Kimberly-Clark Announces Fourth Quarter 2008 Results; Reviews 2009 Business Outlook



    


    
    4Q Net Sales Were $4.6 Billion, a Decrease of Approximately 3 Percent vs.
2007; GAAP-Basis EPS Were $1.01 Compared With $1.07 in 4Q '07
    

    
    Adjusted EPS Declined 9 Percent to $1.01, Slightly Below Previous
Guidance for the Quarter
    

    
    Company Expects Adjusted Earnings Per Share in 2009 Will Be Similar to
2008, in a Range of $4.00 to $4.20, Despite Significant Headwinds from Pension
Expense and Currency Effects
    

    
    DALLAS, Jan. 26 /PRNewswire-FirstCall/ -- Kimberly-Clark Corporation
(NYSE:   KMB) today reported that net sales in the fourth quarter of 2008
decreased 3.4 percent to $4.6 billion, as the effect of weaker foreign
currency exchange rates more than offset organic sales growth of approximately
5 percent.  The growth in organic sales was driven by higher net selling
prices, favorable product mix and continued improvement in sales volumes
across developing and emerging markets.  Overall sales volumes, however, were
below prior year levels due primarily to lower shipments of Huggies diapers
and Pull-Ups in North America, as well as the company's consumer tissue and
K-C Professional products in North America and Europe.  Sales volumes for the
quarter also trailed planned levels as customer and consumer demand was
impacted by deteriorating economic conditions in these geographies.
    

    
    Diluted net income per share for the quarter was $1.01 compared with
$1.07 in the prior year.  Adjusted earnings were $1.01 per share versus $1.11
per share in the fourth quarter of 2007 and below the company's previous
guidance range of $1.02 to $1.07 per share.  During the quarter, the company
made further progress in improving revenue realization, which contributed to
an increase in operating profit margin from recent lows.  Nonetheless,
operating profit and margin were down compared with the prior year, mainly as
a result of higher manufacturing costs, including inflation of about $135
million, and unfavorable currency effects, along with the decline in sales
volumes and higher expenses included in other (income) and expense, net. 
Meanwhile, the company continued to boost marketing investment, increasing
spending by more than $25 million compared with the fourth quarter of 2007. 
Overall, currency effects reduced earnings in the fourth quarter of 2008
compared with the prior year by more than 20 cents per share, including
approximately 8 cents per share as a result of significant currency losses
incurred by the company's equity affiliate, Kimberly-Clark de Mexico.
    

    
    Fourth quarter adjusted earnings per share excludes charges in 2007 for
strategic cost reductions to streamline the company's operations and certain
incremental implementation costs related to the strategic cost reduction plan.
 Additional detail on these items and further information about adjusted
earnings per share and why the company uses this non-GAAP financial measure
are provided later in this news release.
    

    
    Chairman and Chief Executive Officer Thomas J. Falk said, "During the
fourth quarter, economic weakness impacted our categories more than
anticipated, particularly in North America and Europe.  We believe some of the
effects are temporary, reflecting customer warehouse and consumer pantry
inventory reductions; however, consumer trade-down also affected our sales in
several categories.  We are fine tuning our pricing and promotional plans to
ensure we remain competitive, particularly in diapers and training pants in
North America.
    

    
    "Reflecting on the year, we made solid progress on a number of fronts
while managing through a challenging business environment.  Kimberly-Clark
teams have delivered solid organic sales growth, above the high end of our
long range target, brought innovative new and improved products to market,
enhanced the competitive position of our brands, deepened our relationships
with key customers and maintained a strong financial position.  I am also
encouraged that our focus on revenue realization has contributed to positive
operating profit margin momentum as we enter 2009."
    

    Review of fourth quarter sales by business segment

    
    Sales of personal care products decreased 2.5 percent from the fourth
quarter of 2007.  Net selling prices increased 6 percent, product mix improved
1 percent and sales volumes were flat, while currency effects reduced sales by
almost 9 percent.
    

    
    Personal care sales in North America declined about 2 percent versus the
year-ago quarter, as an improvement in net selling prices of 6 percent was
more than offset by a 7 percent drop in sales volumes and unfavorable currency
effects of 1 percent.  The higher selling prices resulted from increases
implemented earlier in 2008 across all categories, net of increased
promotional activity primarily for Huggies diapers to match competitive moves.
 The decrease in sales volumes was primarily attributable to lower shipments
of the company's diaper and child care brands, which were down approximately
10 percent overall, as customers adjusted inventory levels, child care
category sales slowed and some consumers switched to lower-priced product
offerings.  Meanwhile, sales volumes for Kotex feminine care and Depend and
Poise adult care products experienced a low single-digit decline.
    

    
    In Europe, personal care sales fell approximately 16 percent in the
quarter, mainly as a result of a 14 percent impact from weaker currencies. 
Sales volumes were even with the year-ago quarter, while net selling prices
decreased about 2 percent in continued competitive market conditions.  Sales
volumes of Huggies diapers in the company's four core markets of the U.K.,
France, Italy and Spain were unchanged compared with the fourth quarter of
2007.
    

    
    In developing and emerging markets, personal care sales slipped about 1
percent, as continued strong growth in organic sales was more than offset by
negative currency effects of almost 17 percent.  Sales volumes increased by
more than 5 percent, while net selling prices improved about 8 percent and
product mix was better by approximately 3 percent.  The growth in organic
sales was broad-based, with particular strength in China, Russia, Turkey,
Vietnam, Brazil and the Andean region in Latin America.
    

    
    Sales of consumer tissue products declined 2.6 percent in the fourth
quarter.  Although net selling prices climbed approximately 11 percent and
product mix was favorable by 1 percent, overall sales volumes were down 6
percent compared with the prior year and unfavorable currency exchange rates
reduced sales by more than 8 percent.
    

    
    In North America, sales of consumer tissue products increased more than 3
percent in the fourth quarter, as an increase in net selling prices of almost
13 percent and improved product mix of about 1 percent were partially offset
by a 10 percent decline in sales volumes and currency effects of 1 percent. 
The improvement in net selling prices reflects price increases implemented
across the bathroom tissue, paper towel and facial tissue categories during
the course of 2008.  This focus on improving revenue realization, along with
slower category growth and consumer trade-down, particularly in paper towels,
contributed to the lower sales volumes.  For the quarter, shipments were down
more than 10 percent for Viva and Scott paper towels, approximately 7 percent
for Cottonelle and Scott bathroom tissue and about 3 percent for Kleenex
facial tissue.  A portion of the overall volume decline also was due to the
company's decision in late 2007 to shed certain low-margin private label
business.
    

    
    In Europe, consumer tissue sales fell about 14 percent compared with the
fourth quarter of 2007, with weaker foreign currency exchange rates accounting
for the entire decline.  Sales volumes were down approximately 5 percent, due
mainly to lower sales of Andrex and Scottex bathroom tissue and Kleenex facial
tissue in response to higher prices and continued softness in category sales,
particularly in the U.K.  Net selling prices improved 4 percent, primarily
reflecting list price increases across multiple markets, and product mix also
was better by 1 percent.
    

    
    Consumer tissue sales in developing and emerging markets were lower by
about 2 percent, as unfavorable currency effects of approximately 17 percent
more than offset robust growth in organic sales. During 2008, the company
raised prices in most markets to recover higher raw materials costs and drove
improvements in mix with more differentiated, value-added products, strategies
that resulted in higher net selling prices of nearly 13 percent and better
product mix of 2 percent.  Meanwhile, sales volumes were even with the
year-ago quarter.
    

    
    Sales of K-C Professional (KCP) & other products went down 8.5 percent
from the year-ago quarter.  Although net selling prices improved by
approximately 5 percent, changes in foreign currency rates decreased sales by
more than 7 percent, sales volumes dropped more than 5 percent and product mix
was off about 1 percent.  Economic weakness and rising unemployment levels in
North America and Europe began to affect KCP's categories in the fourth
quarter.  In North America, sales went down approximately 3 percent.  Sales
volumes declined more than 8 percent and currency effects were negative by
more than 1 percent, partially offset by an improvement in net selling prices
of nearly 7 percent.  In Europe, KCP's sales fell 15 percent in the fourth
quarter, driven by lower sales volumes and unfavorable product mix of 7
percent and about 1 percent, respectively, and a decrease in currency rates
averaging 11 percent.  These factors were partially offset by a 4 percent
benefit from price increases implemented earlier in the year.   Across
developing and emerging markets, sales were down 8 percent, mainly as a result
of adverse currency effects of about 17 percent, partially offset by sales
volume gains and higher net selling prices.
    

    
    Sales of health care products increased 0.6 percent in the fourth
quarter, with growth in sales volumes of 5 percent mostly offset by
unfavorable currency exchange rates and product mix of approximately 3 percent
and 1 percent, respectively.  The improvement in sales volumes was paced by
double-digit growth in exam gloves and medical devices.  Overall, sales
volumes outside North America grew at a high-single digit rate.
    

    Other fourth quarter operating results

    
    Operating profit was $623 million in the fourth quarter of 2008, compared
with $668 million in 2007.  Excluding net charges for the company's strategic
cost reduction plan in both years and related implementation costs in 2007,
adjusted operating profit for the quarter decreased almost 10 percent to $629
million from $696 million in the prior year despite benefits from higher net
selling prices and cost savings.  As previously mentioned, key factors
contributing to the decrease included higher manufacturing costs and currency
effects, along with lower sales volumes, increases in strategic marketing and
higher expenses included in other (income) and expense, net.  Selling and
general expenses also were up versus the fourth quarter of 2007, primarily to
support growth in developing and emerging markets.
    

    
    Manufacturing costs for the quarter reflected inflation in key cost
inputs of more than $135 million compared with the year-ago period, as well as
increases in other operating costs, including production curtailments to
control inventory levels.   Inflation comprised $75 million for raw materials
other than fiber, primarily polymer resins and other oil-based materials,
approximately $35 million of energy costs, $15 million in fiber costs and
about $10 million in distribution costs.  Translation losses arising from
changes in currency exchange rates reduced fourth quarter operating profit by
approximately $60 million in 2008 versus 2007.  Excluding
restructuring-related gains in both years, other (income) and expense, net in
the fourth quarter was a net expense of $29 million in 2008 compared with a
net expense of $3 million in 2007.  The increase reflects a higher level of
currency transaction losses compared with the prior year, as well as costs
incurred in 2008 related to a legal judgment and a debt refinancing, partially
offset by favorable settlement of a value-added tax matter in Latin America. 
Cost savings in the quarter from the company's FORCE (Focused On Reducing
Costs Everywhere) program and strategic cost reduction plan totaled $20
million and $14 million, respectively.
    

    
    The company's effective tax rate in the fourth quarter was 22.4 percent
in 2008 and 23.9 percent in 2007.  Excluding the effects of charges for the
company's strategic cost reduction plan in both years, as well as related
implementation costs, net effects from synthetic fuel partnerships and
minority owners' share of tax benefits in 2007, the adjusted effective tax
rate for the quarter was 23.2 percent in 2008 compared with 25.0 percent in
2007.  The decline was due primarily to the timing of tax initiatives which,
compared with the company's previous guidance for the quarter, also reduced
income taxes by approximately $28 million, or 7 cents per share.  The net
effect of synthetic fuel partnership activities in the fourth quarter of 2007
was a cost of $6 million.  Synthetic fuel produced by the partnerships was
eligible for tax credits through the end of 2007, at which time the law giving
rise to the tax benefits expired.  The partnerships were dissolved during 2008
at no cost to the company.  Reconciliations of the above effective tax rate
calculations are provided in a separate section of this news release.
    

    
    Kimberly-Clark's share of net income of equity companies in the fourth
quarter decreased to $21 million from $43 million in 2007, primarily as a
result of lower net income at Kimberly-Clark de Mexico, S.A.B. de C.V. (KCM). 
Although KCM delivered double-digit organic sales growth and improved its
gross profit margin, operating profit and net income were significantly
reduced by currency effects, including transaction losses on more than $300
million of U.S. dollar-denominated liabilities, as the Mexican peso weakened
by more than 20 percent versus the U.S. dollar.  Kimberly-Clark's share of
KCM's currency transaction and translation losses in the quarter totaled about
$35 million, equivalent to approximately 8 cents per share.
    

    
    Minority owners' share of subsidiaries' net income was $35 million in the
fourth quarter of 2008 compared with $51 million in the prior year.  The
decrease was due mainly to minority owners' share of tax benefits at
majority-owned subsidiaries in the year-ago quarter of more than $20 million,
partially offset by increased earnings at majority-owned subsidiaries in Latin
America and the Middle East and higher returns payable on the redeemable
preferred securities issued by the company's consolidated financing
subsidiary.
    

    Update on cost savings programs

    
    The company's strategic cost reduction plan was part of a comprehensive,
multi-year effort announced in July 2005 to further improve Kimberly-Clark's
competitive position and was completed as of the end of 2008.  Under the plan,
manufacturing and administrative operations, primarily in North America and
Europe, were streamlined with expected annual savings of at least $350 million
by 2009.  During the fourth quarter, the most significant activities involved
consolidating infant and child care operations in North America, improving the
cost structure in Health Care, streamlining administrative operations in
Europe and the sale of a facility in Asia.
    

    
    Employees at all 23 facilities slated for sale, closure or streamlining
as part of the cost reduction plan have been notified about workforce
reductions and other actions.  Cumulative pretax charges of $880 million
(about $610 million after tax) were incurred, at the low end of the company's
most recent expectations for total pretax charges of $880 to $900 million
($610 to $620 million after tax).
    

    
    For the full year of 2008, year-over-year pretax savings of nearly $110
million were realized, bringing the cumulative annual total to approximately
$335 million since the plan's inception.  Including projected year-over-year
savings of about $50 million in 2009, total annual savings from the plan are
now expected to reach $385 million, well ahead of the above-mentioned savings
objective.
    

    
    Regarding the company's ongoing FORCE program, savings of $63 million in
2008 were below planned levels, primarily as a result of higher-than-expected
manufacturing costs throughout the year.
    

    
    Combined strategic cost reduction and FORCE savings totaled more than
$170 million for the year, somewhat below the company's original target for
savings of $200 to $250 million from the two programs.
    

    Cash flow and balance sheet

    
    Cash provided by operations in the fourth quarter totaled $678 million,
down about 1 percent from $685 million in the prior year.  The decrease was
due primarily to lower net income, a reduced level of accrued expenses and a
$50 million contribution to the company's U.S. pension plan in 2008, mostly
offset by lower tax payments versus the year-ago quarter.  Capital spending
for the quarter was $253 million in 2008 compared with $213 million in the
prior year.  For the full year of 2008, capital spending totaled $906 million,
consistent with the company's targeted range of $850 to $950 million.  During
the fourth quarter, the company repurchased approximately 1.3 million shares
of its common stock at a cost of $75 million, bringing repurchases for the
full year to about 10.0 million shares at a cost of $625 million, in line with
the company's updated target of $600 to $650 million.
    

    
    Total debt and redeemable preferred securities was $7.0 billion at
December 31, 2008 compared with $7.3 billion at September 30, 2008 and $6.5
billion at the end of 2007.
    

    Full year results

    
    For the year of 2008, sales of $19.4 billion were up 6.3 percent from
$18.3 billion in the prior year.  Sales volumes increased about 1 percent, net
selling prices were higher by more than 4 percent and product mix was
favorable by almost 1 percent, resulting in organic sales growth of about 6
percent, while favorable currency effects added less than 1 percent to sales. 
Full year operating profit of $2,547 million included net charges of about $60
million for strategic cost reductions.  Adjusted operating profit was $2,607
million, down approximately 5 percent from $2,734 million in 2007.  The
benefits of top-line growth, along with cost savings of $171 million, were
more than offset by inflation in key cost components totaling more than $725
million, an increase in strategic marketing spending of about $95 million and
higher levels of selling and administrative expenses, mainly to support growth
in developing and emerging markets.  For the year, diluted net income per
share in 2008 was $4.04 compared with $4.09 in 2007.  Adjusted earnings per
share declined approximately 3 percent to $4.14 in 2008 from $4.25 in 2007. 
Those amounts are adjusted for charges related to strategic cost reductions in
both years, related incremental implementation costs and the gain on a
litigation settlement in 2007, as well as an extraordinary loss recorded in
the second quarter of 2008.
    

    Outlook
    The company outlined key planning and guidance assumptions for 2009, as
follows:
    --  Organic sales growth in the low single digits.  Year-over-year net
        selling prices are expected to be up approximately 2 to 3 percent,
        while product mix and overall sales volumes should both be flat to up
        modestly.  Volume trends are expected to improve in the second half of
        the year.
    --  Net sales decline of 4 to 5 percent.  Currency is expected to reduce
        sales for the full year by approximately 7 percent.
    --  Adjusted operating profit similar to 2008, in a range of plus or minus
        low single digits, as lower costs are expected to be substantially
        offset by higher pension expense, currency effects and additional
        investments in strategic marketing.
        --  Deflation in key cost inputs of approximately $300 million.  This
            reflects estimated average market pricing for benchmark northern
            softwood pulp of approximately $740 per metric ton, oil prices
            averaging $70 per barrel for the year and natural gas prices in
            North America in a range of $7 to $8 per mmbtu for the year. 
            Weaker currency exchange rates reduce the potential benefit of
            forecasted declines in dollar-based input costs for operations
            outside the U.S.
        --  Savings from the company's FORCE program and its strategic cost
            reduction plan totaling about $150 million.
        --  Pension expense of approximately $295 million across all company
            defined benefit plans, an increase of approximately $200 million
            from 2008.  Cash contributions to the plans in 2009, including
            those required under the U.S. Pension Protection Act of 2005, are
            expected to total about $530 million versus $130 million in 2008.
        --  Year-over-year currency translation and transaction losses for
            consolidated operations of $250 to $325 million due to the
            weakening of key foreign currencies versus the U.S. dollar.  The
            transaction losses include estimated amounts equivalent to 10 to
20
            cents per share related to conversion of local currency cash
            balances to U.S. dollars at certain operations in Latin America. 
            The exact timing and magnitude of the transaction losses will
            depend on market conditions.
        --  Planned increases in strategic marketing spending will be directed
            to support new and improved products, continued growth in
            developing and emerging markets and improve overall brand equity
            and market share.


    --  The adjusted effective tax rate for the year is expected to be in a
        range of 28 to 30 percent versus 27.3 percent in 2008.  The
        year-over-year increase in the tax rate (at the midpoint) is
equivalent
        to approximately 10 cents per share, or more than 2 percentage points
        of earnings growth.
    --  The company's share of net income of equity companies is expected to
be
        somewhat below the 2008 level, as improved operating performance at
K-C
        de Mexico is expected to be more than offset by further weakness in
the
        Mexican peso.
    --  Capital investments of $800 to $850 million are planned to support
        future sales and earnings growth.  Spending will approximate 4.5
        percent of sales compared with the company's long-term targeted range
        of 5 to 6 percent of sales.
    --  A low single-digit percentage increase in the dividend is anticipated
        effective April 2009, subject to approval by the Board of Directors.
    --  In light of this year's pension funding requirements, the company
        currently does not expect to repurchase any of its common stock in
        2009.  Share repurchases will be resumed if the company is successful
        in generating incremental cash flow.


    
    The company noted that although commodity costs have fallen dramatically
since mid-2008, the related weakness in foreign currencies, along with higher
pension expense resulting from last year's negative returns in global equity
markets will be a significant drag on the company's 2009 results.  The
increase in pension expense in 2009 is equivalent to approximately 34 cents
per share, or more than 8 percentage points of growth compared with adjusted
earnings of $4.14 per share in 2008.  In addition, projected incremental
currency transaction losses could further dampen earnings growth by as much as
5 percentage points.  Based on plans in place for the coming year, the company
expects to generate sufficient improvement in other aspects of its business
operations to substantially offset the negative effects from pension and
currencies.  As a result, adjusted earnings per share in 2009 are expected to
be similar to 2008, in a range of $4.00 to $4.20.  Adjusted earnings per share
in the first half of the year are likely to be down versus 2008, with
improvement expected in the second half of the year.
    

    
    Commenting on the outlook, Falk said, "The collapse of global financial
markets has precipitated significant changes in commodity costs and currency
rates and resulted in a high level of volatility and uncertainty in the
current business environment.  Although it has become more challenging to
predict our results in the near-term, we will continue to do the right things
for the long-term health of our businesses and effectively manage those
factors which we can control.  In short, we will continue to focus on
executing our Global Business Plan strategies.  Consistent with this focus and
our commitment to deliver on the long-term financial objectives of the Plan,
we have decided to discontinue providing earnings guidance for individual
quarters within a year.
    

    
    "Our plan for 2009 assumes no improvement in the external environment in
the near-term, with gradually improving conditions later in the year.  We are
encouraged that commodity costs have fallen from their 2008 highs, which
should help us to improve profitability over time, and that as of today, our
cost assumptions appear to be conservative.  Keep in mind, however, that a
number of factors could cause consumer demand or net selling prices for our
products to change unexpectedly or result in further volatility in currency
exchange rates and our input costs.  We will carefully monitor economic and
competitive conditions and adjust our plans as appropriate to deliver the best
possible results.
    

    
    "In this environment, the strength of our marketing and innovation
programs is vitally important to ensure our brands provide a great value to
consumers.  We will continue to invest to build our capabilities in these
areas and we will continue to support our growth initiatives and further build
brand equity with higher marketing spending.  We have no plans to cut back on
these key investments.  We will be disciplined to strike the right balance
between volume growth and profitability.  At the same time, we will accelerate
cost reductions and drive efficiency in every aspect of our operations to
improve our competitive position.  We will also continue to focus on
maximizing our cash flow and maintaining a strong balance sheet.
    

    
    "We are confident that we will emerge from this challenging period
stronger than ever and that we have the right strategies in place to drive
sustainable growth and deliver shareholder value over the long-term."
    

    Non-GAAP financial measures

    
    This press release and the accompanying tables include the following
financial measures that have not been calculated in accordance with accounting
principles generally accepted in the U.S., or GAAP, and are therefore referred
to as nonGAAP financial measures.
    
    --  adjusted earnings and earnings per share
    --  adjusted operating profit
    --  adjusted effective tax rate


    
    These non-GAAP financial measures exclude certain items that are included
in the company's earnings, earnings per share, operating profit and effective
tax rate calculated in accordance with GAAP.  A detailed explanation of each
of the adjustments to the comparable GAAP financial measures is given below. 
In accordance with the requirements of SEC Regulation G, reconciliations of
the non-GAAP financial measures to the comparable GAAP financial measures are
attached.
    

    
    The company provides these non-GAAP financial measures as supplemental
information to our GAAP financial measures.  Management and the company's
Board of Directors use adjusted earnings, adjusted earnings per share and
adjusted operating profit to (a) evaluate the company's historical and
prospective financial performance and its performance relative to its
competitors, (b) allocate resources and (c) measure the operational
performance of the company's business units and their managers.  Additionally,
the Management Development and Compensation Committee of the company's Board
of Directors uses these non-GAAP financial measures when setting and assessing
achievement of incentive compensation goals.  These goals are based, in part,
on the company's adjusted earnings per share and improvement in the company's
adjusted return on invested capital determined by excluding the charges that
are used in calculating these non-GAAP financial measures.
    

    
    In addition, Kimberly-Clark management believes that investors'
understanding of the company's performance is enhanced by including these
non-GAAP financial measures as a reasonable basis for comparing the company's
ongoing results of operations.  Many investors are interested in understanding
the performance of our businesses by comparing our results from ongoing
operations from one period to the next.  By providing these non-GAAP financial
measures, together with reconciliations, we believe we are enhancing
investors' understanding of our businesses and our results of operations, as
well as assisting investors in evaluating how well the company is executing
the material changes to our enterprise contemplated by the strategic cost
reduction plan.  Also, many financial analysts who follow our company focus on
and publish both historical results and future projections based on non-GAAP
financial measures.  We believe that it is in the best interests of our
investors for us to provide this information to analysts so that those
analysts accurately report the non-GAAP financial information.
    

    --  We calculate adjusted earnings, adjusted earnings per share, adjusted
        operating profit and adjusted effective tax rate by excluding from the
        comparable GAAP measure (i) charges related to our strategic cost
        reduction plan for streamlining the company's operations, (ii) certain
        incremental implementation costs relating to our strategic cost
        reduction plan, (iii) an after-tax extraordinary loss related to the
        restructuring of certain contractual arrangements, (iv) the gain on a
        litigation settlement and (v) the net effect in 2007 of the company's
        investment in synthetic fuel partnerships and the minority owners'
        share of tax benefits on the company's effective tax rate.  Each of
        these adjustments and the basis for such adjustments are described
        below:
    --  Strategic cost reduction plan. In July 2005, the company authorized a
        strategic cost reduction plan aimed at streamlining manufacturing and
        administrative operations, primarily in North America and Europe.  The
        strategic cost reduction plan commenced in the third quarter of 2005
        and was completed as of December 31, 2008.  At the time we announced
        the plan, we advised investors that we would report our earnings,
        earnings per share and operating profit excluding the strategic cost
        reduction plan charges so that investors could compare our operating
        results without the plan charges from period to period and could
assess
        our progress in implementing the plan.  Management does not consider
        these charges to be part of our earnings from ongoing operations for
        purposes of evaluating the performance of its business units and their
        managers and excludes these charges when making decisions to allocate
        resources among its business units.
    --  Implementation costs. In connection with our strategic cost reduction
        plan, the company incurred incremental implementation costs related to
        the transfer of certain administrative processes to third-party
        providers.  These costs were incurred primarily in the first six
months
        of 2007.  Management excludes these implementation costs from our
        earnings from ongoing operations for purposes of evaluating the
        performance of our business units and their managers and excludes
these
        costs when making decisions to allocate resources among its business
        units.
    --  Extraordinary loss.  In June 2008, the company restructured
contractual
        arrangements of two financing entities, which resulted in the
        consolidation of these two entities.  As a result of the
consolidation,
        notes receivable and loan obligations held by these entities with
        aggregate fair values of $600 million and $612 million, respectively,
        were included in long-term notes receivable and long-term debt on the
        company's consolidated balance sheet.  Because the fair value of the
        loans exceeded the fair value of the notes receivable, the company
        recorded an after-tax extraordinary loss of approximately $8 million
on
        its income statement for the period ended June 30, 2008, as required
by
        FIN 46R.  Management does not consider this loss to be part of our
        earnings from ongoing operations for purposes of evaluating the
        performance of its business units and their managers and excludes this
        loss when making decisions to allocate resources among its business
        units.
    --  Litigation settlement. In the third quarter of 2007, the company
        received proceeds from settlement of litigation related to prior
years'
        operations in Latin America.  Management does not consider this gain
to
        be part of our earnings from ongoing operations for purposes of
        evaluating the performance of its business units and their managers
and
        excludes the gain when making decisions to allocate resources among
its
        business units.
    --  Adjusted effective tax rate. In the analysis of its effective tax
rate,
        the company excludes the effects of charges for the strategic cost
        reduction plan, related implementation costs and the litigation
        settlement gain, as well as net effects in 2007 from the company's
        investment in synthetic fuel partnerships and the minority owners'
        share of tax benefits.  We believe that adjusting for these items
        provides improved insight into the tax effects of our ongoing business
        operations.


    
    These non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for the comparable GAAP measure.  There are
limitations to these non-GAAP financial measures because they are not prepared
in accordance with GAAP and may not be comparable to similarly titled measures
of other companies due to potential differences in methods of calculation and
items being excluded. The company compensates for these limitations by using
these non-GAAP financial measures as a supplement to the GAAP measures and by
providing reconciliations of the non-GAAP and comparable GAAP financial
measures.  The non-GAAP financial measures should be read only in conjunction
with the company's consolidated financial statements prepared in accordance
with GAAP.
    

    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 and its well-known global brands are an indispensable part
of life for people in more than 150 countries.  Every day, 1.3 billion people
- nearly a quarter of the world's population - trust K-C brands and the
solutions they provide to enhance their health, hygiene and well-being.  With
brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend,
Kimberly-Clark holds No. 1 or No. 2 share positions in more than 80 countries.
 To keep up with the latest K-C news and to learn more about the company's
137-year history of innovation, visit www.kimberly-clark.com.
    

    
    Copies of Kimberly-Clark's Annual Report to Stockholders and its proxy
statements and 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 economic conditions, anticipated currency rates and
exchange risk, cost savings, changes in finished product selling prices,
anticipated raw material and energy costs, anticipated costs and benefits
related to the strategic cost reduction plan, anticipated financial and
operating results, strategies, contingencies and anticipated 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 Item 1A of the company's Annual Report on Form 10-K for the
year ended December 31, 2007 entitled "Risk Factors."
    

    

    
                              KIMBERLY-CLARK CORPORATION
                             CONSOLIDATED INCOME STATEMENT
                               PERIODS ENDED DECEMBER 31
                      (Millions of dollars, except per share amounts)
    

    
                                             Three Months
                                            Ended December 31
                                         2008             2007         Change
    

    
    Net Sales                           $4,598           $4,758        - 3.4%
        Cost of products sold            3,143            3,296        - 4.6%
    

    
    Gross Profit                         1,455            1,462        - 0.5%
        Marketing, research and general
         expenses                          817              792        + 3.2%
        Other (income) and expense, net     15                2          N.M.
    

    
    Operating Profit                       623              668        - 6.7%
        Nonoperating  income                 -               15          N.M.
        Interest income                     15               11        +36.4%
        Interest expense                   (80)             (84)       - 4.8%
    

    
    Income Before Income Taxes and
     Equity Interests                      558              610        - 8.5%
        Provision for income taxes        (125)            (146)       -14.4%
    Income Before Equity Interests         433              464        - 6.7%
        Share of net income of equity
         companies                          21               43        -51.2%
        Minority owners' share of
         subsidiaries' net income          (35)             (51)       -31.4%
    

    
    Net Income                            $419             $456        - 8.1%
    

    
    Net Income Per Share Basis -
     Diluted                             $1.01            $1.07        - 5.6%
    

    
    N.M. - Not meaningful
    Unaudited
    

    
                            KIMBERLY-CLARK CORPORATION
                             PERIODS ENDED DECEMBER 31
                              (Millions of dollars)
    

    
    Notes:
    1. Charges for the Strategic Cost Reductions are included in the
       Consolidated Income Statement as follows:
    

    
                                                     Three Months
                                                   Ended December 31
                                                   2008         2007
    Cost of products sold                          $12          $18
    

    
    Marketing, research and general expenses         8            9
    

    
    Other (income) and expense, net                (14)          (1)
    

    
    Provision for income taxes                      (6)         (10)
    

    
    Net Charges                                     $-          $16
    

    
    In addition, charges of $2 million ($1 million after tax) in 2007 for
    the related implementation costs are included in marketing, research
    and general expenses.
    

    
    Unaudited
    


    
                             KIMBERLY-CLARK CORPORATION
                            CONSOLIDATED INCOME STATEMENT
                              PERIODS ENDED DECEMBER 31
                     (Millions of dollars, except per share amounts)
    

    
                                              Twelve Months
                                             Ended December 31
                                           2008              2007   Change
    

    
    Net Sales                           $19,415           $18,266      + 6.3%
        Cost of products sold            13,557            12,562      + 7.9%
    

    
    Gross Profit                          5,858             5,704      + 2.7%
        Marketing, research and general
         expenses                         3,291             3,106      + 6.0%
        Other (income) and expense, net      20               (18)       N.M.
    

    
    Operating Profit                      2,547             2,616      - 2.6%
        Nonoperating expense                  -               (67)       N.M.
        Interest income                      46                34      +35.3%
        Interest expense                   (304)             (265)     +14.7%
    

    
    Income Before Income Taxes,
     Equity Interests and
     Extraordinary Loss                   2,289             2,318      - 1.3%
        Provision for income taxes         (618)             (537)     +15.1%
    Income Before Equity Interests        1,671             1,781      - 6.2%
     and Extraordinary Loss
        Share of net income of equity
         companies                          166               170      - 2.4%
        Minority owners' share of
         subsidiaries' net income          (139)             (128)     + 8.6%
        Extraordinary loss, net of
         income taxes                        (8)                -        N.M.
    

    
    Net Income                           $1,690            $1,823      - 7.3%
    

    
    Net Income Per Share Basis - Diluted
    

    
        Before extraordinary loss         $4.06             $4.09      -  .7%
    

    
        Net Income                        $4.04             $4.09      - 1.2%
    

    
    N.M. - Not meaningful
    Unaudited
    

    
                         KIMBERLY-CLARK CORPORATION
                         PERIODS ENDED DECEMBER 31
                (Millions of dollars, except per share amounts)
    

    
    Notes:
    1. Charges for the Strategic Cost Reductions are included in the
       Consolidated Income Statement as follows:
    

    
                                                     Twelve Months
                                                   Ended December 31
                                                   2008         2007
    Cost of products sold                          $43          $89
    

    
    Marketing, research and general expenses        29           32
    

    
    Other (income) and expense, net                (12)         (14)
    

    
    Provision for income taxes                     (24)         (46)
    

    
    Net Charges                                    $36          $61
    

    
    In addition, charges of $27 million ($17 million after tax) in 2007 for
    the related implementation costs are included in marketing, research and
    general expenses.
    

    
    2. Other (income) and expense, net for 2007 includes a pre-tax gain of
       $16 million ($10 million after tax) for a litigation settlement.
    

    
    3.  Other Information:
    

    
                                                   Twelve Months
                                                 Ended December 31
                                                  2008       2007
    Cash Dividends Declared Per Share            $2.32      $2.12
    



    
                                                    December 31
    Common Shares (Millions)                      2008       2007
    

    
    Outstanding, as of                           413.6      420.9
    

    
    Average Diluted for:
          Three Months Ended                     415.2      426.5
          Twelve Months Ended                    418.6      445.6
    

    
    Unaudited
    


    
                            KIMBERLY-CLARK CORPORATION
                            PERIODS ENDED DECEMBER 31
                              (Millions of dollars)
    Supplemental Financial Information:
    

    
    Preliminary Balance Sheet Data:
                                                    December 31   December 31
                                                        2008         2007
    

    
    Cash and cash equivalents                            $364        $473
    

    
    Accounts receivable, net                            2,477       2,561
    

    
    Inventories                                         2,493       2,444
    

    
    Total current assets                                5,821       6,097
    

    
    Total assets                                       18,074      18,440
    

    
    Accounts payable                                    1,674       1,768
    

    
    Debt payable within one year                        1,083       1,098
    

    
    Total current liabilities                           4,737       4,929
    

    
    Long-term debt                                      4,882       4,394
    

    
    Redeemable preferred securities of subsidiary       1,011       1,005
    

    
    Stockholders' equity                                3,878       5,224
    

    
                                             Twelve Months
                                           Ended December 31
    Preliminary Cash Flow Data:          2008              2007
    

    
    Cash provided by operations        $2,516            $2,429
    

    
    Cash used for investing             $(847)            $(898)
    

    
    Cash used for financing           $(1,747)          $(1,427)
    

    
        Depreciation and amortization    $775              $807
    

    
        Capital spending                 $906              $989
    

    
        Cash dividends paid              $950              $933
    

    
    Unaudited


    KIMBERLY-CLARK CORPORATION
    PERIODS ENDED DECEMBER 31

    Description of Business Segments

    
    The Corporation is organized into operating segments based on product
groupings. These operating segments have been aggregated into four reportable
global business segments:  Personal Care; Consumer Tissue; K-C Professional &
Other; and Health Care. The reportable segments were determined in accordance
with how the Corporation's executive managers develop and execute the
Corporation's global strategies to drive growth and profitability of the
Corporation's worldwide Personal Care, Consumer Tissue, K-C Professional &
Other, and Health Care operations. These strategies include global plans for
branding and product positioning, technology, research and development
programs, cost reductions including supply chain management, and capacity and
capital investments for each of these businesses. Segment management is
evaluated on several factors, including operating profit. Segment operating
profit excludes other income and (expense), net; income and expense not
associated with the business segments; and the costs of corporate decisions
related to the Strategic Cost Reductions.  Corporate & Other includes the
costs related to the Strategic Cost Reductions.
    

    
    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; baby wipes; 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, napkins and related products for household use. Products
in this segment are sold under the Kleenex, Scott, Cottonelle, Viva, Andrex,
Scottex, Hakle, Page and other brand names.
    

    
    The K-C Professional & Other segment manufactures and markets facial and
bathroom tissue, paper towels, napkins, wipers and a range of safety products
for the away-from-home marketplace. Products in this segment are sold under
the Kimberly-Clark, Kleenex, Scott, WypAll, Kimtech, Kleenguard and Kimcare
brand names.
    

    
    The Health Care segment manufactures and markets disposable health care
products such as surgical gowns, drapes, infection control products,
sterilization wrap, face masks, exam gloves, respiratory products and other
disposable medical products.  Products in this segment are sold under the
Kimberly-Clark, Ballard and other brand names.
    

    Unaudited



    

    
                            KIMBERLY-CLARK CORPORATION
                          SELECTED BUSINESS SEGMENT DATA
                            PERIODS ENDED DECEMBER 31
                              (Millions of dollars)
    

    
                           Three Months                Twelve Months
                         Ended December 31            Ended December 31
                      2008     2007    Change      2008     2007    Change
    NET SALES:
    

    
    Personal Care   $1,914   $1,963    - 2.5%    $8,272   $7,563    + 9.4%
    Consumer
     Tissue          1,640    1,683    - 2.6%     6,748    6,475    + 4.2%
    K-C Professional
     & Other           730      798    - 8.5%     3,174    3,039    + 4.4%
    Health Care        317      315    +  .6%     1,224    1,207    + 1.4%
    

    
    Corporate
     & Other            17       13      N.M.        79       41      N.M.
    

    
    Intersegment
     Sales             (20)     (14)     N.M.       (82)     (59)     N.M.
    

    
    Consolidated    $4,598   $4,758    - 3.4%   $19,415  $18,266    + 6.3%
    

    
    OPERATING PROFIT:
    

    
    Personal Care     $380     $425    -10.6%    $1,649   $1,562    + 5.6%
    Consumer Tissue    182      160    +13.8%       601      702    -14.4%
    K-C Professional
     & Other           101      124    -18.5%       428      478    -10.5%
    Health Care         45       44    + 2.3%       143      195    -26.7%
    

    
    Corporate
     & Other           (70)     (83)  - 15.7%      (254)    (339)   -25.1%
    

    
    Other income and
     (expense), net    (15)      (2)     N.M.       (20)      18      N.M.
    

    
    Consolidated      $623     $668    - 6.7%    $2,547   $2,616    - 2.6%
    

    
    Note:  Corporate & Other and Other income and (expense), net, include the
           following amounts of pre-tax charges for the Strategic Cost
           Reductions.  In 2007, Corporate & Other also includes the related
           implementation costs.
    

    
                              Three Months             Twelve Months
                            Ended December 31        Ended December 31
                            2008        2007         2008         2007
    Corporate & Other       $(20)       $(29)        $(72)       $(148)
    

    
    Other income and
     (expense), net           14           1           12           14
    

    
    N.M. - Not meaningful
    Unaudited
    

    
                           KIMBERLY-CLARK CORPORATION
                          SELECTED BUSINESS SEGMENT DATA
                            PERIODS ENDED DECEMBER 31
    


    
    PERCENTAGE CHANGE IN NET SALES VERSUS PRIOR YEAR
    

    
                                 Three Months Ended December 31, 2008
                                                  Net       Mix/
                           Total     Volume      Price    Other(1)  Currency
    

    
    Consolidated            (3.4)      (3)         7         1        (8)
    

    
        Personal Care       (2.5)       -          6         1        (9)
    

    
        Consumer Tissue     (2.6)      (6)        11         -        (8)
    

    
        K-C Professional &
         Other              (8.5)      (5)         5        (1)       (7)
    

    
        Health Care          0.6        5          -        (1)       (3)
    



    
                                Twelve Months Ended December 31, 2008
                                                  Net       Mix/
                           Total     Volume      Price    Other(1)  Currency
    

    
    Consolidated             6.3        1          4         -         1
    

    
        Personal Care        9.4        5          3         -         1
    

    
        Consumer Tissue      4.2       (4)         6         1         1
    

    
        K-C Professional
         & Other             4.4       (1)         4         -         1
    

    
        Health Care          1.4        4         (1)       (3)        1
    

    
    (1) Mix/Other includes rounding.
    

    
                            KIMBERLY-CLARK CORPORATION
                             PERIODS ENDED DECEMBER 31
                 (Millions of dollars, except per share amounts)
    

    
    NON-GAAP RECONCILIATION SCHEDULES
    The tables on the following pages present the reconciliation of
    non-GAAP financial measures to GAAP financial measures.
    

    
    EARNINGS SUMMARY:
    

    
                                 Three Months Ended December 31
                                     2008                 2007
                                          Diluted             Diluted
                                         Earnings            Earnings
                             Income        Per      Income     Per
                            (Expense)     Share   (Expense)   Share
    

    
    Adjusted Earnings          $419        $1.01      $473     $1.11
    

    
    Adjustments for:
    

    
      Strategic Cost Reduction
       charges                    -            -       (16)     (.04)
    

    
      Implementation costs        -            -        (1)        -
    

    
    Net Income                 $419        $1.01      $456     $1.07
    



    
                                 Twelve Months Ended December 31
                                     2008                 2007
                                          Diluted             Diluted
                                         Earnings            Earnings
                             Income        Per      Income     Per
                            (Expense)     Share   (Expense)   Share
    

    
    Adjusted Earnings        $1,734        $4.14    $1,891     $4.25
    

    
    Adjustments for:
    

    
      Strategic Cost Reduction
       charges                  (36)        (.09)      (61)     (.14)
    

    
      Implementation costs        -            -       (17)     (.04)
    

    
      Litigation settlement       -            -        10       .02
    

    
      Extraordinary loss         (8)        (.02)        -         -
    

    
    Rounding                      -          .01         -         -
    

    
    Net Income               $1,690        $4.04    $1,823     $4.09
    

    
                            KIMBERLY-CLARK CORPORATION
                             PERIODS ENDED DECEMBER 31
                               (Millions of dollars)
    OPERATING PROFIT SUMMARY:
    

    
                                                      Three Months
                                                   Ended December 31
                                                   2008          2007
    

    
    Adjusted Operating Profit                      $629          $696
    

    
    Adjustments for:
    

    
      Strategic Cost Reduction charges               (6)          (26)
    

    
      Implementation costs                            -            (2)
    

    
    Operating Profit                               $623          $668
    



    
                                                     Twelve Months
                                                    Ended December 31
                                                   2008          2007
    

    
    Adjusted Operating Profit                    $2,607        $2,734
    

    
    Adjustments for:
    

    
      Strategic Cost Reduction charges              (60)         (107)
    

    
      Implementation costs                            -           (27)
    

    
      Litigation settlement                           -            16
    

    
    Operating Profit                             $2,547        $2,616
    

    
                             KIMBERLY-CLARK CORPORATION
                              PERIODS ENDED DECEMBER 31
                                (Millions of dollars)
    

    
    Effective Income Tax Rate Reconciliation - Adjustments(1) and
    Synthetic Fuel Partnership Activities:
    

    
                                              Three Months Ended
                                               December 31, 2008
    

    
                                                 As         Excluding
                                             Reported     Adjustments(1)
    

    
    Income Before Income Taxes                 $558            $564
    

    
    Provision for Income Taxes                  125             131
    

    
    Effective Income Tax Rate                  22.4%
    

    
    Adjusted Effective Income Tax Rate                         23.2%
    



    
                        Three Months Ended December 31, 2007
                                                             Minority Owners'
                                             Synthetic          Share of Tax
                                               Fuels             Benefits(2)
    

    
                              Excluding  Effect                     Excluding
                        As   Adjustments   of     Excluding    Tax     Tax
                     Reported    (1)  Activities Activities Benefits Benefits
    

    
    Income Before
     Income Taxes      $610      $638     $15      $623       $-      $623
    

    
    Provision for
     Income Taxes       146       157      21       136      (20)      156
    

    
    Net Synthetic
     Fuel Benefit                         $(6)
    

    
    Effective Income
     Tax Rate          23.9%
    

    
    Adjusted Effective
     Income Tax Rate             24.6%             21.8%              25.0%
    

    
    (1)  Charges for Strategic Cost Reductions in 2008 and Strategic
         Cost Reductions and related implementation costs in 2007.
    

    
    (2)  Minority owners' share of tax benefits at majority-owned
         subsidiaries.
    

    
                             KIMBERLY-CLARK CORPORATION
                              PERIODS ENDED DECEMBER 31
                                (Millions of dollars)
    


    
    Effective Income Tax Rate Reconciliation - Adjustments(1) and
    Synthetic Fuel Partnership Activities:
    


    
                                                Twelve Months Ended
                                                 December 31, 2008
    

    
                                                As          Excluding
                                             Reported     Adjustments(1)
    

    
    Income Before Income Taxes               $2,289          $2,349
    

    
    Provision for Income Taxes                  618             642
    

    
    Effective Income Tax Rate                  27.0%
    

    
    Adjusted Effective Income Tax Rate                         27.3%
    



    
                                   Twelve Months Ended December 31, 2007
                                                             Minority Owners'
                                             Synthetic          Share of Tax
                                               Fuels             Benefits(2)
    

    
                              Excluding  Effect                     Excluding
                        As   Adjustments   of     Excluding    Tax     Tax
                     Reported    (1)  Activities Activities Benefits Benefits
    

    
    Income Before
     Income Taxes    $2,318    $2,436     $(67)     $2,503     $-     $2,503
    

    
    Provision for
     Income Taxes       537       587      (81)        668    (20)       688
    

    
    Net Synthetic
     Fuel Benefit                          $14
    

    
    Effective Income
     Tax Rate          23.2%
    

    
    Adjusted Effective
     Income Tax Rate             24.1%                26.7%             27.5%
    

    
    (1)  Charges for Strategic Cost Reductions in 2008 and Strategic Cost
         Reductions and related implementation costs and a litigation
         settlement in 2007.
    

    
    (2)  Minority owners' share of tax benefits at majority-owned
         subsidiaries.


    




For further information:

For further information: Investor Relations, Mike Masseth,
+1-972-281-1478, mmasseth@kcc.com, or Paul Alexander, +1-972-281-1440,
palexand@kcc.com, or Media Relations, Dave Dickson, +1-972-281-1481,
ddickson@kcc.com, all of Kimberly-Clark Corporation Web Site:
http://www.kimberly-clark.com

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