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Kimberly-Clark Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed February 26, 2004
Period End
December 31, 2003
Security
KMB
In the record · 2016–202610-K1110-Q328-K111

KMB filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 111 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Leadership change8-K · Sep ’19Sep ’19
  3. Change in control8-K · Sep ’21Sep ’21
  4. Leadership change8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed February 26, 2004. Cited figures are marked; the original filing is the authoritative source.

Kimberly-Clark Corporation's 2003 Form 10-K reports net sales of $14.35 billiona, up from $13.57 billion in 2002, with net income of $1.69 billion ($3.33 diluted EPS) versus $1.67 billion ($3.22 diluted) a year earlier.

Operating profit declined to $2.41 billionb from $2.46 billion, reflecting intense competition and promotional spending, higher fiber, energy and distribution costs, and roughly $140 million of higher pension expense. Cash provided by operations reached a record $2.61 billion, and the company repurchased 10.4 million shares for $529 million while raising its dividend. Stockholders' equity rose to $6.77 billion, and total debt and preferred securities declined to $4.2 billion.

The company guided to 2004 net sales growth of 3 to 5 percent, cost savings of about $150 millionc, and diluted EPS of $3.55 to $3.65. It also announced it was evaluating a tax-free spin-off of its Neenah Paper and Technical Paper businesses and related pulp and timber assets, expected in the second half of 2004 subject to Board approval. Management noted that its credit ratings were downgraded by S&P to AA- in July 2003, and Moody's changed its outlook to negative.

A synthetic fuel partnership acquired in 2003 reduced the income tax provision by $131.3 milliond, lowering the effective tax rate to 23.8 percent from 29.0 percent in 2002. The benefit added $.05 per share to 2003 earnings, and the company expects the benefit to continue through 2007.

02—Key points

Key Highlights

  1. Net sales rose to $14.35 billion in 2003 from $13.57 billion in 2002, with the company citing favorable currency effects of about 4 percent and sales volume growth of more than 2 percent.
  2. Operating profit fell 2 percent to $2.41 billion, as higher promotional spending, fiber, distribution and energy costs, and about $140 million of higher pension expense offset about $190 million of cost savings.
  3. Net income increased to $1.69 billion ($3.33 per diluted share) from $1.67 billion ($3.22 per diluted share) in 2002, helped by a 23.8 percent effective tax rate versus 29.0 percent a year earlier.
  4. Cash provided by operations hit a record $2.61 billion, and the company repurchased 10.4 million shares for $529 million during 2003.
  5. The company announced it was evaluating a tax-free spin-off of Neenah Paper, Technical Paper and pulp and timber assets, expected in the second half of 2004 if approved by the Board.
  6. 2004 guidance calls for net sales growth of 3 to 5 percent, diluted EPS of $3.55 to $3.65, and about $150 million of cost reductions, with a dividend increase of nearly 18 percent.
  7. Competitive pressure in North American and European diaper and pants categories weighed on results, with U.S. diaper market share falling to 38 percent in 2003 from 40 percent in 2002.

03—Questions

Frequently Asked Questions

  1. Why did operating profit decline in 2003 despite higher sales?

    The filing attributes the 2 percent decline in operating profit to higher promotional spending, increased fiber, distribution and energy costs, about $140 million of higher pension expense, and a higher level of other expense. These factors more than offset about $190 million of cost savings, favorable currency effects and higher sales volumes.

  2. How did the synthetic fuel partnership affect results?

    The company acquired a 49.5 percent minority interest in a synthetic fuel partnership in April 2003. In 2003 it recorded $105.5 million of pretax losses as nonoperating expense, while the related tax credits and deductions reduced the income tax provision by $131.3 million. The net effect increased net income by $25.8 million, or $.05 per share.

  3. What is the proposed Pulp and Paper Spin-Off?

    On February 25, 2004, the company announced it was evaluating a tax-free spin-off of its Neenah Paper and Technical Paper businesses along with its pulp and timber assets in Pictou, Nova Scotia and Terrace Bay, Ontario. The transaction requires Board approval and, if approved, is expected to occur in the second half of 2004. Stand-alone net sales of these operations were approximately $650 million in 2003.

  4. What are the company's main customer and debt-related risks?

    Wal-Mart Stores, Inc. accounted for approximately 13 percent of 2003 net sales. Total debt and preferred securities was $4.2 billion at year-end 2003, down $.3 billion, and S&P lowered the long-term credit rating to AA- in July 2003 while Moody's changed its outlook to negative.

04—Continue

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