As reported by Kimberly-Clark Corporation’s FORM 10-Q for the quarterly period ended March 31, 2003, with respect to the lawsuits against Safeskin and certain of its former officers and directors described in the 2002 Form 10-K, the U.S. District Court for the Southern District of California approved the settlement agreement in March 2003, and all claims against Safeskin and the other defendants in those lawsuits have been released and dismissed with prejudice in accordance with the settlement agreement.

According to a Press Release dated February 2, 2003, Kimberly-Clark Corporation (KMB) announced that its wholly-owned subsidiary, Safeskin Corporation, and certain former officers and directors of Safeskin have agreed to settle previously disclosed securities and shareholder derivative litigation. Under the terms of the settlement, all claims against Safeskin and all other defendants in these litigation matters will be dismissed without admission of liability or wrongdoing by any party. The settlement of the 2 actions is subject to notice to class members and court approval. Kimberly-Clark acquired Safeskin, a manufacturer of disposable medical examination gloves and related products, in February 2000. The lawsuits relate to events occurring before the acquisition. The settlement brings to an end all securities and shareholder derivative suits relating to Safeskin and avoids the expense and uncertainty of further litigation. The total amount paid in settlement of both the lawsuits is $55 million, most of which is covered by insurance. Kimberly-Clark will record a pre-tax charge of approximately $21 million, or $.03 per share, as an unusual item in the fourth quarter of 2002. The charge includes legal defense and insurance costs and the uninsured portion of the settlement.

The original Complaint named Safeskin and certain officers and directors as defendants, alleging that these parties violated Sections 10(b) and 20(a) of the Exchange Act, as well as SEC Rule 10b-5 promulgated thereunder, by originating a series of materially misleading statements and omissions concerning the Company's business prospects. Specifically, the Complaint alleged that during the Class Period, defendants knowingly or recklessly overstated Safeskin's results of operations and net income for the third and fourth quarters of fiscal year 1998 and misled the investing public as to the Company's opportunities for fiscal 1999, by "stuffing the channel," i.e., selling to its distributors more product than they wanted or could reasonably sell and thereby giving the false appearance that the Company's business was continuing to grow at record levels. The Complaint also alleged that, during the Class Period, certain of the defendants sold 250,000 shares of Safeskin stock while in possession of materially adverse, non-public information, thereby reaping over $8 million in proceeds. On March 11, 1999, only one month after the Company's February 10, 1999 press release which stated that Safeskin would "deliver another year of record results in 1999," the defendants announced that the Company would experience revenues and earnings well below analysts' expectations for the first quarter of 1999 and for the entire fiscal year, with revenues for the quarter at a level $25 million below expectations. The defendants cited high distributor inventory levels as the reason for the shortfall.