Kimberly-Clark 2010 Annual Report Download - page 24

PART II
(Continued)
the Consolidated Financial Statements for additional information. In 2008, Corporate & Other includes
$72 million in charges and Other (income) and expense, net includes $12 million in income related to strategic
cost reductions. See Item 8, Note 6 to the Consolidated Financial Statements for additional information.
Commentary:
2010 versus 2009
Percentage Change in Operating Profit Versus Prior Year
Change Due To
Total
Change Volume
Net
Price
Input
Cost(a)
Cost
Savings Currency Other(b)
Consolidated .............................. (1.8) 2 8 (28) 13 — 3
Personal Care .............................. 1.4 3 2 (16) 11 (3) 4
Consumer Tissue ........................... (10.3) (5) 21 (45) 13 (6) 12
K-C Professional & Other .................... 0.9 (6) 14 (31) 10 (3) 17
Health Care ............................... (28.7) 29 (9) (19) 12 2 (44)
(a) Includes inflation in raw materials, energy and distribution costs.
(b) Includes the effect of the 2009 organization optimization initiative charges and related benefits. Consolidated also includes the effect of
the charge related to the adoption of highly inflationary accounting in Venezuela in 2010.
• Consolidated operating profit decreased $52 million or 1.8 percent compared to the prior year. The
benefits of increases in net sales, cost savings of $370 million, and a decrease in pension expense of
about $120 million, were more than offset by inflation in key cost inputs of about $790 million, and
increased marketing, research and general expenses, which included higher strategic marketing spending
of about $100 million, and increases related to I-Flow and to support future growth in K-C
International. Comparisons were also impacted by the effect of the organization optimization initiative
charges of $128 million in 2009 and related benefits in 2010, and a $98 million charge related to the
adoption of highly inflationary accounting in Venezuela. Operating profit as a percent of net sales
decreased to 14.0 percent from 14.8 percent last year.
• Operating profit for the personal care segment increased 1.4 percent as higher sales volumes, higher net
selling prices, and cost savings were mostly offset by inflation in key input costs, increased marketing,
research and general expenses and unfavorable currency effects. In North America, operating profit
increased due to cost savings, higher net selling prices, increased sales volumes, and favorable currency
effects, partially offset by inflation in key cost inputs and increased marketing expenses. In Europe,
operating profit increased due to cost savings partially offset by inflation in key cost inputs and
decreases in net selling prices. Operating profit in K-C International decreased as higher sales volumes
were more than offset by unfavorable currency effects, primarily in Venezuela, increases in marketing
and general expenses and inflation in key input costs.
• Consumer tissue segment operating profit decreased 10.3 percent. Increases in net selling prices, cost
savings and lower general expenses were more than offset by inflation in key input costs, unfavorable
currency effects, lower sales volumes and higher marketing expenses. Operating profit in North
America decreased as increases in net selling prices and cost savings were more than offset by inflation
in key input costs, lower sales volumes and higher marketing expenses. In Europe, operating profit
increased as cost savings, higher net selling prices and lower general expenses were partially offset by
inflation in key input costs. Operating profit in K-C International decreased as higher net selling prices
and improvements in product mix were more than offset by inflation in key input costs, unfavorable
currency effects, primarily in Venezuela, and increased marketing, research and general expenses.
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