Attached files
file | filename |
---|---|
EX-99.1 CHARTER - 3Q2009 EARNINGS PRESS RELEASE PDF - KIMBERLY CLARK CORP | kc_er-3q09.pdf |
8-K - 3Q2009 FORM 8K - KIMBERLY CLARK CORP | kc_8k3q09.htm |
Kay
Jackson
972-281-1486
kay.jackson@kcc.com
KIMBERLY-CLARK
ANNOUNCES RECORD EPS FOR THIRD QUARTER
2009 AND SIGNIFICANTLY IMPROVED OUTLOOK FOR FULL YEAR
All-time
Record EPS
$1.40 Compared With GAAP-basis EPS of $0.99 and Adjusted EPS of
$1.02
in
3Q ’08
3Q
Net Sales Decreased 2 Percent to $4.9 Billion, Including Currency Drag of 5
Percent
Cash
Provided By Operations Increased 23 Percent
Company
Raises Earnings Guidance for 2009; EPS Outlook Increased to $4.50 to $4.60 Due
to Additional Cost Savings, Improved Organic Sales and Further Recovery in
Currency Rates
DALLAS,
October 22, 2009—Kimberly-Clark Corporation (NYSE: KMB) today reported that net
sales in the third quarter of 2009 decreased 1.7 percent to $4.9 billion,
as the effect of weaker foreign currency exchange rates more than offset organic
sales growth of about 3 percent. The growth in organic sales was
driven by higher net selling prices, which increased approximately 3 percent,
while overall sales volumes were essentially even with year-ago
levels. Sales volumes continue to reflect challenging economic
conditions, particularly affecting the company’s K-C Professional and Consumer
Tissue businesses in North America and Europe, along with the company’s focus on
improving net realized revenue. Meanwhile, sales volumes rose
approximately 18 percent for K-C’s global Health Care business and about 3
percent for the company’s operations in developing and emerging
markets.
Diluted
net income per share for the quarter was an all-time record $1.40 compared with
$0.99 in 2008 and prior-year adjusted earnings of $1.02. During the
quarter, the company delivered continued double-digit organic sales growth in
developing and emerging markets, realized improved net selling prices in North
America, generated strong sales and operating profit growth in Health Care,
achieved significant cost savings and benefited from lower costs stemming from
commodity cost deflation. These factors led to an increase in gross profit
margin of nearly 600 basis points and growth in both operating profit and
diluted net income per share in excess of 40 percent. The growth in
earnings per share was achieved despite unfavorable currency effects of
approximately 15 cents per share.
Adjusted
earnings per share in the third quarter of 2008 exclude charges for strategic
cost reductions. Additional detail on these items and further
information about adjusted earnings per share and why the company uses this
non-GAAP financial measure are provided later in this news release.
Chairman
and Chief Executive Officer Thomas J. Falk said, “We delivered outstanding third
quarter results in a challenging environment, while maintaining a strong focus
on doing what’s right to sustain our long-term growth. Third quarter
performance was highlighted by strong margin expansion in each of our four
business segments, record earnings per share and excellent cash
flow. We realized sizable
-
more -
- 2
-
benefits
from improved net realized revenue, and our strategy of driving efficiency in
every aspect of our operations led to another quarter of significant cost
reductions as well as overhead efficiencies. At the same time, we
continued to deliver on our targeted growth initiatives, with double-digit
organic top-line growth in developing and emerging markets and excellent results
in Health Care. In addition, we continued to support our brands with
an increase in strategic marketing spending of about $50 million in local
currency terms. We also improved our working capital position in the
quarter, building further on the progress we made in the first half of the
year. All-in-all, we continue to execute our business plans well and
I’m really pleased that bottom-line results in the third quarter are spurring a
significant increase in our outlook for the year.”
Review
of third quarter sales by business segment
Sales
of personal care
products declined 0.7 percent compared with the third quarter of
2008. Although net selling prices increased 5 percent and sales
volumes advanced about 1 percent, weaker currencies reduced sales by 6 percent
and changes in product mix reduced sales by about 1 percent.
Personal
care sales in North America decreased nearly 1 percent versus the third
quarter of 2008. Although net selling prices advanced approximately 2
percent, sales volumes fell 2 percent and currency effects reduced sales by 1
percent. The higher selling prices resulted from increases
implemented during 2008 in most product categories. Sales volumes for
Huggies diapers fell about 3 percent, and volumes for the company’s child care
brands were down about 7 percent, reflecting continued category
softness. Nonetheless, the company’s third quarter market shares in
both categories were even with year-ago levels. In other areas of the
business, sales volumes for Huggies baby wipes decreased about 5 percent
compared to double-digit growth in the year-ago period, and volumes for Kotex
feminine care products were also down about 5 percent. Lastly,
volumes for K-C’s adult incontinence brands rose 10 percent, including benefits
from product innovation on the Depend brand launched earlier in the
year.
In
Europe, personal care sales declined approximately 9 percent in the quarter, as
unfavorable currency exchange rates reduced sales by more than 12
percent. Sales volumes rose nearly 7 percent, while net selling
prices were down about 2 percent and changes in product mix reduced sales by
more than 1 percent. The volume gains reflect continued strong
performance for Huggies diapers in Central Europe, along with solid improvement
in the company’s four core markets of the U.K., France, Italy and
Spain. In addition, sales volumes for Huggies baby wipes increased at
a double-digit rate in the third quarter.
In
developing and emerging markets, personal care sales increased 2 percent,
as continued double-digit growth in organic sales was mostly offset by negative
currency effects of 11 percent. Net selling prices improved about 10
percent and sales volumes rose 4 percent, while changes in product mix reduced
sales by about 1 percent in the third quarter. The growth in organic
sales was broad-based, with particular strength in Argentina, Brazil, China,
Russia, South Africa, South Korea, Turkey and the Andean region in Latin
America.
Sales
of consumer tissue
products declined 5.0 percent in the third quarter. Although net
selling
-
more -
- 3 -
prices
and product mix each improved about 1 percent, overall sales volumes were down 2
percent compared with the prior year and unfavorable currency exchange rates
reduced sales by approximately 5 percent.
In
North America, sales of consumer tissue products fell 2 percent compared to the
year-ago period, as an increase in net selling prices of 2 percent was more than
offset by a decline in sales volumes of 4 percent. The
improvement in net selling prices reflects list price increases implemented
during 2008, partially offset by an increase in competitive promotional
activity. The lower sales volumes reflect the company’s focus on
improving revenue realization, as well as slower category growth and consumer
trade-down. For the quarter, volumes were down at a double-digit rate
for paper towels and mid-single digits for Kleenex facial tissue, while volumes
for bathroom tissue fell slightly.
In
Europe, consumer tissue sales dropped approximately 14 percent compared
with the third quarter of 2008, including negative currency effects of more than
10 percent. Net selling prices decreased more than 2 percent and
sales volumes declined more than 1 percent in a continued competitive
environment.
Consumer
tissue sales in developing and emerging markets fell about 3 percent,
driven by unfavorable currency effects of more than 7 percent and slightly lower
sales volumes. These factors were partially offset by higher net
selling prices of approximately 3 percent and improved product mix of more than
1 percent, reflecting the company’s actions over the past year to recover
inflationary cost increases and improve profitability.
Sales
of K-C Professional (KCP) &
other products decreased 4.5 percent compared with the third quarter of
2008. Overall sales volumes fell 4 percent, net of an approximate 3
percent benefit from the acquisition of Jackson Safety that occurred in April
2009. Changes in foreign currency rates reduced sales by 4 percent,
and product mix was unfavorable by 1 percent, while higher net selling prices
increased sales by nearly 4 percent. Economic weakness and
rising unemployment levels in North America and Europe continued to have a
significant effect on KCP’s categories in the third quarter. In North
America, sales declined about 1 percent. Overall sales volumes
declined 4 percent, net of an approximate 6 percent benefit from the Jackson
Safety acquisition. In addition, changes in product mix and negative
currency effects each reduced sales by about 1 percent, while net selling prices
rose approximately 5 percent in the quarter. In Europe, KCP’s sales
declined 20 percent in the third quarter, including negative currency effects of
9 percent. In addition, sales volumes were 12 percent lower and
product mix was off 1 percent, while net selling prices increased 2
percent. Across developing and emerging markets, sales rose
approximately 7 percent despite an adverse currency effect of nearly 7
percent. Higher sales volumes and improved product mix each benefited
sales by about 5 percent, and increased net selling prices contributed 4 points
of growth.
Sales
of health care products
increased 15.8 percent in the third quarter. Sales volumes climbed
about 18 percent and product mix was higher by 1 percent, while unfavorable
currency exchange rates reduced sales by approximately 2 percent and net selling
prices fell nearly 1 percent. Volume growth was
broad-
-
more -
- 4 -
based
across several product categories, including continued double-digit growth in
exam gloves. The business continues to benefit from strong results in
nitrile gloves, including the new Lavender offering introduced late last
year. In addition, approximately 40 percent of the total gain in
health care volumes in the quarter was attributable to increased global demand
for face masks as a result of the H1N1 flu virus.
Other
third quarter operating results
Operating
profit was $871 million in the third quarter of 2009, up about 43 percent from
$610 million in 2008, and up approximately 39 percent compared with prior
year adjusted operating profit of $625 million. The latter amount
excludes net charges incurred in 2008 for the company’s strategic cost reduction
plan.
In
addition to the effect of higher net selling prices, there were a number of
other significant factors affecting year-over-year operating profit
comparisons. Deflation in key cost inputs amounted to more than
$270 million overall versus 2008, including about $130 million in lower
fiber costs, approximately $100 million for raw materials other than fiber,
primarily polymer resins and other oil-based materials, about $25 million of
lower energy costs, and more than $15 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
$47 million and
$14 million, respectively. Third quarter results also included
approximately $12 million in severance and related costs to streamline the
organization, more than offset by related savings of approximately $24
million. A breakdown of the costs by income statement line and
business segment is included later in this news release. Pension
expense rose by about $25 million in the third quarter, as expected, with a
majority of the increase reflected in cost of sales.
Meanwhile,
currency effects reduced third quarter operating profit by approximately
$75 million in 2009 versus 2008. Translation losses arising from
changes in currency exchange rates totaled about $30 million. In
addition, cost of sales in the third quarter of 2009 included about $35 million
of expense to recognize the U.S. dollar cost of importing finished product into
Venezuela at the currency rate in place in the parallel market rather than the
official rate. The company has successfully implemented other actions
in that country to improve business results in order to mitigate the effects of
the ongoing currency restrictions. Lastly, currency transaction
losses included in other (income) and expense, net in the third quarter amounted
to $13 million in 2009 and $4 million in 2008.
The
company’s effective tax rate for the third quarter of 2009 was 29.6 percent,
consistent with the anticipated full year range of 28 to 30
percent. In the year-ago quarter, the effective tax rate was
28.1 percent.
Kimberly-Clark’s
share of net income of equity companies in the third quarter decreased to
$40 million from $53 million in 2008, mainly as a result of lower net
income at Kimberly-Clark de Mexico, S.A.B. de C.V. (KCM). Although
KCM delivered solid organic sales growth and improved its gross profit margin,
net income comparisons were adversely affected by a favorable income tax
settlement in the year-ago period and currency translation losses in
2009. Compared with the third
-
more -
- 5 -
quarter
of 2008, the Mexican peso depreciated on average by more than 20 percent versus
the U.S. dollar.
Net
income attributable to noncontrolling interests was $29 million in the third
quarter of 2009 compared with $35 million in the prior year. The
decrease was primarily due to the acquisition of the remaining interest in the
company’s Andean affiliate in January 2009.
Organization
optimization initiative – update
As
announced in June of 2009, the company plans to reduce its worldwide salaried
workforce by approximately 1,600 positions by the end of the
year. This action is intended to further improve Kimberly-Clark’s
underlying profitability and cash flow and put the company in a better position
to take advantage of future growth and innovation opportunities. As
mentioned earlier in this release, third quarter results included $12 million in pre-tax
severance and related costs for this initiative, bringing year-to-date costs to
$122 million. The company now expects that full-year severance and
related costs will total $130 to $140 million pre-tax in 2009, down slightly
from the previous estimate of $140 to $150 million. Related savings
from this initiative in the third quarter of 2009 were approximately $24
million, with full-year savings anticipated to be about $55
million. Expected annualized pre-tax savings are approximately $135
million compared to the previous estimate of about $150 million.
Cash
flow and balance sheet
Cash
provided by operations in the third quarter totaled $791 million, an
increase of 23 percent from $641 million in the prior year. The
improvement was driven by higher cash earnings and reduced working capital,
partially offset by increased pension plan contributions. Third
quarter contributions to the company’s defined benefit pension plans totaled
$223 million in 2009 versus $14 million in 2008, bringing year-to-date
contributions to $718 million compared to $67 million last year. The
company contributed $200 million to its U.S. defined benefit pension plan in the
third quarter, which was incremental to the company’s previous plan for the
year. As a result, the company now anticipates contributions for the
year to total approximately $730 million compared to its previous plan of $530
million. Capital spending for the quarter was $167 million
compared with $219 million in the prior year. The company
continues to target total spending of $800 to $850 million for the
year. Consistent with its previously announced plans for 2009, the
company did not repurchase any shares of its common stock during the third
quarter.
Total
debt and redeemable securities was $6.7 billion at September 30, 2009 compared
with $7.0 billion at the end of 2008.
Year-to-date
results
For
the first nine months of 2009, sales of $14.1 billion fell 4.6 percent from
$14.8 billion in the prior year. Unfavorable currency effects reduced
sales by nearly 8 percent, more than offsetting organic sales growth of
approximately 3 percent. Net selling prices increased about 4 percent
and product mix added approximately 1 point of sales growth, while sales volumes
declined about 2 percent. Year-to-date operating profit of $2,108
million was up 10 percent compared to $1,924 million in 2008 and up 7
percent
-
more -
- 6 -
compared
to prior-year adjusted operating profit of $1,978 million. The
benefits of organic sales growth, FORCE and strategic cost reduction plan
savings of about $190 million and deflation in key cost components totaling
approximately $525 million, were partially offset by negative currency effects
of about $350 million, severance and related costs of $122 million, increased
pension expense of more than $120 million, higher operating costs and increased
strategic marketing spending. Through nine months, diluted net income
per share in 2009 was $3.35 compared with $3.02 in 2008 and prior-year adjusted
earnings of $3.13. Adjusted results in 2008 exclude strategic cost
reduction charges and an extraordinary loss related to the restructuring of
certain contractual arrangements.
Outlook
The
company updated several key planning and guidance assumptions for 2009, as
follows:
|
·
|
Net sales decline of about 2
percent versus previous guidance for a decline of 4 to 6
percent. Currency rates are now expected to reduce sales for
the full year by approximately 5 percent, compared to the company’s
previous assumption for a negative impact of 6 to 7
percent. Meanwhile, organic sales are expected to grow about 3
percent, up from previous expectations of 1 to 2 percent. Sales
volumes are anticipated to be flat to down slightly for the year and
product mix should be flat to up modestly. Based on performance
to date and plans for the fourth quarter, the full-year benefit from
higher net selling prices is expected to be at least 3
percent.
|
|
·
|
Deflation
in key cost inputs is expected to be within the company’s previous
expectation of $600 to $700 million. This reflects estimated
average market pricing for benchmark northern softwood pulp of
approximately $800 to $825 per metric ton for the fourth quarter and oil
prices averaging $70 to $75 per barrel for the balance of the
year. Pulp prices have moved higher than previously
estimated. On the other hand, the continued strengthening in
foreign currency rates is providing greater than anticipated benefits for
operations outside the U.S. that purchase dollar-based raw
materials.
|
|
·
|
Cost
savings from the company’s FORCE program and strategic cost reduction plan
of approximately $250 million, compared to prior guidance for savings of
at least $200 million. The increased savings expectations are
primarily due to the company’s continued efforts to identify and implement
incremental savings opportunities in sourcing and supply chain
activities.
|
|
·
|
Negative
year-over-year currency effects for consolidated operations now expected
to be $325 to $375 million versus the previously assumed range of $400 to
$450 million.
|
Commenting
on the outlook, Falk said, “We are assuming the economic environment will remain
relatively stable for the balance of 2009. We will continue to pursue
our targeted growth initiatives and invest in our brands. At the same
time, we remain focused on reducing costs, improving margins and maximizing cash
flow. We expect a strong finish to the year, even though pulp and polymer costs
are expected to increase sequentially from third quarter levels and competitive
promotional activity is anticipated to rise modestly.
-
more -
- 7 -
“All-in-all,
we are well ahead of our plan for the year and are raising our earnings guidance
for the second consecutive quarter. We now expect earnings per share
in 2009 will be in a range of $4.50 to $4.60 per share, up significantly from
our previous estimate of $4.10 to $4.25. The improvement is being
driven primarily by a combination of increased cost savings, better organic
sales growth and a further recovery in currency exchange rates. We
are making excellent progress managing the factors we control and executing well
in a difficult environment. Based on our new outlook, we now expect
full-year earnings per share to grow 9 to 11 percent compared to adjusted
earnings per share in 2008. That’s at the high end of, or slightly
above, our long-range Global Business Plan target and is a credit to the hard
work of our worldwide team.”
Non-GAAP
financial measures
This
press release and the accompanying tables include the following financial
measures in 2008 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
These
non-GAAP financial measures exclude certain items that are included in the
company’s earnings, earnings per share and operating profit 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. 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 these non-GAAP financial
measures, together with reconciliations, we believe we
-
more -
- 8 -
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
calculated adjusted earnings, adjusted earnings per share and adjusted operating
profit by excluding from the comparable GAAP measure charges related to our
strategic cost reduction plan for streamlining the company’s operations and an
after-tax extraordinary loss related to the restructuring of certain contractual
arrangements in the second quarter of 2008. The nature of and basis
for the 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 was completed as
of 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.
|
|
·
|
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 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 on its income
statement for the period ended June 30, 2008. 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.
|
These
non-GAAP financial measures are not meant to be considered in isolation or as a
substitute for the comparable GAAP measure. There are limitations to
these non-GAAP financial measures because they are not prepared in accordance
with GAAP and 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 a supplement to the GAAP measures and by
providing reconciliations of the non-GAAP and comparable GAAP
-
more -
- 9 -
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 (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 137-year
history of innovation, visit 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 economic conditions, anticipated currency rates and exchange risk,
cost savings, changes in finished product selling prices, anticipated raw
material and energy costs, anticipated benefits related to the strategic cost
reduction plan and organization optimization initiatives, anticipated financial
and operating results, revenue realization 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, 2008 entitled “Risk
Factors".
-
more -
- 10 -
KIMBERLY-CLARK
CORPORATION
CONSOLIDATED
INCOME STATEMENT
PERIODS
ENDED SEPTEMBER 30
(Millions
of dollars, except per share amounts)
Three Months
|
|||||||||
Ended September
30
|
|||||||||
2009
|
2008
|
Change
|
|||||||
Net Sales
|
$
|
4,913
|
$
|
4,998
|
- 1.7%
|
||||
Cost of products sold
|
3,186
|
3,535
|
- 9.9%
|
||||||
Gross Profit
|
1,727
|
1,463
|
+
18.0%
|
||||||
Marketing, research and general expenses
|
852
|
848
|
+ .5%
|
||||||
Other (income) and expense, net
|
4
|
5
|
N.M.
|
||||||
Operating Profit
|
871
|
610
|
+
42.8%
|
||||||
Interest income
|
7
|
15
|
- 53.3%
|
||||||
Interest expense
|
(67
|
)
|
(76
|
)
|
- 11.8%
|
||||
Income Before Income Taxes
and Equity Interests
|
811
|
549
|
+
47.7%
|
||||||
Provision for income taxes
|
(240
|
)
|
(154
|
)
|
+
55.8%
|
||||
Income Before Equity Interests
|
571
|
395
|
+
44.6%
|
||||||
Share of net income of equity companies
|
40
|
53
|
- 24.5%
|
||||||
Net Income
|
611
|
448
|
+
36.4%
|
||||||
Net income attributable to
noncontrolling interests(a)
|
(29
|
)
|
(35
|
)
|
- 17.1%
|
||||
Net
Income Attributable to Kimberly-Clark Corporation(a)
|
$
|
582
|
$
|
413
|
+
40.9%
|
||||
Per Share Basis
– Diluted
|
|||||||||
Net
Income Attributable to Kimberly-Clark Corporation(a)
|
$
|
1.40
|
$
|
.99
|
+
41.4%
|
|
(a) Effective
January 1, 2009, the Corporation adopted new accounting requirements
related to the presentation of
noncontrolling interests
in consolidated financial statements. Prior
year amounts have been recast to conform to those
requirements.
|
N.M.
– Not meaningful
Unaudited
-
more -
- 11 -
KIMBERLY-CLARK
CORPORATION
PERIODS
ENDED SEPTEMBER 30
(Millions
of dollars)
Notes:
1.
Charges for the Strategic Cost Reductions are included in the Consolidated
Income Statement as follows:
Three Months
|
|||
Ended
September 30
|
|||
2008
|
|||
Cost of products sold
|
$
|
10
|
|
Marketing, research and general expenses
|
5
|
||
Provision for income taxes
|
(4
|
)
|
|
Net Charges
|
$
|
11
|
2.
|
Organization
optimization charges are included in the Consolidated Income Statement as
follows:
|
Three Months
|
|||
Ended
September 30
|
|||
2009
|
|||
Cost of products sold
|
$
|
14
|
|
Marketing, research and general expenses
|
(2
|
)
|
|
Provision for income taxes
|
(3
|
)
|
|
Net Charges
|
$
|
9
|
|
Unaudited
|
-
more -
- 12 -
KIMBERLY-CLARK
CORPORATION
CONSOLIDATED
INCOME STATEMENT
PERIODS
ENDED SEPTEMBER 30
(Millions
of dollars, except per share amounts)
Nine Months
|
|||||||||
Ended September
30
|
|||||||||
2009
|
2008
|
Change
|
|||||||
Net Sales
|
$
|
14,133
|
$
|
14,817
|
- 4.6%
|
||||
Cost of products sold
|
9,379
|
10,414
|
- 9.9%
|
||||||
Gross Profit
|
4,754
|
4,403
|
+ 8.0%
|
||||||
Marketing, research and general expenses
|
2,524
|
2,474
|
+ 2.0%
|
||||||
Other (income) and expense, net
|
122
|
5
|
N.M.
|
||||||
Operating Profit
|
2,108
|
1,924
|
+ 9.6%
|
||||||
Interest income
|
21
|
31
|
- 32.3%
|
||||||
Interest expense
|
(211
|
)
|
(224
|
)
|
- 5.8%
|
||||
Income Before Income Taxes,
Equity Interests and Extraordinary Loss
|
1,918
|
1,731
|
+
10.8%
|
||||||
Provision for income taxes
|
(562
|
)
|
(493
|
)
|
+
14.0%
|
||||
Income Before Equity Interests
and Extraordinary Loss
|
1,356
|
1,238
|
+ 9.5%
|
||||||
Share of net income of equity companies
|
116
|
145
|
- 20.0%
|
||||||
Extraordinary
loss, net of income taxes
|
-
|
(8
|
)
|
N.M.
|
|||||
Net Income
|
1,472
|
1,375
|
+ 7.1%
|
||||||
Net income attributable to
noncontrolling interests(a)
|
(80
|
)
|
(104
|
)
|
- 23.1%
|
||||
Net
Income Attributable to Kimberly-Clark Corporation(a)
|
$
|
1,392
|
$
|
1,271
|
+ 9.5%
|
||||
Per Share Basis
– Diluted
|
|||||||||
Before
extraordinary loss
|
$
|
3.35
|
$
|
3.04
|
+
10.2%
|
||||
Net
Income Attributable to Kimberly-Clark Corporation(a)
|
$
|
3.35
|
$
|
3.02
|
+
10.9%
|
(a)
|
Effective January 1, 2009, the Corporation adopted new accounting
requirements related to the presentation of noncontrolling interests in
consolidated
financial statements. Prior year amounts have been recast to
conform to those requirements.
|
N.M.
– Not meaningful
Unaudited
-
more -
- 13 -
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
|
|||
2008
|
|||
Cost of products sold
|
$
|
31
|
|
Marketing, research and general expenses
|
21
|
||
Other
(income) and expense, net
|
2
|
||
Provision for income taxes
|
(18
|
)
|
|
Net Charges
|
$
|
36
|
2. Organization
optimization charges are included in the Consolidated Income Statement as
follows:
Nine Months
|
|||
Ended
September 30
|
|||
2009
|
|||
Cost of products sold
|
$
|
41
|
|
Marketing, research and general expenses
|
81
|
||
Provision for income taxes
|
(35
|
)
|
|
Net Charges
|
$
|
87
|
3. Other
information:
Nine
Months
|
||||||
Ended September
30
|
||||||
2009
|
2008
|
|||||
Cash
Dividends Declared Per Share
|
$
|
1.80
|
$
|
1.74
|
September
30
|
||||||
Common Shares (Millions)
|
2009
|
2008
|
||||
Outstanding,
as of
|
414.7
|
414.7
|
||||
Average
Diluted for:
|
||||||
Three
Months Ended
|
416.8
|
418.1
|
||||
Nine
Months Ended
|
416.1
|
420.9
|
Unaudited
-
more -
- 14 -
KIMBERLY-CLARK
CORPORATION
PERIODS
ENDED SEPTEMBER 30
(Millions
of dollars)
Supplemental
Financial Information:
Preliminary Balance Sheet Data:
|
||||||
September 30
|
December 31
|
|||||
2009
|
2008
|
|||||
Cash
and cash equivalents
|
$
|
750
|
$
|
364
|
||
Accounts
receivable, net
|
2,449
|
2,492
|
||||
Inventories
|
2,014
|
2,493
|
||||
Total
current assets
|
5,784
|
5,813
|
||||
Total
assets
|
18,588
|
18,089
|
||||
Accounts
payable
|
1,668
|
1,603
|
||||
Debt
payable within one year
|
1,210
|
1,083
|
||||
Total
current liabilities
|
5,312
|
4,752
|
||||
Long-term
debt
|
4,442
|
4,882
|
||||
Redeemable
preferred and common securities of subsidiaries
|
1,046
|
1,032
|
||||
Stockholders’
equity
|
5,499
|
4,261
|
Nine
Months
|
||||||
Ended
September 30
|
||||||
Preliminary Cash Flow Data:
|
2009
|
2008
|
||||
Cash
provided by operations
|
$
|
2,480
|
$
|
1,838
|
||
Cash
used for investing
|
$
|
(748
|
)
|
$
|
(636
|
)
|
Cash
used for financing
|
$
|
(1,369
|
)
|
$
|
(1,122
|
)
|
Depreciation
and amortization
|
$
|
563
|
$
|
596
|
||
Capital
spending
|
$
|
563
|
$
|
653
|
||
Cash dividends paid
|
$
|
737
|
$
|
709
|
Unaudited
-
more -
- 15 -
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, Kimcare and Jackson
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
-
more -
- 16 -
KIMBERLY-CLARK
CORPORATION
SELECTED
BUSINESS SEGMENT DATA
PERIODS
ENDED SEPTEMBER 30
(Millions
of dollars)
Three Months
|
Nine Months
|
|||||||||||||||||
Ended September 30
|
Ended September 30
|
|||||||||||||||||
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||
NET
SALES:
|
||||||||||||||||||
Personal
Care
|
$
|
2,132
|
$
|
2,147
|
- 0.7%
|
$
|
6,231
|
$
|
6,358
|
- 2.0%
|
||||||||
Consumer
Tissue
|
1,625
|
1,711
|
- 5.0%
|
4,754
|
5,108
|
- 6.9%
|
||||||||||||
K-C
Professional & Other
|
805
|
843
|
- 4.5%
|
2,192
|
2,444
|
- 10.3%
|
||||||||||||
Health
Care
|
351
|
303
|
+ 15.8%
|
984
|
907
|
+ 8.5%
|
||||||||||||
Corporate
& Other
|
11
|
17
|
N.M.
|
38
|
62
|
N.M.
|
||||||||||||
Intersegment
Sales
|
(11
|
)
|
(23
|
)
|
N.M.
|
(66
|
)
|
(62
|
)
|
N.M.
|
||||||||
Consolidated
|
$
|
4,913
|
$
|
4,998
|
- 1.7%
|
$
|
14,133
|
$
|
14,817
|
- 4.6%
|
||||||||
OPERATING
PROFIT(a):
|
||||||||||||||||||
Personal
Care
|
$
|
467
|
$
|
404
|
+ 15.6%
|
$
|
1,303
|
$
|
1,269
|
+ 2.7%
|
||||||||
Consumer
Tissue
|
232
|
133
|
+ 74.4%
|
587
|
419
|
+
40.1%
|
||||||||||||
K-C
Professional & Other
|
163
|
119
|
+ 37.0%
|
345
|
327
|
+ 5.5%
|
||||||||||||
Health
Care
|
78
|
22
|
+
254.5%
|
188
|
98
|
+
91.8%
|
||||||||||||
Corporate
& Other(b)
|
(65
|
)
|
(63
|
)
|
+
3.2%
|
(193
|
)
|
(184
|
)
|
+ 4.9%
|
||||||||
Other
income and (expense), net(b)(c)
|
(4
|
)
|
(5
|
)
|
N.M.
|
(122
|
)
|
(5
|
)
|
N.M.
|
||||||||
Consolidated
|
$
|
871
|
$
|
610
|
+ 42.8%
|
$
|
2,108
|
$
|
1,924
|
+ 9.6%
|
(a)
Organization optimization charges in 2009 are included by business
segment as follows:
Three
Months
|
Nine
Months
|
||||||||
Ended
September 30
|
Ended
September 30
|
||||||||
2009
|
2009
|
||||||||
Personal
Care
|
$
|
3
|
$
|
44
|
|||||
Consumer
Tissue
|
5
|
47
|
|||||||
K-C
Professional & Other
|
2
|
16
|
|||||||
Health
Care
|
-
|
6
|
|||||||
Corporate
& Other
|
2
|
9
|
|||||||
Total
|
$
|
12
|
$
|
122
|
N.M.
– Not meaningful
Unaudited
-
more -
- 17 -
KIMBERLY-CLARK
CORPORATION
SELECTED
BUSINESS SEGMENT DATA
PERIODS
ENDED SEPTEMBER 30
(b) Corporate
& Other and Other income and (expense), net, include the following amounts
of pre-tax charges for the strategic cost reductions.
|
Three
Months
|
Nine
Months
|
|||||||
Ended
September 30
|
Ended
September 30
|
||||||||
2008
|
2008
|
||||||||
Corporate
& Other
|
$
|
(15
|
)
|
$
|
(52
|
)
|
|||
Other
income and (expense), net
|
-
|
(2
|
)
|
(c) Other
income and (expense), net, includes the following amounts of currency
transaction gains (losses).
|
Three Months
|
Nine Months
|
||||||||||||||
Ended September 30
|
Ended September 30
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Other
income and (expense), net
|
$
|
(13
|
)
|
$
|
(4
|
)
|
$
|
(109
|
)
|
$
|
2
|
PERCENTAGE
CHANGE IN NET SALES VERSUS PRIOR YEAR
Three Months Ended September 30, 2009
|
||||||||||||||
Net
|
Mix/
|
|||||||||||||
Total
|
Volume
|
Price
|
Other(1)
|
Currency
|
||||||||||
Consolidated
|
(1.7
|
)
|
-
|
3
|
-
|
(5
|
)
|
|||||||
Personal
Care
|
(0.7
|
)
|
1
|
5
|
(1
|
)
|
(6
|
)
|
||||||
Consumer
Tissue
|
(5.0
|
)
|
(2
|
)
|
1
|
1
|
(5
|
)
|
||||||
K-C
Professional & Other
|
(4.5
|
)
|
(4
|
)
|
4
|
(1
|
)
|
(4
|
)
|
|||||
Health
Care
|
15.8
|
18
|
(1
|
)
|
1
|
(2
|
)
|
Nine Months Ended September 30, 2009
|
||||||||||||||
Net
|
Mix/
|
|||||||||||||
Total
|
Volume
|
Price
|
Other(1)
|
Currency
|
||||||||||
Consolidated
|
(4.6
|
)
|
(2
|
)
|
4
|
1
|
(8
|
)
|
||||||
Personal
Care
|
(2.0
|
)
|
1
|
6
|
-
|
(9
|
)
|
|||||||
Consumer
Tissue
|
(6.9
|
)
|
(4
|
)
|
4
|
1
|
(8
|
)
|
||||||
K-C
Professional & Other
|
(10.3
|
)
|
(8
|
)
|
4
|
1
|
(7
|
)
|
||||||
Health
Care
|
8.5
|
12
|
-
|
(1
|
)
|
(3
|
)
|
(1)
Mix/Other includes rounding.
-
more -
- 18 -
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, 2008
|
||||||||
Diluted
|
||||||||
Income
|
Earnings
|
|||||||
(Expense)
|
Per Share
|
|||||||
Adjusted
Earnings
|
$
|
424
|
$
|
1.02
|
||||
Adjustments
for:
|
||||||||
Strategic
Cost Reduction charges
|
(11
|
)
|
(.03
|
)
|
||||
Net
Income Attributable to Kimberly-Clark Corporation
|
$
|
413
|
$
|
.99
|
Nine
Months Ended
|
||||||||
September
30, 2008
|
||||||||
Diluted
|
||||||||
Income
|
Earnings
|
|||||||
(Expense)
|
Per Share
|
|||||||
Adjusted
Earnings
|
$
|
1,315
|
$
|
3.13
|
||||
Adjustments
for:
|
||||||||
Strategic
Cost Reduction charges
|
(36
|
)
|
(.09
|
)
|
||||
Extraordinary
Loss
|
(8
|
)
|
(.02
|
)
|
||||
Net
Income Attributable to Kimberly-Clark Corporation
|
$
|
1,271
|
$
|
3.02
|
-
more -
- 19 -
KIMBERLY-CLARK
CORPORATION
PERIODS
ENDED SEPTEMBER 30
(Millions
of dollars)
OPERATING
PROFIT SUMMARY:
Three Months Ended September 30,
2008
|
||||
Adjusted
Operating Profit
|
$
|
625
|
||
Adjustments
for:
|
||||
Strategic
Cost Reduction charges
|
(15
|
)
|
||
Operating
Profit
|
$
|
610
|
Nine Months Ended September 30,
2008
|
||||
Adjusted
Operating Profit
|
$
|
1,978
|
||
Adjustments
for:
|
||||
Strategic
Cost Reduction charges
|
(54)
|
|||
Operating
Profit
|
$
|
1,924
|
Investor
Relations contact:
|
Paul
Alexander, 972-281-1440, palexand@kcc.com
|
Media
Relations contact:
|
Kay
Jackson, 972-281-1486,
kay.jackson@kcc.com
|
###