E10.10. Free Cash Flow for Kimberley-Clark Corporation (Medium) Below are summary numbers from reformulated balance sheets for 2007 and 2006 for Kimberly-Clark Corporation, the paper products company, along with numbers from the reformulated income statement for 2007 (in millions). 2007 2006 Operating assets Operating liabilities $18,057.0 $16,796.2 6,011.8 5,927.2 Financial assets 382.7 270.8 Financial obligations 6,496 4 4,395.4 Operating income (after tax) $2,740.1 Net financial expense (after tax) 147.1

a. The net payout to shareholders (dividends and share repurchases minus share issues) in 2007 was $3,405.9 million. Calculate free cash flow using Method 1 and Method 2.

b. The firm reported cash flow from operations of $2,429 million in its 2007 cash flow statement and also reported net interest payments of $142,4 million. It reported $898 million in cash spent on investing activities, but this was after including a net $56 mil- lion from liquidating short-term interest-bearing securities. The firm's statutory tax rate is 36.6 percent. Calculate free cash flow from these reported numbers. Real World Connection Follow Kimberly-Clark through the continuing case at the end of each chapter. Also see Exercises E4.8, E6.14, E7.8, and E11.16 and Minicase 5.3.