Kimberly-Clark Corporation (KMB) Q4 2011 Earnings Report, Transcript and Summary

Paul J. Alexander - Vice President of Investor Relations Mark A. Buthman - Chief Financial Officer and Senior Vice President Thomas J. Falk - Executive Chairman, Chief Executive Officer, President and Member of Executive Committee

Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division Jason Gere - RBC Capital Markets, LLC, Research Division John P. San Marco - Janney Montgomery Scott LLC, Research Division James Armstrong - Vertical Research Partners Inc. Javier Escalante - Consumer Edge Research, LLC John A. Faucher - JP Morgan Chase & Co, Research Division Gail S. Glazerman - UBS Investment Bank, Research Division Constance Marie Maneaty - BMO Capital Markets U.S. Lauren R. Lieberman - Barclays Capital, Research Division Alice Beebe Longley - Buckingham Research Group, Inc. Gregory Hessler - BofA Merrill Lynch, Research Division Christopher Ferrara - BofA Merrill Lynch, Research Division William Schmitz - Deutsche Bank AG, Research Division Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division Chip A. Dillon - Vertical Research Partners Inc.

[Operator Instructions] It is now my pleasure to introduce today's first speaker, Mr. Paul Alexander.

Thank you, David, and good morning, everyone. Welcome to our year-end earnings conference call. Here with me today in Dallas are Tom Falk, Chairman and CEO; Mark Buthman, Senior VP and CFO; and Mike Azbell, Vice President and Controller. Here's the agenda for our call. Mark will begin with a review of our fourth quarter results, followed by an update on pulp and tissue restructuring. Tom will then provide his perspectives on our full year results and our 2012 outlook. We'll finish with Q&A. As usual, we have a presentation of today's materials in the Investor Section of our website. This morning's presentation also includes an appendix with the details of our 2012 planning assumptions. Before we begin, let me remind you we'll be making forward-looking statements today. There can be no assurance that future events will occur as anticipated or that our results will be as estimated. Please see the Risk Factors section of our latest annual report on Form 10-K for a further discussion of forward-looking statements. I'd also like to point out that we will be referring to adjusted results and outlook, both of which exclude certain items described in this morning's news release. For further information on these adjustments and reconciliations to comparable financial measures determined in accordance with GAAP, please see today's news release and additional information on our website. With that, I'll turn it over to Mark.

Thank you, Paul, and good morning. Let's start with the headlines. First, we achieved organic sales growth of 3%, highlighted by 7% growth in K-C International. Second, we generated solid improvements in both adjusted gross and operating margins. And third, we delivered adjusted earnings per share of $1.28. That's a 7% increase compared to the prior year. Now let's cover the details of the quarter. Overall sales increased 2% to $5.2 billion. Organic sales rose 3%, driven by higher net selling prices of 2% and increased sales volumes of 1%. On the other hand, lost sales in conjunction with the divestiture, combined with the impact of our pulp and tissue restructuring, reduced sales by 1%. Moving down to P&L. Adjusted gross margin was 32.6%. That's up 20 basis points year-on-year. The improvement was driven by higher selling prices and $70 million of FORCE cost savings. These items more than offset cost inflation of $55 million and the negative impact of lower production volumes. Fourth quarter adjusted operating profit rose 9%, and adjusted operating margin was 14.7%. That's up 90 basis points compared to the prior year. In addition to the gross margin improvement, adjusted operating margin benefited from flat between-the-line spending and higher other income. Fourth quarter adjusted earnings per share were $1.28. That compares with $1.20 last year. The improvement came despite a higher effective tax rate and lower net income from equity companies. So for the year, adjusted earnings per share were $4.80, at the low end of our previous guidance range of $4.80 to $4.90 a share. Cash provided by operations in the fourth quarter of 2011 was $517 million. That compares to $948 million in the prior year. The decline was driven by a significant improvement in working capital last year that didn't repeat in 2011, along with higher pension contributions. Fourth quarter 2011 primary working capital levels were solid overall, although receivables did increase somewhat including some impact from timing of collections. For the full year, our cash conversion cycle improved 3 days to a record low of 47 days, and I expect us to continue to show improvement in 2012. In addition, we anticipate modest pension contributions this year, which should help drive a substantial increase in operating cash flow in 2012. Consistent with our previous guidance, we did not repurchase any common stock during the quarter. For the year, we repurchased 19 million shares at a cost of $1.24 billion. Including dividends, we returned approximately $2.3 billion of cash to shareholders during 2011. We'll continue to allocate capital in shareholder-friendly ways heading into 2012. We plan to invest $1 billion to $1.1 billion of capital spending to grow our businesses, and we expect to increase our dividend at a mid-single digit rate, which will be our 40th consecutive annual increase. We also expect to repurchase $900 million to $1.1 billion worth of our shares this year. Together, our plans for dividends and share purchases will total at least $2 billion of cash returned to shareholders in 2012. Now I'll highlight a few areas from our segment results for the quarter. In Personal Care, organic sales rose 3% with volumes up 2% and net selling prices advancing 1%. K-C International had another great quarter with 11% organic growth led by Latin America, China, South Korea and Vietnam. In North America, organic sales fell 5%, mostly due to lower volumes. We continued to generate solid volume growth in Adult Care. On the other hand, volumes were down in infant and child care, including the impacts of category declines, competitive activity and some consumer trade-down in the Child Care category. Personal Care operating margins of 15.4% remained well below prior year. The decline was driven by input cost inflation, higher between-the-line spending and increased promotion spending in North American diapers. We clearly aren't satisfied with margins at these levels, and we expect to bring more of the 2011 U.S. diaper price increase to the bottom line in 2012, which should help improve overall margin performance. Now turning to Consumer Tissue. Organic sales were up 1%. Net selling prices rose 3%. Product mix was favorable by 1 point, while organic volumes fell 3%. Consumer Tissue operating margins improved to 14.3%. That's our best performance in over 2 years. That was driven by selling price increases, cost savings, input cost deflation and lower between-the-line spending. Margins were up in every region around the world, and I'm encouraged by the improved profitability that our tissue teams delivered in 2011 and expect to see further progress in 2012. Moving to K-C Professional & Other. Organic sales were up about 3%. The increase was driven by improved volumes and higher net selling prices. Volumes were up low-single digits in each region, despite market demand continuing to be relatively sluggish. Operating margins of 15.5% were up 150 basis points versus last year. It was driven by benefits from sales growth and cost savings. Lastly, Health Care organic sales were up 9%. That included volume growth of 7% and higher net selling prices of 2%. Medical supply volumes rose double digits led by growth in exam gloves and surgical products. In addition, our North American medical device business increased volumes at the mid-single digits. Operating margins of 14.3% were up considerably from last year, driven by significant litigation-related expenses 1 year ago that were connected with our I-Flow acquisition, along with benefits from sales growth and cost savings. So that wraps up the financial review of the quarter. But before I turn it over to Tom, I wanted to provide an update on our pulp and tissue restructuring actions. Overall, we made significant progress in 2011 and we're on track or ahead of all major elements of our plan. Actions are underway or complete at all but one of the facilities that will be impacted by last year's announcement. In the fourth quarter, we closed our pulp mill in Australia. We sold 2 K-C Professional facilities in Spain. We announced the closure of our pulp mill in Everett, Washington. Earlier in 2011, we streamlined a Consumer Tissue facility in Australia. In addition, as mentioned in this morning's news release, we recently made a decision to streamline an additional Consumer Tissue facility in North America that is located in Chester, Pennsylvania. Taking into account all restructuring actions, both the January 2011 announcement and this additional streamlining action, we now expect total restructuring charges of $385 million to $420 million after-tax over the 2011 and 2012 time period within the range we expected 1 year ago. We incurred $289 million of after-tax charges in 2011. So most of the restructuring charges are now behind us. Lastly, in terms of the benefits from restructuring, we're ahead of plan. Fourth quarter savings were about $10 million. That brings full year 2011 savings to $20 million. We continue to grow -- expect to grow savings and reach at least $75 million in 2013, and we now anticipate savings of at least $100 million in 2014. So all in all, I'm very pleased with the progress our teams are making with all our restructuring actions. So that wraps up my comments. To recap, we achieved solid organic sales growth, led by K-C International. We delivered improved margins and earnings per share, and we continue to allocate capital in shareholder-friendly ways. Now I'll turn it over to Tom.

Thanks, Mark, and good morning, everyone. Since Mark has already reviewed the fourth quarter, I'll focus my comments on the full year, and then I'll discuss our 2012 outlook. So starting with our 2011 performance, adjusted earnings per share rose 3% in 2011. That's below our original objective for the year. That was mostly due to 2 factors. First, we absorbed about $580 million of cost inflation, and that was more than double our original expectation for the year. And second, we had soft demand in portions of our developed markets particularly in the infant and child care categories in the U.S., which continue to be impacted by a multi-year decline in the birth rate. So regardless of the reasons, we're not satisfied with the results that we delivered in 2011, and we plan to get back on track in 2012. Having said that, we did make good progress in several areas that I'll highlight briefly. First, we launched a number of innovations, including Huggies Little Movers Slip-On Diapers, Poise Hourglass Shape Pads, Kleenex Cool Touch facial tissue, U by Kotex tweens and an improved COTTONELLE bathroom tissue. All of these innovations are performing very well in the marketplace so far. Our innovations and our supporting marketing programs helped improve our brands' market positions. In the U.S., we improved or maintained market share in 6 of our 8 consumer categories in 2011. We also increased market share in a number of areas in K-C International such as in China and in Latin America. Second, we successfully executed our growth initiatives. K-C International's performance was particularly strong with 8% organic sales growth and a double-digit increase in operating profit. In China, Personal Care organic growth was 20%, boosted by our expanding diaper business, while Huggies are now sold in more than 70 cities. And in Latin America, Personal Care organic growth was more than 15%. In total, K-C International accounted for about 36% of K-C's sales in 2011. That's up 3 percentage points from the previous year. Elsewhere, we achieved mid to high single-digit volume growth in North America in a number of businesses including adult care, feminine care, baby wipes and our Health Care medical device business. Third, we took aggressive steps in response to the cost environment. We achieved higher net selling prices of 2%, and we delivered $265 million in FORCE cost savings, and we tightly controlled our overhead spending. In terms of commodities, cost moderated some over the back half of 2011 from the peak levels we experienced in the summer. At the same time, our pricing and cost reduction initiatives built further momentum. As a result, our second half of the year adjusted gross margin was up 100 basis points from the first half of the year. So I'm encouraged by this performance, and I expect more improvement in 2012. Finally, as Mark mentioned, we made excellent progress with our restructuring actions, and we continue to allocate capital in shareholder-friendly ways. So overall, we achieved our top line goal, we missed our bottom line target last year. We also delivered a number of important accomplishments, and we plan to build on them going forward. Now let me turn to our 2012 outlook. In short, our plan is to continue to execute our global business plan, to invest behind our brands and to deliver improved growth in adjusted earnings per share. Now we expect economic conditions to remain challenging in the near term, particularly in developed markets. And while we're cautiously optimistic that portions of the U.S. economy are improving, we aren't planning for a big increase in market demand. Category demand will remain soft in the infant and child care categories in the U.S., and we're also closely monitoring the European marketplace and events in Venezuela. On the other hand, we anticipate another strong year for K-C International, boosted by solid economic growth and execution of our growth strategies. In terms of commodity costs, we're assuming a relatively benign environment in 2012. We currently expect an impact in the range of $50 million of deflation to $50 million of inflation. So costs will be down slightly in developed markets, but up somewhat in emerging markets. On the other hand, given the strengthening of the U.S. dollar over the last several months, foreign currency exchange rates will likely be a headwind for us this year. We have an excellent pipeline of innovation launching across the business this year, [indiscernible] activities in North America include an improved Huggies diaper, a new and improved Huggies baby wipes lineup, and exciting innovations in adult care and feminine care. We also have several launches coming in K-C International, particularly in infant care and in feminine care. So we'll support our innovations and targeted growth initiatives with an increased level of strategic marketing, and spending in this area should rise much faster than sales growth. We'll also increase our investments in research and development and selling to support our future growth and to improve our capabilities. At the same time, we'll continue to manage our company with financial discipline. We expect to deliver another solid year of cost savings and to return significant amounts of cash to shareholders again this year. So all in all, in 2012, we expect to deliver organic sales growth of 3% to 4% and adjusted earnings per share growth of 4% to 7%. The growth in adjusted earnings per share compares favorably to our 2011 growth of 3%. Similar to 2011, given the timing of our initiatives, we expect that adjusted earnings per share will be stronger in the second half of 2012. So to summarize, we continue to execute our strategies for the long-term benefit of Kimberly-Clark. We expect to make significant investments behind our brands in 2012 and deliver improved bottom line growth. And we remain convinced that execution of our Global Business Plan will continue to improve shareholder value. So that wraps up our prepared remarks, and now we'll begin to take your questions.

[Operator Instructions] Our first question comes from Ali Dibadj with Sanford Bernstein. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So just a few questions. One is obviously want to drill down a little bit further on K-C North America particularly on infant and child care being down high-single digits. And you mentioned some drivers, so category softness from birth rate, competitive promotion and trade-down. Can you help just aggregate the large decline into those buckets, so we can try to figure out -- I mean, can you help us figure out going forward which one of these things are going to get better?

Yes, I guess I'd say a couple of things. If you looked at -- for the full year of 2011, the category for baby -- for diapers was down 2% to 3%. Our volume was down about 4%. So it was a little bit steeper in the fourth quarter with the count decline. Basically we took 7% of diapers out of every bag across the fourth quarter. Usually we don't see all of that hit. This time, we took a bigger hit from that. So that should start to roll off as consumers rebuild their household inventory. Second factor, price. We'd expected to realize more of that price in the fourth quarter. More of it wound up being spent back in trade but also in couponing, really to respond to the competitive environment. Some of that was a response to our launch of Huggies Little Movers Slip-On Diapers in the third quarter, where there was still a lot of noise in the marketplace. But that should start to get better sequentially. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Okay. Okay, if we switch gears just a second, and obviously, you guys are very well known for strong capital allocation, giving back to shareholders. This year, I think it was $2.3 billion and I'm referring [ph] -- I think it was $2.3 billion. Next year, it sounds like it's going to be a little less than that, both dividend and share buyback. But it's been at least for the past couple of years below your free cash flow. How should we think about that? How should we think about the philosophy there, and the safety, frankly, of those things that people gravitate towards from the quarter 4 [ph]. And also particularly in the context that it looks like it's going to be a little bit less this year versus last year.

So last year, as you'll recall, we said early in the year, we were going to take out about $700 million of additional leverage, and that, that was going to be a higher than normal year. So I'd say this year will be another solid year. I think it'll be the 40th year in a row we've increased the dividend. So that's obviously a strong long-standing commitment, expect to see that continue. And I'd say maybe the challenge that lots of multinationals face is as we make more money overseas is getting that money back on a timely basis to be able to use it to fund dividends and share repurchases, and we've been aggressive at that. And you see that in the slightly higher effective tax rate next year than this year, as it does cost more to bring that money back. But it's not our plan to accumulate cash in the balance sheet long-term. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So is it your plan to accumulate debt to be able to pay the dividend and the share buyback that people are used to?

No. I think if you take a look at the cash flow we'll generate, say, next year, round numbers, let's take $3 billion, you'll have $1 billion to $1.1 billion go to CapEx, you'll have $1 billion to $1.1 billion go to dividends, and the balance will go back to -- in the form of share repurchases. As the business grows, you want to target to be a solid single A credit. Over time as we did this year if we can take on just a little bit of leverage and keep us right in that solid range, we might make the decision to do that. But you should think about us funding those obligations primarily out of operating cash flow. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: Okay. That's helpful. Because that hasn't been the case for the past couple of years, obviously. So -- and then last question is, is just a broader question of what you said for reaching your top line, but we missed at the bottom line goal and then next year, gross profit will grow faster than operating profit. It seems like -- and this is not just a Kimberly question -- you have a broad, obviously, view of the whole sector, but it feels like, look this is just the new world we're in where you're going to have to invest more, one is going to have to invest more than you used to just to grow like you used to. Is that -- are you seeing any end in sight about this? Or is that just kind of the new view that we're going to have to have going forward here?

Well, I'd say the markets are certainly more competitive and there's plenty of things to worry about in the world today. But if I look at last year and say, wow, we had a commodity cost spike that was double our original expectations, it's tougher to get price quickly to cover that, and that showed up in our numbers. We do have a fair amount of carryover price increase coming into 2012, and commodity environment looks like it's going to be more neutral for us. So we should see that flow to the bottom line a little bit more readily in 2012.

Next question comes from Jason Gere with RBC Capital Markets.

I guess 2 questions. One, wanted to just go back on the Personal Care margins. Obviously, it's kind of the lowest that we've seen in a while. So as we think about the year progressing and coming off that floor, I mean, what's your view? Is it more commodity is going to get better as the year progresses? Or do you see the promotional environment easing? And can you get back to that 20% kind of margin that we've been accustomed to seeing for the last couple of years?

Yes, I'd say a good near-term target is to say -- if you look at where the fourth quarter margin was in Personal Care, it was kind of the low point to get back. In 2012, something closer to the average for 2011 would be a good first step, and that's probably more realistic given the -- at least where the price of oil seems to be hanging these days. I'd say the things that are going to get better will be, one, getting some positive price realization as opposed to negative price drag. That's the quickest and easiest, as it's already in place in the marketplace. We've just got to bring it to the bottom line. There'll be some commodity relief, but that's not going to be a huge plus for us in Personal Care. You probably may be seeing more in the near term on tissue with lower pulp prices.

Okay. And then, I guess, just shifting to my next question, I think you said when we look at the cadence of earnings for the year, the second half would be stronger than the first half. Was that correct?

Yes, I said the profile will be similar to what it was in 2011. So I think in 2011 the way it shook out is, I don't know, 47% of our full year earnings were in the first half and 53% were in the second half. So what you tend to see is a slightly positive bias toward the back of just because cost savings build during the year. And so you'll -- that's typically the way it plays out. We have a couple of other business, KCP and Health Care in particular, where distributors tend to have a much stronger December than January. And so there's a little bit of seasonal bias that pushes it that way as well.

Okay. Because I guess my thought was that the first half, you would see much stronger gross margins just given the easier comparisons and kind of where pulp has played out in -- unless is there any change in cadence for the organic sales, the 3 to 4, should that be pretty steady every quarter? Or, I mean, maybe the timing of innovation, I'm just wondering -- that's why I was just a little curious why the second half would -- I understand the cost savings but why the second half would be stronger than the first half especially with the gross margin kind of upside coming in the first half of the year.

Yes. The cost inflation should be much more favorable in the first half of the year, especially as pulp is below our full year estimate range, but some of the other factors, you said timing of innovation and the -- and marketing investments related to that affected as well.

Okay. Great. And then just the last question. I know last quarter you talked a bit about trade destocking in the Battery [ph] category. I was just wondering, just generally speaking, relationship with retailers. Are you seeing anything in North America in particular right now just in terms of how retailers are managing the inventory, especially in the category like diapers where you are seeing softer trends?

I would say nothing abnormal at this time of the year. And so, retailers everywhere just like companies like us are all trying to take days out of their cash conversion cycle. And so you see that kind of push, but these are pretty high-turn categories. So they can't afford to be out of stock either, so I think that's the balance point for us.

Our next question comes from John San Marco with Janney Capital Markets.

I was surprised you didn't call out the mix shift toward K-C International as a driver of margin decline in the Personal Care segment. Can you tell me either how operating margins compare in K-C International versus rest of world, or how much of the margin decline is being driven by K-C International's rapid growth? Or is it really just not that material?

The mix shift from K-C International is not that material overall. And so, I mean, we took a look at it and didn't think it was noteworthy enough to comment on.

And, John, this is Paul. Actually just for the fourth quarter, margins in K-C International, Personal Care were up year-over-year. So the gap is closing.

We got more price in Personal Care in the International business than we did in the -- obviously, North America was negative. So that was part of it.

Sure. And then this brings me to my second question, which is, I was hoping to learn more about the 7% price decrease in Europe Personal Care. Was that promotion or list price? And then I guess why make such as severe price investment when the volume growth in that region seemed to be pretty darn strong?

Yes. It's really more of a timing of promotion in Europe. As to when you're on deal, you typically have bigger discounts and higher volume spikes and it's more of a function of how the trade in Europe wants to run the category. So when you're on promotion, you're going to see that kind of a relationship. If you look at the full year, you wouldn't see as big of a shift. It just happened that more of it was in the fourth quarter of this year compared to last year.

Got it. And then the last, just one quick housecleaning. Did you say how much advertising was up for the quarter or for the year?

For the year, it was pretty flat in absolute dollar terms, and, I don't know, Paul, if you've got the quarterly numbers. Similar, I think if...

It's the same for the fourth quarter, pretty similar to year-over-year.

Our next question comes from Chip Dillon with Vertical Research Partners.

This is James Armstrong filling in for Chip. First question, why did the diluted share count increase at the end of the year? Was there something abnormal with the options or was something else going on?

Well, we hit a all-time record stock price, so there was higher option exercise than normal in the fourth quarter. So that was the primary factor.

Yes, and we didn't buy shares in the fourth quarter, which we expected.

Okay, perfect. And then the other question I have is on tissue and pulp restructuring, you saw a $20 million benefit in 2011 and expect $30 million in 2012. First, am I right in assuming that, that is an incremental $30 million for 2012 for a total of $50 million? And then second, why is the improvement this gradual, specifically given the Everett mill is a giant discrete item, why wouldn't you see more of $100 million in 2012?

Yes, good questions. The answer to your first question is yes, the $30 million is incremental to the $20 million. And the answer to the second question is we -- given we knew where this was going, we really started taking steps to reduce spend at Everett in 2011, which is why we probably got more benefit in 2011 than maybe we were expecting at the time we started the restructuring. So cutting maintenance spending, things like that, that wouldn't have a benefit when you knew the facility was going to be closed or sold were -- we were able to get more benefit there in 2011 than we expected.

Our next question comes from Javier Escalante with Consumer Edge Research.

Two questions. One, I think that Mark made a comment that you were looking to realize more diaper pricing going in 2012. And the question is, what needs to happen, because we understood that the Slip-On Diaper introduction, the couponing, you probably already knew it, and basically we should have seen a more positive mix in the fourth quarter given that you reduced the diaper count. So I'm kind of like confused how come we see diaper pricing deterioration in the fourth quarter, but at the same time, Mark mentioned that you are looking for more pricing realization and the volumes are so weak. So I'm confused about your guidance and the way you are looking at the category in the U.S.

No, I think in the fourth quarter, we wound up spending more on coupons competitively to make sure that we had the right value equation. Some of that was in response to our Slip-ons launch. Some of it was just the other activity that takes place in the category from time to time. So we didn't realize as much of the price increase as we thought we would. We expect that to be better overall in 2012 as the pricing is in effect longer, and we would expect to see a more -- competitors line up to that over time. We'll see what happens in the marketplace.

Yes, but if your volumes were so weak with less pricing, what give you confidence that you can realize more pricing? Shouldn't volume even worsen if you take more pricing? I mean, if volumes were down so much in the quarter, why is it that if you take more pricing volumes are not going to deteriorate?

Yes. I mean, our share overall was flat in the quarter. So we'd, say -- we picked up some share with Slip-ons and in our Super Premium segment. We've got some innovation coming in 2012 that will obviously strengthen our product line up across the board, and we believe that in the end, mom wants the best diaper for her baby and she'll choose Huggies with the product lineup that we have in place.

And finally, on the planning assumption of pulp averaging $940 to $960 per ton into 2012. Our pricing, the thing that we see in the spot market is well below that. It's nearly or over $100 per ton in January. So 2 questions here. Why is it that you are forecasting such a conservative pulp budget number? And secondly, coming back to the question whether your earnings progression should be front-end loaded instead of back-end loaded just because of given that the cost environment is such a -- you have the carryover of the pricing in 2011 and then you have -- you're lapping very high commodity increases last year. So I'm still also confused about how much of advertising spending you need to increase in order to make these earnest progression back-end loaded again in 2012?

Yes, good questions. From a pulp forecasting standpoint, we look at the 3 major industry forecasters and average those, and that's basically what our process is. We don't try to outsmart the experts in this area. And so the experts are expecting China to come back and be a stronger buyer, and that's going to lead to higher fiber prices as 2012 progresses. We'll see if that takes place, and we'll update you on our actual assumptions as we go through the year. We don't buy a lot of spot tonnage, but the current market price is below that. And so that will be a factor that will help the first part of the year. But there are other factors that will push it the other direction, and I think, as we said, overall, our guidance is to be slightly back-half loaded, not easily [ph] so, but a profile looks similar to what we saw in 2011.

Our next question comes from John Faucher with JPMorgan Chase. John A. Faucher - JP Morgan Chase & Co, Research Division: Quick question for you. On the other income line, we saw a big favorable swing. I think it was about $0.13 or so this year. And just wondering, as we look to map that out next year, it's going to be a relatively tough lap again, sort of more in the back half of the year, which would argue for a little more of a front-end loaded year. But how do we think about that line item, not just for 2012 but also sort of longer term to try and map that out a little bit better?

Yes. I mean, the primary thing that goes in there on a normal basis, is currency exchange or transaction gains and losses on currency hedges that we have in place. And so we had more gains this year, which was a big driver. Our guess is as we look at swings in the currency market late in 2011, we'll likely have more losses on those lines in 2012. And we also had a onetime effect. We sold a small healthcare joint venture that went in the fourth quarter. So that kind of stuff will pop in there from time to time, when we have those small gains or losses on things. This year they happen to be gains, but in our guidance, we don't assume that any of those will take place in 2012. So that'll also be a factor in the year-on-year earnings growth rate. We won't have as much good news on that line for sure. John A. Faucher - JP Morgan Chase & Co, Research Division: Okay. So we're probably better off just going in, predicting something closer to flat or, plus or minus low singles and then kind of going from there. Is that the right way to look at it?

I'd say that sounds about right. John A. Faucher - JP Morgan Chase & Co, Research Division: And then you guys talked about the working capital improvement that you're projecting out. And can you walk us through? Is that can be something we should see relatively quickly? Or is that something you think it's going to be sort of a slow build over the course of the year?

No, it'll be a slow build across the year. Inventories will be the key driver. We do have a lot of innovation coming to market, which is, depending on which business is launching you're going to see some ebbs and flows as we build inventories to get ready for launch. But you should think of it as more gradual, and it's -- order of magnitude, 2 to 3 days over the course of the year.

Our next question comes from Gail Glazerman with UBS.

Going back to inflation a little bit. Can you talk about what you're seeing in terms of -- and expecting in terms of both waste paper and resins? I mean, the white pulp, if anything, waste paper seems to have come off even sharper. Are you expecting that to rebound as you are with pulp?

Yes, I mean, I think our full year forecast for waste paper is higher than the current spot and that's one that -- we hit an all-time record in September, and then it dropped way off in the -- late in the fourth quarter. And so we're currently seeing prices in the market that are below our full year average. And that one, we don't have ramping back up probably quite as much as pulp this year, but there is still -- the forecast for that is to have some upward pressure as the year progresses. And resin I'd say, the -- our current outlook for the year is slightly higher than the current prices we're paying. So we're really calling for oil in that -- how does it fall, $90 to $100 a barrel kind of range or...

Yes, $95 to $105.

$95 to $105, yes.

Polymer for the full year shouldn't be a big factor in the year-over-year comparisons, pretty similar to 2011 average. But as Tom mentioned, it's starting off the year a little bit lower than our full year expectation.

Okay. And can you talk a little bit about demand trends that you're seeing in K-C Professional around the world, anything that makes you feel maybe a little bit better entering 2012 or a little bit worse given how economically sensitive it is?

Yes. I guess, a couple of things. I mean, our businesses in emerging markets is a place we're putting a lot of focus. So we've got some aggressive growth plan in Latin America, places like China and Russia. So we're putting more sales people on the ground, and we're really -- we're aggressively growing those areas. So we're certainly taking share and in some cases, pioneering new category spaces. I would say, Europe, for lots of reasons that all of you are likely aware of, we would say is probably one that's looking like it's going to have a tougher economic growth year in 2012. We already have strong share positions there, but the economic growth and the pricing environment in Europe is going to be tough. North America, a mixed bag. I think we're cautiously optimistic. We saw some progress in the fourth quarter in our washroom business, and we've got a lot of innovation coming in 2012. So we'd probably expect to see a fairly benign economic growth, so very low single-digit, and we could hopefully do a little bit better than that in the North American market, particularly in places like safety and healthy workplace.

Okay. And just one last question. You mentioned the trade-down in infant and child care, and I'm wondering, one, was that mainly in terms of product or was it private label? And was that something you're seeing in any of your other product areas?

Private label shares actually for the full year were pretty flat, and I think they were flatter down in all categories but one. And in diapers, what you saw more was Pampers lost a little bit of share to Luvs, and we picked up in our Super Premium segment behind the launch of our Slip-On Diapers. And we gave it up out of our tier 4 business or our mainline business, but private label shares were fairly flat. I don't know, Paul, if you've got the data there but...

Yes, just to build on that. In the fourth quarter, private label picked up about 1 share point in the training pant category.

In training pant but not in diapers.

Diapers, they were -- it was flat.

Yes.

Okay. But did you see anything across any other product areas, in tissue or anything else?

No. As Tom mentioned, for the full year, private label was up in only 1 category, and that was about 0.5 point in feminine care.

Our next question comes from Connie Maneaty with BMO Capital.

Just a couple of more questions on your outlook for commodities. It strikes me also that natural gas is at a decade low. And I think electric rates might also be lower than they were in the last year. Is it -- can you tell us what your outlook on those is? And if costs come in better than your forecast, is it your intention to reinvest it or to drop it to earnings?

Yes, good question. So, I mean, natural gas, I think, our outlook is what, Paul, $3.50?

$3.00 to $3.50.

Yes, and so that's a little higher than the current spot prices. Obviously, we also buy a lot of gas around the world. And so it's -- those are -- that's just the U.S. price, and there is more variability around that. For every dollar and MMBtu, it's, what, $16 million or something on a full year basis. So that can be a big impact. Now we are at least partially hedged going into 2012. And so we're typically hedging 12 to 18 months out on a rolling basis. So not all of that will drop directly to the bottom line, and part of it we will have locked in to protect against spikes. And from a pricing standpoint, I mean, it's our intention to take the benefit of the commodity costs where we can. Obviously, if it shifts too much, you'll start to see market pricing adjust in some categories, and that can be an offset. We already have our strategic marketing plan laid out for the year, and know where we want to spend it and what we are going to spend it on, and so we'll focus on that. But if we have benefit from commodity costs over that, we'll risk surprising you on the upside.

Okay. Can you describe how business [ph] does in terms of demand or takeaway or market straddle when the balance of strategic spending [indiscernible] promotion versus tilted more to advertising?

Again, I'm not -- the question was broken up just a little bit, Connie. Were you asking how is the business plan looking at it with strategic marketing versus trade?

Yes, it's not how it -- it's more what's your experience in terms of demand or market share when the plan is [indiscernible] more towards advertising versus promotion.

Well, I think that one of the exciting things about the plan is that it's not just advertising by itself. It's advertising coupled with some great innovation aimed at a specific consumer need area. And so we've got great innovation in the market that we're supporting now. We've got more coming in 2012. And so we're going to spend behind those big ideas. And what we've seen is when we do that, you have stories like, you buy Kotex where you can pick up share in the marketplace. And so that's what the plan is in 2012 is to continue to invest behind innovation, invest behind our brands in emerging markets. And that's a more sustainable way to create growth going forward.

Our next question comes from Lauren Lieberman with Barclays Capital.

Couple of things. So first was just on the businesses in Personal Care that aren't infant and child care. So I know wipes tend to be a bit choppy depending on timing of promotions and such. But both fem care and adult care decelerated. Adult Care I would've thought you would have kind a follow-on benefit of the Poise launch at the end of the last quarter, and it's the first time we've seen fem care volume down slightly. Comp has been tough for a while. So any additional color you can add there would be great.

Yes. Probably it's timing of innovation. We've got a lot of innovation coming in fem care in 2012, and so we probably had a little lighter promotional calendar than normal. And we're saving up our dry powder for that activity, which is going to hit later this year. And in Adult Care, I'd say, overall, shares look good and promotional calendar was a little lighter. It was around some of the same phenomena. We've got some innovation coming, particularly in North America on that front. So both businesses had a solid year overall and look like they've got great growth planned for 2012.

On the fem care piece, was U by Kotex volume still up or was that part down as well? [indiscernible]

Yes. No, U by Kotex was still up.

Okay. And then on the Adult, I'm just curious, though, because the Poise launch happened at the end of the quarter. So was there any kind of shifting of promotional dollars also because of the competitive dynamics in child and infant care? Was that part of it?

No, no, really not. I mean, we laid up a plan for those businesses and executed the plan. And I think despite the challenges in infant and child care, one of the things our North American team did a great job on this year is really insulate the key innovations. So whether it was Cool Touch or some of the new COTTONELLE variants or some of the things that we launched in independent Poise, we did those really per the plan that we tested.

Okay, great. And then K-C International, I mean, it did -- I know the growth is still quite strong especially relative to developed markets, but there was a pretty significant deceleration sequentially. So just what were the biggest win factors there? And the comp wasn't particularly tough. You had Venezuela in the numbers last year. So as we look forward, are we thinking high single digits or just go back to being double-digit growth?

No. I think that's the right range. If you look at our business in China and Latin America, those did very, very well. There's other parts of the world that aren't as strong. Australia, for example, had a relatively soft volume quarter. Korea still is quite strong. So there was nothing fundamental in the numbers that I saw that was driving that. I don't know, Paul, if you've got any other color for Lauren.

Yes, just the one another thing that happened in Q4, Lauren, was we started to roll off a little bit of some of the price increases that helped boost the numbers in the third quarter. But volumes continue to grow nicely and high single-digit growth overall for the business.

Okay, great. And then on restructuring. So the additional North America tissue piece, can you just tell us a little bit more about what that facility is? Is it more private label or is it branded capacity?

No, the -- Chester is a large tissue facility in the Northeast that has served the heritage Scott tissue and Scott towel business for many, many years. And it's really a testimony to our Consumer Tissue supply chain team that as Dave currently leading [ph] the organization and freed up capacity, they were able to take some capacity out of that facility and still service our business with our remaining assets. And so we challenged them to continue to improve margin and find ways to improve their cost structure, and they've served up some really exciting ideas for us this year.

Okay, that's great. And my final thing, sorry, was just on share repurchase. So, I mean, my memory is that last quarter when you talked about making the bigger pension contribution and holding back on repo in the fourth quarter, that the expectation was a sort of above-normal year for repurchase in 2012. and just the numbers you've laid out, strong but fairly typical actually. So what's changed in your thought process on share repurchase for this year?

Yes, Lauren, I think on a typical basis we might buy back 700 million to 800 million of shares. We're at 900 million to 1 billion this year. If we have additional cash that we can bring back effectively, we'll probably -- there's a chance we could buy it -- be a little bit above that. But it's consistent with the plan we laid out in the fourth quarter.

Our next question comes from Alice Longley with Buckingham Research.

I have a follow-up question about your first half versus second half guidance. I think you said the year is going to be second half weighted, similarly to 2011. So that means the year-over-year increases in earnings are likely to be even throughout the year?

Yes, similarly. Yes, that sounds about right.

Okay. And your guidance is for an increase in your SG&A ratio driven largely by intensified marketing, it sounds like. Is that going to be weighted entirely to Personal Care? We had, in the fourth quarter, spending between-the-line in tissue was down, and promotions were also not a factor off the top line for tissue. So I'm just wondering if the increase in spending is all weighted to Personal Care in 2012.

It's probably heavier weighted to Personal Care. We've got more innovation coming in baby, child care and adult care and feminine care in 2012. But where we have innovation on COTTONELLE or Kleenex around the world, we'll spend behind those ideas as well. I think on the selling expense front, we are also adding selling expense capability for our K-C Professional and Health Care businesses as we grow those businesses internationally especially. So you'll see a little bit of a push in that line. And we're trying to manage the rest of our G&A to grow at a slower rate than sales if we can.

Should we assume that SG&A in tissue is up versus 2011, the ratio?

In terms of including strategic marketing?

Yes.

Yes.

So that intensifying SG&A ratio applies to both Personal Care and tissue?

Yes.

Okay. And my final question is about margins for Personal Care. I think you said that in 2012, you should get to the average margin for 2011. Does that mean that we should see for all of 2012 the same or similar margin for Personal Care as the entirety of 2011? Or are we only going to get to the average of 2011 by the end of 2012?

No, I think for a full year basis, that's the right target. And so that's what we're aiming at.

And the idea is margins might be down in the first half and up in the second for Personal Care?

Certainly the comparisons will be tougher in the first half. That's for sure. And so you should expect to see more of the year-over-year quarterly improvement happen in the second half, just because the comparisons will be a lot easier.

And then since we've got even EPS increases through the year overall now, does that mean that operating margins might be up more for tissue in the first half than the second as sort of an offset to what happens in Personal Care?

Well, you -- with the lower pulp cost, you're going to get more benefit of that in tissue in the first part of the year. That's for sure.

Okay. So we've sort of got reverse trends in terms of margin comps in tissue from Personal Care?

In the first half of the year, that's probably correct.

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

This is actually Greg Hessler standing in for Todd. Just one quick housekeeping item. You guys have the February 2012 maturity of $400 million. Have you identified whether you plan to retire that with excess cash on hand or if you'd to look refinance that?

It would be a combination of cash on hand and short- and long-term debt. We'll make that call in February.

We exited the year with no commercial paper outstanding, so we got lots of flexibility.

Our next question comes from Chris Ferrara with Bank of America.

So I just wanted to get a little bit deeper into the reinvestments you're going to make, right? So I guess, if I look at marketing research G&A as a percentage of sales, I guess, it spent a lot of time historically around 17%, crept its way up to 18.6% in 2010, came back down again in 2011. And, I guess, for your guidance to work, right, for operating profit to grow 3% to 6% and for gross profit to grow more than that -- in other words, if we assume your guidance on gross profit and for your EPS guidance to make sense, you need mRNA, basically, MR G&A to be that kind of at historical highs in 2010. And, I guess, can you talk a little bit about that? And is that right? And is that maybe why we're seeing the organic sales guidance at plus 3 to 4, which is essentially an acceleration in a pretty tough environment?

Yes, well, I think you're directionally right on the level of spending, and if we spend all that money and don't get any top line lift, I'm going to feel really bad about it. So yes, we are -- we do have a lot of innovation coming. We're going to invest behind it at appropriate levels. We've got exciting growth plans in our emerging markets around the world where we're building out our platform. And we've got -- we're going to continue to invest despite the challenging economic environment, and we believe this is a great opportunity for us to drive our business and pick up share in some of these markets.

That helps. And, I guess, can you just give a little color around, I guess, the disaggregation between launch spending and, I guess, you made reference to capabilities, building capabilities in the press release [ph] too. And I think you said something about building up in Latin America. Can you just talk, I guess, about how you might think about the breakout between those 2?

You mean in terms of how much of it is onetime versus how much of it is part of long-term plan?

Yes. Essentially, yes. I mean, how much is advertising, right, behind new product launches? And how much of it is just building up a sales force in places where you want to be more aggressive?

I'd say more of it is strategic marketing, and a much smaller percentage of it would be building up sales capability. And so it is one -- if you said we -- a healthy model is we're bringing margin-accretive innovation to market, enhancing our gross margin and reinvesting a part of that every year in higher strategic marketing spending. We haven't always been able to do that, because of the commodity volatility we face and the difficulty we've had in getting price increases to offset that. And so this is another step forward in that direction, but it's one that we think is a journey that if we continue to drive innovation at the right level, we'll be strategically investing in the business long term.

Right, that's helpful. And, I guess, one last thing, can you try to help us out, I guess, directionally on what you think pension expense year-on-year in 2012 will be and what you think the FX drag from a profit perspective would be? I mean, even if you had it in basis points gross margin grade, EPS, pennies, either way would be...

Yes. The pension should be pretty flat. We put enough money in the plan last year, and as you know, we took some action several years ago to really wind up or freeze our DB plan, so that we don't have as big of an impact. We moved everybody into a defined contribution in the U.S. So that isn't as big of a factor as it may have, would have been in previous years. And FX, I don't know, Paul, if you've got any color on that from a percentage drag?

Yes, if you look at just translation, it could be a couple of points of operating profit headwind, and transaction is harder to quantify precisely, but it's probably in that ballpark as well. So overall, currency is going to be a mid single-digit drag on results next year.

Got it. And from the profit side, some of that's I suspect in gross margins or in COGS, and some of it's also in between-the-lines, is that right?

Right. And some of it might wind up in the other income expense line, or the transaction part, where we had gains this year, we may have losses next year.

Our next question comes from Bill Schmitz with Deutsche Bank.

I know you talked about private label trends in diapers this year, but if you look back to like 2008 till now, it looks like private label took about 4 points of market share. Do you think that's cyclical? Or is that a change in consumers' mindset in the diaper side? Because, obviously, that's a lot of volume that's going away.

Yes, our total category view would not be that significant. Actually it spiked up in early '08 when the -- by a couple of points when the economy turned south, and then it has shifted back down. So you might be looking at some of the measured outlet data might look a little different. But on an all-outlet basis that we look at, I don't know. Paul's got the numbers in front of him, but...

It's about 1.5 points increase, Bill, from 2008 to today.

Okay. I mean, that's a big increase though, right? I mean, especially because it's such capacity utilization game in diapers?

Yes. I mean, I would say it's not a trivial increase, but it is one that we continue to be focused on. We've got to be competitive across all spectrums. So I would say if you look back to a little longer perspective, when I was running the diaper business in the early '90s, I think private label shares were up in the mid-20s. And so they actually have come down over the long term even though they have spiked up a little bit in recent terms.

Got you. And then just on pricing again. Broadly, it seems like it's really schizophrenic. So, I mean, if you look in the U.K., and it's only a quarter of data, but it seems like you guys had a 12% price decrease in diapers. I mean, is that really just timing of promotions? But you kind of do it category by category, tissues use was way up, Procter's [ph] was flat. I mean, can we read anything in terms of like is there going to be a consistent pricing across the industry? Or kind of what's going on there?

Because you've got both trade as a reduction of sales and consumer coupon values as a reduction of sales, we add all of that up into a net, plus or minus, price number. You're going to have more volatility there. And so there really wasn't any list price changes in Europe. It was all a combination of trade and couponing, and the same is true in the U.S. So you're going to have more volatility in those numbers.

Got you. I mean, so we shouldn't -- it doesn't suggest that there's a change in strategy in Europe. I mean, you want to optimize, get to that double-digit operating profit number, and then take it from there. Is that still the MO in Europe?

Yes, absolutely.

Okay. And then just on the tax rate, because like you said before, you're generating all this cash overseas and you're going to continue to repatriate it to pay the dividend and whatnot. I mean, is the tax rate for next year the new base? Or will it kind of go up every single year because more and more cash is coming in from overseas and has to be repatriated every year? And the reason I ask that is if that's the case, because it looks like the sort of evergreen 6% to 9% EPS growth [ph] algorithm, it's still in place but you lose kind of 2 points on tax. And is there going to be a 2 point tax hit every year now, going forward?

No, I don't think so. I think what you typically see is probably -- and Mark's looking at me, so I'll let him correct my estimate here, but I would say we've assumed in our plan something like a 30 to 40 basis point increase in the effective rate over time, makes sense. And actually, we came in at low end of our range this year. Next year is more kind of the normal level that you'd expect, and so we've got to go do tax planning and see if we can improve on that. We don't have the visibility of those at this point. But, Mark, maybe you want to add more color to that.

No. I think that's right. If you look at the last 10 years, tax has been a help to our algorithm. Looking forward, it's probably going to be a little bit of a drag. But I think the good news is, from an operating standpoint, the business we've got between innovation and marketing support, we should be able to have more of an operating earnings-driven plan. But -- and we're -- our tax team works hard. We've worked hard to get to the bottom end of the range this year, and we'll work hard to get to the bottom end of the range next year.

Our next question comes from Caroline Levy with CLSA. Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division: Just a couple of quick things. Can you tell us what's going on in Mexico and what you think the outlook is for that? And also just elaborate a little bit on the Venezuela risk. And then I just want to clarify, are you -- is there very little risk of a down first quarter? Because again it seems like you did say it's going to be a back-end loaded year. I just want to understand what the risk is in the first quarter if you could help.

Yes, sure. On Mexico, I assume you're talking about Kimberly-Clark de Mexico, and so we've got a very strong business there. They had a little tougher finish to the year where they got hit in the fourth quarter with a weaker peso and high commodity costs and they didn't get much price realization. They're expecting a better year in 2012 as the peso should improve a bit on a relative basis and they should be able to get some pricing. So we're expecting that to be a positive. Venezuela is one that -- obviously, with a presidential election this year, it's difficult to say what exactly will happen there. It's only about 1% of our sales and about 3% of our operating profit. And so it's not a huge factor for us, and it's one that we're watching and managing very closely. And with regard to the first quarter, we don't really give specific quarterly guidance anymore, and so we'll give you a full year guidance and a little bit of a perspective on the profile, and then every quarter, we'll update you on how we did. And so that's really the message we have going forward. Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division: And then just, sorry, a follow-on. The retail environment, when they see pulp prices down as much as they are, are you -- you tend to encounter some pressure to withdraw pricing or to fund sales in any other way, retailer-driven?

I mean, even at our current pricing levels, the current level of pulp cost would support that. And so we never really were priced up for the peak, and much of the pricing went into effect at pulp price levels that are pretty similar to where they are now. And so that doesn't mean they don't call and ask, but we have a very good story when they do. Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division: And I'm sorry, are you in any way hedged on pulp? Or do you tend to just buy in the open market?

No, we tend to buy at a market-based price.

The next question comes from Chip Dillon with Vertical Research Partners.

It's actually me this time. I'm having -- I just wanted to -- I have a little difficulty in reconciling the year. If we look at your pulp forecast, which is spot on to what Reese [ph] said 2011 was for NBSK, 951. And so we just made a simple extrapolation that the 2 tissue segments were roughly flat '11 to '12, and I'm not saying that, but just roughly, that would mean that the Personal Care business would have to really surge back in 2012 to like a record, like $1.8 billion in terms of EBIT, to get you there. And so it just seems like if I take your pulp forecast, and assume nothing else heroic happens in K-C Professional or Consumer Tissue, you're going to have to see quite a turnaround from the rate of earnings that you saw in PC in the second half, which was actually under $1.5 billion. So is that -- is there a different way you would encourage us to think about that?

Yes. I would say assuming that K-C Professional and Consumer Tissue were flat year-on-year, would probably be an incorrect set of assumptions. So we wouldn't think that was an acceptable plan, and the people that we have running those businesses wouldn't either. So yes, no, we would expect to have a decent growth year in both KCP and Consumer Tissue in 2012. We got lots of cost savings coming through. We got more restructuring savings coming through. We've got lots of brand activity going on. So I'd expect to see a positive growth year in both those segments of the business.

And so even if they both were up about 10%, which would be $130 million, you would still have to have a number that approaches the 2010 level for Personal Care to get to, at least on my calculations, to the low end. So I guess even then, you're still saying you expect a nice recovery in Personal Care during 2012.

Yes. And as we talked, I mean, getting back -- we've got a lot of innovation coming, lots of investment behind that, but getting back to a margin that is roughly equivalent to the full year segment average in 2011 would be a big turnaround in that business this year.

Okay. And then the second little question I had was I noticed on the -- well, 2 things on the -- do you actually disclose or can you tell us much natural gas you use at least in the U.S. and maybe outside the U.S. every year?

Yes, natural gas, we use about 16 million MMBtus a year. So every dollar of MMBtu is about $16 million in cost, and that's really just North America. We don't have -- I don't think we've given statistics outside of that. But I don't know, Paul, if you've got any other rules of thumb for him.

The global number, including the U.S., would be about twice that amount.

Yes.

Okay. And then you also mentioned, I don't have it in front of me, but the other fiber that you use beyond pulp, I believe was 1.4 million, which was a lot higher than what I think we'd have been using in the past. And I didn't know if that is just -- I would imagine most of that kind of is reflecting the growth outside of the U.S. in Consumer and K-C Professional. Is that basically it?

Yes, that's basically right. I'd say that number's been kind of creeping up. I mean, it was 1.2 million not that long ago, but now it's up to about 1.4 million. And so it just reflects growth in KCP and in some cases, recovered fiber is a pretty significant source of fiber for our consumer business as well in some markets.

Our next question comes from Javier Escalante with Consumer Edge Research.

I have a question with regards to, again, to the Personal Care business, the diaper business in North America. Number one, if you can tell us how much of the decline in volumes has to do with the changing diaper count? And also whether this allocation or this change in inventory for retailers, that $30 million that you commented in the release is disproportionately allocated to diapers. I'm just trying to understand what is the underlying industry growth in diapers given that you are saying that you didn't lose share but again high single-digit volume growth is pretty high. So I don't think that -- I just trying to reconcile this.

No, the $30 million was really a cost of downtime in the quarter. And so that was our -- the cost of idling facilities and that was spread across our business in various places as our teams really -- they focus on hitting inventory at a target level, and if they're at target level, then they shut machines down, whatever business that is in the world. And so some of that fell on our Baby, Child Care business as our volumes underperformed expectations. As it relates to the reconciliation of our volume in the quarter versus our share, I mean there's a lot of factors that affect those, I'm sure you know. I mean, our mix was positive, and so that helped us from a share standpoint, but other than that, we really haven't got the analytics yet to unpack everything that happened from a volume standpoint. So some part of it's trade inventory, some part of it's consumer household inventory, et cetera.

But the reduction in diaper count, does it have an impact on your volume growth or in the way you measure volume growth or not?

No, because we're measuring thousands of diapers in our volume count. But if you think about it, consumers buying a package with 7% fewer diapers in it. And so on average in their home, their household inventory drops. But usually you'd say maybe about half of that, and based on historical count reductions, would be the impact that you'd have in the period that you did the cut reduction, because if you said, "Okay, on average, consumer's got a half a bag in their household, that bag has 7% fewer diapers, so half of that would be 3.5." But this quarter, we had a bigger volume drop, and so part of that was about the count change, and probably part of it was mix, some part of it was retail or inventory changes. It's hard to digest which piece of that exactly took place here.

Let me phrase it differently then. What is your assumption for underlying diaper growth or contraction in North America going into 2012, down 2%, down 3% because of the lower birth rate? What is the industry growing at or declining at?

If you looked at full year 2011, it was down 4%. And I would expect it to be less negative than that in 2012. So down 2% is probably a reasonable expectation.

At this time, we have no further questioners in the queue.

All right. Thanks, David. We'll wrap up with a closing comment from Tom.

Okay. Well, once again, we're not satisfied with our 2011 performance. We're going to get back on track in 2012 and have another year where we successfully implement our Global Business Plan. Thank you for your support at Kimberly-Clark.

Thank you.