Management Highlights Targeted Initiatives for Creating Sustainable Growth;
Reiterates Plan to Significantly Increase Marketing Spending Over Next
Several Years; Unveils New 3-Year Target for Ongoing Cost Savings
Company Expects First Quarter 2007 Adjusted EPS to Meet or Beat the High
End of Previous Guidance Range of $0.99 to $1.01 and Reaffirms Adjusted EPS
Guidance of $4.10 to $4.20 for the Full Year
NEW YORK, March 26 /PRNewswire-FirstCall/ -- Kimberly-Clark Corporation
(NYSE: KMB) today said that it expects adjusted earnings in the first
quarter of 2007 will be at or slightly above the high end of its previous
guidance range, which called for earnings of $0.99 to $1.01 per share. The
company also reaffirmed its plan to deliver top- and bottom-line growth in
2007 in line with the long-term objectives set forth under the company's
Global Business Plan.
Adjusted earnings exclude anticipated charges for strategic cost
reductions to streamline the company's operations and anticipated
incremental implementation costs related to the transfer of certain
administrative processes to third party providers. Further information
about adjusted earnings is provided on pages 3-5.
The above announcements were made in connection with the company's
Investor Day meeting, held here this morning. Thomas J. Falk, Chairman and
CEO, and other members of Kimberly-Clark's senior leadership team met with
investors and analysts to review progress on the company's Global Business
Plan, introduced in 2003, and its strategies for creating sustainable
growth. The executives detailed targeted initiatives for building market
share and brand equity, bolstering innovation, improving speed to market
and delivering ongoing cost savings across the company's global business
portfolio.
"We're off to a very good start in 2007, building on the momentum we
created throughout 2006," Mr. Falk said. "Our teams are continuing to
execute well, bringing new and improved products to market and driving
costs out of the system. We have plans in place to deliver solid top- and
bottom-line improvement for the year as a whole."
The anticipated strong financial performance for the first quarter
reflects broad-based revenue growth, highlighted by continued double-digit
gains in developing and emerging markets and excellent sales volumes for
the company's baby and child care brands in North America. Innovations such
as Huggies Supreme Gentle Care and Natural Fit diapers, Pull-Ups training
pants with Cool Alert and improved Huggies baby wipes helped boost the
growth in North America.
"We are making significant progress under our Global Business Plan,
having successfully delivered on our financial commitments each year since
the plan was introduced. Moreover, we have become a leaner, stronger, more
focused company and implemented substantial changes within each of our
businesses to ensure Kimberly-Clark's long term success," Falk said. "Our
category-defining brands, world-class capabilities and financial discipline
will help us continue to drive sustainable growth, and we are confident
that we have the right plan and team in place to deliver enhanced value for
shareholders for many years to come."
Additional highlights from the meeting follow.
Accelerating Innovation
Regarding innovation, Falk outlined how the company is acting on
customer, shopper and user insights to drive its innovation process. He
also detailed Kimberly-Clark's continued efforts to increase its speed to
market, reporting that product development cycle time has been cut in half
since the launch of the Global Business Plan. Progress made in reducing
cycle time has created efficiencies, enabling the company to devote a
larger amount of spending to longer-term ideas without a commensurate
increase in overall spending. Falk cited numerous examples of how the
company's innovation pipeline is contributing to growth across all business
segments and said R&D spending is forecast to increase in line with sales
to fuel future growth.
Enhanced Commitment To Strategic Marketing
During his presentation, Chief Marketing Officer Tony Palmer reiterated
the company's plan to boost future spending for strategic marketing, noting
that advertising and promotion expense in 2007 is expected to increase at a
faster rate than sales. This year's increase will put the company on track
to reach its Global Business Plan target to raise spending levels as a
percent of sales by more than 100 basis points from 2004 to 2009. The
increased investment in strategic marketing will support the company's
targeted growth initiatives and will help drive improvements in market
share and brand equity. Palmer also outlined the company's plan to focus on
improving marketing execution and capabilities by sharing best practices
across the enterprise and better leveraging the advantages of
Kimberly-Clark's global scale.
Continued Financial Discipline & Cost Savings Focus
Chief Financial Officer Mark Buthman reaffirmed Kimberly-Clark's
commitment to delivering ongoing cost savings through its FORCE (Focused On
Reducing Costs Everywhere) program. Buthman noted that savings from the
program are expected to total $485 -- $510 million for the three-year
period from 2005 through 2007 compared with a target of $400 -- $500
million established in December 2004. With this initial goal successfully
met, Buthman outlined a new three-year target to deliver an additional $350
-- $450 million of savings from 2008 through 2010. Buthman also reviewed
the company's excellent progress in implementing its separate Strategic
Cost Reduction Plan, noting that Kimberly-Clark is on track to deliver more
savings than originally estimated while Plan charges are anticipated to be
within the lower half of the initial range.
Buthman also reported that the financial discipline underpinning the
company's Global Business Plan is delivering strong results, contributing
to an increase in adjusted ROIC of 150 basis points since 2003. Over that
same period, cash outlays for dividends and share repurchases totaled $6.3
billion, up nearly 60 percent versus the previous three years. Buthman
indicated that Kimberly-Clark will continue to allocate capital in a
disciplined manner, with a focus on increasing cash flow and deploying cash
in shareholder-friendly ways, through healthy dividend increases and
meaningful share repurchases.
Non-GAAP Financial Measure
This press release mentions forecasted adjusted earnings per share
which has not been calculated in accordance with accounting principles
generally accepted in the U.S., or GAAP, and is therefore referred to as a
non-GAAP financial measure. This non-GAAP financial measure excludes
certain items that are included in the company's earnings per share
calculated in accordance with GAAP. A detailed explanation of each of the
adjustments is given below. In accordance with the requirements of
Regulation G, a reconciliation of this non-GAAP financial measure to the
comparable GAAP financial measure is attached.
Kimberly-Clark provides non-GAAP financial measures as supplemental
information to our GAAP financial measures. Management and the company's
Board of Directors use adjusted earnings per share, among other measures,
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 this
non-GAAP financial measure, among other measures, when setting and
assessing achievement of incentive compensation goals. These goals are
based, in part, on the company's adjusted earnings per share determined by
excluding the charges that are used in calculating this non-GAAP financial
measure.
In addition, Kimberly-Clark management believes that investors'
understanding of the company's performance is enhanced by including
non-GAAP financial measures as a reasonable basis for comparing the
company's ongoing results of operations. We believe that 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 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 per share by excluding from the
comparable GAAP measure the following: (i) charges related to our strategic
cost reduction plan for streamlining the company's operations; and (ii)
certain incremental implementation costs relating to our strategic cost
reduction plan. 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 per share and operating profit and margin
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 will incur incremental implementation costs related
to the transfer of certain administrative processes to third party
providers. These costs will be 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.
This non-GAAP financial measure is not meant to be considered in
isolation or as a substitute for the comparable GAAP measures. There are
limitations to 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 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.
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 the No. 1 or No. 2 share position in more than 80
countries. To keep up with the latest K-C news and to learn more about the
company's 135-year history of innovation, visit
http://www.kimberly-clark.com .
Certain matters contained in this news release concerning the business
outlook, including new product introductions, cost savings and
acquisitions, anticipated costs and benefits related to the Competitive
Improvement Initiatives, 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
NON-GAAP RECONCILIATION SCHEDULE
The information below presents the reconciliation of non-GAAP financial
measures to GAAP financial measures.
OUTLOOK FOR 2007
Estimated Full-Year 2007 Diluted
Earnings Per Share:
Adjusted Earnings Per Share $4.10 -- $4.20
Strategic Cost Reductions (.31) -- (.28)
Implementation Costs (.04) -- (.04)
Earnings Per Share -- Diluted $3.75 -- $3.88
Previous Guidance -- Estimated
First Quarter 2007 Diluted
Earnings Per Share:
Adjusted Earnings Per Share $.99 -- $1.01
Strategic Cost Reductions (.12) -- (.09)
Earnings Per Share - Diluted $.87 -- $.92
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, or
ddickson@kcc.com , or Joey Mooring, +1-972-281-1443, or
joey.mooring@kcc.com , or investors, Mike Masseth,
+1-972-271-1478, or mmasseth@kcc.com , all of Kimberly-Clark
Corporation
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