Kimberly-Clark 2010 Annual Report Download - page 25

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PART II
(Continued)
• Operating profit for K-C Professional & Other products increased 0.9 percent as higher net selling
prices and cost savings were mostly offset by inflation in key input costs and unfavorable currency
effects.
• Operating profit for the health care segment decreased 28.7 percent. The benefit of higher sales volumes
and cost savings were more than offset by higher selling and general expenses, including ongoing
I-Flow litigation-related expenses, inflation in key cost inputs and lower net selling prices.
Organization Optimization Initiative
In June 2009, we announced actions to reduce our worldwide salaried workforce by approximately 1,600
positions. These actions resulted in cumulative pretax charges of approximately $128 million in 2009. Related
savings from this initiative were approximately $80 million in 2010 and $55 million in 2009. See Item 8, Note 5
to the Consolidated Financial Statements for detail on costs incurred for the initiative.
Other (income) and expense, net
Other (income) and expense, net for 2010 includes a $79 million charge related to the adoption of highly
inflationary accounting in Venezuela. In addition, Other (income) and expense, net includes currency transaction
losses of $20 million in 2010 and $110 million in 2009. Included in 2009 was approximately $73 million of
currency transaction losses related to operations in Venezuela.
Commentary:
2009 versus 2008
Percentage Change in Operating Profit Versus Prior Year
Change Due To
Total
Change Volume
Net
Price
Input
Costs(a)
Production
(Curtailment)/
Efficiencies Currency Other(b)
Consolidated .......................... 10.9 (2) 29 26 (5) (14) (23)(c)
Personal Care ......................... 5.5 2 25 10 (2) (13) (17)
Consumer Tissue ...................... 22.5 (12) 31 54 (12) (7) (32)
K-C Professional & Other ............... 8.4 (14) 33 32 (11) (4) (28)
Health Care ........................... 70.6 45 (3) 36 19 (4) (22)
(a) Includes raw materials deflation and energy and distribution variations.
(b) Includes organization optimization severance and related charges and cost savings.
(c) Strategic cost reduction charges of $60 million were included in 2008.
• Consolidated operating profit increased $278 million or 10.9 percent from the prior year. The benefits of
higher net selling prices, cost savings of about $240 million and deflation in key cost components
totaling approximately $675 million, were partially offset by lower sales volumes, negative currency
effects of about $355 million, severance and related costs of $128 million, increased pension expense of
about $155 million, higher operating costs and increased strategic marketing spending. Operating profit
as a percent of net sales increased to 14.8 percent from 13.1 percent in 2008. Charges in 2008 of
$60 million for strategic cost reductions, which were a part of a multi-year plan completed in 2008 to
improve our competitive position, are not included in the results of the business segments.
21