As Previously Reported, Net Sales Rose More Than 11 Percent to $5.0
Billion, With Increases in Each Business Segment
GAAP-Basis EPS Were $0.99 vs. $1.00 in 2007; Adjusted EPS Were $1.03 vs.
$1.04 in the Year-Ago Quarter
Cash Provided By Operations Increased 16 Percent on Improved Working
Capital Performance
DALLAS, July 24 /PRNewswire-FirstCall/ -- Kimberly-Clark Corporation
(NYSE: KMB) today reported full details of its second quarter 2008 results.
Preliminary net sales and earnings per share figures were announced on July
14, 2008. For the quarter, net sales increased 11.2 percent to $5.0
billion, a new quarterly record. Sales were higher in all four of the
company's business segments, highlighted by continued strong performance
across developing and emerging markets and double-digit sales growth for
Personal Care products in North America. Organic sales growth exceeded 7
percent, including improvements of about 3 percent in both sales volumes
and net selling prices. Changes in currency exchange rates also benefited
sales by approximately 4 percent.
Diluted net income per share was $0.99 compared with $1.00 in the prior
year. Adjusted earnings in the second quarter of 2008 were $1.03 per share
versus $1.04 per share in 2007. The top-line growth and cost savings
contributed positively to results; however, those improvements were not
sufficient to overcome an increased level of inflation, as input costs
climbed about $180 million, and a planned higher investment in strategic
marketing of nearly $25 million. As expected, a lower share count, net of a
related increase in interest expense, benefited year-over-year earnings per
share comparisons, while a higher effective income tax rate than in 2007,
due primarily to the expiration of synthetic fuel tax benefits, was an
offsetting factor.
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,
as well as an after-tax extraordinary loss related to the restructuring of
certain contractual arrangements in the second quarter of 2008. Further
information about these adjustments, along with the company's rationale for
reporting adjusted earnings and other non-GAAP financial measures is
provided later in this news release.
Chairman and Chief Executive Officer Thomas J. Falk said, "Our second
quarter results reflect continued progress with our top-line growth
strategies as well as the significant challenges we are facing on the cost
front. Although we have delivered organic sales growth of more than 6
percent through the first half of the year, the reality is that the rapid
run-up in commodity costs has outpaced our ability to offset inflation in
the near-term with price increases and other actions. As a result, we have
increased our emphasis on improving revenue realization and during the
second quarter implemented or announced new price increases in the U.S. and
other markets around the world. These moves should lead to sequentially
better bottom-line results in the fourth quarter, as we announced last
week.
Meanwhile, we will continue to drive our Global Business Plan
strategies to strengthen the long-term health of our company and our
brands. We will also continue to operate our business efficiently,
improving productivity and driving costs out of the system. Finally, we
remain committed to improving our working capital performance, which will
benefit our already strong cash flow."
Review of second quarter sales by business segment
Sales of personal care products climbed 15.1 percent in the second
quarter. Sales volumes rose 9 percent, net selling prices improved about 2
percent and currency effects added approximately 4 percent to sales.
Personal care sales in North America went up about 10 percent compared
with the second quarter of 2007, driven primarily by strong sales volume
growth of 8 percent. Higher net selling prices and favorable currency
translation both added 1 percent to sales. Sales volumes improved across
most categories, paced by double-digit growth for Huggies diapers and high
single-digit gains for the company's child care and incontinence care
brands. Selling prices rose primarily as a result of price increases for
diaper and child care products implemented during the first quarter in the
U.S., partially offset by competitive promotional activities.
In Europe, personal care sales were up approximately 8 percent in the
quarter. Favorable currency effects boosted sales by about 13 percent;
however, sales volumes were lower by 5 percent. The volume decline reflects
lower sales of Huggies diapers, partially offset by increased sales of baby
wipes and child care products across the region. Sales volumes of Huggies
diapers in the company's four core markets -- U.K., France, Italy and Spain
-- were down 8 percent as the company maintained net selling prices
generally in line with prior year levels in a continued highly competitive
environment.
In developing and emerging markets (D&E), personal care sales surged
about 25 percent, as the company is benefiting from strong product and
customer programs in rapidly growing markets. Sales volumes increased more
than 14 percent, while net selling prices and the mix of products sold both
improved approximately 2 percent. Stronger foreign currencies benefited
sales by more than 6 percent. The growth in sales volumes was broad-based,
with particular strength throughout most of Latin America and in South
Korea, China, Russia, Turkey and Vietnam.
Sales of consumer tissue products were 7.7 percent above the second
quarter of 2007. Although overall sales volumes declined 3 percent versus
the prior year, net selling prices and product mix improved by 5 percent
and 2 percent, respectively, and favorable currency exchange rates
benefited sales by 4 percent.
In North America, sales of consumer tissue products decreased 1 percent
in the second quarter, as an increase in net selling prices of about 5
percent was more than offset by a 6 percent decline in sales volumes. The
improvement in selling prices was due mainly to price increases for
bathroom tissue and paper towels implemented during the first quarter in
the U.S., while the majority of the decrease in sales volumes was
attributable to the paper towel and private label tissue categories. In
towels, volumes were down following implementation of price increases
during the first quarter in the U.S. and in comparison to strong growth in
the year-ago quarter. The lower level of private label sales reflects the
company's decision in late 2007 to shed certain low-margin business to
support growth of more profitable products such as Scott bathroom tissue.
Meanwhile, sales of both Scott and Cottonelle bathroom tissue registered
solid improvement in the quarter, driven primarily by higher net selling
prices.
In Europe, consumer tissue sales rose about 11 percent versus the
second quarter of 2007. Currency exchange rates strengthened by an average
of 10 percent, accounting for virtually all of the increase. Sales volumes
were down approximately 3 percent, due mainly to lower sales of Andrex and
Scottex bathroom tissue, as sales softened somewhat following
implementation of price increases. Overall, net selling prices improved
nearly 4 percent.
Consumer tissue sales in developing and emerging markets rose
approximately 21 percent. Sales volumes increased approximately 6 percent,
highlighted by strong growth in Latin America and Russia. Net selling
prices and product mix improved 7 percent and 1 percent, respectively, as
the company has raised prices in response to higher raw materials costs and
shifted mix to more differentiated, value-added products. Favorable
currency effects added 7 percent to sales.
Sales of K-C Professional (KCP) & other products advanced 10.1 percent
compared with the year-ago quarter. Net selling prices and product mix
improved by 3 percent and 2 percent, respectively, while sales volumes were
approximately 1 percent higher than the prior year. Changes in foreign
currency rates increased sales by about 4 percent. Globally, KCP achieved
double-digit growth in sales of washroom, workplace and safety products. In
North America and Europe, organic sales rose at a mid-single digit rate,
driven primarily by higher net selling prices and better product mix.
Across developing and emerging markets, sales were up 22 percent on sales
volume gains of 9 percent, net selling price/mix improvements of 7 percent
and currency benefits of 6 percent.
Sales of health care products increased 3.2 percent in the second
quarter, reflecting 5 percent growth in sales volumes and favorable
currency effects of 2 percent, partially offset by declines of about 2
percent in both net selling prices and product mix. The improvement in
sales volumes was broad-based across most categories and geographic
regions, paced by double-digit growth of medical devices and exam gloves.
The price and mix declines were mainly attributable to competitive
conditions affecting surgical supplies in North America.
Other second quarter operating results
Operating profit was $650 million in the second quarter of 2008,
compared with $649 million in 2007. 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 decreased 2
percent to $665 million from $678 million in the prior year. The decrease
was driven by higher manufacturing costs which, combined with the increase
in strategic marketing spending, exceeded the benefits from top-line growth
and cost savings. Inflation in key manufacturing cost inputs totaled
approximately $180 million, consisting of higher fiber costs, up $70
million versus the second quarter of 2007, more than $55 million for raw
materials other than fiber, including nonwovens and other oil-based
materials, about $30 million of higher energy costs and approximately $25
million in distribution costs. Cost savings in the quarter from the
company's FORCE (Focused On Reducing Costs Everywhere) program and
strategic cost reduction plan totaled almost $40 million.
Interest expense for the quarter increased approximately $21 million
from the prior year, mainly as a result of new long-term debt issued to
fund the company's $2.0 billion accelerated share repurchase program in
July 2007.
The company's effective tax rate in the second quarter was 29.9 percent
in 2008 and 20.0 percent in 2007. Excluding the effects of charges for the
company's strategic cost reduction plan in both years, as well as related
implementation costs and net effects from synthetic fuel partnerships in
2007, the adjusted effective tax rate for the quarter was 30.1 percent in
2008, up versus 28.9 percent in 2007, as expected, due to the timing of tax
initiatives. Synthetic fuel partnership activities provided a benefit of
$12 million in the second quarter of 2007. Synthetic fuel produced by the
partnerships was eligible for tax credits through the end of 2007, at which
time the law giving rise to the tax benefits expired. The partnerships will
be dissolved during 2008 at no cost to the company. 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 second
quarter increased to about $48 million from approximately $43 million in
2007, due mainly to higher net income at Kimberly-Clark de Mexico, S.A.B.
de C.V. Results from the company's Mexican affiliate reflected solid volume
growth, higher net selling prices and currency benefits, which more than
offset inflation in raw materials costs and an increase in the effective
tax rate.
Minority owners' share of subsidiaries' net income was approximately
$34 million in the second quarter of 2008 compared with about $26 million
in the prior year. The increase was mainly attributable to minority owners'
share of increased earnings at majority-owned subsidiaries in Asia and the
Middle East and higher returns on the redeemable preferred securities of
the company's consolidated financing subsidiary.
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 second 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 administrative
operations in North America and Europe. With savings of $38 million in the
second quarter and $66 million for the year to date, the company is on
track to exceed its target to reduce costs by $75 to $100 million for the
full year.
Employees have been notified about workforce reductions and other
actions at all 23 facilities slated for sale, closure or streamlining as
part of the cost reduction plan. To date, pretax charges of $859 million
(about $599 million after tax) have been incurred. With the plan's
activities nearing completion, the company is again lowering the total
projected cost of the plan. Cumulative charges for implementing the plan,
through its completion by the end of this year, are now expected to total
$880 to $900 million ($610 to $620 million after tax), a reduction of up to
$10 million, both pretax and after tax, from the company's previous
estimates.
Cash flow and balance sheet
Cash provided by operations in the second quarter increased 16 percent
to $753 million from $652 million in 2007, primarily because a lower level
of cash was invested in primary working capital (accounts receivable and
inventories, less accounts payable) than in the year-ago quarter. Capital
spending for the quarter was $213 million in 2008 compared with $262
million in the prior year. Through six months, capital spending of $434
million is in line with the company's plan to spend $850 to $950 million
this year. During the second quarter, the company repurchased approximately
3.5 million shares of its common stock at a cost of $220 million, bringing
year-to-date repurchases to about 6.6 million shares at a cost of $420
million. As previously announced, the company expects to buy back $700 to
$800 million of its common stock in 2008.
At June 30, 2008, total debt and redeemable preferred securities was
$7.4 billion, including the newly consolidated loan obligations described
below, compared with $6.5 billion at the end of 2007.
Consolidation of variable interest entities and extraordinary loss
During the second quarter of 2008, the company restructured contractual
arrangements related to two nonconsolidated financing entities to, among
other things, extend the maturity dates of debt obligations held by the
entities. As a result of these transactions, the company began to
consolidate the entities effective June 30, 2008, as required by FASB
Interpretation No. 46 (Revised December 2003), Consolidation of Variable
Interest Entities ("FIN 46R"). Accordingly, notes receivable and loan
obligations held by the entities with aggregate fair values totaling $600
million and $612 million, respectively, have been included in long-term
notes receivable and long-term debt on the consolidated balance sheet. In
addition, because the fair value of the debt obligations exceeded the fair
value of the notes receivable, the company recorded an extraordinary
noncash loss, net of income taxes, of approximately $8 million, or 2 cents
per share, during the second quarter of 2008 pursuant to the requirements
of FIN 46R.
Year-to-date results
For the first six months of 2008, sales of $9.8 billion rose 10.5
percent from $8.9 billion in the prior year. Sales volumes increased about
3 percent, net selling prices were higher by more than 2 percent and
product mix was favorable by 1 percent, resulting in organic sales growth
of 6-plus percent, while favorable currency effects added approximately 4
percent to sales. Year-to-date operating profit of $1,314 million included
charges of more than $38 million for strategic cost reductions. Adjusted
operating profit was $1,353 million, up slightly from $1,346 million in
2007. The benefits of top-line growth, along with cost savings of about $90
million, were mostly offset by inflation in key cost components totaling
approximately $340 million and an increase in strategic marketing spending
of more than $45 million. Through six months, diluted net income per share
in 2008 was $2.04 compared with $1.99 in 2007. Adjusted earnings per share
increased 2 percent to $2.11 in 2008 from $2.07 in 2007. Those amounts are
adjusted for charges related to strategic cost reductions in both years,
related incremental implementation costs in 2007 and the extraordinary loss
in 2008.
Outlook
As previously announced on July 14, 2008 and based on the planning
assumptions outlined on that date, the company expects that adjusted
earnings per share in 2008 will be in a range of $0.98 to $1.03 for the
third quarter and in a range of $4.20 to $4.30 for the full year.
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)
an after-tax extraordinary loss related to the restructuring of certain
contractual arrangements, and (iv) the net effect of the company's
investment in synthetic fuel partnerships 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 excludes these implementation
costs from our earnings from ongoing operations for purposes of
evaluating the performance of our business units and their managers
and excludes these costs when making decisions to allocate resources
among its business units.
-- Extraordinary loss. In June 2008, the company restructured
contractual arrangements of two financing entities, which resulted in
the consolidation of these two entities. As a result of the
consolidation, notes receivable and loan obligations held by these
entities with aggregate fair values of $600 million and $612 million,
respectively, have been included in long-term notes receivable and
long-term debt on the company's consolidated balance sheet. Because
the fair value of the loans exceeded the fair value of the notes
receivable, the company recorded an after-tax extraordinary loss of
approximately $8 million on its income statement for the period ended
June 30, 2008, as required by FIN 46R. Management does not consider
this loss to be part of our earnings from ongoing operations for
purposes of evaluating the performance of its business units and their
managers and excludes this loss when making decisions to allocate
resources among its business units.
-- 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 and related implementation costs, as well as net
effects from the company's investment in synthetic fuel partnerships.
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. (CDT) 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 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, 2007 entitled "Risk Factors."
KIMBERLY-CLARK CORPORATION
CONSOLIDATED INCOME STATEMENT
PERIODS ENDED JUNE 30
(Millions of dollars, except per share amounts)
Three Months
Ended June 30
2008 2007 Change
Net Sales $5,006.2 $4,502.0 +11.2%
Cost of products sold 3,521.7 3,056.0 +15.2%
Gross Profit 1,484.5 1,446.0 +2.7%
Marketing, research and general expenses 827.3 797.6 +3.7%
Other (income) and expense, net 7.1 (.3) N.M.
Operating Profit 650.1 648.7 +0.2%
Nonoperating expense - (47.5) N.M.
Interest income 7.4 7.4 -
Interest expense (72.8) (51.9) +40.3%
Income Before Income Taxes, Equity Interests
and Extraordinary Loss 584.7 556.7 +5.0%
Provision for income taxes (174.6) (111.5) +56.6%
Income Before Equity Interests and
Extraordinary Loss 410.1 445.2 -7.9%
Share of net income of equity companies 48.4 42.8 +13.1%
Minority owners' share of subsidiaries' net
income (34.1) (26.2) +30.2%
Extraordinary loss, net of income taxes (7.7) - N.M.
Net Income $416.7 $461.8 -9.8%
Net Income Per Share Basis - Diluted
Before extraordinary loss $1.01 $1.00 +1.0%
Net Income $.99 $1.00 -1.0%
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
(Millions of dollars, except per share amounts)
Notes:
1. Charges for the Strategic Cost Reductions are included in the
Consolidated Income Statement as follows:
Three Months
Ended June 30
2008 2007
Cost of products sold $8.7 $10.7
Marketing, research and general
expenses 4.9 7.1
Other (income) and expense, net .9 -
Provision for income taxes (5.5) (7.9)
Strategic cost reductions after
taxes 9.0 9.9
Minority interest - (.1)
Net Charges $9.0 $9.8
In addition, charges of $11.0 million ($7.1 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 JUNE 30
(Millions of dollars, except per share amounts)
Six Months
Ended June 30
2008 2007 Change
Net Sales $9,818.9 $8,887.3 +10.5%
Cost of products sold 6,878.7 6,089.0 +13.0%
Gross Profit 2,940.2 2,798.3 +5.1%
Marketing, research and general expenses 1,625.7 1,530.2 +6.2%
Other (income) and expense, net .3 3.3 N.M.
Operating Profit 1,314.2 1,264.8 +3.9%
Nonoperating expense - (75.1) N.M.
Interest income 15.7 14.0 +12.1%
Interest expense (147.5) (102.8) +43.5%
Income Before Income Taxes, Equity Interests
and Extraordinary Loss 1,182.4 1,100.9 +7.4%
Provision for income taxes (339.2) (223.6) +51.7%
Income Before Equity Interests and
Extraordinary Loss 843.2 877.3 -3.9%
Share of net income of equity companies 91.8 87.8 +4.6%
Minority owners' share of subsidiaries' net
income (69.7) (51.3) +35.9%
Extraordinary loss, net of income taxes (7.7) - N.M.
Net Income $857.6 $913.8 -6.2%
Net Income Per Share Basis - Diluted
Before extraordinary loss $2.06 $1.99 +3.5%
Net Income $2.04 $1.99 +2.5%
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
(Millions of dollars, except per share amounts)
Notes:
1. Charges for the Strategic Cost Reductions are included in the
Consolidated Income Statement as follows:
Six Months
Ended June 30
2008 2007
Cost of products sold $20.5 $52.5
Marketing, research and general
expenses 16.2 15.2
Other (income) and expense, net 1.6 (9.3)
Provision for income taxes (13.2) (33.5)
Strategic cost reductions after
taxes 25.1 24.9
Minority interest - (.1)
Net Charges $25.1 $24.8
In addition, charges of $23.2 million ($14.8 million after tax) in 2007
for the related implementation costs are included in marketing, research and
general expenses.
2. Other Information:
Six Months
Ended June 30
2008 2007
Cash Dividends Declared Per Share $1.16 $1.06
June 30
Common Shares (Millions) 2008 2007
Outstanding, as of 416.2 455.3
Average Diluted for:
Three Months Ended 419.9 459.6
Six Months Ended 421.4 459.8
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
(Millions of dollars)
Supplemental Financial Information:
Preliminary Balance Sheet Data:
June 30 December 31
2008 2007
Cash and cash equivalents $545.8 $472.7
Accounts receivable, net 2,599.0 2,560.6
Inventories 2,629.8 2,443.8
Total assets 19,625.5 18,439.7
Accounts payable 1,751.6 1,768.3
Debt payable within one year 1,348.4 1,097.9
Total current liabilities 5,214.5 4,928.6
Long-term debt 4,995.5 4,393.9
Redeemable preferred securities of
subsidiary 1,011.0 1,004.6
Stockholders' equity 5,603.4 5,223.7
Six Months
Ended June 30
Preliminary Cash Flow Data: 2008 2007
Cash provided by operations $1,196.9 $1,176.0
Cash used for investing $(436.1) $(498.4)
Cash used for financing $(679.3) $(584.6)
Depreciation and amortization $400.2 $412.9
Capital spending $433.6 $544.0
Cash dividends paid $467.5 $465.8
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
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 JUNE 30
(Millions of dollars)
Three Months Six Months
Ended June 30 Ended June 30
2008 2007 Change 2008 2007 Change
NET SALES:
Personal Care $2,165.0 $1,881.5 +15.1% $4,211.1 $3,679.1 +14.5%
Consumer Tissue 1,689.6 1,568.6 +7.7% 3,396.6 3,161.7 +7.4%
K-C Professional &
Other 839.9 763.0 +10.1% 1,600.8 1,460.4 +9.6%
Health Care 306.3 296.7 +3.2% 604.2 599.4 +.8%
Corporate & Other 23.0 9.0 N.M. 44.8 17.0 N.M.
Intersegment Sales (17.6) (16.8) N.M. (38.6) (30.3) N.M.
Consolidated $5,006.2 $4,502.0 +11.2% $9,818.9 $8,887.3 +10.5%
OPERATING PROFIT:
Personal Care $436.4 $393.2 +11.0% $864.6 $740.4 +16.8%
Consumer Tissue 130.4 168.9 -22.8% 285.9 376.0 -24.0%
K-C Professional &
Other 110.9 119.9 -7.5% 207.6 228.6 -9.2%
Health Care 29.8 52.0 -42.7% 76.0 107.6 -29.4%
Corporate & Other (50.3) (85.6) -41.2% (119.6) (184.5) -35.2%
Other income and
(expense), net (7.1) .3 N.M. (.3) (3.3) N.M.
Consolidated $650.1 $648.7 +.2% $1,314.2 $1,264.8 +3.9%
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 Six Months
Ended June 30 Ended June 30
2008 2007 2008 2007
Corporate & Other $(13.6) $(28.8) $(36.7) $(90.9)
Other income and (expense), net (.9) - (1.6) 9.3
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
PERIODS ENDED JUNE 30
PERCENTAGE CHANGE IN NET SALES VERSUS PRIOR YEAR
Three Months Ended June 30, 2008
Net Mix/
Total Volume Price Other(1) Currency
Consolidated 11.2 3 3 1 4
Personal Care 15.1 9 2 - 4
Consumer Tissue 7.7 (3) 5 2 4
K-C Professional & Other 10.1 1 3 2 4
Health Care 3.2 5 (2) (2) 2
Six Months Ended June 30, 2008
Net Mix/
Total Volume Price Other(1) Currency
Consolidated 10.5 3 2 1 4
Personal Care 14.5 8 1 1 4
Consumer Tissue 7.4 (2) 4 1 4
K-C Professional & Other 9.6 1 3 2 4
Health Care .8 2 (2) (1) 2
(1) Mix/Other includes rounding.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
(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 June 30
2008 2007
Diluted Diluted
Income Earnings Income Earnings
(Expense) Per Share (Expense) Per Share
Adjusted Earnings $433.4 $1.03 $478.7 $1.04
Adjustments for:
Strategic Cost Reduction charges (9.0) (.02) (9.8) (.02)
Implementation costs - - (7.1) (.02)
Extraordinary loss (7.7) (.02) - -
Net Income $416.7 $.99 $461.8 $1.00
Six Months Ended June 30
2008 2007
Diluted Diluted
Income Earnings Income Earnings
(Expense) Per Share (Expense) Per Share
Adjusted Earnings $890.4 $2.11 $953.4 $2.07
Adjustments for:
Strategic Cost Reduction charges (25.1) (.06) (24.8) (.05)
Implementation costs - - (14.8) (.03)
Extraordinary loss (7.7) (.02) - -
Rounding - .01 - -
Net Income $857.6 $2.04 $913.8 $1.99
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
(Millions of dollars, except per share amounts)
OPERATING PROFIT SUMMARY:
Three Months
Ended June 30
2008 2007
Adjusted Operating Profit $664.6 $677.5
Adjustments for:
Strategic Cost Reduction charges (14.5) (17.8)
Implementation costs - (11.0)
Operating Profit $650.1 $648.7
Six Months
Ended June 30
2008 2007
Adjusted Operating Profit $ 1,352.5 $ 1,346.4
Adjustments for:
Strategic Cost Reduction charges (38.3) (58.4)
Implementation costs - (23.2)
Operating Profit $ 1,314.2 $ 1,264.8
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
(Millions of dollars)
Effective Income Tax Rate Reconciliation - Adjustments(1) and Synthetic
Fuel Partnership Activities:
Three Months Ended
June 30, 2008
As Excluding
Reported Adjustments(1)
Income Before Income Taxes $584.7 $599.2
Provision for Income Taxes 174.6 180.1
Effective Income Tax Rate 29.9%
Adjusted Effective Income Tax Rate 30.1%
Three Months Ended June 30, 2007
Synthetic Fuels
As Excluding Effect of Excluding
Reported Adjustments(1) Activities Activities
Income Before Income Taxes $556.7 $585.5 $(47.5) $633.0
Provision for Income Taxes 111.5 123.3 (59.5) 182.8
Net Synthetic Fuel Benefit $12.0
Effective Income Tax Rate 20.0%
Adjusted Effective Income
Tax Rate 21.1% 28.9%
(1) Charges for Strategic Cost Reductions in 2008 and Strategic Cost
Reductions and related implementation costs in 2007.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
(Millions of dollars)
Effective Income Tax Rate Reconciliation - Adjustments(1) and Synthetic
Fuel Partnership Activities:
Six Months Ended
June 30, 2008
As Excluding
Reported Adjustments(1)
Income Before Income Taxes $1,182.4 $1,220.7
Provision for Income Taxes 339.2 352.4
Effective Income Tax Rate 28.7%
Adjusted Effective Income Tax Rate 28.9%
Six Months Ended June 30, 2007
Synthetic Fuels
As Excluding Effect of Excluding
Reported Adjustments(1) Activities Activities
Income Before Income
Taxes $1,100.9 $1,182.5 $(75.1) $1,257.6
Provision for Income
Taxes 223.6 265.5 (94.2) 359.7
Net Synthetic Fuel Benefit $19.1
Effective Income Tax Rate 20.3%
Adjusted Effective Income
Tax Rate 22.5% 28.6%
(1) Charges for Strategic Cost Reductions in 2008 and Strategic Cost
Reductions and related implementation costs in 2007.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED JUNE 30
OUTLOOK FOR 2008
Estimated Full-Year 2008 Diluted Earnings Per Share:
Adjusted Earnings Per Share $4.20 - $4.30
Adjustments for:
Strategic Cost Reductions (.11) - (.09)
Extraordinary Loss (.02) (.02)
Earnings Per Share - Diluted $4.07 - $4.19
Estimated Third Quarter 2008 Diluted Earnings Per Share:
Adjusted Earnings Per Share $.98 - $1.03
Adjustments for:
Strategic Cost Reductions (.03) - (.02)
Earnings Per Share - Diluted $.95 - $1.01
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:
investors, Mike Masseth, +1-972-281-1478,
mmasseth@kcc.com, or Paul Alexander, +1-972-281-1440,
palexand@kcc.com, or media, Dave Dickson, +1-972-281-1481,
ddickson@kcc.com, all of Kimberly-Clark Corporation
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