Kimberly-Clark 2010 Annual Report Download - page 27

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PART II
(Continued)
in sales volumes and net selling prices of 3 percent each, and cost savings. These benefits were partially
offset by inflation in key input costs, primarily pulp.
• The average number of common shares outstanding declined in 2010 as compared to 2009, due to share
repurchases throughout 2010 under our share repurchase program.
2009 versus 2008
• Interest expense decreased due to lower average interest rates and a lower average level of debt. See
Item 8, Note 8 to the Consolidated Financial Statements for detail on debt activity.
• Our effective income tax rate was 29.0 percent for 2009 compared with 27.0 percent for 2008. The
increase was primarily due to favorable audit activity in 2008 relating to prior years and currency effects
in Latin America and Asia-Pacific.
• Our share of net income of equity companies declined by $2 million primarily due to unfavorable
currency effects affecting our investment in KCM. Despite higher selling prices and sales volumes,
KCM’s U.S. dollar results were negatively affected as the Mexican peso results for 2009 were translated
into U.S. dollars using currency exchange rates that were 18 percent weaker versus the U.S. dollar in
2009 than in 2008. Also affecting the year-over-year comparisons were currency transaction losses in
2008 on its more than $300 million of U.S. dollar denominated liabilities that were refinanced into
Mexican peso liabilities in 2009. The currency transaction losses reduced our share of KCM’s net
income by approximately $23 million in 2008.
• Net income attributable to noncontrolling interests decreased $29 million primarily due to the
acquisition of the remaining interest in our Andean affiliate in January 2009. See Item 8, Note 7 to the
Consolidated Financial Statements for additional detail.
• The average number of common shares outstanding declined in 2009 as compared to 2008, primarily
due to share repurchases throughout 2008 under our share repurchase program. No shares were
repurchased under the program during 2009.
Liquidity and Capital Resources
Year Ended
December 31
2010 2009
(Millions of dollars)
Cash provided by operations ................................................... $2,744 $3,481
Capital spending ............................................................ 964 848
Acquisitions of businesses, net of cash acquired .................................... —458
Ratio of total debt and redeemable securities to capital(a) ............................. 51.2% 53.1%
Pretax interest coverage—times ................................................ 9.6 8.8
(a) Capital is total debt and redeemable securities of subsidiaries plus stockholders’ equity.
Cash Flow Commentary:
Cash provided by operations decreased $737 million primarily due to a lower level of working capital
improvements as compared to the prior year, partially offset by decreased pension plan contributions.
23