Delaware
|
39-0394230
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
Large accelerated filer x
|
Accelerated filer ¨
|
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
|
Smaller reporting company ¨
|
Three Months Ended
|
|||||||
March 31
|
|||||||
(Millions of dollars, except per share amounts)
|
2010
|
2009
|
|||||
Net Sales
|
$
|
4,835
|
$
|
4,493
|
|||
Cost of products sold
|
3,188
|
3,039
|
|||||
Gross Profit
|
1,647
|
1,454
|
|||||
Marketing, research and general expenses
|
881
|
749
|
|||||
Other (income) and expense, net
|
101
|
77
|
|||||
Operating Profit
|
665
|
628
|
|||||
Interest income
|
5
|
8
|
|||||
Interest expense
|
(61
|
)
|
(73
|
)
|
|||
Income Before Income Taxes and Equity Interests
|
609
|
563
|
|||||
Provision for income taxes
|
(241
|
)
|
(164
|
)
|
|||
Income Before Equity Interests
|
368
|
399
|
|||||
Share of net income of equity companies
|
43
|
32
|
|||||
Net Income
|
411
|
431
|
|||||
Net income attributable to noncontrolling interests
|
(27
|
)
|
(24
|
)
|
|||
Net Income Attributable to Kimberly-Clark Corporation
|
$
|
384
|
$
|
407
|
|||
Per Share Basis:
|
|||||||
Net Income Attributable to Kimberly-Clark Corporation
|
|||||||
Basic
|
$
|
.92
|
$
|
.98
|
|||
Diluted
|
.92
|
.98
|
|||||
Cash Dividends Declared
|
$
|
.66
|
$
|
.60
|
March 31,
|
December 31,
|
|||||
(Millions of dollars)
|
2010
|
2009
|
||||
ASSETS
|
||||||
Current Assets
|
||||||
Cash and cash equivalents
|
$
|
669
|
$
|
798
|
||
Accounts receivable, net
|
2,557
|
2,566
|
||||
Inventories
|
2,104
|
2,033
|
||||
Other current assets
|
389
|
467
|
||||
Total Current Assets
|
5,719
|
5,864
|
||||
Property
|
16,942
|
16,934
|
||||
Less accumulated depreciation
|
8,984
|
8,901
|
||||
Net Property
|
7,958
|
8,033
|
||||
Investments in Equity Companies
|
398
|
355
|
||||
Goodwill
|
3,277
|
3,275
|
||||
Long-Term Notes Receivable
|
608
|
607
|
||||
Other Assets
|
1,037
|
1,075
|
||||
$
|
18,997
|
$
|
19,209
|
|||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||
Current Liabilities
|
||||||
Debt payable within one year
|
$
|
1,001
|
$
|
610
|
||
Accounts payable
|
1,995
|
1,920
|
||||
Accrued expenses
|
1,839
|
2,064
|
||||
Other current liabilities
|
421
|
329
|
||||
Total Current Liabilities
|
5,256
|
4,923
|
||||
Long-Term Debt
|
4,387
|
4,792
|
||||
Noncurrent Employee Benefits
|
1,807
|
1,989
|
||||
Long-Term Income Taxes Payable
|
201
|
168
|
||||
Deferred Income Taxes
|
409
|
377
|
||||
Other Liabilities
|
207
|
218
|
||||
Redeemable Preferred and Common Securities of Subsidiaries
|
1,052
|
1,052
|
||||
Stockholders’ Equity
|
||||||
Kimberly-Clark Corporation
|
5,396
|
5,406
|
||||
Noncontrolling Interests
|
282
|
284
|
||||
Total Stockholders’ Equity
|
5,678
|
5,690
|
||||
$
|
18,997
|
$
|
19,209
|
Three Months
|
|||||||
Ended March 31
|
|||||||
(Millions of dollars)
|
2010
|
2009
|
|||||
Operating Activities
|
|||||||
Net income
|
$
|
411
|
$
|
431
|
|||
Depreciation and amortization
|
193
|
177
|
|||||
Stock-based compensation
|
4
|
10
|
|||||
(Increase) decrease in operating working capital
|
(157
|
)
|
156
|
||||
Deferred income taxes
|
86
|
(46
|
)
|
||||
Net losses on asset dispositions
|
10
|
8
|
|||||
Equity companies’ earnings in excess of dividends paid
|
(41
|
)
|
(32
|
)
|
|||
Postretirement benefits
|
(149
|
)
|
(21
|
)
|
|||
Other
|
107
|
9
|
|||||
Cash Provided by Operations
|
464
|
692
|
|||||
Investing Activities
|
|||||||
Capital spending
|
(184
|
)
|
(211
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
-
|
(11
|
)
|
||||
Proceeds from sales of investments
|
10
|
5
|
|||||
Proceeds from dispositions of property
|
-
|
3
|
|||||
Net decrease in time deposits
|
61
|
57
|
|||||
Other
|
(6
|
)
|
(12
|
)
|
|||
Cash Used for Investing
|
(119
|
)
|
(169
|
)
|
|||
Financing Activities
|
|||||||
Cash dividends paid
|
(250
|
)
|
(240
|
)
|
|||
Net (decrease) increase in short-term debt
|
(10
|
)
|
245
|
||||
Proceeds from issuance of long-term debt
|
-
|
2
|
|||||
Repayments of long-term debt
|
(4
|
)
|
(10
|
)
|
|||
Cash paid on redeemable preferred securities of subsidiary
|
(13
|
)
|
(13
|
)
|
|||
Shares purchased from noncontrolling interests
|
-
|
(278
|
)
|
||||
Proceeds from exercise of stock options
|
21
|
16
|
|||||
Acquisitions of common stock for the treasury
|
(141
|
)
|
-
|
||||
Other
|
(20
|
)
|
(17
|
)
|
|||
Cash Used for Financing
|
(417
|
)
|
(295
|
)
|
|||
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
(57
|
)
|
-
|
||||
Increase in Cash and Cash Equivalents
|
(129
|
)
|
228
|
||||
Cash and Cash Equivalents, beginning of year
|
798
|
364
|
|||||
Cash and Cash Equivalents, end of period
|
$
|
669
|
$
|
592
|
Three Months
Ended March 31
|
||||||||
(Millions of dollars)
|
2010
|
2009
|
||||||
Net Income
|
$
|
411
|
$
|
431
|
||||
Other Comprehensive Income, Net of Tax:
|
||||||||
Unrealized currency translation adjustments
|
(26
|
)
|
(361
|
)
|
||||
Employee postretirement benefits
|
36
|
32
|
||||||
Other
|
2
|
(6
|
)
|
|||||
Total Other Comprehensive Income, Net of Tax
|
12
|
(335
|
)
|
|||||
Comprehensive Income
|
423
|
96
|
||||||
Comprehensive income attributable to noncontrolling interests
|
33
|
(9
|
)
|
|||||
Comprehensive Income Attributable to
Kimberly-Clark Corporation
|
$
|
390
|
$
|
105
|
Fair Value Measurements
|
|||||||||||||||
March 31
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
(Millions of dollars)
|
|||||||||||||||
Assets
|
|||||||||||||||
Company-owned life insurance (“COLI”)
|
$
|
44
|
$
|
-
|
$
|
44
|
$
|
-
|
|||||||
Available-for-sale securities
|
19
|
14
|
-
|
5
|
|||||||||||
Derivatives
|
52
|
-
|
52
|
-
|
|||||||||||
Total
|
$
|
115
|
$
|
14
|
$
|
96
|
$
|
5
|
|||||||
Liabilities
|
|||||||||||||||
Derivatives
|
$
|
52
|
$
|
-
|
$
|
52
|
$
|
-
|
Carrying
|
Estimated
|
|||||||
(Millions of dollars)
|
Amount
|
Fair Value
|
||||||
Assets
|
||||||||
Cash and cash equivalents(a)
|
$
|
669
|
$
|
669
|
||||
Time deposits (included in other current assets)(b)
|
133
|
133
|
||||||
Long-term notes receivable(c)
|
608
|
593
|
||||||
Other note receivable (included in accounts receivable and other assets)
|
21
|
21
|
||||||
Liabilities and redeemable preferred and common securities of subsidiaries
|
||||||||
Short-term debt(d)
|
100
|
100
|
||||||
Monetization loan(c)
|
397
|
398
|
||||||
Long-term debt(e)
|
4,891
|
5,365
|
||||||
Redeemable preferred and common securities of subsidiaries(f)
|
1,052
|
1,146
|
(a)
|
Cash equivalents are comprised of certificates of deposit, time deposits and other interest-bearing investments with original maturity dates of 90 days or less, all of which are recorded at cost, which approximates fair value.
|
(b)
|
Time deposits are comprised of deposits with original maturities of more than 90 days but less than one year, all of which are recorded at cost, which approximates fair value.
|
(c)
|
Long-term notes receivable represent held-to-maturity securities, which arose from the sale of nonstrategic timberlands and related assets. The notes are backed by irrevocable standby letters of credit issued by money center banks. A consolidated VIE has an outstanding long-term monetization loan secured by the related note held by this VIE (indicated by Note 1 and Loan 1 below). The following summarizes the terms of the notes and the monetization loan as of March 31, 2010 (millions of dollars):
|
Description
|
Face
Value
|
Carrying
Amount
|
Maturity
|
Interest Rate(1)
|
|||||
Note 1
|
$ 397
|
$ 392
|
09/30/2014
|
LIBOR
|
|||||
Note 2
|
220
|
216
|
07/07/2011
|
LIBOR minus 12.5 bps
|
|||||
Loan 1
|
397
|
397
|
01/31/2011
|
LIBOR plus 127 bps
|
(d)
|
Short-term debt issued by non-U.S. subsidiaries is recorded at cost, which approximates fair value.
|
(e)
|
Long-term debt includes long-term debt instruments and the portion payable within the next twelve months ($504 million). Fair values were estimated based on quoted prices for financial instruments for which all significant inputs were observable, either directly or indirectly.
|
(f)
|
The redeemable preferred securities are not traded in active markets. Accordingly, their fair values were calculated using a pricing model that compares the stated spread to the fair value spread to determine the price at which each of the financial instruments should trade. The model used the following inputs to calculate fair values: face value, current benchmark rate, fair value spread, stated spread, maturity date and interest payment dates. The fair value and the carrying amount of the redeemable common securities of $41 million were based on an independent third-party appraisal, adjusted for current market conditions.
|
Millions of dollars
|
||||
Cost of products sold
|
$
|
19
|
||
Other (income) and expense, net
|
79
|
|||
Provision for income taxes
|
(2
|
)
|
||
Net charge
|
$
|
96
|
March 31, 2010
|
December 31, 2009
|
|||||||||||||||||||||||
(Millions of dollars)
|
LIFO
|
Non-
LIFO
|
Total
|
LIFO
|
Non-
LIFO
|
Total
|
||||||||||||||||||
At the lower of cost determined on the
|
||||||||||||||||||||||||
FIFO or weighted-average cost methods
|
||||||||||||||||||||||||
or market:
|
||||||||||||||||||||||||
Raw materials
|
$
|
139
|
$
|
300
|
$
|
439
|
$
|
137
|
$
|
282
|
$
|
419
|
||||||||||||
Work in process
|
172
|
96
|
268
|
177
|
111
|
288
|
||||||||||||||||||
Finished goods
|
661
|
681
|
1,342
|
573
|
685
|
1,258
|
||||||||||||||||||
Supplies and other
|
-
|
278
|
278
|
-
|
277
|
277
|
||||||||||||||||||
972
|
1,355
|
2,327
|
887
|
1,355
|
2,242
|
|||||||||||||||||||
Excess of FIFO or weighted-average
|
||||||||||||||||||||||||
cost over LIFO cost
|
(223
|
)
|
-
|
(223
|
)
|
(209
|
)
|
-
|
(209
|
)
|
||||||||||||||
Total
|
$
|
749
|
$
|
1,355
|
$
|
2,104
|
$
|
678
|
$
|
1,355
|
$
|
2,033
|
Defined
|
Other Postretirement
|
|||||||||||
Benefit Plans
|
Benefit Plans
|
|||||||||||
Three Months Ended March 31
|
||||||||||||
(Millions of dollars)
|
2010
|
2009
|
2010
|
2009
|
||||||||
Service cost
|
$
|
14
|
$
|
16
|
$
|
4
|
$
|
3
|
||||
Interest cost
|
77
|
77
|
11
|
13
|
||||||||
Expected return on plan assets
|
(84
|
)
|
(65
|
)
|
-
|
-
|
||||||
Recognized net actuarial loss
|
25
|
43
|
-
|
-
|
||||||||
Other
|
3
|
1
|
1
|
1
|
||||||||
Net periodic benefit cost
|
$
|
35
|
$
|
72
|
$
|
16
|
$
|
17
|
Average Common Shares
Outstanding
|
|||||
Three Months
|
|||||
Ended March 31
|
|||||
(Millions of shares)
|
2010
|
2009
|
|||
Average shares outstanding
|
416.2
|
413.7
|
|||
Participating securities
|
1.4
|
1.9
|
|||
Basic
|
417.6
|
415.6
|
|||
Dilutive effect of stock options
|
.9
|
.1
|
|||
Dilutive effect of restricted share and restricted share unit awards
|
.8
|
.2
|
|||
Diluted
|
419.3
|
415.9
|
Stockholders’ Equity
Attributable to
|
||||||||||||||||
(Millions of dollars)
|
Comprehensive
Income
|
The
Corporation
|
Noncontrolling
Interests
|
Redeemable
Securities of
Subsidiaries
|
||||||||||||
Balance at December 31, 2009
|
$
|
5,406
|
$
|
284
|
$
|
1,052
|
||||||||||
Comprehensive Income:
|
||||||||||||||||
Net income
|
$
|
411
|
384
|
13
|
14
|
|||||||||||
Other comprehensive income,
net of tax:
|
||||||||||||||||
Unrealized translation
|
(26
|
)
|
(33
|
)
|
6
|
1
|
||||||||||
Employee postretirement
benefits
|
36
|
37
|
(1
|
)
|
-
|
|||||||||||
Other
|
2
|
2
|
-
|
-
|
||||||||||||
Total Comprehensive Income
|
$
|
423
|
||||||||||||||
Stock-based awards exercised or vested
|
19
|
-
|
-
|
|||||||||||||
Income tax benefits on stock-based
compensation
|
1
|
-
|
-
|
|||||||||||||
Shares repurchased
|
(150
|
)
|
-
|
-
|
||||||||||||
Recognition of stock-based compensation
|
4
|
-
|
-
|
|||||||||||||
Dividends declared
|
(275
|
)
|
(20
|
)
|
-
|
|||||||||||
Other
|
1
|
-
|
(2
|
)
|
||||||||||||
Return on redeemable preferred
securities and noncontrolling interests
|
-
|
-
|
(13
|
)
|
||||||||||||
Balance at March 31, 2010
|
$
|
5,396
|
$
|
282
|
$
|
1,052
|
Stockholders’ Equity
Attributable to
|
||||||||||||||||
(Millions of dollars)
|
Comprehensive
Income
|
The
Corporation
|
Noncontrolling
Interests
|
Redeemable
Securities of
Subsidiaries
|
||||||||||||
Balance at December 31, 2008
|
$
|
3,878
|
$
|
383
|
$
|
1,032
|
||||||||||
Comprehensive Income:
|
||||||||||||||||
Net income
|
$
|
431
|
407
|
10
|
14
|
|||||||||||
Other Comprehensive income,
net of tax:
|
||||||||||||||||
Unrealized translation
|
(361
|
)
|
(330
|
)
|
(31
|
)
|
-
|
|||||||||
Employee postretirement
benefits
|
32
|
34
|
(2
|
)
|
-
|
|||||||||||
Other
|
(6
|
)
|
(6
|
)
|
-
|
-
|
||||||||||
Total Comprehensive Income
|
$
|
96
|
||||||||||||||
Stock-based awards exercised or vested
|
14
|
-
|
- | |||||||||||||
Recognition of stock-based compensation
|
10
|
-
|
-
|
|||||||||||||
Dividends declared
|
(248
|
)
|
(14
|
)
|
-
|
|||||||||||
Additional investment in subsidiary and other
|
(184
|
)
|
(108
|
)
|
13
|
|||||||||||
Return on redeemable preferred securities
|
-
|
-
|
(13
|
)
|
||||||||||||
Balance at March 31, 2009
|
$
|
3,575
|
$
|
238
|
$
|
1,046
|
Three Months
|
||||
Ended March 31
|
||||
2009
|
||||
Net Income attributable to Kimberly-Clark Corporation
|
$
|
407
|
||
Decrease in Kimberly-Clark Corporation’s additional paid-in capital for purchase of remaining shares in its Andean region subsidiary(a)
|
(133
|
)
|
||
Change from net income attributable to Kimberly-Clark Corporation and transfers to noncontrolling interests
|
$
|
274
|
||
(a)
|
During the first quarter of 2009, the Corporation acquired the remaining 31 percent interest in its Andean region subsidiary, Colombiana Kimberly Colpapel S.A., for $289 million. The acquisition was recorded as an equity transaction that reduced noncontrolling interests, accumulated other comprehensive income (“AOCI”) and additional paid-in capital classified in stockholders’ equity by $278 million and increased investments in equity companies by $11 million.
|
Assets
|
Liabilities
|
|||||||||||||||
(Millions of dollars)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Foreign currency exchange risk
|
$
|
20
|
$
|
55
|
$
|
35
|
$
|
38
|
||||||||
Interest rate risk
|
32
|
10
|
6
|
5
|
||||||||||||
Commodity price risk
|
-
|
-
|
11
|
29
|
||||||||||||
Total
|
$
|
52
|
$
|
65
|
$
|
52
|
$
|
72
|
Effect of Derivative Instruments on the Consolidated Income Statement
for the three months ended March 31, 2010 and 2009 (Millions of dollars)
|
||||||||||
Foreign exchange contracts
|
Income Statement Classification
|
Gain or (Loss)
Recognized in Income
|
||||||||
2010
|
2009
|
|||||||||
Fair Value Hedges
|
Other income and (expense), net
|
$
|
(8
|
)
|
$
|
(15
|
)
|
|||
Undesignated Hedging Instruments(a)
|
Other income and (expense), net
|
$
|
(19
|
)
|
$
|
(76
|
)
|
(a)
|
The majority of the gains and (losses) on these instruments arise from derivatives entered into with third parties to manage foreign currency exchange exposure on the remeasurement of non-U.S. dollar denominated monetary assets and liabilities. Consequently, the effect on earnings from the use of these undesignated derivatives is substantially neutralized by the recorded transactional gains and losses.
|
(Millions of dollars)
|
Amount of Gain or
(Loss) Recognized
in OCI
|
Income Statement Classification of Gain or (Loss) Reclassified from AOCI
|
Gain or (Loss) Reclassified from AOCI into Income
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||||
Cash Flow Hedges
|
||||||||||||||||||
Interest rate contracts
|
$
|
(7
|
)
|
$
|
7
|
Interest expense
|
$
|
1
|
$
|
1
|
||||||||
Foreign exchange
contracts
|
5
|
18
|
Cost of products sold
|
(11
|
)
|
18
|
||||||||||||
Commodity contracts
|
(10
|
)
|
(22
|
)
|
Cost of products sold
|
(3
|
)
|
(12
|
)
|
|||||||||
Total
|
$
|
(12
|
)
|
$
|
3
|
$
|
(13
|
)
|
$
|
7
|
||||||||
Net Investment Hedges
|
||||||||||||||||||
Foreign exchange
contracts
|
$
|
(4
|
)
|
$
|
(8
|
)
|
$
|
-
|
$
|
-
|
Fair Values of Derivative Instruments
|
|||||||||||||
Asset Derivatives at March 31 | |||||||||||||
(Millions of dollars)
|
2010 |
2009
|
|||||||||||
Balance
|
Balance
|
||||||||||||
Sheet
|
Fair
|
Sheet
|
Fair
|
||||||||||
Location
|
Value
|
Location
|
Value
|
||||||||||
Derivatives designated as hedging
instruments:
|
|||||||||||||
Interest rate contracts
|
Other current
assets
|
$
|
24
|
Other current
assets
|
$
|
-
|
|||||||
Interest rate contracts
|
Other assets
|
8
|
Other assets
|
10
|
|||||||||
Foreign exchange contracts
|
Other current assets
|
11
|
Other current assets
|
25
|
|||||||||
Total
|
$
|
43
|
$
|
35
|
|||||||||
|
|||||||||||||
Undesignated derivatives:
|
|||||||||||||
|
|||||||||||||
Foreign exchange contracts
|
Other current assets
|
$
|
9
|
Other current assets
|
$
|
30
|
|||||||
|
|||||||||||||
Total asset derivatives
|
$
|
52
|
$
|
65
|
Fair Values of Derivative Instruments
|
|||||||||||
Liability Derivatives at March 31
|
|||||||||||
(Millions of dollars)
|
2010
|
2009
|
|||||||||
Balance
|
Balance
|
||||||||||
Sheet
|
Fair
|
Sheet
|
Fair
|
||||||||
Location
|
Value
|
Location
|
Value
|
||||||||
Derivatives designated as hedging
instruments:
|
|||||||||||
|
|||||||||||
Interest rate contracts
|
Accrued expenses
|
$
|
-
|
Accrued expenses
|
$
|
5
|
|||||
Foreign exchange contracts
|
Accrued expenses
|
18
|
Accrued expenses
|
13
|
|||||||
Commodity contracts
|
Accrued expenses
|
10
|
Accrued expenses
|
26
|
|||||||
Commodity contracts
|
Other liabilities
|
1
|
Other liabilities
|
3
|
|||||||
Total
|
$
|
29
|
$
|
47
|
|||||||
Undesignated Derivatives:
|
|||||||||||
|
|||||||||||
Foreign exchange contracts and other
|
Accrued expenses
|
$
|
23
|
Accrued expenses
|
$
|
25
|
|||||
Total liability derivatives
|
$
|
52
|
$
|
72
|
·
|
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 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.
|
Three Months
|
|||||||
Ended March 31
|
|||||||
(Millions of dollars)
|
2010
|
2009
|
|||||
NET SALES:
|
|||||||
Personal Care
|
$
|
2,137
|
$
|
1,977
|
|||
Consumer Tissue
|
1,606
|
1,574
|
|||||
K-C Professional & Other
|
730
|
651
|
|||||
Health Care
|
367
|
298
|
|||||
Corporate & Other
|
12
|
13
|
|||||
Intersegment sales
|
(17
|
)
|
(20
|
)
|
|||
Consolidated
|
$
|
4,835
|
$
|
4,493
|
Three Months
|
|||||||
Ended March 31
|
|||||||
(Millions of dollars)
|
2010
|
2009
|
|||||
OPERATING PROFIT (reconciled to income before
|
|||||||
income taxes):
|
|||||||
Personal Care
|
$
|
472
|
$
|
442
|
|||
Consumer Tissue
|
181
|
194
|
|||||
K-C Professional & Other
|
107
|
80
|
|||||
Health Care
|
57
|
48
|
|||||
Other income and (expense), net(a)
|
(101
|
)
|
(77
|
)
|
|||
Corporate & Other(b)
|
(51
|
)
|
(59
|
)
|
|||
Total Operating Profit
|
665
|
628
|
|||||
Interest income
|
5
|
8
|
|||||
Interest expense
|
(61
|
)
|
(73
|
)
|
|||
Income Before Income Taxes
|
$
|
609
|
$
|
563
|
(a)
|
Other income and (expense), net included a $79 million charge for the adoption of highly inflationary accounting in Venezuela effective January 1, 2010. See additional information in Note 3 to the Consolidated Financial Statements. In addition, foreign currency transaction losses totaled $21 million in the first quarter of 2010 and $76 million in the prior year.
|
(b)
|
Included in Corporate & Other in 2010 is a $19 million charge related to the adoption of highly inflationary accounting in Venezuela. See additional information in Note 3 to the Consolidated Financial Statements. The charges related to the business segments are as follows:
|
Millions of Dollars | ||||
Personal Care
|
$
|
11
|
||
Consumer Tissue
|
6
|
|||
K-C Professional & Other
|
2
|
|||
Total
|
$
|
19
|
·
|
Overview of First Quarter 2010 Results
|
·
|
Results of Operations and Related Information
|
·
|
Liquidity and Capital Resources
|
·
|
New Accounting Standards
|
·
|
Environmental Matters
|
·
|
Business Outlook
|
·
|
Net sales increased 7.6 percent.
|
·
|
Operating profit increased 5.9 percent and net income attributable to Kimberly-Clark Corporation decreased 5.7 percent.
|
·
|
Cash provided by operations was $464 million, a decrease of 33 percent from last year.
|
·
|
An after tax charge of $96 million was recorded in first quarter 2010 related to the January 1, 2010 adoption of highly inflationary accounting in Venezuela.
|
·
|
The effective tax rate was 39.6 percent compared to 29.1 percent in the prior year.
|
Net Sales
|
2010
|
2009
|
||||
Personal Care
|
$
|
2,137
|
$
|
1,977
|
||
Consumer Tissue
|
1,606
|
1,574
|
||||
K-C Professional & Other
|
730
|
651
|
||||
Health Care
|
367
|
298
|
||||
Corporate & Other
|
12
|
13
|
||||
Intersegment sales
|
(17
|
)
|
(20
|
)
|
||
Consolidated
|
$
|
4,835
|
$
|
4,493
|
Percent Change in Net Sales Versus Prior Year
|
|||||||||||||||
Changes Due To
|
|||||||||||||||
Total
|
Volume
|
Net
|
Mix/
|
||||||||||||
Change
|
Growth
|
Price
|
Currency
|
Other
|
|||||||||||
Consolidated
|
7.6
|
2
|
1
|
5
|
-
|
||||||||||
Personal Care
|
8.1
|
3
|
1
|
5
|
(1
|
)
|
|||||||||
Consumer Tissue
|
2.0
|
(3
|
)
|
-
|
5
|
-
|
|||||||||
K-C Professional & Other
|
12.1
|
4
|
2
|
5
|
1
|
||||||||||
Health Care
|
23.2
|
20
|
-
|
3
|
-
|
·
|
Personal care net sales in North America 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 percent 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 Corporation’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, in part due to the previously mentioned timing of promotional activities.
|
|
In Europe, personal care net 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 Corporation’s child care brands.
|
|
In K-C’s international operations in Asia, Latin America, the Middle East, Eastern Europe and Africa, personal care net 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 China, Turkey, South Asia and Latin America.
|
·
|
In North America, 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 percent 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.
|
|
In Europe, consumer tissue net 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.
|
|
In K-C’s international operations in Asia, Latin America, the Middle East, Eastern Europe and Africa, consumer tissue net 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.
|
·
|
Net 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 Jackson Products, Inc. (“Jackson”) added 3 percent 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 Corporation’s continued focus on increasing net realized revenue. Organic sales volumes advanced 1 percent.
|
|
In North America, KCP net sales increased 12 percent, including an approximate 6 percent benefit from Jackson. Meanwhile, net selling prices rose 3 percent, organic sales volumes were up about 2 percent and changes in currency rates added 1 percent to sales. In Europe, KCP’s sales rose 9 percent in the first quarter, including favorable currency effects of 9 percent and a benefit from Jackson of more than 1 percent. Organic sales volumes were up about 1 percent, while net selling prices fell 2 percent.
|
|
In K-C’s international operations in Asia, Latin America, the Middle East, Eastern Europe and Africa, KCP’s net 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.
|
·
|
Net 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 (“I-Flow”) and an 8 percent increase in organic sales volumes. In addition, favorable currency exchange rates added 3 percent of sales growth in the quarter. The organic volume growth was highlighted by double-digit gains in medical devices and in exam gloves. In addition, increased global demand for face masks as a result of the H1N1 flu virus was responsible for nearly 4 percent of organic volume growth in the quarter.
|
Net Sales
|
2010
|
2009
|
||||
North America
|
$
|
2,647
|
$
|
2,539
|
||
Outside North America
|
2,364
|
2,105
|
||||
Intergeographic sales
|
(176
|
)
|
(151
|
)
|
||
Consolidated
|
$
|
4,835
|
$
|
4,493
|
Commentary:
|
·
|
Net sales in North America increased 4 percent compared with the prior year due to higher net selling prices and increases in sales volumes.
|
·
|
Net sales outside North America increased 12 percent, particularly in Asia and Europe, due to higher volumes and favorable currency effects partially offset by lower net selling prices.
|
Operating Profit
|
2010
|
2009
|
||||
Personal Care
|
$
|
472
|
$
|
442
|
||
Consumer Tissue
|
181
|
194
|
||||
K-C Professional & Other
|
107
|
80
|
||||
Health Care
|
57
|
48
|
||||
Other income and (expense), net(a)
|
(101
|
)
|
(77
|
)
|
||
Corporate & Other(b)
|
(51
|
)
|
(59
|
)
|
||
Consolidated
|
$
|
665
|
$
|
628
|
(a)
|
Other income and (expense), net included a $79 million charge for the adoption of highly inflationary accounting in Venezuela effective January 1, 2010. See additional information in Note 3 to the Consolidated Financial Statements. In addition, foreign currency transaction losses totaled $21 million in the first quarter of 2010 and $76 million in the prior year.
|
(b)
|
Included in Corporate & Other in 2010 is a $19 million charge related to the adoption of highly inflationary accounting in Venezuela. See additional information in Notes 3 and 9 to the Consolidated Financial Statements.
|
Percentage Change in Operating Profit Versus Prior Year
|
||||||||||||||||||||||||||
Changes Due To
|
||||||||||||||||||||||||||
Total
|
Net
|
Input
|
||||||||||||||||||||||||
Change
|
Volume
|
Price
|
Costs(a)
|
Currency
|
Other(b)
|
|||||||||||||||||||||
Consolidated
|
5.9
|
5
|
6
|
(11
|
)
|
11
|
(5
|
)
|
||||||||||||||||||
Personal Care
|
6.8
|
2
|
3
|
(5
|
)
|
2
|
5
|
|||||||||||||||||||
Consumer Tissue
|
(6.7
|
)
|
(6
|
)
|
3
|
(12
|
)
|
-
|
8
|
|||||||||||||||||
K-C Professional & Other
|
33.8
|
5
|
19
|
(23
|
)
|
7
|
26
|
|||||||||||||||||||
Health Care
|
18.8
|
64
|
-
|
(13
|
)
|
5
|
(37
|
)
|
(b) Includes cost savings. Consolidated also includes the charge related to the adoption of highly inflationary accounting in Venezuela.
|
·
|
Personal care segment operating profit increased 6.8 percent as the benefits from cost savings, higher net selling prices, sales volume increases and production efficiencies were tempered by higher input costs and increased marketing, research and general expenses. In North America, operating profit increased primarily due to cost savings, production efficiencies, higher net selling prices and favorable currency effects, partially offset by higher input costs and increases in marketing, research and general expense. In Europe, operating profit increased due to cost savings partially offset by lower net selling prices. Operating profit in the Corporation’s operations in Asia, Latin America, the Middle East, Eastern Europe and Africa decreased as the benefits from higher sales volumes were more than offset by increases in marketing, research and general expenses.
|
·
|
Consumer tissue segment operating profit decreased 6.7 percent as higher input costs, lower sales volumes and increased strategic marketing expense were tempered by cost savings and production efficiencies. In North America, operating profit increased due to higher net selling prices and production efficiencies, partially offset by lower sales volumes and higher input costs. In Europe, operating profit decreased as cost savings were more than offset by lower selling prices. Operating profit in the Corporation’s operations in Asia, Latin America, the Middle East, Eastern Europe and Africa decreased due to higher selling and general expenses and unfavorable currency effects, partially offset by increased sales volumes.
|
·
|
Operating profit for K-C Professional & Other products increased 33.8 percent due to cost savings and higher net selling prices, partially offset by higher input costs.
|
·
|
Health care segment operating profit increased 18.8 percent due to increased sales volumes and cost savings, partially offset by increased selling and general expenses.
|
Operating Profit
|
2010
|
2009
|
||||
North America
|
$
|
562
|
$
|
505
|
||
Outside North America
|
255
|
259
|
||||
Other income and (expense), net (a)
|
(101
|
)
|
(77
|
)
|
||
Corporate & Other(b)
|
(51
|
)
|
(59
|
)
|
||
Consolidated
|
$
|
665
|
$
|
628
|
(a)
|
Other income and (expense), net included a $79 million charge for t |