Tina Barry
(972) 281-1484
[email protected]
RISING SALES AND OPERATING MARGIN BOOSTED KIMBERLY-CLARK'S SECOND QUARTER
EARNINGS FROM OPERATIONS TO A RECORD 81 CENTS PER SHARE, AN INCREASE OF 12.5
PERCENT COMPARED WITH 1999
Sales Jumped 10 Percent on the Strength of Double-Digit Volume Growth; EPS
From Operations Grew at Double-Digit Rate for Eighth Consecutive Quarter
DALLAS, July 25, 2000 - Kimberly-Clark Corporation (KMB:NYSE) today reported
that new and improved products and global expansion of its core businesses
lifted sales in the second quarter of 2000 to $3.5 billion, an increase of
10.0 percent compared with 1999. Driven by the sales gain and continuing
success in reducing costs, the company's operating margin, before unusual
items, improved to 18.7 percent. Second quarter earnings from operations of
81 cents per share rose 12.5 percent from 72 cents per share in 1999, setting
an all-time quarterly record.
Including unusual items, diluted net income per share for the second
quarter was 79 cents in 2000, an increase of 8.2 percent compared with 73 cents
in 1999. The unusual items consisted of charges for business improvement and
other nonoperating items in both years, including a gain in 1999 on the sale of
the company's pulp mill in Miranda, Spain.
Wayne R. Sanders, chairman and chief executive officer of Kimberly-Clark,
said, "I'm pleased that our positive momentum is continuing. We're growing our
sales with a blend of new and improved products and successful acquisitions.
In addition, selling price increases have begun to mitigate significantly
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higher raw material costs. Meanwhile, ongoing productivity gains and cost
reduction efforts also contributed to our improved results. Clearly, our
global teams are doing an outstanding job of delivering top-line growth and
driving solid and sustainable improvement through to the bottom-line.
"Strong cash flow continues to underpin our growth and provide tremendous
value for shareholders. So far this year, cash provided by operations has
increased nearly 15 percent to $1.1 billion. We're in the enviable position
of being able to invest in the future growth of our businesses while continuing
to repurchase shares of our common stock. In fact, we repurchased another
6.5 million shares in the second quarter, bringing the total for the year to
14.0 million shares."
REVIEW OF OPERATING RESULTS
Sales of $3.5 billion for the second quarter were up 10.0 percent compared
with 1999, with improvement in each of the company's core businesses and in
every region of the world. Sales would have increased approximately 11 percent
if the revenues of the company's pulp and timberlands operations in the
southeastern United States and pulp operations in Spain, which were closed or
sold in 1999, were excluded. Sales volumes, excluding divestitures, were
12 percent higher, while selling prices increased 1 percent and changes in
foreign currency rates reduced sales by about 2 percent.
Tissue sales rose 9.0 percent from the second quarter of 1999. Excluding
the revenues of divested businesses, however, sales were up over 11 percent,
driven by an increase in sales volumes of approximately 12 percent and a 2
percent rise in selling prices, partially offset by currency effects. Sales
volumes for both consumer and away-from-home products in North America grew at
double-digit rates, led by improved products such
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as Kleenex Cottonelle and Scott bathroom tissue, Scott paper towels and Kleenex
Scottfold hand towels. The company's tissue operations in Europe and Latin
America also achieved double-digit increases in sales volumes, with the
acquisition of Attisholz's tissue business and strong sales of Andrex bathroom
tissue in the U.K. contributing to the gains in Europe.
Sales of personal care products were 4.9 percent greater than in 1999,
with increased sales volumes accounting for the entire gain. In North America,
sales volumes of Huggies diapers remained at healthy levels, but were below
last year's all-time record. Sales volumes of the company's other personal
care products in North America continued to rise, paced by solid increases in
Depend and Poise incontinence care products and Kotex feminine care products.
In Europe, sales volumes of diapers and training and youth pants were up nearly
20 percent, driven by strong sales of Huggies diapers and expansion of Pull-Ups
training pants, DryNites youth pants and Little Swimmers swimpants into new
geographies. Additionally, higher shipments of Huggies diapers and Kotex
feminine pads in Korea contributed to a sixth consecutive quarter of
double-digit sales volume growth in Asia.
Sales of health care and other products rose 50.9 percent, due
primarily to the acquisitions of Ballard Medical Products and Safeskin
Corporation along with solid growth in sales volumes of the company's base
business.
Operating profit in the second quarter of 2000 was $638.3 million, 12.1
percent greater than in the prior year. Excluding unusual items, operating
profit rose 15.8 percent to $649.5 million in the second quarter of 2000
compared with $560.7 million in 1999, with improvement in each business
segment. The increase was achieved despite significantly higher raw materials
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costs worldwide, mainly for fiber used in the company's tissue business.
Kimberly-Clark's share of net income of equity companies in the second
quarter was $41.1 million in 2000 compared with $46.9 million in 1999. The
decrease was primarily attributable to lower earnings at Kimberly-Clark de
Mexico, S.A. de C.V. ("KCM"). Although KCM posted double-digit gains in sales
and operating profit before currency effects, its strong operating performance
was more than offset by changes in the value of the Mexican peso.
YEAR-TO-DATE RESULTS
For the first six months of 2000, sales of $6.9 billion were up 9.2
percent from $6.3 billion last year. Excluding the sales of divested
businesses, however, sales were about 11 percent higher. Operating profit was
$1,317.0 million in 2000 versus $1,113.9 million in 1999. However, before
unusual items, operating profit for the year increased 12.9 percent to
$1,274.1 million from $1,128.1 million in 1999. Diluted earnings per share
were $1.65 in 2000, 16.2 percent greater than $1.42 per share in 1999.
Diluted earnings per share before unusual items were $1.60 in 2000 compared
with $1.44 in 1999, an increase of 11.1 percent.
Kimberly-Clark Corporation is a leading consumer products company. Its
global tissue, personal care and health care brands include Huggies, Pull-Ups,
Kotex, Depend, Kleenex, Scott, Kimberly-Clark, Safeskin, Tecnol, Kimwipes and
WypAll. Other brands well known outside the U.S. include Andrex, Scottex,
Page, Popee and Kimbies. Kimberly-Clark also is a major producer of premium
business, correspondence and technical papers. The company has manufacturing
operations in 40 countries and sells its products in more than 150 countries.
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Certain matters contained in this news release concerning the business outlook,
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. 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, 1999 entitled
"Factors That May Affect Future Results."
Kimberly-Clark Web Site: www.kimberly-clark.com
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KIMBERLY-CLARK CORPORATION
SECOND QUARTER ENDED JUNE 30
(Millions, except per share amounts)
<TABLE>
<CAPTION>
EARNINGS PER SHARE SUMMARY:
Second Quarter Six Months
Ended June 30 Ended June 30
--------------- ---------------
2000 1999 Change 2000 1999 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Net Income Per
Share - Diluted.............. $.79 $.73 8.2% $1.65 $1.42 16.2%
Adjusted for Unusual Items:
Charges for Business
Improvement and
Other Programs............. .01 .01 .02 .04
Other Charges (Credits).... .01 (.02) (.07) (.02)
------ ------ ------ ------
Earnings From
Operations - Diluted......... $.81 $.72 12.5% $1.60 $1.44 11.1%
====== ====== ====== ======
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic........................ 542.1 532.3 543.7 534.1
Diluted 546.8 536.3 548.1 537.4
OTHER INFORMATION:
SIX MONTHS ENDED JUNE 30 2000 1999 Change
------- ------- --------
Cash Dividends Declared Per Share........................ $ .54 $ .52 + 3.8%
Capital Spending......................................... 495.2 359.9 + 37.6%
TWELVE MONTHS ENDED JUNE 30
Net Income Return on Average Stockholders'
Equity................................................. 37.3% 32.1% + 16.2%
AS OF JUNE 30
Net Debt to Capital...................................... 33.2% 39.5% - 15.9%
Number of Common Shares Outstanding...................... 538.7 532.6
</TABLE>
Unaudited
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KIMBERLY-CLARK CORPORATION
SECOND QUARTER ENDED JUNE 30
(Millions, except per share amounts)
<TABLE>
<CAPTION>
2000 1999 Change
---- ---- ------
<S> <C> <C> <C>
Net Sales.................................... $3,464.5 $3,148.6 + 10.0%
Cost of products sold...................... 2,032.1 1,851.6 + 9.7%
--------- ---------
Gross Profit................................. 1,432.4 1,297.0 + 10.4%
Advertising, promotion
and selling expenses..................... 534.0 517.6 + 3.2%
Research expense........................... 68.4 62.2 + 10.0%
General expense............................ 183.4 166.8 + 10.0%
Goodwill amortization...................... 20.7 10.2 +102.9%
Restructuring items........................ - (1.4) N.M.
Other (income) expense, net................ (12.4) (27.7) - 55.2%
--------- ---------
Operating Profit............................. 638.3 569.3 + 12.1%
Interest income............................ 7.2 5.2 + 38.5%
Interest expense........................... (54.0) (54.6) - 1.1%
--------- ---------
Income Before Income Taxes................... 591.5 519.9 + 13.8%
Provision for income taxes................. 182.9 165.8 + 10.3%
--------- ---------
Income Before Equity Interests............... 408.6 354.1 + 15.4%
Share of net income of equity
companies................................ 41.1 46.9 - 12.4%
Minority owners' share of
subsidiaries' net income................. (15.4) (9.9) + 55.6%
--------- ---------
Net Income................................... $ 434.3 $ 391.1 + 11.0%
========= =========
Net Income Per Share:
Basic...................................... $ .80 $ .73 + 9.6%
========= =========
Diluted.................................... $ .79 $ .73 + 8.2%
========= =========
</TABLE>
Notes:
1. In 2000, charges for business improvement and other programs and other
charges (credits) are included in operating profit as follows: cost of
products sold - $4.7 million; advertising, promotion and selling
expenses - $1.0 million; and general expense - $5.5 million.
2. In 1999, charges (credits) for business improvement and other programs
and other charges (credits) are included in operating profit as follows:
cost of products sold - $14.8 million; general expense - $1.4 million;
restructuring items - $(1.4) million; and other (income) expense, net -
$(23.4) million.
N.M.-Not meaningful
Unaudited
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KIMBERLY-CLARK CORPORATION
SIX MONTHS ENDED JUNE 30
(Millions, except per share amounts)
<TABLE>
<CAPTION>
2000 1999 Change
---- ---- ------
<S> <C> <C> <C>
Net Sales.................................... $6,851.7 $6,273.8 + 9.2%
Cost of products sold...................... 4,013.0 3,703.5 + 8.4%
--------- ---------
Gross Profit................................. 2,838.7 2,570.3 + 10.4%
Advertising, promotion
and selling expenses..................... 1,086.2 1,024.8 + 6.0%
Research expense........................... 129.6 117.0 + 10.8%
General expense............................ 366.5 316.9 + 15.7%
Goodwill amortization...................... 39.0 17.0 +129.4%
Restructuring items........................ - 1.5 N.M.
Other (income) expense, net................ (99.6) (20.8) +378.8%
--------- ---------
Operating Profit............................. 1,317.0 1,113.9 + 18.2%
Interest income............................ 15.0 11.2 + 33.9%
Interest expense........................... (103.4) (108.1) - 4.3%
--------- ---------
Income Before Income Taxes................... 1,228.6 1,017.0 + 20.8%
Provision for income taxes................. 385.1 327.0 + 17.8%
--------- ---------
Income Before Equity Interests............... 843.5 690.0 + 22.2%
Share of net income of
equity companies......................... 88.7 90.5 - 2.0%
Minority owners' share of
subsidiaries' net income................. (27.7) (14.8) + 87.2%
--------- ---------
Net Income................................... $ 904.5 $ 765.7 + 18.1%
========= =========
Net Income Per Share:
Basic...................................... $ 1.66 $ 1.43 + 16.1%
========= =========
Diluted.................................... $ 1.65 $ 1.42 + 16.2%
========= =========
</TABLE>
Notes:
1. In 2000, charges for business improvement and other programs and other
charges (credits) are included in operating profit as follows: cost of
products sold - $19.0 million; advertising, promotion and selling
expenses - $3.5 million; general expense - $10.4 million; and other
(income) expense, net - $(75.8) million.
2. In 1999, charges (credits) for business improvement and other
programs and other charges (credits) are included in operating profit as
follows: cost of products sold - $33.3 million; general expense -
$2.8 million; restructuring items - $1.5 million; and other (income)
expense, net - $(23.4) million.
N.M.-Not meaningful
Unaudited
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KIMBERLY-CLARK CORPORATION
SELECTED BUSINESS SEGMENT DATA
SECOND QUARTER ENDED JUNE 30
(Millions)
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
--------------- ---------------
2000 1999 Change 2000 1999 Change
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
NET SALES:
Tissue....................... $1,784.1 $1,636.3 + 9.0% $3,578.0 $3,350.6 + 6.8%
Personal Care................ 1,360.8 1,297.5 + 4.9% 2,659.1 2,498.7 + 6.4%
Health Care and
Other...................... 333.4 221.0 +50.9% 639.7 438.6 +45.9%
Intersegment
Sales...................... (13.8) (6.2) N.M. (25.1) (14.1) N.M.
--------- --------- --------- ---------
Consolidated................. $3,464.5 $3,148.6 +10.0% $6,851.7 $6,273.8 + 9.2%
========= ========= ========= =========
OPERATING PROFIT (a):
Tissue....................... $ 320.3 $ 255.6 +25.3% $ 625.6 $ 543.0 +15.2%
Personal Care................ 279.9 266.6 + 5.0% 549.4 501.1 + 9.6%
Health Care and
Other...................... 46.0 43.2 + 6.5% 90.7 84.8 + 7.0%
Unallocated
items - net................ (7.9) 3.9 N.M. 51.3 (15.0) N.M.
--------- --------- --------- ---------
Consolidated................. $ 638.3 $ 569.3 +12.1% $1,317.0 $1,113.9 +18.2%
========= ========= ========= =========
</TABLE>
(a) Operating profit includes charges (credits) for business improvement
and other programs and other charges (credits) as follows:
<TABLE>
<CAPTION>
Second Quarter Six Months
Ended June 30 Ended June 30
--------------- -------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Tissue $ 5.2 $ 8.9 $ 18.5 $21.7
Personal Care 1.2 5.7 4.0 15.0
Health Care and Other 4.8 .2 10.4 1.1
Unallocated items - net - (23.4) (75.8) (23.6)
----- ------- ------- -------
Consolidated $11.2 $(8.6) $(42.9) $14.2
====== ======= ======= =======
</TABLE>
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Description of Business Segments
The Tissue segment manufactures and markets facial and bathroom tissue, paper
towels, wipers and napkins for household and away-from-home use; wet wipes;
printing, premium business and correspondence papers; and related products.
The Personal Care segment manufactures and markets disposable diapers,
training and youth pants and swimpants; feminine and incontinence care
products; and related products.
The Health Care and Other segment manufactures and markets 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; specialty and technical papers;
and other products.
N.M.-Not meaningful
Unaudited
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