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Kimberly-Clark Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed February 23, 2006
Period End
December 31, 2005
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 23, 2006. Cited figures are marked; the original filing is the authoritative source.

Kimberly-Clark Corporation's 2005 results show net sales rising 5.4 percent to $15.90 billiona, while operating profit fell 7.8 percent to $2.31 billion and net income decreased 12.9 percent to $1.57 billion, with diluted EPS down 9.1 percent to $3.28 (the filing states $3.28 for 2005 versus $3.61 in 2004).

Management attributes the profit decline to cost inflation of about $400 millionb, competitive pricing pressure in North American and European diaper and pants categories, and $228.6 million of charges for the Competitive Improvement Initiatives. Cost savings of nearly $210 million and higher volumes did not fully offset these pressures. Developing and emerging markets were a bright spot, with consumer product sales growing almost 16 percent.

The Competitive Improvement Initiatives, launched in July 2005, are a multi-year program expected to be substantially completed by December 31, 2008. The company expects cumulative pretax charges of approximately $900 million to $1.1 billionc and annual pretax savings rising to $300-$350 million by 2009, with a planned net workforce reduction of about 6,000 employees. In January 2006 the company authorized two further phase projects, including a workforce reduction in Europe and the closure of two manufacturing facilities.

Capital returns remained significant: the company returned $2.3 billiond to shareholders through dividends and share repurchases, including $1.5 billion of buybacks in 2005. Cash provided by operations was $2.31 billion, down from $2.73 billion, mainly due to working capital investment and higher tax payments. Total debt and preferred securities rose to $4.6 billion, and the company's credit ratings were unchanged at Aa2 (Moody's) and AA- (S&P).

02—Key points

Key Highlights

  1. Net sales increased 5.4 percent to $15.90 billion, with volume gains of more than 3 percent and currency adding nearly 2 percent.
  2. Operating profit declined 7.8 percent to $2.31 billion, with operating margin falling to 14.5 percent from 16.6 percent.
  3. Net income fell 12.9 percent to $1.57 billion; diluted EPS decreased 9.1 percent to $3.28, aided by share repurchases that benefited EPS by $.14.
  4. Competitive Improvement Initiatives incurred $228.6 million of 2005 charges, with total expected cumulative pretax charges of $900 million to $1.1 billion through 2008.
  5. Developing and emerging market consumer product net sales grew almost 16 percent, while diaper and pants pricing pressure persisted in North America and Europe.
  6. Cash provided by operations was $2.31 billion, down from $2.73 billion in 2004; capital spending was $709.6 million.
  7. The company returned $2.3 billion to shareholders in 2005 through dividends and share repurchases, and dividends declared per share rose to $1.80 from $1.60.

03—Questions

Frequently Asked Questions

  1. Why did Kimberly-Clark's profits decline in 2005 despite higher sales?

    Net sales rose 5.4 percent, but operating profit fell 7.8 percent. The filing attributes this to about $400 million of cost inflation, higher marketing, research and general expenses, and $228.6 million of charges for the Competitive Improvement Initiatives, partially offset by gross cost savings of nearly $210 million.

  2. What are the Competitive Improvement Initiatives and what do they cost?

    They are a multi-year program launched in July 2005 to streamline manufacturing and administrative operations, primarily in North America and Europe. Cumulative charges are expected to be approximately $900 million to $1.1 billion pretax, with annual pretax savings of $300-$350 million by 2009 and a net workforce reduction of about 6,000 employees by the end of 2008.

  3. How strong is the company's balance sheet and liquidity position?

    Total debt and preferred securities were $4.6 billion at year-end 2005, compared with $4.2 billion a year earlier. The company's long-term debt is rated Aa2 by Moody's and AA- by S&P, with no rating changes in 2005. It held $1.5 billion of revolving credit facilities, all unused at December 31, 2005.

  4. How much did Kimberly-Clark return to shareholders?

    The company returned $2.3 billion through dividends and share repurchases in 2005. It repurchased approximately 24.3 million shares at a cost of about $1.5 billion, and dividends declared per share increased to $1.80 from $1.60 in 2004.

  5. Which regions and segments drove growth in 2005?

    Developing and emerging markets were the strongest growth area, with consumer product net sales up almost 16 percent. Consumer Tissue net sales rose 8.2 percent, led by North America, while Personal Care grew 5.2 percent. Business-to-Business sales declined 3.4 percent, largely because of the divested pulp operations.

04—Continue

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