Kimberly-Clark Earnings Call Nuggets: Share Repurchases and Guidance Details
Chip Dillon – Vertical Research Partners: Wanted to ask you, I notice you had a pretty accelerated pace of buyback in the first quarter, I mean more than half of what you plan to do for the year and I was just wondering with the strong results, why you might not top that up a little bit given that you’ve already done so much?
Thomas J. Falk – Chairman and CEO: Our plan heading into the year just like we did last year was to be a little bit front-end loaded on share repurchases given the cost of commercial paper. We’re still holding course. We had $1 billion to $1.2 billion in our outlook for the year. We still think that’s a good plan. So, here it plays out if we have more cash flow, obviously that’s one of the options we got to deploy it.
Chip Dillon – Vertical Research Partners: The second question I had was, and I might be missing a little something here, but on K-C International, I noticed that in tissue I know that that’s not the bigger focus. It’s obviously Personal Care, and you mentioned that the volumes grew 4% and of course you are coming off a strong 12% gain a year ago, what should we see that sort of normalize that in Personal Care in the emerging K-C International markets? I mean is 4% kind of the number we should go with as we look ahead or I think based on Tom’s comments should we look for something maybe a little bigger than that going forward?
Thomas J. Falk – Chairman and CEO: I think Chip in K-C International the volumes were pretty flat on Consumer Tissue. We did pick up some price and mix on that front and expense well – I think the volumes were down 1%. So, again we’re not adding additional capacity there and are focusing on driving mix and revenue realization in getting our margins up and you saw some of that improvement in the quarter…
Chip Dillon – Vertical Research Partners: I was really talking more about Personal Care?
Thomas J. Falk – Chairman and CEO: On the Personal Care front, I’d say the toughest comp in the first quarter and so we’d expect to see with the innovation picking up in the last three quarters of the year that we’ll see a little better growth from Personal Care going forward.
Mark A. Buthman – SVP and CFO: Yeah, if you look at relative to our 3% to 5% top line Chip obviously Personal Care and KCI is going to be higher as part of mix.
Gail Glazerman – UBS: I just wondered if you could talk a little bit more about exactly what surprised you in the first quarter and I guess just trying to reconcile that with the guidance for the rest of the year. Last call you talk about actually expecting the second half to be improved relative to the first and it doesn’t feel like that’s consistent with the current guidance and you were just talking about the innovation pipeline that will flow through the next few quarters. So can you give a little bit of color there?
Thomas J. Falk – Chairman and CEO: Yeah, that’s a fair push Gail, so I’d say two things. One is Consumer Tissue in North America was really way ahead of expectations and so Cottonelle volumes were up double-digit. Kleenex facial tissue was up double-digits. On the facial tissue front that’s probably more of a strong cold and flu season phenomena. On the Cottonelle front, one of our primary branded competitors that’s not a public company, has had some product supply problems and they sent a note out to their customers that indicated they are going to have trouble supplying and that certainly helped our business and it showed up in their share loss and our volume gain in the first quarter. So we ran everything full and tried to take advantage of as much of those business opportunities as we could. So that certainly helped us. We assume they’ll work their way out of that problem later in the year and so that’s why we don’t expect that level of volume growth in Cottonelle to continue at that kind of a rate. So that was one thing. Then I think the other thing that was a big positive for us was cost savings. So we had a very strong start for the year on FORCE. Now, you could say, gosh, you are over $80 million in FORCE in the third quarter and fourth quarter of last year, so why were you surprised. But it was a stronger start for the year than we have probably forecast and that should bode well for our results in the balance of the year.
Gail Glazerman – UBS: Just looking at the European restructuring a little bit, you commented that you aren’t selling Huggies in, I guess, 13 countries and moving out of the remainder. But I presume you are still selling diapers with the comment about, I think 14% private label growth and I’m just wondering when would you expect to see that trail off?
Thomas J. Falk – Chairman and CEO: Yeah, we will honor all of the private label contract commitments we have with our customers in Europe, and so we signed those contracts. They had a certain date at which they would renew and we will fulfill the terms of the contract. We are continuing to sell diapers in Italy as we noted in the restructuring and there may be some other private label contracts that we’ll retain post the shutdown of some of the facilities in the U.K. and Spain. So, I think the good news on the European front is that, in our other Personal care categories and in Consumer Tissue, we saw a good growth in the retained portfolio and we’re investing in those and things like Andrex Washlets in the U.K, our Pull-ups business had a nice improvement in Europe, our baby wipes business is growing like crazy, and so the strategy that we’ve had of focusing more on those growth opportunities in that market, very early days, but we’re encouraged by the first quarter performance.
A Closer Look: Kimberly-Clark Earnings Cheat Sheet>>