Kimberly-Clark 2008 Annual Report Download - page 44

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PART II
(Continued)
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 were completed by December 31,
2008. The strategic cost reductions resulted in cumulative charges of $880 million before tax or $610 million
after tax.
Since the inception of the strategic cost reductions, a net workforce reduction of 5,800 has occurred. As of
December 31, 2008, charges have been recorded related to the cost reduction initiatives for 23 facilities,
including 3 facilities which have been closed and are being marketed for sale.
For the full year of 2008, year-over-year pretax savings of nearly $110 million were realized, bringing the
cumulative annual total to approximately $335 million since the plan’s inception. Including projected year-over-
year savings of about $50 million in 2009, total annual savings from the plan are now expected to reach $385
million.
See Item 8, Note 4 to the Consolidated Financial Statements for detail on costs incurred for the plan.
Other income and (expense), net
Other income and (expense), net for 2008 includes costs for a legal judgment and the refinancing of the
dealer remarketable securities (see Item 8, Note 6 to the Consolidated Financial Statements) partially offset by
favorable settlement of a value-added tax matter in Latin America. A gain of $16 million for the settlement of
litigation related to prior years’ operations in Latin America is included in 2007. In addition, currency transaction
losses included in this line item were about $5 million higher in 2008 than in 2007.
Commentary:
2007 versus 2006
Percentage Change in Operating Profit Versus Prior Year
Total
Change
Change Due To
Volume
Net
Price
Raw
Materials
Cost
Energy and
Distribution
Expense Currency Other(a)
Consolidated ......................... 24.5 16 8 (16) (4) 4 17(b)
Personal Care ......................... 19.9 19 1 (8) (2) 3 7
Consumer Tissue ...................... (9.2) 6 16 (18) (7) 2 (8)
K-C Professional & Other ............... 1.3 8 6 (16) (1) 2 2
Health Care .......................... (7.6) 1 (2) (6) (4) 6 (3)
(a) Includes the benefit of cost savings achieved, net of higher marketing and general expenses.
(b) Charges for strategic cost reductions were $377 million lower in 2007 than in 2006.
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