Kimberly-Clark 2007 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 of the 2007 Kimberly-Clark annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
SFAS 160 is effective for fiscal years beginning after December 15, 2008. Early adoption is not permitted.
Adoption is prospective, except for the following provisions, which are required to be adopted retrospectively:
• Noncontrolling interests are required to be reclassified from the mezzanine to equity, separate from the
parent’s shareholders’ equity, in the consolidated balance sheet.
• Consolidated net income must be recast to include net income attributable to both controlling and
noncontrolling interests.
Except for the classification of minority owners’ interests into equity and the inclusion of all of the income
of less than 100 percent owned subsidiaries in reported net income, adoption of SFAS 160 is not expected to
have a material effect on the Corporation’s financial statements.
On January 10, 2008, the FASB issued SFAS 133 Implementation Issue No. E23. This Implementation
Issue clarifies the use of the shortcut method under paragraph 68 of SFAS 133, Accounting for Derivative
Instruments and Hedging Activities. The Implementation Issue also requires a company to review all existing
hedging relationships as of January 1, 2008 for which the shortcut method had been applied and to dedesignate
those hedging relationships that no longer qualify for use of the shortcut method under the Implementation Issue.
The Corporation has completed the required review and does not have to dedesignate any hedging relationships.
Note 2. Strategic Cost Reduction Plan
In July 2005, the Corporation authorized a multi-year plan to further improve its competitive position by
accelerating investments in targeted growth opportunities and strategic cost reductions aimed at streamlining
manufacturing and administrative operations, primarily in North America and Europe.
The strategic cost reductions commenced in the third quarter of 2005 and are expected to be substantially
completed by December 31, 2008. Based on current estimates, the strategic cost reductions are expected to result
in cumulative charges of approximately $880 to $910 million before tax ($610 to $630 million after tax) over that
three and one-half year period.
By the end of 2008, it is anticipated there will be a net workforce reduction of about 10 percent, or
approximately 6,000 employees. Since the inception of the strategic cost reductions, a net workforce reduction of
approximately 4,700 has occurred. Approximately 24 manufacturing facilities are expected to be sold, closed, or
streamlined. As of December 31, 2007, charges have been recorded related to the cost reduction initiatives for
23 facilities. To date, 14 facilities have been disposed of and 3 additional facilities have been closed and are
being marketed for sale.
The following pretax charges were incurred in connection with the strategic cost reductions:
Year Ended December 31
2007 2006 2005
(Millions of dollars)
Noncash charges ....................................................... $ 60.0 $264.8 $179.7
Charges for workforce reductions ......................................... 8.8 161.9 35.6
Other cash charges ..................................................... 29.9 44.6 11.0
Charges for special pension and other benefits ............................... 8.5 13.1 2.3
Total pretax charges .................................................... $107.2 $484.4 $228.6
49