4Q Net Sales Increased More Than 10 Percent to a Record $4.8 Billion in
2007; GAAP-Basis EPS Were $1.07 vs. $1.05 in 2006
Adjusted EPS Rose 8 Percent to $1.11, Consistent With Previous Guidance
2008 Outlook Calls for Continued Top- and Bottom-Line Growth in Line With
Long-Term Targets
DALLAS, Jan. 24 /PRNewswire-FirstCall/ -- Kimberly-Clark Corporation
(NYSE: KMB) today reported that net sales in the fourth quarter of 2007
improved 10.5 percent to $4.8 billion, setting a new quarterly record.
Highlights included continued strong growth in developing and emerging
markets, where sales climbed in excess of 20 percent, and double-digit
volume gains for several of the company's well-known Personal Care brands
in North America. Overall, organic sales growth totaled approximately 6
percent, driven principally by higher sales volumes, while changes in
currency exchange rates also benefited sales by nearly 5 percent.
Diluted net income per share was $1.07 compared with $1.05 in the prior
year. Adjusted earnings in the fourth quarter of 2007 were $1.11 per share,
up nearly 8 percent from $1.03 per share in 2006 and in line with the
company's previous guidance range of $1.09 to $1.11 per share. The increase
in sales, along with continued success in reducing costs, enabled the
company to deliver improved results for the quarter while absorbing
approximately $115 million of cost inflation and increasing strategic
marketing expenses by $10 million. A lower share count, partially offset by
a related increase in interest expense, and a lower adjusted effective
income tax rate also contributed to the increase in adjusted earnings per
share versus the year-ago period.
Adjusted earnings exclude charges for strategic cost reductions to
streamline the company's operations in both years and certain incremental
implementation costs related to the strategic cost reduction plan in 2007.
Also excluded from adjusted earnings in the year-ago quarter is the
company's share of an equity affiliate's gain on the sale of a business.
Further information about adjusted earnings and other non-GAAP financial
measures is provided in a separate section of this news release.
Chairman and Chief Executive Officer Thomas J. Falk said, "Looking back
on 2007, I'm encouraged by the progress K-C teams have made under our
Global Business Plan. By focusing on innovation, building our brands and
partnering with customers while relentlessly driving costs out of the
system, we again delivered on our financial commitments. For the year,
better-than-expected top-line growth contributed to solid improvement in
adjusted operating profit and earnings per share -- in line with our
long-term targets -- despite significantly higher inflation and a stepped
up level of marketing spending. I was also pleased with our fourth quarter
performance overall and with the sustained excellent results in Personal
Care and developing and emerging markets in particular. Still, because of
the toll inflation has taken on our Consumer Tissue and K-C Professional
margins, we are not satisfied with our current position. Recently announced
price increases are among the steps we're taking to improve revenue
realization in those businesses."
Review of fourth quarter sales
The fourth quarter sales growth of 10.5 percent included an increase in
sales volumes of more than 4 percent versus the prior year, as well as
improvements in net selling prices and product mix of approximately 1
percent each. As noted above, stronger foreign currencies boosted sales by
almost 5 percent.
Sales of personal care products climbed 16.4 percent in the fourth
quarter. Sales volume growth exceeded 10 percent and net selling prices
improved about 1 percent, while currency effects added approximately 5
percent to sales.
Personal care sales in North America went up about 13 percent compared
with the fourth quarter of 2006, driven by a 10-plus percent increase in
overall sales volumes. The remainder of the improvement was attributable to
higher net selling prices and appreciation of the Canadian dollar, each of
which benefited sales by more than 1 percent. Volume growth was
broad-based, as product innovations helped drive double-digit volume gains
for Huggies diapers and baby wipes and for the company's child care brands,
with particular strength in higher-margin, super premium product offerings.
Child care volumes benefited from continued growth of Pull-Ups training
pants and the third quarter introduction of GoodNites Sleep Boxers and
Sleep Shorts in the youth pants category. Meanwhile, sales volumes of the
company's Depend and Poise incontinence care brands rose 7 percent and
Kotex feminine care volumes were up slightly compared with the year-ago
quarter. In Europe, personal care sales advanced 13 percent in the quarter,
with favorable currency effects accounting for the entire increase. Sales
volumes improved 3 percent, offset by a 3 percent decline in net selling
prices. The volume gain reflects higher sales of Huggies diapers and baby
wipes, Pull-Ups training pants and DriNites youth pants across the region.
Competitive promotional activity in diapers affected net selling prices and
also contributed to a 2 percent decline in sales volumes of Huggies diapers
in the company's four core markets -- U.K., France, Italy and Spain. In
developing and emerging markets (D&E), personal care top-line momentum
remained very strong, as sales rose nearly 25 percent, boosted by an
increase in sales volumes of 14 percent and currency benefits of about 9
percent. Net selling prices were also up 1 percent. The growth in sales
volumes was broad-based, with particular strength throughout most of Latin
America and in South Korea, China and Russia.
Sales of consumer tissue products were 6.8 percent above the fourth
quarter of 2006, due primarily to favorable currency exchange rates that
benefited sales by 5 percent, along with improved product mix and net
selling prices, each approximately 1 percent better than the prior year.
In North America, sales of consumer tissue products decreased about 1
percent in the fourth quarter, as 1 percent lower sales volumes and a 2
percent decline in net selling prices were partially offset by favorable
product mix and currency effects of 1 percent each. Sales volumes of
bathroom tissue and paper towels increased 6 percent and 3 percent,
respectively, on continued growth of Scott bathroom tissue and Viva paper
towels behind product improvements for these brands. These improvements,
however, were offset by a 12 percent reduction in shipments of Kleenex
facial tissue mainly because of a weaker cold and flu season than in the
prior year. The decline in net selling prices reflects heightened levels of
competitive promotional activity in the premium bathroom tissue category to
support recent product upgrades, including the company's improved
Cottonelle bathroom tissue, as well as support for facial tissue in
anticipation of a seasonal pick up in volumes that has not yet occurred. In
Europe, consumer tissue sales rose about 14 percent. Currency exchange
rates strengthened by an average of more than 10 percent, accounting for a
majority of the increase. Sales volumes were up 4 percent, on higher sales
of Kleenex facial tissue and Andrex bathroom tissue, while a 1 percent
increase in net selling prices was offset by a slight fall-off in product
mix. Consumer tissue sales in developing and emerging markets rose
approximately 17 percent. Favorable currency effects added 9 percent to
sales, and net selling prices and product mix improved 6 percent and 3
percent, respectively, while sales volumes were down approximately 1
percent. Over the past year, prices have been raised in most D&E markets in
response to higher raw materials costs.
Sales of K-C Professional (KCP) & other products advanced 8.1 percent
compared with the fourth quarter of 2006. Currency effects benefited sales
by almost 5 percent, while sales volumes, net selling prices and product
mix were all about 1 percent better than the prior year. KCP continued to
post solid sales volume gains in Latin America and volumes were up 3
percent in North America, reflecting continued growth of the Kleenex, Scott
and Cottonelle washroom brands and Kimtech and WypAll wiper products. In
Europe, however, sales volumes were lower in comparison to strong growth in
the year-ago period.
Sales of health care products increased 1.4 percent in the fourth
quarter. Improved product mix of about 2 percent and currency benefits of
the same amount were partially offset by decreases in sales volumes and net
selling prices of approximately 1 percent and 2 percent, respectively. The
decrease in sales volumes was mainly attributable to a higher level of
sales of face masks in the year-ago quarter primarily due to avian flu
preparedness and the company's decision in the second half of 2006 to exit
the latex exam glove business. In the fourth quarter, the company made
further progress in transitioning customers and users from latex to its
higher-margin, clinically-preferred nitrile gloves, and sales of exam
gloves improved sequentially versus third quarter levels, as expected.
Nevertheless, the growth in sales of nitrile gloves has not yet fully
compensated for the drop-off in sales of latex gloves, due in part to
supply constraints earlier in the year and competitive market conditions.
In other areas of the business, fourth quarter sales of medical devices,
particularly Ballard respiratory catheters, generated solid improvement.
Other fourth quarter operating results
Operating profit was $669 million in the fourth quarter of 2007,
compared with $611 million in 2006. Excluding net charges for the company's
strategic cost reduction plan in both years and related implementation
costs in 2007, adjusted operating profit for the quarter increased 3.5
percent to $697 million from $673 million in the prior year. Top-line
growth, along with FORCE (Focused On Reducing Costs Everywhere) cost
savings of about $30 million and strategic cost reductions of $30 million
enabled the company to more than offset approximately $115 million of cost
inflation. The inflationary increases were driven primarily by higher fiber
costs, up about $60 million versus the fourth quarter of 2006, and
approximately $40 million for raw materials other than fiber, including
nonwovens and other oil-based materials, along with about $10 million in
distribution costs and $5 million of higher energy costs. Marketing,
research and general expenses in the fourth quarter reflect the higher
level of marketing spending, as well as increased expenses to support
growth in developing and emerging markets and to further build capabilities
in key areas such as customer development.
Interest expense for the quarter increased approximately $29 million
from the prior year, mainly as a result of new long-term debt issued in
late July to fund the company's accelerated share repurchase program.
The company's effective tax rate in the fourth quarter was 23.8 percent
in 2007 and 23.0 percent in 2006. Excluding the effects of charges for the
company's strategic cost reduction plan and related implementation costs,
as well as net effects from synthetic fuel partnerships in both years and
minority owners' share of tax benefits in 2007, the adjusted effective tax
rate for the quarter was 24.8 percent in 2007 compared with 29.1 percent in
2006. The decline was due primarily to reversal of valuation allowances on
deferred tax assets at certain majority-owned subsidiaries in Latin America
based on a sustained improvement in the subsidiaries' operating results.
The net effect of synthetic fuel partnership activities was a cost of
nearly $7 million in the fourth quarter of 2007 compared with a benefit of
approximately $11 million in the prior year. The cost in the current
quarter reflects a partial phase out of benefits, retroactive to the
beginning of the year, as a result of the recent increase in the price of
oil. The overall impact of income taxes in the fourth quarter was favorable
by approximately $9 million, or 2 cents per share, versus both the prior
year and the company's previous guidance. Reconciliations of the above
effective tax rate calculations are provided in a separate section of this
news release.
Kimberly-Clark's share of net income of equity companies in the fourth
quarter decreased to about $43 million from nearly $94 million in 2006, due
mainly to lower net income at Kimberly-Clark de Mexico, S.A.B. de C.V.
(KCM). The 2006 total includes a gain of approximately $46 million from
KCM's sale of its pulp and paper business. The remainder of the decline was
driven primarily by lower operating profit at KCM, where sales growth of
about 3 percent did not overcome the impact of significantly higher raw
materials costs. As previously noted, Kimberly-Clark excluded the $46
million gain from 2006 adjusted earnings.
Minority owners' share of subsidiaries' net income was approximately
$51 million in the fourth quarter of 2007 compared with almost $28 million
in the prior year. The increase was mainly attributable to minority owners'
share of the above-mentioned tax benefits at majority-owned subsidiaries.
Competitive improvement initiatives -- update on strategic cost
reduction plan
The company's strategic cost reduction plan is part of a comprehensive,
multi-year effort announced in July 2005 to further improve
Kimberly-Clark's competitive position. The plan calls for streamlining
manufacturing and administrative operations primarily in North America and
Europe, with expected annual savings of at least $350 million by 2009.
These cost savings are allowing the company to invest in targeted growth
opportunities and in key capabilities, including innovation, marketing and
customer development.
During the fourth quarter, the company continued to successfully
execute planned cost reduction activities, the most significant of which
involved consolidating infant and child care operations in North America,
improving the cost structure in Health Care and streamlining of
administrative operations in North America and Europe. Savings for the full
year totaled approximately $105 million, somewhat above the company's
target to save $75 to $100 million.
To date, employees have been notified about workforce reductions and
other actions at 23 of 24 facilities slated for sale, closure or
streamlining as part of the cost reduction plan. In addition, pretax
charges of $820 million (about $574 million after tax), or approximately 90
percent of the plan's expected cost, have now been incurred. The company
estimates cumulative charges for implementing the plan, through its
completion in 2008, will total $880 to $910 million ($610 to $630 million
after tax), of which approximately 35 percent is expected to be paid in
cash.
Cash flow and balance sheet
Cash provided by operations in the fourth quarter decreased to $685
million from $813 million in 2006, primarily because the prior year's cash
flow included a special dividend of $123 million received from KCM
following the sale of its pulp and paper business. Capital spending for the
quarter was $213 million in 2007 compared with $333 million in the prior
year. For the full year of 2007, capital spending totaled $989 million,
consistent with the company's targeted spending range of $900 million to $1
billion.
During the fourth quarter, the company repurchased approximately 3.9
million shares of its common stock at a cost of nearly $269 million. For
the year, the company spent $2.8 billion to repurchase about 41.2 million
shares of Kimberly-Clark stock, including the purchase of 29.6 million
shares in July under an accelerated share repurchase agreement (ASR) for an
initial payment of $2.0 billion.
At December 31, 2007, total debt and preferred securities was $6.5
billion compared with $4.4 billion at the end of 2006. In late July, the
company issued $2.1 billion of long-term debt principally to finance the
ASR.
Full year results
For the year of 2007, sales of $18.3 billion were up 9 percent from
$16.7 billion in the prior year, as a result of a 4 percent increase in
sales volumes, improvements of approximately 1 percent in both net selling
prices and product mix and favorable currency effects of nearly 3 percent.
Year-to-date operating profit was $2,616 million compared with $2,102
million in 2006. Adjusted operating profit increased approximately 6
percent to $2,734 million in 2007 from $2,586 million in the prior year.
The benefits of top-line growth, along with cost savings of about $265
million, more than offset inflation in key cost components totaling
approximately $350 million and a $50 million increase in strategic
marketing spending. For the year, diluted net income per share in 2007 was
$4.09 compared with $3.25 in 2006. Adjusted earnings per share increased 9
percent to $4.25 in 2007 from $3.90 in 2006. Those amounts are adjusted
for: charges related to strategic cost reductions in both years;
incremental implementation costs and a gain on settlement of litigation in
2007; and the gain resulting from the sale of part of an affiliate's
business in 2006.
Outlook
The company detailed its planning assumptions for 2008 as follows:
-- Organic sales growth of 4 to 6 percent, in line with or slightly above
its long-term objective. Sales volumes are expected to increase 3 to
4 percent, while net selling prices are anticipated to rise 1 to 2
percent, reflecting price increases implemented during 2007 or
scheduled for implementation in early 2008.
-- Net sales growth of 5 to 7 percent, as foreign currency effects, at
current rates, should benefit sales comparisons by at least 1 percent.
-- Adjusted operating profit growth of 5 to 8 percent, in line with its
long-term objective, as higher prices and continued significant cost
savings should more than offset expected inflationary pressures and
fund increased levels of strategic marketing.
-- Cost inflation is projected to be at least $400 million, due
mainly to higher fiber, polymer resin and other oil-based raw
materials costs. Energy and distribution costs are also expected
to increase.
-- Savings from the company's FORCE program and its strategic cost
reduction plan are expected to total $200 to $250 million.
-- Strategic marketing spending is planned to increase at a faster
rate than sales to support new and improved products and improve
overall brand equity and market share.
-- The adjusted effective tax rate for the year is expected to be in a
range of 28 to 30 percent versus 27.4 percent in 2007. The company
expects no benefits from its synthetic fuel partnerships in 2008. The
partnerships ceased operations because the law giving rise to the
related tax deductions and credits expired at the end of 2007, as
scheduled.
-- The company's share of net income of equity companies is expected to
be slightly above the 2007 level.
-- Share repurchases of about $800 million to $1 billion are anticipated,
subject to market conditions. At current market prices, this equates
to approximately 3 percent of outstanding shares and is consistent
with the Global Business Plan target of 2 to 3 percent. The total
includes final settlement of the accelerated share repurchase executed
in July 2007.
-- Capital spending should total $850 million to $950 million, slightly
below the long-range objective for annual spending of 5 to 6 percent
of sales.
-- A high single-digit percentage increase in the dividend, effective in
April 2008, subject to approval by the Board of Directors.
Commenting on the outlook, Falk said, "The underlying strength of our
business results throughout 2007 in the face of significant inflationary
pressures gives us confidence that we will continue to execute our Global
Business Plan well in the coming year. We expect good top-line growth in
2008, as we build on our momentum in Personal Care and developing and
emerging markets and successfully drive our other targeted growth
initiatives. We also will continue to aggressively reduce costs and we are
intent on improving results in businesses that have been most significantly
impacted by cost inflation. At the same time, we will invest more to
further strengthen key capabilities in innovation, marketing and customer
development -- investments that will help us deliver sustainable growth.
Finally, we will remain focused on increasing cash flow and deploying it in
shareholder-friendly ways.
"All things considered, we expect adjusted earnings per share in 2008
will be in a range of $4.45 to $4.60 per share. Compared with adjusted
earnings of $4.25 per share in 2007, this will enable us to deliver growth
of 5 to 8 percent, in line with our long-term objective.
"As for the first quarter, we expect adjusted earnings per share will
be in a range of $1.05 to $1.08. This reflects recent increases in pulp,
polymer resin and oil-based costs and the timing of previously announced
price increases for key consumer brands in the U.S., which are scheduled to
be implemented in mid-February. We expect our earnings momentum to
accelerate later in the year as those price increases are realized and our
top-line growth and cost savings initiatives gain further traction."
Non-GAAP financial measures
This press release and the accompanying tables include the following
financial measures that have not been calculated in accordance with
accounting principles generally accepted in the U.S., or GAAP, and are
therefore referred to as non-GAAP financial measures:
-- adjusted earnings and earnings per share
-- adjusted operating profit
-- adjusted effective tax rate
These non-GAAP financial measures exclude certain items that are
included in the company's earnings, earnings per share, operating profit
and effective tax rate calculated in accordance with GAAP. A detailed
explanation of each of the adjustments to the comparable GAAP financial
measures is given below. In accordance with the requirements of SEC
Regulation G, reconciliations of the non-GAAP financial measures to the
comparable GAAP financial measures are attached.
The company provides these non-GAAP financial measures as supplemental
information to our GAAP financial measures. Management and the company's
Board of Directors use adjusted earnings, adjusted earnings per share and
adjusted operating profit to (a) evaluate the company's historical and
prospective financial performance and its performance relative to its
competitors, (b) allocate resources and (c) measure the operational
performance of the company's business units and their managers.
Additionally, the Management Development and Compensation Committee of the
company's Board of Directors uses these non-GAAP financial measures when
setting and assessing achievement of incentive compensation goals. These
goals are based, in part, on the company's adjusted earnings per share and
improvement in the company's adjusted return on invested capital determined
by excluding the charges that are used in calculating these non-GAAP
financial measures.
In addition, Kimberly-Clark management believes that investors'
understanding of the company's performance is enhanced by including these
non-GAAP financial measures as a reasonable basis for comparing the
company's ongoing results of operations and for understanding the company's
effective tax rate. Many investors are interested in understanding the
performance of our businesses by comparing our results from ongoing
operations from one period to the next. By providing the non-GAAP financial
measures, together with the reconciliations, we believe we are enhancing
investors' understanding of our businesses and our results of operations,
as well as assisting investors in evaluating how well the company is
executing the material changes to our enterprise contemplated by the
strategic cost reduction plan. Also, many financial analysts who follow our
company focus on and publish both historical results and future projections
based on non-GAAP financial measures. We believe that it is in the best
interests of our investors for us to provide this information to analysts
so that those analysts accurately report the non-GAAP financial
information.
We calculate adjusted earnings, adjusted earnings per share, adjusted
operating profit and adjusted effective tax rate by excluding from the
comparable GAAP measure (i) charges related to our strategic cost reduction
plan for streamlining the company's operations, (ii) certain incremental
implementation costs relating to our strategic cost reduction plan, (iii)
the gain on a litigation settlement, (iv) our share of an equity
affiliate's gain on the sale of a business, and (v) the net effect of the
company's investment in synthetic fuel partnerships and the minority
owners' share of tax benefits on the company's effective tax rate. Each of
these adjustments and the basis for such adjustments are described below:
-- Strategic cost reduction plan. In July 2005, the company authorized a
strategic cost reduction plan aimed at streamlining manufacturing and
administrative operations, primarily in North America and Europe. The
strategic cost reduction plan commenced in the third quarter of 2005
and is expected to be substantially completed by December 31, 2008.
At the time we announced the plan, we advised investors that we would
report our earnings, earnings per share and operating profit excluding
the strategic cost reduction plan charges so that investors could
compare our operating results without the plan charges from period to
period and could assess our progress in implementing the plan.
Management does not consider these charges to be part of our earnings
from ongoing operations for purposes of evaluating the performance of
its business units and their managers and excludes these charges when
making decisions to allocate resources among its business units.
-- Implementation costs. In connection with our strategic cost reduction
plan, the company has incurred incremental implementation costs
related to the transfer of certain administrative processes to third
party providers. These costs were incurred primarily in the first six
months of 2007. Management intends to exclude these implementation
costs from our earnings from ongoing operations for purposes of
evaluating the performance of our business units and their managers
and to exclude these costs when making decisions to allocate resources
among its business units.
-- Litigation settlement. In the third quarter of 2007, the company
received proceeds from settlement of litigation related to prior
years' operations in Latin America. Management does not consider this
gain to be part of our earnings from ongoing operations for purposes
of evaluating the performance of its business units and their managers
and excludes the gain when making decisions to allocate resources
among its business units.
-- Gain on sale of business. In the fourth quarter of 2006, the
company's equity affiliate, Kimberly-Clark de Mexico, S.A. de C.V.
sold its pulp and paper business and recorded an after-tax gain of
$95 million. The company's share of the gain was approximately $46
million. We exclude this gain from our adjusted earnings and adjusted
earnings per share so that investors can compare our operating results
without the non-recurring gain. Management also excludes this gain
when evaluating the operating performance of the company.
-- Adjusted effective tax rate. In the analysis of its effective tax
rate, the company excludes the effects of charges for the strategic
cost reduction plan, related implementation costs and the litigation
settlement gain, as well as net effects from the company's investment
in synthetic fuel partnerships and the minority owners' share of tax
benefits. We believe that adjusting for these items provides improved
insight into the tax effects of our ongoing business operations.
These non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for the comparable GAAP measures. There are
limitations to these non-GAAP financial measures because they are not
prepared in accordance with GAAP and they may not be comparable to
similarly titled measures of other companies due to potential differences
in methods of calculation and items being excluded. The company compensates
for these limitations by using these non-GAAP financial measures as
supplements to the GAAP measures and by providing the reconciliations of
the non-GAAP and comparable GAAP financial measures. The non-GAAP financial
measures should be read only in conjunction with the company's consolidated
financial statements prepared in accordance with GAAP.
Conference call
A conference call to discuss this news release and other matters of
interest to investors and analysts will be held at 9 a.m. (CST) today. The
conference call will be simultaneously broadcast over the World Wide Web.
Stockholders and others are invited to listen to the live broadcast or a
playback, which can be accessed by following the instructions set out in
the Investors section of the company's Web site
(http://www.kimberly-clark.com).
About Kimberly-Clark
Kimberly-Clark and its well-known global brands are an indispensable
part of life for people in more than 150 countries. Every day, 1.3 billion
people -- nearly a quarter of the world's population -- trust K-C brands
and the solutions they provide to enhance their health, hygiene and
well-being. With brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex
and Depend, Kimberly-Clark holds No. 1 or No. 2 share positions in more
than 80 countries. To keep up with the latest K-C news and to learn more
about the company's 136-year history of innovation, visit
http://www.kimberly-clark.com.
Copies of Kimberly-Clark's Annual Report to Stockholders and its proxy
statements and other SEC filings, including Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, are made
available free of charge on the company's Web site on the same day they are
filed with the SEC. To view these filings, visit the Investors section of
the company's Web site.
Certain matters contained in this news release concerning the business
outlook, including new product introductions, cost savings, changes in
finished product selling prices, anticipated costs and benefits related to
the strategic cost reduction plan, anticipated benefits from the
accelerated share repurchase agreement, anticipated financial and operating
results, strategies, contingencies and anticipated transactions of the
company constitute forward-looking statements and are based upon
management's expectations and beliefs concerning future events impacting
the company. There can be no assurance that these future events will occur
as anticipated or that the company's results will be as estimated. For a
description of certain factors that could cause the company's future
results to differ materially from those expressed in any such
forward-looking statements, see Item 1A of the company's Annual Report on
Form 10-K for the year ended December 31, 2006 entitled "Risk Factors."
KIMBERLY-CLARK CORPORATION
CONSOLIDATED INCOME STATEMENT
PERIODS ENDED DECEMBER 31
(Millions of dollars, except per share amounts)
Three Months
Ended December 31
2007 2006 Change
Net Sales $4,758.1 $4,307.2 + 10.5%
Cost of products sold 3,296.0 2,941.3 + 12.1%
Gross Profit 1,462.1 1,365.9 + 7.0%
Marketing, research and general
expenses 792.0 744.7 + 6.4%
Other (income) and expense, net 1.2 10.6 - 88.7%
Operating Profit 668.9 610.6 + 9.5%
Nonoperating income (expense) 14.7 (24.9) N.M.
Interest income 9.5 9.4 + 1.1%
Interest expense (83.4) (54.4) + 53.3%
Income Before Income Taxes and Equity
Interests 609.7 540.7 + 12.8%
Provision for income taxes (145.4) (124.3) + 17.0%
Income Before Equity Interests 464.3 416.4 + 11.5%
Share of net income of equity companies 43.1 93.9 - 54.1%
Minority owners' share of subsidiaries'
net income (51.4) (27.7) + 85.6%
Net Income $ 456.0 $ 482.6 - 5.5%
Net Income Per Share Basis - Diluted $ 1.07 $ 1.05 + 1.9%
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
(Millions of dollars)
Notes:
1. Charges for the Strategic Cost Reductions are included in the
Consolidated Income Statement as follows:
Three Months
Ended December 31
2007 2006
Cost of products sold $ 18.0 $ 40.1
Marketing, research and general expenses 8.8 22.3
Other (income) and expense, net (.8) .4
Provision for income taxes (9.6) (22.7)
Strategic Cost Reductions after taxes 16.4 40.1
Minority interest (.1) -
Net Charges $ 16.3 $ 40.1
In addition, charges of $1.9 million ($1.2 million after tax) in 2007 for
the related implementation costs are included in marketing, research and
general expenses.
Unaudited
KIMBERLY-CLARK CORPORATION
CONSOLIDATED INCOME STATEMENT
PERIODS ENDED DECEMBER 31
(Millions of dollars, except per share amounts)
Twelve Months
Ended December 31
2007 2006 Change
Net Sales $18,266.0 $16,746.9 + 9.1%
Cost of products sold 12,562.1 11,664.8 + 7.7%
Gross Profit 5,703.9 5,082.1 +12.2%
Marketing, research and general
expenses 3,105.9 2,948.3 + 5.3%
Other (income) and expense, net (18.4) 32.3 N.M.
Operating Profit 2,616.4 2,101.5 +24.5%
Nonoperating expense (66.9) (65.5) + 2.1%
Interest income 32.8 29.2 +12.3%
Interest expense (264.8) (220.3) +20.2%
Income Before Income Taxes and Equity
Interests 2,317.5 1,844.9 +25.6%
Provision for income taxes (536.5) (469.2) +14.3%
Income Before Equity Interests 1,781.0 1,375.7 +29.5%
Share of net income of equity
companies 170.0 218.6 -22.2%
Minority owners' share of
subsidiaries' net income (128.1) (94.8) +35.1%
Net Income $1,822.9 $1,499.5 +21.6%
Net Income Per Share Basis - Diluted $ 4.09 $ 3.25 +25.8%
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
(Millions of dollars, except per share amounts)
Notes:
1. Charges for the Strategic Cost Reductions are included in the
Consolidated Income Statement as follows:
Twelve Months
Ended December 31
2007 2006
Cost of products sold $89.4 $342.4
Marketing, research and general expenses 31.8 134.0
Other (income) and expense, net (14.0) 8.0
Provision for income taxes (45.6) (137.8)
Strategic Cost Reductions after taxes 61.6 346.6
Minority interest (.2) (1.6)
Net Charges $61.4 $345.0
In addition, charges of $27.1 million ($17.3 million after tax) in 2007
for the related implementation costs are included in marketing, research
and general expenses.
2. Other (income) and expense, net includes a pre-tax gain of
$16.4 million ($9.9 million after tax) in 2007 for a litigation
settlement.
3. Other Information:
Twelve Months
Ended December 31
2007 2006
Cash Dividends Declared Per Share $ 2.12 $ 1.96
December 31
Common Shares (Millions) 2007 2006
Outstanding, as of 420.9 455.6
Average Diluted for:
Three Months Ended 426.5 461.2
Twelve Months Ended 445.6 461.6
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
(Millions of dollars)
Supplemental Financial Information:
Preliminary Balance Sheet Data:
December 31 December 31
2007 2006
Cash and cash equivalents $ 472.7 $ 360.8
Accounts receivable, net 2,560.6 2,336.7
Inventories 2,443.8 2,004.5
Total assets 18,439.7 17,067.0
Accounts payable 1,768.3 1,530.8
Debt payable within one year 1,097.9 1,326.4
Total current liabilities 4,928.6 5,015.8
Long-term debt 4,393.9 2,276.0
Preferred securities of subsidiary 1,004.6 793.4
Stockholders' equity 5,223.7 6,097.4
Twelve Months
Ended December 31
Preliminary Cash Flow Data: 2007 2006
Cash provided by operations $ 2,428.9 $ 2,579.5
Cash used for investing $ (898.1) $ (1,035.9)
Cash used for financing $(1,426.8) $ (1,551.3)
Depreciation and amortization $ 806.5 $ 932.8
Capital spending $ 989.3 $ 972.1
Cash dividends paid $ 932.9 $ 884.0
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
Description of Business Segments
The Corporation is organized into operating segments based on product
groupings. These operating segments have been aggregated into four
reportable global business segments: Personal Care; Consumer Tissue; K-C
Professional & Other; and Health Care. The reportable segments were
determined in accordance with how the Corporation's executive managers
develop and execute the Corporation's global strategies to drive growth and
profitability of the Corporation's worldwide Personal Care, Consumer
Tissue, K-C Professional & Other, and Health Care operations. These
strategies include global plans for branding and product positioning,
technology, research and development programs, cost reductions including
supply chain management, and capacity and capital investments for each of
these businesses. Segment management is evaluated on several factors,
including operating profit. Segment operating profit excludes other income
and (expense), net; income and expense not associated with the business
segments; and the costs of corporate decisions related to the Strategic
Cost Reductions. Corporate & Other includes the costs related to the
Strategic Cost Reductions.
The principal sources of revenue in each of our global business
segments are described below.
The Personal Care segment manufactures and markets disposable diapers,
training and youth pants and swimpants; baby wipes; feminine and
incontinence care products; and related products. Products in this segment
are primarily for household use and are sold under a variety of brand
names, including Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex,
Lightdays, Depend, Poise and other brand names.
The Consumer Tissue segment manufactures and markets facial and
bathroom tissue, paper towels, napkins and related products for household
use. Products in this segment are sold under the Kleenex, Scott,
Cottonelle, Viva, Andrex, Scottex, Hakle, Page and other brand names.
The K-C Professional & Other segment manufactures and markets facial
and bathroom tissue, paper towels, napkins, wipers and a range of safety
products for the away-from-home marketplace. Products in this segment are
sold under the Kimberly-Clark, Kleenex, Scott, WypAll, Kimtech, Kleenguard
and Kimcare brand names.
The Health Care segment manufactures and markets disposable health care
products such as surgical gowns, drapes, infection control products,
sterilization wrap, face masks, exam gloves, respiratory products and other
disposable medical products. Products in this segment are sold under the
Kimberly-Clark, Ballard and other brand names.
Unaudited
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
PERIODS ENDED DECEMBER 31
(Millions of dollars)
Three Months Twelve Months
Ended December 31 Ended December 31
2007 2006 Change 2007 2006 Change
NET SALES:
Personal Care $1,962.8 $1,686.1 +16.4% $7,562.7 $6,740.9 +12.2%
Consumer Tissue 1,683.0 1,575.2 + 6.8% 6,474.5 5,982.0 + 8.2%
K-C Professional
& Other 798.3 738.8 + 8.1% 3,039.2 2,813.1 + 8.0%
Health Care 315.3 310.9 + 1.4% 1,206.8 1,237.4 - 2.5%
Corporate & Other 13.2 8.8 +50.0% 40.7 32.3 +26.0%
Intersegment
Sales (14.5) (12.6) +15.1% (57.9) (58.8) - 1.5%
Consolidated $4,758.1 $4,307.2 +10.5% $18,266.0 $16,746.9 + 9.1%
OPERATING PROFIT:
Personal Care $425.7 $342.3 +24.4% $1,562.4 $1,302.5 +20.0%
Consumer Tissue 160.3 205.8 -22.1% 702.4 772.6 - 9.1%
K-C Professional
& Other 124.5 126.5 - 1.6% 478.2 472.1 + 1.3%
Health Care 44.0 50.2 -12.4% 195.0 211.2 - 7.7%
Corporate & Other (84.4) (103.6) -18.5% (340.0) (624.6) -45.6%
Other income and
(expense), net (1.2) (10.6) -88.7% 18.4 (32.3) N.M.
Consolidated $668.9 $610.6 + 9.5% $2,616.4 $2,101.5 +24.5%
Note: Corporate & Other and Other income and (expense), net, include the
following amounts of pre-tax charges for the Strategic Cost
Reductions. In 2007, Corporate & Other also includes the related
implementation costs.
Three Months Twelve Months
Ended December 31 Ended December 31
2007 2006 2007 2006
Corporate & Other $ (26.8) $ (62.4) $(121.2) $(476.4)
Other income and (expense), net .8 (.4) 14.0 (8.0)
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
PERIODS ENDED DECEMBER 31
PERCENTAGE CHANGE IN NET SALES VERSUS PRIOR YEAR
Three Months Ended December 31, 2007
Net Mix/
Total Volume Price Other(1) Currency
Consolidated 10.5 4 1 1 5
Personal Care 16.4 10 1 - 5
Consumer Tissue 6.8 - 1 1 5
K-C Professional & Other 8.1 1 1 1 5
Health Care 1.4 (1) (2) 2 2
Twelve Months Ended December 31, 2007
Net Mix/
Total Volume Price Other(1) Currency
Consolidated 9.1 4 1 1 3
Personal Care 12.2 8 - 1 3
Consumer Tissue 8.2 1 2 1 4
K-C Professional & Other 8.0 3 1 1 3
Health Care (2.5) (5) - 1 1
(1) Mix/Other includes rounding.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
(Millions of dollars, except per share amounts)
NON-GAAP RECONCILIATION SCHEDULES
The tables on the following pages present the reconciliation of
non-GAAP financial measures to GAAP financial measures.
EARNINGS SUMMARY:
Three Months Ended December 31
2007 2006
Diluted Diluted
Income Earnings Income Earnings
(Expense) Per Share (Expense) Per Share
Adjusted Earnings $ 473.5 $ 1.11 $ 477.1 $ 1.03
Adjustments for:
Gain on sale of Equity
Affiliate Business - - 45.6 .10
Strategic Cost Reduction
charges (16.3) (.04) (40.1) (.09)
Implementation costs (1.2) - - -
Rounding - - - .01
Net Income $ 456.0 $ 1.07 $ 482.6 $ 1.05
Twelve Months Ended December 31
2007 2006
Diluted Diluted
Income Earnings Income Earnings
(Expense) Per Share (Expense) Per Share
Adjusted Earnings $ 1,891.7 $ 4.25 $ 1,798.9 $ 3.90
Adjustments for:
Gain on sale of Equity
Affiliate Business - - 45.6 .10
Strategic Cost Reduction
charges (61.4) (.14) (345.0) (.75)
Implementation costs (17.3) (.04) - -
Litigation settlement 9.9 .02 - -
Net Income $ 1,822.9 $ 4.09 $ 1,499.5 $ 3.25
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
(Millions of dollars)
OPERATING PROFIT SUMMARY:
Three Months
Ended December 31
2007 2006
Adjusted Operating Profit $ 696.8 $ 673.4
Adjustments for:
Strategic Cost Reduction charges (26.0) (62.8)
Implementation costs (1.9) -
Operating Profit $ 668.9 $ 610.6
Twelve Months
Ended December 31
2007 2006
Adjusted Operating Profit $ 2,734.3 $2,585.9
Adjustments for:
Strategic Cost Reduction charges (107.2) ( 484.4)
Implementation costs (27.1) -
Litigation settlement 16.4 -
Operating Profit
$ 2,616.4 $2,101.5
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
(Millions of dollars)
Effective Income Tax Rate Reconciliation - Adjustments(1) and Synthetic
Fuel Partnership Activities and the Minority Owners' Share of Tax Benefits:
Three Months Ended December 31, 2007
Minority
Owners' Share
Synthetic Fuels of Tax Benefits(2)
Excluding
As Excluding Effect of Excluding Tax Tax
Reported Adjustments(1) Activities Activities Benefits Benefits
Income
Before
Income
Taxes $609.7 $637.6 $14.7 $622.9 $ - $622.9
Provision
for Income
Taxes 145.4 155.7 21.4 134.3 (20.4) 154.7
Net Synthetic
Fuel
Benefit $(6.7)
Effective
Income
Tax Rate 23.8%
Adjusted
Effective
Income
Tax Rate 24.4% 21.6% 24.8%
Three Months Ended December 31, 2006
Synthetic Fuels
As Excluding Effect of Excluding
Reported Adjustments(1) Activities Activities
Income
Before
Income
Taxes $540.7 $603.5 $(24.9) $628.4
Provision
for Income
Taxes 124.3 147.0 (35.6) 182.6
Net Synthetic
Fuel
Benefit $10.7
Effective
Income
Tax Rate 23.0%
Adjusted
Effective
Income
Tax Rate 24.4% 29.1%
(1) Charges for Strategic Cost Reductions and related implementation costs
in 2007 and Strategic Cost Reductions in 2006.
(2) Minority owners' share of tax benefits at majority-owned subsidiaries.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
(Millions of dollars)
Effective Income Tax Rate Reconciliation - Adjustments(1) and Synthetic
Fuel Partnership Activities and the Minority Owners' Share of Tax Benefits:
Twelve Months Ended December 31, 2007
Minority
Owners' Share
Synthetic Fuels of Tax Benefits(2)
Excluding
As Excluding Effect of Excluding Tax Tax
Reported Adjustments(1) Activities Activities Benefits Benefits
Income
Before
Income
Taxes $2,317.5 $2,435.4 $(66.9) $ 2,502.3 $ - $2,502.3
Provision
for Income
Taxes 536.5 585.4 (80.5) 665.9 (20.4) 686.3
Net Synthetic
Fuel Benefit $13.6
Effective
Income
Tax Rate 23.1%
Adjusted
Effective
Income
Tax Rate 24.0% 26.6% 27.4%
Twelve Months Ended December 31, 2006
Synthetic Fuels
As Excluding Effect of Excluding
Reported Adjustments(1) Activities Activities
Income
Before
Income
Taxes $ 1,844.9 $ 2,329.3 $ (65.5) $ 2,394.8
Provision
for Income
Taxes 469.2 607.0 (86.0) 693.0
Net
Synthetic Fuel
Benefit $ 20.5
Effective
Income
Tax Rate 25.4%
Adjusted
Effective
Income
Tax Rate 26.1% 28.9%
(1) Charges for Strategic Cost Reductions, related implementation costs
and a litigation settlement in 2007 and Strategic Cost Reductions in
2006.
(2) Minority owners' share of tax benefits at majority-owned
subsidiaries.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED DECEMBER 31
OUTLOOK FOR 2008
Estimated Full-Year 2008 Diluted Earnings Per Share:
Adjusted Earnings Per Share $ 4.45 - $ 4.60
Strategic Cost Reductions (.13) - (.09)
Earnings Per Share - Diluted $ 4.32 - $ 4.51
Estimated First Quarter 2008 Diluted
Earnings Per Share:
Adjusted Earnings Per Share $ 1.05 - $ 1.08
Strategic Cost Reductions (.05) - (.04)
Earnings Per Share - Diluted $ 1.00 - $ 1.04
SOURCE Kimberly-Clark Corporation
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Related links:
http://www.kimberly-clark.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/19991117/KMBLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Media, Dave Dickson, +1-972-281-1481,
ddickson@kcc.com, or Joey Mooring, +1-972-281-1443,
joey.mooring@kcc.com, or Investors, Mike Masseth,
+1-972-271-1478, mmasseth@kcc.com, all of Kimberly-Clark
Corporation
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