1. Pranay Damania Juan Espinosa Ryan Foelske Brandon McArthur
Thursday, November 13, 2008

2. Company Overview “Improving the Health and Hygiene of People Everyday”
Personal Products industry
Products made from natural or synthetic fibers
Advanced technologies in fibers, nonwovens, and absorbency.
Founded in 1872 & headquartered in Dallas, TX
Consumers in more than 150 countries worldwide
Manufacturing facilities in 40 countries
More than 55,000 employees
FY2007 Total Revenues of $18.26B; Market cap: $23.39B
More than 1.3 billion people (1/4 of the world’s population) trust K-C brands EVERYDAY. 2

3. Consumer Brands 3 3

4. Business Segments: Brands
Personal Care
Huggies, Pull-Ups, Little Swimmers, GoodNites, Kotex, Lightdays, Depend, Poise
Consumer Tissue
Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Hakle, Page
K-C Professional & Other
Kimberly-Clark, Kleenex, Scott, WypAll, Kimtech, Kleenguard, Kimcare
Health Care
Kimberly-Clark, Ballard 4 4

5. Business Segments: Products
Personal Care
Disposable diapers, training and youth pants, and swim pants
Baby wipes
Feminine and incontinence care products
Consumer Tissue
Facial & bathroom tissue
Paper towels
Napkins
K-C Professional & Other
Wipers
Various safety products
Healthcare
Surgical gowns
Drapes
Infection control products
Sterilization wrap
Disposable face masks and exam gloves
Respiratory products 5 5

6. K-C invented five of their eight major consumer product categories:
Company Overview
K-C invented five of their eight major consumer product categories:
facial tissue, paper towels, toilet paper on a roll, feminine pads and disposable training pants
COGS Makes up about 69% of Sales: Primary raw material: fiber recycled from recovered waste paper
Largest Consumer of Polypropylene- Oil Derivative 6

7. Macroeconomic Overview
Oil continues to be volatile, but lower prices will have positive impact on economy and K-C. Yesterday’s Price $55.47 /barrel
Decline in Consumer Confidence
K-C affected by decline in economy, but generally looked as recessionary proof
Strained consumers continue to purchase K-C products during any economy, but may look to lower priced generic brands. 7

8. Total net sales grew 21% between 2004 and 2007.

9. Total operational profit grew 4.4% between 2004 and 2007.

11. Total operating profit grew 4,4% between 2004 and 2007.

12. Key Factors
Significant increases in inputs that can reduce KMB`s financial results
Competitive market
Change in the policies of retail trade customers and dependence on key retailers.
No successful of the reduce costs plan.
Differences between real and estimated sales.
Foreign market risks 12

13. Strategic cost reduction plan
Implemented since 2005, this plan expects to reduce costs by reform manufacturing and administrative operations. So far, this plan includes:
Less facilities
Reduce selling, general and administrative expenses
Relocation of equipment
Reduction of workforce
This plan expected to result in cumulative charges of approximately $630 million by the end of 2008 (4% of total 2007 net sales). 13

14. Peer Group Comparison – Business Focus
Highly competitive industry
Industry participants vary in size and function
Proctor and Gamble
Johnson & Johnson
Georgia-Pacific - Private firm
Colgate Palmolive

15. Peer Group Comparison Criteria for Peer Companies Growth Potential
Risk Profile
Peer Companies
Proctor and Gamble (PG)
Johnson & Johnson (JNJ)

16. 2 Yr Stock price – KMB, PG, JNJ, S&P50016

17. Ratio Analysis : DuPont
2007
2006
2005
2004
2003
Revenues
18,266.00
16,746.90
15,902.60
15,
14,026.30
Net Income
1,822.90
1,499.50
1,580.60
1,770.40
1,643.60
Total Assets
17,753.35
16,685.10
16,660.60
16,898.95
16,779.80
Total Equity
5,660.55
5,827.80
6,093.85
6,697.90
6,766.30
Net Profit Margin
9.98%
8.95%
9.94%
11.74%
11.72%
Asset Turnover
1.03
1.00
0.95
0.89
0.84
Leverage
3.14
2.86
2.73
2.52
2.48
ROA
10.27%
8.99%
9.49%
10.48%
9.80%
ROE
32.20%
25.73%
25.94%
26.43%
24.29%

18. DCF Analysis WACC: 8.22% Beta estimates:
Yahoo: 0.33
Bloomberg: 0.7
3-year Weekly: 0.63
Used: 0.65
Used 0.65 to due to confidence in our own calculations and huge differences in other sources.
Cost of Debt:
Used weighted average of LT and ST debt from balance sheet
Found costs on Yahoo
LT: 10-yr corporate AA
ST: 2-yr corporate AA
WACC: 8.22%

19. Oil Price vs. COGS 19

20. DCF Analysis Sensitivity Chart: WACC vs COGS/Sales 65% 67% 69% 70% 71%
73%
75%
WACC
7.50%
137.39
119.95
102.51
93.80
85.08
67.64
50.20
7.75%
129.71
113.16
96.61
88.33
80.06
63.51
46.96
8.00%
122.79
107.04
91.29
83.42
75.54
59.79
44.04
8.25%
116.54
101.51
86.48
78.97
71.45
56.42
41.40
8.50%
110.86
96.49
82.11
74.93
67.74
53.37
38.99
8.75%
105.67
91.90
78.12
71.24
64.35
50.58
36.80
9.00%
100.91
87.69
74.47
67.85
61.24
48.02
34.79
9.25%
96.54
83.82
71.10
64.74
58.38
45.67
32.95
9.50%
92.50
80.25
68.00
61.87
55.75
43.49
31.24

21. DCF Analysis

22. DCF Analysis Projected Cash Flows 2008 2009 2010 2011 2012 2013
Net income
1,590
1,104
1,308
1,516
1,734
1,903 +
Depreciation and amortization
957
1,086
1,218
1,355
1,496
1,641 -
∆ NWC
$274
($4)
($33)
($39)
($46)
($42)
Cap. Exp.
($1,169)
($1,247)
($1,284)
($1,323)
($1,363)
($1,404) =
FCF
$1,652
$938
$1,209
$1,509
$1,822
$2,098

23. DCF Analysis $73.40 10% + $80.74 Value per share 10% - $66.06
Value of Firm =
$35,390
LESS
Debt
5,492
PLUS
Cash and Cash Equivalents
$473
Firm's equity value
$30,371
Outstanding Shares
413.8
10% +
$80.74
Value per share
$73.40
10% -
$66.06

24. Relative Valuation – Multiples
KMB PG
JNJ
Average
P/E Ratio (TTM)
14.42
17.03
14.18
15.21
Price to Sales (TTM)
1.30
2.22
2.71
2.08
Price to Book (MRQ)
4.46
2.75
4.20
3.80
Price to Cash Flow (TTM)
10.28
12.08
10.85
11.07

25. Relative Valuation Football Chart
Relative Valuation Range : $61.22 – 70.35
Triangulated Value : $74.73

26. Current Position
RCMP purchased 300 shares of KMB on April 20th, 2005 for $63.91/share
Currently KMB is trading at $56.64 as of November 12, 2008 for an unrealized loss of $2,181.00
Dividend Payouts sum up to $2,151.00
Total Unrealized Loss = $30.00

27. Recommendation BUY 100 Shares at Market Price Value per Share
DCF Value = $ 73.40
Triangulated Value = $ 74.73
Current Market Price = $ 56.64
Currently under-valued by approx 22.83%
BUY 100 Shares at Market Price