01—Abstract
Summary
Summary of the 10-K filed February 11, 2016. Cited figures are marked; the original filing is the authoritative source.
Kimberly-Clark Corporation's 2015 Form 10-K reports net sales of $18.59 billiona, down 5.7 percent from $19.72 billion in 2014, as changes in foreign currency exchange rates reduced net sales by 10 percent.
Organic net sales increased 5 percent, with volumes up 4 percent. Operating profit fell 36.0 percent to $1.61 billionb, and diluted earnings per share from continuing operations fell to $2.77 from $3.91. The decline was driven largely by a $1.36 billion pre-tax charge for pension settlements tied to the transfer of $2.5 billion of U.S. pension obligations to two insurers, along with a $108 million pre-tax charge from deconsolidating the Venezuelan business.
Excluding these and other adjusting items, adjusted operating profit rose 1 percent to $3.21 billion and adjusted diluted EPS rose to $5.76c from $5.51 in 2014. Cash provided by operations was $2.3 billion in 2015, down from $2.8 billion, reflecting higher pension contributions and increased operating working capital. The company repurchased 7.1 million shares for $800 million and paid $1.3 billion in dividends, and it raised its dividend 5 percent, its 43rd consecutive annual increase.
Total debt rose to $7.8 billiond at year-end from $7.0 billion, and stockholders' equity fell to $40 million from $999 million, largely due to the pension-related charges and share repurchases. For 2016, the company expects adjusted earnings per share between $5.95 and $6.15, with sales volume, net selling price and mix growth of 3 to 5 percent, currency headwinds to net sales of 5 to 6 percent, FORCE cost savings of at least $350 million, share repurchases of $600 million to $900 million, and capital spending of $950 million to $1,050 million. Management also plans to increase the quarterly dividend by mid-single digits effective April 2016, subject to Board approval.
02—Key points
Key Highlights
- Net sales of $18.59 billion decreased 5.7 percent from 2014, with currency reducing sales by 10 percent while organic net sales rose 5 percent.
- GAAP operating profit fell 36.0 percent to $1.61 billion, driven by a $1.36 billion pre-tax pension settlement charge; adjusted operating profit rose 1 percent to $3.21 billion.
- GAAP diluted EPS from continuing operations was $2.77 versus $3.91 in 2014; adjusted diluted EPS was $5.76 versus $5.51.
- Venezuelan operations were deconsolidated effective December 31, 2015, producing a $102 million after-tax charge, and will be excluded from results beginning in the first quarter of 2016.
- Cash provided by operations was $2.3 billion, versus $2.8 billion in 2014, while the company returned capital through $800 million of buybacks and $1.3 billion of dividends.
- Stockholders' equity fell to $40 million at year-end 2015 from $999 million, and total debt rose to $7.8 billion from $7.0 billion.
- 2016 guidance calls for adjusted EPS of $5.95 to $6.15 and share repurchases of $600 million to $900 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Kimberly-Clark kept $0.05.
- Revenue$18.59B100.0%
- Cost of revenue−$11.97B64.4%
- Gross profit$6.62B35.6%
- Operating costs−$5.01B27.0%
- Operating income$1.61B8.7%
- Interest, other & tax−$600.0M3.2%
- Net income$1.01B5.4%
Where FY2015 revenue went
$18.59B- Cost of revenue: $11.97B, 64% of revenue
- Other operating costs: $4.69B, 25% of revenue
- Net income: $1.01B, 5.4% of revenue
- R&D: $324.0M, 1.7% of revenue
- Interest, other & tax: $600.0M, 3.2% of revenue
Kept 5.4% as net incomeNet income $1.01B · 5.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 11, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $18.59B$19.72B | −5.7% |
| Cost of Revenue | $11.97B$13.04B | −8.2% |
| Gross Profit | $6.62B$6.68B | −0.9% |
| R&D Expenses | $324.00M$368.00M | −12.0% |
| Operating Income | $1.61B$2.52B | −36.0% |
| Interest Expense | $295.00M$284.00M | +3.9% |
| Net Income | $1.01B$1.53B | −33.6% |
| EPS (Basic) | $2.78$4.07 | −31.7% |
| EPS (Diluted) | $2.77$4.04 | −31.4% |
| Shares Outstanding (Basic) | 363.80M374.50M | −2.9% |
| Shares Outstanding (Diluted) | 366.30M377.40M | −2.9% |
05—Questions
Frequently Asked Questions
Why did reported operating profit fall so sharply in 2015?
Operating profit fell 36.0 percent to $1.61 billion, mainly because of $1.358 billion in pre-tax pension settlement charges recorded in other (income) and expense, net, after the U.S. pension plan transferred $2.5 billion of benefit obligations to two insurance companies. Charges related to Venezuelan operations of $153 million and a $63 million 2014 Organization Restructuring charge also contributed. Currency effects significantly reduced results as well.
How did the underlying business perform excluding one-time items?
Adjusted operating profit rose 1 percent to $3.21 billion, and adjusted diluted EPS rose to $5.76 from $5.51. The company cited organic sales growth, FORCE cost savings of $365 million and input cost deflation of $150 million, partly offset by translation effects of $360 million on adjusted operating profit.
What is the company's 2016 outlook?
Management expects adjusted EPS of $5.95 to $6.15 in 2016. Guidance assumes volume, net price and mix growth of 3 to 5 percent, net sales reduced by currency of 5 to 6 percent, FORCE savings of at least $350 million, an adjusted effective tax rate of 30.5 to 32.5 percent, capital spending of $950 million to $1,050 million, and share repurchases of $600 million to $900 million.
How does the company return cash to shareholders?
In 2015 the company paid $1.3 billion in dividends and repurchased 7.1 million shares for $800 million. It raised its quarterly dividend 5 percent, its 43rd consecutive annual increase, and plans to increase it again by mid-single digits effective April 2016, subject to Board approval.
What is the company's exposure to its largest customer and to emerging markets?
Net sales to Wal-Mart Stores, Inc. were approximately 14 percent of total net sales in 2015. More than half of net sales came from outside the U.S., and the company manufactures in 39 countries, with growth focused on China, Eastern Europe and Latin America. Developing and emerging market organic net sales grew 10 percent in 2015.
06—Continue