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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 September 30, 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/0b9152a66e32be9abaff0f1b476301bf-kmb-20220930_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 October 18, 2022, there were 337,492,094 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
September 30
Nine Months Ended
September 30
(Millions of dollars, except per share amounts)2022202120222021
Net Sales$5,053 $5,010 $15,211 $14,475 
Cost of products sold3,510 3,527 10,619 9,923 
Gross Profit1,543 1,483 4,592 4,552 
Marketing, research and general expenses873 819 2,665 2,488 
Other (income) and expense, net15 7 (42)24 
Operating Profit655 657 1,969 2,040 
Nonoperating expense(18)(10)(49)(71)
Interest income4 1 7 4 
Interest expense(73)(64)(206)(192)
Income Before Income Taxes and Equity Interests568 584 1,721 1,781 
Provision for income taxes(127)(126)(356)(386)
Income Before Equity Interests441 458 1,365 1,395 
Share of net income of equity companies29 21 81 88 
Net Income470 479 1,446 1,483 
Net income attributable to noncontrolling interests(3)(10)(19)(26)
Net Income Attributable to Kimberly-Clark Corporation$467 $469 $1,427 $1,457 
Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic$1.38 $1.39 $4.23 $4.32 
Diluted$1.38 $1.39 $4.22 $4.31 
See notes to the unaudited interim consolidated financial statements.

1


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
September 30
Nine Months Ended
September 30
(Millions of dollars)2022202120222021
Net Income$470 $479 $1,446 $1,483 
Other Comprehensive Income (Loss), Net of Tax
   Unrealized currency translation adjustments(316)(151)(530)(288)
   Employee postretirement benefits20 16 36 45 
   Other45 35 79 93 
Total Other Comprehensive Income (Loss), Net of Tax(251)(100)(415)(150)
Comprehensive Income219 379 1,031 1,333 
   Comprehensive (income) loss attributable to noncontrolling interests9 1 7 (8)
Comprehensive Income Attributable to Kimberly-Clark Corporation$228 $380 $1,038 $1,325 
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)September 30, 2022December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents$362 $270 
Accounts receivable, net2,333 2,207 
Inventories2,281 2,239 
Other current assets649 849 
Total Current Assets5,625 5,565 
Property, Plant and Equipment, Net7,737 8,097 
Investments in Equity Companies266 290 
Goodwill2,043 1,840 
Other Intangible Assets, Net866 810 
Other Assets1,299 1,235 
TOTAL ASSETS$17,836 $17,837 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year$959 $433 
Trade accounts payable3,660 3,840 
Accrued expenses and other current liabilities2,190 2,096 
Dividends payable388 380 
Total Current Liabilities7,197 6,749 
Long-Term Debt7,628 8,141 
Noncurrent Employee Benefits837 809 
Deferred Income Taxes636 694 
Other Liabilities695 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 September 30, 2022 and December 31, 2021
473 473 
Additional paid-in capital633 605 
Common stock held in treasury, at cost - 41.1 and 41.8 million shares at September 30, 2022 and December 31, 2021, respectively
(5,126)(5,183)
Retained earnings8,086 7,858 
Accumulated other comprehensive income (loss)(3,629)(3,239)
Total Kimberly-Clark Corporation Stockholders' Equity437 514 
Noncontrolling Interests146 223 
Total Stockholders' Equity583 737 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,836 $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 September 30, 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 June 30, 2022378,597 $473 $598 40,962 $(5,111)$8,022 $(3,389)$149 $742 
Net income in stockholders' equity, excludes redeemable interests' share— — — — — 467 — 9 476 
Other comprehensive income, net of tax,
excludes redeemable interests' share
— — — — — — (239)(13)(252)
Stock-based awards exercised or vested— — (2)(84)9 — — — 7 
Shares repurchased— — — 191 (25)— — — (25)
Recognition of stock-based compensation— — 31 —  — — — 31 
Dividends declared ($1.16 per share)
— — — — — (391)— (1)(392)
Other— — 6 — 1 (12)(1)2 (4)
Balance at September 30, 2022378,597 $473 $633 41,069 $(5,126)$8,086 $(3,629)$146 $583 


Nine Months Ended September 30, 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     1,427  30 1,457 
Other comprehensive income, net of tax, excludes redeemable interests' share      (389)(26)(415)
Stock-based awards exercised or vested  (81)(1,272)131    50 
Shares repurchased   579 (75)   (75)
Recognition of stock-based compensation  98      98 
Dividends declared ($3.48 per share)
     (1,174) (82)(1,256)
Other  11  1 (25)(1)1 (13)
Balance at September 30, 2022378,597 $473 $633 41,069 $(5,126)$8,086 $(3,629)$146 $583 
See notes to the unaudited interim consolidated financial statements.
4


Three Months Ended September 30, 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 June 30, 2021378,597 $473 $627 41,661 $(5,159)$7,798 $(3,215)$234 $758 
Net income in stockholders' equity, excludes redeemable interests' share— — — — — 469 — 10 479 
Other comprehensive income, net of tax, excludes redeemable interests' share— — — — — — (89)(11)(100)
Stock-based awards exercised or vested— — (1)(237)26 — — — 25 
Shares repurchased— — — 429 (58)— — — (58)
Recognition of stock-based compensation— — (13)— — — — — (13)
Dividends declared ($1.14 per share)
— — — — — (384)— — (384)
Other— — 1 — — — (1)—  
Balance at September 30, 2021378,597 $473 $614 41,853 $(5,191)$7,883 $(3,305)$233 $707 

Nine Months Ended September 30, 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— — — — — 1,457 — 25 1,482 
Other comprehensive income, net of tax, excludes redeemable interests' share— — — — — — (132)(18)(150)
Stock-based awards exercised or vested— — (78)(1,189)130 — — — 52 
Shares repurchased— — — 3,169 (422)— — — (422)
Recognition of stock-based compensation— — 28 — — — — — 28 
Dividends declared ($3.42 per share)
— — — — — (1,154)— (17)(1,171)
Other— — 7 — — 13 (1)— 19 
Balance at September 30, 2021378,597 $473 $614 41,853 $(5,191)$7,883 $(3,305)$233 $707 
5


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
Nine Months Ended
September 30
(Millions of dollars)20222021
Operating Activities
Net income$1,446 $1,483 
Depreciation and amortization568 572 
Asset impairments 3 
Gain on previously held equity investment in Thinx(85) 
Stock-based compensation101 30 
Deferred income taxes(131)(42)
Net (gains) losses on asset dispositions14 34 
Equity companies' earnings (in excess of) less than dividends paid(21)(25)
Operating working capital(166)(432)
Postretirement benefits6 39 
Other10 6 
Cash Provided by Operations1,742 1,668 
Investing Activities
Capital spending(679)(734)
Acquisition of business, net of cash acquired(46) 
Proceeds from dispositions of property7 31 
Investments in time deposits(411)(632)
Maturities of time deposits632 598 
Other(20)1 
Cash Used for Investing(517)(736)
Financing Activities
Cash dividends paid(1,167)(1,133)
Change in short-term debt487 854 
Debt proceeds 5 
Debt repayments(312)(269)
Proceeds from exercise of stock options84 52 
Acquisitions of common stock for the treasury(74)(393)
Cash dividends paid to noncontrolling interests(82)(17)
Other(45)(40)
Cash Used for Financing(1,109)(941)
Effect of Exchange Rate Changes on Cash and Cash Equivalents(24)(8)
Change in Cash and Cash Equivalents92 (17)
Cash and Cash Equivalents - Beginning of Period270 303 
Cash and Cash Equivalents - End of Period$362 $286 
See notes to the unaudited interim consolidated financial statements.

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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
GAAP guidance requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100 percent. Under highly inflationary accounting, the countries’ functional currency becomes the U.S. dollar, and its income statement and balance sheet are measured in U.S. dollars using both current and historical rates of exchange. 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”). 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 September 30, 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 nine months ended September 30, 2022 and 2021.
In the first quarter of 2022, published inflation indices indicated that the three-year cumulative inflation in Turkey exceeded 100 percent, and as of April 1, 2022, we elected to adopt highly inflationary accounting for our subsidiary in Turkey (“K-C Turkey”). The effect of changes in exchange rates on lira-denominated monetary assets and liabilities has been reflected in earnings in Other (income) and expense, net and was not material. As of September 30, 2022, K-C Turkey had a small net lira monetary position. Net sales of K-C Turkey were less than 1 percent of our consolidated net sales for the nine months ended September 30, 2022.
Recently Issued Accounting Standard
In September 2022, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) No. 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50). The new guidance requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the provision on roll forward information, which is effective for fiscal years beginning after December 15, 2023. As the guidance requires only additional disclosures, the effects of this standard on our financial position, results of operations and cash flows are not expected to be material.
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.
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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.
The total purchase price consideration was allocated to the net assets acquired based upon their respective estimated fair values as follows:
Current Assets$28 
Property, Plant and Equipment, Net2 
Goodwill297 
Other Intangible Assets, Net123 
Other Assets4 
Current Liabilities(17)
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 September 30, 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 nine months ended September 30, 2022.
Pro forma results of operations have not been presented as the impact on our consolidated financial statements is not material.
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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 nine months ended September 30, 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 September 30, 2022 and December 31, 2021, derivative assets were $283 and $65, respectively, and derivative liabilities were $131 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 and commodity 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 September 30, 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 $63 and $72 at September 30, 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
September 30, 2022December 31, 2021
Assets
Cash and cash equivalents(a)
1$362 $362 $270 $270 
Time deposits(b)
1168 168 416 416 
Liabilities
Short-term debt(c)
2599 599 118 118 
Long-term debt(d)
27,988 7,269 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.
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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
September 30
Nine Months Ended
September 30
(Millions of shares)2022202120222021
Basic337.6 336.8 337.3 337.4 
Dilutive effect of stock options and restricted share unit awards0.7 0.7 1.0 1.0 
Diluted338.3 337.5 338.3 338.4 
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 September 30, 2022 and 2021 was 337.5 million and 336.7 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 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 nine months ended September 30, 2022 was primarily due to the weakening of certain foreign currencies versus the U.S. dollar.
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)$(63)
Other comprehensive income (loss) before reclassifications
(266)5 (12)56 
(Income) loss reclassified from AOCI 52 (a)(3)(a)35 
Net current period other comprehensive income (loss)(266)57 (15)91 
Balance as of September 30, 2021$(2,423)$(855)$(55)$28 
Balance as of December 31, 2021$(2,422)$(803)$(34)$20 
Other comprehensive income (loss) before
    reclassifications
(501)(6)(2)101 
(Income) loss reclassified from AOCI 44 (a) (a)(26)
Net current period other comprehensive income (loss)(501)38 (2)75 
Balance as of September 30, 2022$(2,923)$(765)$(36)$95 
(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 September 30, 2022 and December 31, 2021, derivative assets were $283 and $65, respectively, and derivative liabilities were $131 and $41, respectively, primarily comprised of foreign currency exchange contracts. Derivative assets are recorded in
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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.
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 September 30, 2022, the aggregate notional values and carrying values of debt subject to outstanding interest rate contracts designated as fair value hedges were $525 and $465, respectively. For the nine months ended September 30, 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 September 30, 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. During 2022, we increased the notional level of our foreign currency designated cash flow hedges to help mitigate the impacts of significantly increased macroeconomic foreign currency rate fluctuations, and as of September 30, 2022, the aggregate notional value of outstanding foreign exchange derivative contracts designated as cash flow hedges was $2,106. For the nine months ended September 30, 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 September 30, 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 September 30, 2022 is September 2025.
Net Investment Hedges
For derivative instruments that are designated and qualify as net investment hedges, the aggregate notional value was $1.3 billion at September 30, 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 nine
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months ended September 30, 2022, unrealized gains of $176 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 September 30, 2022.
Undesignated Hedging Instruments
Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in Other (income) and expense, net. Losses of $13 and $2 were recorded in the three months ended September 30, 2022 and 2021, respectively. Losses of $48 and $8 were recorded in the nine months ended September 30, 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 September 30, 2022, the notional value of these undesignated derivative instruments was approximately $2.1 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 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, reusable underwear 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, Thinx, 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.
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Information concerning consolidated operations by business segment is presented in the following tables:
Three Months Ended September 30Nine Months Ended September 30
20222021Change20222021Change
NET SALES
Personal Care$2,628 $2,656 -1 %$8,067 $7,635 +6 %
Consumer Tissue1,578 1,541 +2 %4,683 4,475 +5 %
K-C Professional836 797 +5 %2,418 2,314 +4 %
Corporate & Other11 16 N.M.43 51 N.M.
TOTAL NET SALES$5,053 $5,010 +1 %$15,211 $14,475 +5 %
OPERATING PROFIT
Personal Care$423 $496 -15 %$1,364 $1,431 -5 %
Consumer Tissue218 222 -2 %567 687 -17 %
K-C Professional119 96 +24 %294 332 -11 %
Corporate & Other(a)
(90)(150)N.M.(298)(386)N.M.
Other (income) and expense, net(a)
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