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

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.

3. Consumer Brands 3

4. Business Segments: Brands 4

5. Business Segments: Products 5

6. 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

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.

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&P500

17. Ratio Analysis : DuPont

18. 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% DCF Analysis

19. Oil Price vs. COGS

20. DCF Analysis • Sensitivity Chart: WACC vs COGS/Sales

21. DCF Analysis

22. DCF Analysis • Projected Cash Flows

23. DCF Analysis

24. Relative Valuation – Multiples

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

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 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