KIMBERLY CLARK CORP - Quarter Report: 2021 June (Form 10-Q)

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 June 30, 2021

☐ 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

KIMBERLY CLARK CORPORATON

(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	KMB	New York Stock Exchange
0.625% Notes due 2024	KMB24	New 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

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 July 16, 2021, there were 336,762,087 shares of the Corporation's common stock outstanding.

Table of Contents


PART I – FINANCIAL INFORMATION			1

Item 1. Financial Statements			1

UNAUDITED CONSOLIDATED INCOME STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30 , 2021 AND 2020			1

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30 , 2021 AND 2020			2

CONSOLIDATED BALANCE SHEETS AS OF JUNE 30 , 2021 (UNAUDITED) AND DECEMBER 31, 2020			3

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30 , 2021 AND 2020			4

UNAUDITED CONSOLIDATED CASH FLOW STATEMENTS FOR THE SIX MONTHS ENDED JUNE 3 0 , 2021 AND 2020			6
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS			7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			15

Item 4. Controls and Procedures			22

PART II – OTHER INFORMATION			24



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			24

Item 6. Exhibits			25

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

(Unaudited)


	Three Months Ended June 30				Six Months Ended June 30
(Millions of dollars, except per share amounts)	2021		2020		2021		2020
Net Sales	$	4,722	$	4,612	$	9,465	$	9,621
Cost of products sold	3,242		2,835		6,396		6,053
Gross Profit	1,480		1,777		3,069		3,568
Marketing, research and general expenses	854		844		1,669		1,717
Other (income) and expense, net	13		8		17		22
Operating Profit	613		925		1,383		1,829
Nonoperating expense	(55)		(6)		(61)		(17)
Interest income	2		2		3		4
Interest expense	(65)		(65)		(128)		(126)
Income Before Income Taxes and Equity Interests	495		856		1,197		1,690
Provision for income taxes	(113)		(199)		(260)		(396)
Income Before Equity Interests	382		657		937		1,294
Share of net income of equity companies	28		35		67		73
Net Income	410		692		1,004		1,367
Net income attributable to noncontrolling interests	(6)		(11)		(16)		(26)
Net Income Attributable to Kimberly-Clark Corporation	$	404	$	681	$	988	$	1,341

Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic	$	1.20	$	2.00	$	2.92	$	3.93
Diluted	$	1.19	$	1.99	$	2.92	$	3.92

See notes to the unaudited interim consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30				Six Months Ended June 30
(Millions of dollars)	2021		2020		2021		2020
Net Income	$	410	$	692	$	1,004	$	1,367
Other Comprehensive Income (Loss), Net of Tax
Unrealized currency translation adjustments	78		125		(137)		(274)
Employee postretirement benefits	11		5		29		39
Other	22		(24)		58		8
Total Other Comprehensive Income (Loss), Net of Tax	111		106		(50)		(227)
Comprehensive Income	521		798		954		1,140
Comprehensive (income) loss attributable to noncontrolling interests	(6)		(15)		(9)		(18)
Comprehensive Income Attributable to Kimberly-Clark Corporation	$	515	$	783	$	945	$	1,122

See notes to the unaudited interim consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(2021 Data is Unaudited)


(Millions of dollars)	June 30, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	306	$	303
Accounts receivable, net	2,340		2,235
Inventories	2,110		1,903
Other current assets	816		733
Total Current Assets	5,572		5,174
Property, Plant and Equipment, Net	8,018		8,042
Investments in Equity Companies	350		300
Goodwill	1,834		1,895
Other Intangible Assets, Net	803		832
Other Assets	1,250		1,280
TOTAL ASSETS	$	17,827	$	17,523

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year	$	1,493	$	486
Trade accounts payable	3,337		3,336
Accrued expenses and other current liabilities	2,037		2,262
Dividends payable	377		359
Total Current Liabilities	7,244		6,443
Long-Term Debt	7,591		7,878
Noncurrent Employee Benefits	875		864
Deferred Income Taxes	665		723
Other Liabilities	666		718
Redeemable Preferred Securities of Subsidiaries	28		28
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 June 30, 2021 and December 31, 2020	473		473
Additional paid-in capital	627		657
Common stock held in treasury, at cost - 41.7 and 39.9 million shares at June 30, 2021 and December 31, 2020, respectively	(5,159)		(4,899)
Retained earnings	7,798		7,567
Accumulated other comprehensive income (loss)	(3,215)		(3,172)
Total Kimberly-Clark Corporation Stockholders' Equity	524		626
Noncontrolling Interests	234		243
Total Stockholders' Equity	758		869
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	17,827	$	17,523

See notes to the unaudited interim consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Three Months Ended June 30, 2021
(Millions of dollars, shares in thousands, except per share amounts)	Common Stock Issued			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Stockholders' Equity
	Shares	Amount				Shares	Amount
Balance at March 31, 2021	378,597	$	473	$	658	40,956	$	(5,050)	$	7,764	$	(3,327)	$	228	$	746
Net income in stockholders' equity, excludes redeemable interests' share	—	—		—		—	—		404		—		6		410
Other comprehensive income, net of tax, excludes redeemable interests' share	—	—		—		—	—		—		111		—		111
Stock-based awards exercised or vested	—	—		(53)		(637)	70		—		—		—		17
Shares repurchased	—	—		—		1,342	(179)		—		—		—		(179)
Recognition of stock-based compensation	—	—		19		—	—		—		—		—		19
Dividends declared ($1.14 per share)	—	—		—		—	—		(385)		—		1		(384)
Other	—	—		3		—	—		15		1		(1)		18
Balance at June 30, 2021	378,597	$	473	$	627	41,661	$	(5,159)	$	7,798	$	(3,215)	$	234	$	758


	Six Months Ended June 30, 2021
(Millions of dollars, shares in thousands, except per share amounts)	Common Stock Issued			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Stockholders' Equity
	Shares	Amount				Shares	Amount
Balance at December 31, 2020	378,597	$	473	$	657	39,873	$	(4,899)	$	7,567	$	(3,172)	$	243	$	869
Net income in stockholders' equity, excludes redeemable interests' share	—	—		—		—	—		988		—		15		1,003
Other comprehensive income, net of tax, excludes redeemable interests' share	—	—		—		—	—		—		(43)		(7)		(50)
Stock-based awards exercised or vested	—	—		(77)		(952)	104		—		—		—		27
Shares repurchased	—	—		—		2,740	(364)		—		—		—		(364)
Recognition of stock-based compensation	—	—		41		—	—		—		—		—		41
Dividends declared ($2.28 per share)	—	—		—		—	—		(770)		—		(17)		(787)
Other	—	—		6		—	—		13		—		—		19
Balance at June 30, 2021	378,597	$	473	$	627	41,661	$	(5,159)	$	7,798	$	(3,215)	$	234	$	758

See notes to the unaudited interim consolidated financial statements.


	Three Months Ended June 30, 2020
(Millions of dollars, shares in thousands, except per share amounts)	Common Stock Issued			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Stockholders' Equity
	Shares	Amount				Shares	Amount
Balance at March 31, 2020	378,597	$	473	$	559	37,761	$	(4,562)	$	6,978	$	(3,615)	$	213	$	46
Net income in stockholders' equity, excludes redeemable interests' share	—	—		—		—	—		681		—		10		691
Other comprehensive income, net of tax, excludes redeemable interests' share	—	—		—		—	—		—		102		4		106
Stock-based awards exercised or vested	—	—		(38)		(557)	66		—		—		—		28
Shares repurchased	—	—		—		370	(49)		—		—		—		(49)
Recognition of stock-based compensation	—	—		38		—	—		—		—		—		38
Dividends declared ($1.07 per share)	—	—		—		—	—		(365)		—		—		(365)
Other	—	—		(5)		—	—		5		—		—		—
Balance at June 30, 2020	378,597	$	473	$	554	37,574	$	(4,545)	$	7,299	$	(3,513)	$	227	$	495


	Six Months Ended June 30, 2020
(Millions of dollars, shares in thousands, except per share amounts)	Common Stock Issued				Additional Paid-in Capital		Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Stockholders' Equity
	Shares		Amount				Shares	Amount
Balance at December 31, 2019	$	378.597	$	473	$	556	37,149	$	(4,454)	$	6,686	$	(3,294)	$	227	$	194
Net income in stockholders' equity, excludes redeemable interests' share	—		—		—		—	—		1,341		—		24		1,365
Other comprehensive income, net of tax, excludes redeemable interests' share	—		—		—		—	—		—		(219)		(8)		(227)
Stock-based awards exercised or vested	—		—		(52)		(1,622)	187		—		—		—		135
Shares repurchased	—		—		—		2,047	(278)		—		—		—		(278)
Recognition of stock-based compensation	—		—		53		—	—		—		—		—		53
Dividends declared ($2.14 per share)	—		—		—		—	—		(730)		—		(17)		(747)
Other	—		—		(3)		—	—		2		—		1		—
Balance at June 30, 2020	378,597		$	473	$	554	37,574	$	(4,545)	$	7,299	$	(3,513)	$	227	$	495

See notes to the unaudited interim consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

(Unaudited)


	Six Months Ended June 30
(Millions of dollars)	2021		2020
Operating Activities
Net income	$	1,004	$	1,367
Depreciation and amortization	378		414
Asset impairments	3		—
Stock-based compensation	42		54
Deferred income taxes	(74)		12
Net (gains) losses on asset dispositions	15		13
Equity companies' earnings (in excess of) less than dividends paid	(32)		(47)
Operating working capital	(495)		490
Postretirement benefits	36		(15)
Other	9		(5)
Cash Provided by Operations	886		2,283
Investing Activities
Capital spending	(499)		(636)
Proceeds from dispositions of property	30		5
Investments in time deposits	(451)		(323)
Maturities of time deposits	433		254
Other	—		10
Cash Used for Investing	(487)		(690)
Financing Activities
Cash dividends paid	(748)		(722)
Change in short-term debt	960		(667)
Debt proceeds	5		1,241
Debt repayments	(253)		(252)
Proceeds from exercise of stock options	27		135
Acquisitions of common stock for the treasury	(331)		(263)
Other	(54)		(39)
Cash Used for Financing	(394)		(567)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(2)		(20)
Change in Cash and Cash Equivalents	3		1,006
Cash and Cash Equivalents - Beginning of Period	303		442
Cash and Cash Equivalents - End of Period	$	306	$	1,448

See notes to the unaudited interim consolidated financial statements.

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, 2020. 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 June 30, 2021, 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 six months ended June 30, 2021 and 2020.

Recently Adopted Accounting Standard

In 2019, the Financial Accounting Standards Board issued Accounting Standards Update No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the tax basis of goodwill after a business combination, and the recognition of deferred tax liabilities for outside basis differences. The new guidance also changes the calculation of the income tax impact of hybrid taxes and the methodology for calculating income taxes in an interim period. We adopted this standard as of January 1, 2021 on either a prospective basis or through a modified retrospective approach, as required by the standard. There was no cumulative effect adjustment recorded to retained earnings as the amount was not material. The effects of this standard on our financial position, results of operations and cash flows were not material.

Note 2. 2018 Global Restructuring Program

In January 2018, we announced the 2018 Global Restructuring Program to reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. We expect to close or sell approximately 10 manufacturing facilities and expand production capacity at several others. We expect to exit or divest some lower-margin businesses that generate approximately 1 percent of our net sales. The restructuring is expected to impact our organizations in all major geographies. Workforce reductions are expected to be in the range of 6,300 to 6,400.

The restructuring is expected to be completed in 2021, with total costs anticipated to be in the range of $2.0 billion to $2.1 billion pre-tax ($1.5 billion to $1.6 billion after tax). Cash costs are expected to be $1.1 billion to $1.15 billion, primarily related to workforce reductions. Non-cash charges are expected to be $900 to $950 pre-tax and will primarily consist of incremental depreciation, asset write-offs and pension settlement and curtailment charges. Restructuring charges in 2021 are expected to be $180 to $280 pre-tax ($135 to $215 after tax).

The following net charges were incurred in connection with the 2018 Global Restructuring Program:


	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Cost of products sold:
Charges (adjustments) for workforce reductions	$	—	$	1	$	(2)	$	1
Asset impairments	—		—		3		—
Asset write-offs	—		3		1		9
Incremental depreciation	4		33		8		68
Other exit costs	21		23		40		52
Total	25		60		50		130
Marketing, research and general expenses:
Charges (adjustments) for workforce reductions	16		1		14		(2)
Other exit costs	14		26		25		52
Total	30		27		39		50
Other (income) and expense, net	8		—		8		—
Nonoperating expense	56		—		56		—
Total charges	119		87		153		180
Provision for income taxes	(25)		(15)		(32)		(33)
Net charges	94		72		121		147
Net impact related to equity companies and noncontrolling interests	—		—		(1)		(1)
Net charges attributable to Kimberly-Clark Corporation	$	94	$	72	$	120	$	146

The following summarizes the restructuring liabilities activity:


	2021		2020
Restructuring liabilities at January 1	$	93	$	132
Charges for workforce reductions and other cash exit costs	77		99
Cash payments	(98)		(122)
Currency and other	—		(3)
Restructuring liabilities at June 30	$	72	$	106

Restructuring liabilities of $57 and $75 are recorded in Accrued expenses and other current liabilities and $15 and $31 are recorded in Other Liabilities as of June 30, 2021 and 2020, respectively. The impact related to restructuring charges is recorded in Operating working capital and Other Operating Activities, as appropriate, in our consolidated cash flow statements.

Through June 30, 2021, cumulative pre-tax charges for the 2018 Global Restructuring Program were $2.0 billion ($1.5 billion after tax).

Note 3. 2020 Acquisition

On October 1, 2020 (“Acquisition Date”), we acquired Softex Indonesia, in an all-cash transaction for approximately $1.2 billion. The transaction price, subject to working capital and net debt adjustments, resulted in a preliminary purchase price of $1.1 billion as of December 31, 2020 in addition to the assumption of certain indebtedness of Softex Indonesia at closing. The allocation of purchase consideration related to Softex Indonesia was substantially completed in the fourth quarter of 2020. 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 fourth quarter of 2021.

See Note 3, Acquisition, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020 for the preliminary purchase price allocation, valuation methodology, and other information related to the Softex Indonesia acquisition.

Note 4. 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 six months ended June 30, 2021 and for the full year 2020, 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 June 30, 2021 and December 31, 2020, derivative assets were $41 and $44, respectively, and derivative liabilities were $60 and $92, 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 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 7.

Redeemable preferred securities of subsidiaries are measured on a recurring basis at fair value and were $28 as of June 30, 2021 and December 31, 2020, respectively. They are not traded in active markets. The fair values of the redeemable securities were based on a discounted cash flow valuation model. Measurement of the redeemable preferred securities is considered a level 3 measurement.

Company-owned life insurance ("COLI") assets are measured on a recurring basis at fair value. COLI assets were $73 at June 30, 2021 and December 31, 2020, 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 Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value

		June 30, 2021				December 31, 2020
Assets
Cash and cash equivalents(a)	1	$	306	$	306	$	303	$	303
Time deposits(b)	1	369		369		364		364

Liabilities
Short-term debt(c)	2	1,180		1,180		223		223

Long-term debt(d)	2	7,904		9,079		8,141		9,627

(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 5. 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 June 30		Six Months Ended June 30
(Millions of shares)	2021	2020	2021	2020
Basic	337.3	340.9	337.8	341.1
Dilutive effect of stock options and restricted share unit awards	1.0	1.0	1.0	1.2
Diluted	338.3	341.9	338.8	342.3

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 June 30, 2021 and 2020 was 336.9 million and 341.0 million, respectively.

Note 6. 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 six months ended June 30, 2021 was primarily due to the weakening of foreign currencies versus the U.S. dollar, particularly the Indonesian rupiah, the Korean won and the euro.

The changes in the components of AOCI attributable to Kimberly-Clark, net of tax, are as follows:


	Unrealized Translation		Defined Benefit Pension Plans			Other Postretirement Benefit Plans			Cash Flow Hedges and Other
Balance as of December 31, 2019	$	(2,271)	$	(979)		$	(13)		$	(31)
Other comprehensive income (loss) before reclassifications	(266)		22			2			17
(Income) loss reclassified from AOCI	—		16		(a)	(1)		(a)	(9)
Net current period other comprehensive income (loss)	(266)		38			1			8

Balance as of June 30, 2020	$	(2,537)	$	(941)		$	(12)		$	(23)

Balance as of December 31, 2020	$	(2,157)	$	(912)		$	(40)		$	(63)
Other comprehensive income (loss) before reclassifications	(127)		1			(12)			28
(Income) loss reclassified from AOCI	—		38		(a)	—		(a)	29
Net current period other comprehensive income (loss)	(127)		39			(12)			57

Balance as of June 30, 2021	$	(2,284)	$	(873)		$	(52)		$	(6)

(a) Included in computation of net periodic benefit costs.

Note 7. 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 June 30, 2021 and December 31, 2020, derivative assets were $41 and $44, respectively, and derivative liabilities were $60 and $92, 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.

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 short-term contract structures, including fixed price contracts, 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 June 30, 2021, the aggregate notional values and carrying values of debt subject to outstanding interest rate contracts designated as fair value hedges were $625 and $642, respectively. For the six months ended June 30, 2021 and 2020, 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 June 30, 2021, 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 2021 and future periods. As of June 30, 2021, the aggregate notional value of outstanding foreign exchange derivative contracts designated as cash flow hedges was $741. For the six months ended June 30, 2021 and 2020, 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 June 30, 2021, 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 June 30, 2021 is June 2023.

Net Investment Hedges

For derivative instruments that are designated and qualify as net investment hedges, the aggregate notional value was 1.5 billion at June 30, 2021. 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 six months ended

June 30, 2021, unrealized gains of $25 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 June 30, 2021.

Undesignated Hedging Instruments

Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in Other (income) and expense, net. Gains of $3 and $12 were recorded in the three months ended June 30, 2021 and 2020, respectively. A loss of $6 and gain of $8 were recorded in the six months ended June 30, 2021 and 2020. 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 June 30, 2021, the notional value of these undesignated derivative instruments was approximately $2.3 billion.

Note 8. 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 described in Note 2.

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 June 30						Six Months Ended June 30
	2021		2020		Change		2021		2020		Change
NET SALES
Personal Care	$	2,517	$	2,229	+13	%	$	4,979	$	4,651	+7	%
Consumer Tissue	1,424		1,645		-13	%	2,934		3,368		-13	%
K-C Professional	765		724		+6	%	1,517		1,572		-3	%
Corporate & Other	16		14		N.M.		35		30		N.M.
TOTAL NET SALES	$	4,722	$	4,612	+2	%	$	9,465	$	9,621	-2	%

OPERATING PROFIT
Personal Care	$	454	$	519	-13	%	$	935	$	1,046	-11	%
Consumer Tissue	196		428		-54	%	465		793		-41	%
K-C Professional	110		155		-29	%	236		336		-30	%
Corporate & Other(a)	(134)		(169)		N.M.		(236)		(324)		N.M.
Other (income) and expense, net(a)	13		8		+63	%	17		22		-23	%
TOTAL OPERATING PROFIT	$	613	$	925	-34	%	$	1,383	$	1,829	-24	%

(a) Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including charges related to the 2018 Global Restructuring Program. Restructuring charges related to the Personal Care, Consumer Tissue and K-C Professional business segments were $24, $26 and $6, respectively, for the three months ended June 30, 2021, $40, $34, and $11, respectively, for the three months ended June 30, 2020, $39, $42 and $9, respectively, for the six months ended June 30, 2021, and $74, $76 and $26, respectively for the six months ended June 30, 2020 .

N.M. - Not Meaningful

Sales of Principal Products:


	Three Months Ended June 30				Six Months Ended June 30
(Billions of dollars)	2021		2020		2021		2020
Baby and child care products	1.8		1.5		3.5		3.2
Consumer tissue products	1.4		1.6		2.9		3.4
Away-from-home professional products	0.8		0.7		1.5		1.6
All other	0.7		0.8		1.6		1.4
Consolidated	$	4.7	$	4.6	$	9.5	$	9.6

Note 9. Supplemental Balance Sheet Data

The following schedule presents a summary of inventories by major class:


	June 30, 2021						December 31, 2020
	LIFO		Non-LIFO		Total		LIFO		Non-LIFO		Total
Raw materials	$	141	$	301	$	442	$	131	$	263	$	394
Work in process	149		86		235		103		86		189
Finished goods	585		769		1,354		453		749		1,202
Supplies and other	—		276		276		—		263		263
	875		1,432		2,307		687		1,361		2,048
Excess of FIFO or weighted-average cost over LIFO cost	(197)		—		(197)		(145)		—		(145)
Total	$	678	$	1,432	$	2,110	$	542	$	1,361	$	1,903

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:


	June 30, 2021		December 31, 2020
Land	$	171	$	174
Buildings	2,991		2,932
Machinery and equipment	14,668		14,382
Construction in progress	633		845
	18,463		18,333
Less accumulated depreciation	(10,445)		(10,291)
Total	$	8,018	$	8,042

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 Second Quarter 2021 Results

•Impact of COVID-19

•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 8 to the unaudited interim consolidated financial statements.

This section presents a discussion and analysis of our second quarter 2021 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, acquisitions and exited businesses also impact the year-over-year change in net sales. Our analysis compares the three and six months ended June 30, 2021 results to the same periods in 2020.

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 periods as indicated in the reconciliations included later in this MD&A:

•2018 Global Restructuring Program - In 2018, we initiated this restructuring program to reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. See Item 1, Note 2 to the unaudited interim consolidated financial statements for details.

Overview of Second Quarter 2021 Results

•Net sales of $4.7 billion increased 2 percent compared to the year-ago period, including an organic sales decline of 3 percent.

•Operating profit was $613 in 2021 and $925 in 2020. Net Income Attributable to Kimberly-Clark Corporation was $404 in 2021 compared to $681 in 2020, and diluted earnings per share were $1.19 in 2021 compared to $1.99 in 2020. Results in 2021 and 2020 include charges related to the 2018 Global Restructuring Program.

Impact of COVID-19

We continue to actively address the COVID-19 situation and its impact globally. We believe that we will emerge from these events well positioned for long-term growth, though we cannot reasonably estimate the duration and severity of this global pandemic or its ultimate impact on the global economy and our business and results.

We have experienced increased volatility in demand for some of our products as consumers adapt to the evolving environment. Throughout 2020 demand increased in our Consumer Tissue and Personal Care business segments across all major geographies as consumers increased home inventory levels in response to COVID-19. Elevated sales were particularly pronounced in our Consumer Tissue business, with a second spike during the fourth quarter as COVID-19 cases surged in advance of the winter season. The demand increase was followed by a period of retail demand softness in the first six months of 2021 as consumers used existing home inventories. Our K-C Professional business experienced volume declines throughout 2020 and the first six months of 2021 reflecting the reduction in away from home demand.

During 2020 and to a more limited extent the first six months of 2021, we experienced temporary closures of certain facilities, though we did not experience a material impact from a plant closure and our facilities were largely exempt or partially exempt from government closure orders. At many of our facilities, we have been experiencing increased employee absences, which may continue in the current situation. We have also experienced incidents of supply chain disruption and raw material shortages, particularly in markets where COVID-19 case levels have spiked.

During 2020 and the first six months of 2021, we also experienced increased volatility in foreign currency exchange rates and commodity prices (including substantial commodity inflation in the first six months of 2021), as certain countries experienced increased macro-economic volatility from the COVID-19 situation.

Results of Operations and Related Information

This section presents a discussion and analysis of our second quarter 2021 net sales, operating profit and other information relevant to an understanding of the results of operations.

Consolidated


Selected Financial Results	Three Months Ended June 30						Six Months Ended June 30
	2021		2020		Percent Change		2021		2020		Percent Change
Net Sales:
North America	$	2,393	$	2,623	-9	%	$	4,744	$	5,224	-9	%
Outside North America	2,405		2,052		+17	%	4,875		4,536		+7	%
Intergeographic sales	(76)		(63)		+21	%	(154)		(139)		+11	%
Total Net Sales	4,722		4,612		+2	%	9,465		9,621		-2	%
Operating Profit:
North America	488		769		-37	%	997		1,428		-30	%
Outside North America	272		333		-18	%	639		747		-14	%
Corporate & Other(a)	(134)		(169)		N.M.		(236)		(324)		N.M.
Other (income) and expense, net(a)	13		8		+63	%	17		22		-23	%
Total Operating Profit	613		925		-34	%	1,383		1,829		-24	%



Share of net income of equity companies	28		35		-20	%	67		73		-8	%

Net Income Attributable to Kimberly-Clark Corporation	404		681		-41	%	988		1,341		-26	%
Diluted Earnings per Share	1.19		1.99		-40	%	2.92		3.92		-26	%

(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

GAAP to Non-GAAP Reconciliations of Selected Financial Results


	Three Months Ended June 30, 2021
	As Reported			2018 Global Restructuring Program		As Adjusted Non-GAAP
Cost of products sold	$	3,242		$	25	$	3,217
Gross Profit	1,480			(25)		1,505
Marketing, research and general expenses	854			30		824
Other (income) and expense, net	13			8		5
Operating Profit	613			(63)		676
Nonoperating expense	(55)			(56)		1
Provision for income taxes	(113)			25		(138)
Effective tax rate	22.8		%	—		22.5		%


Net Income Attributable to Kimberly-Clark Corporation	404			(94)		498
Diluted Earnings per Share(a)	1.19			(0.28)		1.47


	Three Months Ended June 30, 2020
	As Reported			2018 Global Restructuring Program		As Adjusted Non-GAAP
Cost of products sold	$	2,835		$	60	$	2,775
Gross Profit	1,777			(60)		1,837
Marketing, research and general expenses	844			27		817

Operating Profit	925			(87)		1,012

Provision for income taxes	(199)			15		(214)
Effective tax rate	23.2		%	—		22.7		%
Share of net income of equity companies	35			(1)		36
Net income attributable to noncontrolling interests	(11)			1		(12)
Net Income Attributable to Kimberly-Clark Corporation	681			(72)		753
Diluted Earnings per Share(a)	1.99			(0.21)		2.20


	Six Months Ended June 30, 2021
	As Reported			2018 Global Restructuring Program		As Adjusted Non-GAAP
Cost of products sold	$	6,396		$	50	$	6,346
Gross profit	3,069			(50)		3,119
Marketing, research and general expenses	1,669			39		1,630
Other (income) and expense, net	17			8		9
Operating profit	1,383			(97)		1,480
Nonoperating expense	(61)			(56)		(5)
Provision for income taxes	(260)			32		(292)
Effective tax rate	21.7		%	—		21.6		%

Net income attributable to noncontrolling interests	(16)			1		(17)
Net income attributable to Kimberly‑Clark Corporation	988			(120)		1,108
Diluted earnings per share(a)	2.92			(0.35)		3.27


	Six Months Ended June 30, 2020
	As Reported			2018 Global Restructuring Program		As Adjusted Non-GAAP
Cost of products sold	$	6,053		$	130	$	5,923
Gross profit	3,568			(130)		3,698
Marketing, research and general expenses	1,717			50		1,667

Operating profit	1,829			(180)		2,009

Provision for income taxes	(396)			33		(429)
Effective tax rate	23.4		%	—		22.9		%
Share of net income of equity companies	73			(1)		74
Net income attributable to noncontrolling interests	(26)			2		(28)
Net income attributable to Kimberly-Clark Corporation	1,341			(146)		1,487
Diluted Earnings per Share(a)	3.92			(0.43)		4.34

(a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding.

Analysis of Consolidated Results


Net Sales	Percent Change		Adjusted Operating Profit	Percent Change
	Three Months Ended June 30	Six Months Ended June 30		Three Months Ended June 30	Six Months Ended June 30
Volume	(4)	(7)	Volume	(15)	(18)
Net Price	1	1	Net Price	3	4
Mix/Other	1	1	Input Costs	(34)	(24)
Acquisition/Exited Businesses(e)	2	2	Cost Savings(c)	14	13
Currency	3	2	Currency Translation	2	2
Total(a)	2	(2)	Other(d)	(3)	(3)
Organic(b)	(3)	(5)	Total	(33)	(26)

(a) Total may not equal the sum of volume, net price, mix/other, acquisition/exited businesses and currency due to rounding.

(b) Combined impact of changes in volume, net price and mix/other.

(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.

(e) Combined impact of the acquisition of Softex Indonesia and exited businesses in conjunction with the 2018 Global Restructuring Program.

Net sales in the second quarter of $4.7 billion increased 2 percent compared to the year ago period. Changes in foreign currency exchange rates increased sales by 3 percent and the net impact of the Softex Indonesia acquisition and exited businesses in conjunction with the 2018 Global Restructuring Program increased sales by 2 percent. Organic sales decreased 3 percent as volumes declined 4 percent while the combined impact of changes in net selling prices and product mix increased sales by approximately 1 percent.

In North America, organic sales decreased 11 percent in consumer products and 4 percent in K-C Professional. Volumes in North America, particularly consumer tissue, were negatively impacted by consumer and retailer destocking following the stock up that occurred in prior periods related to the global outbreak of COVID-19. Outside North America, organic sales were up 9 percent in D&E markets and up 1 percent in developed markets.

Operating profit in the second quarter was $613 in 2021 and $925 in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program. Second quarter adjusted operating profit was $676 in 2021 and $1,012 in 2020. Results were impacted by lower sales volumes and $345 of higher input costs, driven by pulp, other materials and distribution costs. Other manufacturing costs were higher, including inefficiencies from lower production volumes. Results benefited from higher net selling prices, $115 of cost savings from our FORCE program, $30 of cost savings from the 2018 Global Restructuring Program and lower marketing, research and general expense.

The second quarter effective tax rate was 22.8 percent in 2021 and 23.2 percent in 2020. The second quarter adjusted effective tax rate was 22.5 percent in 2021 and 22.7 percent in 2020.

Kimberly-Clark’s share of net income of equity companies in the second quarter was $28 in 2021 and $35 in 2020.

Diluted net income per share for the second quarter was $1.19 in 2021 and $1.99 in 2020. Second quarter adjusted earnings per share were $1.47 in 2021, a decrease of 33 percent compared to $2.20 in 2020.

Year-to-date net sales of $9.5 billion decreased 2 percent compared to the year ago period. Organic sales decreased 5 percent, as volumes declined 7 percent and changes in net selling prices and product mix each increased sales by 1 percent. Changes in foreign currency exchange rates increased sales by approximately 2 percent and the net impact of the Softex Indonesia acquisition and business exits in conjunction with the 2018 Global Restructuring Program increased sales by 2 percent. Year-to-date operating profit was $1,383 in 2021 and $1,829 in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program. Year-to-date adjusted operating profit was $1,480 in 2021 and $2,009 in 2020. Results were impacted by lower sales volumes, higher input costs and elevated other manufacturing costs. Results benefited from higher net selling prices, $180 of FORCE savings and $70 of cost savings from the 2018 Global Restructuring Program. Through six months, diluted net income per share was $2.92 in 2021 and $3.92 in 2020. Year-to-date adjusted earnings per share were $3.27 in 2021 and $4.34 in 2020.

Results by Business Segments

Personal Care


	Three Months Ended June 30				Six Months Ended June 30					Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020			2021		2020		2021		2020
Net Sales	$	2,517	$	2,229	$	4,979	$	4,651	Operating Profit	$	454	$	519	$	935	$	1,046

Net Sales	Percent Change				Percent Change				Operating Profit	Percent Change				Percent Change
Volume			4				—		Volume			1				(3)
Net Price			—				—		Net Price			(1)				(1)
Mix/Other			2				2		Input Costs			(28)				(19)
Acquisition/Exited Businesses(e)			4				4		Cost Savings(c)			10				10
Currency			3				1		Currency Translation			2				1
Total(a)			13				7		Other(d)			3				1
Organic(b)			6				2		Total			(13)				(11)

(a) Total may not equal the sum of volume, net price, mix/other, acquisition/exited businesses and currency due to rounding.

(b) Combined impact of changes in volume, net price and mix/other.

(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.

(e) Combined impact of the acquisition of Softex Indonesia and exited businesses in conjunction with the 2018 Global Restructuring Program.

Second quarter net sales in North America increased 2 percent. Changes in product mix increased sales by 2 percent, driven by baby and child care, and changes in foreign currency exchange rates increased sales by 1 percent. Exited businesses related to the 2018 Global Restructuring Program reduced sales by 1 percent.

Net sales in D&E markets increased 24 percent. The Softex Indonesia acquisition increased sales by 14 percent while changes in foreign currency exchange rates increased sales by 2 percent. Volumes rose 6 percent and the combined impact of changes in net selling prices and product mix increased sales by 2 percent. Organic sales increased in Argentina, Brazil, China, India and throughout the Middle East, Africa, Eastern Europe region but declined in ASEAN and most of the rest of Latin America.

Net sales in developed markets outside North America increased 26 percent. Changes in foreign currency exchange rates increased sales by 14 percent and volumes rose 12 percent.

Operating profit of $454 decreased 13 percent. Results were impacted by input cost inflation and higher other manufacturing cost increases while the comparison benefited from organic sales growth and cost savings.

Consumer Tissue


	Three Months Ended June 30				Six Months Ended June 30					Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020			2021		2020		2021		2020
Net Sales	$	1,424	$	1,645	$	2,934	$	3,368	Operating Profit	$	196	$	428	$	465	$	793

Net Sales	Percent Change				Percent Change				Operating Profit	Percent Change				Percent Change
Volume			(15)				(15)		Volume			(30)				(27)
Net Price			—				—		Net Price			(1)				—
Mix/Other			(1)				(1)		Input Costs			(30)				(22)
Currency			3				2		Cost Savings(c)			18				14
Total(a)			(13)				(13)		Currency Translation			1				2
Organic(b)			(17)				(15)		Other(d)			(12)				(8)
									Total			(54)				(41)

(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.

(d) Includes impact of changes in marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.

Second quarter net sales in North America decreased 26 percent. Volumes fell 27 percent and changes in product mix decreased sales by 2 percent, while changes in net selling prices increased sales by 2 percent.

Net sales in D&E markets increased 9 percent including a 3 percent favorable impact from changes in foreign currency exchange rates. Volumes rose 3 percent and changes in product mix increased sales by 1 percent, while changes in net selling prices decreased sales by 2 percent. The Softex Indonesia acquisition increased sales by 4 percent.

Net sales in developed markets outside North America increased 1 percent, including a 10 percent benefit from changes in foreign currency exchange rates. Changes in net selling prices decreased sales by 6 percent, compared to very low promotion levels in the year-ago period, and volumes were down 1 percent. Exited businesses related to the 2018 Global Restructuring Program reduced sales by 2 percent.

Operating profit of $196 decreased 54 percent. The comparison was impacted by lower organic sales, higher input costs and other manufacturing cost increases, including inefficiencies from lower production volumes. Results benefited from cost savings, lower advertising spending and favorable currency effects.

K-C Professional


	Three Months Ended June 30				Six Months Ended June 30					Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020			2021		2020		2021		2020
Net Sales	$	765	$	724	$	1,517	$	1,572	Operating Profit	$	110	$	155	$	236	$	336

Net Sales	Percent Change				Percent Change				Operating Profit	Percent Change				Percent Change
Volume			(4)				(13)		Volume			(18)				(31)
Net Price			5				6		Net Price			25				29
Mix/Other			1				1		Input Costs			(45)				(34)
Currency			3				2		Cost Savings(c)			11				11
Total(a)			6				(3)		Currency Translation			3				2
Organic(b)			2				(6)		Other(d)			(5)				(7)
									Total			(29)				(30)

(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.

(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.

Second quarter net sales in North America decreased 3 percent. Volumes were down 11 percent, while changes in net selling prices increased sales by approximately 6 percent and changes in product mix increased sales by 2 percent. Sales were down mid-teens in washroom products and wipers while sales increased double-digits in safety and other products, mostly due to higher net selling prices and favorable product mix.

Net sales in D&E markets increased 31 percent including a 3 percent benefit from changes in foreign currency exchange rates. Volumes rose 24 percent, compared to a soft year-ago period, while changes in net selling prices increased sales by 5 percent.

Net sales in developed markets outside North America increased 13 percent including an 11 percent benefit from changes in foreign currency exchange rates. Changes in net selling prices increased sales by 5 percent while volumes decreased approximately 2 percent.

Operating profit of $110 decreased 29 percent. The comparison was impacted by lower volumes and higher input costs. Results benefited from increased net selling prices and cost savings.

2018 Global Restructuring Program

Second quarter 2021 pre-tax savings from the 2018 Global Restructuring Program were $30, bringing cumulative savings to $495. See Item 1, Note 2 to the unaudited interim consolidated financial statements for additional information.

To implement this program, we expect to incur incremental capital spending of approximately $600 to $700 by the end of 2021.

Liquidity and Capital Resources

Cash Provided by Operations

Cash provided by operations was $886 for the first six months of 2021 compared to $2,283 in the prior year. The decrease was driven by lower earnings, working capital increase in accounts receivable and inventory, payments for accrued expenses and timing of tax payments.

Investing

During the six months ended June 30, 2021, our capital spending was $499 compared to $636 in the prior year. We anticipate that full year capital spending will be $1.1 billion to $1.2 billion, which is down from our prior estimate as of first quarter 2021 of $1.2 billion to $1.3 billion.

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 $1.2 billion as of June 30, 2021 (included in Debt payable within one year on the consolidated balance sheet). The average month-end balance of short-term debt for the second quarter of 2021 was $1.3 billion. These short-term borrowings provide supplemental funding for supporting 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 June 30, 2021 and December 31, 2020, total debt was $9.1 billion and $8.4 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.

In July 2017, the United Kingdom's Financial Conduct Authority, which regulates the London Interbank Offered Rate (LIBOR), announced that it intends to phase out LIBOR by the end of 2021. We are currently evaluating the potential effect of the eventual replacement of the LIBOR, but we do not expect the effect to be material.

We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During the first six months of 2021, we repurchased 2.5 million shares of our common stock at a cost of $336 through a broker in the open market. We expect our full-year repurchases will be $400 to $450, which is down from our prior estimate as of first quarter 2021 of $650 to $750.

K-C Argentina began accounting for their operations as highly inflationary effective July 1, 2018, as required by GAAP. 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 June 30, 2021, 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 and six months ended June 30, 2021.

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, payments for our 2018 Global Restructuring Program, 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 savings from our FORCE program, costs and savings from the 2018 Global Restructuring Program, cash flow and uses of cash, growth initiatives, innovations, marketing and other spending, net sales, anticipated currency rates and exchange risks, including the impact in Argentina, effective tax rate, contingencies and anticipated transactions of Kimberly-Clark, including dividends, share repurchases and pension contributions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based upon management's expectations and beliefs concerning future events impacting Kimberly-Clark. There can be no assurance that these future events will occur as anticipated or that our results will be as estimated. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them.

The assumptions used as a basis for the forward-looking statements include many estimates that, among other things, depend on the achievement of future cost savings and projected volume increases. In addition, many factors outside our control, including pandemics (including the ongoing COVID-19 outbreak and the related responses of governments, consumers, customers, suppliers and employees), epidemics, fluctuations in foreign currency exchange rates, the prices and availability of our raw materials, supply chain disruptions due to COVID-19, changes in customer preferences (including consumer tissue destocking following a COVID-19 related stock up in 2020), severe weather conditions or government trade or similar regulatory actions, potential competitive pressures on selling prices for our products, energy costs, general economic and political conditions globally and in the markets in which we do business, as well as our ability to maintain key customer relationships and to realize the expected benefits and synergies of the Softex Indonesia acquisition, could affect the realization of these estimates.

For a description of certain factors that could cause our future results to differ from those expressed in these forward-looking statements, see Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 entitled "Risk Factors." Other factors not presently known to us or that we presently consider immaterial could also affect our business operations and financial results.

Item 4. Controls and Procedures

As of June 30, 2021, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure

controls and procedures. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of June 30, 2021. There were no changes in our internal control over financial reporting during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. All our share repurchases during the second quarter of 2021 were made through a broker in the open market.

The following table contains information for shares repurchased during the second quarter of 2021. None of the shares in this table were repurchased directly from any of our officers or directors.


Period (2021)	Total Number of Shares Purchased(a)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs(b)
April 1 to April 30	405,800	$	136.24	37,030,376	42,969,624
May 1 to May 31	374,800	133.70		37,405,176	42,594,824
June 1 to June 30	426,800	130.38		37,831,976	42,168,024
Total	1,207,400

(a)Share repurchases were made pursuant to a share repurchase program authorized by our Board of Directors on November 13, 2014. This program allows for the repurchase of 40 million shares in an amount not to exceed $5 billion (the "2014 Program").

(b)Includes shares under the 2014 Program, as well as available shares under a share repurchase program authorized by our Board of Directors on January 22, 2021 that allows for the repurchase of 40 million shares in an amount not to exceed $5 billion.

Item 6. Exhibits

(a)Exhibits

Exhibit No. (3)a. Restated Certificate of Incorporation, as amended April 29, 2021, incorporated by reference to Exhibit No. (3)a of the Corporation's Current Report on Form 8-K filed on April 29, 2021.

Exhibit No. (3)b. By-Laws, as amended April 29, 2021, incorporated by reference to Exhibit No. (3)b of the Corporation's Current Report on Form 8-K filed on April 29, 2021.

Exhibit No. (4). Copies of instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission on request.

Exhib it No. (10)k 2021 Outside Directors' Compensation Plan effective April 29, 2021, incorporated by re ference to Exhibit No. (10)k of the Corporation's Current Report on Form 8-K filed on April 2 9, 2021.

Exhibit No. (10)n . Form of Award Agreements under 20 21 Equity Participation Plan for Nonqualified Sto ck Options , filed herewith.

Exhibit No. (10)o 2021 Equity Participation Plan effective April 29, 2021, incorporated by reference to Exhibit No. (10)o of the Corporation's Current Report on Form 8-K filed on April 29, 2021.

Exhibit No. (10)q. Form of Award Agreements under 2021 Equity Participation Plan for Performance Restricted Stock Units, filed herewith.

Exhibit No. (10)r . Form of Award Agreements under 20 21 Equity Participation Plan for Time-Vested Restricted Stock Units, filed herewith .

Exhibit No. (31)a. Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), filed herewith.

Exhibit No. (31)b. Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), filed herewith.

Exhibit No. (32)a. Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith.

Exhibit No. (32)b. Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith.

Exhibit No. (101).INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Exhibit No. (101).SCH XBRL Taxonomy Extension Schema Document

Exhibit No. (101).CAL XBRL Taxonomy Extension Calculation Linkbase Document

Exhibit No. (101).DEF XBRL Taxonomy Extension Definition Linkbase Document

Exhibit No. (101).LAB XBRL Taxonomy Extension Label Linkbase Document

Exhibit No. (101).PRE XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit No. 104 The cover page from this Current Report on Form 10-Q formated as Inline XBRL

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



						KIMBERLY-CLARK CORPORATION
						(Registrant)







By:						/s/ Andrew Drexler
						Andrew Drexler
						Vice President and Controller
						(principal accounting officer)

July 23, 2021