Worldwide Consumer Business “THE NEW SCOTT WE’RE NOT JUST A PAPER COMPANY ANYMORE”

Worldwide Consumer BusinessWorldwide Consumer Business

““THE NEWTHE NEW

SCOTTSCOTTWE’RE NOT JUSTWE’RE NOT JUST

A PAPER COMPANYA PAPER COMPANY

ANYMORE”ANYMORE”


PurposePurpose

To Explain Transition from Old Scott to New ScottTo Explain Transition from Old Scott to New Scott

From:From: To:To:

Declining VolumeDeclining Volume Grow, Grow, GrowGrow, Grow, Grow

PROFITABLYPROFITABLY

Fragmented ProductsFragmented Products& Regional Brands& Regional Brands

Global Brands, MarketedGlobal Brands, MarketedSynergisticallySynergistically

Slow to InnovateSlow to Innovate Aggressive Innovation &Aggressive Innovation &Excellent ExecutionExcellent Execution

No WorldwideNo WorldwideLeadershipLeadership

Global World ClassGlobal World ClassLeadershipLeadership


New ScottNew ScottConsumer Regional HeadsConsumer Regional Heads

North AmericaNorth America EuropeEurope Asia & PacificAsia & Pacific


Strengthened OrganizationalStrengthened OrganizationalCapabilityCapability

Hired 14 New Key LeadersHired 14 New Key Leaders

- - 150 Years of Consumer150 Years of Consumer

Packaged Goods ExperiencePackaged Goods Experience From World Class CompaniesFrom World Class Companies

- - Coca ColaCoca Cola

- - Kimberly ClarkKimberly Clark

-- Procter & Gamble Procter & Gamble


New ScottNew Scott

Establish Global BrandsEstablish Global Brands Grow These Brands ProfitablyGrow These Brands Profitably Grow Organizational CapabilityGrow Organizational Capability


Presenting thePresenting theNew Scott BrandsNew Scott Brands


Basic Bath TissueBasic Bath Tissue

OldOld NewNew


Premium Bath TissuePremium Bath Tissue

OldOld NewNew


Scott, Scott Extra, Scott UltraScott, Scott Extra, Scott Ultra


Basic TowelsBasic Towels

OldOld NewNew


Premium TowelsPremium Towels

OldOld NewNew


Wet Wipes – Babies & ChildrenWet Wipes – Babies & Children

OldOld NewNew


Wet Wipes – AdultsWet Wipes – Adults

OldOld NewNew


All ProductsAll Products

OldOld


All ProductsAll Products

NewNew


New ScottNew Scott

New, Global PackagingNew, Global Packaging New, Global PositioningsNew, Global Positionings New, Global AdvertisingNew, Global Advertising New, Global InitiativesNew, Global Initiatives


OverviewOverview

Scott Brands Marketed in 22 CountriesScott Brands Marketed in 22 Countries


OverviewOverview

Scott Brands Marketed in 22 CountriesScott Brands Marketed in 22 Countries 1994 Worldwide Sales: Over $2.8 Billion1994 Worldwide Sales: Over $2.8 Billion


OverviewOverview

Scott Brands Marketed in 22 CountriesScott Brands Marketed in 22 Countries 1994 Worldwide Sales: Over $2.8 Billion1994 Worldwide Sales: Over $2.8 Billion 1994 Worldwide Operating Income: $388 Million1994 Worldwide Operating Income: $388 Million

- Restructuring- Restructuring

- Cost Savings- Cost Savings

- Mix Improvements- Mix Improvements+$125 Million/+$125 Million/

+47%+47%vs. 1993vs. 1993

Include AffiliatesInclude Affiliates


OverviewOverview

Scott Brands Marketed in 22 CountriesScott Brands Marketed in 22 Countries 1994 Worldwide Sales: Over $2.8 Billion1994 Worldwide Sales: Over $2.8 Billion 1994 Worldwide Operating Income: $388 Million1994 Worldwide Operating Income: $388 Million

- Restructuring- Restructuring

- Cost Savings- Cost Savings

- Mix Improvements- Mix Improvements But…1994 Sales 3% Lower vs. 1993.But…1994 Sales 3% Lower vs. 1993.

+$125 Million/+$125 Million/+47%+47%

vs. 1993vs. 1993

Include AffiliatesInclude Affiliates

WE MUST FIX THIS AND GROWWE MUST FIX THIS AND GROW


OverviewOverview

Largest Worldwide Tissue ProducerLargest Worldwide Tissue Producer Cost CompetitiveCost Competitive Proprietary StrengthsProprietary Strengths

-TechnologyTechnology- BrandsBrands

We Must…We Must…


Choose to LeadChoose to LeadChoose to InnovateChoose to Innovate


Strategic PlanStrategic Plan

== ++SignificantlySignificantly

DecreaseDecreaseCostsCosts

Maximize Shareholder ValueMaximize Shareholder Value

SignificantlySignificantlyIncreaseIncreaseProfitsProfits

FuelFuelProfitableProfitableGrowthGrowth



Significantly Decrease CostsSignificantly Decrease Costs

SignificantlySignificantlyIncreaseIncreaseProfitsProfits == ++

Restructuring BenefitsRestructuring Benefits-1995 Benefit: $200 Million1995 Benefit: $200 Million- Goal: 100% to the Bottom LineGoal: 100% to the Bottom Line

SignificantlySignificantlyDecreaseDecrease

CostsCosts





Additional Cost SavingAdditional Cost Saving-Streamline Canada & EuropeStreamline Canada & Europe- Plant Productivity & ReliabilityPlant Productivity & Reliability- Worldwide Procurement &Worldwide Procurement &

LogisticsLogistics- Fiber EffectivenessFiber Effectiveness


CostsCosts


Full YearFull YearSavingsSavingsPotential:Potential:$100 Million$100 Million


New Scott:New Scott:Continuous Cost ReductionContinuous Cost Reduction Eliminate Non-Essential CostsEliminate Non-Essential Costs Generate New Cost SavingsGenerate New Cost Savings Execute QuicklyExecute Quickly





CostsCosts


Fuel Profitable GrowthFuel Profitable Growth

Basic Brand ManagementBasic Brand Management Accelerated Brand GrowthAccelerated Brand Growth





CostsCosts


Basic Brand ManagementBasic Brand Management

Global BrandingGlobal Branding-- Global Packaging & Positioning Global Packaging & Positioning-- Global Advertising Global Advertising

Group Brand PromotionsGroup Brand Promotions





CostsCosts



Fully Capitalize on Fully Capitalize on AllAll Trade Channels Trade Channels-- $250+ Million Incremental Sales $250+ Million Incremental Sales

PotentialPotential





CostsCosts



Improve Basic Business StructureImprove Basic Business Structure-- National Brands & National Products National Brands & National Products-- Rationalize SKUs Rationalize SKUs-- Mix Improvements Mix Improvements-- 100% Capacity Utilization 100% Capacity Utilization





CostsCosts


Accelerated Brand Growth & New Product DevelopmentAccelerated Brand Growth & New Product DevelopmentRange of Range of Consumer NeedsConsumer Needs

ValueValue

BrandBrand PositioningPositioning TechnologyTechnology

BaseBase Meet Basic NeedsMeet Basic Needs TraditionalTraditional

MainstreamMainstream ExtraExtra Meet Basic Needs Meet Basic Needs withwithOne Superior AttributeOne Superior Attribute

TraditionalTraditional

PremiumPremium UltraUltra ProprietaryProprietaryMeet the Most Meet the Most Demanding NeedsDemanding Needs

Meet Special NeedsMeet Special Needs- Added Value IngredientsAdded Value Ingredients- Niche Product FormatsNiche Product Formats

SpecialtySpecialty Ultra PlusUltra Plus ProprietaryProprietary





CostsCosts


New Worldwide Initiative: CottonelleNew Worldwide Initiative: CottonelleCurrent Competition:Current Competition:

Consumers Have Unmet Needs:Consumers Have Unmet Needs: Irritation & AllergiesIrritation & AllergiesOdorOdorDry vs. WetDry vs. Wet

New Cottonelle BrandNew Cottonelle BrandPositioning:Positioning:

““Advanced Personal HygieneAdvanced Personal Hygiene””

Product Execution:Product Execution: HypoallergenicHypoallergenicBaking SodaBaking SodaDry & MoistDry & Moist

SoftSoft-Charmin: Squeezably Soft-Charmin: Squeezably Soft-Northern: Quilted Softness-Northern: Quilted Softness-Angel Soft: Cushiony Soft-Angel Soft: Cushiony Soft-Cottonelle: Cottony Soft-Cottonelle: Cottony Soft

Current: 6% Potential: 10-12%Current: 6% Potential: 10-12%U.S. & Market ShareU.S. & Market Share


Consumers Have Unmet Needs…Consumers Have Unmet Needs…

39% Have Concerns with Inks, Dyes,39% Have Concerns with Inks, Dyes,

Sensitive SkinSensitive Skin 39% Have Concerns with Odor Control39% Have Concerns with Odor Control 55% of Bath Tissue Users Supplement Dry 55% of Bath Tissue Users Supplement Dry

Tissue CleaningTissue Cleaning





CostsCosts


New Worldwide Initiative: CottonelleNew Worldwide Initiative: CottonelleCurrent Competition:Current Competition:

Consumers Have Unmet Needs:Consumers Have Unmet Needs: Irritation & AllergiesIrritation & AllergiesOdorOdorDry vs. WetDry vs. Wet

New Cottonelle BrandNew Cottonelle BrandPositioning:Positioning:

““Advanced Personal HygieneAdvanced Personal Hygiene””

Product Execution:Product Execution: HypoallergenicHypoallergenicBaking SodaBaking SodaDry & MoistDry & Moist

SoftSoft-Charmin: Squeezably Soft-Charmin: Squeezably Soft-Northern: Quilted Softness-Northern: Quilted Softness-Angel Soft: Cushiony Soft-Angel Soft: Cushiony Soft-Cottonelle: Cottony Soft-Cottonelle: Cottony Soft



Adult Moist Wipes:Adult Moist Wipes:New Incremental BusinessNew Incremental Business

Current U.S. Category $80 MillionCurrent U.S. Category $80 Million >50% of Consumers Use Additional>50% of Consumers Use Additional

Cleaning MethodsCleaning Methods >40% of Consumers Convert when Sampled>40% of Consumers Convert when Sampled If 20% of U.S. Homes Convert, Category If 20% of U.S. Homes Convert, Category

Size Would Increase to $500+ MillionSize Would Increase to $500+ Million Worldwide: Multi-Billion Dollar OpportunityWorldwide: Multi-Billion Dollar Opportunity





CostsCosts


New Worldwide Initiative: Viva UltraNew Worldwide Initiative: Viva UltraCurrent Competition:Current Competition:

Consumers Have Unmet Needs:Consumers Have Unmet Needs: COMBINATIONCOMBINATION-Speed of AbsorbencySpeed of Absorbency-Absorbent CapacityAbsorbent Capacity-Wet StrengthWet Strength

New Viva Ultra BrandNew Viva Ultra BrandPositioning:Positioning:

““Cloth-like Performance at aCloth-like Performance at aFraction of the CostFraction of the Cost””

Product Execution:Product Execution: Ultra (Kitchen)Ultra (Kitchen)Scrub Cloths (Portable Box)Scrub Cloths (Portable Box)

““Speed of Absorbency” OnlySpeed of Absorbency” Only““Absorbent Capacity” OnlyAbsorbent Capacity” Only


Like ClothLike Cloth





CostsCosts


New Worldwide Initiative: Scott CleanNew Worldwide Initiative: Scott CleanCurrent Competition:Current Competition:

Consumers Have Unmet Needs:Consumers Have Unmet Needs: COMBINATIONCOMBINATION-Absorb SpillsAbsorb Spills-Clean SurfacesClean Surfaces

New Scott Clean BrandNew Scott Clean BrandPositioning:Positioning:

““The Paper Towel That Leaves Surfaces The Paper Towel That Leaves Surfaces Truly Clean Because Its Thirsty Truly Clean Because Its Thirsty FiberWeve Doesn’t Leave Lint as FiberWeve Doesn’t Leave Lint as it Absorbsit Absorbs””

Product Execution:Product Execution: Single RollSingle RollDouble RollDouble RollTriple RollTriple RollExtra Big SheetsExtra Big SheetsChoose-A-SizeChoose-A-Size

““Speed of Absorbency” OnlySpeed of Absorbency” Only““Absorbent Capacity” OnlyAbsorbent Capacity” Only



Consumers Have Unmet Needs…Consumers Have Unmet Needs…

Most Common “Frequent” Uses of Paper TowelsMost Common “Frequent” Uses of Paper Towels

42%

43%

49%

49%

62%

74%

78%

Clean HH Lightly

Clean Bathroom

CoverFood/Microwave

CleanCounter/Tables

CleanCar/Windshield

CleanWindow/Mirror

Wipe up LiquidSpill

No Lint TowelRequired





CostsCosts


Key Initiatives – Implementation PlanKey Initiatives – Implementation Plan

RegionRegion InitiativesInitiatives I Q ‘95I Q ‘95 II Q ‘95II Q ‘95 III Q ‘95III Q ‘95 IV Q ‘95IV Q ‘95

North AmericaNorth America Cottonelle APHCottonelle APHViva UltraViva UltraScott CleanScott CleanFresh LineFresh Line

EuropeEurope Cottonelle APHCottonelle APHScott Extra/UltraScott Extra/UltraScott CleanScott CleanFresh LineFresh Line

PacificPacific Cottonelle APHCottonelle APHScott Extra/UltraScott Extra/UltraScott CleanScott CleanFresh LineFresh Line





CostsCosts


Beginning a Revolution in Brand GrowthBeginning a Revolution in Brand Growth

Breakthrough ProductsBreakthrough Products Highly Distinctive and Proprietary PositioningsHighly Distinctive and Proprietary Positionings World Class AdvertisingWorld Class Advertising Global ExecutionGlobal Execution Key Initiatives Full Year World Impact on Sales:Key Initiatives Full Year World Impact on Sales:

$700-800 Million$700-800 Million





CostsCosts


Accelerated Brand GrowthAccelerated Brand Growth

Adapt Proven Adapt Proven Away-From-HomeAway-From-Home Innovations: Innovations:- - WipesWipes-- Cleaning Systems Cleaning Systems-- Dispensing Systems Dispensing Systems


SummarySummaryKey Strategic ImperativesKey Strategic Imperatives

““Profitize” 100% of Profitize” 100% of Restructuring SavingsRestructuring Savings Offset Pulp and Other InflationOffset Pulp and Other Inflation

- - Additional Cost SavingsAdditional Cost Savings- - Mix ImprovementsMix Improvements-- Pricing Pricing

Drive Volume Growth & Profit MarginDrive Volume Growth & Profit Margin-- Sales Growth: Sales Growth: +10%/Year Minimum+10%/Year Minimum-- Operating Margin: Operating Margin: 20% Minimum20% Minimum

PROFITPROFIT

PROFITPROFIT

PROFITPROFIT

-Restructuring & Cost Restructuring & Cost ReductionReduction

-Basic Brand ManagementBasic Brand Management

-Incremental Sales fromIncremental Sales fromInitiativesInitiatives

Worldwide Consumer Business “THE NEW SCOTT WE’RE NOT JUST A PAPER COMPANY ANYMORE”

Documents

worldwide sales

new cost savings

scott extra

millionnew scott

old scott

global advertising new

global packaging new

global positionings