01—Abstract
Summary
Summary of the 10-K filed February 23, 2011. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation's 2010 Form 10-K reports net sales of $19.75 billiona, up from $19.12 billion in 2009, with net income attributable to Kimberly-Clark of $1.84 billion, down from $1.88 billion, and diluted EPS of $4.45 versus $4.52.
Operating profit was $2.77 billionb, compared with $2.83 billion in 2009. The company cites inflation in key input costs (about $790 million), higher marketing spending, and a $98 million pretax charge from adopting highly inflationary accounting for its Venezuelan subsidiary, partially offset by cost savings of $370 million. Cash provided by operations fell to $2.74 billion from $3.48 billion, and capital spending was $964 million.
The filing discloses a pulp and tissue restructuring plan initiated January 21, 2011, to exit remaining integrated pulp operations and streamline or close 5 to 6 manufacturing facilities by the end of 2012. The company expects cumulative pretax charges of $400 million to $600 millionc, and expects annual net sales to decline by $250 million to $300 million by 2013 while operating profit rises by at least $75 million. Management also expects 2011 share repurchases of $1.5 billion and has increased its regular quarterly dividend for 2011.
Total long-term debt was $5.39 billiond at year-end, and total debt and redeemable securities were $6.5 billion. Key risks cited include raw material and energy cost inflation (particularly pulp and petroleum-based materials), intense competition from private label and low-cost producers, economic weakness, and dependence on large retailers. Wal-Mart Stores accounted for approximately 13 percent of net sales in 2010.
02—Key points
Key Highlights
- Net sales rose to $19.75 billion in 2010 from $19.12 billion in 2009, driven by higher volumes, net selling prices and product mix.
- Net income attributable to Kimberly-Clark declined to $1.84 billion from $1.88 billion; diluted EPS was $4.45 versus $4.52.
- Operating profit fell to $2.77 billion from $2.83 billion, as inflation in key input costs of about $790 million and higher marketing spending offset cost savings of $370 million.
- A $96 million after-tax charge resulted from adopting highly inflationary accounting for the Venezuelan subsidiary, and net investment in K-C Venezuela was $175 million at year-end.
- A pulp and tissue restructuring plan launched January 21, 2011 is expected to cost $400 million to $600 million pretax through 2012 and reduce annual net sales by $250 million to $300 million by 2013, while raising operating profit by at least $75 million.
- Cash provided by operations decreased to $2.74 billion from $3.48 billion, and the company repurchased about $800 million of stock in 2010, with plans for $1.5 billion of repurchases in 2011.
- Wal-Mart Stores accounted for approximately 13 percent of net sales in both 2010 and 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Kimberly-Clark kept $0.09.
- Revenue$19.75B100.0%
- Cost of revenue−$13.20B66.8%
- Gross profit$6.55B33.2%
- Operating costs−$3.78B19.1%
- Operating income$2.77B14.0%
- Interest, other & tax−$930.0M4.7%
- Net income$1.84B9.3%
Where FY2010 revenue went
$19.75B- Cost of revenue: $13.20B, 67% of revenue
- Other operating costs: $3.46B, 18% of revenue
- Net income: $1.84B, 9.3% of revenue
- R&D: $317.0M, 1.6% of revenue
- Interest, other & tax: $930.0M, 4.7% of revenue
Kept 9.3% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 23, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $19.75B$19.11B | +3.3% |
| Cost of Revenue | $13.20B$12.70B | +3.9% |
| Gross Profit | $6.55B$6.42B | +2.0% |
| R&D Expenses | $317.00M$301.00M | +5.3% |
| Operating Income | $2.77B$2.83B | −1.8% |
| Interest Expense | $243.00M$275.00M | −11.6% |
| Net Income | $1.84B$1.88B | −2.2% |
| EPS (Basic) | $4.47$4.53 | −1.3% |
| EPS (Diluted) | $4.45$4.52 | −1.5% |
| Shares Outstanding (Basic) | 412.40M416.10M | −0.9% |
| Shares Outstanding (Diluted) | 414.40M416.80M | −0.6% |
05—Questions
Frequently Asked Questions
What drove the change in Kimberly-Clark's 2010 sales and profit?
Net sales increased 3.3 percent to $19.75 billion, reflecting higher sales volumes, net selling prices and improved product mix. Operating profit decreased 1.8 percent to $2.77 billion because inflation in key input costs, increased marketing, research and general expenses, and the Venezuela highly inflationary accounting charge more than offset sales growth and cost savings of $370 million.
What is the pulp and tissue restructuring plan?
Initiated January 21, 2011, the plan exits the company's remaining integrated pulp manufacturing operations and streamlines, sells or closes 5 to 6 manufacturing facilities worldwide by the end of 2012. It includes exiting certain non-strategic, primarily non-branded products and shifting some production to lower-cost facilities. Cumulative pretax charges are expected to be $400 million to $600 million, most of which is incremental depreciation.
How much is Kimberly-Clark returning to shareholders?
The company repurchased about 12.8 million shares, at a cost of about $800 million, during 2010. For 2011 it expects to repurchase $1.5 billion of common stock, subject to market conditions. Dividends paid in 2010 totaled $1.07 billion, and the company has increased its regular quarterly dividend for 2011.
What are the main risks highlighted in the filing?
The filing highlights significant increases in raw material, energy and transportation costs, particularly pulp and petroleum-based materials, which are not currently hedged with derivatives for pulp. It also cites intense pricing pressure from private label and low-cost competitors, economic weakness, dependence on large retailers, foreign market risks in 39 manufacturing countries, and ongoing currency restrictions in Venezuela.
06—Continue