Kimberly-Clark 2007 Annual Report Download - page 21

PART I
ITEM 1. BUSINESS
Kimberly-Clark Corporation was incorporated in Delaware in 1928. The Corporation is a global health and
hygiene company focused on product innovation and building its personal care, consumer tissue, K-C
Professional & Other and health care operations. The Corporation is principally engaged in the manufacturing
and marketing of a wide range of health and hygiene products around the world. Most of these products are made
from natural or synthetic fibers using advanced technologies in fibers, nonwovens and absorbency. As used in
Items 1, 1A, 2, 3, 6, 7, 7A, 8 and 9A of this Form 10-K, the term “Corporation” refers to Kimberly-Clark
Corporation and its consolidated subsidiaries. In the remainder of this Form 10-K, the terms “Kimberly-Clark” or
“Corporation” refer only to Kimberly-Clark Corporation. For financial information by business segment and
geographic area, and information about principal products and markets of the Corporation, reference is made to
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and to
Item 8, Note 17 to the Consolidated Financial Statements.
Recent Developments
On July 23, 2007, the Corporation entered into an accelerated share repurchase agreement (the “ASR
Agreement”) through which it purchased approximately 29.6 million shares of its common stock from Bank of
America, N.A., at an initial purchase price of $67.48 per share, or an aggregate of $2 billion. On July 30, 2007,
the Corporation issued $2.1 billion of long-term notes and used a portion of the net proceeds from the sale of
these notes to repay a short-term revolving credit agreement, under which the Corporation borrowed $2 billion on
July 27, 2007 to fund the settlement of the ASR Agreement. See Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and Item 8, Notes 4 and 8 to the Consolidated
Financial Statements for a discussion of the ASR Agreement.
In July 2005, the Corporation authorized a multi-year plan to improve its competitive position by
accelerating investments in targeted growth opportunities. A plan to streamline manufacturing and administrative
operations, primarily in North America and Europe, was also initiated (the “Strategic Cost Reduction Plan”). See
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8,
Note 2 to the Consolidated Financial Statements for a discussion of the Strategic Cost Reduction Plan.
During 2005, the Corporation repatriated approximately $985 million of previously unremitted earnings of
certain of its non-U.S. subsidiaries under the provisions of the American Jobs Creation Act of 2004. This Act
provides, among other things, for a one-time deduction for certain foreign earnings that are repatriated to and
reinvested in the U.S. As a result, the Corporation recorded income tax expense and a related income tax liability
of approximately $55.5 million in 2005.
On November 30, 2004, the Corporation distributed to its stockholders all of the outstanding shares of
common stock of Neenah Paper, Inc. (“Neenah Paper”). Neenah Paper was formed in April 2004 to facilitate the
spin-off of the Corporation’s U.S. fine paper and technical paper businesses and its Canadian pulp mills.
Description of the Corporation
The Corporation is organized into operating segments based on product groupings. These operating
segments have been aggregated into four reportable global business segments: Personal Care; Consumer Tissue;
K-C Professional & Other; and Health Care. The reportable segments were determined in accordance with how
the Corporation’s executive managers develop and execute the Corporation’s global strategies to drive growth
and profitability of the Corporation’s worldwide Personal Care, Consumer Tissue, K-C Professional & Other and
Health Care operations. These strategies include global plans for branding and product positioning, technology,
research and development programs, cost reductions including supply chain management, and capacity and
capital investments for each of these businesses. The principal sources of revenue in each of our global business
1