Kimberly-Clark Announces First Quarter 2010 Results
1Q Net Sales Increased Approximately 8 Percent to $4.8 Billion
GAAP-basis EPS $0.92 and Adjusted EPS $1.14 Compared With EPS of $0.98 in
1Q '09
Marketing Spending Up Significantly to Support Product Launches and
Targeted Growth Initiatives
Company Reaffirms Previous Guidance for 2010 Adjusted EPS of $4.80 to
$5.00
</pre>
<p><span class="xn-location">DALLAS</span>, <span class="xn-chron">April 22</span> /CNW/ -- Kimberly-Clark Corporation (NYSE: KMB) today reported that net sales in the first quarter of 2010 increased 7.6 percent to <span class="xn-money">$4.8 billion</span>, including an approximate 5 percent benefit from stronger foreign currency exchange rates. Organic sales rose 2 percent, with sales volumes and net selling prices each up 1 percent. The combined impact of the I-Flow Corporation and <span class="xn-location">Jackson</span> Safety acquisitions completed in 2009 added an additional point of sales growth in the quarter. The organic volume growth was highlighted by an 8 percent increase for the company's global Health Care business and a 5 percent gain for K-C's international operations in Asia, Latin America, the <span class="xn-location">Middle East</span>, Eastern <span class="xn-location">Europe</span> and <span class="xn-location">Africa</span>.</p>
<p/>
<p>Diluted net income per share for the quarter was <span class="xn-money">$0.92</span> and adjusted earnings per share were <span class="xn-money">$1.14</span> compared with diluted net income per share of <span class="xn-money">$0.98</span> in 2009. Bottom-line results were favorably impacted by the growth in net sales, improved gross margin of more than 150 basis points and a lower level of foreign currency transaction losses. On the other hand, strategic marketing spending increased by <span class="xn-money">$60 million</span> in the quarter to support the company's product innovation activities and targeted growth initiatives. In addition, the company's effective tax rate in the first quarter was significantly higher than the year-ago period, including a one-time charge equivalent to 5 cents per share related to recent changes in tax law in conjunction with U.S. health care reform legislation.</p>
<p/>
<p>Adjusted earnings per share in 2010 exclude a one-time after tax charge of <span class="xn-money">$96 million</span> for the remeasurement of the local currency balance sheet in <span class="xn-location">Venezuela</span> as a result of the adoption of highly inflationary accounting in that country in <span class="xn-chron">January 2010</span>. Additional detail on this item 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.</p>
<p/>
<p>Chairman and Chief Executive Officer Thomas J. Falk said, "We are off to a solid start to the year with our first quarter results. Organic sales rose 2 percent, and we delivered strong improvements in gross margin and adjusted earnings per share, including excellent contributions from our ongoing cost savings program and last year's organization optimization initiative. In addition, we strengthened our brands by launching a number of innovations in the first quarter and by significantly increasing strategic marketing spending. Our targeted growth initiatives, particularly in our K-C International business and in Health Care, continued to progress well. Finally, we continued to deploy cash flow in shareholder-friendly ways, including raising our dividend by 10 percent and resuming our share repurchase plan. All-in-all, we are off to a good start to 2010."</p>
<pre>
Review of first quarter sales by business segment
</pre>
<p>Sales of personal care products increased 8.1 percent compared with the first quarter of 2009. Changes in currency rates benefited sales by 5 percent, sales volumes rose 3 percent and net selling prices advanced 1 percent, while product mix was off 1 percent.</p>
<p/>
<p>Personal care sales in <span class="xn-location">North America</span> increased 4 percent versus the first quarter of 2009. Sales volumes were up 2 percent, currency effects benefited sales by 1 percent, and changes in net selling prices, driven by the timing of promotional activity for Huggies diapers, added an additional point of growth. The growth in volumes was broad-based across most categories, including a double-digit increase in feminine care as a result of initial shipments of the new U by Kotex line extension that was launched toward the end of the first quarter. In addition, sales volumes for Huggies baby wipes and the company's child care brands rose 5 percent and 4 percent, respectively, compared to soft year-ago results that included the impacts of a slowdown in category sales. In other areas of the business, sales volumes for adult care rose 3 percent, including early benefits from recent innovation on both the Poise and Depend brands. Finally, sales volumes for Huggies diapers were off about 5 percent in the first quarter.</p>
<p/>
<p>In <span class="xn-location">Europe</span>, personal care sales rose 6 percent in the quarter, including a currency exchange rate benefit of 9 percent. Net selling prices declined nearly 2 percent and changes in product mix reduced sales by about 1 percent. Overall sales volumes were down slightly in the first quarter, as a 4 percent decline in Huggies diapers was nearly offset by strong growth in Huggies baby wipes and the company's child care brands.</p>
<p/>
<p>In K-C's international operations in Asia, Latin America, the <span class="xn-location">Middle East</span>, Eastern <span class="xn-location">Europe</span> and <span class="xn-location">Africa</span>, personal care sales increased 15 percent, as changes in currency rates benefited sales by 9 percent and organic sales rose 6 percent. Sales volumes were up 7 percent, while changes in product mix reduced sales by about 1 percent. The growth in volumes was broad-based, with particular strength in <span class="xn-location">China</span>, <span class="xn-location">Turkey</span>, South Asia and Latin America.</p>
<p/>
<p>Sales of consumer tissue products increased 2.0 percent in the first quarter. Favorable currency exchange rates improved sales by about 5 percent and net selling prices were up slightly, while sales volumes were down approximately 3 percent.</p>
<p/>
<p>In <span class="xn-location">North America</span>, sales of consumer tissue products decreased approximately 4 percent compared to the year-ago period. Sales volumes were down nearly 6 percent and product mix was slightly unfavorable, while changes in net selling prices added more than 2 points to sales, primarily due to sheet count reductions taken in the first quarter on Cottonelle bathroom tissue to improve net realized revenue. Although bathroom tissue sales volumes were down about 3 percent in the quarter, overall net sales were up modestly as a result of the sheet count reductions. Sales volumes for Kleenex facial tissue declined 3 percent in the quarter in conjunction with a mild cold and flu season. Finally, paper towel volumes fell at a double-digit rate and continue to be impacted by consumer trade-down.</p>
<p/>
<p>In <span class="xn-location">Europe</span>, consumer tissue sales rose about 3 percent compared with the first quarter of 2009, including favorable currency effects of 8 percent. Net selling prices decreased 3 percent, reflecting a continued competitive environment, and sales volumes were off about 2 percent in the quarter.</p>
<p/>
<p>In K-C's international operations in Asia, Latin America, the <span class="xn-location">Middle East</span>, Eastern <span class="xn-location">Europe</span> and <span class="xn-location">Africa</span>, consumer tissue sales increased 12 percent, as currency effects were favorable by 10 percent and organic sales rose 2 percent. Sales volumes advanced approximately 2 percent in the first quarter, while a 1 percent benefit from changes in product mix was essentially offset by slightly lower net selling prices.</p>
<p/>
<p>Sales of K-C Professional (KCP) & other products increased 12.1 percent compared with the first quarter of 2009. Favorable currency effects benefited sales by 5 percent and the acquisition of <span class="xn-location">Jackson</span> Safety added 3 points of sales growth in the quarter. In addition, net selling prices increased 2 percent and changes in product mix benefited sales by 1 percent, reflecting the company's continued focus on increasing net realized revenue. Organic sales volumes advanced 1 percent.</p>
<p/>
<p>In <span class="xn-location">North America</span>, KCP sales increased 12 percent, including an approximate 6 percent benefit from <span class="xn-location">Jackson</span> Safety. Meanwhile, net selling prices rose 3 percent, organic sales volumes were up about 2 percent and changes in currency rates added 1 point to sales. In <span class="xn-location">Europe</span>, KCP's sales rose 9 percent in the first quarter, including favorable currency effects of 9 percent and a benefit from <span class="xn-location">Jackson</span> Safety of more than 1 percent. Organic sales volumes were up about 1 percent, while net selling prices fell 2 percent.</p>
<p/>
<p>In K-C's international operations in Asia, Latin America, the <span class="xn-location">Middle East</span>, Eastern <span class="xn-location">Europe</span> and <span class="xn-location">Africa</span>, KCP's sales increased 23 percent, including benefits from currency rates totaling 10 percent. Sales volumes were up about 7 percent, with particular strength in South Asia and Latin America, and the combined impact of higher net selling prices and improved product mix increased sales by 6 percent.</p>
<p/>
<p>Sales of health care products increased 23.2 percent in the first quarter. Growth was driven by a 12 percent benefit from the acquisition of I-Flow Corporation and an 8 point increase in organic sales volumes. In addition, favorable currency exchange rates added 3 points of sales growth in the quarter. The organic volume growth was highlighted by double-digit gains in medical devices and in exam gloves.</p>
<p/>
<p>In addition, increased global demand for face masks as a result of the H1N1 flu virus was responsible for nearly 4 points of organic volume growth in the quarter.</p>
<pre>
Other first quarter operating results
</pre>
<p>Operating profit was <span class="xn-money">$665 million</span> in the first quarter of 2010, up 6 percent from <span class="xn-money">$628 million</span> in 2009. Excluding the previously mentioned charge for the balance sheet remeasurement in <span class="xn-location">Venezuela</span>, first quarter 2010 adjusted operating profit was <span class="xn-money">$763 million</span>, up 21 percent versus operating profit in the year-ago period.</p>
<p/>
<p>In addition to the effect of higher net sales, there were a number of other significant factors affecting year-over-year operating profit comparisons. Cost savings in the quarter from the company's FORCE (Focused On Reducing Costs Everywhere) program totaled approximately <span class="xn-money">$80 million</span>. The company also realized benefits of about <span class="xn-money">$35 million</span> related to the 2009 organization optimization initiative that streamlined its salaried workforce. Pension expense fell by nearly <span class="xn-money">$40 million</span>, as expected, with a majority of the decrease reflected in cost of sales. In addition, improved manufacturing efficiencies as a result of a lower level of production curtailment than in the year-ago period benefited first quarter operating profit comparisons by approximately <span class="xn-money">$35 million</span>. Meanwhile, inflation in key cost inputs amounted to about <span class="xn-money">$70 million</span> overall versus 2009, including <span class="xn-money">$50 million</span> in higher fiber costs, <span class="xn-money">$25 million</span> for raw materials other than fiber, and <span class="xn-money">$10 million</span> in distribution costs, partially offset by <span class="xn-money">$15 million</span> of lower energy costs. Marketing, research and general expenses increased in the first quarter, reflecting the previously mentioned rise in strategic marketing, along with higher selling, research and administrative expenses, driven by increases to support future growth in K-C International and the I-Flow acquisition.</p>
<p/>
<p>Meanwhile, other (income) and expense, net was <span class="xn-money">$101 million</span> of expense in the first quarter of 2010 compared to <span class="xn-money">$77 million</span> of expense in the first quarter of 2009. The 2010 result included <span class="xn-money">$79 million</span> of the one-time charge for the balance sheet remeasurement in <span class="xn-location">Venezuela</span>. In addition, foreign currency transaction losses totaled <span class="xn-money">$21 million</span> in the first quarter of 2010 and <span class="xn-money">$76 million</span> in the prior year.</p>
<p/>
<p>The company's effective tax rate for the first quarter of 2010 was 39.6 percent compared to 29.1 percent in the prior year. The adjusted effective tax rate in the first quarter of 2010, which excludes the effects of the charge for the balance sheet remeasurement in <span class="xn-location">Venezuela</span>, was 34.4 percent and decreased earnings by about 9 cents per share compared to 2009 results. The first quarter adjusted rate was above the company's full-year target range of 29 to 31 percent, driven by an approximate <span class="xn-money">$20 million</span> one-time non-cash charge related to recent changes in tax law (Medicare Part D subsidy) in conjunction with passage of U.S. health care reform legislation.</p>
<p/>
<p>Kimberly-Clark's share of net income of equity companies in the first quarter increased to <span class="xn-money">$43 million</span> from <span class="xn-money">$32 million</span> in 2009, mainly as a result of higher net income at Kimberly-Clark de <span class="xn-location">Mexico</span>, S.A.B. de C.V. (KCM). KCM delivered double-digit growth in net sales, operating profit and net income, as results were positively impacted by solid organic sales growth, improved gross margin and favorable currency effects.</p>
<pre>
Cash flow and balance sheet
</pre>
<p>Cash provided by operations in the first quarter of 2010 totaled <span class="xn-money">$464 million</span> compared to <span class="xn-money">$692 million</span> in the prior year. The decline was driven by a lower level of improvement in primary working capital (accounts receivable + inventories - accounts payable) compared to the prior year and higher pension plan contributions, partially offset by higher cash earnings. First quarter contributions to the company's defined benefit pension plans totaled about <span class="xn-money">$175 million</span> in 2010 versus <span class="xn-money">$90 million</span> in 2009. The company continues to target full-year 2010 pension contributions of approximately <span class="xn-money">$240 million</span>.</p>
<p/>
<p>Capital spending for the quarter was <span class="xn-money">$184 million</span> compared with <span class="xn-money">$211 million</span> in 2009. The company continues to target full-year 2010 spending in a range of <span class="xn-money">$1.0 to $1.1 billion</span>. During the first quarter, the company repurchased approximately 2.5 million shares of its common stock at a cost of about <span class="xn-money">$150 million</span>, in line with the company's target to repurchase <span class="xn-money">$500 to $600 million</span> worth of its shares in 2010. Total debt and redeemable securities was <span class="xn-money">$6.4 billion</span> at <span class="xn-chron">March 31, 2010</span> compared with <span class="xn-money">$6.5 billion</span> at the end of 2009.</p>
<pre>
Outlook
</pre>
<p>The company updated several key planning and guidance assumptions for 2010, as follows:</p>
<pre>
-- Net sales increase of 4 to 6 percent versus previous guidance for an
increase of 5 to 6 percent.
-- Organic sales are expected to grow 3 to 4 percent, up from the
previous assumption for growth of 2 to 3 percent. The company
continues to expect volume growth of 2 to 3 percent. Given its
focus on improving net realized revenue, the company is now
expecting that the combination of higher net selling prices and
improved product mix will contribute 1 point of sales growth.
That
compares to the previous assumption that price and mix would be
even with the prior year.
-- Currency rates are expected to increase sales between 0 and 1
percent versus the company's previous assumption for a benefit of
approximately 2 percent.
-- The combined impact of the 2009 acquisitions of I-Flow Corporation
and Jackson Safety should benefit 2010 sales by 1 point. This is
unchanged from the company's previous guidance.
-- Inflation in key cost inputs of $600 to $700 million compared to the
previous assumption of $300 to $400 million. This reflects estimated
average market pricing for benchmark northern softwood pulp of
approximately $920 to $940 per metric ton and oil prices averaging $80
to $85 per barrel for the year. A majority of the increased inflation
assumption is due to higher pulp costs. In addition, polymer resin
and
superabsorbent costs are also projected to be higher than previously
estimated.
-- Savings from the company's FORCE program totaling $200 to $250
million,
up from the previous assumption of $150 to $200 million. The company
continues to aggressively identify and implement incremental savings
opportunities, particularly in sourcing and supply chain activities.
</pre>
<p>Commenting on the outlook, Falk said, "Despite the near-term input cost headwinds we are facing, we will continue to strengthen our brands, pursue our targeted growth initiatives and reinvest in our business for future growth. We have launched a number of innovations this year and will bring more to market as the year progresses. We will support our brands with strong marketing programs and continue to expect that strategic marketing spending will rise at a faster pace than sales in 2010.</p>
<p/>
<p>"Given recent input cost changes and expectations for additional near-term increases, particularly with pulp, we are now experiencing significantly higher cost inflation in 2010 than previously estimated. So, we are aggressively looking for ways to increase revenue realization and focusing on generating incremental cost savings and controlling discretionary spending. These actions, coupled with the flexibility we built into our original 2010 plan, will help offset nearly all of the higher-than-expected input costs.</p>
<p/>
<p>"In summary, we are continuing to target adjusted earnings per share in 2010 in a range of <span class="xn-money">$4.80 to $5.00</span> per share. With what we know now, it's more likely that adjusted EPS will be toward the low end of that range. We are firmly convinced that we are executing the right strategies to drive sustainable growth and long-term shareholder value."</p>
<pre>
Non-GAAP financial measures
</pre>
<p>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.</p>
<pre>
-- Adjusted earnings and earnings per share
-- Adjusted operating profit
-- Adjusted effective tax rate
</pre>
<p>These non-GAAP financial measures exclude the following item included in the company's earnings, earnings per share, operating profit and effective tax rate for the quarter ended <span class="xn-chron">March 31, 2010</span> calculated in accordance with GAAP:</p>
<pre>
-- Adoption of highly inflationary accounting for our Venezuelan
operations. The company recorded a one-time after tax loss in first
quarter 2010 for the remeasurement of the local currency balance sheet
in Venezuela as a result of the adoption of highly inflationary
accounting in that country effective January 1, 2010. Management does
not consider this loss to be part of our earnings from ongoing
operations for the 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.
</pre>
<p>In accordance with the SEC's requirements, reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures are attached.</p>
<p/>
<p>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 has used the 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.</p>
<p/>
<p>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 are enhancing investors' understanding of our businesses and our results of operations. Also, many financial analysts who follow our company focus on and publish both historical results and future projections based on nonGAAP 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.</p>
<p/>
<p>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 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.</p>
<pre>
Conference call
</pre>
<p>A conference call to discuss this news release and other matters of interest to investors and analysts will be held at <span class="xn-chron">9 a.m. (CDT</span>) 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 (<a href="http://www.kimberly-clark.com">www.kimberly-clark.com</a>).</p>
<pre>
About Kimberly-Clark
</pre>
<p>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 138-year history of innovation, visit <a href="http://www.kimberly-clark.com">www.kimberly-clark.com</a>.</p>
<p/>
<p>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.</p>
<p/>
<p>Certain matters contained in this news release concerning the business outlook, including economic conditions, anticipated currency rates and exchange risk, anticipated impact of acquisitions, cost savings, changes in finished product selling prices, cash flow and uses of cash, capital spending, marketing spending, anticipated raw material and energy costs, anticipated benefits related to the organization optimization initiative, 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 <span class="xn-chron">December 31, 2009</span> entitled "Risk Factors."</p>
<pre>
</pre>
<p> </p>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
CONSOLIDATED INCOME STATEMENT
PERIODS ENDED MARCH 31
(Millions of dollars, except per share amounts)
</pre>
<p> </p>
<p> </p>
<pre>
Three
Months
Ended
March 31
--------
2010 2009 Change
---- ---- ------
</pre>
<p> </p>
<pre>
Net Sales $4,835 $4,493 +7.6%
Cost of products sold 3,188 3,039 +4.9%
----- -----
</pre>
<p> </p>
<pre>
Gross Profit 1,647 1,454 +13.3%
Marketing, research and
general expenses 881 749 +17.6%
Other (income) and
expense, net 101 77 +31.2%
--- ---
</pre>
<p> </p>
<pre>
Operating Profit 665 628 +5.9%
Interest income 5 8 -37.5%
Interest expense (61) (73) -16.4%
--- ---
</pre>
<p> </p>
<pre>
Income Before Income
Taxes and Equity
Interests 609 563 +8.2%
Provision for income
taxes (241) (164) +47.0%
---- ----
Income Before Equity
Interests 368 399 -7.8%
Share of net income of
equity companies 43 32 +34.4%
--- ---
</pre>
<p> </p>
<pre>
Net Income 411 431 -4.6%
Net income attributable
to noncontrolling
interests (27) (24) +12.5%
--- ---
</pre>
<p> </p>
<pre>
Net Income Attributable
to Kimberly-Clark
Corporation $384 $407 -5.7%
==== ====
</pre>
<p> </p>
<pre>
Per Share Basis -
Diluted Net Income
Attributable to
Kimberly-Clark
Corporation $.92 $.98 -6.1%
==== ====
</pre>
<p> </p>
<pre>
Unaudited
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
PERIODS ENDED MARCH 31
(Millions of dollars, except per share amounts)
</pre>
<p> </p>
<p>Notes:</p>
<p> </p>
<pre>
1. Effective January 1, 2010, the Corporation began accounting for
its Venezuelan subsidiary's operations as highly inflationary and
the subsidiary's functional currency became the U.S. dollar, as
required by U.S. accounting rules. On January 8, 2010, the
Venezuelan government devalued its currency and established a dual
official exchange rate structure. In addition, for transactions
that do not qualify for settlement at the official exchange rate, a
market exists for the acquisition and exchange of bolivar- and U.S.
dollar-denominated bonds, effectively resulting in a parallel
market exchange rate substantially unfavorable to the official
exchange rate. The Corporation determined that, effective January
1, 2010, the parallel exchange rate is the appropriate exchange rate
to remeasure K-C Venezuela's bolivar-denominated transactions into
U.S. dollars as this is the rate at which K-C Venezuela converts
the bolivars it generates from its operations into U.S. dollars to
pay for the significant imports of finished goods and raw materials
to support its operations.
As a result, the Corporation recorded a one-time after tax charge of
$96 million in first quarter 2010 to remeasure the subsidiary's
bolivar-denominated net monetary asset position into U.S. dollars
at a parallel exchange rate of approximately 6 bolivars per U.S.
dollar. This charge was recorded in the following Consolidated
Income Statement line items:
</pre>
<p> </p>
<p> </p>
<p> </p>
<p>Cost of products sold <span class="xn-money">$19</span></p>
<p> </p>
<pre>
Other (income) and
expense, net 79
</pre>
<p> </p>
<pre>
Provision for income
taxes (2)
---
</pre>
<p> </p>
<pre>
Net charge $96
</pre>
<p> </p>
<p> </p>
<p>2. Other Information:</p>
<p> </p>
<pre>
Three
Months
Ended March
31
------------
2010 2009
---- ----
Cash Dividends Declared Per
Share $.66 $.60
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
March 31
--------
Common Shares (Millions) 2010 2009
------------------------ ---- ----
</pre>
<p> </p>
<p>Outstanding, as of 414.9 413.9</p>
<p> </p>
<pre>
Average Diluted for Three
Months Ended 419.3 415.9
</pre>
<p> </p>
<pre>
Unaudited
</pre>
<p> </p>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
PERIODS ENDED MARCH 31
(Millions of dollars)
</pre>
<p> </p>
<p>Supplemental Financial Information:</p>
<p> </p>
<pre>
Preliminary Balance Sheet Data:
-------------------------------
</pre>
<p> </p>
<pre>
March 31 December 31
2010 2009
---- ----
</pre>
<p> </p>
<p>Cash and cash equivalents <span class="xn-money">$669</span> <span class="xn-money">$798</span></p>
<p> </p>
<p>Accounts receivable, net 2,557 2,566</p>
<p> </p>
<p>Inventories 2,104 2,033</p>
<p> </p>
<p>Total current assets 5,719 5,864</p>
<p> </p>
<p>Total assets 18,997 19,209</p>
<p> </p>
<p>Accounts payable 1,995 1,920</p>
<p> </p>
<p>Debt payable within one year 1,001 610</p>
<p> </p>
<p>Total current liabilities 5,256 4,923</p>
<p> </p>
<p>Long-term debt 4,387 4,792</p>
<p> </p>
<pre>
Redeemable preferred and common securities of
subsidiaries 1,052 1,052
</pre>
<p> </p>
<pre>
Stockholders' equity 5,678 5,690
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months
Ended March 31
--------------
Preliminary Cash Flow Data: 2010 2009
--------------------------- ---- ----
</pre>
<p> </p>
<p>Cash provided by operations <span class="xn-money">$464</span> <span class="xn-money">$692</span></p>
<p> </p>
<p> </p>
<p>Cash used for investing $(119) $(169)</p>
<p> </p>
<p> </p>
<p>Cash used for financing $(417) $(295)</p>
<p> </p>
<p> </p>
<p> Depreciation and amortization <span class="xn-money">$193</span> <span class="xn-money">$177</span></p>
<p> </p>
<p> </p>
<p> Capital spending <span class="xn-money">$184</span> <span class="xn-money">$211</span></p>
<p> </p>
<p> </p>
<p> Cash dividends paid <span class="xn-money">$250</span> <span class="xn-money">$240</span></p>
<p> </p>
<p> </p>
<pre>
Unaudited
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
PERIODS ENDED MARCH 31
Description of Business Segments
</pre>
<p>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 and income and expense not associated with the business segments.</p>
<p/>
<p>The principal sources of revenue in each of our global business segments are described below.</p>
<p/>
<p>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.</p>
<p/>
<p>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.</p>
<p/>
<p>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 <span class="xn-location">Jackson</span> brand names.</p>
<p/>
<p>The Health Care segment manufactures and markets disposable health care products such as surgical drapes and gowns, infection control products, face masks, exam gloves, respiratory products, pain management products and other disposable medical products. Products in this segment are sold under the Kimberly-Clark, Ballard, ON-Q and other brand names.</p>
<pre>
Unaudited
</pre>
<p> </p>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
PERIODS ENDED MARCH 31
(Millions of dollars)
</pre>
<p> </p>
<pre>
Three Months
Ended March 31
--------------
2010 2009 Change
---- ---- ------
NET SALES:
</pre>
<p> </p>
<pre>
Personal Care $2,137 $1,977 + 8.1%
Consumer Tissue 1,606 1,574 + 2.0%
K-C Professional & Other 730 651 + 12.1%
Health Care 367 298 + 23.2%
</pre>
<p> </p>
<p>Corporate & Other 12 13 N.M.</p>
<p> </p>
<pre>
Intersegment Sales (17) (20) N.M.
--- ---
</pre>
<p> </p>
<pre>
Consolidated $4,835 $4,493 + 7.6%
====== ======
</pre>
<p> </p>
<p>OPERATING PROFIT:</p>
<p> </p>
<pre>
Personal Care $472 $442 + 6.8%
Consumer Tissue 181 194 - 6.7%
K-C Professional & Other 107 80 + 33.8%
Health Care 57 48 + 18.8%
</pre>
<p> </p>
<p>Corporate & Other(a) (51) (59) - 13.6%</p>
<p> </p>
<pre>
Other income and (expense), net(a)(b) (101) (77) + 31.2%
---- ---
</pre>
<p> </p>
<pre>
Consolidated $665 $628 + 5.9%
==== ====
</pre>
<p> </p>
<pre>
(a) For the period ended March 31, 2010, Corporate & Other includes
a one-time $19 million charge and Other income and (expense), net
includes a one-time $79 million charge related to the adoption of
highly inflationary accounting in Venezuela.
(b) For the period ended March 31, 2010, Other income and (expense),
net includes $21 million of currency transaction losses, versus
currency transaction losses of $76 million in 2009.
</pre>
<p> </p>
<pre>
N.M. - Not meaningful
Unaudited
</pre>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
PERIODS ENDED MARCH 31
</pre>
<p> </p>
<p>PERCENTAGE CHANGE IN NET SALES VERSUS PRIOR YEAR</p>
<p> </p>
<p> </p>
<pre>
Three Months Ended March 31, 2010
---------------------------------
Organic Acquisition Total
Total Volume Volume(1) Volume
----- ------ --------- ------
</pre>
<p> </p>
<p>Consolidated 7.6 1 1 2</p>
<p> </p>
<p> Personal Care 8.1 3 - 3</p>
<p> </p>
<p> Consumer Tissue 2.0 (3) - (3)</p>
<p> </p>
<pre>
K-C Professional &
Other 12.1 1 3 4
</pre>
<p> </p>
<pre>
Health Care 23.2 8 12 20
</pre>
<p> </p>
<p> </p>
<p> </p>
<pre>
Three Months Ended March 31, 2010
---------------------------------
Net Mix/
Price Other(2) Currency
----- -------- --------
</pre>
<p> </p>
<p>Consolidated 1 - 5</p>
<p> </p>
<p> Personal Care 1 (1) 5</p>
<p> </p>
<p> Consumer Tissue - - 5</p>
<p> </p>
<pre>
K-C Professional &
Other 2 1 5
</pre>
<p> </p>
<p> Health Care - - 3</p>
<p> </p>
<p> </p>
<pre>
(1) Volume related to Jackson Safety and I-Flow Corporation acquisitions.
(2) Mix/Other includes rounding.
</pre>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
PERIODS ENDED MARCH 31
(Millions of dollars, except per share amounts)
NON-GAAP RECONCILIATION SCHEDULES
The tables below present the reconciliation of non-GAAP financial
measures to GAAP financial measures.
EARNINGS SUMMARY:
</pre>
<p> </p>
<pre>
Three Months Ended
March 31, 2010
--------------
Diluted
Income Earnings
(Expense) Per Share
--------- ---------
</pre>
<p> </p>
<p>Adjusted Earnings <span class="xn-money">$480</span> <span class="xn-money">$1.14</span></p>
<p> </p>
<pre>
Adjustments for the one-time charge
related to adoption of highly
inflationary (96) (.23)
accounting in Venezuela
</pre>
<p> </p>
<pre>
Rounding - .01
--- ---
</pre>
<p> </p>
<pre>
Net Income Attributable to Kimberly-
Clark Corporation $384 $.92
==== ====
</pre>
<p> </p>
<p>OPERATING PROFIT SUMMARY:</p>
<p> </p>
<pre>
Three
Months
------
Ended
March
31
------
2010
----
</pre>
<p> </p>
<p> </p>
<p>Adjusted Operating Profit <span class="xn-money">$763</span></p>
<p> </p>
<pre>
Adjustments for the one-time
charge related to adoption of
highly inflationary accounting
in Venezuela (98)
---
</pre>
<p> </p>
<pre>
Operating Profit $665
====
</pre>
<p> </p>
<pre>
EFFECTIVE INCOME TAX RATE RECONCILIATION: Adjustments for the one-
time charge related to adoption of highly inflationary accounting in
Venezuela:
</pre>
<p> </p>
<pre>
Three Months Ended
March 31, 2010
------------------
As Excluding
Reported Adjustments Adjustments
-------- ----------- -----------
</pre>
<p> </p>
<pre>
Income Before Income
Taxes and Equity
Interests $609 $(98) $707
</pre>
<p> </p>
<pre>
Provision for income
taxes 241 (2) 243
</pre>
<p> </p>
<pre>
Effective Income Tax
Rate 39.6% 34.4%
</pre>
<p> </p>
<pre>
KIMBERLY-CLARK CORPORATION
PERIODS ENDED MARCH 31
</pre>
<p> </p>
<pre>
OUTLOOK FOR 2010
Estimated Full-Year 2010 Diluted Earnings Per Share:
</pre>
<p> </p>
<p>Adjusted Earnings Per Share <span class="xn-money">$4.80</span> - <span class="xn-money">$5.00</span></p>
<p> </p>
<pre>
Adjustments for the one-time
charge related to adoption of
highly inflationary accounting
in Venezuela (.23) (.23)
---- ----
</pre>
<p> </p>
<pre>
Earnings Per Share - Diluted $4.57 - $4.77
===== =====
</pre>
<p> </p>
<p>Estimated Full-Year 2010 Effective Tax Rate:</p>
<p> </p>
<p>Adjusted Effective Tax Rate 29% - 31%</p>
<p> </p>
<pre>
Adjustments for the one-time
charge related to adoption of
highly inflationary accounting
in Venezuela 1% - 1%
--- ---
</pre>
<p> </p>
<pre>
Effective Tax Rate 30% - 32%
=== ===
For further information: Investor Relations, Paul Alexander, +1-972-281-1440, [email protected], or Media, Kay Jackson, +1-972-281-1486, [email protected], both of Kimberly-Clark Corporation Web Site: http://www.kimberly-clark.com
Share this article