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KMB Kimberly-Clark

Filed: 23 Jul 21, 11:13am
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
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
kmb-20210630_g1.jpg
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 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 filerx  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
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)2021202020212020
Net Sales$4,722 $4,612 $9,465 $9,621 
Cost of products sold3,242 2,835 6,396 6,053 
Gross Profit1,480 1,777 3,069 3,568 
Marketing, research and general expenses854 844 1,669 1,717 
Other (income) and expense, net13 17 22 
Operating Profit613 925 1,383 1,829 
Nonoperating expense(55)(6)(61)(17)
Interest income2 3 
Interest expense(65)(65)(128)(126)
Income Before Income Taxes and Equity Interests495 856 1,197 1,690 
Provision for income taxes(113)(199)(260)(396)
Income Before Equity Interests382 657 937 1,294 
Share of net income of equity companies28 35 67 73 
Net Income410 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.

1


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended
June 30
Six Months Ended
June 30
(Millions of dollars)2021202020212020
Net Income$410 $692 $1,004 $1,367 
Other Comprehensive Income (Loss), Net of Tax
   Unrealized currency translation adjustments78 125 (137)(274)
   Employee postretirement benefits11 29 39 
   Other22 (24)58 
Total Other Comprehensive Income (Loss), Net of Tax111 106 (50)(227)
Comprehensive Income521 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.

2


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(2021 Data is Unaudited)
(Millions of dollars)June 30, 2021December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents$306 $303 
Accounts receivable, net2,340 2,235 
Inventories2,110 1,903 
Other current assets816 733 
Total Current Assets5,572 5,174 
Property, Plant and Equipment, Net8,018 8,042 
Investments in Equity Companies350 300 
Goodwill1,834 1,895 
Other Intangible Assets, Net803 832 
Other Assets1,250 1,280 
TOTAL ASSETS$17,827 $17,523 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year$1,493 $486 
Trade accounts payable3,337 3,336 
Accrued expenses and other current liabilities2,037 2,262 
Dividends payable377 359 
Total Current Liabilities7,244 6,443 
Long-Term Debt7,591 7,878 
Noncurrent Employee Benefits875 864 
Deferred Income Taxes665 723 
Other Liabilities666 718 
Redeemable Preferred Securities of Subsidiaries28 28 
Stockholders' Equity
Kimberly-Clark Corporation
Preferred stock - 0 par value - authorized 20.0 million shares, NaN issued0 
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 capital627 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 earnings7,798 7,567 
Accumulated other comprehensive income (loss)(3,215)(3,172)
Total Kimberly-Clark Corporation Stockholders' Equity524 626 
Noncontrolling Interests234 243 
Total Stockholders' Equity758 869 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$17,827 $17,523 
See notes to the unaudited interim consolidated financial statements.
3


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 CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling InterestsTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at March 31, 2021378,597 $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, 2021378,597 $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 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— — — — — 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, 2021378,597 $473 $627 41,661 $(5,159)$7,798 $(3,215)$234 $758 
See notes to the unaudited interim consolidated financial statements.
4



Three Months Ended June 30, 2020
(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 March 31, 2020378,597 $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— — — — — — 102 106 
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)— — — — — 
Balance at June 30, 2020378,597 $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 CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling InterestsTotal Stockholders' Equity
SharesAmountSharesAmount
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)— — — — 
Balance at June 30, 2020378,597 $473 $554 37,574 $(4,545)$7,299 $(3,513)$227 $495 
See notes to the unaudited interim consolidated financial statements.
5


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
 
Six Months Ended
June 30
(Millions of dollars)20212020
Operating Activities
Net income$1,004 $1,367 
Depreciation and amortization378 414 
Asset impairments3 0 
Stock-based compensation42 54 
Deferred income taxes(74)12 
Net (gains) losses on asset dispositions15 13 
Equity companies' earnings (in excess of) less than dividends paid(32)(47)
Operating working capital(495)490 
Postretirement benefits36 (15)
Other9 (5)
Cash Provided by Operations886 2,283 
Investing Activities
Capital spending(499)(636)
Proceeds from dispositions of property30 
Investments in time deposits(451)(323)
Maturities of time deposits433 254 
Other0 10 
Cash Used for Investing(487)(690)
Financing Activities
Cash dividends paid(748)(722)
Change in short-term debt960 (667)
Debt proceeds5 1,241 
Debt repayments(253)(252)
Proceeds from exercise of stock options27 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 Equivalents3 1,006 
Cash and Cash Equivalents - Beginning of Period303 442 
Cash and Cash Equivalents - End of Period$306 $1,448 
See notes to the unaudited interim consolidated financial statements.

6



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).
7


The following net charges were incurred in connection with the 2018 Global Restructuring Program:
Three Months Ended
June 30
Six Months Ended
June 30
2021202020212020
Cost of products sold:
Charges (adjustments) for workforce reductions$0 $$(2)$
Asset impairments0 3 
Asset write-offs0 1 
Incremental depreciation4 33 8 68 
Other exit costs21 23 40 52 
Total25 60 50 130 
Marketing, research and general expenses:
Charges (adjustments) for workforce reductions16 14 (2)
Other exit costs14 26 25 52 
Total30 27 39 50 
Other (income) and expense, net8 8 
Nonoperating expense56 56 
Total charges119 87 153 180 
Provision for income taxes(25)(15)(32)(33)
Net charges94 72 121 147 
Net impact related to equity companies and noncontrolling interests0 (1)(1)
Net charges attributable to Kimberly-Clark Corporation$94 $72 $120 $146 
The following summarizes the restructuring liabilities activity:
20212020
Restructuring liabilities at January 1$93 $132 
Charges for workforce reductions and other cash exit costs77 99 
Cash payments(98)(122)
Currency and other0 (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.
8


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 LevelCarrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
June 30, 2021December 31, 2020
Assets
Cash and cash equivalents(a)
1$306 $306 $303 $303 
Time deposits(b)
1369 369 364 364 
Liabilities
Short-term debt(c)
21,180 1,180 223 223 
Long-term debt(d)
27,904 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.
9


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)2021202020212020
Basic337.3 340.9 337.8 341.1 
Dilutive effect of stock options and restricted share unit awards1.0 1.0 1.0 1.2 
Diluted338.3 341.9 338.8 342.3 
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 TranslationDefined Benefit Pension PlansOther Postretirement Benefit PlansCash Flow Hedges and Other
Balance as of December 31, 2019$(2,271)$(979)$(13)$(31)
Other comprehensive income (loss) before reclassifications(266)22 17 
(Income) loss reclassified from AOCI16 (a)(1)(a)(9)
Net current period other comprehensive income (loss)(266)38 
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 AOCI0 38 (a)0 (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
10


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
11


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.
12


Information concerning consolidated operations by business segment is presented in the following tables:
Three Months Ended June 30Six Months Ended June 30
20212020Change20212020Change
NET SALES
Personal Care$2,517 $2,229 +13 %$4,979 $4,651 +7 %
Consumer Tissue1,424 1,645 -13 %2,934 3,368 -13 %
K-C Professional765 724 +6 %1,517 1,572 -3 %
Corporate & Other16 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 Tissue196 428 -54 %465 793 -41 %
K-C Professional110 155 -29 %236 336 -30 %
Corporate & Other(a)
(134)(169)N.M.(236)(324)N.M.
Other (income) and expense, net(a)
13 +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 30Six Months Ended June 30
(Billions of dollars)2021202020212020
Baby and child care products1.8 1.5 3.5 3.2 
Consumer tissue products1.4 1.6 2.9 3.4 
Away-from-home professional products0.8 0.7 1.5 1.6 
All other0.7 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, 2021December 31, 2020
LIFONon-LIFOTotalLIFONon-LIFOTotal
Raw materials$141 $301 $442 $131 $263 $394 
Work in process149 86 235 103 86 189 
Finished goods585 769 1,354 453 749 1,202 
Supplies and other0 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)0 (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.
13


The following schedule presents a summary of property, plant and equipment, net:
June 30, 2021December 31, 2020
Land$171 $174 
Buildings2,991 2,932 
Machinery and equipment14,668 14,382 
Construction in progress633 845 
18,463 18,333 
Less accumulated depreciation(10,445)(10,291)
Total$8,018 $8,042 

14


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.


15


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 ResultsThree Months Ended June 30Six Months Ended June 30
20212020Percent Change20212020Percent Change
Net Sales:
North America$2,393 $2,623 -9 %$4,744 $5,224 -9 %
Outside North America2,405 2,052 +17 %4,875 4,536 +7 %
Intergeographic sales(76)(63)+21 %(154)(139)+11 %
Total Net Sales4,722 4,612 +2 %9,465 9,621 -2 %
Operating Profit:
North America488 769 -37 %997 1,428 -30 %
Outside North America272 333 -18 %639 747 -14 %
Corporate & Other(a)
(134)(169)N.M.(236)(324)N.M.
Other (income) and expense, net(a)
13 +63 %17 22 -23 %
Total Operating Profit613 925 -34 %1,383 1,829 -24 %
Share of net income of equity companies28 35 -20 %67 73 -8 %
Net Income Attributable to Kimberly-Clark Corporation404 681 -41 %988 1,341 -26 %
Diluted Earnings per Share1.19 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
16


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 Profit1,480 (25)1,505 
Marketing, research and general expenses854 30 824 
Other (income) and expense, net13 8 5 
Operating Profit613 (63)676 
Nonoperating expense(55)(56)1 
Provision for income taxes(113)25 (138)
Effective tax rate22.8 %22.5 %
Net Income Attributable to Kimberly-Clark Corporation404 (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 Profit1,777 (60)1,837 
Marketing, research and general expenses844 27 817 
Operating Profit925 (87)1,012 
Provision for income taxes(199)15 (214)
Effective tax rate23.2 %22.7 %
Share of net income of equity companies35 (1)36 
Net income attributable to noncontrolling interests(11)(12)
Net Income Attributable to Kimberly-Clark Corporation681 (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 profit3,069 (50)3,119 
Marketing, research and general expenses1,669 39 1,630 
Other (income) and expense, net17 8 9 
Operating profit1,383 (97)1,480 
Nonoperating expense(61)(56)(5)
Provision for income taxes(260)32 (292)
Effective tax rate21.7 %21.6 %
Net income attributable to noncontrolling interests(16)1 (17)
Net income attributable to Kimberly‑Clark Corporation988 (120)1,108 
Diluted earnings per share(a)
2.92 (0.35)3.27 

17


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 profit3,568 (130)3,698 
Marketing, research and general expenses1,717 50 1,667 
Operating profit1,829 (180)2,009 
Provision for income taxes(396)33 (429)
Effective tax rate23.4 %22.9 %
Share of net income of equity companies73 (1)74 
Net income attributable to noncontrolling interests(26)(28)
Net income attributable to Kimberly-Clark Corporation1,341 (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 SalesPercent ChangeAdjusted Operating ProfitPercent Change
Three Months
Ended June 30
Six Months
Ended June 30
 Three Months Ended June 30Six Months
Ended June 30
Volume(4)(7)Volume(15)(18)
Net Price1 1 Net Price3 4 
Mix/Other1 1 Input Costs(34)(24)
Acquisition/Exited
   Businesses(e)
2 2 
Cost Savings(c)
14 13 
Currency3 2 Currency Translation2 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.
(c) Combined benefits of the FORCE (Focused On Reducing Costs Everywhere) program and 2018 Global Restructuring Program.
(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.
18


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 30Six Months Ended June 30


Three Months Ended June 30Six Months Ended June 30
20212020202120202021202020212020
Net Sales$2,517 $2,229 $4,979 $4,651 Operating Profit$454 $519 $935 $1,046 
Net SalesPercent ChangePercent ChangeOperating ProfitPercent ChangePercent Change
Volume4  Volume1 (3)
Net Price  Net Price(1)(1)
Mix/Other2 2 Input Costs(28)(19)
Acquisition/Exited
   Businesses(e)
4 4 
Cost Savings(c)
10 10 
Currency3 1 Currency Translation2 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.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring Program.
(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.
19


Consumer Tissue
Three Months Ended June 30Six Months Ended June 30


Three Months Ended June 30Six Months Ended June 30
20212020202120202021202020212020
Net Sales$1,424 $1,645 $2,934 $3,368 Operating Profit$196 $428 $465 $793 
Net SalesPercent ChangePercent ChangeOperating ProfitPercent ChangePercent Change
Volume(15)(15)Volume(30)(27)
Net Price  Net Price(1) 
Mix/Other(1)(1)Input Costs(30)(22)
Currency3 2 
Cost Savings(c)
18 14 
Total(a)
(13)(13)Currency Translation1 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.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring Program.
(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.
20


K-C Professional
Three Months Ended June 30Six Months Ended June 30


Three Months Ended June 30Six Months Ended June 30
20212020202120202021202020212020
Net Sales$765 $724 $1,517 $1,572 Operating Profit$110 $155 $236 $336 
Net SalesPercent ChangePercent ChangeOperating ProfitPercent ChangePercent Change
Volume(4)(13)Volume(18)(31)
Net Price5 6 Net Price25 29 
Mix/Other1 1 Input Costs(45)(34)
Currency3 2 
Cost Savings(c)
11 11 
Total(a)
6 (3)Currency Translation3 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.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring Program.
(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
21


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
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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.
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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 30405,800 $136.24 37,030,376 42,969,624 
May 1 to May 31374,800 133.70 37,405,176 42,594,824 
June 1 to June 30426,800 130.38 37,831,976 42,168,024 
Total1,207,400 
(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.
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Item 6.    Exhibits
(a)Exhibits
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.
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



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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
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