3Q Net Sales Climbed Nearly 10 Percent to a Record $4.6 Billion in 2007;
GAAP-Basis EPS Were $1.04 vs. $0.79 in 2006
Adjusted EPS Increased 8 Percent to $1.07, Slightly Above Previous
Expectations
Company Now Anticipates Adjusted EPS of $4.23 to $4.25 for 2007, Toward
High End of Previous Guidance Range of $4.20 to $4.25
DALLAS, Oct. 22 /PRNewswire-FirstCall/ -- Kimberly-Clark Corporation
(NYSE: KMB) today reported that net sales in the third quarter of 2007
increased 9.7 percent to $4.6 billion, setting a new quarterly record. The
improvement was highlighted by excellent volume gains for many of the
company's well-known Personal Care, Consumer Tissue and K-C Professional
brands and a twelfth consecutive quarter of double-digit sales expansion in
developing and emerging markets. Overall, organic sales growth totaled 7
percent and changes in currency exchange rates also benefited sales by
about 3 percent.
Diluted net income per share was $1.04 compared with 79 cents in the
prior year. Adjusted earnings in the third quarter of 2007 were $1.07 per
share, up more than 8 percent from 99 cents per share in 2006 and slightly
above the company's previous guidance range of $1.04 to $1.06 per share.
The higher sales, along with continued success in reducing costs, enabled
the company to fund a $10 million increase in strategic marketing spending
and deliver a 6 percent increase in adjusted operating profit for the
quarter despite approximately $70 million of cost inflation. A lower share
count, partially offset by a related increase in interest expense, also
contributed to the bottom-line improvement 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 current quarter is a gain on
settlement of litigation related to prior years' operations in Latin
America. 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, "I'm
encouraged by the progress we have made again this quarter under our Global
Business Plan. We're focused on driving our targeted growth initiatives and
continually improving our capabilities and cost effectiveness. As a result,
we have generated better-than-expected top-line growth and a solid
improvement in adjusted operating profit at a time when cost inflation has
pressured our margins. Overall, our teams are doing a great job of
delivering on our bottom-line commitments in the short-term while at the
same time making the necessary changes to further strengthen our
competitive position and prospects for long-term sustainable growth."
Review of third quarter sales
The growth in third quarter sales of nearly 10 percent was driven by a
5 percent increase in sales volumes, along with improved net selling prices
and product mix, each approximately 1 percent better than the prior year.
As noted above, stronger foreign currencies also added about 3 percent to
sales.
Sales of personal care products advanced 12.0 percent in the third
quarter, highlighted by sales volume growth of approximately 8 percent.
Product mix improved 1 percent, while currency effects added more than 3
percent to sales.
Personal care sales in North America increased about 8 percent compared
with the third quarter of 2006, with higher sales volumes accounting for
almost all of the increase. Net selling prices rose 1 percent, offset by a
1 percent decline in product mix. Product innovations spurred broad-based
volume growth, with a double-digit gain for Huggies baby wipes, high
single- digit growth for Huggies diapers and mid-single digit increases for
the company's child care and incontinence care brands. Child care volumes
benefited from the late-quarter introduction of GoodNites Sleep Boxers and
Sleep Shorts, a unique, new offering in the youth pants category.
Meanwhile, sales volumes of Kotex feminine care products were even with the
year-ago quarter. In Europe, personal care sales also were up 8 percent in
the quarter, due primarily to favorable currency effects of 8 percent.
Sales volumes and product mix both improved 1 percent, offset by a 2
percent decline in net selling prices. The volume gain reflects higher
sales of Huggies diapers and baby wipes across the region, even though
timing of promotional activities resulted in a 3 percent decline in sales
volumes of Huggies diapers in the four core markets - U.K., France, Italy
and Spain. In developing and emerging markets (D&E), personal care sales
expanded more than 20 percent for the second straight quarter, boosted by a
12 percent increase in sales volumes, favorable product mix of 3 percent
and currency benefits of about 6 percent. All four D&E regions posted
double-digit volume gains, with particular strength throughout most of
Latin America and in South Korea, China and Russia.
Sales of consumer tissue products increased 10.5 percent versus the
third quarter of 2006, benefiting from higher sales volumes, up 4 percent,
along with improved net selling prices and foreign currency effects, each
approximately 3 percent better than the prior year.
In North America, sales of consumer tissue products climbed nearly 11
percent in the third quarter, driven primarily by sales volume growth of
more than 7 percent and an increase in net selling prices of about 3
percent. Product improvements for Kleenex facial tissue, Scott bathroom
tissue and Viva paper towels, backed by a stepped-up level of advertising,
helped all three brands achieve double-digit volume gains in the quarter.
Meanwhile, sales volumes for Cottonelle bathroom tissue and Scott towels
were similar to last year. In Europe, consumer tissue sales rose about 8
percent. Favorable currencies accounted for most of the increase, as the
Euro and the U.K. pound strengthened by an average of 7 percent. Sales
volumes were up 2 percent, on higher sales of Andrex bathroom tissue and
Kleenex facial tissue, partially offset by a 1 percent decrease in net
selling prices. Consumer tissue sales in developing and emerging markets
increased more than 11 percent, mainly attributable to higher net selling
prices and currency effects, both of which benefited sales by approximately
6 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 & other products improved 8.8 percent
compared with the year-ago quarter. Sales volumes increased more than 4
percent, net selling prices and product mix were both about 1 percent
better and currency effects added 3 percent to sales. The higher volumes
reflect mid-single digit gains in North America, led by the Kleenex, Scott
and Cottonelle washroom brands and Kimtech and WypAll wiper products, as
well as continued double- digit growth in Latin America.
Sales of health care products were down 5.2 percent in the third
quarter. Sales volumes were approximately 9 percent lower, partially offset
by improved product mix of 3 percent and currency benefits of 1 percent.
The decrease in sales volumes was primarily attributable to the company's
decision in the second half of last year to exit the latex exam glove
business, along with a higher level of sales of face masks in the year-ago
quarter primarily due to avian flu preparedness. In the exam glove
category, the company has transitioned many customers and users from latex
to its higher-margin, clinically-preferred nitrile gloves. Sales growth of
these products, although strong, has not yet compensated for the drop-off
in sales of latex gloves, due in part to supply constraints earlier in the
year and competitive market conditions. As a result, overall sales of exam
gloves declined more than 20 percent in the third quarter. In other areas
of the business, third quarter sales of medical devices, particularly
Ballard respiratory catheters, generated solid improvement.
The company believes health care sales comparisons will show some
sequential improvement in the fourth quarter, given projected growth in
demand for nitrile exam gloves and a sharp decline in sales of latex gloves
in the year-ago period.
Other third quarter operating results
Operating profit was $683 million in the third quarter of 2007,
compared with $526 million in 2006. Excluding net charges totaling about
$25 million for the company's strategic cost reduction plan and related
implementation costs, as well as the litigation settlement gain of more
than $16 million in 2007, adjusted operating profit for the quarter
increased approximately 6 percent to $691 million from $650 million in the
prior year. Top-line growth, along with FORCE (Focused On Reducing Costs
Everywhere) cost savings of about $40 million and strategic cost reductions
of $27 million enabled the company to more than offset approximately $70
million of cost inflation. The inflationary increases were driven primarily
by higher fiber costs, up nearly $50 million versus the third quarter of
2006, and about $25 million for raw materials other than fiber, including
nonwovens and other oil-based materials, partially offset by lower energy
costs. Marketing, research and general expenses in the third 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 $22 million
from the prior year, mainly as a result of new long-term debt issued in
late July to fund the company's previously announced accelerated share
repurchase program.
The company's effective tax rate in the third quarter was 27.6 percent
in 2007 and 24.9 percent in 2006. Excluding the effects of charges for the
company's strategic cost reduction plan, related implementation costs and
the litigation settlement gain, as well as net benefits from synthetic fuel
partnerships in both years, the adjusted effective tax rate for the quarter
was 27.6 percent in 2007 compared with 28.1 percent in 2006. The net
benefit from synthetic fuel partnership activities was $1 million in the
third quarter of 2007, down from approximately $5 million in the prior
year. The net benefit 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.
Kimberly-Clark's share of net income of equity companies in the third
quarter was about $39 million compared with nearly $43 million in 2006,
primarily reflecting a decline in net income at Kimberly-Clark de Mexico,
S.A.B. de C.V. due to the absence of earnings from pulp and paper
operations that were sold late last year.
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 will allow for investment in targeted growth
opportunities and in key capabilities, including innovation, marketing and
customer development.
During the third quarter, the company continued to successfully execute
planned cost reduction activities, the most significant of which involved
the consolidation of infant and child care operations in North America and
streamlining of administrative operations in North America and Europe. With
year-to-date savings totaling $76 million, the company is on track to meet
its target to save $75 to $100 million for the full year.
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 $794 million (about $558 million after tax), or more than 85
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 $875 to $925 million ($615 to $650 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 third quarter decreased to $585
million from $648 million in 2006, primarily as a result of higher levels
of working capital compared with the year-ago quarter, which more than
offset an increase in cash earnings. Capital spending for the quarter was
$233 million in 2007 compared with $240 million in the prior year. The
company expects capital spending for the full year will be toward the high
end of its targeted spending range of $900 million to $1 billion.
During the third quarter, the company repurchased approximately 33.0
million shares of its common stock at a cost of more than $2.2 billion,
including the purchase of 29.6 million shares on July 24 under an
accelerated share repurchase agreement (ASR) with Bank of America for an
initial payment of $2.0 billion. Year-to-date, the company has spent more
than $2.5 billion to repurchase about 37.3 million shares of Kimberly-Clark
stock. The company reaffirmed its commitment to repurchase $2.8 billion of
its common stock in 2007.
At September 30, 2007, total debt and preferred securities was $6.6
billion compared with $4.4 billion at the end of 2006. In late July, the
company issued $2.1 billion of long-term debt at an average interest rate
of approximately 6.2 percent, principally to finance the ASR.
Year-to-date results
For the first nine months of 2007, sales of $13.5 billion were up 9
percent from $12.4 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 $1,948 million compared with
$1,491 million in 2006. Adjusted operating profit, which excludes charges
related to strategic cost reductions in both years and incremental
implementation costs and the gain on settlement of litigation in 2007,
increased approximately 7 percent to $2,038 million in 2007 from $1,913
million in the prior year. The benefits of top-line growth, along with cost
savings of about $205 million, more than offset inflation in key cost
components totaling approximately $235 million and a $40 million increase
in strategic marketing spending. Through nine months, diluted net income
per share in 2007 was $3.03 compared with $2.21 in 2006. Adjusted earnings
per share increased more than 9 percent to $3.14 in 2007 from $2.87 in
2006.
Outlook
Commenting on the outlook, Falk said, "The underlying strength of our
business results through the first nine months gives us confidence that we
will continue to execute our Global Business Plan well over the balance of
the year. We expect top-line momentum will remain positive, paced by
continued strong performance in developing and emerging markets and success
of our other targeted growth initiatives, particularly in Personal Care and
K-C Professional. We also will continue to drive costs out of the system
through our FORCE and strategic cost reduction efforts. These factors,
combined with benefits from our accelerated share repurchase, should enable
us to overcome significant inflationary pressures and deliver another
quarter of solid bottom-line growth. Meanwhile, our plans incorporate
further increases in spending for strategic marketing to support volume
growth and improve brand equity, as we remain committed to boost spending
above the rate of sales growth this year. All in all, we expect adjusted
earnings per share in the fourth quarter will be in a range of $1.09 to
$1.11 per share, up 6 to 8 percent from $1.03 per share last year.
"With the anticipated improvement in our fourth quarter performance, we
now expect adjusted earnings per share for the full year of 2007 will be in
a range of $4.23 to $4.25. This compares with our previous guidance for
adjusted earnings per share of $4.20 to $4.25 and will result in growth of
8 to 9 percent versus $3.90 per share in 2006."
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 S.E.C.
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 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 will incur 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.
* 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 benefits 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 135-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 Competitive Improvement Initiatives, 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 SEPTEMBER 30
(Millions of dollars, except per share amounts)
Three Months
Ended September 30
2007 2006 Change
Net Sales $4,620.6 $4,210.4 +9.7%
Cost of products sold 3,177.1 2,934.9 +8.3%
Gross Profit 1,443.5 1,275.5 +13.2%
Marketing, research and
general expenses 783.7 749.2 +4.6%
Other (income) and
expense, net (22.9) (.1) N.M.
Operating Profit 682.7 526.4 +29.7%
Nonoperating expense (6.5) (17.2) -62.2%
Interest income 9.3 6.8 +36.8%
Interest expense (78.6) (56.5) +39.1%
Income Before Income Taxes
and Equity Interests 606.9 459.5 +32.1%
Provision for income taxes (167.5) (114.6) +46.2%
Income Before Equity Interests 439.4 344.9 +27.4%
Share of net income of
equity companies 39.1 42.8 -8.6%
Minority owners' share of
subsidiaries' net income (25.4) (23.5) +8.1%
Net Income $453.1 $364.2 +24.4%
Net Income Per Share Basis
- Diluted $1.04 $.79 +31.6%
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 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 September 30
2007 2006
Cost of products sold $18.9 $80.2
Marketing, research and general expenses 7.8 46.7
Other (income) and expense, net (3.9) (3.3)
Provision for income taxes (2.5) (32.4)
Strategic Cost Reductions after taxes 20.3 91.2
Minority interest - (.2)
Net Charges $20.3 $91.0
In addition, charges of $2.0 million ($1.3 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.
Unaudited
KIMBERLY-CLARK CORPORATION
CONSOLIDATED INCOME STATEMENT
PERIODS ENDED SEPTEMBER 30
(Millions of dollars, except per share amounts)
Nine Months
Ended September 30
2007 2006 Change
Net Sales $13,507.9 $12,439.7 +8.6%
Cost of products sold 9,266.1 8,723.5 +6.2%
Gross Profit 4,241.8 3,716.2 +14.1%
Marketing, research and
general expenses 2,313.9 2,203.6 +5.0%
Other (income) and
expense, net (19.6) 21.7 N.M.
Operating Profit 1,947.5 1,490.9 +30.6%
Nonoperating expense (81.6) (40.6) N.M.
Interest income 23.3 19.8 +17.7%
Interest expense (181.4) (165.9) +9.3%
Income Before Income Taxes
and Equity Interests 1,707.8 1,304.2 +30.9%
Provision for income taxes (391.1) (344.9) +13.4%
Income Before Equity Interests 1,316.7 959.3 +37.3%
Share of net income of
equity companies 126.9 124.7 +1.8%
Minority owners' share of
subsidiaries' net income (76.7) (67.1) +14.3%
Net Income $1,366.9 $1,016.9 +34.4%
Net Income Per Share Basis
- Diluted $3.03 $2.21 +37.1%
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 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:
Nine Months
Ended September 30
2007 2006
Cost of products sold $71.4 $302.3
Marketing, research and general expenses 23.0 111.7
Other (income) and expense, net (13.2) 7.6
Provision for income taxes (36.0) (115.1)
Strategic Cost Reductions after taxes 45.2 306.5
Minority interest (0.1) (1.6)
Net Charges $45.1 $304.9
In addition, charges of $25.2 million ($16.1 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:
Nine Months
Ended September 30
2007 2006
Cash Dividends Declared Per Share $1.59 $1.47
September 30
Common Shares (Millions) 2007 2006
Outstanding, as of 423.7 457.7
Average Diluted for:
Three Months Ended 436.0 459.8
Nine Months Ended 451.7 460.9
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 30
(Millions of dollars)
Supplemental Financial Information:
Preliminary Balance Sheet Data:
September 30 December 31
2007 2006
Cash and cash equivalents $539.6 $360.8
Accounts receivable, net 2,516.9 2,336.7
Inventories 2,386.3 2,004.5
Total assets 18,324.3 17,067.0
Accounts payable 1,713.6 1,530.8
Debt payable within one year 1,395.9 1,326.4
Total current liabilities 5,368.5 5,015.8
Long-term debt 4,379.3 2,276.0
Preferred securities of subsidiary 821.5 793.4
Stockholders' equity 4,996.9 6,097.4
Nine Months
Ended September 30
Preliminary Cash Flow Data: 2007 2006
Cash provided by operations $1,760.7 $1,766.5
Cash used for investing $(716.4) $(617.1)
Cash used for financing $(854.8) $(1,113.2)
Depreciation and amortization $626.4 $714.5
Capital spending $776.8 $639.0
Cash dividends paid $707.7 $659.6
Unaudited
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 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 and drapes, sterilization wrap, face masks,
exam gloves, and respiratory care and digestive health products as well as
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 SEPTEMBER 30
(Millions of dollars)
Three Months Nine Months
Ended September 30 Ended September 30
2007 2006 Change 2007 2006 Change
NET SALES:
Personal
Care $1,920.8 $1,714.7 +12.0% $5,599.9 $5,054.8 +10.8%
Consumer
Tissue 1,629.8 1,475.2 +10.5% 4,791.5 4,406.8 +8.7%
K-C Professional
& Other 780.5 717.5 +8.8% 2,240.9 2,074.3 +8.0%
Health Care 292.1 308.2 -5.2% 891.5 926.5 -3.8%
Corporate &
Other 10.5 6.8 +54.4% 27.5 23.5 +17.0%
Intersegment
Sales (13.1) (12.0) +9.2% (43.4) (46.2) -6.1%
Consolidated $4,620.6 $4,210.4 +9.7% $13,507.9 $12,439.7 +8.6%
OPERATING PROFIT:
Personal
Care $396.3 $331.6 +19.5% $1,136.7 $960.2 +18.4%
Consumer
Tissue 166.1 180.2 -7.8% 542.1 566.8 -4.4%
K-C Professional
& Other 125.1 127.2 -1.7% 353.7 345.6 +2.3%
Health Care 43.4 51.4 -15.6% 151.0 161.0 -6.2%
Corporate &
Other (71.1) (164.1) -56.7% (255.6) (521.0) -50.9%
Other income and
(expense), net 22.9 .1 N.M. 19.6 (21.7) N.M.
Consolidated $682.7 $526.4 +29.7% $1,947.5 $1,490.9 +30.6%
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 Nine Months
Ended September 30 Ended September 30
2007 2006 2007 2006
Corporate & Other $(28.7) $(126.9) $(119.6) $(414.0)
Other income and
(expense), net 3.9 3.3 13.2 (7.6)
N.M. - Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
PERIODS ENDED SEPTEMBER 30
PERCENTAGE CHANGE IN NET SALES VERSUS PRIOR YEAR
Three Months Ended September 30, 2007
Net Mix/
Total Volume Price Other(1) Currency
Consolidated 9.7 5 1 1 3
Personal Care 12.0 8 - 1 3
Consumer Tissue 10.5 4 3 - 3
K-C Professional & Other 8.8 4 1 1 3
Health Care (5.2) (9) - 3 1
Nine Months Ended September 30, 2007
Net Mix/
Total Volume Price Other(1) Currency
Consolidated 8.6 4 1 1 3
Personal Care 10.8 7 - 1 3
Consumer Tissue 8.7 2 3 1 3
K-C Professional & Other 8.0 4 1 - 3
Health Care (3.8) (6) - 1 1
(1) Mix/Other includes rounding.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 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 September 30
2007 2006
Diluted Diluted
Income Earnings Income Earnings
(Expense) Per Share (Expense) Per Share
Adjusted Earnings $464.8 $1.07 $455.2 $.99
Adjustments for:
Strategic Cost
Reduction charges (20.3) (.05) (91.0) (.20)
Implementation costs (1.3) - - -
Litigation settlement 9.9 .02 - -
Net Income $453.1 $1.04 $364.2 $.79
Nine Months Ended September 30
2007 2006
Diluted Diluted
Income Earnings Income Earnings
(Expense) Per Share (Expense) Per Share
Adjusted Earnings $1,418.2 $3.14 $1,321.8 $2.87
Adjustments for:
Strategic Cost
Reduction charges (45.1) (.10) (304.9) (.66)
Implementation costs (16.1) (.04) - -
Litigation settlement 9.9 .02 - -
Rounding - .01 - -
Net Income $1,366.9 $3.03 $1,016.9 $2.21
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 30
(Millions of dollars, except per share amounts)
OPERATING PROFIT SUMMARY:
Three Months
Ended September 30
2007 2006
Adjusted Operating Profit $691.1 $650.0
Adjustments for:
Strategic Cost Reduction charges (22.8) (123.6)
Implementation costs (2.0) -
Litigation settlement 16.4 -
Operating Profit $682.7 $526.4
Nine Months
Ended September 30
2007 2006
Adjusted Operating Profit $2,037.5 $1,912.5
Adjustments for:
Strategic Cost Reduction charges (81.2) (421.6)
Implementation costs (25.2) -
Litigation settlement 16.4 -
Operating Profit $1,947.5 $1,490.9
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 30
(Millions of dollars)
Effective Income Tax Rate Reconciliation - Adjustments(1) and Synthetic
Fuel Partnership Activities:
Three Months Ended September 30, 2007
Synthetic Fuel
Excluding Effect
As Adjustments Adjustments of Excluding
Reported (1) (1) Activities Activities
Income Before
Income Taxes $606.9 $(8.4) $615.3 $(6.5) $621.8
Provision for
Income Taxes 167.5 3.4 164.1 (7.7) 171.8
Net Synthetic
Fuel Benefit $1.2
Effective Income
Tax Rate 27.6%
Adjusted Effective
Income Tax Rate 26.7% 27.6%
Three Months Ended September 30, 2006
Synthetic Fuel
Excluding Effect
As Adjustments Adjustments of Excluding
Reported (1) (1) Activities Activities
Income Before
Income Taxes $459.5 $(123.6) $583.1 $(17.2) $600.3
Provision for
Income Taxes 114.6 (32.4) 147.0 (21.7) 168.7
Net Synthetic
Fuel Benefit $4.5
Effective Income
Tax Rate 24.9%
Adjusted Effective
Income Tax Rate 25.2% 28.1%
(1) Charges for Strategic Cost Reductions, related implementation costs
and a litigation settlement in 2007 and Strategic Cost Reductions in
2006.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 30
(Millions of dollars)
Effective Income Tax Rate Reconciliation - Adjustments(1) and Synthetic
Fuel Partnership Activities:
Nine Months Ended September 30, 2007
Synthetic Fuel
Excluding Effect
As Adjustments Adjustments of Excluding
Reported (1) (1) Activities Activities
Income Before
Income Taxes $1,707.8 $(90.0) $1,797.8 $(81.6) $1,879.4
Provision for
Income Taxes 391.1 (38.6) 429.7 (101.9) 531.6
Net Synthetic
Fuel Benefit $20.3
Effective Income
Tax Rate 22.9%
Adjusted Effective
Income Tax Rate 23.9% 28.3%
Nine Months Ended September 30, 2006
Synthetic Fuel
Excluding Effect
As Adjustments Adjustments of Excluding
Reported (1) (1) Activities Activities
Income Before
Income Taxes $1,304.2 $(421.6) $1,725.8 $(40.6) $1,766.4
Provision for
Income Taxes 344.9 (115.1) 460.0 (50.4) 510.4
Net Synthetic
Fuel Benefit $9.8
Effective Income
Tax Rate 26.4%
Adjusted Effective
Income Tax Rate 26.7% 28.9%
(1) Charges for Strategic Cost Reductions, related implementation costs
and a litigation settlement in 2007 and Strategic Cost Reductions in
2006.
KIMBERLY-CLARK CORPORATION
PERIODS ENDED SEPTEMBER 30
OUTLOOK FOR 2007
Estimated Full-Year 2007 Diluted Earnings Per Share:
Adjusted Earnings Per Share $4.23 - $4.25
Strategic Cost Reductions (.15) - (.14)
Implementation costs (.04) - (.04)
Litigation settlement .02 - .02
Earnings Per Share - Diluted $4.06 - $4.09
Estimated Fourth Quarter 2007 Diluted Earnings Per Share:
Adjusted Earnings Per Share $1.09 - $1.11
Strategic Cost Reductions (.05) - (.04)
Earnings Per Share - Diluted $1.04 - $1.07
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:
Investor Relations, Mike Masseth,
+1-972-281-1478, mmasseth@kcc.com, or Paul Alexander,
+1-972-281-1440, palexander@kcc.com, or Media, Dave Dickson,
+1-972-281-1481, ddickson@kcc.com, all of Kimberly-Clark
Corporation
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