Exhibit 99.1
Kimberly-Clark Reports First Quarter 2003 Results
Sales Rose Nearly 4 Percent to $3.5 Billion; Diluted Net Income
Was 78 Cents Per Share
DALLAS, April 22, 2003--Kimberly-Clark Corporation (NYSE: KMB)
today reported that first quarter sales were $3.5 billion in 2003, an
increase of nearly 4 percent from the prior year. Diluted net income
for the first quarter was 78 cents per share in 2003 compared with 84
cents per share in 2002, a decline of approximately 7 percent.
First quarter earnings per share, before unusual items in both
years and the cumulative effect of a change in accounting principle in
2002, declined 8 percent to 80 cents per share in 2003 from 87 cents
per share last year. The unusual items are described in more detail
below.
Kimberly-Clark management believes that, because of the nature
of the unusual items, investors' understanding of the company's
performance is enhanced by disclosing earnings per share before unusual
items as a reasonable basis for comparison of the company's ongoing
results of operations. The attached Earnings Summary schedule provides
a reconciliation of earnings per share before unusual items to diluted
net income per share determined in accordance with generally accepted
accounting principles.
Sales in the first quarter of 2003 benefited from a 3 percent
improvement in currency exchange rates as well as volume growth in each
of the company's three business segments of approximately 2 percent.
Net selling prices were 1 percent lower, reflecting a continued
competitive environment, particularly in the diaper and training pant
categories in North America.
Compared with the prior year, first quarter operating profit
and net income were also impacted by higher pension expense of about
$35 million, as well as a change in currency effects, mainly because of
gains recorded in 2002. First quarter bottom-line results increased
sequentially from the fourth quarter of 2002, driven primarily by
improvements in the company's infant and child care businesses in North
America and benefits from cost savings programs.
Thomas J. Falk, chairman and chief executive officer of
Kimberly-Clark, said, "We made progress on our priorities for 2003 in
the first quarter. Our businesses delivered volume growth despite
intense competition and continued to aggressively drive plans for new
and improved products. In addition, with more than $40 million in cost
reductions achieved in the quarter, we're on track to meet our $175 to
$200 million target for the year.
"Meanwhile, continued strong cash flow enabled us to
repurchase another 2.5 million shares of our common stock during the
quarter and make a planned contribution to our pension plan."
Cash provided by operations of $520.7 million in the first
quarter was even with 2002 even though the company contributed $100
million to its U.S. pension plan in March of this year.
Unusual items
In the first quarter of 2003, the company recorded a pretax
charge of about $16 million, or 2 cents per share, as a result of a
legal judgment related to a 1987 European government grant to a
facility that was sold in 1998. Net income in the first quarter of 2002
included a charge of 2 cents per share for the cumulative effect of the
accounting change to meet the requirements of EITF's pronouncement on
trade promotions and consumer coupons. Last year's first quarter
results also included pretax charges of approximately $9 million,
equivalent to 1 cent per share, for business improvement programs.
Review of first quarter sales
All three business segments - Consumer Tissue, Personal Care
and Business-to-Business - posted higher sales. Sales of consumer
tissue products were up approximately 6 percent, driven primarily by
currency effects in Europe and higher sales volumes in North America.
Overall, changes in foreign currency rates boosted sales by almost 5
percent and sales volumes increased more than 2 percent, while net
selling prices were about 1 percent lower due to promotional activity.
In North America, sales volumes of consumer tissue products
improved 3 percent, highlighted by continued solid growth in Cottonelle
and Scott bathroom tissue and Huggies baby wipes. Pricing was off 1
percent due to increases in competitive promotion spending. In Europe,
sales climbed approximately 19 percent, but were essentially flat
before currency effects. Sales volumes were up 2 percent, reflecting
market share gains for Scottex bathroom tissue in Spain and for Andrex
bathroom tissue and Kleenex facial tissue in the U.K.; however, net
selling prices declined by a similar amount. Meanwhile, consumer tissue
sales rose slightly in both Latin America and Asia.
Personal Care sales were 2 percent higher in the first
quarter. Sales volumes and currency were each up 1.5 percent, partially
offset by lower net selling prices. The decline in selling prices
reflects competitive price reductions and promotions, primarily in the
North American diaper and training pant categories, partially offset by
price increases implemented in Latin America following currency
devaluations.
In North America, sales volumes of personal care products were
about even with last year, as record first quarter volumes of Depend
and Poise adult incontinence care products as well as Pull-Ups training
pants and GoodNites youth pants were offset by lower shipments of
Huggies diapers, which were down 4 percent. Selling prices in North
America were down 2 percent. Personal care sales in Europe rose
approximately 19 percent in the quarter due primarily to favorable
currency rates. Increased sales volumes of Pull-Ups and DryNites
training and youth pants and other European personal care products were
tempered by somewhat lower sales volumes and selling prices for the
company's diaper products due to competitive activity. In Latin
America, sales decreased 11 percent, as volume improvements and price
increases were not sufficient to offset unfavorable currency throughout
most of the region. Finally, personal care sales expanded 9 percent in
Asia in the first quarter. Double-digit growth in Australia and Korea
from both currency benefits and higher sales volumes was partially
offset by continued economic weakness in the Philippines and Taiwan.
Sales of business-to-business products were up 4 percent in
the quarter. Currency-related gains totaled approximately 4 percent and
sales volumes advanced more than 2 percent. Volumes rose 4 percent for
the company's global Health Care business. K-C Professional's sales
volumes grew at a double-digit rate in Latin America and Asia, but were
essentially flat in North America and Europe. Overall selling prices
declined approximately 2 percent compared with the first quarter of
last year.
Other first quarter operating results
Operating profit in the first quarter of 2003 was $579.3
million, about 13 percent below the prior year. Increased sales
volumes, currency translation and savings of more than $40 million
achieved through the company's cost reduction programs contributed
positively. These factors, however, were more than offset by lower net
selling prices, inflation in key raw material costs, primarily fiber
and resin, and the increase in pension expense, as well as a
significant change in other income and expense.
Other income and expense, net was an expense of $35.4 million
in the first quarter of 2003 compared with income of $18.7 million in
2002. In addition to the charge of $16 million related to the European
legal judgment, the expense in 2003 consisted primarily of currency
transaction losses, while the income in 2002 included currency gains on
Australian dollar forward contracts related to last year's acquisition
of the remaining 45 percent interest in K-C Australia.
Kimberly-Clark's share of net income of equity companies in
the first quarter decreased from $32.4 million in 2002 to $26.0 million
in 2003 primarily due to lower net income at Kimberly-Clark de Mexico,
S.A. de C.V. (KCM). Compared with last year, depreciation of the
Mexican peso reduced the company's share of KCM's net income by
approximately $10 million. Before currency effects, KCM's first quarter
sales and operating profit both improved 9 percent.
Outlook
Commenting on the outlook, Mr. Falk said, "In 2003, we are
committed to driving sales volume growth and reducing costs. Based on
our progress in the first quarter, we remain comfortable with our
previous guidance. As we reiterated in January, we expect earnings per
share before unusual items in 2003 will be $3.36 per share or better.
Current external estimates are generally in line with this guidance.
"Regarding the second quarter, given recent cost increases,
particularly in fiber, energy and oil-based products, and the current
competitive environment, we expect earnings per share for the quarter
will be similar to the first quarter, before unusual items. Although
inflationary pressures will have some impact on the second quarter, we
are taking extra measures to mitigate the effect on the year as a
whole. Our teams are looking at all areas, from pricing to promotional
activities to additional cost and expense reductions.
"Finally, we will focus on further strengthening our cash flow
in 2003. Our cash flow will fund our growth investments and the
recently announced 13 percent increase in our quarterly dividend. It
also enables us to continue share repurchases in 2003. We plan to buy
back approximately 2 percent of our outstanding common stock this year,
depending on market conditions."
Conference call
A conference call to discuss this news release and other
matters of interest to investors and analysts will be held at 9 a.m.
(CST) today. The conference call will be simultaneously broadcast over
the World Wide Web. Stockholders and others are invited to listen to
the live broadcast or a playback, which can be accessed by following
the instructions set out in the Investors section of the company's Web
site (www.kimberly-clark.com).
About Kimberly-Clark
Kimberly-Clark Corporation is a leading manufacturer and
marketer of global consumer brands with annual sales of $13.6 billion.
It is home to some of the world's most recognized and trusted brands,
including Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend. The
company's tissue, personal care and health care products are
manufactured in 43 countries and sold in more than 150. Nearly
one-quarter of the world's population, or 1.3 billion people, use
Kimberly-Clark products each year. For more information about
Kimberly-Clark's well-known brands, visit the Kimberly-Clark Web site
at www.kimberly-clark.com.
Copies of Kimberly-Clark's Annual Report to Stockholders, its
proxy statements and its other SEC filings, including Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, are made available free of charge on the company's Web site on the
same day they are filed with the SEC. To view these filings, visit the
Investors section of the company's Web site.
Certain matters contained in this news release concerning the
business outlook, including new product introductions, cost savings and
acquisitions, anticipated financial and operating results, strategies,
contingencies and transactions of the company constitute
forward-looking statements and are based upon management's expectations
and beliefs concerning future events impacting the company. There can
be no assurance that these future events will occur as anticipated or
that the company's results will be as estimated. For a description of
certain factors that could cause the company's future results to differ
materially from those expressed in any such forward-looking statements,
see the section of Part I, Item 1 of the company's Annual Report on
Form 10-K for the year ended December 31, 2002 entitled "Factors That
May Affect Future Results."
Kimberly-Clark Web site: www.kimberly-clark.com
KIMBERLY-CLARK CORPORATION
FIRST QUARTER ENDED MARCH 31
(Millions, except per share amounts)
EARNINGS SUMMARY:
The following table presents the reconciliation of earnings before unusual items
to GAAP net income.
2003 2002
-------------------------------- --------------------------------
Diluted Diluted
Income Earnings Income Earnings
(Expense) Per Share (Expense) Per Share
------------- ------------ ------------- -------------
Earnings Before Unusual
Items..................................... $ 408.8 $ .80 $ 456.1 $ .87
Charges for Unusual Items:
European Legal
Judgment................................ (11.1) (.02) - -
Change in Accounting
Principle............................... - - (11.4) (.02)
Business Improvement
Programs................................ - - (5.5) (.01)
---------- ---------- ------------ --------
Net Income.................................. $ 397.7 $ .78 $ 439.2 $ .84
=========== ========== ============ ========
Average Diluted Common
Shares Outstanding........................ 511.3 523.7
OTHER INFORMATION:
THREE MONTHS ENDED MARCH 31
------------------------------------------------
2003 2002
------------ -----------
Cash Dividends Declared
Per Share................................. $ .34 $ .30
Capital Spending............................ 182.5 165.8
AS OF MARCH 31
------------------------------------------------
2003 2002
------------ -----------
Number of Common Shares
Outstanding............................... 509.0 519.1
Unaudited
KIMBERLY-CLARK CORPORATION
FIRST QUARTER ENDED MARCH 31
(Millions, except per share amounts)
2003 2002 Change
------------- ------------- ------
Net Sales...................................................... $ 3,459.7 $ 3,330.9 + 3.9%
Cost of products sold........................................ 2,256.1 2,118.5 + 6.5%
------------- -------------
Gross Profit................................................... 1,203.6 1,212.4 - 0.7%
Marketing, research and general
expenses................................................... 588.9 566.2 + 4.0%
Other (income) expense, net.................................. 35.4 (18.7) N.M.
------------- -------------
Operating Profit............................................... 579.3 664.9 -12.9%
Interest income.............................................. 4.8 3.7 +29.7%
Interest expense............................................. (43.0) (46.7) - 7.9%
------------- -------------
Income Before Income Taxes..................................... 541.1 621.9 -13.0%
Provision for income taxes................................... 157.5 185.1 -14.9%
------------- -------------
Income Before Equity Interests................................. 383.6 436.8 -12.2%
Share of net income of equity
companies.................................................. 26.0 32.4 -19.8%
Minority owners' share of
subsidiaries' net income................................... (11.9) (18.6) -36.0%
------------- -------------
Income Before Cumulative Effect
of Accounting Change......................................... 397.7 450.6 -11.7%
Cumulative effect of accounting
change, net of income taxes.................................. - (11.4) N.M.
------------- -------------
Net Income..................................................... $ 397.7 $ 439.2 - 9.4%
============= =============
Per Share Basis - Diluted:
Income Before Cumulative Effect
of Accounting Change....................................... $ .78 $ .86 - 9.3%
Cumulative effect of accounting
change, net of income taxes................................ - (.02) N.M.
------------- -------------
Net Income................................................... $ .78 $ .84 - 7.1%
============= ============
Notes:
1. In 2003, charges for unusual items are included as follows: other (income)
expense, net - $15.6 million.
2. In 2002, charges (credits) for unusual items are included as follows: cost
of products sold - $7.5 million; marketing, research and general expenses
- $1.4 million; minority owners' share of subsidiaries' net income -
$(1.3) million; and cumulative effect of accounting change, net of income
taxes - $11.4 million.
3. The Corporation accounts for stock-based compensation using the
intrinsic-value method. The following presents pro forma information about
net income and earnings per share as if the Corporation had applied fair
value expense recognition to all employee stock options granted.
(Millions of dollars, except per share amounts) 2003 2002
-----------------------------------------------------------------------------------------------------
Pro forma net income.................................................. $381.7 $422.6
Pro forma earnings per share - diluted................................ .75 .81
N.M.-Not meaningful
Unaudited
KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
FIRST QUARTER ENDED MARCH 31
(Millions, except per share amounts)
2003 2002 Change
------------- ------------- ------
NET SALES:
Personal Care........................................ $ 1,282.5 $ 1,257.2 + 2.0%
Consumer Tissue...................................... 1,325.3 1,254.8 + 5.6%
Business-to-Business................................. 887.8 852.9 + 4.1%
Intersegment sales................................... (35.9) (34.0) N.M.
------------- -------------
Consolidated......................................... $ 3,459.7 $ 3,330.9 + 3.9%
============= =============
OPERATING PROFIT: (a)
Personal Care........................................ $ 260.2 $ 264.1 - 1.5%
Consumer Tissue...................................... 233.8 245.2 - 4.6%
Business-to-Business................................. 144.5 159.9 - 9.6%
Unallocated items - net ............................. (59.2) (4.3) N.M.
------------- -------------
Consolidated......................................... $ 579.3 $ 664.9 -12.9%
============= =============
(a) Operating profit includes charges for unusual items as follows:
2003 2002
------------ -------------
Personal Care.................................. $ - $ 3.4
Consumer Tissue................................ - 4.2
Business-to-Business........................... - 1.3
Unallocated items - net........................ 15.6 -
------------- -------------
Consolidated................................... $ 15.6 $ 8.9
============= =============
Description of Business Segments
The Corporation is organized into 12 operating segments based on product
groupings. These operating segments have been aggregated into three reportable
global business segments: Personal Care; Consumer Tissue; and
Business-to-Business. Each reportable segment is headed by an executive officer
who reports to our Chief Executive Officer and is responsible for the
development and execution of global strategies to drive growth and profitability
of the Corporation's worldwide personal care, consumer tissue and
business-to-business operations. These strategies include global plans for
branding and product positioning, technology and research and development
programs, cost reductions including supply chain management, and capacity and
capital investments for each of these businesses. The principal sources of
revenue in each of our global business segments are described below.
The Personal Care segment manufactures and markets disposable diapers, training
and youth pants and swimpants; feminine and incontinence care products; and
related products. Products in this segment are primarily for household use and
are sold under a variety of brand names, including Huggies, Pull-Ups, Little
Swimmers, GoodNites, Kotex, Lightdays, Depend, Poise and other brand names.
The Consumer Tissue segment manufactures and markets facial and bathroom tissue,
paper towels and napkins for household use; wet wipes; and related products.
Products in this segment are sold under the Kleenex, Scott, Cottonelle, Viva,
Andrex, Scottex, Page, Huggies and other brand names.
The Business-to-Business segment manufactures and markets facial and bathroom
tissue, paper towels, wipers and napkins for away-from-home use; health care
products such as surgical gowns, drapes, infection control products,
sterilization wraps, disposable face masks and exam gloves, respiratory
products, and other disposable medical products; printing, premium business and
correspondence papers; specialty and technical papers; and other products.
Products in this segment are sold under the Kimberly-Clark, Kleenex, Scott,
Kimwipes, WypAll, Surpass, Safeskin, Tecnol, Ballard and other brand names.
N.M.-Not meaningful
Unaudited