Kimberly-Clark 2008 Annual Report Download - page 91

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KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
If the Corporation’s investments in all of its real estate entities were to be disposed of at their carrying
amounts, a portion of the tax credits may be recaptured and may result in a charge to earnings. As of
December 31, 2008, this recapture risk is estimated to be $46 million. The Corporation has no current intention
of disposing of these investments during the recapture period, nor does it anticipate the need to do so in the
foreseeable future in order to satisfy any anticipated liquidity need. Accordingly, the recapture risk is considered
to be remote.
Note 13. Leases and Commitments
Leases
The Corporation has entered into operating leases for certain warehouse facilities, automobiles and
equipment. The future minimum obligations under operating leases having a noncancelable term in excess of one
year as of December 31, 2008 are as follows:
Millions
Year Ending December 31:
2009 ........................................................................ $142
2010 ........................................................................ 114
2011 ........................................................................ 98
2012 ........................................................................ 80
2013 ........................................................................ 65
Thereafter .................................................................... 189
Future minimum obligations ......................................................... $688
Certain operating leases contain residual value guarantees, which provide that if the Corporation does not
purchase the leased property from the lessor at the end of the lease term, the Corporation is liable to the lessor for
the shortfall, if any, between the proceeds from the sale of the property and an agreed value. At December 31,
2008, the maximum amount of the residual value guarantee was approximately $18 million. Management expects
the proceeds from the sale of the properties under the operating leases will exceed the agreed values.
Operating lease obligations have been reduced by approximately $3 million for rental income from
noncancelable sublease agreements.
Consolidated rental expense under operating leases was $316 million, $271 million and $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 in 2010, $445 million in 2011, $78 million in 2012 and $75 million in 2013. Total commitments
beyond the year 2013 are $232 million.
Although the Corporation is primarily liable for payments on the above-mentioned leases and purchase
commitments, its exposure to losses, if any, under these arrangements is not material.
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