Kimberly-Clark 2010 Annual Report Download - page 75

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KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
We have significant interests in other variable interest real estate entities in which we are not the primary
beneficiary. We account for our interests in these nonconsolidated real estate entities by the equity method of
accounting, and have accounted for the related income tax credits and other tax benefits as a reduction in our
income tax provision. As of December 31, 2010, we had net equity of $6 million in our nonconsolidated real
estate entities. We have made noncontractual cash infusions to certain of the entities aggregating $8 million
principally to provide cash flow to support debt payments.
As of December 31, 2010, total permanent financing debt for the nonconsolidated entities was $94 million.
A total of $28 million of the permanent financing debt is guaranteed by Kimberly-Clark and the remainder of this
debt is secured solely by the properties. At December 31, 2010, our maximum loss exposure for our
nonconsolidated real estate entities is estimated to be $36 million and is comprised of our net equity in these
entities of $6 million, our permanent financing guarantees of $28 million, and income tax credit recapture risk of
$2 million.
If our investments in all of our 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, 2010, this
recapture risk is estimated to be $12 million. We have no current intention of disposing of these investments
during the recapture period, nor do we 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 15. Leases and Commitments
Leases
We have 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, 2010 are as follows:
Millions of dollars
Year Ending December 31:
2011 .................................................................... $194
2012 .................................................................... 143
2013 .................................................................... 118
2014 .................................................................... 103
2015 .................................................................... 84
Thereafter ................................................................ 153
Future minimum obligations ..................................................... $795
Certain operating leases contain residual value guarantees under which, if the leased property is not
purchased from the lessor at the end of the lease term, we will be 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, 2010, the maximum
amount of the residual value guarantee was $15 million. We expect the proceeds from the sale of the properties
under the operating leases will exceed the agreed values.
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