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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________  
Commission file number 1-225
https://cdn.kscope.io/547cb8465a37cd518dd7836c4443e973-kmb-20220331_g1.jpg
KIMBERLY-CLARK CORPORATION
(Exact name of registrant as specified in its charter

Delaware 39-0394230
(State or other jurisdiction of
incorporation)
 (I.R.S. Employer
Identification No.)
P.O. Box 619100
Dallas, TX
75261-9100
(Address of principal executive offices)
(Zip code)
(972) 281-1200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockKMBNew York Stock Exchange
0.625% Notes due 2024KMB24New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
  Accelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No x
As of April 15, 2022, there were 336,925,493 shares of the Corporation's common stock outstanding.



Table of Contents




PART I – FINANCIAL INFORMATION
Item 1.    Financial Statements
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended
March 31
(Millions of dollars, except per share amounts)20222021
Net Sales$5,095 $4,743 
Cost of products sold3,575 3,154 
Gross Profit1,520 1,589 
Marketing, research and general expenses886 815 
Other (income) and expense, net(59)4 
Operating Profit693 770 
Nonoperating expense(4)(6)
Interest income2 1 
Interest expense(65)(63)
Income Before Income Taxes and Equity Interests626 702 
Provision for income taxes(114)(147)
Income Before Equity Interests512 555 
Share of net income of equity companies23 39 
Net Income535 594 
Net income attributable to noncontrolling interests(12)(10)
Net Income Attributable to Kimberly-Clark Corporation$523 $584 
Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic$1.55 $1.73 
Diluted$1.55 $1.72 
See notes to the unaudited interim consolidated financial statements.

1


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
March 31
(Millions of dollars)20222021
Net Income$535 $594 
Other Comprehensive Income (Loss), Net of Tax
   Unrealized currency translation adjustments53 (215)
   Employee postretirement benefits11 18 
   Other(9)36 
Total Other Comprehensive Income (Loss), Net of Tax55 (161)
Comprehensive Income590 433 
   Comprehensive (income) loss attributable to noncontrolling interests(8)(3)
Comprehensive Income Attributable to Kimberly-Clark Corporation$582 $430 
See notes to the unaudited interim consolidated financial statements.

2


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(2022 Data is Unaudited)
(Millions of dollars)March 31, 2022December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents$493 $270 
Accounts receivable, net2,516 2,207 
Inventories2,265 2,239 
Other current assets629 849 
Total Current Assets5,903 5,565 
Property, Plant and Equipment, Net8,114 8,097 
Investments in Equity Companies266 290 
Goodwill2,177 1,840 
Other Intangible Assets, Net926 810 
Other Assets1,286 1,235 
TOTAL ASSETS$18,672 $17,837 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year$969 $433 
Trade accounts payable3,846 3,840 
Accrued expenses and other current liabilities2,054 2,096 
Dividends payable388 380 
Total Current Liabilities7,257 6,749 
Long-Term Debt8,101 8,141 
Noncurrent Employee Benefits797 809 
Deferred Income Taxes687 694 
Other Liabilities716 681 
Redeemable Common and Preferred Securities of Subsidiaries260 26 
Stockholders' Equity
Kimberly-Clark Corporation
Preferred stock - no par value - authorized 20.0 million shares, none issued
  
Common stock - $1.25 par value - authorized 1.2 billion shares; issued 378.6 million shares at March 31, 2022 and December 31, 2021
473 473 
Additional paid-in capital599 605 
Common stock held in treasury, at cost - 41.6 and 41.8 million shares at March 31, 2022 and December 31, 2021, respectively
(5,175)(5,183)
Retained earnings7,988 7,858 
Accumulated other comprehensive income (loss)(3,180)(3,239)
Total Kimberly-Clark Corporation Stockholders' Equity705 514 
Noncontrolling Interests149 223 
Total Stockholders' Equity854 737 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $18,672 $17,837 
See notes to the unaudited interim consolidated financial statements.
3


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)


Three Months Ended March 31, 2022
(Millions of dollars, shares in thousands, except per share amounts)Common Stock
Issued
Additional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling InterestsTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at December 31, 2021378,597 $473 $605 41,762 $(5,183)$7,858 $(3,239)$223 $737 
Net income in stockholders' equity, excludes redeemable interests' share— — — — — 523 — 12 535 
Other comprehensive income, net of tax,
excludes redeemable interests' share
— — — — — — 59 (4)55 
Stock-based awards exercised or vested— — (26)(347)35 — — — 9 
Shares repurchased— — — 215 (27)— — — (27)
Recognition of stock-based compensation— — 16 —  — — — 16 
Dividends declared ($1.16 per share)
— — — — — (391)— (82)(473)
Other— — 4 — — (2)  2 
Balance at March 31, 2022378,597 $473 $599 41,630 $(5,175)$7,988 $(3,180)$149 $854 


Three Months Ended March 31, 2021
(Millions of dollars, shares in thousands, except per share amounts)Common Stock
Issued
Additional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling InterestsTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at December 31, 2020378,597 $473 $657 39,873 $(4,899)$7,567 $(3,172)$243 $869 
Net income in stockholders' equity, excludes redeemable interests' share— — — — — 584 — 9 593 
Other comprehensive income, net of tax, excludes redeemable interests' share— — — — — — (154)(7)(161)
Stock-based awards exercised or vested— — (24)(315)34 — — — 10 
Shares repurchased— — — 1,398 (185)— — — (185)
Recognition of stock-based compensation— — 22 — — — — — 22 
Dividends declared ($1.14 per share)
— — — — — (385)— (18)(403)
Other— — 3 — — (2)(1)1 1 
Balance at March 31, 2021378,597 $473 $658 40,956 $(5,050)$7,764 $(3,327)$228 $746 
See notes to the unaudited interim consolidated financial statements.
4


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
Three Months Ended
March 31
(Millions of dollars)20222021
Operating Activities
Net income$535 $594 
Depreciation and amortization188 189 
Asset impairments 3 
Gain on previously held equity investment in Thinx(85) 
Stock-based compensation16 22 
Deferred income taxes(52)(35)
Net (gains) losses on asset dispositions6 4 
Equity companies' earnings (in excess of) less than dividends paid(23)(39)
Operating working capital(369)(400)
Postretirement benefits(14)(15)
Other2 (2)
Cash Provided by Operations204 321 
Investing Activities
Capital spending(253)(298)
Acquisition of business, net of cash acquired(34) 
Investments in time deposits(83)(159)
Maturities of time deposits255 207 
Other(1)5 
Cash Used for Investing(116)(245)
Financing Activities
Cash dividends paid(384)(359)
Change in short-term debt834 744 
Debt proceeds 5 
Debt repayments(300)(253)
Proceeds from exercise of stock options23 10 
Acquisitions of common stock for the treasury(25)(169)
Other(15)(30)
Cash Used for Financing133 (52)
Effect of Exchange Rate Changes on Cash and Cash Equivalents2 (7)
Change in Cash and Cash Equivalents223 17 
Cash and Cash Equivalents - Beginning of Period270 303 
Cash and Cash Equivalents - End of Period$493 $320 
See notes to the unaudited interim consolidated financial statements.

5



KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Dollar amounts are reported in millions, except per share dollar amounts, unless otherwise noted.
For further information, refer to the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2021. The terms "Corporation," "Kimberly-Clark," "K-C," "we," "our" and "us" refer to Kimberly-Clark Corporation and its consolidated subsidiaries.
Highly Inflationary Accounting in Argentina
GAAP guidance requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100 percent. In the second quarter of 2018, published inflation indices indicated that the three-year cumulative inflation in Argentina exceeded 100 percent, and as of July 1, 2018, we elected to adopt highly inflationary accounting for our subsidiaries in Argentina (“K-C Argentina”). Under highly inflationary accounting, K-C Argentina’s functional currency became the U.S. dollar, and its income statement and balance sheet have been measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in Other (income) and expense, net and was not material.  As of March 31, 2022, K-C Argentina had a small net peso monetary position. Net sales of K-C Argentina were approximately 1 percent of our consolidated net sales for the three months ended March 31, 2022 and 2021.
Note 2. 2022 Acquisition
On February 24, 2022, we completed our acquisition of a majority and controlling share of Thinx Inc. (“Thinx”), an industry leader in the reusable period and incontinence underwear category, for total consideration of $181 consisting of cash of $53, the fair value of our previously held equity investment of $127, and certain share-based award costs of $1.
We previously accounted for our ownership interest in Thinx as an equity method investment, but upon increasing our ownership to 58%, we began consolidating the operations of Thinx into our financial statements at the end of the first quarter of 2022. The consolidated results of operations for Thinx are reported in our Personal Care business segment on a one-month lag. The share of Thinx net income and equity attributable to the third-party minority owner of Thinx is classified in our consolidated income statement within Net income attributable to noncontrolling interests and in our consolidated balance sheet within Redeemable Common and Preferred Securities of Subsidiaries. This noncontrolling equity interest is measured at the estimated redemption value, which approximates fair value.
We have substantially completed an initial purchase price allocation in which we utilized several generally accepted valuation methodologies to estimate the fair value of certain acquired assets. The primary valuation methods included two forms of the Income Approach (i.e., the multi-period excess earnings method (distributor method) and the relief-from-royalty method). These valuation methodologies are commonly used to value similar identifiable intangible assets in the Consumer Packaged Goods industry. All of the selected valuation methodologies incorporate unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy in Accounting Standard Codification 820, Fair Value Measurements. In connection with these valuation methodologies, we are required to make estimates and assumptions regarding market comparable companies, revenue growth rates, operating margins, distributor and customer attrition rates, royalty rates, distributor margins, discount rates, etc., which are primarily based on cash flow forecasts, business plans, economic projections and other information available to market participants.
6


The total purchase price consideration was allocated to the net assets acquired based upon their respective estimated fair values as follows:
Current Assets$40 
Property, Plant and Equipment, Net2 
Goodwill297 
Other Intangible Assets, Net123 
Other Assets4 
Current Liabilities(29)
Deferred Income Taxes(18)
Other Liabilities(4)
Fair value of net assets acquired415 
Less fair value of non-controlling interest(234)
Total purchase price consideration$181 
Other Intangible Assets, Net includes brands and customer relationships which have estimated useful lives of 4 to 15 years, primarily 15 years. Based on the carrying value of these finite-lived assets as of March 31, 2022, amortization expense per year for each of the next five years is estimated to be approximately $8.
Goodwill of $297 was allocated to the Personal Care business segment. The goodwill is primarily attributable to future growth opportunities and any intangible assets that did not qualify for separate recognition. For tax purposes, the acquisition of additional Thinx shares was treated as a stock acquisition, and the goodwill acquired is not tax deductible.
The preliminary estimates of the fair value of identifiable assets acquired and liabilities assumed are subject to revisions, which may result in adjustments to the preliminary values discussed above. We continue to evaluate potential contingencies that may have existed as of the acquisition date and expect to finalize the purchase price allocation no later than the first quarter of 2023.
As a result of this transaction during the quarter ended March 31, 2022, an $85 non-recurring, non-cash gain was recognized in Other (income) expense, net as a result of the remeasurement of the carrying value of our previously held equity investment to fair value, and related transaction and integration costs of $21 were recorded in Marketing, research and general expenses. This recognition resulted in a net benefit of $64 pre-tax ($68 after tax) being included in our consolidated income statement for the quarter ended March 31, 2022. In addition, we removed the non-cash gain impact from Operating Activities in our consolidated cash flow statements for the quarter ended March 31, 2022.
Pro forma results of operations have not been presented as the impact on our consolidated financial statements is not material.
Note 3. Fair Value Information
The following fair value information is based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels in the hierarchy used to measure fair value are:
Level 1 – Unadjusted quoted prices in active markets accessible at the reporting date for identical assets and liabilities.
Level 2 – Quoted prices for similar assets or liabilities in active markets. Quoted prices for identical or similar assets and liabilities in markets that are not considered active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3 – Prices or valuations that require inputs that are significant to the valuation and are unobservable.
A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
During the three months ended March 31, 2022 and for the full year 2021, there were no significant transfers to or from level 3 fair value determinations.
Derivative assets and liabilities are measured on a recurring basis at fair value. At March 31, 2022 and December 31, 2021, derivative assets were $57 and $65, respectively, and derivative liabilities were $85 and $41, respectively. The fair values of derivatives used to manage interest rate risk and commodity price risk are based on LIBOR rates and interest rate swap curves
7


and NYMEX price quotations, respectively. The fair values of hedging instruments used to manage foreign currency risk are based on published quotations of spot currency rates and forward points, which are converted into implied forward currency rates. Measurement of our derivative assets and liabilities is considered a level 2 measurement. Additional information on our classification and use of derivative instruments is contained in Note 6.
Redeemable common and preferred securities of subsidiaries are measured on a recurring basis at their estimated redemption values, which approximate fair value. As of March 31, 2022 and December 31, 2021, the securities were valued at $260 and $26, respectively. No redeemable common securities were outstanding at December 31, 2021. The securities are not traded in active markets, and their measurement is considered a level 3 measurement.
Company-owned life insurance ("COLI") assets are measured on a recurring basis at fair value. COLI assets were $69 and $72 at March 31, 2022 and December 31, 2021, respectively. The COLI policies are a source of funding primarily for our nonqualified employee benefits and are included in Other Assets. The COLI policies are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy.
The following table includes the fair value of our financial instruments for which disclosure of fair value is required:
Fair Value Hierarchy LevelCarrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
March 31, 2022December 31, 2021
Assets
Cash and cash equivalents(a)
1$493 $493 $270 $270 
Time deposits(b)
1239 239 416 416 
Liabilities
Short-term debt(c)
2955 955 118 118 
Long-term debt(d)
28,115 8,439 8,456 9,492 
(a)Cash equivalents are composed of certificates of deposit, time deposits and other interest-bearing investments with original maturity dates of 90 days or less. Cash equivalents are recorded at cost, which approximates fair value.
(b)Time deposits are composed of deposits with original maturities of more than 90 days but less than one year and instruments with original maturities of greater than one year, included in Other current assets or Other Assets in the consolidated balance sheet, as appropriate. Time deposits are recorded at cost, which approximates fair value.
(c)Short-term debt is composed of U.S. commercial paper and/or other similar short-term debt issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.
(d)Long-term debt includes the current portion of these debt instruments. Fair values were estimated based on quoted prices for financial instruments for which all significant inputs were observable, either directly or indirectly.
Note 4. Earnings Per Share ("EPS")
There are no adjustments required to be made to net income for purposes of computing EPS. The average number of common shares outstanding is reconciled to those used in the basic and diluted EPS computations as follows:
Three Months Ended
March 31
(Millions of shares)20222021
Basic337.0 338.2 
Dilutive effect of stock options and restricted share unit awards1.2 1.2 
Diluted338.2 339.4 
The impact of options outstanding that were not included in the computation of diluted EPS because their exercise price was greater than the average market price of the common shares was insignificant. The number of common shares outstanding as of March 31, 2022 and 2021 was 337.0 million and 337.6 million, respectively.
Note 5. Stockholders' Equity
Net unrealized currency gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries, except those in highly inflationary economies, are recorded in Accumulated Other Comprehensive Income ("AOCI"). For these operations, changes in exchange rates generally do not affect cash flows; therefore, unrealized translation adjustments are recorded in AOCI rather than net income. Upon sale or substantially complete liquidation of any of these subsidiaries, the
8


applicable unrealized translation would be removed from AOCI and reported as part of the gain or loss on the sale or liquidation.
Also included in unrealized translation amounts are the effects of foreign exchange rate changes on intercompany balances of a long-term investment nature and transactions designated as hedges of net foreign investments.
The change in net unrealized currency translation for the three months ended March 31, 2022 was primarily due to the strengthening of certain foreign currencies versus the U.S. dollar, particularly the Brazilian real.
The changes in the components of AOCI attributable to Kimberly-Clark, net of tax, are as follows:
Unrealized TranslationDefined Benefit Pension PlansOther Postretirement Benefit PlansCash Flow Hedges and Other
Balance as of December 31, 2020$(2,157)$(912)$(40)$(63)
Other comprehensive income (loss) before reclassifications
(205) 2 22 
(Income) loss reclassified from AOCI 14 (a) (a)12 
Net current period other comprehensive income (loss)(205)14 2 34 
Balance as of March 31, 2021$(2,362)$(898)$(38)$(29)
Balance as of December 31, 2021$(2,422)$(803)$(34)$20 
Other comprehensive income (loss) before
    reclassifications
57 7 (2)(2)
(Income) loss reclassified from AOCI 6 (a) (a)(7)
Net current period other comprehensive income (loss)57 13 (2)(9)
Balance as of March 31, 2022$(2,365)$(790)$(36)$11 
(a) Included in computation of net periodic benefit costs.
Note 6. Objectives and Strategies for Using Derivatives
As a multinational enterprise, we are exposed to financial risks, such as changes in foreign currency exchange rates, interest rates, and commodity prices. We employ a number of practices to manage these risks, including operating and financing activities and, where appropriate, the use of derivative instruments.
At March 31, 2022 and December 31, 2021, derivative assets were $57 and $65, respectively, and derivative liabilities were $85 and $41, respectively, primarily comprised of foreign currency exchange contracts. Derivative assets are recorded in Other current assets or Other Assets, as appropriate, and derivative liabilities are recorded in Accrued expenses and other current liabilities or Other Liabilities, as appropriate.
Foreign Currency Exchange Rate Risk
Translation adjustments result from translating foreign entities' financial statements into U.S. dollars from their functional currencies. The risk to any particular entity's net assets is reduced to the extent that the entity is financed with local currency borrowings. A portion of our balance sheet translation exposure for certain affiliates, which results from changes in translation rates between the affiliates’ functional currencies and the U.S. dollar, is hedged with cross-currency swap contracts and certain foreign denominated debt which are designated as net investment hedges. The foreign currency exposure on certain non-functional currency denominated monetary assets and liabilities, primarily intercompany loans and accounts payable, is hedged with primarily undesignated derivative instruments.
Derivative instruments are entered into to hedge a portion of forecasted cash flows denominated in foreign currencies for non-U.S. operations' purchases of raw materials, which are priced in U.S. dollars, and imports of intercompany finished goods and work-in-process priced predominantly in U.S. dollars and euros. The derivative instruments used to manage these exposures are designated as cash flow hedges.
Interest Rate Risk
Interest rate risk is managed using a portfolio of variable and fixed-rate debt composed of short and long-term instruments. Interest rate swap contracts may be used to facilitate the maintenance of the desired ratio of variable and fixed-rate debt and are designated as fair value hedges. From time to time, we also hedge the anticipated issuance of fixed-rate debt, and these contracts are designated as cash flow hedges.
9


Commodity Price Risk
We use derivative instruments, such as forward contracts, to hedge a limited portion of our exposure to market risk arising from changes in prices of certain commodities. These derivatives are designated as cash flow hedges of specific quantities of the underlying commodity expected to be purchased in future months. In addition, we utilize negotiated contracts of varying durations along with strategic pricing mechanisms to manage volatility for a portion of our commodity costs.
Fair Value Hedges
Derivative instruments that are designated and qualify as fair value hedges are predominantly used to manage interest rate risk. The fair values of these interest rate derivative instruments are recorded as an asset or liability, as appropriate, with the offset recorded in Interest expense. The offset to the change in fair values of the related debt is also recorded in Interest expense. Any realized gain or loss on the derivatives that hedge interest rate risk is amortized to Interest expense over the life of the related debt. As of March 31, 2022, the aggregate notional values and carrying values of debt subject to outstanding interest rate contracts designated as fair value hedges were $525 and $501, respectively. For the three months ended March 31, 2022 and 2021, gains or losses recognized in Interest expense for interest rate swaps were not significant.
Cash Flow Hedges
For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is initially recorded in AOCI, net of related income taxes, and recognized in earnings in the same income statement line and period that the hedged exposure affects earnings. As of March 31, 2022, outstanding commodity forward contracts were in place to hedge a limited portion of our estimated requirements of the related underlying commodities in the remainder of 2022 and future periods. As of March 31, 2022, the aggregate notional value of outstanding foreign exchange derivative contracts designated as cash flow hedges was $781. For the three months ended March 31, 2022 and 2021, no significant gains or losses were reclassified into Interest expense, Cost of products sold or Other (income) and expense, net as a result of the discontinuance of cash flow hedges due to the original forecasted transaction no longer being probable of occurring. At March 31, 2022, amounts to be reclassified from AOCI into Interest expense, Cost of products sold or Other (income) and expense, net during the next twelve months are not expected to be material. The maximum maturity of cash flow hedges in place at March 31, 2022 is December 2024.
Net Investment Hedges
For derivative instruments that are designated and qualify as net investment hedges, the aggregate notional value was $1.4 billion at March 31, 2022. We exclude the interest accruals on cross-currency swap contracts and the forward points on foreign exchange forward contracts from the assessment and measurement of hedge effectiveness.  We recognize the interest accruals on cross-currency swap contracts in earnings within Interest expense.  We amortize the forward points on foreign exchange contracts into earnings within Interest expense over the life of the hedging relationship.  Changes in fair value of net investment hedges are recorded in AOCI and offset the change in the value of the net investment being hedged.  For the three months ended March 31, 2022, unrealized gains of $9 related to net investment hedge fair value changes were recorded in AOCI and no significant amounts were reclassified from AOCI to Interest expense.
No significant amounts were excluded from the assessment of net investment, fair value or cash flow hedge effectiveness as of March 31, 2022.
Undesignated Hedging Instruments
Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in Other (income) and expense, net. A loss of $34 and a loss of $9 were recorded in the three months ended March 31, 2022 and 2021, respectively. The effect on earnings from the use of these non-designated derivatives is substantially neutralized by the transactional gains and losses recorded on the underlying assets and liabilities. At March 31, 2022, the notional value of these undesignated derivative instruments was approximately $2.2 billion.
Note 7. Business Segment Information
We are organized into operating segments based on product groupings. These operating segments have been aggregated into three reportable global business segments: Personal Care, Consumer Tissue and K-C Professional. The reportable segments were determined in accordance with how our chief operating decision maker and our executive managers develop and execute global strategies to drive growth and profitability. These strategies include global plans for branding and product positioning, technology, research and development programs, cost reductions including supply chain management, and capacity and capital investments for each of these businesses. Segment management is evaluated on several factors, including operating profit. Segment operating profit excludes Other (income) and expense, net and income and expense not associated with ongoing
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operations of the business segments, including the costs of corporate decisions related to the 2018 Global Restructuring Program which was completed in 2021.
The principal sources of revenue in each global business segment are described below:
Personal Care brands offer our consumers a trusted partner in caring for themselves and their families by delivering confidence, protection and discretion through a wide variety of innovative solutions and products such as disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products.  Products in this segment are sold under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Depend, Plenitud, Softex, Poise and other brand names.
Consumer Tissue offers a wide variety of innovative solutions and trusted brands that responsibly improve everyday living for families around the world.  Products in this segment include facial and bathroom tissue, paper towels, napkins and related products, and are sold under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve and other brand names.
K-C Professional partners with businesses to create Exceptional Workplaces, helping to make them healthier, safer and more productive through a range of solutions and supporting products such as wipers, tissue, towels, apparel, soaps and sanitizers. Our brands, including Kleenex, Scott, WypAll, Kimtech and KleenGuard are well known for quality and trusted to help people around the world work better.
Information concerning consolidated operations by business segment is presented in the following tables:
Three Months Ended March 31
20222021Change
NET SALES
Personal Care$2,729 $2,462 +11 %
Consumer Tissue1,568 1,510 +4 %
K-C Professional780 752 +4 %
Corporate & Other18 19 N.M.
TOTAL NET SALES$5,095 $4,743 +7 %
OPERATING PROFIT
Personal Care$475 $481 -1 %
Consumer Tissue171 269 -36 %
K-C Professional90 126 -29 %
Corporate & Other(a)
(102)(102)N.M.
Other (income) and expense, net(a)
(59)4 N.M.
TOTAL OPERATING PROFIT$693 $770 -10 %
(a)    Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including the non-cash, non-recurring gain and transaction and integration costs related to the acquisition of a controlling interest in Thinx in 2022 and charges related to the 2018 Global Restructuring Program in 2021. Restructuring charges related to the Personal Care, Consumer Tissue and K-C Professional for the three months ended March 31, 2021 were, $15, $16, and $3, respectively.
N.M. - Not Meaningful
Sales of Principal Products:
Three Months Ended March 31
(Billions of dollars)20222021
Baby and child care products$1.9 $1.7 
Consumer tissue products1.6 1.5 
Away-from-home professional products0.8 0.8 
All other0.8 0.7 
Consolidated$5.1 $4.7 
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Note 8. Supplemental Balance Sheet Data
The following schedule presents a summary of inventories by major class:
March 31, 2022December 31, 2021
LIFONon-LIFOTotalLIFONon-LIFOTotal
Raw materials$152 $362 $514 $141 $352 $493 
Work in process153 96 249 153 89 242 
Finished goods621 817 1,438 607 835 1,442 
Supplies and other 290 290  280 280 
926 1,565 2,491 901 1,556 2,457 
Excess of FIFO or weighted-average cost over
  LIFO cost
(226) (226)(218) (218)
Total$700 $1,565 $2,265 $683 $1,556 $2,239 
Inventories are valued at the lower of cost or net realizable value, determined on the FIFO or weighted-average cost methods, and at the lower of cost or market, determined on the LIFO cost method.
The following schedule presents a summary of property, plant and equipment, net:
March 31, 2022December 31, 2021
Land$168 $169 
Buildings3,026 2,993 
Machinery and equipment14,745 14,606 
Construction in progress766 760 
18,705 18,528 
Less accumulated depreciation(10,591)(10,431)
Total$8,114 $8,097 

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction
This management's discussion and analysis ("MD&A") of financial condition and results of operations is intended to provide investors with an understanding of our recent performance, financial condition and prospects.  Dollar amounts are reported in millions, except per share dollar amounts, unless otherwise noted. The following will be discussed and analyzed:
Overview of First Quarter 2022 Results
Results of Operations and Related Information
Liquidity and Capital Resources
Information Concerning Forward-Looking Statements
We describe our business outside North America in two groups – Developing and Emerging Markets ("D&E") and Developed Markets. D&E markets comprise Eastern Europe, the Middle East and Africa, Latin America and Asia-Pacific, excluding Australia and South Korea. Developed Markets consist of Western and Central Europe, Australia and South Korea. We have three reportable business segments: Personal Care, Consumer Tissue and K-C Professional. These business segments are described in greater detail in Note 7 to the unaudited interim consolidated financial statements.
On February 24, 2022, we completed our acquisition of a majority and controlling share of Thinx Inc. (“Thinx”), an industry leader in the reusable period and incontinence underwear category, for total consideration of $181 consisting of cash of $53, the fair value of our previously held equity investment of $127, and certain share-based award costs of $1.
This section presents a discussion and analysis of our first quarter 2022 net sales, operating profit and other information relevant to an understanding of the results of operations. In addition, we provide commentary regarding organic sales growth, which describes the impact of changes in volume, net selling prices and product mix on net sales. Change in foreign currency exchange rates and exited businesses also impact the year-over-year change in net sales. Our analysis compares the three months ended March 31, 2022 results to the same period in 2021.
In March 2022, we implemented significant adjustments to our business in Russia and suspended all media, advertising and promotional activity as well as capital investments in our sole manufacturing facility. Consistent with the humanitarian nature of our products, we are producing only essential items, specifically baby diapers and feminine pads, which are critical to the health and hygiene of women, girls and babies, but our ability to provide these items may change as the situation evolves. Our Russia business has historically represented approximately 1 to 2 percent of our net sales, operating profit and total assets. We are actively monitoring the situation, and as the business, geopolitical and regulatory environment concerning Russia evolves, our assets may be partially or fully impaired. For a more complete discussion of the risks we encounter in our business, please refer to Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021.
Throughout this MD&A, we refer to financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S., or GAAP, and are therefore referred to as non-GAAP financial measures. These measures include adjusted gross and operating profit, adjusted net income, adjusted earnings per share, adjusted other (income) and expense, net and adjusted effective tax rate. We believe these measures provide our investors with additional information about our underlying results and trends, as well as insight into some of the financial measures used to evaluate management.
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measures, and they should be read only in conjunction with our unaudited interim consolidated financial statements prepared in accordance with GAAP.  There are limitations to these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items being excluded.  We compensate for these limitations by using these non-GAAP financial measures as a supplement to the GAAP measures and by providing reconciliations of the non-GAAP and comparable GAAP financial measures.
The non-GAAP financial measures exclude the following item for the relevant time period as indicated in the reconciliations included later in this MD&A:
Acquisition of controlling interest in Thinx – In the first quarter of 2022, we increased our investment in Thinx. As a result of this transaction, a net benefit was recognized of $64 pre-tax ($68 after tax), primarily due to the non-recurring, non-cash gain recognized related to the remeasurement of the carrying value of our previously held equity investment to fair value partially offset by transaction and integration costs. See Item 1, Note 2 to the unaudited interim consolidated financial statements for details.
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The non-GAAP financial measures also exclude charges in 2021 for the 2018 Global Restructuring Program as indicated in the reconciliations included later in this MD&A. In 2018, we initiated this restructuring in order to reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. As a result, we recognized restructuring charges in 2018, 2019, 2020 and 2021 for this program. Restructuring actions were completed in 2021.
Overview of First Quarter 2022 Results
Net sales of $5.1 billion increased 7 percent compared to the year-ago period, including organic sales growth of 10 percent.
Operating profit was $693 in 2022 and $770 in 2021. Net Income Attributable to Kimberly-Clark Corporation was $523 in 2022 compared to $584 in 2021, and diluted earnings per share were $1.55 in 2022 compared to $1.72 in 2021. Results in 2022 include the net benefit of the acquisition of a controlling interest of Thinx, compared to 2021 results, which include charges related to the 2018 Global Restructuring Program.
Results of Operations and Related Information
This section presents a discussion and analysis of our first quarter 2022 net sales, operating profit and other information relevant to an understanding of the results of operations.
Consolidated
Selected Financial ResultsThree Months Ended March 31
20222021Percent Change
Net Sales:
North America$2,614 $2,351 +11 %
Outside North America2,546 2,470 +3 %
Intergeographic sales(65)(78)-17 %
Total Net Sales5,095 4,743 +7 %
Operating Profit:
North America459 508 -10 %
Outside North America277 367 -25 %
Corporate & Other(a)
(102)(101)N.M.
Other (income) and expense, net(a)
(59)N.M.
Total Operating Profit693 770 -10 %
Share of net income of equity companies23 39 -41 %
Net Income Attributable to Kimberly-Clark Corporation
523 584 -10 %
Diluted Earnings per Share1.55 1.72 -10 %
(a) Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including adjustments as indicated in the Non-GAAP Reconciliations.
N.M. - Not Meaningful
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GAAP to Non-GAAP Reconciliations of Selected Financial Results
Three Months Ended March 31, 2022
As
Reported
 Acquisition of Controlling Interest in ThinxAs
Adjusted
Non-GAAP
Marketing, research and general expenses$886 $21 $865 
Other (income) and expense, net(59)(85)26 
Operating Profit693 64 629 
Provision for income taxes(114)4 (118)
Effective tax rate18.2 %21.0 %
Net Income Attributable to Kimberly-Clark Corporation523 68 455 
Diluted Earnings per Share(a)
1.55 0.20 1.35 
Three Months Ended March 31, 2021
As
Reported
2018 Global
Restructuring
Program
As
Adjusted
Non-GAAP
Cost of products sold$3,154 $25 $3,129 
Gross Profit1,589 (25)1,614 
Marketing, research and general expenses815 806 
Operating Profit770 (34)804 
Provision for income taxes(147)(154)
Effective tax rate20.9 %20.9 %
Net income attributable to noncontrolling interests(10)(11)
Net Income Attributable to Kimberly-Clark Corporation584 (26)610 
Diluted Earnings per Share(a)
1.72 (0.08)1.80 
(a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding.
Analysis of Consolidated Results
Net SalesPercent Change for Three Months Ended
March 31, 2022
Adjusted Operating ProfitPercent Change for Three Months Ended
March 31, 2022
Volume2 Volume(2)
Net Price6 Net Price37 
Mix/Other2 Input Costs(58)
Currency(2)
Cost Savings(c)
6 
Total(a)
7 Currency Translation(2)
Other(d)
(3)
Organic(b)
10 Total(22)
(a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Benefits of the FORCE (Focused On Reducing Costs Everywhere) program.
(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
Net sales in the first quarter of $5.1 billion increased 7 percent compared to the year-ago period. Changes in foreign currency exchange rates reduced sales by 2 percent. Organic sales increased 10 percent as changes in net selling prices increased sales by 6 percent, volumes grew 2 percent and changes in product mix increased sales by 2 percent.
In North America, organic sales increased 13 percent in consumer products and increased 5 percent in K-C Professional. Outside North America, organic sales rose 10 percent in D&E markets and 8 percent in developed markets.
Operating profit in the first quarter was $693 in 2022 and $770 in 2021. Results in 2022 include the net benefit of the acquisition of a controlling interest in Thinx, compared to 2021 results which include charges related to the 2018 Global
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Restructuring Program. First quarter adjusted operating profit was $629 in 2022 and $804 in 2021. Results were impacted by $470 of higher input costs, driven by pulp and polymer-based materials, distribution and energy costs. Higher marketing, research and general expense as well as the impact of unfavorable foreign currency transaction effects reduced operating profit in the quarter. Results benefited from organic sales growth, $50 of cost savings from our FORCE program and lower other manufacturing costs.
The first quarter effective tax rate was 18.2 percent in 2022 and 20.9 percent in 2021. The first quarter adjusted effective tax rate was 21.0 percent in 2022 and 20.9 percent in 2021.
Our share of net income of equity companies in the first quarter was $23 in 2022 and $39 in 2021. Equity results were negatively impacted by input cost inflation.
Diluted net income per share for the first quarter of 2022 was $1.55 and $1.72 in 2021. First quarter adjusted earnings per share were $1.35 in 2022, a decrease of 25 percent compared to $1.80 in 2021.
Results by Business Segments
Personal Care
Three Months Ended March 31


Three Months Ended March 31
2022202120222021
Net Sales$2,729 $2,462 Operating Profit$475 $481 
Net SalesPercent ChangeOperating ProfitPercent Change
Volume 3 Volume1 
Net Price8 Net Price40 
Mix/Other 3 Input Costs(44)
Currency(2)
Cost Savings(c)
5 
Total(a)
11 Currency Translation(3)
Other(d)
 
Organic(b)
13 Total(1)
(a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Benefits of the FORCE program.
(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
First quarter net sales in North America increased 16 percent. Changes in net selling prices and product mix increased sales by 8 percent and 3 percent, respectively. Volumes rose 5 percent, in part due to the weather-related supply chain disruptions in the year-ago period. Organic sales were up double-digits in baby & child care, adult care and feminine care.
Net sales in D&E markets increased 8 percent. Changes in net selling prices and product mix increased sales by 9 percent and 3 percent, respectively, while volumes declined 1 percent. Changes in foreign currency exchange rates decreased sales by 3 percent. Organic sales growth was strong across all regions and categories.
Net sales in developed markets outside North America increased 5 percent. Volumes increased 8 percent and changes in net selling prices increased sales by 4 percent, while changes in foreign currency exchange rates decreased sales by 7 percent.
Operating profit of $475 decreased 1 percent. The comparison was impacted by input cost inflation, higher marketing, research and general expense as well as unfavorable foreign currency effects. Results benefited from organic sales growth and cost savings.
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Consumer Tissue
Three Months Ended March 31


Three Months Ended March 31
2022202120222021
Net Sales$1,568 $1,510 Operating Profit$171 $269 
Net SalesPercent ChangeOperating ProfitPercent Change
Volume 2 Volume(1)
Net Price5 Net Price26 
Mix/Other  Input Costs(66)
Exited businesses(e)
(1)
Cost Savings(c)
7 
Currency(2)Currency Translation 
Total(a)
4 
Other(d)
(2)
Organic(b)
7 Total(36)
(a) Total may not equal the sum of volume, net price, mix/other, exited businesses and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Benefits of the FORCE program.
(d) Includes impact of changes in marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
(e) Impact of exited businesses in conjunction with the 2018 Global Restructuring Program.
First quarter net sales in North America increased 9 percent. Volumes grew 6 percent and changes in net selling prices increased sales by 4 percent, while unfavorable changes in product mix decreased sales by 1 percent. The volume growth reflects comparison to the start of COVID-related consumer and retailer inventory destocking in the year-ago period.
Net sales in D&E markets increased 3 percent. Changes in net selling prices increased sales by approximately 7 percent and changes in product mix increased sales by 1 percent, while volumes were down 2 percent. Changes in foreign currency exchange rates decreased sales by 2 percent.
Net sales in developed markets outside North America decreased 5 percent. Exited businesses related to the 2018 Global Restructuring program reduced sales by 4 percent, and changes in foreign currency exchange rates decreased sales by 6 percent. Volumes were down 1 percent, while changes in net selling prices increased sales by approximately 6 percent.
Operating profit of $171 decreased 36 percent. The comparison was impacted by input cost inflation and higher marketing, research and general expense. Results benefited from organic sales growth, lower other manufacturing costs and cost savings.
K-C Professional
Three Months Ended March 31


Three Months Ended March 31
2022202120222021
Net Sales$780 $752 Operating Profit$90 $126 
Net SalesPercent ChangeOperating ProfitPercent Change
Volume  Volume(13)
Net Price4 Net Price25 
Mix/Other 1 Input Costs(63)
Currency(2)
Cost Savings(c)
6 
Total(a)
4 Currency Translation(1)
Other(d)
17 
Organic(b)
6 Total(29)
(a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Benefits of the FORCE program.
(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
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First quarter net sales in North America increased 5 percent. Changes in net selling prices and product mix increased sales by 4 percent and 1 percent, respectively. Washroom products sales were up strong double-digits, while sales of wipers and safety products slowed versus a strong year-ago.
Net sales in D&E markets increased 4 percent. Changes in net selling prices and product mix increased sales by 3 percent and 2 percent, respectively, and volumes grew by 2 percent. Changes in foreign currency exchange rates decreased sales by 3 percent.
Net sales in developed markets outside North America were even with the year-ago period. Changes in net selling prices and product mix increased sales by 5 percent and 3 percent, respectively, while volumes decreased 1 percent. Changes in foreign currency exchange rates reduced sales by 7 percent.
Operating profit of $90 decreased 29 percent. The comparison was impacted by input cost inflation and higher marketing, research and general expense. Results benefited from organic sales growth, lower other manufacturing costs and cost savings.
Liquidity and Capital Resources
Cash Provided by Operations
Cash provided by operations was $204 for the first three months of 2022 compared to $321 in the prior year. The decline was driven by lower operating profit.
Investing
During the three months ended March 31, 2022, our capital spending was $253 compared to $298 in the prior year. We anticipate that full year capital spending will be $1.0 billion to $1.1 billion. Acquisition of business, net of cash acquired of $34 in the first quarter of 2022 reflected the acquisition of a controlling interest of Thinx.
Financing
Our short-term debt, which consists of U.S. commercial paper with original maturities up to 90 days and/or other similar short-term debt issued by non-U.S. subsidiaries, was $1.0 billion as of March 31, 2022 (included in Debt payable within one year on the consolidated balance sheet). The average month-end balance of short-term debt for the first quarter of 2022 was $0.9 billion. These short-term borrowings provide supplemental funding to support our operations. The level of short-term debt generally fluctuates depending upon the amount of operating cash flows and the timing of customer receipts and payments for items such as dividends and income taxes.
At March 31, 2022 and December 31, 2021, total debt was $9.1 billion and $8.6 billion, respectively.
We maintain a $2.0 billion revolving credit facility which expires in June 2026 and a $750 revolving credit facility which expires in June 2022.  These facilities, currently unused, support our commercial paper program, and would provide liquidity in the event our access to the commercial paper markets is unavailable for any reason.
The United Kingdom’s Financial Conduct Authority, which regulates the London Interbank Offered Rate (“LIBOR”), is in the process of phasing out LIBOR with completion of the phase out expected by June 30, 2023. We have evaluated the potential effect of the elimination of LIBOR and do not expect the effect to be material. Accounting guidance has been issued to ease the transition to alternative reference rates from a financial reporting perspective.
We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During the first three months of 2022, we repurchased 214 thousand shares of our common stock at a cost of $27 through a broker in the open market. We are targeting full-year 2022 share repurchases of approximately $100, subject to market conditions.
We believe that our ability to generate cash from operations and our capacity to issue short-term and long-term debt are adequate to fund working capital, capital spending, pension contributions, dividends and other needs for the foreseeable future. Further, we do not expect restrictions or taxes on repatriation of cash held outside of the U.S. to have a material effect on our overall business, liquidity, financial condition or results of operations for the foreseeable future.
Information Concerning Forward-Looking Statements
Certain matters contained in this report concerning the business outlook, including raw material, energy and other input costs, the anticipated cost