corporation invested $338.3
million in working capital in 2000, including the effect of the timing of
income tax payments, versus $61.5 million in 1999.
- - Approximately $22 million and $86 million of cash payments were charged
to the accruals for the Business Improvement and Other Programs in 2000 and
1999, respectively.
- - Capital spending in 2000 increased nearly $384 million over 1999 in large
part due to the Corporation's continued investments in its proprietary
technologies for tissue, wet wipes and adult care products in North America
and for diaper manufacturing outside North America.
- - In June 2000, the Corporation transferred $220 million of notes receivable
for cash to a noncontrolled special purpose entity in which the Corporation
has a minority voting interest. This transfer resulted in no gain or loss
to the Corporation.
Financing Commentary:
- - In 2000, the Corporation repurchased 21.0 million shares of its common
stock in connection with its share repurchase program at a total cost of
nearly $1.2 billion. At December 31, 2000, authority to repurchase 36.5
million shares remained under February and November 2000 repurchase
authorities from the Corporation's board of directors. In 1999, the
Corporation repurchased 13.5 million shares of its common stock at a total
cost of about $750 million.
- - At December 31, 2000, total debt was $3.5 billion, an increase of almost
$.8 billion above the prior year-end total. Net debt (total debt net of
cash, cash equivalents and, at December 31, 1999, $220 million of long-term
notes receivable) was nearly $3.3 billion at December 31, 2000 compared
with almost $2.2 billion at December 31, 1999. The Corporation's ratio of
net debt to capital was 35.2 percent, approximately the mid-point of the
Corporation's targeted range of 30 to 40 percent.
- - Excluding the Unusual Items in both years, the pretax interest coverage
ratio was 11.4 in 2000 and 11.0 in 1999.
- - On July 27, 2000, the Corporation issued $300 million aggregate principal
amount of 7.10 percent notes due August 1, 2007.
- - Revolving credit facilities of $1.1 billion, which were unused at
December 31, 2000, are in place for general corporate purposes and to back
up commercial paper borrowings.
- - The Corporation's long-term debt securities have a Double-A rating and its
commercial paper is rated in the top category.
Other Commentary:
- - On January 31, 2001, the Corporation completed the acquisition of Linostar
S.p.A., a leading Italian-based diaper manufacturer that produces and
markets Lines, Italy's second largest diaper brand. The Corporation intends
to account for this acquisition using the purchase method.
- - Management believes that the Corporation's ability to generate cash from
operations and its capacity to issue short-term and long-term debt are
adequate to fund working capital, capital spending and other needs in the
foreseeable future.
MARKET RISK SENSITIVITY AND INFLATION RISKS
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 in order
to reduce credit risk and risk of nonperformance by third parties.
Foreign Currency Risk
Foreign currency risk is managed by the use of foreign currency forward,
swap and option contracts. The use of these contracts allows 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 2000, 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, 2000, 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 $51 million. These
hypothetical gains or losses on foreign currency contracts and transactional
exposures are defined as the difference between the contract rates and the
hypothetical exchange rates. In the view of management, the above losses
resulting from the hypothetical changes in foreign currency exchange rates are
not material to the Corporation's consolidated financial position, results of
operations or cash flows.
Interest Rate Risk
Interest rate risk is managed through the maintenance of a portfolio of
variable- and fixed-rate debt composed of short- and long-term instruments. The
objective is to maintain a cost-effective mix that management deems appropriate.
At December 31, 2000, the debt portfolio was composed of approximately 49
percent variable-rate debt, adjusted for the effect of variable-rate assets, and
51 percent fixed-rate debt. The strategy employed to manage exposure to interest
rate fluctuations did
not change significantly during 2000, 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, 2000, 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 25 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. 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.
CONTINGENCIES AND LEGAL MATTERS
In April 1998, the U.S. Environmental Protection Agency enacted new and
more stringent air emission and water discharge regulations, referred to as the
Cluster Rule, that impose additional pollution control requirements on the
Corporation's pulp production facilities. These rules would have required the
Corporation to spend more than $250 million to meet the Cluster Rule
requirements at its Mobile, Alabama pulp mill. Sappi Fine Paper (S.D. Warren
Company), a producer of printing and publishing papers, had purchased
approximately one-third of the pulp mill's output. On May 4, 1998, S.D. Warren
and the Corporation announced an agreement to terminate their pulp supply
contract effective September 1, 1999. As a result of the cancellation of the
pulp supply contract and the cost of implementing the Cluster Rule, on
May 5, 1998, the Corporation announced its intention to dispose of its entire
integrated pulp operation in Mobile, Alabama, including the related sale of
the associated woodlands operations (the "Southeast Timberlands") and the
closure of its pulp production facility. The pulp facility was shut down in
August 1999. Closure of the pulp mill resulted in the elimination of
approximately 450 jobs, and severance costs of $18.0 million for these employees
were charged to cost of products sold in the third quarter of 1998, at the time
the employees were notified of their termination benefits.
On September 30, 1999, the Corporation sold approximately 460,000 acres of
the Southeast Timberlands to Joshua Timberlands, LLC for notes receivable with
approximate face value of $400 million ("Joshua Notes"). 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.
In November 1999, the Joshua Notes were transferred for cash to a
noncontrolled special purpose entity ("SPE") in which the Corporation has a
minority voting interest. The transfer of the Joshua Notes, which was accounted
for as a sale, resulted in no gain or loss to the Corporation. The SPE is
accounted for as an equity investment.
In connection with the Mobile pulp mill closure, on May 5, 1998, the
Corporation gave notice to Mobile Energy Services Company, L.L.C. ("MESC") of
its intent to terminate a long-term energy services contract. The resulting
termination penalty of $24.3 million was charged to cost of products sold in
the second quarter of 1998. On January 14, 1999, MESC and related parties
(the "Debtors") filed for Chapter 11 bankruptcy protection and instituted an
action against the Corporation claiming unspecified damages in connection with
the pulp mill closure.
On December 31, 1999, a joint motion (the "Motion") was filed with the U.S.
Bankruptcy Court (the "Court") seeking approval of a settlement agreement and
compromise of claims and pending litigation against the Corporation arising from
the closure of the pulp mill and termination of the energy services contract.
Under the proposed settlement agreement, the Corporation agreed to pay MESC at
closing approximately $30 million, subject to certain adjustments. The Court
granted the Motion on January 24, 2000. Closing of the settlement would be
subject to, among other conditions, the Debtors filing a plan of reorganization
from bankruptcy and the ultimate approval of that plan by the Court. The
approximate $30 million payment, which will be accrued when the conditions for
settlement are met, is in addition to $24.3 million previously accrued by the
Corporation. In addition, the proposed settlement provides, among other things,
an agreement by MESC to provide energy to the Corporation's Mobile tissue mill
at market rates.
In August 2000, the Debtors filed a plan of reorganization with the Court
that would implement the settlement agreement. During the fourth quarter of
2000, several crucial elements of the Debtors' plan became no longer viable.
As a result, the Debtors have sought and received from the Court and the
Corporation several extensions of deadlines contained in the settlement
agreement.
Because of uncertainty involving the Debtors' business plans, the
settlement agreement may not be finalized and approved by the Court.
Consequently, the Corporation has developed contingency plans to minimize or
avoid disruption to its Mobile operations in the event that MESC is unable or
unwilling to supply energy to the Mobile tissue mill. If the settlement
agreement is not finalized, the litigation and arbitration proceedings between
the Corporation and the Debtors could resume. The outcome of the MESC
litigation, arbitration and settlement 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 or
results of operations. The Corporation has been named as a potentially
responsible party at a number of waste disposal sites, none of which,
individually or in the aggregate, in management's opinion, is likely to have
a material adverse effect on the Corporation's business, financial condition
or results of operations.
NEW PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") 133, Accounting for
Derivative Instruments and Hedging Activities, was issued in 1998 and amended
in 2000 by SFAS 138, Accounting for Certain Derivative Instruments and Hedging
Activities. SFAS 133, which will be adopted January 1, 2001, will require that
all derivatives be recorded on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If the derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the hedged
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings. The Corporation has completed an inventory of its
derivative instruments and has determined which of these derivatives qualify for
hedge accounting. Based on its derivative positions at December 31, 2000, the
Corporation will, upon adoption, recognize the cumulative effect of an
accounting change as a pretax loss of approximately $.5 million in other
(income) expense, net and an after-tax gain of $1.5 million in other
comprehensive income.
During 2000, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board issued EITF 00-14, Accounting for Certain Sales
Incentives. Under EITF 00-14, the face value of consumer coupons must be
recorded at the time they are issued based upon estimated redemptions and
classified along with similar discounts as a reduction in sales revenue. The
effective date of EITF 00-14 is the second quarter of 2001. The Corporation
has historically followed the practice of recording the face value of coupons
based upon estimated redemptions as promotion expense in the period that the
related sales revenue is recognized. The Corporation will adopt EITF 00-14 in
the second quarter of 2001 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 $186
million, $204 million and $158 million in 2000, 1999 and 1998, 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. The net income effect of this change
is currently estimated to be an after-tax charge equal to $.02 per share.
OUTLOOK
The Corporation expects 2001 to be a year of continued growth that will
provide it opportunity to build on its global franchises. The Corporation
intends to invest more than $50 million in comprehensive marketing programs
and start-up costs to support the introduction of its new Cottonelle Fresh
rollwipes, making it one of the most significant new product launches in the
Corporation's history. The Corporation will also incur start-up costs for
its new tissue machines in Oklahoma and Tennessee. Additionally, the
Corporation expects to expand its diaper business in Europe with the
acquisition of Linostar. The Corporation's objectives remain unchanged. The
Corporation is continuing to target sales increases of 6 to 8 percent and
double-digit increases in earnings per share from operations annually.
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."
CONSOLIDATED INCOME STATEMENT
Kimberly-Clark Corporation and Subsidiaries
Year Ended December 31
---------------------------------
(Millions of dollars, except per share amounts) 2000 1999 1998
- --------------------------------------------------------------------------------------------
NET SALES. . . . . . . . . . . . . . . . . . . . . . . . $13,982.0 $13,006.8 $12,297.8
Cost of products sold. . . . . . . . . . . . . . . . . 8,228.5 7,681.6 7,700.2
---------- ---------- ----------
GROSS PROFIT . . . . . . . . . . . . . . . . . . . . . . 5,753.5 5,325.2 4,597.6
Advertising, promotion and selling expenses. . . . . . 2,122.7 2,097.8 1,937.4
Research expense . . . . . . . . . . . . . . . . . . . 277.4 249.8 224.8
General expense. . . . . . . . . . . . . . . . . . . . 742.1 707.4 717.0
Goodwill amortization. . . . . . . . . . . . . . . . . 81.7 41.8 33.3
Restructuring and other unusual charges. . . . . . . . - (27.0) 111.8
Other (income) expense, net. . . . . . . . . . . . . . (104.2) (180.0) (124.4)
---------- ---------- ----------
OPERATING PROFIT. . . . . . . . . . . . . . . . . . . . . 2,633.8 2,435.4 1,697.7
Interest income . . . . . . . . . . . . . . . . . . . . 24.0 29.4 24.3
Interest expense. . . . . . . . . . . . . . . . . . . . (221.8) (213.1) (198.7)
---------- ---------- ----------
INCOME BEFORE INCOME TAXES. . . . . . . . . . . . . . . . 2,436.0 2,251.7 1,523.3
Provision for income taxes. . . . . . . . . . . . . . . 758.5 730.2 522.2
---------- ---------- ----------
INCOME BEFORE EQUITY INTERESTS. . . . . . . . . . . . . . 1,677.5 1,521.5 1,001.1
Share of net income of equity companies . . . . . . . . 186.4 189.6 137.1
Minority owners' share of subsidiaries' net income. . . (63.3) (43.0) (23.9)
---------- ---------- ----------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE. . . 1,800.6 1,668.1 1,114.3
Cumulative effect of accounting change,
net of income taxes. . . . . . . . . . . . . . . . . - - (11.2)
---------- ---------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . $ 1,800.6 $ 1,668.1 $ 1,103.1
========== ========== ==========
PER SHARE BASIS
BASIC
Income before cumulative effect of accounting change $ 3.34 $ 3.11 $ 2.02
========== ========== ==========
Net income . . . . . . . . . . . . . . . . . . . . . $ 3.34 $ 3.11 $ 2.00
========== ========== ==========
DILUTED
Income before cumulative effect of accounting change $ 3.31 $ 3.09 $ 2.01
========== ========== ==========
Net income . . . . . . . . . . . . . . . . . . . . . $ 3.31 $ 3.09 $ 1.99
========== ========== ==========
See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEET
Kimberly-Clark Corporation and Subsidiaries
December 31
------------------------
(Millions of dollars) ASSETS 2000 1999
- ---------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . $ 206.5 $ 322.8
Accounts receivable . . . . . . . . . . . . . . 1,809.6 1,600.6
Inventories . . . . . . . . . . . . . . . . . . 1,390.4 1,239.9
Deferred income taxes . . . . . . . . . . . . . 287.1 311.4
Prepaid expenses and other. . . . . . . . . . . 96.3 81.5
--------- ---------
TOTAL CURRENT ASSETS. . . . . . . . . . . . . 3,789.9 3,556.2
PROPERTY
Land. . . . . . . . . . . . . . . . . . . . . . 239.2 190.7
Buildings . . . . . . . . . . . . . . . . . . . 1,854.4 1,739.2
Machinery and equipment . . . . . . . . . . . . 9,135.1 8,811.7
Construction in progress. . . . . . . . . . . . 786.1 408.8
--------- ---------
12,014.8 11,150.4
Less accumulated depreciation . . . . . . . . . 5,096.3 4,858.8
--------- ---------
NET PROPERTY. . . . . . . . . . . . . . . . . 6,918.5 6,291.6
INVESTMENTS IN EQUITY COMPANIES . . . . . . . . . 798.8 863.1
GOODWILL, NET OF ACCUMULATED AMORTIZATION . . . . 2,009.9 1,246.1
OTHER ASSETS. . . . . . . . . . . . . . . . . . . 962.7 858.5
--------- ---------
$14,479.8 $12,815.5
========= =========
See Notes to Consolidated Financial Statements.
December 31
---------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
- --------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Debt payable within one year. . . . . . . . . . . . . . . . . . . . . . . $ 1,490.5 $ 782.4
Trade accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 872.8 780.4
Other payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303.1 245.3
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,239.8 1,312.1
Accrued income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 523.5 584.6
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144.2 141.0
---------- ----------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . 4,573.9 3,845.8
LONG-TERM DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000.6 1,926.6
NONCURRENT EMPLOYEE BENEFIT AND OTHER OBLIGATIONS . . . . . . . . . . . . . 869.2 868.5
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . 987.5 836.9
MINORITY OWNERS' INTERESTS IN SUBSIDIARIES. . . . . . . . . . . . . . . . . 281.3 244.6
STOCKHOLDERS' EQUITY
Preferred stock - no par value - authorized 20.0 million shares,
none issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Common stock - $1.25 par value - authorized 1.2 billion shares;
issued 568.6 million shares at December 31, 2000 and 1999 . . . . . . . 710.8 710.8
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 412.3 166.4
Common stock held in treasury, at cost - 35.2 million and 28.0 million
shares at December 31, 2000 and 1999, respectively. . . . . . . . . . . (1,974.1) (1,420.4)
Accumulated other comprehensive income (loss) . . . . . . . . . . . . . . (1,337.6) (1,114.8)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,982.0 6,764.6
Unearned compensation on restricted stock . . . . . . . . . . . . . . . . (26.1) (13.5)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . . . . . . . . . 5,767.3 5,093.1
---------- ----------
$14,479.8 $12,815.5
========== ==========
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
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at
December 31, 1997 . . . . . .568,596,810 $710.8 $113.3 12,250,368 $(617.1) $(966.6) $5,099.9 $ - $4,340.3
Shares issued for the
exercise of stock options
and awards. . . . . . . . . . - - (43.8) (1,643,718) 82.1 - - - 38.3
Stock option income tax
benefits. . . . . . . . . . . - - 16.8 - - - - - 16.8
Shares purchased for
treasury. . . . . . . . . - - - 19,732,752 (919.7) - - - (919.7)
Comprehensive income:
Net income. . . . . . . . . . - - - - - - 1,103.1 - 1,103.1 $1,103.1
Other comprehensive
income (loss):
Unrealized translation
adjustments . . . . . . - - - - - 3.1 - - 3.1 3.1
Minimum pension liability
adjustment. . . . . . . - - - - - (.8) - - (.8) (.8)
--------
Comprehensive income. . . . . . - - - - - - - - - $1,105.4
========
Dividends declared on
common shares . . . . . . . . - - - - - - (549.6) - (549.6)
--------- ------ ------- ----------- --------- -------- -------- ------ -------- --------
Balance at
December 31, 1998 . . . . . .568,596,810 710.8 86.3 30,339,402 (1,454.7) (964.3) 5,653.4 - 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
Medical Products. . . . . . . - - 100.6 (13,758,610) 686.2 - - - 786.8
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
adjustments . . . . . . - - - - - (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
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
- ------------------------------------------------------------------------------------------------------------------------------------
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
adjustments . . . . . . - - - - - (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
=========== ====== ====== ========== ========= ========= ======== ====== ========
See Notes to Consolidated Financial Statements.
CONSOLIDATED CASH FLOW STATEMENT
Kimberly-Clark Corporation and Subsidiaries
Year Ended December 31
---------------------------------
(Millions of dollars) 2000 1999 1998
- ------------------------------------------------------------------------------------------------
OPERATIONS
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,800.6 $ 1,668.1 $ 1,103.1
Business improvement programs 7.2 (13.8) 292.5
Cumulative effect of accounting change, net of income taxes. - - 11.2
Mobile pulp mill fees and related severance. . . . . . . . . - 9.0 42.3
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . 591.7 586.2 594.5
Goodwill amortization. . . . . . . . . . . . . . . . . . . . 81.7 41.8 33.3
Deferred income tax provision. . . . . . . . . . . . . . . . 84.1 126.2 13.6
Net losses (gains) on asset sales. . . . . . . . . . . . . . 19.3 (143.9) (125.9)
Equity companies' earnings in excess of dividends paid . . . (67.0) (78.7) (15.1)
Minority owners' share of subsidiaries' net income . . . . . 63.3 43.0 23.9
(Increase) decrease in operating working capital . . . . . . (338.3) (61.5) 63.6
Postretirement benefits. . . . . . . . . . . . . . . . . . . (121.9) (43.1) (57.5)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5 6.6 14.2
---------- ---------- ----------
CASH PROVIDED BY OPERATIONS . . . . . . . . . . . . . . 2,133.2 2,139.9 1,993.7
---------- ---------- ----------
INVESTING
Capital spending. . . . . . . . . . . . . . . . . . . . . . (1,170.3) (786.4) (669.5)
Acquisitions of businesses, net of cash acquired. . . . . . (294.5) (271.9) (342.5)
Proceeds from dispositions of property and businesses . . . 44.5 115.2 324.9
Proceeds from investments . . . . . . . . . . . . . . . . . 53.1 - -
Proceeds from notes receivable. . . . . . . . . . . . . . . 220.0 383.0 -
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . (37.7) (22.3) (16.7)
---------- ---------- ----------
CASH USED FOR INVESTING . . . . . . . . . . . . . . . . (1,184.9) (582.4) (703.8)
---------- ---------- ----------
FINANCING
Cash dividends paid . . . . . . . . . . . . . . . . . . . . (580.1) (551.3) (545.5)
Net increase (decrease) in short-term debt. . . . . . . . . 700.7 (163.8) (2.6)
Increases in long-term debt . . . . . . . . . . . . . . . . 359.4 117.7 541.3
Decreases in long-term debt . . . . . . . . . . . . . . . . (446.7) (75.9) (319.1)
Proceeds from exercise of stock options . . . . . . . . . . 90.3 60.8 38.3
Acquisitions of common stock for the treasury . . . . . . . (1,190.7) (779.0) (919.7)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 12.8 (29.4)
---------- ---------- ----------
CASH USED FOR FINANCING . . . . . . . . . . . . . . . . (1,064.6) (1,378.7) (1,236.7)
---------- ---------- ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . $ (116.3) $ 178.8 $ 53.2
========== ========== ==========
See Notes to Consolidated Financial Statements.
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, disclosure of contingencies at the date of the financial
statements and the reported amounts of net sales and expenses during the
reporting period. Differences from those estimates are recorded in the
appropriate period.
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.
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 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. 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.
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.
Costs of bringing significant new or expanded facilities into operation
are expensed as incurred. Prior to 1998, the Corporation's practice had
been to record such costs as deferred charges and to amortize them over
periods of not more than five years. The Corporation adopted Statement of
Position 98-5, Reporting on the Costs of Start-Up Activities, effective
January 1, 1998, and recorded a pretax charge of $17.8 million, $11.2 million
after taxes, or $.02 per share, as the cumulative effect of this accounting
change.
NOTE 1. (Continued)
GOODWILL
Goodwill is amortized on the straight-line method over periods ranging
from 10 years to 40 years. Accumulated amortization of goodwill at December
31, 2000 and 1999 was $242.3 million and $185.8 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 and other intangible assets.
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 expenses are charged to income during the period incurred,
except for expenses related to the development of a major commercial or media
campaign, which are charged to income during the period in which the
advertisement or campaign is first presented by the media. Advertising
expenses charged to income totaled $349.3 million in 2000, $336.5 million in
1999 and $295.3 million in 1998.
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.
NEW PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") 133, Accounting for
Derivative Instruments and Hedging Activities, was issued in 1998 and amended
in 2000 by SFAS 138, Accounting for Certain Derivative Instruments and Hedging
Activities. SFAS 133, which will be adopted January 1, 2001, will require
that all derivatives be recorded on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments through earnings
or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in
fair value will be immediately recognized in earnings. The Corporation has
completed an inventory of its derivative instruments and has determined which
of these derivatives qualify for hedge accounting. Based on its derivative
positions at December 31, 2000, the Corporation will, upon adoption, recognize
the cumulative effect of an accounting change as a pretax loss of
NOTE 1. (Continued)
approximately $.5 million in other (income) expense, net and an after-tax gain
of $1.5 million in other comprehensive income.
During 2000, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board issued EITF 00-14, Accounting for Certain Sales
Incentives. Under EITF 00-14, the face value of consumer coupons must be
recorded at the time they are issued based upon estimated redemptions and
classified along with similar discounts as a reduction in sales revenue. The
effective date of EITF 00-14 is the second quarter of 2001. The Corporation
has historically followed the practice of recording the face value of coupons
based upon estimated redemptions as promotion expense in the period that the
related sales revenue is recognized. The Corporation will adopt EITF 00-14 in
the second quarter of 2001 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 $186
million, $204 million and $158 million in 2000, 1999 and 1998, 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. The net income effect
of this change is currently estimated to be an after-tax charge equal
to $.02 per share.
NOTE 2. BUSINESS IMPROVEMENT AND OTHER PROGRAMS
The Corporation announced business improvement programs in 1998 and 1997
to address its ongoing competitiveness and improve its operating efficiency
and cost structure. A summary of these programs together with cost and other
information is presented below.
1998 PLAN
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 $18.2 million, $42.6 million and $49.1
million were recorded in 2000, 1999 and 1998, respectively. 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 shut down in October
2000. Through December 31, 2000, the Corporation had notified and
subsequently terminated 814 employees. The costs of this workforce reduction
were charged to earnings in the period in which such employee severance
benefits were appropriately communicated.
1997 PLAN
On November 21, 1997, the Corporation announced a restructuring plan (the
"1997 Plan"). The 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. In 1998, the Corporation determined that
its Villanovetta, Italy tissue manufacturing facility was an impaired asset
because its cash flows from use and disposal were insufficient to cover the
carrying amount of the asset. In 1998, other less significant modifications
were made to the 1997 Plan, the largest of which was a charge for losses on
European feminine care equipment removed from service. Costs for the 1997
Plan of $250.8 million were recorded in 1998 at the time costs became
accruable under appropriate accounting principles. Included in such costs was
an asset impairment charge for the Villanovetta facility of $26.8 million,
losses on the European feminine care equipment of $12.1 million and
accelerated depreciation related to assets that were to be disposed of but
which continued to be operated during 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.
Charges (credits) under these two plans for the three years ended
December 31, 2000 are summarized below:
Amounts Charged to Earnings
---------------------------
(Millions of dollars) 2000 1999 1998
- ---------------------------------------------------------------------------------------
Workforce severance . . . . . . . . . . . . . . . . . . . . . $ 5.5 $ 11.2 $ 64.3
Write-downs of property, plant and equipment and other assets - (11.5) 91.4
Contract settlements, lease terminations and other costs. . . - (27.1) 31.3
Asset impairments . . . . . . . . . . . . . . . . . . . . . . - - 31.3
Accelerated depreciation. . . . . . . . . . . . . . . . . . . 12.7 53.3 81.6
----- ------- ------
Total pretax charge . . . . . . . . . . . . . . . . . . . $18.2 $ 25.9 $299.9
===== ======= ======
Income statement classification:
Cost of products sold . . . . . . . . . . . . . . . . . . . $18.2 $ 52.9 $183.1
Restructuring and other unusual charges . . . . . . . . . . - (27.0) 116.8
----- ------- ------
Total pretax charge . . . . . . . . . . . . . . . . . . . $18.2 $ 25.9 $299.9
===== ======= ======
NOTE 2. (Continued)
The effects of these two plans were included in operating profit by
business segment and geography as follows:
Year Ended December 31
---------------------------
(Millions of dollars) 2000 1999 1998
- --------------------------------------------------------------------------------------
By Business Segment . . . . . . . . . . . . . . . . . . . . .
Tissue. . . . . . . . . . . . . . . . . . . . . . . . . . . $17.1 $19.9 $164.2
Personal Care . . . . . . . . . . . . . . . . . . . . . . . 1.1 13.4 121.8
Health Care . . . . . . . . . . . . . . . . . . . . . . . . - (1.3) 13.2
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . - (6.1) .7
----- ----- ------
Total pretax charge . . . . . . . . . . . . . . . . . . . $18.2 $25.9 $299.9
===== ===== ======
By Geography
North America . . . . . . . . . . . . . . . . . . . . . . . $ 1.0 $ 6.4 $194.9
Outside North America . . . . . . . . . . . . . . . . . . . 17.2 25.6 104.3
Unallocated . . . . . . . . . . . . . . . . . . . . . . . . - (6.1) .7
----- ----- ------
Total pretax charge . . . . . . . . . . . . . . . . . . . $18.2 $25.9 $299.9
===== ===== ======
These two plans decreased operating profit and net income as follows:
Year Ended December 31
---------------------------
(Millions of dollars) 2000 1999 1998
- --------------------------------------------------------------------------------------
Operating profit . . . . . . . . . . . . . . . . . . . . . . . $18.2 $25.9 $299.9
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8 21.1 213.0
Set forth below is a summary of the types and amounts recognized as
accrued expenses for these two plans together with cash payments made against
such accruals for the two years ended December 31, 2000.
2000
-------------------
Balance Balance
(Millions of dollars) 12/31/99 Additions Payments 12/31/00
- --------------------------------------------------------------------------------------------------
Workforce severance . . . . . . . . . . . . . . . . $16.5 $5.5 $(18.7) $3.3
Environmental costs and lease contract terminations 8.0 - (3.0) 5.0
----- ---- ------- ----
$24.5 $5.5 $(21.7) $8.3
===== ==== ======= ====
1999
-------------------
Balance Additions Balance
(Millions of dollars) 12/31/98 (Reductions) Payments 12/31/99
- --------------------------------------------------------------------------------------------------
Workforce severance . . . . . . . . . . . . . . . . $ 53.3 $ 11.2 $(48.0) $16.5
Asset removal costs . . . . . . . . . . . . . . . . 15.2 (8.9) (6.3) -
Environmental costs and lease contract terminations 41.2 (9.1) (24.1) 8.0
Other costs . . . . . . . . . . . . . . . . . . . . 20.1 (12.1) (8.0) -
------ ------ ------ -----
$129.8 $(18.9) $(86.4) $24.5
====== ====== ====== =====
NOTE 2. (Continued)
These two plans are completed as of December 31, 2000. The accrued
expense balance of $8.3 million will be paid in accordance with the terms of
the applicable employee severance and other agreements.
OTHER INFORMATION
1999 Unusual Charges
In 1999, the Corporation incurred $13.6 million of unusual business
improvement costs that were not related to the business improvement plans
discussed above. The costs, which primarily were for employee severance and
write off of assets removed from service, were charged to cost of products
sold when incurred.
Write-down of Certain Intangible and Other Assets
In 1998, the carrying amounts of trademarks and unamortized goodwill of
certain European businesses were determined to be impaired and written down.
In addition, the Corporation began depreciating the cost of all newly acquired
personal computers ("PCs") over two years. In recognition of the change in
estimated useful lives, PC assets with a remaining net book value of $16.6
million became subject to accelerated depreciation charges. These charges,
along with $8.8 million of charges for write-downs of other assets and a loss
on a pulp contract, reduced 1998 operating profit $81.2 million and net income
$64.7 million. Of the $81.2 million, $6.8 million was charged to cost of
products sold and $74.4 million was charged to general expense. In 1999,
accelerated depreciation on PCs reduced operating profit $8.3 million, $2.7
million of which was charged to cost of products sold and $5.6 million was
charged to general expense. In 2000, accelerated depreciation on PCs reduced
operating profit $6.2 million, $2.0 million of which was charged to cost of
products sold and $4.2 million was charged to general expense. At September
30, 2000, these PCs were fully depreciated.
Approximately 91 percent of the 1998 write-down of certain intangible and
other assets and accelerated depreciation on PCs described above related to
the Personal Care segment and 9 percent related to the Tissue segment. In
2000 and 1999, 50 percent of $6.2 million and $8.3 million, respectively, of
accelerated depreciation was charged to each of the Personal Care and Tissue
segments.
NOTE 3. INCOME TAXES
An analysis of the provision for income taxes follows:
Year Ended December 31
------------------------
(Millions of dollars) 2000 1999 1998
- --------------------------------------------------------------------------------------
Current income taxes:
United States. . . . . . . . . . . . . . . . . . . . . . . $407.3 $386.9 $402.0
State. . . . . . . . . . . . . . . . . . . . . . . . . . . 36.5 69.8 26.8
Other countries. . . . . . . . . . . . . . . . . . . . . . 230.6 147.3 79.8
------- ------- -------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . 674.4 604.0 508.6
------- ------- -------
Deferred income taxes:
United States. . . . . . . . . . . . . . . . . . . . . . . 91.3 139.2 39.8
State. . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 (18.7) 5.5
Other countries. . . . . . . . . . . . . . . . . . . . . . (21.2) 5.7 (38.3)
------- ------- -------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . 84.1 126.2 7.0
------- ------- -------
Total provision for income taxes . . . . . . . . . . . . . . 758.5 730.2 515.6
Less income taxes related to cumulative effect of
accounting change. . . . . . . . . . . . . . . . . . . . . - - (6.6)
------- ------- -------
Total provision excluding income taxes related to cumulative
effect of accounting change. . . . . . . . . . . . . . . . $758.5 $730.2 $522.2
======= ======= =======
Income before income taxes is classified in the Consolidated Income
Statement as follows:
Year Ended December 31
---------------------------
(Millions of dollars) 2000 1999 1998
- ----------------------------------------------------------------------------------------
Income Before Cumulative Effect of Accounting Change:
United States. . . . . . . . . . . . . . . . . . . . . . . $1,787.5 $1,782.7 $1,455.6
Other countries. . . . . . . . . . . . . . . . . . . . . . 648.5 469.0 67.7
-------- ------- -------
$2,436.0 $2,251.7 $1,523.3
======== ======== ========
Cumulative Effect of Accounting Change:
United States. . . . . . . . . . . . . . . . . . . . . . . $ - $ - $ (17.2)
Other countries. . . . . . . . . . . . . . . . . . . . . . - - (.6)
-------- -------- ---------
$ - $ - $ (17.8)
======== ======== =========
NOTE 3. (Continued)
Deferred income tax assets are composed of the following:
December 31
-----------------
(Millions of dollars) 2000 1999
- --------------------------------------------------------------------------------------
Current deferred income tax asset attributable to:
Advertising and promotion accruals. . . . . . . . . . . . . . . . $ 20.8 $ 27.5
Pension, postretirement and other employee benefits . . . . . . . 130.4 121.9
Other accrued expenses. . . . . . . . . . . . . . . . . . . . . . 100.0 124.6
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.8 31.0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7 6.7
Valuation allowances. . . . . . . . . . . . . . . . . . . . . . . (3.6) (.3)
-------- --------
Net current deferred income tax asset . . . . . . . . . . . . . . . $ 287.1 $ 311.4
======== ========
Noncurrent deferred income tax asset attributable to:
Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . $ (16.7) $ (42.4)
Income tax loss carryforwards . . . . . . . . . . . . . . . . . . 222.3 294.1
Foreign tax credits . . . . . . . . . . . . . . . . . . . . . . . 30.0 22.9
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 11.1
Valuation allowances. . . . . . . . . . . . . . . . . . . . . . . (155.2) (278.7)
-------- --------
Net noncurrent deferred income tax asset included in other assets $ 102.5 $ 7.0
======== ========
Noncurrent deferred income tax liability attributable to:
Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . $(928.5) $(888.8)
Income tax loss carryforwards . . . . . . . . . . . . . . . . . . 40.7 55.3
Pension and other postretirement benefits . . . . . . . . . . . . 157.9 227.0
Installment sales . . . . . . . . . . . . . . . . . . . . . . . . (275.7) (275.7)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 45.3
-------- --------
Net noncurrent deferred income tax liability. . . . . . . . . . . . $(987.5) $(836.9)
======== ========
Valuation allowances for deferred income tax assets decreased $120.2
million in 2000 and decreased $6.6 million in 1999. Valuation allowances at
the end of 2000 primarily relate to the potentially unusable portion of income
tax loss carryforwards of $766 million in jurisdictions primarily outside the
United States. If not utilized against taxable income, $190 million of the
loss carryforwards will expire from 2001 through 2010. The remaining $576
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.
NOTE 3. (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
excluding income taxes applicable to the cumulative effect of an accounting
change.
Year Ended December 31
-------------------------------------------------------------
2000 1999 1998
----------------- ---------------- ------------------
(Millions of dollars) AMOUNT PERCENT Amount Percent Amount Percent
- ---------------------------------------------------------------------------------------------------
Income before income taxes:
As reported. . . . . . . . . . . . $2,436.0 $2,251.7 $1,523.3
Charges (credits) for business
improvement programs and
other unusual items. . . . . . . (1.1) (97.3) 280.1
-------- -------- --------
Income before income taxes
excluding the above charges. $2,434.9 $2,154.4 $1,803.4
======== ======== ========
Tax at U.S. statutory rate(a). . . . $ 852.2 35.0% $ 754.0 35.0% $ 631.2 35.0%
State income taxes, net of federal
tax benefit. . . . . . . . . . . . 32.5 1.3 29.7 1.4 17.3 1.0
Operating losses for which no tax
benefit was recognized . . . . . . 15.8 .6 19.7 .9 34.6 1.9
Net operating losses realized. . . . (71.4) (2.9) (12.7) (.6) (10.2) (.5)
Other - net. . . . . . . . . . . . . (73.9) (3.0) (99.1) (4.6) (96.1) (5.4)
-------- ---- -------- ---- -------- -----
755.2 31.0% 691.6 32.1% 576.8 32.0%
==== ==== ====
Tax effects of business improvement
programs and other unusual items . 3.3 - 38.6 39.7% (54.6) (19.5)%
-------- ==== -------- ==== --------- =====
Provision for income taxes . . . . . $ 758.5 31.1% $ 730.2 32.4% $ 522.2 34.3%
======== ==== ======== ==== ======== ====
(a) Tax at U.S. statutory rate is based on income before income taxes excluding
the charges (credits) for business improvement programs and other unusual
items. The tax effects of such programs are shown elsewhere in the table.
At December 31, 2000, income taxes have not been provided on
approximately $2.4 billion of unremitted earnings of subsidiaries operating
outside the U.S. These earnings, which are considered to be invested
indefinitely, would become subject to income tax if they were remitted as
dividends, were lent to the Corporation or a U.S. affiliate, or if the
Corporation were to sell its stock in the subsidiaries. Determination of the
amount of unrecognized deferred U.S. income tax liability on these unremitted
earnings is not practicable because of the complexities associated with its
hypothetical calculation. Withholding taxes of approximately $210 million
would be payable upon remittance of all previously unremitted earnings at
December 31, 2000.
NOTE 4. 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. For the principal defined
benefit plans in North America and the United Kingdom, the funding policy is
to contribute assets that, at a minimum, fully fund the accumulated benefit
obligation, subject to regulatory and tax deductibility limits. The 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.
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.
Summarized financial information about postretirement plans, excluding
defined contribution retirement plans, is presented below.
NOTE 4. (Continued)
Pension Benefits Other Benefits
------------------- -----------------
Year Ended December 31
---------------------------------------
(Millions of dollars) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year. . . . . . $3,648.5 $3,867.5 $ 626.9 $ 658.6
Service cost . . . . . . . . . . . . . . . . . . . 63.4 73.3 10.9 12.5
Interest cost. . . . . . . . . . . . . . . . . . . 263.6 251.1 48.3 45.2
Participants' contributions. . . . . . . . . . . . 8.5 7.2 5.2 4.9
Amendments . . . . . . . . . . . . . . . . . . . . 4.5 11.6 - -
Actuarial loss (gain). . . . . . . . . . . . . . . 181.3 (292.9) 41.0 (28.4)
Acquisitions . . . . . . . . . . . . . . . . . . . 6.6 1.0 - -
Curtailments . . . . . . . . . . . . . . . . . . . - 11.9 - (4.1)
Special termination benefits . . . . . . . . . . . 1.1 1.9 - -
Currency exchange rate effects . . . . . . . . . . (68.9) (12.2) (.9) 1.5
Benefit payments . . . . . . . . . . . . . . . . . (261.5) (271.9) (69.5) (63.3)
-------- -------- ------- -------
Benefit obligation at end of year. . . . . . . . . 3,847.1 3,648.5 661.9 626.9
-------- -------- ------- -------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year . . 4,426.2 3,927.2 - -
Actual (loss) return on plan assets. . . . . . . . (47.5) 736.9 - -
Acquisitions . . . . . . . . . . . . . . . . . . . 2.7 - - -
Employer contributions . . . . . . . . . . . . . . 19.3 25.0 64.3 58.4
Participants' contributions. . . . . . . . . . . . 8.5 7.2 5.2 4.9
Currency exchange rate effects . . . . . . . . . . (67.7) (8.4) - -
Benefit payments . . . . . . . . . . . . . . . . . (255.0) (261.7) (69.5) (63.3)
-------- -------- ------- -------
Fair value of plan assets at end of year . . . . . 4,086.5 4,426.2 - -
-------- -------- ------- -------
FUNDED STATUS
Excess (deficiency) of plan assets over benefit
obligation. . . . . . . . . . . . . . . . . . 239.4 777.7 (661.9) (626.9)
Unrecognized net actuarial gain. . . . . . . . . . (37.0) (682.4) (46.2) (91.6)
Unrecognized transition amount . . . . . . . . . . (5.4) (10.9) - -
Unrecognized prior service cost. . . . . . . . . . 62.5 67.0 (13.4) (15.5)
-------- -------- ------- -------
Net amount recognized. . . . . . . . . . . . . . . $ 259.5 $ 151.4 $(721.5) $(734.0)
======== ======== ======= =======
AMOUNTS RECOGNIZED IN THE BALANCE SHEET CONSIST OF:
Prepaid benefit cost . . . . . . . . . . . . . . . $ 364.1 $ 248.2 $ - $ -
Accrued benefit cost . . . . . . . . . . . . . . . (131.9) (117.9) (721.5) (734.0)
Intangible asset . . . . . . . . . . . . . . . . . 4.6 4.9 - -
Accumulated other comprehensive income . . . . . . 22.7 16.2 - -
-------- -------- ------- -------
Net amount recognized. . . . . . . . . . . . . . . $ 259.5 $ 151.4 $(721.5) $(734.0)
======== ======== ======= =======
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.
NOTE 4. (Continued)
Summary disaggregated information about these pension plans follows:
Assets Exceed ABO Exceeds
ABO Assets
--------------- --------------
December 31
----------------------------------
(Millions of dollars) 2000 1999 2000 1999
- ----------------------------------------------------------------------------
Projected benefit obligation . . . . . . $3,650.0 $3,483.1 $197.1 $165.4
ABO. . . . . . . . . . . . . . . . . . . 3,364.6 3,309.1 167.6 152.6
Fair value of plan assets. . . . . . . . 4,037.5 4,379.6 49.0 46.6
Pension Benefits Other Benefits
----------------- ---------------
December 31
------------------------------------
2000 1999 2000 1999
- ----------------------------------------------------------------------------
WEIGHTED AVERAGE ASSUMPTIONS
Discount rate . . . . . . . . . . 7.2% 7.4% 7.5% 7.7%
Expected return on plan assets. . 9.3% 9.3% - -
Rate of compensation increase . . 4.1% 4.3% - -
Health care cost trend rate(a). . - - 6.9% 7.5%
(a) Assumed to decrease gradually to 6% in 2003 and remain at that level
for the large majority of plans and to zero by 2005 and thereafter for the
balance.
Pension Benefits Other Benefits
---------------------------- ---------------------
Year Ended December 31
---------------------------------------------------
(Millions of dollars) 2000 1999 1998 2000 1999 1998
- ------------------------------------------------------------------------------------------
COMPONENTS OF NET PERIODIC
BENEFIT COST
Service cost. . . . . . . . . . . . $ 63.4 $ 73.3 $ 69.2 $10.9 $12.5 $11.8
Interest cost . . . . . . . . . . . 263.6 251.1 247.1 48.3 45.2 44.2
Expected return on plan assets. . . (397.6) (352.8) (332.3) - - -
Amortization of prior service cost. 9.1 9.5 8.5 (2.1) (2.1) (2.1)
Amortization of transition amount . (4.4) (4.6) (5.3) - - -
Recognized net actuarial (gain)
loss. . . . . . . . . . . . . . . (20.2) 4.8 2.9 (4.3) (4.4) (4.9)
Curtailments. . . . . . . . . . . . - 18.0 .7 - (4.1) (.4)
Other . . . . . . . . . . . . . . . 1.0 6.1 5.1 - - -
------- ------- ------- ----- ----- -----
Net periodic benefit cost (credit). $ (85.1) $ 5.4 $ (4.1) $52.8 $47.1 $48.6
======= ======= ======= ===== ===== =====
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:
One-Percentage-Point
--------------------
(Millions of dollars) Increase Decrease
- ---------------------------------------------------------------------------------
Effect on total of service and interest cost components . . . $ 3.2 $ 4.3
Effect on postretirement benefit obligation . . . . . . . . . 40.9 42.4
NOTE 4. (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 $29.8
million, $26.1 million and $23.8 million in 2000, 1999 and 1998, 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. Cos s charged to expense under the plans were
$22.6 million, $25.1 million and $26.1 million in 2000, 1999 and 1998,
respectively.
NOTE 5. EARNINGS PER SHARE
A reconciliation of the average number of common shares outstanding used
in the basic and diluted EPS computations follows:
Average Common Shares Outstanding
-----------------------------------
(Millions) 2000 1999 1998
- ----------------------------------------------------------------------------------------------------
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539.5 536.3 550.3
Dilutive effect of stock options. . . . . . . . . . . . . . . . . 3.9 3.1 2.3
Dilutive effect of deferred compensation plan shares. . . . . . . .1 .1 -
Dilutive effect of shares issued for participation share awards . .3 .6 .5
----- ----- -----
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543.8 540.1 553.1
===== ===== =====
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:
Description 2000 1999 1998
- ----------------------------------------------------------------------------------------------------
Average number of share equivalents (millions). . . . . . . . . . . .5 .1 8.9
Weighted-average option price . . . . . . . . . . . . . . . . . . . $157.27(a) $58.10 $52.74
Expiration date of options. . . . . . . . . . . . . . . . . . . . . 2001 TO 2010 2009 2004 to 2008
Options outstanding at year end . . . . . . . . . . . . . . . . . . .5 .1 9.1
(a) The weighted-average option price in 2000 represents converted options
from the Safeskin Corporation acquisition.
The number of common shares outstanding as of December 31, 2000, 1999 and
1998 was 533.4 million, 540.6 million and 538.3 million, respectively.
NOTE 6. DEBT
Long-term debt is composed of the following:
Weighted-
Average December 31
Interest ----------------
Rate Maturities 2000 1999
- ---------------------------------------------------------------------------------------------------
Notes and debentures. . . . . . . . . . . . . . . . . . . 7.3% 2001 to 2028 $1,652.8 $1,591.6
Industrial development revenue bonds. . . . . . . . . . . 4.7% 2002 to 2034 414.1 416.8
Bank loans and other financings in various currencies . . 9.7% 2001 to 2016 211.2 215.6
-------- --------
Total long-term debt. . . . . . . . . . . . . . . . . . . 2,278.1 2,224.0
Less current portion. . . . . . . . . . . . . . . . . . 277.5 297.4
-------- -------
Long-term portion . . . . . . . . . . . . . . . . . . . . $2,000.6 $1,926.6
======== ========
Fair value of long-term debt was $2,295.9 million and $2,212.0 million at
December 31, 2000 and 1999, respectively. Scheduled maturities of long-term
debt are $45.6 million in 2002, $33.5 million in 2003, $122.7 million in 2004
and $56.1 million in 2005.
At December 31, 2000, the Corporation had a $1.1 billion syndicated
revolving credit facility. This facility, unused at December 31, 2000,
permits borrowing at competitive interest rates and is available for general
corporate purposes, including backup for commercial paper borrowings. The
Corporation pays commitment fees on the unused portion but may cancel the
facility without penalty at any time prior to its expiration. Of this
facility, $550 million expires in October 2001 and the balance expires in
November 2005.
Debt payable within one year:
December 31
----------------
(Millions of dollars) 2000 1999
- -------------------------------------------------------------------------------------------------
Commercial paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,046.3 $353.4
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . 277.5 297.4
Other short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166.7 131.6
-------- ------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,490.5 $782.4
======== ======
At December 31, 2000 and 1999, the weighted-average interest rate for
commercial paper was 6.5 percent and 5.4 percent, respectively.
NOTE 7. 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 in order to reduce credit risk and risk of
nonperformance by third parties.
Foreign Currency Risk Management
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
2000, 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.
Changes in foreign currency transaction rates decreased net income $2.2
million, $1.4 million and $32.8 million in 2000, 1999 and 1998, respectively.
Included in foreign currency losses were the Corporation's share of foreign
currency gains and losses at the Corporation's Mexican affiliate,
Kimberly-Clark de Mexico, S.A. de C.V. ("KCM"), attributable to changes in the
value of the Mexican peso, which is the Corporation's most significant
foreign currency risk. The Corporation's share of the peso currency losses
was not significant in 2000 and 1999, and was $.02 per share in 1998.
Beginning in 1999, the Mexican economy was no longer deemed to be
hyperinflationary and the peso, rather than the U.S. dollar, became the
functional currency for accounting purposes. Consequently, changes in the
value of the peso resulted in gains or losses on U.S. dollar obligations of
KCM. Prior to 1999, Mexico's economy was deemed to be hyperinflationary and
the functional currency of KCM was the U.S. dollar. Accordingly, changes in
the value of the peso did not result in foreign currency gains or losses
attributable to the U.S. dollar obligations of KCM. However, changes in the
value of the peso in 1998 resulted in gains or losses attributable to
peso-denominated monetary assets held by KCM.
Gains and losses on instruments that hedge firm commitments are deferred
and included in the basis of the underlying hedged items. Premiums paid for
options are amortized ratably over the life of the option. Contracts used to
hedge recorded foreign currency transactions generally mature within
one year and are marked-to-market with the resulting gains or losses included
in current income. These gains and losses offset foreign exchange gains and
losses on the underlying transactions. Notwithstanding the sizable notional
principal amounts involved, the Corporation's credit exposure under these
arrangements is limited to the fair value of the agreements with a positive
fair value at the reporting date. Additionally, credit risk with respect to
the counterparties is considered minimal in view of the financial strength of
the counterparties.
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 and 1999:
2000 1999
---------------------------------- ---------------------------------
NOTIONAL Notional
PRINCIPAL CARRYING FAIR Principal Carrying Fair
(Millions of dollars) AMOUNTS VALUES VALUES Amounts Values Values
- ------------------------------------------------------------------------------------------------------
Forward contracts
Assets. . . . . . . . . . . $333.5 $ 12.1 $ 7.3 $770.5 $18.0 $16.8
Liabilities . . . . . . . . 664.3 (20.2) (13.9) 375.9 (6.8) (4.4)
NOTE 7. (Continued)
Translation Risk
The income statements of foreign operations, other than those in
hyperinflationary economies, are translated into U.S. dollars at rates of
exchange in effect each month. The balance sheets of these operations are
translated at period-end exchange rates, and the differences from historical
exchange rates are reflected in stockholders' equity as unrealized translation
adjustments.
The income statements and balance sheets of operations in
hyperinflationary economies are translated into U.S. dollars using both
current and historical rates of exchange. For balance sheet accounts
translated at current exchange rates, such as cash and accounts receivable,
the differences from historical exchange rates are reflected in income.
Operations that are deemed to be hyperinflationary are as follows: 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 2000 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.
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 25 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. Derivative
instruments have not been used to manage these risks.
NOTE 8. 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:
(Thousands of shares) 2000 1999 1998
- ------------------------------------------------------------------------------
Outstanding - Beginning of year . . . . . 10,229 10,049 9,381
Awarded . . . . . . . . . . . . . . . . . - - 2,145
Dividend shares credited - net. . . . . . 602 808 883
Matured . . . . . . . . . . . . . . . . . (4,015) (483) (1,925)
Forfeited . . . . . . . . . . . . . . . . (208) (145) (435)
------ ------ ------
Outstanding - End of year . . . . . . . . 6,608 10,229 10,049
====== ====== ======
Amounts expensed related to participation shares were $44.5 million,
$34.9 million and $23.1 million in 2000, 1999 and 1998, 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 under the Corporation's Global Stock Option Plan. Employees were
granted options to purchase a fixed number of shares, ranging from 25 to 125
shares per employee, of common stock at a price equal to the fair market value
of the Corporation's stock at the date of grant. The grants generally 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.
NOTE 8. (Continued)
Data concerning stock option activity follows:
2000 1999 1998
----------------------- -------------------------- ---------------------
WEIGHTED- Weighted- Weighted-
AVERAGE Average Average
EXERCISE Exercise Exercise
(Options in thousands) OPTIONS PRICE Options Price Options Price
- ------------------------------------------------------------------------------------------------------------
Outstanding - Beginning of
year . . . . . . . . . . . 20,167 $44.08 17,132 $41.04 16,195 $36.73
Granted. . . . . . . . . . . 5,799 52.95 5,271 48.46 3,076 55.94
Exercised. . . . . . . . . . (2,876) 30.88 (2,154) 27.24 (1,608) 22.91
Canceled or expired. . . . . (554) 67.96 (545) 51.46 (531) 50.86
Converted Safeskin and
Ballard stock options. . . 1,405 85.22 463 36.13 - -
------ ------ ------
Outstanding - End of year. . 23,941(a) 49.67 20,167 44.08 17,132 41.04
====== ====== ======
Exercisable - End of year. . 11,330 46.95 9,588 36.59 8,429 30.10
====== ====== ======
(a) Data concerning stock options at December 31, 2000 follows (options in
thousands):
Options Outstanding
----------------------------------
Options Exercisable
Weighted- ------------------------
Average Remaining Weighted-
Exercise Contractual Average
Excercise Price Range Options Price Life (Years) Options Price
- -----------------------------------------------------------------------------------------
$12.36 - $28.34. . . . . 2,908 $ 25.16 3.1 2,908 $ 25.16
30.42 - 40.43. . . . . 2,106 39.88 4.8 2,106 39.88
40.85 - 52.13. . . . . 9,891 49.58 6.4 4,213 49.29
53.05 - 64.50. . . . . 8,583 54.01 8.3 1,705 55.98
82.44 - 255.63. . . . . 453 172.56 1.4 398 179.85
----- ------
23,941 11,330
====== ======
At December 31, 2000, the number of additional shares of common stock of
the Corporation available for awards under the 1992 Plan was 10.3 million
shares.
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:
(Millions of dollars, except per share amounts) 2000 1999 1998
- ---------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . $53.3 $41.2 $31.0
Basic and diluted net income per share. . . . . . . . . . .10 .08 .06
NOTE 8. (Continued)
The weighted-average fair value of the individual options granted during
2000, 1999 and 1998 is estimated as $16.24, $11.77 and $13.36, respectively,
on the date of grant. The fair values were determined using a Black-Scholes
option-pricing model with the following assumptions:
2000 1999 1998
- ------------------------------------------------------------
Dividend yield. . . . . . 2.04% 2.15% 1.79%
Volatility. . . . . . . . 26.20% 21.40% 17.60%
Risk-free interest rate . 6.50% 5.25% 5.59%
Expected life . . . . . . 5.8 YEARS 5.8 years 5.8 years
UNEARNED COMPENSATION ON RESTRICTED STOCK AWARDS
Effective January 1, 1999, the Corporation adopted a restricted stock
plan under which certain key employees may be granted, in the aggregate, up to
2.5 million shares or awards of restricted stock units of the Corporation's
common stock. 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 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, 2000, 1.6 million shares of the Corporation's
common stock 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 2000 and 1999, $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.
NOTE 9. COMMITMENTS
LEASES
The future minimum obligations under leases having a noncancelable term
in excess of one year as of December 31, 2000, are as follows:
Operating
(Millions of dollars) Leases
- -------------------------------------------------------------
Year Ending December 31:
2001 . . . . . . . . . . . . . . . . . . . . . . . $ 72.2
2002 . . . . . . . . . . . . . . . . . . . . . . . 45.2
2003 . . . . . . . . . . . . . . . . . . . . . . . 31.4
2004 . . . . . . . . . . . . . . . . . . . . . . . 24.1
2005 . . . . . . . . . . . . . . . . . . . . . . . 17.6
Thereafter . . . . . . . . . . . . . . . . . . . . 47.3
------
Future minimum obligations . . . . . . . . . . . . . $237.8
======
Operating lease obligations have been reduced by approximately $8.7
million for rental income from noncancelable sublease agreements.
Consolidated rental expense under operating leases was $145.9 million,
$151.4 million and $156.9 million in 2000, 1999 and 1998, respectively.
RAW MATERIALS
The Corporation has entered into long-term contracts for the purchase of
raw materials, primarily pulp. The minimum purchase commitments extend to
2005. At current prices, the commitments are approximately $651 million, $668
million and $465 million in 2001, 2002 and 2003, respectively. The commitment
beyond the year 2003 is approximately $339 million in total.
Although the Corporation is primarily liable for rental payments on the
above-mentioned leases and, considering the purchase commitments for raw
materials described above, management believes the Corporation's exposure to
losses, if any, under these arrangements is not material.
NOTE 10. STOCKHOLDERS' EQUITY AND OTHER COMPREHENSIVE INCOME
STOCKHOLDERS' EQUITY
At December 31, 2000, unremitted net income of equity companies included
in consolidated retained earnings was $771 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:
Year Ended December 31
----------------------------------------------------------------------------------------
2000 1999 1998
------------------------- ---------------------------- -------------------------
PRETAX TAX EXP. NET Pretax Tax Exp. Net Pretax Tax Exp. Net
(Millions of dollars) AMOUNT (CREDIT) AMOUNT Amount (Credit) Amount Amount (Credit) Amount
- ---------------------------------------------------------------------------------------------------------------------
Unrealized translation
adjustments. . . . . . . $(218.8) $ - $(218.8) $(154.6) $ - $(154.6) $ 3.1 $ - $3.1
Minimum pension liability
adjustment . . . . . . . (6.5) (2.5) (4.0) 6.6 2.5 4.1 (1.4) (.6) (.8)
------- ----- ------- ------- ---- ------ ----- ---- ----
Other comprehensive
income (loss). . . . . . $(225.3) $(2.5) $(222.8) $(148.0) $2.5 $(150.5) $ 1.7 $(.6) $2.3
======= ===== ======= ======= ==== ======= ===== ==== ====
Accumulated balances of other comprehensive income (loss), net of
applicable income taxes:
December 31
-----------------------
(Millions of dollars) 2000 1999
- --------------------------------------------------------------------------------
Unrealized translation adjustments . . . . . . . . . . . $(1,323.5) $(1,104.7)
Minimum pension liability adjustment . . . . . . . . . . (14.1) (10.1)
--------- ---------
Accumulated other comprehensive income (loss). . . . . . $(1,337.6) $(1,114.8)
========= =========
NOTE 11. ACQUISITIONS AND DISPOSITIONS OF BUSINESSES
ACQUISITIONS
On February 8, 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. On June 30, 2000, the Corporation completed the
acquisition of S-K Corporation ("S-K") in Taiwan. These acquisitions were
accounted for as purchases. Accordingly, the results of operations of these
two entities have been included in the Corporation's consolidated results of
operations from the date of their acquisition and their assets and liabilities
are included in the consolidated balance sheet as of December 31, 2000.
The Corporation engaged independent appraisers to assist in the
determination of the fair value of the acquired assets of Safeskin and S-K.
Although the appraisals are not yet complete, the Corporation believes that
the allocation of the purchase price will result in assigning values to
goodwill and other intangible assets in a range of $755 million to $780
million. These intangibles will be amortized on the straight-line method over
periods of up to 30 years.
The unaudited pro forma combined historical results of the Corporation,
as if Safeskin and S-K had been acquired at the beginning of fiscal 2000 and
1999, are estimated to be:
(Millions of dollars, except per share amounts) 2000 1999
- ------------------------------------------------------------------------------------
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . $14,066.7 $13,329.3
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 1,799.3 1,636.2
Basic net income per share . . . . . . . . . . . . . . . . . . 3.33 3.05
Diluted net income per share . . . . . . . . . . . . . . . . . 3.30 3.03
The pro forma results include amortization of the intangibles discussed
above and interest expense on debt assumed to be issued to acquire the
treasury stock exchanged in the Safeskin purchase and to finance the purchase
of S-K. The pro forma results are not necessarily indicative of what actually
would have occurred if the acquisition had been completed as of the beginning
of each of the fiscal periods presented, nor are they necessarily indicative
of future consolidated results.
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 the allocation of values to 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 2000, 1999 and 1998 were $175.5
million, $44.8 million and $343.5 million, respectively. The Corporation
recognized goodwill on acquisitions of consolidated subsidiaries of $130.0
million in 2000, $41.4 million in 1999 and $72.8 million in 1998. In
addition, goodwill of $150.4 million related to the acquisitions of equity
companies in 1998 was recorded in investments in equity companies.
NOTE 11. (Continued)
DISPOSITIONS
Southeast Timberlands
- ----------------------
In April 1998, the U.S. Environmental Protection Agency enacted new and
more stringent air emission and water discharge regulations, referred to as
the Cluster Rule, that impose additional pollution control requirements on the
Corporation's pulp production facilities. These rules would have required the
Corporation to spend more than $250 million to meet the Cluster Rule
requirements at its Mobile, Alabama pulp mill. Sappi Fine Paper (S.D. Warren
Company), a producer of printing and publishing papers, had purchased
approximately one-third of the pulp mill's output. On May 4, 1998, S.D.
Warren and the Corporation announced an agreement to terminate their pulp
supply contract effective September 1, 1999. As a result of the cancellation
of the pulp supply contract and the cost of implementing the Cluster Rule, on
May 5, 1998, the Corporation announced its intention to dispose of its entire
integrated pulp operation in Mobile, Alabama, including the related sale of
the associated woodlands operations (the "Southeast Timberlands") and the
closure of its pulp production facility. The pulp facility was shut down in
August 1999. Closure of the pulp mill resulted in the elimination of
approximately 450 jobs, and severance costs of $18.0 million for these
employees were charged to cost of products sold in the third quarter of 1998,
at the time the employees were notified of their termination benefits.
On September 30, 1999, the Corporation sold approximately 460,000 acres
of the Southeast Timberlands to Joshua Timberlands, LLC for notes receivable
with approximate face value of $400 million ("Joshua Notes"). 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.
In November 1999, the Joshua Notes were transferred for cash to a
noncontrolled special purpose entity ("SPE") in which the Corporation has a
minority voting interest. The transfer of the Joshua Notes, which was
accounted for as a sale, resulted in no gain or loss to the Corporation. The
SPE is accounted for as an equity investment.
In connection with the Mobile pulp mill closure, on May 5, 1998, the
Corporation gave notice to Mobile Energy Services Company, L.L.C. ("MESC") of
its intent to terminate a long-term energy services contract. The resulting
termination penalty of $24.3 million was charged to cost of products sold in
the second quarter of 1998. On January 14, 1999, MESC and related parties
(the "Debtors") filed for Chapter 11 bankruptcy protection and instituted an
action against the Corporation claiming unspecified damages in connection with
the pulp mill closure.
On December 31, 1999, a joint motion (the "Motion") was filed with the
U.S. Bankruptcy Court (the "Court") seeking approval of a settlement agreement
and compromise of claims and pending litigation against the Corporation
arising from the closure of the pulp mill and termination of the energy
services contract. Under the proposed settlement agreement, the Corporation
agreed to pay MESC at closing approximately $30 million, subject to certain
adjustments. The Court granted the Motion on January 24, 2000. Closing of
the settlement would be subject to, among other conditions, the Debtors filing
a plan
NOTE 11. (Continued)
of reorganization from bankruptcy and the ultimate approval of that
plan by the Court. The approximate $30 million payment, which will be
accrued when the conditions for settlement are met, is in addition to $24.3
million previously accrued by the Corporation. In addition, the proposed
settlement provides, among other things, an agreement by MESC to provide
energy to the Corporation's Mobile tissue mill at market rates.
In August 2000, the Debtors filed a plan of reorganization with the Court
that would implement the settlement agreement. During the fourth quarter of
2000, several crucial elements of the Debtors' plan became no longer viable.
As a result, the Debtors have sought and received from the Court and the
Corporation several extensions of deadlines contained in the settlement
agreement.
Because of uncertainty involving the Debtors' business plans, the
settlement agreement may not be finalized and approved by the Court.
Consequently, the Corporation has developed contingency plans to minimize or
avoid disruption to its Mobile operations in the event that MESC is unable or
unwilling to supply energy to the Mobile tissue mill. If the settlement
agreement is not finalized, the litigation and arbitration proceedings between
the Corporation and the Debtors could resume. The outcome of the MESC
litigation, arbitration and settlement is not expected to have a material
adverse effect on the Corporation's business, financial condition or results
of operations.
K-C Aviation Inc.
- -------------------
In August 1998, the Corporation completed the sale of its subsidiary, K-C
Aviation Inc., for $250 million in cash. The sale resulted in a pretax gain
of $140.0 million, which was included in other (income) expense, net. The
transaction resulted in an after-tax gain of $78.3 million, or $.14 per share.
NOTE 12. CONTINGENCIES AND LEGAL MATTERS
LITIGATION
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 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, similar actions by the
States of Maryland, New York and West Virginia, as well as approximately 45
class action complaints, were filed in various federal and state courts around
the United States.
The actions by the States of Florida, Maryland, New York and West
Virginia, the private plaintiffs in Minnesota and the federal private class
action plaintiffs were dismissed with prejudice pursuant to settlements with
defendants. A settlement was reached in the California class action
litigation and was preliminarily approved by the judge in December 2000. With
respect to the only remaining litigation, filed in Tennessee on behalf of a
purported class of indirect purchasers of commercial products, the Corporation
has answered the complaint and has denied the allegations contained therein as
well as any liability.
On February 8, 2000, the Corporation completed the acquisition of
Safeskin. Approximately 300 product liability lawsuits seeking monetary
damages, in most cases of an unspecified amount, were 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.
Since March 11, 1999, numerous lawsuits (collectively the "Securities
Actions") have been 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 and discovery is proceeding.
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
stayed discovery in the Derivative Action so that it can be coordinated with
discovery in the Securities Actions. Safeskin has referred the defense of the
Derivative Action and the Securities Actions to its insurance carriers.
On April 14, 2000, a complaint was filed against Kimberly-Clark Tissue
Company (formerly known as Scott Paper Company) ("KCTC") and others in State
of Maine Superior Court. Nineteen plaintiffs seek compensation for injuries
allegedly caused by exposure to substances emitted by the defendants' mills,
including two former KCTC mills, and from the Central Maine Disposal Landfill
in Fairfield, Maine.
NOTE 12. (Continued)
The Corporation intends to contest the foregoing claims vigorously and,
in management's opinion, they are not, individually or in the aggregate,
expected to have a material adverse effect on the Corporation's business,
financial condition or results of operations.
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 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.
NOTE 13. UNAUDITED QUARTERLY DATA
2000 1999
(Millions of dollars, -------------------------------------------------------------------------------------
except per share amounts) FOURTH(A) THIRD(B) SECOND(C) FIRST(D) Fourth(e) Third(f) Second(g) First(h)
- --------------------------------------------------------------------------------------------------------------------
Net sales . . . . . . . . . . $3,600.8 $3,529.5 $3,464.5 $3,387.2 $3,425.5 $3,307.5 $3,148.6 $3,125.2
Gross profit. . . . . . . . . 1,483.4 1,431.4 1,432.4 1,406.3 1,409.0 1,345.9 1,297.0 1,273.3
Operating profit. . . . . . . 674.7 642.1 638.3 678.7 602.5 719.0 569.3 544.6
Net income. . . . . . . . . . 455.7 440.4 434.3 470.2 424.0 478.4 391.1 374.6
Per share basis:
Basic . . . . . . . . . . .85 .82 .80 .86 .78 .90 .73 .70
Diluted . . . . . . . . . .85 .81 .79 .86 .77 .89 .73 .69
Cash dividends declared
per share . . . . . . . . . .27 .27 .27 .27 .26 .26 .26 .26
Market price per share:
High. . . . . . . . . . . . 73.25 61.81 62.94 68.13 69.56 62.19 64.06 54.88
Low . . . . . . . . . . . . 53.63 49.94 53.00 42.00 50.81 52.13 48.00 44.81
Close . . . . . . . . . . . 70.69 55.81 57.56 56.06 65.44 52.75 57.00 47.94
(a) Included in the fourth quarter 2000 are the following items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
------------------------------------------------------------------------------------------------------------
Charges for business improvement and other
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
==== ===== ===== ==== ====
(b) Included in the third quarter 2000 are the following items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
------------------------------------------------------------------------------------------------------------
Charges for business improvement and other
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
==== ===== ===== ==== ====
(c) Included in the second quarter 2000 are the following items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
------------------------------------------------------------------------------------------------------------
Charges for business improvement and other
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
==== ===== ==== ==== =====
NOTE 13. (continued)
(d) Included in the first quarter 2000 are the following items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
------------------------------------------------------------------------------------------------------------
Charges for business improvement and other
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)
===== ======= ======= ====== ======
(e) Included in the fourth quarter 1999 are the following items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
------------------------------------------------------------------------------------------------------------
Charges for business improvement and other
programs . . . . . . . . . . . . . . . . . . . . . . . $ 8.5 $(.2) $2.4
Business integration and other costs . . . . . . . . . . 1.8 9.2 6.1
----- ---- ----
Total. . . . . . . . . . . . . . . . . . . . . . . . . $10.3 $9.0 $8.5 $.02 $.02
===== ==== ==== ==== ====
(f) Included in the third quarter 1999 are the following items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
------------------------------------------------------------------------------------------------------------
Charges for business improvement and other
programs . . . . . . . . . . . . . . . . . . . . . . . $36.2 $ 19.4 $ 13.4
Business integration and other costs . . . . . . . . . . 9.4 13.4 8.4
Gain on asset disposal . . . . . . . . . . . . . . . . . - (153.3) (95.7)
----- ------- ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . $45.6 $(120.5) $(73.9) $(.14) $(.14)
===== ======= ====== ===== =====
(g) Included in the second quarter 1999 are the following items:
Net Income per Share
--------------------
Gross Operating Net
(Millions of dollars, except per share amounts) Profit Profit Income Basic Diluted
------------------------------------------------------------------------------------------------------------
Charges for business improvement and other
programs. . . . . . . . . . . . . . . . . . . . . . . $ 5.8 $ 5.8 $ 4.4
Mobile pulp mill fees and related severance . . . . . . 9.0 9.0 5.6
Gains on asset disposals. . . . . . . . . . . . . . . . - (23.4) (16.6)
---- ------ ------
Total . . . . . . . . . . . . . . . . . . . . . . . $14.8 $ (8.6) $ (6.6) $(.01) $(.01)
===== ====== ====== ===== =====
(h) Gross profit, operating profit, net income and basic and diluted net income
per share in the first quarter 1999 includes $18.5 million, $22.8
million, $15.4 million and $.03, respectively, related to the charges
for business improvement and other programs.
NOTE 14. SUPPLEMENTAL DATA (Millions of dollars)
SUPPLEMENTAL BALANCE SHEET DATA
December 31
------------------
Summary of Accounts Receivable 2000 1999
- ------------------------------------------------------------------------------------------------------------------
Accounts Receivable:
From customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,683.9 $1,492.3
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198.8 179.9
Less allowance for doubtful accounts and sales discounts . . . . . . . . . . . . . . . . . (73.1) (71.6)
-------- -------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,809.6 $1,600.6
======== ========
Accounts receivable are carried at amounts that approximate fair value.
In June 2000, $220 million of long-term notes receivable, previously
classified as other assets, were transferred for cash to a noncontrolled
special purpose entity in which the Corporation has a minority voting
interest.
December 31
-------------------
Summary of Inventories 2000 1999
- ----------------------------------------------------------------------------------------------------------------
Inventories by Major Class:
At the lower of cost on the FIFO method, weighted-average cost
method or market:
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 387.2 $ 342.3
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159.1 171.2
Finished goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840.1 713.4
Supplies and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220.0 215.4
------- --------
1,606.4 1,442.3
Excess of FIFO cost over LIFO cost. . . . . . . . . . . . . . . . . . . . . . . . . . . (216.0) (202.4)
------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,390.4 $1,239.9
======== ========
Total inventories include $444.1 million and $399.2 million of
inventories valued on the LIFO method at December 31, 2000 and 1999,
respectively.
December 31
-------------------
Summary of Accrued Expenses 2000 1999
- ----------------------------------------------------------------------------------------------------------------
Accruals for the 1998 and 1997 Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8.3 $ 24.5
Accrued advertising and promotion expense . . . . . . . . . . . . . . . . . . . . . . . . 214.1 277.8
Accrued salaries and wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428.7 392.8
Other accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588.7 617.0
-------- --------
Total accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,239.8 $1,312.1
======== ========
NOTE 14. (Continued)
Summary of Accrued Consumer Coupon Redemption Costs
- ---------------------------------------------------------
Balance, December 31, 1999 . . . . . $ 58.7
Additions charged to expense . . . . 158.8
Payments . . . . . . . . . . . . . . (136.1)
Changes in estimates . . . . . . . . (26.6)
Currency rate changes. . . . . . . . (.8)
-------
Balance, December 31, 2000 . . . . . $ 54.0
=======
SUPPLEMENTAL CASH FLOW STATEMENT DATA
Summary of Cash Flow Effects of (Increase) Decrease in Year Ended December 31
Operating Working Capital(a) 2000 1999 1998
- --------------------------------------------------------------------------------------------
Accounts receivable........................................ $ (88.8) $ (10.3) $ 87.5
Inventories................................................ (49.0) 111.2 (.4)
Prepaid expenses........................................... 10.4 28.0 14.2
Trade accounts payable..................................... (2.4) 41.1 (101.2)
Other payables............................................. 24.5 (98.4) 41.0
Accrued expenses........................................... (116.3) (147.3) (116.3)
Accrued income taxes....................................... (77.4) 34.9 130.8
Currency rate changes...................................... (39.3) (20.7) 8.0
-------- -------- --------
(Increase) decrease in operating working capital........... $(338.3) $ (61.5) $ 63.6
======== ======== ========
(a) Excludes the effects of acquisitions, dispositions and the business
improvement and other programs discussed in Note 2 to the Consolidated
Financial Statements.
Year Ended December 31
-----------------------------
Other Cash Flow Data 2000 1999 1998
- ----------------------------------------------------------------------------------------
Reconciliation of changes in cash and cash equivalents:
Balance, January 1....................................... $ 322.8 $144.0 $ 90.8
(Decrease)/Increase...................................... (116.3) 178.8 53.2
-------- ------ ------
Balance, December 31..................................... $ 206.5 $322.8 $144.0
======== ====== ======
Interest paid.............................................. $ 233.1 $227.1 $192.1
Income taxes paid.......................................... 783.2 557.8 368.6
Increase (decrease) in cash and cash equivalents due to
currency rate changes.................................... 11.4 .1 2.4
Year Ended December 31
----------------------------
Interest Expense 2000 1999 1998
- ----------------------------------------------------------------------------------------
Gross interest cost.......................................... $242.7 $226.0 $211.1
Capitalized interest on major construction projects.......... (20.9) (12.9) (12.4)
------- ------- -------
Interest expense............................................. $221.8 $213.1 $198.7
======= ======= =======
NOTE 15. BUSINESS SEGMENT AND GEOGRAPHIC DATA INFORMATION
The Corporation is organized into three global business segments as follows:
- - The Tissue segment manufactures and markets facial and bathroom tissue,
paper towels, wipers and napkins for household and away-from-home use; wet
wipes; printing, premium business and correspondence papers; and related
products. Products in this 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 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 Health Care and Other segment manufactures and markets 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; specialty and technical
papers; and other products. Products in this segment are sold under the
Kimberly-Clark, Safeskin, Tecnol, Ballard and other brand names.
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:
CONSOLIDATED OPERATIONS BY BUSINESS SEGMENT
Net Sales Operating Profit(a)
--------------------------------- -----------------------------
(Millions of dollars) 2000 1999 1998 2000 1999 1998
- ---------------------------------------------------------------------------------------------
Tissue................... $ 7,303.2 $ 6,968.8 $ 6,733.1 $1,305.0 $1,114.1 $ 921.3
Personal Care............ 5,437.6 5,138.1 4,596.5 1,136.7 1,092.8 588.7
Health Care and Other.... 1,291.0 936.4 1,001.5 186.1 154.3 161.2
---------- ---------- ---------- -------- -------- --------
Combined................. 14,031.8 13,043.3 12,331.1 2,627.8 2,361.2 1,671.2
Intersegment sales....... (49.8) (36.5) (33.3) - - -
Unallocated - net(b)..... - - - 6.0 74.2 26.5
---------- ---------- ---------- -------- -------- --------
Consolidated............ $13,982.0 $13,006.8 $12,297.8 $2,633.8 $2,435.4 $1,697.7
========== ========== ========== ======== ======== ========
Assets Depreciation Capital Spending
-------------------------------------------------------------------------------
(Millions of dollars) 2000 1999 1998 2000 1999 1998 2000 1999 1998
- --------------------------------------------------------------------------------------------------------
Tissue............... $ 6,773.3 $ 6,096.6 $ 5,870.8 $345.9 $359.6 $341.5 $ 682.2 $482.2 $345.6
Personal Care........ 3,667.7 3,234.8 3,138.7 200.9 195.8 220.0 410.7 260.7 290.4
Health Care
and Other.......... 2,583.3 1,679.0 951.1 43.7 29.8 31.8 74.8 43.0 31.2
--------- --------- --------- ------ ------ ------ -------- ------ ------
Combined............. 13,024.3 11,010.4 9,960.6 590.5 585.2 593.3 1,167.7 785.9 667.2
Unallocated
assets(c).......... 1,455.5 1,805.1 1,727.2 1.2 1.0 1.2 2.6 .5 2.3
--------- --------- --------- ------ ------ ------ -------- ------ ------
Consolidated........ $14,479.8 $12,815.5 $11,687.8 $591.7 $586.2 $594.5 $1,170.3 $786.4 $669.5
========= ========= ========= ====== ====== ====== ======== ====== ======
NOTE 15. (Continued)
(a) Included in Business Segment operating profit are the following unusual
items:
2000
---------------------------------------------------------
Personal Health Care
(Millions of dollars) Tissue Care and Other Unallocated Total
- ----------------------- -------- ---------- ------------ ----------- --------
Charges for business improvement
and other programs............................... $20.2 $4.2 $ - $ - $ 24.4
Business integration and other costs............... 14.6 1.0 19.5 - 35.1
Patent settlement and accrued liability reversal... - - - (75.8) (75.8)
Litigation settlements............................. - - - 15.2 15.2
----- ---- ----- ------ ------
Total.......................................... $34.8 $5.2 $19.5 $(60.6) $ (1.1)
===== ==== ===== ====== ======
1999
----------------------------------------------------------
Personal Health Care
(Millions of dollars) Tissue Care and Other Unallocated Total
- ----------------------- -------- ---------- ------------ ----------- ---------
Charges for business improvement
and other programs.............................. $31.8 $16.3 $1.4 $ (1.7) $ 47.8
Business integration and other costs.............. 16.4 - 6.2 - 22.6
Mobile pulp mill fees and related severance....... 9.0 - - - 9.0
Gains on asset disposals.......................... - - - (176.7) (176.7)
----- ----- ---- ------- -------
Total......................................... $57.2 $16.3 $7.6 $(178.4) $ (97.3)
===== ===== ==== ======= =======
1998
----------------------------------------------------------
Personal Health Care
(Millions of dollars) Tissue Care and Other Unallocated Total
- ----------------------- -------- ---------- ------------ ----------- --------
Charges for business improvement
and other programs.............................. $172.1 $196.6 $12.5 $ (3.4) $377.8
Mobile pulp mill fees and related severance....... 42.3 - - - 42.3
Gain on asset disposal............................ - - - (140.0) (140.0)
------ ------ ----- ------- ------
Total......................................... $214.4 $196.6 $12.5 $(143.4) $280.1
====== ====== ===== ======= ======
(b) Consists of other income (expense), net and expenses not associated with
the business segments.
(c) Includes investments in equity companies of $798.8 million, $863.1
million and $813.1 million in 2000, 1999 and 1998, respectively.
CONSOLIDATED OPERATIONS BY GEOGRAPHIC AREA
Net Sales Operating Profit(a)
------------------------- --------------------
(Millions of dollars) 2000 1999 1998 2000 1999 1998
- --------------------------- ----------------------------------------------------------------
United States............... $ 9,059.4 $ 8,392.5 $ 7,992.8 $1,937.1 $1,821.9 $1,407.2
Canada...................... 990.3 843.4 785.1 211.3 105.3 112.7
Intergeographic items(b).... (673.5) (507.4) (408.9) - - -
---------- ---------- ---------- -------- -------- ---------
North America............... 9,376.2 8,728.5 8,369.0 2,148.4 1,927.2 1,519.9
Europe...................... 2,474.5 2,544.7 2,471.2 149.7 183.3 (39.7)
Asia, Latin America, Africa
and Middle East........... 2,680.5 2,084.6 1,766.2 329.7 250.7 191.0
---------- ---------- ---------- -------- -------- ---------
Combined.................... 14,531.2 13,357.8 12,606.4 2,627.8 2,361.2 1,671.2
Intergeographic items....... (549.2) (351.0) (308.6) - - -
Unallocated - net(c)........ - - - 6.0 74.2 26.5
---------- ---------- ---------- -------- -------- ---------
Consolidated.............. $13,982.0 $13,006.8 $12,297.8 $2,633.8 $2,435.4 $1,697.7
========== ========== ========== ======== ======== =========
NOTE 15. (Continued)
Assets
----------------------------------
(Millions of dollars) 2000 1999 1998
- ----------------------- ----------------------------------
United States............................... $ 7,599.9 $ 6,363.1 $ 5,807.4
Canada...................................... 517.0 497.5 470.0
Intergeographic items....................... (79.4) (79.0) (52.6)
---------- ---------- ----------
North America............................... 8,037.5 6,781.6 6,224.8
Europe...................................... 2,447.3 2,404.1 2,133.2
Asia, Latin America, Africa and Middle East. 2,676.0 1,960.7 1,714.9
---------- ---------- ----------
Combined ................................... 13,160.8 11,146.4 10,072.9
Intergeographic items....................... (136.5) (136.0) (112.3)
Unallocated assets - net(d)................. 1,455.5 1,805.1 1,727.2
---------- ---------- ----------
Consolidated.............................. $14,479.8 $12,815.5 $11,687.8
========== ========== ==========
(a) Included in geographic operating profit are the following unusual
items:
2000
-------------------------------------------------------------------
Asia,
Latin America,
Africa and
(Millions of dollars) U.S. Canada Europe Middle East Unallocated Total
- ----------------------- -------------------------------------------------------------------
Charges for business improvement
and other programs............... $ 6.1 $1.1 $17.2 $- $ - $ 24.4
Business integration and other
costs............................ 28.8 .3 6.0 - - 35.1
Patent settlement and accrued
liability reversal............... - - - - (75.8) (75.8)
Litigation settlements............. - - - - 15.2 15.2
----- ---- ----- -- ------ ------
Total.......................... $34.9 $1.4 $23.2 $- $(60.6) $ (1.1)
===== ==== ===== === ====== ======
1999
------------------------------------------------------------------
Asia,
Latin America,
Africa and
(Millions of dollars) U.S. Canada Europe Middle East Unallocated Total
- ---------------------- ------------------------------------------------------------------
Charges for business improvement
and other 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)
===== ==== ===== ===== ======= =======
1998
------------------------------------------------------------------
Asia,
Latin America,
Africa and
(Millions of dollars) U.S. Canada Europe Middle East Unallocated Total
- ---------------------- ------------------------------------------------------------------
Charges for business improvement
and other programs............... $213.9 $(7.9) $162.8 $12.4 $ (3.4) $ 377.8
Mobile pulp mill fees and related
severance........................ 42.3 - - - - 42.3
Gain on asset disposal............. - - - - (140.0) (140.0)
------ ------ ------ ----- ------- -------
Total.......................... $256.2 $(7.9) $162.8 $12.4 $(143.4) $ 280.1
====== ====== ====== ===== ======= =======
NOTE 15. (Continued)
(b) Net sales include $409.2 million, $287.6 million and $255.9 million by
operations in Canada to the U.S. in 2000, 1999 and 1998, respectively.
(c) Consists of other income (expense), net and expenses not associated with
geographic areas.
(d) Includes investments in equity companies of $798.8 million, $863.1 million
and $813.1 million in 2000, 1999 and 1998, respectively.
EQUITY COMPANIES' DATA BY GEOGRAPHIC AREA
Kimberly-
Clark's
Share
Net Gross Operating Net of Net
(Millions of dollars) Sales Profit Profit Income Income
- -----------------------------------------------------------------------------------------------
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(a)... 602.1 242.1 88.9 56.9 27.9
-------- ------ ------ ------ ------
Total.......................... $2,504.6 $972.3 $603.6 $396.0 $186.4
======== ====== ====== ====== ======
For the year ended:
December 31, 1999
Latin America(b)................... $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
======== ====== ====== ====== ======
For the year ended:
December 31, 1998
Latin America(c).................. $1,606.8 $574.4 $344.5 $245.5 $113.5
Asia, Australia and Middle East... 666.9 236.6 81.8 49.1 23.6
-------- ------ ------ ------ ------
Total......................... $2,273.7 $811.0 $426.3 $294.6 $137.1
======== ====== ====== ====== ======
(a) 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.
(b) As of January 1, 1999, the Corporation consolidated Colombiana Kimberly
Colpapel S.A., its Colombian affiliate, in which the Corporation made an
additional investment in late 1998 to gain majority ownership of certain
equity affiliates.
(c) Operating profit, net income and Kimberly-Clark's share of net income
includes a loss of $38.9 million, $19.8 million and $9.2 million,
respectively, related to the change in the value of the Mexican peso. In
May 1998, the Corporation acquired 50 percent of Klabin Tissue, S.A., the
leading tissue manufacturer in Brazil.
NOTE 15. (Continued)
Non- Non- Stock-
Current Current Current Current holders'
(Millions of dollars) Assets Assets Liabilities Liabilities Equity
- -----------------------------------------------------------------------------------------
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
======== ======== ====== ====== ========
December 31, 1998
Latin America.................. $ 785.5 $1,170.7 $575.0 $154.0 $1,227.2
Asia, Australia and Middle East 239.2 359.1 129.5 173.8 295.1
-------- -------- ------ ------ --------
Total...................... $1,024.7 $1,529.8 $704.5 $327.8 $1,522.3
======== ======== ====== ====== ========
Equity companies are principally engaged in operations in the Tissue and
Personal Care businesses.
KCM is partially owned by the public and its stock is publicly traded in
Mexico. At December 31, 2000, the Corporation's investment in this equity
company was $455.3 million, and the estimated fair value of the investment
was $1.7 billion based on the market price of publicly traded shares.
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, 2000 and 1999,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 2000.
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, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
- ---------------------------
Deloitte & Touche LLP
Dallas, Texas
January 23, 2001
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.
The Corporation has assessed its internal control system as of December 31,
2000, 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, 2000, 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
January 23, 2001
ADDITIONAL INFORMATION
Transfer Agent, Registrar and Dividend Disbursing Agent
Fleet National Bank is the Transfer Agent, Registrar and Dividend Disbursing
Agent for the Company's common stock and is responsible for maintaining
shareholder account records. Inquiries regarding dividend payments, lost
certificates, IRS Form 1099, changes in address, name or ownership, or
information regarding Kimberly-Clark's Dividend Reinvestment and Stock
Purchase Plan should be addressed to:
Fleet National Bank
c/o EquiServe
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 Fleet National Bank is available to
Kimberly-Clark stockholders of record. The service makes it possible for
Kimberly-Clark stockholders of record to have their dividends automatically
reinvested in common stock and to make additional cash investments up to
$3,000 per quarter.
Stock Exchanges
Kimberly-Clark common stock is listed on the New York, Chicago and Pacific
stock exchanges. The ticker symbol is KMB.
Annual Meeting of Stockholders
The Annual Meeting of Stockholders will be held at the Company's World
Headquarters, 351 Phelps Drive, Irving, Texas, at 11:00 a.m. on Thursday,
April 26, 2001.
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 66,300 employees
as of December 31, 2000. Equity companies had an additional 11,700 employees.
The Corporation had 48,516 stockholders of record and 533.4 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, DryNites, GoodNites, Huggies, Just for
Me, Kimberly-Clark, KimGuard, KimTech, Kimwipes, KleenBebe, Kleenex, Kotex,
Lightdays, Lines, Little Swimmers, Neve, Parentstages.com, Poise, Popee,
Pull-Ups, Safeskin, Scott, Scottex, Scottfold, Splash 'n Go!, Surpass, Tecnol,
Viva and WypAll - are trademarks of Kimberly-Clark Corporation or its
affiliates.
Exhibit (21) CONSOLIDATED SUBSIDIARIES AND EQUITY COMPANIES KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES The following list includes certain companies that were owned directly or indirectly by Kimberly-Clark Corporation, a Delaware corporation, Dallas, Texas, as of December 31, 2000. This list includes all significant subsidiaries and equity companies. The place of incorporation or organization is the same as the location of the company except as shown parenthetically. Consolidated Subsidiaries Avent, Inc. and subsidiaries (Delaware), Tucson, Arizona Ballard Medical Products and subsidiaries, Draper, Utah Colombiana Kimberly Colpapel S.A. and subsidiaries, Medellin, Colombia(69%) Hakle-Kimberly Switzerland GmbH and subsidiaries, Reichenburg, Switzerland Hakle-Kimberly Deutschland GmbH and subsidiaries, Koblenz, Germany Hogla-Kimberly, Limited and subsidiaries, Hadera, Israel(50.1%) Housing Horizons, LLC, Dallas, Texas Kimberly Bolivia S.A., Santa Cruz, Bolivia(35%) Kimberly-Clark Argentina Holdings S.A. and subsidiaries, Buenos Aires, Argentina Kimberly-Clark a.s., Czech Republic Kimberly-Clark Australia Holdings Pty. Ltd. and subsidiaries, Milsons Point, Australia Kimberly-Clark B.V., Ede, The Netherlands Kimberly-Clark CBG Hygienic Products Company Limited, Chengdu, Handan, Kunming and Nanjing, China Kimberly-Clark Canada Inc. and subsidiaries, Mississauga, Ontario, Canada Kimberly-Clark Central American Holdings, S.A., Panama(81%) Kimberly-Clark de Centro America, S.A. and subsidiaries, Sitio del Ni o, El Salvador(81%) Kimberly-Clark Chile, S.A., Santiago, Chile(60%) Kimberly-Clark do Brasil Limitada and ubsidiaries, Sao Paulo, Brazil Kimberly-Clark Ecuador S.A., Quito, Ecuador(69%) Kimberly-Clark Holding Ltd. and subsidiaries, Kent, United Kingdom Kimberly-Clark (Hong Kong) Limited, Kowloon, Hong Kong Kimberly-Clark International, S.A., Panama City, Panama Kimberly-Clark Japan Limited, Tokyo, Japan Kimberly-Clark Kenko Industria e Com rcio Ltda. and subsidiaries, Sao Paulo, Brazil(70%) Kimberly-Clark Lda., Lisbon, Portugal Kimberly-Clark Luxembourg S.A.R.L. and subsidiaries, Luxembourg Kimberly-Clark Malaysia Sendirian Berhad, Petaling Jaya, Malaysia Kimberly-Clark N.V., Duffel, Belgium Kimberly-Clark ooo, Moscow, Russia Kimberly-Clark Paper (Guangzhou) Company Ltd., Guangzhou, China Kimberly-Clark Paper (Shanghai), Ltd., Shanghai, China Kimberly-Clark Paraguay, S.A., Asuncion, Paraguay(92%) Kimberly-Clark Personal Hygienic Products Co., Ltd., Beijing, China Kimberly-Clark Personal Hygienic Products (Nanjing) Co., Ltd., Nanjing, China Kimberly-Clark Peru S.A., Lima, Peru(33%) Kimberly-Clark Philippines Inc., Makati, Philippines(87%) Kimberly-Clark Poland Sp. z o.o, Warsaw, Poland Kimberly-Clark Printing Technology, Inc.(California) and subsidiaries, Roswell, Georgia Kimberly-Clark Products Malaysia) Sdn. Bhd., Kluang, Malaysia Kimberly-Clark Pudumjee Limited, Pune, India(51%) Kimberly-Clark Puerto Rico, Inc. (Delaware), San Juan, Puerto Rico Kimberly-Clark,S.L. and subsidiaries, Madrid, Spain Kimberly-Clark - SID, S.A., Dominican Republic(80%) Kimberly-Clark Singapore Pte. Ltd., Singapore Kimberly-Clark S.N.C., Saint Cloud, France Kimberly-Clark Southern Africa(Holdings) (Pty) Ltd. and subsidiaries, Johannesburg, South Africa(50% plus one share) Kimberly-Clark S.p.A. and subsidiaries, Turin, Italy Kimberly-Clark Technical Paper, Inc. (New Hampshire), East Ryegate, Vermont Kimberly-Clark Thailand Limited, Bangkok, Thailand Kimberly-Clark Tissue Company (Pennsylvania), Dallas, Texas Kimberly-Clark Ukraine LLC, Kiev, Ukraine Kimberly-Clark Uruguay, S.A., Montevideo, Uruguay Kimberly-Clark Venezuela, C.A., Caracas, Venezuela(69%) Kimberly-Clark Vietnam Co., Ltd., Hanoi, Vietnam Kimberly-Clark Worldwide, Inc. (Delaware), Dallas, Texas KIMNICA, S.A., Managua, Nicaragua(81%) Ovisan Turkey, Pendik, Turkey(50.1%) Papeles Absorbentes, S.A., Guatemala City, Guatemala(75%) P.T. Kimberly-Lever Indonesia, Jakarta Utara, Indonesia(50% plus one share) S-K Corporation, Taipei, Taiwan Safeskin Corporation and subsidiaries (Florida), San Diego, California Scott Paper Company de Costa Rica, S.A. and subsidiaries, San Jos , Costa Rica (81%) Scott Paper Company - Honduras, S.A. de C.V., San Pedro, Honduras(81%) Scott, S.A. and subsidiaries, Saint Cloud, France Taiwan Scott Paper Corporation, Taipei, Taiwan Tecnol, Inc. and subsidiaries (Delaware), Fort Worth, Texas YuHan-Kimberly, Limited, Seoul, Korea(70%) Equity Companies KCK Tissue S.A., Buenos Aires, Argentina(50%) Kimberly-Clark Australia Pty. Limited, Milsons Point, New South Wales, Australia(50%) Kimberly-Clark Lever, Ltd., Pune, India(50%) Kimberly-Clark de Mexico, S.A. de C.V. and subsidiaries, Mexico City, Mexico (47.9%) Klabin Kimberly S.A., Sao Paulo, Brazil (50%) Olayan Kimberly-Clark Arabia Company, Al-Khobar, Kingdom of Saudi Arabia(49%) Olayan Kimberly-Clark (Bahrain) WLL, Manama, Bahrain(49%) P.T. Kimsari Paper Indonesia, Medan, Indonesia(50%) Tecnosur S.A., Colombia(34%)
INDEPENDENT AUDITORS' CONSENT Exhibit (23) 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, and 333-51922) and on Form S-3 (Nos. 33-52343, 333-45399 and 333-68903) of our reports dated January 23, 2001 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 21, 2001
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, 2000, 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 22nd day of
February, 2001.
/s/ John F. Bergstrom
------------------------
John F. Bergstrom
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, 2000, 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 22nd day of
February, 2001.
/s/ Pastora San Juan Cafferty
---------------------------------
Pastora San Juan Cafferty
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, 2000, 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 22nd day of
February, 2001.
/s/ Paul J. Collins
----------------------
Paul J. Collins
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, 2000, 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 22nd day of
February, 2001.
/s/ Robert W. Decherd
------------------------
Robert W. Decherd
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, 2000, 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 22nd day of
February, 2001.
/s/ Thomas J. Falk
---------------------
Thomas J. Falk
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, 2000, 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 22nd day of
February, 2001.
/s/ William O. Fifield
-------------------------
William O. Fifield
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, 2000, 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 22nd day of
February, 2001.
/s/ Claudio X. Gonzalez
--------------------------
Claudio X. Gonzalez
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, 2000, 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 22nd day of
February, 2001.
/s/ Marc J. Shapiro
----------------------
Marc J. Shapiro
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, 2000, 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 22nd day of
February, 2001.
/s/ Frank A. McPherson
-------------------------
Frank A. McPherson
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, 2000, 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 22nd day of
February, 2001.
/s/ Linda Johnson Rice
-------------------------
Linda Johnson Rice
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, 2000, 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 22nd day of
February, 2001.
/s/ Wayne R. Sanders
-----------------------
Wayne R. Sanders
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, 2000, 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 22nd day of
February, 2001.
/s/ Wolfgang R. Schmitt
--------------------------
Wolfgang R. Schmitt
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, 2000, 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 22nd day of
February, 2001.
/s/ Randall L. Tobias
------------------------
Randall L. Tobias