Kimberly-Clark 2008 Annual Report Download

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2008 ANNUAL REPORT
Simply Essential

Table of contents

  • Page 1
    Simply Essential 2008 ANNUAL REPORT

  • Page 2
    ... PREFERRED SECURITIES COMMON STOCK PRICE PER SHARE 18,089 6,976 52.74 18,440 6,497 69.34 -1.9% 7.4% -23.9% Health Care 6% KCP & Other 16% Personal Care 43% Asia, Latin America & Other 30% North America 52% 2008 PROFILE BY SEGMENT Consolidated Net Sales Consumer Tissue 35% 2008 PROFILE BY...

  • Page 3
    About Kimberly-Clark Employees of Kimberly-Clark share a passion to improve people's lives. And after 137 years, we do that very well. Our employees created many of the products that today are consumer essentials and built them into global, powerhouse brands. Think Huggies. Kleenex. Kotex. Pull-Ups....

  • Page 4
    ... any measure, 2008 was a challenging year. We saw unprecedented volatility in the global business environment, including wide swings in commodity prices and exchange rates and a slowdown in world economies. Kimberly-Clark was not immune to these global forces. We continued to deliver top-line growth...

  • Page 5
    .... We controlled overhead spending tightly, with general and administrative spending rising slower than sales in 2008. We will continue to closely manage our overhead spending in 2009. 2006 2007 2008 4.5% 5.6% 5.6% ORGANIC SALES GROWING FASTER THAN TARGET Global Business Plan Target = 3-5% All...

  • Page 6
    ...are products workers GLOBAL STRATEGIC LEADERSHIP TEAM $725 want to wear, helping our corporate $385 $350 customers improve compliance and safety performance. As a result, K-C Professional delivered high single-digit sales growth in this channel. K-C Health Care's medical device 2006 2007 2008...

  • Page 7
    ... North Atlantic Consumer Products Robert W. Black Jan B. Spencer President of Kimberly-Clark Professional Group President of Developing and Emerging Markets Lizanne C. Gottung Senior Vice President and Chief Human Resources Officer Mark A. Buthman Senior Vice President and Chief Financial Officer...

  • Page 8
    ... marketing effort built on the success of our 2007 Kleenex "Let It Out" campaign. Our Personal Care business continued to place competitive, breakout advertising and promotional support behind our innovative Huggies Supreme Natural Fit and Gentle Care diapers. Brandweek magazine named the Huggies...

  • Page 9
    ... for 2009 marks the 37th consecutive year Kimberly-Clark has raised its dividend. The health of our cash flow and balance sheet gave us ready access to credit, and demand for our commercial paper remained steady, even amid the financial market turbulence in the fourth quarter. Cash flow funded our...

  • Page 10

  • Page 11
    ...'s comfort needs change constantly as they grow, which is why we offer innovative diaper solutions designed to fit a child's changing body. From Huggies Magic Pants in South Korea to Huggies Supreme Gentle Care and Natural Fit diapers in Kimberly-Clark has kids covered. North America and Europe, 9

  • Page 12
    ... b el of qu een usin ality. g t h e time-th m for a ey are t long he only items I b feminin uy. e care , Brazil lark, ovation Speciali st, Prod Technolo uct & gy Deve lopment Porto A legre, B razil We oft en rece ive pos from w itive fe omen edback o f all age loyal t s who a o the I re ntimus we...

  • Page 13
    .... Our line-up of feminine care products enables young women to make a confident transition to adulthood, with offerings tailored to every pocketbook and every fashion preference. Our strong position in feminine care in developing and emerging markets, with well-known brands such as Kotex, Intimus...

  • Page 14

  • Page 15
    ... to innovate. Our KleenGuard line of safety apparel is a case in point: In the past 18 months, we've introduced more than a dozen new products in North America and Europe, featuring proprietary technologies and new-to-the-world comfort features. Breakthrough anti-fog safety glasses and new iFlex...

  • Page 16
    ... security in every product we make. Take our new Depend Underwear for Women and Depend Underwear for Men, the first gender-specific adult absorbent underwear, which increases comfort and leakage prevention. Or our revolutionary InteguSeal microbial sealant that helps reduce the risk of contamination...

  • Page 17
    ... to w orry. E.S ack, New Jersey Marie Lu na Scientist, Youth/A dult Prod Technolo uct & gy Develo p m ent Neenah, Wiscons in We con sistently hear fro consum m ers abo u t t h e confid our Dep ence end pro d u c t s give the It's rew arding m. to work that ha o n a brand s such a positive people...

  • Page 18
    ...Year ended December 31 INCOME STATEMENT DATA Net sales Gross profit Operating profit Share of net income of equity companies Net income $19,415 5,858 2,547 166 1,690 $18,266 5,704 2,616 170 1,823 $16,747 5,082 2,102 219 1,500 $15,903 5,075 2,311 137 1,568 $15,083 5,069 2,506 125 1,800 2008 2007 2006...

  • Page 19
    ...on June 30, 2008 (based on the closing stock price on the New York Stock Exchange) on such date was approximately $24.9 billion. As of February 16, 2009, there were 413,810,555 shares of the Corporation's common stock outstanding. Documents Incorporated By Reference Certain information contained in...

  • Page 20
    ... Market Risk ...Item 8. Financial Statements and Supplementary Data ...Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...Directors, Executive Officers and Corporate Governance ...Executive...

  • Page 21
    ... 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...

  • Page 22
    PART I (Continued) The Consumer Tissue segment manufactures and markets facial and bathroom tissue, paper towels, napkins and related products for household use. Products in this segment are sold under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Hakle, Page and other brand names. The K-C ...

  • Page 23
    ... are directed toward new or improved personal care, tissue, wiping, and health care products and nonwoven materials. Consolidated research and development expense was $297 million in 2008, $277 million in 2007 and $301 million in 2006. Foreign Market Risks The Corporation operates and markets its...

  • Page 24
    ... supplies approximately 8 percent of its virgin fiber needs from internal pulp manufacturing operations. A number of the Corporation's products, such as diapers, training and youth pants, incontinence care products, disposable wipes and various health care products, contain certain materials...

  • Page 25
    ...'s risk management policy. Increased pricing pressure and intense competition for sales of the Corporation's products could have an adverse effect on the Corporation's financial results. The Corporation competes in intensely competitive markets against well-known, branded products and private label...

  • Page 26
    ... in Latin America and developing and other countries in Eastern Europe and Asia may slow the Corporation's sales growth and earnings potential. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations." The Corporation's success internationally also...

  • Page 27
    ... manage any acquired product lines or businesses in a timely and efficient manner, any inability to achieve anticipated cost savings or other anticipated benefits from these acquisitions in the time frame we anticipate or any unanticipated required increases in trade, promotional or capital spending...

  • Page 28
    .... As part of the Corporation's Global Business Plan, a number of administrative functions have been transferred to third-party service providers. Those functions include certain information technology; finance and accounting; sourcing and supply management; and human resources services. Although...

  • Page 29
    PART I (Continued) Worldwide Production and Service Facilities United States Alabama Mobile-tissue products-(1) & (2) Arizona Tucson-health care products Arkansas Conway-feminine care and incontinence care products and nonwovens Maumelle-wet wipes and nonwovens California Fullerton-tissue products...

  • Page 30
    PART I (Continued) Texas Del Rio-health care products Paris-diapers and training, youth and swim pants San Antonio-personal cleansing products and systems Utah Ogden-diapers and training pants Washington Everett-tissue products, wipers and pulp-(1) & (2) Wisconsin Marinette-tissue products and ...

  • Page 31
    PART I (Continued) China Beijing-feminine care and adult care products Guangzhou-tissue products-(1) & (2) Nanjing-feminine care products Shanghai-tissue products-(1) & (2) Colombia Barbosa-wipers, tissue products, business and correspondence papers and notebooks-(2) Puerto Tejada-tissue products...

  • Page 32
    ... and wet wipes-(3) Peru Puente Piedra-tissue products-(1) & (2) Santa Clara-diapers and feminine care and incontinence care products Poland Klucze-tissue products-(1) Saudi Arabia Al-Khobar-diapers, feminine care and tissue products-(1), (2) & (3) Singapore Tuas-diapers South Africa Cape Town-tissue...

  • Page 33
    ...health care products Pathumthani-feminine care and tissue products-(1) & (2) Samut Prakarn-tissue products-(1) & (2) Trinidad & Tobago San Juan-diapers Turkey Istanbul-diapers United Kingdom Barrow-tissue products-(1) & (2) Barton-upon-Humber-diapers and nonwovens Flint-wet wipes and tissue products...

  • Page 34
    ...Delcora"). Also in May 2007, Delcora initiated an administrative action against the Corporation. Delcora is a public agency that operates a sewerage system and a wastewater treatment facility serving industrial and municipal customers, including Kimberly-Clark's Chester Mill. Delcora also regulates...

  • Page 35
    ...authorized for issuance under equity compensation plans, see Part III, Item 12 of this Form 10-K. The Corporation repurchases shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During 2008, the Corporation purchased $625 million worth of...

  • Page 36
    PART II (Continued) ITEM 6. SELECTED FINANCIAL DATA Year Ended December 31 2008(a) 2007 2006 2005(c) 2004(d) (Millions of dollars, except per share amounts) Net Sales ...Gross Profit ...Operating Profit ...Share of Net Income of Equity Companies ...Income from: Continuing operations ...Discontinued...

  • Page 37
    .... The Corporation's products are sold under such well-known brands as Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend. The Corporation has four reportable global business segments: Personal Care; Consumer Tissue; K-C Professional & Other; and Health Care. These global business segments are...

  • Page 38
    ... in the global financial markets. Although it has become more challenging to predict our results in the nearterm, we will continue to focus on executing our Global Business Plan strategies for the long-term health of our businesses. • • • Overview of 2008 Results The Corporation continued...

  • Page 39
    PART II (Continued) Analysis of Consolidated Net Sales By Business Segment Year Ended December 31 2008 2007 2006 (Millions of dollars) Personal Care ...Consumer Tissue ...K-C Professional & Other ...Health Care ...Corporate & Other ...Intersegment sales ...Consolidated ...By Geographic Area $ 8,...

  • Page 40
    ... U.K. Consumer tissue net sales in the developing and emerging markets increased nearly 13 percent. During 2008, the Corporation raised prices in most markets to recover higher raw materials costs and drove improvements in mix with more differentiated, value-added products, strategies that resulted...

  • Page 41
    ... of increased sales volumes. Product innovations spurred volume growth, with a double-digit gain for Huggies baby wipes, high single-digit growth for Huggies diapers and mid single-digit increases for the Corporation's child care and incontinence care brands. Child care sales volumes benefited from...

  • Page 42
    ... high single-digit improvement. • • Analysis of Consolidated Operating Profit By Business Segment Year Ended December 31 2008 2007 2006 (Millions of dollars) Personal Care ...Consumer Tissue ...K-C Professional & Other ...Health Care ...Other income and (expense), net ...Corporate & Other...

  • Page 43
    ... spending. Operating profit for the health care segment decreased 26.7 percent. The benefit of higher sales volumes was more than offset by the lower net selling prices and higher manufacturing cost. In addition to cost inflation, the segment absorbed manufacturing-related costs as part of a plan...

  • Page 44
    ... in 2007. Commentary: 2007 versus 2006 Percentage Change in Operating Profit Versus Prior Year Change Due To Raw Energy and Total Net Materials Distribution Change Volume Price Cost Expense Currency Other(a) Consolidated ...Personal Care ...Consumer Tissue ...K-C Professional & Other ...Health Care...

  • Page 45
    ... in 2006. • Operating profit for personal care products increased 19.9 percent. Cost savings and higher sales volumes more than offset raw materials cost inflation, the costs for product improvements and increased general and administrative expenses. Operating profit in North America increased...

  • Page 46
    ... per share benefit in 2006 was $.04. 2008 versus 2007 • • Interest expense increased due to a higher average level of debt partially offset by lower average interest rates. See Item 8, Note 6 to the Consolidated Financial Statements for detail on debt activity. The Corporation's effective income...

  • Page 47
    ...interest expense associated with the third quarter 2007 debt issuances that funded the ASR program. Liquidity and Capital Resources Year Ended December 31 2008 2007 (Millions of dollars) Cash provided by operations ...Capital spending ...Acquisitions of businesses, net of cash acquired ...Ratio of...

  • Page 48
    ...end. The increase was primarily due to the consolidation of the financing entities described in Item 8, Note 2 to the Consolidated Financial Statements. At December 31, 2008, the related loans are classified as debt payable within one year on the Consolidated Balance Sheet. The Corporation currently...

  • Page 49
    ...net sales and consolidated operating profit. • • • • • Management believes that the Corporation's ability to generate cash from operations and its capacity to issue short-term and long-term debt are adequate to fund working capital, capital spending, payment of dividends, pension plan...

  • Page 50
    ..., 2008 and 2007 were $261 million and $253 million, respectively. Pension and Other Postretirement Benefits Pension Benefits The Corporation and its subsidiaries in North America and the United Kingdom have defined benefit pension plans (the "Principal Plans") and/or defined contribution retirement...

  • Page 51
    ... factors related to historical market performance, the Corporation considered the range of compounded annual returns for 15 rolling 15-year and 20-year periods through 2008 relative to each plan's current asset allocation. The weighted-average expected long-term rate of return on pension fund assets...

  • Page 52
    ... two weighted-average discount rates. Other Postretirement Benefits Substantially all U.S. retirees and employees are covered by unfunded health care and life insurance benefit plans. Certain benefits are based on years of service and/or age at retirement. The plans are principally noncontributory...

  • Page 53
    ... requires significant management judgment including estimating the future success of product lines, future sales volumes, growth rates for selling prices and costs, alternative uses for the assets and estimated proceeds from disposal of the assets. Impairment testing is conducted at the lowest...

  • Page 54
    ... and the quantitative analysis require the exercise of significant management judgment. Deferred Income Taxes and Potential Assessments As of December 31, 2008, the Corporation had recorded deferred tax assets related to income tax loss carryforwards, income tax credit carryforwards and capital...

  • Page 55
    ...other things, the business outlook, including new product introductions, cost savings, anticipated benefits related to the strategic cost reduction plan, anticipated financial and operating results, strategies, contingencies and anticipated transactions of the Corporation, constitute forward-looking...

  • Page 56
    ... savings and projected volume increases. In addition, many factors outside the control of the Corporation, including the prices and availability of the Corporation's raw materials, potential competitive pressures on selling prices or advertising and promotion expenses for the Corporation's products...

  • Page 57
    ... relates to the price of pulp. Selling prices of tissue products are influenced, in part, by the market price for pulp, which is determined by industry supply and demand. On a worldwide basis, the Corporation supplies approximately 8 percent of its virgin fiber needs from internal pulp manufacturing...

  • Page 58
    PART II (Continued) The Corporation's energy, manufacturing and transportation costs are affected by various market factors including the availability of supplies of particular forms of energy, energy prices and local and national regulatory decisions. As previously discussed under Item 1A, "Risk ...

  • Page 59
    ... FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT Year Ended December 31 2008 2007 2006 (Millions of dollars, except per share amounts) Net Sales ...Cost of products sold ...Gross Profit ...Marketing, research and general expenses...

  • Page 60
    ... II (Continued) KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET December 31 2008 2007 (Millions of dollars) ASSETS Current Assets Cash and cash equivalents ...Accounts receivable, net ...Inventories ...Deferred income taxes ...Time deposits ...Other current assets ...Total...

  • Page 61
    ... or vested and other ...Income tax benefits on stock-based compensation ...Shares repurchased ...Recognition of stock-based compensation ...Dividends declared ... 57,676 (3,814 Balance at December 31, 2008 ...478,597 $ 598 65,038 $(4,285) See Notes to Consolidated Financial Statements. 41

  • Page 62
    PART II (Continued) KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT Year Ended December 31 2008 2007 2006 (Millions of dollars) Operating Activities Net Income ...Extraordinary loss, net of income taxes ...Depreciation and amortization ...Stock-based compensation ......

  • Page 63
    ... accounting principles generally accepted in the United States of America ("U.S.") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the...

  • Page 64
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) employees) directly associated with developing significant computer software applications for internal use are capitalized. Training and data conversion costs are expensed as incurred. Computer ...

  • Page 65
    ... Recognition Sales revenue for the Corporation and its reportable business segments is recognized at the time of product shipment or delivery, depending on when title passes, to unaffiliated customers, and when all of the following have occurred: a firm sales agreement is in place, pricing is fixed...

  • Page 66
    ... to manage a portion of the Corporation's foreign currency transactional exposures. The gain or loss on these derivatives is included in income in the period that changes in their fair values occur. New Accounting Standards Effective January 1, 2008, the Corporation adopted Statement of Financial...

  • Page 67
    ... for business combinations for which the acquisition date occurs during fiscal years beginning on or after December 15, 2008. Adoption is prospective, and early adoption is not permitted. Adoption of SFAS 141(R) is not expected to have a material effect on the Corporation's financial statements. In...

  • Page 68
    ... of risk within plan assets. The FSP is effective for fiscal years ending after December 15, 2009. Since the FSP only requires additional disclosures, it will not have a financial impact on the Corporation's financial statements. Note 2. Monetization Financing Entities The Corporation has...

  • Page 69
    ... in debt payable within one year on the Corporation's Consolidated Balance Sheet. Interest income on the Notes of $14 million and interest expense of $15 million on the monetization loans have been reported on the Corporation's 2008 Consolidated Income Statement. The Notes and monetization loans...

  • Page 70
    ... investments in a mix of money market, fixed income and equity funds managed by unrelated fund managers. The fair values of derivatives used to manage interest rate risk and commodity price risk are based on LIBOR rates and the interest rate swap curves and NYMEX price quotations, respectively. The...

  • Page 71
    ...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...

  • Page 72
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The following pretax charges were incurred in connection with the strategic cost reductions: Year Ended December 31 2007 2006 2005 Total (Millions of dollars) 2008 Noncash charges ...Charges for ...

  • Page 73
    ... business segment level, as the strategic cost reductions are corporate decisions. These charges are included in the following income statement captions: 2008 Year Ended December 31 2007 2006 2005 (Millions of dollars) Total Cost of products sold ...Marketing, research and general expenses ...Other...

  • Page 74
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) 2006 North America Europe Other (Millions of dollars) Total Incremental depreciation and amortization ...Asset impairments ...Asset write-offs ...Charges for workforce reductions and special pension ...

  • Page 75
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Goodwill The changes in the carrying amount of goodwill by business segment are as follows: Personal Care K-C Consumer Professional Health Tissue & Other Care (Millions of dollars) Total Balance at ...

  • Page 76
    ...the revolving credit facility to manage liquidity needs in the event its access to the commercial paper markets is constrained for any reason. The Corporation did not experience any difficulty in issuing commercial paper in 2008 despite the current constrained credit environment in the United States...

  • Page 77
    ... to the Corporation. These long-term loans bear fixed annual interest rates. The funds remaining in the financing subsidiary are invested in equity-based exchange-traded funds. In December 2007, in connection with the restructuring, the Corporation performed a new primary beneficiary analysis of the...

  • Page 78
    ...the end of three or four years. Restricted shares, time-based restricted share units and performance-based restricted share units granted to employees are valued at the closing market price of the Corporation's common stock on the grant date and generally vest over three to five years. The number of...

  • Page 79
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Stock-based compensation costs of $47 million, $63 million and $67 million and related deferred income tax benefits of approximately $15 million, $20 million and $24 million were recognized for 2008, ...

  • Page 80
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) A summary of stock-based compensation under the Plans as of December 31, 2008 and the activity during the year then ended is presented below: WeightedWeightedAverage Average Remaining Exercise ...

  • Page 81
    ... customary business practices in these countries. Other Postretirement Benefit Plans Substantially all U.S. retirees and employees are covered by unfunded health care and life insurance benefit plans. Certain benefits are based on years of service and/or age at retirement. The plans are principally...

  • Page 82
    .... Weighted-Average Assumptions used to determine Net Cost for years ended December 31 Pension Benefits 2008 2007 2006 Other Benefits 2008 2007 2006 Discount rate ...Expected long-term return on plan assets ...Rate of compensation increase ... 6.14% 5.64% 5.47% 6.24% 5.84% 5.68% 8.23% 8.27% 8.28...

  • Page 83
    ... factors related to historical market performance, the Corporation considered the range of compounded annual returns for 15 rolling 15-year and 20-year periods through 2008 relative to each plan's current asset allocation. The weighted-average expected long-term rate of return on pension fund assets...

  • Page 84
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Health Care Cost Trends Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans. A one-percentage-point change in assumed health care trend rates ...

  • Page 85
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Accumulated Other Comprehensive Income (Loss) The changes in the components of accumulated other comprehensive income (loss) are as follows: 2008 Tax Effect Year Ended December 31 2007 Pretax Tax Net ...

  • Page 86
    ...2006. The detailed statement of other comprehensive income (loss) for 2008 is presented below: Year Ended December 31, 2008 Pretax Tax Net Amount Effect Amount (Millions of dollars) Unrealized translation ...Defined benefit pension plans: Unrecognized net actuarial loss and transition amount Funded...

  • Page 87
    ... cost in 2009. Note 11. Risk Management As a multinational enterprise, the Corporation is exposed to risks such as changes in foreign currency exchange rates, interest rates and commodity prices. The Corporation employs a variety of practices to manage these risks, including operating and financing...

  • Page 88
    ... other factors. A number of the Corporation's products, such as diapers, training and youth pants, and incontinence care products contain certain polypropylene materials. The Corporation purchases these materials from a number of suppliers. Significant increases in prices for these materials could...

  • Page 89
    ... finished products are not adjusted or if adjustments significantly trail the increases in prices for these services. Derivative instruments have not been used to manage these risks. The Corporation uses derivative financial instruments to offset a substantial portion of its exposure to market risk...

  • Page 90
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (i) investments in wholly-owned or majority-owned entities, (ii) limited liability companies as a nonmanaging member and (iii) investments in various funds in which the Corporation is one of many ...

  • Page 91
    ...$228 million in 2008, 2007 and 2006, respectively. Purchase Commitments The Corporation has entered into long-term contracts for the purchase of pulp and utilities, principally electricity. Commitments under these contracts based on current prices are approximately $674 million in 2009, $493 million...

  • Page 92
    ... on the Corporation's business, financial condition, results of operations or liquidity. Contingency One of the Corporation's North American tissue mills has an agreement to provide its local utility company a specified amount of electric power for each of the next eight years. In the event that the...

  • Page 93
    ...the credits are shown separately in the Corporation's reconciliation of the U.S. statutory rate to its effective income tax rate in Note 16. Note 16. Income Taxes An analysis of the provision for income taxes follows: Year Ended December 31 2008 2007 2006 (Millions of dollars) Current income taxes...

  • Page 94
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Deferred income tax assets (liabilities) are composed of the following: December 31 2008 2007 (Millions of dollars) Net current deferred income tax asset attributable to: Accrued expenses ...Pension, ...

  • Page 95
    ... for income taxes: Year Ended December 31 2008 2007 2006 Amount Percent Amount Percent Amount Percent (Millions of dollars) Income before income taxes ...Tax at U.S. statutory rate applied to income before income taxes ...State income taxes, net of federal tax benefit ...Statutory rates other...

  • Page 96
    ...financial condition, results of operations or liquidity. As of December 31, 2008, the following tax years remain subject to examination for the major jurisdictions where the Corporation conducts business: Jurisdiction Years United States ...United Kingdom ...Canada ...Korea ...Australia ...76 2006...

  • Page 97
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) The Corporation's U.S. federal income tax returns have been audited through 2005. However, the statute for potential adjustments for the years 2002 to 2003 remains open until June 30, 2009 and until ...

  • Page 98
    ..., Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend, Poise and other brand names. The Consumer Tissue segment manufactures and markets facial and bathroom tissue, paper towels, napkins and related products for household use. Products in this segment are sold under the Kleenex, Scott...

  • Page 99
    ..., as well as data for equity companies, is presented in the following tables: Consolidated Operations by Business Segment Personal Care Consumer Tissue K-C InterProfessional Health segment & Other Care Sales (Millions of dollars) Corporate & Other Consolidated Total Net Sales 2008 ...2007 ...2006...

  • Page 100
    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Sales of Principal Products 2008 2007 2006 (Billions of dollars) Consumer tissue products ...Diapers ...Away-from-home professional products ...All other ...Consolidated ... $ 6.6 4.6 3.0 5.2 $19.4 $...

  • Page 101
    ..., primarily in Latin America, are principally engaged in operations in the Personal Care and Consumer Tissue businesses. At December 31, 2008, the Corporation's equity companies and ownership interest were as follows: Kimberly-Clark Lever Private Limited (India) (50%), Kimberly-Clark de Mexico...

  • Page 102
    ...FINANCIAL STATEMENTS-(Continued) December 31 2008 NonLIFO 2007 NonLIFO Summary of Inventories LIFO Total LIFO Total Inventories by Major Class: At the lower of cost determined on the FIFO or weighted-average cost methods or market: Raw materials ...Work in process ...Finished goods ...Supplies...

  • Page 103
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) Supplemental Cash Flow Statement Data Summary of Cash Flow Effects of Decrease (Increase) in Operating Working Capital(a) Year Ended December 31 2008 2007 2006 Accounts receivable ...Inventories ...Prepaid expenses ...Trade accounts payable...

  • Page 104
    ...for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Corporation's internal control over financial reporting as of December 31, 2008, based on criteria...

  • Page 105
    ... the Chief Executive Officer and Chief Financial Officer, concluded that the Corporation's disclosure controls and procedures were effective as of December 31, 2008. Internal Control Over Financial Reporting Management's Report on the Financial Statements Kimberly-Clark Corporation's management is...

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    ... of information and business ideas. Internal controls have been implemented to provide reasonable assurance that the code of conduct is followed. Management's Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining an adequate system of internal...

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    ... with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule of the Corporation as of and for the year ended December 31, 2008, and our report dated February 26, 2009, expressed an unqualified opinion on...

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    ...the adoption of Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, on January 1, 2007. /s/ DELOITTE & TOUCHE LLP Deloitte & Touche LLP Dallas, Texas February 26, 2009 ITEM 9B. OTHER INFORMATION None. 88

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    ... and Emerging Markets in March 2008. He is responsible for the Corporation's businesses in Asia, Latin America, Eastern Europe, the Middle East and Africa. His past responsibilities have included overseeing the Corporation's strategy, mergers and acquisitions, global competitiveness and innovation...

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    ... Vice President Research, Development & Engineering in the Away From Home sector in 1996; Vice President, Wiper Business in 1998; Vice President, European Operations, Engineering, Supply Chain in the K-C Professional sector in 2000; President, KCP Europe in 2002; President, KCP North America in 2003...

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    ... of the 2009 Proxy Statement captioned "Transactions with Related Persons" and "Corporate Governance Information-Director Independence" is incorporated in this Item 13 by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information in the sections of the 2009 Proxy Statement captioned...

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    ... Amended and Restated Deferred Compensation Plan for Directors, effective January 1, 2008, incorporated by reference to Exhibit No. (10)c of the Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008. Executive Officer Achievement Award Program, as amended November 12...

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    ...of the Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2008. Summary of Financial Counseling Program for Kimberly-Clark Corporation Executives, dated November 12, 2008, filed herewith. Computation of ratio of earnings to fixed charges for the five years ended December...

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    ... Act, filed herewith. Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith. Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule...

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    .... KIMBERLY-CLARK CORPORATION February 27, 2009 By: /s/ MARK A. BUTHMAN Mark A. Buthman Senior Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and...

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    KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006 (Millions of dollars) Balance at Beginning Of Period Additions Charged to Charged to Costs and Other Expenses Accounts(a) Deductions Write-Offs and ...

  • Page 117
    ...and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 27, 2009 /s/ Thomas J. Falk Thomas J. Falk Chief Executive Officer 3. 4. 97

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    ...summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 27, 2009 /s/ Mark A. Buthman Mark A. Buthman Chief Financial Officer...

  • Page 119
    ... S&P 500 INDEX Dec07 Dec08 KIMBERLY-CLARK CORPORATION S&P 500 CONSUMER STAPLES INDEX Indexed Returns Company Name/Index 2003 2004 Year Ended December 31 2005 2006 2007 2008 Kimberly-Clark Corporation ...S&P 500 Index ...S&P 500 Consumer Staples Index ...Executive Certifications 100 100 100...

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    ... New York Stock Exchange corporate governance listing standards as of the date of the certification. Investor Relations Securities analysts, portfolio managers and representatives of institutional investors seeking information about the Corporation should contact Michael D. Masseth, Vice President...

  • Page 121
    ...Page, Poise, Pop-Up, Pull-Ups, Scott, Scottex, Viva, WypAll - are trademarks of Kimberly-Clark Worldwide, Inc. or its affiliates. The Oval Shape is a trademark of Kimberly-Clark Worldwide, Inc. Non-GAAP Financial Measures Organic sales growth, a financial measure contained in this Annual Report (not...

  • Page 122
    ... of our Global Business Plan, provide oversight on internal controls and compliance and seek to ensure responsiveness to shareholder concerns. John R. Alm Audit Committee Retired President and Chief Executive Officer Coca-Cola Enterprises Inc. Abelardo E. Bru Management Development and Compensation...

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    ...health, hygiene and safety, we're able to bring increased freedom and comfort to people worldwide, with an eye toward a sustainable future for the planet we share. Over the years, this commitment to sustainability has become part of the fabric of our corporate culture. Our employees around the world...

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    WORLD HEADQUARTERS P.O. BOX 619100, DALLAS, TEXAS 75261-9100 Toll-Free Investor Information: 800.639.1352 www.kimberly-clark.com