Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Kimberly-Clark Corp. (NYSE:KMB)

Q2 2007 Earnings Call

July 24, 2007 10:00 am ET

Executives

Mike Masseth - VP, IR

Mark Buthman - SVP & CFO

Tom Falk - Chairman & CEO

Randy Vest - Vice President & Controller,

Tina Barry - Head of Corporate Communications

Analysts

Bill Schmitz - Deutsche Bank

Justin Hott - Bear Stearns

Lauren Lieberman - Lehman Brothers

Ali Dibadj - Sanford Bernstein

Chris Ferrara - Merrill Lynch

Linda Bolton - Oppenheimer

Amy Chasen - Goldman Sachs

John Faucher - J.P. Morgan

Todd Duvick - Banc of America Securities

Gail Glazerman - UBS

Alec Patterson - RCM

Jason Gere - A.G. Edwards

Chip Dillon - Citigroup

April Scee - Banc of America Securities

TRANSCRIPT SPONSOR
Wall Street Breakfast

Operator

We now have Mr. Mike Masseth and Mr. Randy Vest in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of Mr. Masseth presentation, we will open the floor for questions.

At that time instructions will be given as to the procedure to follow, if you would like to ask a question. I would now like to turn the conference over to Mr. Mike Masseth. Mr. Masseth you may begin, sir.

Mike Masseth

Thanks, David, and good morning, everyone. We appreciate your interest in Kimberly-Clark. With us today are Tom Falk, Chairman and CEO; Mark Buthman, Senior VP and CFO; Randy Vest, Vice President and Controller; and Tina Barry, Head of Corporate Communications.

Here's the agenda for today's call. Mark will start with a review of our second quarter results, then Tom will provide his perspective on our results and discuss our outlook for 2007.

That will leave us plenty of time to finish, as usual with Q&A. For those wishing to follow along we have a presentation of today's materials in the investor section of our website, Kimberly-Clark.com.

First, let me remind you that we will be making forward-looking statements during the call today. There can be no assurance that future events will occur as anticipated or that the Company's results will be as estimated.

Please refer to the risk factors section of our latest annual report on Form 10-K for a description of factors that could cause our future results to differ materially from those expressed in any forward-looking statements.

We will also be referring to certain non-GAAP financial measures, including adjusted earnings per share, adjusted operating profit, and adjusted operating margin. Management believes that reporting in this manner enables investors to better understand and analyze our ongoing results of operations.

For additional information on why we make these adjustments, and reconciliations to comparable financial measures, determined in accordance with GAAP, see today's news release and additional information on our website. Now I will turn it over to Mark.

Mark Buthman

Thanks, Mike. Good morning, everyone. I hope you had a chance to review our news release this morning with the details of our results. I'm going to briefly review the quarter starting with a few headlines.

First, we achieved excellent top-line growth with sales up 8%. That includes 5% organic growth at the high end of our sales objective with good progress from a number of our targeted growth initiatives.

Second, we delivered strong bottom line results, slightly ahead of our guidance, adjusted earnings per share for the quarter were $1.04 up 9% from last year and above our guidance for earnings in the range of $1.01 to $1.03.

Third, we announced a $2 billion accelerated share repurchase that will be funded by an increase in our leverage. The ASR which is expected to initially settle later this week is further evidence of our strong balance sheet and cash flow and our commitment to deploy cash in shareholder friendly ways.

Now I would like to review details of our results starting with the top line for each of our segments. In Personal Care, sales jumped 10% driven mostly by strong volume growth of 6% and currency benefits of 3%. In North America, volumes increased 2% led by Huggies.

The brand delivered mid to high single digit volume growth in both diapers and baby wipes. Our market shares continue to expand in both categories fueled by premium tier innovations.

In Feminine Care, although down versus last year volumes and market share were consistent with performance over the last two quarters. In child care, while volumes were off 4% compared to strong growth last year, we've got some exciting innovation coming to market in the third quarter that we expect to help further improve our market leading position.

Moving to Europe, second quarter sales volumes for Personal Care rose 4%. Huggies diapers continues to improve in core markets with volumes up 5% in the quarter behind strong gains from our supreme upgrades and the new Huggies little walkers diaper pant.

In the developing and emerging markets personal care sales climbed 21%, the 11th consecutive quarter of double-digit growth. We had fantastic performance across D&E. Highlights included 18% volume growth in the fast growing bricked countries, continued double-digit volume growth in both infant care and feminine care in Latin America. And great results from Huggies in Australia.

Turning to Consumer Tissue, sales rose 9%, including 4 points of benefit from currency. Segment volumes increased 3% while net selling prices were higher by 2%. In North America, volume growth was broad based with a 7% gain overall supported by a healthy increase in strategic marketing.

Kleenex facial tissue volumes continue to rise advancing 5% in the second quarter. In addition, super premium Viva towel volumes were up at a strong double digit rate as we focus on driving growth in this part of the business.

Lastly, bathroom tissue volumes were up nicely with growth in Cottonelle and Scott. Speaking of Cottonelle next month we will be rolling out a softness improvement that comes with some increase in net pricing.

Switching to Europe enhanced product mix boosted the top line by 1 point offsetting slightly lower volumes the decline in volumes was primarily due to shedding some low margin business as we've exited certain facilities as part of our strategic cost reduction plan.

Moving to K-C Professional and other, sales increased 8% including 3 points of benefit from currency. Volumes advanced 4% and higher net selling prices added another point of top line growth. We are continuing to make good progress with our growth initiatives in KCP.

In the second quarter global wiper sales increased at a double-digit rate and global sales in the safety and scientific channels grew high single digits. At the same time, we're continuing to build our overall KCP business in the developing and emerging markets where sales grew about 20%.

Lastly, healthcare segment sales declined 7% due primarily to the lower volumes of 8%. As was the case in the first quarter comparisons were impacted by our decision in the third quarter last year to exit the Latex exam glove business.

Although we continue to realize very strong sales of our higher margin nitrile gloves that growth did not overcome the impact of the fall off in Latex glove sales. Second quarter comparisons as we expected were also affected by strong growth last year in face masks which benefited from avian flu preparedness that didn't recur this year.

These two factors more than offset solid growth in our medical devices business. Now based on plans in place we expect healthcare sales to build going forward particularly in the fourth quarter.

Moving to operating profit and cost savings, and for this discussion I will refer to adjusted operating profit and margin, which excludes charges from our strategic cost reduction plan and certain incremental implementation costs related to the plan.

Second quarter operating profit was $678 million with an operating margin of 15.1%. Operating profit was up 7% at the high end of our full year growth objective of 5 to 7%. That improvement came despite absorbing cost inflation of about $85 million in the quarter including about $55 million from higher fiber costs.

We increased strategic marketing spending by $13 million compared to the year-ago period, spending also increased sequentially from the first quarter as we planned. Second quarter increases supported growth in businesses across D&E, in Huggies diapers in Europe, Kleenex facial tissue and Viva towels.

Now turning to cost savings, we delivered total savings of about $76 million in the quarter. Our ongoing FORCE program delivered savings of $60 million. In terms of our strategic cost reduction plan year-over-year second quarter savings were $16 million.

Looking briefly at second quarter segment operating margins Personal Care is performing at a very high level with margins well above 20% with improvement in both the North Atlantic and in D&E.

Healthcare margins remained healthy at 17.5% despite the lower sales in the quarter. K-C Professional and other posted solid operating profit growth although margins were down somewhat due to fiber cost increases.

In Consumer Tissue although we are realizing benefits from top-line growth and cost savings, margins continue to be pressured by pulp cost inflation. Now switching to taxes, there are plenty of details in the news release so I won't repeat them here but bottom line, our taxes were in line with our second quarter guidance.

That's true for both the adjusted effective tax rate and the net benefit from our synthetic fuels initiative. Looking forward based on what we know now the third quarter adjusted rate should be in the 28 to 30% range. We also expect to realize a net benefit of about $0.02 a share from synthetic fuels.

Now moving to cash flow on the balance sheet, cash generation was solid in the second quarter. Cash provided by operations was $652 million. That's up 9% compared to $600 million in the prior year. The increase was primarily due to higher earnings and reduced investment in working capital compared to the second quarter a year ago.

Now looking to capital spending, we invested $262 million in the second quarter which included a sizable amount for the new tissue machine in North America that, by the way, started up on budget and slightly ahead of schedule at the end of the quarter. We continue to expect full-year spending between $900 million and $1 billion.

Regarding share repurchases we bought 2.1 million shares of KMB stock at a cost of $150 million during the quarter bringing our year to date repurchases to $300 million. As mentioned in the news release, we're raising our 2007 share repurchase target to $2.8 billion up from our original plan of $600 million to $800 million for the year. This new amount includes the $2 billion accelerated share repurchase agreement we entered into late yesterday.

We're funding the ASR with an increase in our leverage. This move aligns our capital structure with our global business plan strategies. Given our strong balance sheet and excellent cash flow, leaves us adequate financial flexibility and access to capital for future business investment needs.

That wraps up the financial review. So to recap, we achieved very good top-line growth, we delivered bottom line results slightly ahead of our commitments and we raised our share repurchase targets significantly supported by an increase in our leverage.

Now I'll turn it over to Tom.

Tom Falk

Thanks, Mark, and good morning, everyone. I'd like to comment briefly about our performance now that we're halfway through the year, and then I will review our outlook for the balance of the year.

The bottom line is that we're ahead of plan for the first six months. We have very good momentum and we believe we will continue to deliver solid growth the rest of the year. I'd also like to add my perspective on the announcements today to step up our share repurchases and to take on $2 billion in additional leverage.

The change in our capital structure is a strong signal about our confidence that we will continue to deliver on the objectives of our global business plan. We should also view there's a positive signal about the value of KMB shares. We believe our stock is an attractive investment given our future earnings potential and cash generation power.

Now turning to our results for the first half of the year, the headline is that better than expected top-line growth has translated into better than expected bottom line growth. Our K-C teams around the world are staying focused on our global business plan.

They are making great progress implementing our targeted growth initiatives and driving costs out of the system. Here are some first half numbers that speak to the momentum that we have created. Personal Care sales have climbed 10% and our operating profit margin in Personal Care expanded by 130 basis points to more than 20% of sales. A combination of strong brands and innovation is driving this excellent performance.

Our sales in developing and emerging markets were up 16% and operating profit in D&E has grown at an even faster rate. Our K-C Professional sales have also rose 8% and that's driven by rapid growth in the workplace, scientific, and safety channels.

Consumer Tissue sales in the first half were also up 8% and organic growth was 5% in those markets, we are getting some pricing but higher fiber costs are weighing down our margins. Healthcare margins of 18% are up slightly even though sales are lower for the first half.

Cost savings from our FORCE and strategic cost reduction programs have totaled $138 million, and that puts us in great shape relative to our full-year savings objective of $200 million to $250 million. And what's more, we now expect that both the total cost of the strategic cost reduction program and the portion that's paid out in cash will be below our previous forecast without any reduction of our long-term savings targets, and all of these numbers are detailed in our news release.

So on an overall basis adjusted operating profit grew nearly 7% in the first six months. That's at the high end of the range we have targeted for the year, despite significantly higher inflation than we expected coming into the year and a $30 million increase year-over-year in marketing spending.

Finally we delivered a 10% improvement in our adjusted earnings per share and that's ahead of our full-year target for mid to high single-digit growth. So all in all I'm pleased with our performance so far this year but I also know that we can do better.

We've continued to deliver on our commitments, our sales, adjusted earnings per share, cash flow provided by operations and adjusted return on invested capital all have shown solid improvement.

However, we still have work to do to restore margins in our Consumer Tissue and K-C Professional businesses, their margins have been hardest hit by inflation because they use a lot of fiber and a lot of pulp and waste paper. My goal is to make sure we build on our momentum in the short term while continuing to make the necessary changes that improve our competitive position for the long term.

That brings me to the outlook for the balance of the year. Based on our performance in the first half and our plans for the balance of the year we're raising our earnings guidance for the full year 2007. Specifically, we expect adjusted earnings per share for the year to be in a range of $4.20 to $4.25.

That includes approximately $0.03 per share benefit from the increased level of share repurchases in conjunction with the accelerated share repurchase program. This compares with our previous guidance for adjusted earnings per share of $4.10 to $4.20, and will result in growth of 8% to 9% versus the $3.90 per share we achieved in 2006.

We expect continued strong performance in Personal Care and in developing and emerging market. We're also looking for improved revenue realization in consumer tissue and K-C Professional from price increases that have been implemented or that are scheduled to be implemented shortly.

We have good innovation coming to market across our businesses, and that's supported by strong marketing plans to help drive our growth. We also expect further benefits from our cost savings programs. We believe that these plans will enable us to overcome inflationary pressure in what continues to be a challenging cost environment.

As for the third quarter, we expect adjusted earnings per share will be in a range of $1.04 to $1.06 per share and that includes a $0.01 per share benefit from the execution of the accelerated share repurchase program.

So to summarize we're on track for a very good year in 2007 with top and bottom line growth slated to come in ahead of our original plan. We're executing our global business plan well. We're delivering sustainable growth in sales and earnings. We're delivering improving returns in cash flow and we're deploying our cash in shareholder friendly ways.

We have been doing what we said we would do and we intend to continue meeting or beating our commitments. We believe we have the right strategies in place to create value for you our shareholders. And that's the bottom line objective of all of our efforts. With that, thank you for your interest today and now we'll be happy to begin to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Bill Schmitz with Deutsche Bank.

Bill Schmitz - Deutsche Bank

Good morning.

Tom Falk

Good morning, Bill.

Bill Schmitz - Deutsche Bank

Can you just give us some gross margin guidance for the back half of the year, kind of with prices -- it seems like you took a price increase, there is some pricing but also obviously pulp is much higher than you thought?

Tom Falk

I think in the third quarter it is especially going to be difficult for us to make a lot of progress on gross margin given the outlook for fiber and that we're not really going to be realizing a lot of benefit from our strategic cost -- or from our selling price initiatives but I would expect to see perhaps a little bit of improvement in the fourth quarter.

Bill Schmitz - Deutsche Bank

Okay. How about the pricing calendar? What does that look like?

Tom Falk

Well, we did some price realizations still coming in K-C professional. They had their price increase that went into effect in May so we didn't have a full quarter of that in the second quarter so we'll have the benefit of that in the back half.

We've got this price count or really a count reduction in Consumer Tissue. I wouldn't expect a lot of benefit from that in the third quarter but we should start to see some benefit in the fourth quarter.

Bill Schmitz - Deutsche Bank

Great. Thanks. This might sound random but there's some news release that some product was stolen from a factory from South Carolina. What was that? That was on E-Bay. Why was it such a big deal?

Tom Falk

I don't know, Bill. You've stumped the CEO on that. I'm sure we'll figure that out though. Not heard of any significant casualty losses. Mark Buthman, is sitting here and he doesn't look like he knows, either.

Bill Schmitz - Deutsche Bank

Okay. So this incident reported that someone's filed with the Sheriff's Office that some product was stolen, a new product launch and was put on e-Bay and you guys are filing suit against them?

Tom Falk

It's not big enough to get to my attention.

Bill Schmitz - Deutsche Bank

Thanks so much knew.

Mark Buthman

Shoot us an e-mail, Bill.

Bill Schmitz - Deutsche Bank

Thanks, bye.

Operator

Our next question comes from Justin Hott with Bear Stearns.

Justin Hott - Bear Stearns

First question, can you talk a little bit about what's going on with inventories this past quarter?

Tom Falk

Yes, they're too high. So we're not satisfied with what our inventory progress is. You got a couple factors out there. So if you look at just the underlying cost inflation in fiber and so forth that's going to take inventories up. On the other hand it also takes payables up at the same time.

We've also got some inventory build going on for some product launch activity and some product restage activity in the second half. In a couple of cases we're -- our customer service, particularly in our healthcare area we were on allocation on gloves for part of the year so we have been rebuilding our inventory levels during the second quarter to get back in the normal customer service levels but that's an area of opportunity for us.

So while working capital year-over-year was a positive we're still not satisfied with where it's at, in particular in the area of inventory.

Justin Hott - Bear Stearns

Okay.

Mike Masseth

One other, Justin, one other seasonal factor there as well is we've built some inventory in Europe in tissue in advance of the normal third quarter shutdowns there.

Justin Hott - Bear Stearns

Okay, thanks, Mike. Question on I guess the cost environment. Can you just update us on what you're thinking on some of your key costs right now and maybe hedging as well, too?

Tom Falk

Yes, really the only thing that we hedge to any great extent is natural gas and we've got hedging in place through the back half of the year. I think we're in the 50% to 60% range, depending on the quarter that you'd look at. Maybe a bit higher than that in the upcoming third quarter. And then we have some hedges in place for the beginning part of '08.

On pulp, we're looking at Northern Soft, as the benchmark grade, looks like it's going to hang in there pretty close to where it's at. You may see a little weakening in the latter part of the year but from all the pulp producers that we have talked to the outlook is that pulp is going to remain strong in the second half of the year. May see some declines in early '08.

Secondary fiber as well because of huge demand from China. Secondary fiber prices in both North America and Europe are skyrocketing. That's been the rationale behind some of the price increases, we’ve been able to achieve in the K-C Professional market. Oil, obviously you guys have as much visibility of that as we do. I would say with this recent is run-up in oil that hasn't come through the supply chain yet so that's probably something we'll look to see if it sustains at $75 a barrel. That's a little bit higher than our forecast for the back half of the year.

And so we'll have some risk from that standpoint. On the other hand, currency is probably a potential positive for us. The weakness in the dollar generally helps us in these other markets report higher earnings.

Justin Hott - Bear Stearns

Would it be fair to assume that the low 800s on pulp you covered on with your guidance?

Tom Falk

Yes.

Justin Hott - Bear Stearns

Okay. And one last question. Feminine care, obviously there's something going on with Playtex here with the recent announcement. In the past how do you view this as an opportunity or how do you plan for when there's a change, I guess, in the industry dynamics when there's another competitor entering? Basically what I'm really wondering is, what does your pipeline look like for the rest of the year and do you see any opportunities any sort of distortion opportunities here?

Tom Falk

Playtex is really just in the tampon category. We're still a relatively small player in tampon category. They really line up more directly with Tampax and Proctor in that space. So I wouldn't say that I would see any major impact of Playtex going from being a small independent company to combining with Energizer here.

Justin Hott - Bear Stearns

Thanks very much.

Tom Falk

Thanks.

Operator

Our next question comes from Lauren Lieberman with Lehman Brothers.

Lauren Lieberman - Lehman Brothers

Thanks. Good morning. First, just to follow-up on Consumer Tissue, or tissue overall you talked about price increases in K-C Professional so the count reduction I'm assuming is North America what percent price increase does that equate to?

Tom Falk

It really varies because it's only on one part of our Cottonelle line. There's some restaging in the category going on where one of our competitors is moving really out of the main line and will be positioning the bulk of their products in the super premium segment and then having a basic product as well, and so we're going to be taking a count reduction on our Cottonelle main line and our Aloe NE product in varying degrees, but not on our super premium.

So it's going to be a sheet count reduction. I think it's like low double-digit percent but it's only on a small part of our product line. Initially when you do that you wind up, customers still buy the same number of cases so you do have a little bit of volume impact when you implement it. It takes awhile for that to work its way through the system.

Lauren Lieberman - Lehman Brothers

Okay. Beyond that does it feel to you right now like two things that the consumer could bear further price increases? Your cost situation would certainly justify it. Then also, if your competitors, more specifically Georgia Pacific, because of their integration if they look Ike they're trying to leverage that cost advantage right now, or if they're going to look to also get some help on their margins.

Tom Falk

It would appear that early days are that not all of the competitors in the Consumer Tissue market have followed this most recent pricing initiative in the premium segment. We'll be looking to take some additional price increases in some markets around the world as we're able to get those and certainly when you look at the overall level of commodity pricing across our businesses, there could be an opportunity for price. It's just difficult to speculate on when that would happen from a competitive standpoint.

Lauren Lieberman - Lehman Brothers

Okay. Then you just mentioned taking price in other markets. That was one thing that kind of jumped out to me in the press release. Was with D&E, both volume and pricing for Consumer Tissue. Can you just walk me through the decision to actually take pricing in those markets to give up, looks like give up some volume because it's rare to see certainly in your business volumes being anything but very, very positive in the D&E market.

Tom Falk

In some cases it may be a capacity issue. It really depends on the market. Where we've got the ability to push price ahead we've been able to do that. In some cases it's mix where we're selling a better mix of products so we're upgrading from a main line to a super premium or improving the value equation there so we really are trying to drive revenue per extended unit because our overall tissue margins in D&E are still below the segment average. We've got an opportunity there to move those up.

Lauren Lieberman - Lehman Brothers

So is the way that you're thinking about the business then in D&E market that it is -- now you're in a mindset where it's -- the strategy is more about building dollar profit in emerging markets than establishing the brands and market share position for tissue?

Tom Falk

Not necessarily. If you look at D&E in total, Personal Care has had a much more explosive growth rate and has had a bigger category penetration story. Bathroom tissue in many markets is pretty heavily penetrated. So the growth opportunity for tissue in D&E is to grow the facial tissue category and to grow the consumer towel category. So in a number of markets you would find our growth initiatives and brand building focused on penetrating in those higher growth categories but they're still relatively small compared to the overall bath tissue category outside North America and Europe.

Lauren Lieberman - Lehman Brothers

Okay. Great. Thanks. And then just one thing on FORCE. Your FORCE savings this is quarter were actually nearly double what we were looking for. I'm surprised you're not raising your overall cost savings expectations for the year just given your cost inflation, the change in guidance, and how much overage there was in FORCE this quarter. Is there flexibility in that number? Is it actually going higher but you just haven't done that usual updated planning’s assumption sheet?

Tom Falk

If you look at our cost savings across both FORCE and our competitive improvement initiatives I think we're at $130 plus million so far year to date and we've got a $200 million to $250 million annual target. And so, we would say we're tracking at or slightly ahead of where we would have expected to be. There may be a little bit of upside there but we know we've got some risk on the overall commodity price front as well. So we're going to need it, I think.

Lauren Lieberman - Lehman Brothers

That's what I'm saying. I think would you need more, given the cost inflation.

Tom Falk

We're not turning aside any good cost reduction programs. I think the other point to keep in mind though, Lauren, is that if you remember last year we weren't very happy with our FORCE program in the second quarter. We didn't have a very good operating quarter in the second quarter. So we had much stronger savings in the back half of the year as operations improved, and so part of it is the comparisons in the second quarter should have given us good FORCE savings.

Lauren Lieberman - Lehman Brothers

I’ve got it. Okay. Thank you so much.

Operator

Our next question comes from Ali Dibadj from Sanford Bernstein.

Ali Dibadj - Sanford Bernstein

Hey it’s Ali Dibadj from Bernstein. Just want to get underneath your Consumer Tissue business a little more, particularly on margins. Looks like they were lower than in recent history, below 11%. Whether intentional or not it looks like you may have benefited from volume not growing as fast in the developing emerging mark on tissue but yet your margins have come down. Is that all because of pulp prices or are there other things in there like early closures or marketing spend increases, anything like that?

Tom Falk

I would say both -- the two biggest factors in the Consumer Tissue results would be higher fiber price for both pulp and in some cases all a bit of secondary fiber. And then we’ve also increased marketing spending in Consumer Tissue and that's behind some of the faster volume growth that you saw in the developed markets.

Ali Dibadj - Sanford Bernstein

And how much more would that spending be towards the D&E versus the U.S. markets or the U.K. markets?

Tom Falk

I don't have the detail right in front of me.

Mark Buthman

It's actually more in developed markets this quarter in tissue, and there's more marketing spending in developing D&E markets in Personal Care.

Ali Dibadj - Sanford Bernstein

Okay. So try to manage the negative margin mix you get if you’re growing tissue in the emerging mark more, is that right?

Tom Falk

I think it has more to do with the timing of innovation. We've had a lot of other activity going in North America behind various product launches, and that's where we've put additional spending this year. And we've had lot more Personal Care launches in D&E and that's where the spending has gone there.

So, it's, but its not as much about maintaining strategic a mix, as it is executing the plan that we have laid out for the year.

Ali Dibadj - Sanford Bernstein

Just switching gears on healthcare business, just try and get underneath that a little bit as well. Just first give us a sense of the supply constraints and how much time we should expect for the resolution of that issue. Secondarily, on just the pure margins number, does it look like they’ve improved very much, particularly for getting rid of the lower margin latex businesses that you talked about last call, and certainly on this call as well?

And then thirdly; just understanding around pricing, how come that's still flat. I kind of would expect that to go up.

Tom Falk

Yeah, in healthcare, we were on allocation on exam gloves until sometime, early to mid second quarter. And so, once you're off allocation it takes a while to rebuild momentum in the marketplace. And so, we would expect to see momentum improve in the third and fourth quarter, as customers are confident that we can supply what they need on that front.

On the cost front, we have seen the benefit of exiting latex, but on the other side most of our glove manufacturing operations are in Thailand, and the strength of the Thai bath has been a mitigating factor on some of the cost progress that we’ve. Obviously, the volume decline also has a fixed cost absorption aspect to that hurts your margin structure.

And on the price front, you're seeing some small improvements in mix year-to-date which is really where most of that is happening. But it's been overwhelmed by the size of the move in the glove category.

Ali Dibadj - Sanford Bernstein

Okay. And that's very helpful. One last question, just around tying bits and pieces of what we've heard from other folks, even from Kimberly-Clark to Mexico on Friday. It looks like particularly around consumer tissue in D&E, and it looks like your results suggest this as well, volume has typically been lower than expected.

It certainly was so in Mexico. Sounds like from your numbers again, it seems to be so as well. Is that a blip? Is there anything going on that we're not aware of or that we haven't heard of? How do you guys think that is? Is that a sustainable problem so to speak, or is that just a one-time thing to think about?

Tom Falk

Well, Ali, consumers need bathroom tissue pretty regularly so it is one that that category tends to be fairly stable. But perhaps as you look at the other more discretionary purchase items like towels and facial, you will see some of that can be affected by economics, but there's really nothing that we've seen going on, on that front, that would be a -- what would you call a trend at this stage.

Ali Dibadj - Sanford Bernstein

Thanks a lot, guys. Very helpful.

Tom Falk

Thanks, Ali.

Operator

Our next question comes from Chris Ferrara with Merrill Lynch.

Chris Ferrara - Merrill Lynch

Hey, guys, sorry if you already pulled this together, but I'm just trying to understand, so the guidance for the back half of the year in EPS, it's coming up more than just the accretion from the share buyback and the beat this quarter. Is that because you see higher raw material costs that you had expected, but you expect cost savings to be better than you had originally expected by an even greater magnitude?

Mark Buthman

The overall as we laid out the guidance for the beginning of the year, $4.10 to $4.20, we're ahead of our plan. Then you would add the accelerated share repurchase on top of that. That really how we got into the $4.20 to $4.25 range. So we're confident with where we are relative to the plan. We believe we've got good plans in place to deliver on that range in the back half of the year. So I think really what we're seeing is our volume is ahead of our expectations, and that that's providing enough profit to cover some of the higher costs that we're seeing, volumes in the back half of the year. We will get some pricing to help with that as well, but really it's been the solid top line that's been the source of our confidence in our guidance for the full year.

Chris Ferrara - Merrill Lynch

I guess -- okay. Then back to the cost savings side though. So FORCE is not ahead of your -- is it true that -- is FORCE ahead but strategic savings a little bit behind, and in total they're a little bit ahead? Is that right?

Tom Falk

If you look at FORCE in the second quarter, to Mike's earlier comments, we had an easy comp last year because we had a pretty lousy productivity quarter. If you look at it, for the first six months we're probably slightly ahead on FORCE and on track with competitive improvement initiatives. We'd expect to be there in total for the full year in the earning range that we talked about.

Chris Ferrara - Merrill Lynch

Got it. Then just one other on a different note, your leverage and where you're taking it following buyback, do you plan to sustain your leverage at that level or is it something where you would ultimately pay back down over time?

Tom Falk

No, we would expect to sustain the leverage at this new level going forward.

Chris Ferrara - Merrill Lynch

So do you have a target leverage ratio that you guys are working with right now and should we assume that where you will get to, that's what your target is?

Tom Falk

We obviously looked at what we thought was appropriate to run the Company going forward. We were probably a step above most of our consumer package goods peers so this will probably move us down one step. Obviously the rating agencies will decide that ultimately, but that was our intention was to move us to more into the mainstream of where our consumer packaged goods peers are rated going forward.

Chris Ferrara - Merrill Lynch

Thanks a lot.

Tom Falk

Thank you.

Operator

Our next question comes from Linda Bolton with Oppenheimer.

Linda Bolton - Oppenheimer

Thank you. I was just curious if there's anything unusual in the Corporate expense line. It looks a little large even when you adjust for the restructuring charges. Is there anything unusual in there?

Tom Falk

You talking about the unallocated?

Linda Bolton - Oppenheimer

Yes.

Tom Falk

Mike can give you some color on that.

Mike Masseth

I think there are some additional expenses typically in the second quarter for compensation expense when -- because options are issued in April, so that boosts the expense in the second quarter a little bit. And there may be a couple of things in there that might not recur but not a whole lot.

Linda Bolton - Oppenheimer

Okay. And on the bath tissue business, I think when you were talking about the North American business you had mentioned that there was some innovation coming that would have some related price increases. Can you clarify if that's separate from the sheet count reductions, or is the sheet count reductions sort of part of that increase that goes along with the innovation?

Mike Masseth

The latter. The sheet count reduction is the price increase. That would be a part of that innovation.

Linda Bolton - Oppenheimer

Okay. All right.

Mike Masseth

There's no list price change that's going to be effective through a sheet count reduction.

Tom Falk

It comes with a nice softness improvement on Cottonelle.

Linda Bolton - Oppenheimer

I got you. Then I'm just adding up your cost increases, 55 plus 25, is the remaining $5 million related to higher energy and distribution costs?

Tom Falk

Yes.

Linda Bolton - Oppenheimer

Okay. And just in terms of your synthetic tax shelter, synthetic fuel thing, it was a benefit of, I believe, $0.04 per share last year and it it looks like the average oil price is trending to be roughly the same if it stays where it is for '07 versus '06. So I'm wondering about your guidance for the year of $0.05 to $0.10 benefit from that. How does that work out?

Tom Falk

I'll let Mark answer that one.

Mark Buthman

Our guidance for the year was $0.5 to $010. We seem to be tracking right on that pace. If you remember early last year, oil price was significantly higher and some of these producers actually shut down production which obviously limited credit. So the dynamic this year is a little different than last year.

Tom Falk

We have two of these partnerships and one of them wasn't operating for most of the first half of the year last year.

Mark Buthman

So for the third quarter we're expecting another $0.02 a share benefit, relative to year ago.

Linda Bolton - Oppenheimer

Okay. So, I mean, we're seeing high oil prices here right now so why wouldn't that also cause them to shut down production this year as last year?

Tom Falk

Because it's the average oil price for the whole year, and there's enough months in at a lower price that they're confident that the average for the year will not result in a phase-out.

Mark Buthman

Right.

Tom Falk

But you're getting to the limit of my understanding of this, so hopefully Mark will have more detail if you need it.

Mark Buthman

That was a very good response, Tom.

Linda Bolton - Oppenheimer

Okay. And just one final thing on these additional implementation costs that you quantify, can you just remind us, has there been any guidance on how much that will be for the full year and will those extend into '08?

Tom Falk

We would not expect those to extend into '08, and we have provided guidance on the amounts and...

Mike Masseth

It's on the last page of the news release, Linda. It should be $0.04 for the year. There's a little bit that trails into the third quarter this year, but that's it.

Mark Buthman

We're largely through those.

Linda Bolton - Oppenheimer

Okay. Great. Thank you.

Tom Falk

Thank you.

Operator

Our next question comes from Amy Chasen with Goldman Sachs.

Amy Chasen - Goldman Sachs

Just a follow-up on the share repurchase. First of all, once you do the ASR, when we think about '08, '09, will you go back to your normal buying back 2 to 3% of the shares outstanding each year?

Tom Falk

That would be our expectation. We will give you more specific guidance on '08 but this will be in addition to our normal share repurchases.

Amy Chasen - Goldman Sachs

Okay. Great. And what type of rate should we assume, interest rate, on the higher debt level, both for '07 and '08? I'm assuming it will be a little bit different, since you're taking on some short-term debt, but it's only temporary.

Mark Buthman

Yeah. I think treasuries today, Amy, are 5% or a little below and we'd pay a normal spread for the rating. We get coming out of the agency review today or tomorrow probably. So, you can sort of do the math.

Amy Chasen - Goldman Sachs

Do you guys have like a preliminary number that you're thinking about?

Tom Falk

Amy, not that we're going to disclose on the conference call.

Mark Buthman

Right.

Amy Chasen - Goldman Sachs

Got it. Okay. And can you also describe, in the press release, it’s said that there's an agreement with B of A, where they might make some price adjustments to you or vice versa, how does that work? Is that a hedging arrangement or what?

Mark Buthman

You should just think about this as we get the benefits from an earnings standpoint of the shares up-front, and then we settle up as if we had bought the shares at the end. So, it's sort of a dollar cost averaging arrangement.

Tom Falk

Pretty typical, the way that most of these programs run, where you get the economy benefit up-front and then you settle up with whatever the pricing is at the end.

Amy Chasen - Goldman Sachs

Okay. All right. Last but not least, just on the Personal Care margins, do you think that Personal Care margins can stay at these levels or even go higher?

Tom Falk

Momentum is pretty good right now. And there's lots of innovation still coming and we feel very good about baby and child care businesses. They’ve got great momentum, really around the world, and have got some good innovation coming, particularly in our GoodNites business in the third quarter. That will be exciting to see how that plays out. So yeah, we're pretty bullish on Personal Care right now.

Amy Chasen - Goldman Sachs

Do you think that margins can move higher over time?

Tom Falk

Well, we'd like to see that. We're certainly not going to slow them down. We're just making sure we're investing at the right level to grow the category the way we want to grow it over time.

Amy Chasen - Goldman Sachs

Okay. Great. Thank you.

Operator

Our next question comes from John Faucher with J.P. Morgan.

John Faucher - J.P. Morgan

A couple of accounting related questions here. As I look at your depreciation and amortization expense for the year, year to date it's down about $60 million is some of that due to cycling against accelerated depreciation charges? And if so, if we pull out the charges go with the sort of normalized earnings can you tell us what depreciation is down year-over-year and how much -- how is that going to track and where does that fit in in terms of your overall cost save estimates? Thanks.

Tom Falk

Some of that depreciation is related to accelerated depreciation on our restructuring, our run rate for the quarter, normal depreciation would be, John, in the 180 to 190 per quarter area.

Mark Buthman

Just shy of $800 million for a full year is a good rule of thumb.

John Faucher - J.P. Morgan

Is that -- I assume since you're taking accelerated depreciation charges that that is down year-over-year. Can you give us an idea, again, excluding charges, the order of magnitude how much that's down?

Tom Falk

That would account for the whole decline in the depreciation and amortization.

John Faucher - J.P. Morgan

So the entire $60 million down year-over-year, that's a clean number? There's no accelerated depreciation charges in the previous ones that you pulled out of the non-GAAP earnings then?

Tom Falk

I'm not sure I follow the question. The depreciation would include charges that would be adjusted out, okay, because they're not adjusted out of the cash flow statement.

John Faucher - J.P. Morgan

If you adjusted last year's depreciation, so normalized depreciation, excluding the charges in the last year, and then compare it to this year, how much is the actual depreciation down? I'm trying to get sort of a normal run rate on depreciation excluding the accelerated depreciation charges in the year ago numbers.

Tom Falk

I haven't done the math but my guess is it would be pretty similar because our asset base is up slightly from capital pending.

Mike Masseth

You can find those disclosures actually, in the annual report, John. There's a break out of the -- in the charges of how much is from accelerated depreciation.

John Faucher - J.P. Morgan

Okay. Great. Thank you very much.

Operator

Our next question comes from Todd Duvick with Banc of America.

Todd Duvick - Banc of America Securities

Good morning.

Tom Falk

Hello, Todd.

Todd Duvick - Banc of America Securities

I wanted to ask a couple questions from a fixed income standpoint and actually you've talked quite a bit about it already but with respect to the share repurchase program, obviously the accelerated repurchase this year but beyond that you've got $50 million shares authorization that you indicated in the press release you are going to execute over the next several years, and given your free cash flow it just seems like that could be modestly leveraging. My question is that your intent or as you said do you just intend for leverage to kind of remain where it is this year?

Tom Falk

No, we would expect that our leverage would be -- would be reset to this new level and that we would basically maintain it at that level, subject to normal growth of the business.

Todd Duvick - Banc of America Securities

Okay. All right. Fair enough. And as you think about your optimal capital structure, what metrics or guidelines can you point to that indicate your comfort level? Because you have been a AA-rated company for about the past decade.

Tom Falk

Or longer, probably. We tend to look at the typical ones that the rating agencies look at. We look at funds from operation to total debt, that interest coverage are the two primary ones that we spend the most time on. Probably don't look as much at debt to capital anymore just because of the impact of share repurchases on shareholder equity.

Todd Duvick - Banc of America Securities

Okay. Finally, can you just give us a sense as to your acquisition appetite? Do you primarily look for strategic bolt-on activities or would you also consider a larger acquisition?

Tom Falk

We've not -- we made our global business plan, major acquisitions are not an important part of our strategy. We would look at bolt-on acquisitions, and areas where it would align with the growth opportunities in our business. So we've done a small amount of that in healthcare, we'd continue to look at opportunities there and as well as for some aspects of our other businesses around the world. We'd also tell you though, that in private equity driven environment it's hard to find deals that are priced at a level that will yield shareholder value. Continue to look and if we found one we certainly wouldn't be hesitant to go forward.

Todd Duvick - Banc of America Securities

Very good. Thank you.

Tom Falk

Thanks.

Operator

Our next question comes from Gail Glazerman with UBS.

Gail Glazerman - UBS

Thank you. Returning to Consumer Tissue can you talk about how, I guess the overall market growth here in North America you were up 7% but how does that compare to the overall market? I guess the same question on Europe. You were down 1%. Can you give a sense of, one, how much of that was related to the facility closures, and two, how that compares to the overall market?

Tom Falk

In Consumer Tissue growth typically in developed markets tends to grow at roughly a rate of population. So you will see a 2 to 3% kind of typical long-term growth rate in North America and maybe a little bit lower than that in Europe. Some other category dynamics in Europe in particular, our branded volume was up slightly in the quarter so the -- so while we were down 1% overall in volume it was really a function of some of the business that we exited from sale of facilities. So as you look at our growth in North America we took share in virtually every category and -- in the period and so we feel good about that.

Gail Glazerman - UBS

Okay. And then you talked about price increases in the U.S. What is the outlook for Consumer Tissue pricing in Europe?

Tom Falk

We get some price in the U.K. on Andrex early in the year. Depending on the country there's some opportunity for price coming later in the year. Those have been announced or are in the process of being discussed with customers. So we'll see. There are other market where pricing has been tougher like Germany. Another factor in Europe is the strength of the European currency relative to the dollar and the fact that a lot of pulp is bought and sold in dollars. They are not necessarily feeling the same sense of urgency from a fiber cost standpoint that we would be in North America.

Gail Glazerman - UBS

Okay. And just in terms of the new tissue machine that just started up are there any kind of incremental start-up costs that we should be modeling in for the second half of the year?

Tom Falk

There will be some start-up costs on that, predominantly in the third quarter although the start-up of one of those machines does take an extended period of time. We got that factored into our guidance for the year and believe that will be manageable.

Gail Glazerman - UBS

In terms of the $85 million of cost inflation in the quarter can you give any sense of how that was broken out amongst the segments?

Tom Falk

Well, the $55 million of fiber, a good chunk of that is going to be in Consumer Tissue although part of that would also relate to K-C Professional. If you look at pulp prices about $30 million was in consumer Tissue, about $20 million was in K-C Professional from a fiber standpoint. Saw a little bit of fiber price also affected personal care because we buy rolled fluff there. That's probably about $10 million. If you look at distribution costs, it's pretty evenly split across the segments. So if that gives you any color on it.

Gail Glazerman - UBS

That's great. And final question, Mike, I don't know if you want to do this off-line, but can you run through some market share trends in the quarter?

Mike Masseth

We can do that off-line. I think, Gail.

Gail Glazerman - UBS

Thanks very much.

Operator

Our next question comes from Alec Patterson with RCM.

Alec Patterson - RCM

Yes, good morning. I just was looking for a little perspective on how you're seeing trends evolve on a channel basis. In particular, the Q2 Nielsen IRI type trends were decidedly weak and obviously your North American results look like they're averaging maybe around 4 or 5% volumes, maybe a slight plus on net price mix. Above what those Nielsen IRI trends were saying. Any insight into what you're seeing on a channel basis that would maybe explain that differential? Differential opening up more than it has in a while?

Tom Falk

Well, we obviously continue to do very well in the nonmeasured channels. So as you look at all of the customers in that space with Wal-Mart, Costco, the Dollar stores, et cetera, those are -- have been great growth opportunities for us and for lots of CPG suppliers. So, momentum continues to be good. We are absolutely continuing to drive our business with all of those measured channels as well, but we've seen good growth momentum in the non-measured.

Alec Patterson - RCM

I guess I'm speaking more specifically to recent trends, because there's always been a gap between measured and non-measured but recently it seems like it's really opened up, and particular the measured channels seem to have slowed down. So I'm just wondering did you see a fair amount of channel shift occur recently, and were there any particular drivers behind that, that you are aware of?

Tom Falk

No, nothing that comes to mind. It seems -- to be honest, we spend less time looking at the Nielsen data and are really trying to develop a more global picture of our business looking at all the channels and are really trying to drive it with each individual customer. So we haven't seen anything that I would say is a significant trend, and that's different than the way it's been trending.

Alec Patterson - RCM

Maybe just a different way to tackle that, do you know roughly your percent of North American business that is in non measured channels, the consumer business?

Tom Falk

I would be guessing.

Mike Masseth

It really varies by category, Alec, and when you get into categories like infant care and childcare, and baby wipes, you're probably up to about 60% in nonmeasured channels. In tissue it it would tend to be in the 40 to 50% range.

Alec Patterson - RCM

That's very helpful. Thanks very much.

Operator

Our next question comes from Jason Gere with A.G. Edwards.

Jason Gere – A.G. Edwards

Good morning. Can you just talk a little bit about the marketing spending? I know it's early in the process with what Tony has been doing but can you talk about maybe some of the analytics that you have been trying to analyze, the returns on the marketing spending, how much do you I guess expect that the marketing spending contributed to the stronger organic sales that you saw in the quarter?

Tom Falk

Yes, I mean, I would say our brand teams have had these plans in place for sometime to increase our marketing spending, really going back to the original global business plan that we announced several years ago and so we've always had the plan to improve that. I would say it's very early days on getting metrics in place and really using it to leverage our spending. So as we get better at that, I think we've just got more upside going forward. So I think the good news is we're spending about what we thought we would spend this year going into the year and we're getting more for it, which is great.

Jason Gere - A.G. Edwards

Okay. And then just going back to the pricing, I mean, it sounds like the sheet count reduction is really kind of it for this year. At would point do I guess do you kind of go back and say we have to look at our margins, we have to take a little bit more pricing?

I know you have some stuff for KCP but when you look at the Consumer Tissue at 10% margins, the sheet count reduction I guess just adds a little bit, but I guess where is kind of that sweet spot where you think maybe we have to go back to list price changes or go to additional SKUs and do a little bit more of what you're starting to do now?

Tom Falk

I think pricing is always about expectations, and pulp at a 10-year high, everybody's kind of expecting it to go down, and if those expectations change I think then you will start to see some pricing in the marketplace. So the longer it stays at this level, I think the more you will see various competitors, including us, thinking about what their cost structure is and what their margin structure needs to be.

We'll just have to watch and see. I'd say I'd be watching what pulp price forecast looks likes and that that's going to be the best indicator of what competitors in the marketplace might be thinking about from a price standpoint.

Jason Gere - A.G. Edwards

Then just on the European Consumer Tissue, can you talk a little bit more about the competitive landscape in terms of private label and what you're seeing out there, I guess over the last few quarters sequentially your volumes are going in the right direction but can you just kind of give a little bit more clarity on how you look at it over maybe the next 6 to 12 months?

Tom Falk

Yes, private label continues to be the toughest competitor in the European market, bar none. Virtually every category they've got 40 or 50 share in the major markets. And so clearly they have built a strong position and consumers believe they get acceptable value from that. So our job is to bring them a better value equation.

Where we've got opportunities in driving improved performance bath initiatives and driving improved facial tissue initiatives we're absolutely taking advantage of that to deliver better value and get more revenue for it it so it's one that obviously we continue to watch and continue to focus on.

Jason Gere - A.G. Edwards

Lastly can you quantify the impact on -- I know the volumes were slightly negative but because of shedding the low-margin business what was the impact there? Can you quantify that?

Tom Falk

The impact of the -- shedding of the low-margin business?

Jason Gere - A.G. Edwards

Yes. You said that the volumes were slightly negative.

Tom Falk

Our branded volumes were up slightly and our overall volumes were down slightly, and so some of it was pretty marginal contribution tonnage that we exited with those mills.

Jason Gere - A.G. Edwards

Okay, great, thank you.

Tom Falk

Thanks.

Operator

Our next question comes from Chip Dillon with Citi.

Chip Dillon - Citigroup

Good morning.

Tom Falk

Good morning, Chip.

Chip Dillon - Citigroup

Quick question on the syn fuels. Do I understand that that actually ends in the third quarter and does not extend until the end of the year?

Tom Falk

No, I think it ends at the end of the year as far as I know.

Mike Masseth

The calendar year.

Chip Dillon - Citigroup

Then it's gone beyond '07.

Tom Falk

Correct.

Mike Masseth

Right.

Chip Dillon - Citigroup

Okay. And then looking at the tissue results, and you guys just did a fantastic job with your quarter when you go back and look at Consumer Tissue. I can't find a number as low as 169 at least going back to 2000 in any quarter and as you look at that level, how concerned are you in the U.S. versus Europe?

In other words, I know that in the U.S. you do have some competitors that are less impacted by pulp prices and some that are equally impacted but in Europe it seems like everyone is impacted equally. Are we seeing better pricing and better margins I guess in Europe than we are in the U.S.? I know normally it's the other way around.

Tom Falk

No, I would say in the U.S., in general, the market seems to be behaving rationally at this point. So obviously we'll wait and see how that plays out as fiber continues to stay where it is. In Europe as I mentioned earlier because, the -- they're buying pulp in dollars and the euro and the sterling has appreciated pretty substantially you're not seeing, perhaps, as great a sense of urgency to take price.

You also had some pretty big spikes in energy last year in electricity rates, in particular in Europe that have come back down a bit so they're actually getting a bit of an energy offset in Europe that you wouldn't see in the U.S. market per se.

Chip Dillon - Citigroup

So that does mean their margins in some countries might actually be better than what we're seeing here now?

Tom Falk

I mean, overall, Europe's tissue margins are still slightly below the segment average. And the U.S. would be above the segment average.

Chip Dillon - Citigroup

And then shifting gears, just looking at Brazil and all of South America, how happy are you with that experience versus your plan and the same for China specifically?

Tom Falk

You talking about Brazil in total or are you just talking about tissue?

Chip Dillon - Citigroup

Brazil in total and China in total.

Tom Falk

Yes, I mean, the brickette market is continuing to go very, very well. And Brazil, really the strength has been on the personal care front where we have seen great progress in our diaper and fem care businesses and are very happy with the progress there. Still got work to do on tissue in Brazil, but we're not where we want to be from a profit standpoint. We've got some of our competitive improvement initiatives.

Plans are playing out there. And we would expect to see some improvement in profitability in the second half of the year from Brazil. And China is growing great guns. We've got a lot of momentum in key markets behind our Personal Care business in particular, and really see a great future there for our businesses in China. And then last question, Tom. As we can see sort of the end of the strategic initiatives a little over a year from now, and given the releveraging of the balance sheet, is there any change in sort of these long-term goals that we should think about beyond '08 that is mid to upper single digit earnings for share growth and upper single to lower double-digit dividend per share growth each year?

No, I think that at least for the near term, as we've talked the next several years, our top line and bottom line goals are the same, and we want to make sure we translate that into shareholder value through dividend increases and share repurchases.

Chip Dillon - Citigroup

Okay. Then lastly this is for Mark, the strategic initiative savings, I think they were $16 million in the quarter what are they cumulatively at this point?

Mark Buthman

They're $49 million year-to-date, and 170.

Chip Dillon - Citigroup

170 all in. Got you. Thanks very much.

Operator

Our next question comes from April Scee with Banc of America Securities.

April Scee - Banc of America Securities

Just a quick question on the 2007 guidance. When we think about '07 guidance do your numbers assume that top line grows 3 to 5% for the back half or that it continues to exceed your long term estimates? Then on a related question are we already seeing the top line impact of the higher marketing spend and the more focused marketing or should we expect that top line momentum could actually get better from here? Thanks a lot.

Tom Falk

I'd say in the second half of the year you would expect to see top line above our 3 to 5% goal but probably still somewhat short of the 8% that we have averaged in the first half. So I think we're already -- we got great momentum, we expect that to continue growing. We'd expect to see some currency benefit in the back half of the year as well if rates continue to stay where they are.

On the marketing spend front, we are investing in our brands, we are doing it intelligently behind the right growth opportunities. But we're really just beginning to leverage our improved marketing capability and I believe we've got a lot of opportunity to continue to share best practices and to leverage a scale that we have got behind our brands around the world.

April Scee - Banc of America Securities

Thank you.

Tom Falk

Thanks, April.

Operator

At this time there are no further questions.

Mike Masseth

Okay, David, I think we will wrap up, then, if there are no further questions. I will just ask Tom to add his parting comments.

Tom Falk

Solid quarter, we've got great momentum for the first half. We've got a great plan to increase our leverage and do that in a way that is shareholder friendly. So we once again appreciate your support of Kimberly-Clark. Thank you very much.

Operator

Ladies and gentlemen, you may disconnect at this time.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Kimberly-Clark Q2 2007 Earnings Call Transcript

Check out Seeking Alpha’s new Earnings Center »

This Transcript
All Transcripts