Kimberly Clark Corp 10-Q for FY2021 Q3
Kimberly Clark Corp (KMB)
10-Q
2021-10-25
For: 2021-09-30
View Original
Added on
April 06, 2026
About this 10-Q
Kimberly Clark Corp filed this 10-Q on October 25, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).
Headline figures
Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.01B
- up 7.0% from $4.68B a year earlier
- Net income
- $469M
- down 0.6% from net income of $472M a year earlier
- Diluted EPS
- $1.39
- up 0.7% from $1.38 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended September 30, 2021
OR
For the transition period from ________ to ________
Commission file number 1-225
(Exact name of registrant as specified in its charter
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | |||||||
(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 | ||||||
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.
x | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of October 18, 2021, there were 336,716,722 shares of the Corporation's common stock outstanding.
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||
| (Millions of dollars, except per share amounts) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of products sold | ||||||||||||||||||||||||||
| Gross Profit | ||||||||||||||||||||||||||
| Marketing, research and general expenses | ||||||||||||||||||||||||||
| Other (income) and expense, net | ||||||||||||||||||||||||||
| Operating Profit | ||||||||||||||||||||||||||
| Nonoperating expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
| Income Before Income Taxes and Equity Interests | ||||||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | ||||||||||||||||||||||
| Income Before Equity Interests | ||||||||||||||||||||||||||
| Share of net income of equity companies | ||||||||||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | ( | ( | ( | ( | ||||||||||||||||||||||
| Net Income Attributable to Kimberly-Clark Corporation | $ | $ | $ | $ | ||||||||||||||||||||||
| Per Share Basis | ||||||||||||||||||||||||||
| Net Income Attributable to Kimberly-Clark Corporation | ||||||||||||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
See notes to the unaudited interim consolidated financial statements.
1
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||
| (Millions of dollars) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Net Income | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Comprehensive Income (Loss), Net of Tax | ||||||||||||||||||||||||||
| Unrealized currency translation adjustments | ( | ( | ( | |||||||||||||||||||||||
| Employee postretirement benefits | ||||||||||||||||||||||||||
| Other | ( | |||||||||||||||||||||||||
| Total Other Comprehensive Income (Loss), Net of Tax | ( | ( | ( | |||||||||||||||||||||||
| Comprehensive Income | ||||||||||||||||||||||||||
| Comprehensive (income) loss attributable to noncontrolling interests | ( | ( | ( | |||||||||||||||||||||||
| Comprehensive Income Attributable to Kimberly-Clark Corporation | $ | $ | $ | $ | ||||||||||||||||||||||
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) | September 30, 2021 | December 31, 2020 | |||||||||||||||
| ASSETS | |||||||||||||||||
| Current Assets | |||||||||||||||||
| Cash and cash equivalents | $ | $ | |||||||||||||||
| Accounts receivable, net | |||||||||||||||||
| Inventories | |||||||||||||||||
| Other current assets | |||||||||||||||||
| Total Current Assets | |||||||||||||||||
| Property, Plant and Equipment, Net | |||||||||||||||||
| Investments in Equity Companies | |||||||||||||||||
| Goodwill | |||||||||||||||||
| Other Intangible Assets, Net | |||||||||||||||||
| Other Assets | |||||||||||||||||
| TOTAL ASSETS | $ | $ | |||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||
| Current Liabilities | |||||||||||||||||
| Debt payable within one year | $ | $ | |||||||||||||||
| Trade accounts payable | |||||||||||||||||
| Accrued expenses and other current liabilities | |||||||||||||||||
| Dividends payable | |||||||||||||||||
| Total Current Liabilities | |||||||||||||||||
| Long-Term Debt | |||||||||||||||||
| Noncurrent Employee Benefits | |||||||||||||||||
| Deferred Income Taxes | |||||||||||||||||
| Other Liabilities | |||||||||||||||||
| Redeemable Preferred Securities of Subsidiaries | |||||||||||||||||
| Stockholders' Equity | |||||||||||||||||
| Kimberly-Clark Corporation | |||||||||||||||||
Preferred stock - | |||||||||||||||||
Common stock - $ | |||||||||||||||||
| Additional paid-in capital | |||||||||||||||||
Common stock held in treasury, at cost - | ( | ( | |||||||||||||||
| Retained earnings | |||||||||||||||||
| Accumulated other comprehensive income (loss) | ( | ( | |||||||||||||||
| Total Kimberly-Clark Corporation Stockholders' Equity | |||||||||||||||||
| Noncontrolling Interests | |||||||||||||||||
| Total Stockholders' Equity | |||||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | |||||||||||||||
See notes to the unaudited interim consolidated financial statements.
3
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
| Three Months Ended September 30, 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 June 30, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income in stockholders' equity, excludes redeemable interests' share | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax, excludes redeemable interests' share | — | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based awards exercised or vested | — | — | ( | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | — | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 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 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income in stockholders' equity, excludes redeemable interests' share | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax, excludes redeemable interests' share | — | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based awards exercised or vested | — | — | ( | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to the unaudited interim consolidated financial statements.
4
| Three Months Ended September 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 June 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income in stockholders' equity, excludes redeemable interests' share | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax, excludes redeemable interests' share | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based awards exercised or vested | — | — | ( | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 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 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income in stockholders' equity, excludes redeemable interests' share | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax, excludes redeemable interests' share | — | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based awards exercised or vested | — | — | ( | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares repurchased | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
See notes to the unaudited interim consolidated financial statements.
5
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
| Nine Months Ended September 30 | |||||||||||||||||
| (Millions of dollars) | 2021 | 2020 | |||||||||||||||
| Operating Activities | |||||||||||||||||
| Net income | $ | $ | |||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Asset impairments | |||||||||||||||||
| Stock-based compensation | |||||||||||||||||
| Deferred income taxes | ( | ( | |||||||||||||||
| Net (gains) losses on asset dispositions | |||||||||||||||||
| Equity companies' earnings (in excess of) less than dividends paid | ( | ( | |||||||||||||||
| Operating working capital | ( | ||||||||||||||||
| Postretirement benefits | |||||||||||||||||
| Other | |||||||||||||||||
| Cash Provided by Operations | |||||||||||||||||
| Investing Activities | |||||||||||||||||
| Capital spending | ( | ( | |||||||||||||||
| Proceeds from dispositions of property | |||||||||||||||||
| Investments in time deposits | ( | ( | |||||||||||||||
| Maturities of time deposits | |||||||||||||||||
| Other | |||||||||||||||||
| Cash Used for Investing | ( | ( | |||||||||||||||
| Financing Activities | |||||||||||||||||
| Cash dividends paid | ( | ( | |||||||||||||||
| Change in short-term debt | ( | ||||||||||||||||
| Debt proceeds | |||||||||||||||||
| Debt repayments | ( | ( | |||||||||||||||
| Proceeds from exercise of stock options | |||||||||||||||||
| Acquisitions of common stock for the treasury | ( | ( | |||||||||||||||
| Other | ( | ( | |||||||||||||||
| Cash Used for Financing | ( | ( | |||||||||||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | ( | ( | |||||||||||||||
| Change in Cash and Cash Equivalents | ( | ||||||||||||||||
| Cash and Cash Equivalents - Beginning of Period | |||||||||||||||||
| Cash and Cash Equivalents - End of Period | $ | $ | |||||||||||||||
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 September 30, 2021, K-C Argentina had a small net peso monetary position. Net sales of K-C Argentina were approximately 1
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 11 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 now anticipated to be in the range of $2.1 billion to $2.2 billion pre-tax ($1.6 billion to $1.7 billion after tax). Cash costs are expected to be $1.15 billion to $1.2 billion, primarily related to workforce reductions. Non-cash charges are expected to be $950 to $1.0 billion pre-tax and will primarily consist of incremental depreciation, asset write-offs and pension settlement and curtailment charges. Restructuring charges in 2021 are now expected to be $280 to $380 pre-tax ($225 to $300 after tax).
7
| Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Cost of products sold: | |||||||||||||||||||||||
| Charges (adjustments) for workforce reductions | $ | $ | $ | $ | |||||||||||||||||||
| Asset impairments | |||||||||||||||||||||||
| Asset write-offs | |||||||||||||||||||||||
| Incremental depreciation | |||||||||||||||||||||||
| Other exit costs | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
| Marketing, research and general expenses: | |||||||||||||||||||||||
| Charges (adjustments) for workforce reductions | ( | ||||||||||||||||||||||
| Other exit costs | |||||||||||||||||||||||
| Total | |||||||||||||||||||||||
| Other (income) and expense, net | ( | ( | |||||||||||||||||||||
| Nonoperating expense | |||||||||||||||||||||||
| Total charges | |||||||||||||||||||||||
| Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Net charges | |||||||||||||||||||||||
| Net impact related to equity companies and noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
| Net charges attributable to Kimberly-Clark Corporation | $ | $ | $ | $ | |||||||||||||||||||
| 2021 | 2020 | |||||||||||||
| Restructuring liabilities at January 1 | $ | $ | ||||||||||||
| Charges for workforce reductions and other cash exit costs | ||||||||||||||
| Cash payments | ( | ( | ||||||||||||
| Currency and other | ( | ( | ||||||||||||
| Restructuring liabilities at September 30 | $ | $ | ||||||||||||
Restructuring liabilities of $48 and $80 are recorded in Accrued expenses and other current liabilities and $17 and $34 are recorded in Other Liabilities as of September 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.
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 nine months ended September 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 September 30, 2021 and December 31, 2020, derivative assets were $79 and $44 , respectively, and derivative liabilities were $39 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
Company-owned life insurance ("COLI") assets are measured on a recurring basis at fair value. COLI assets were $73
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 | |||||||||||||||||||||||||
| September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
Cash and cash equivalents(a) | 1 | $ | $ | $ | $ | ||||||||||||||||||||||||
Time deposits(b) | 1 | ||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Short-term debt(c) | 2 | ||||||||||||||||||||||||||||
Long-term debt(d) | 2 | ||||||||||||||||||||||||||||
(a)Cash equivalents are composed of certificates of deposit, time deposits and other interest-bearing investments with original maturity dates of 90 days or less. Cash equivalents are recorded at cost, which approximates fair value.
(b)Time deposits are composed of deposits with original maturities of more than 90 days but less than one year and instruments with original maturities of greater than one year, included in Other current assets or Other Assets in the consolidated balance sheet, as appropriate. Time deposits are recorded at cost, which approximates fair value.
(c)Short-term debt is composed of U.S. commercial paper and/or other similar short-term debt issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.
(d)Long-term debt includes the current portion of these debt instruments. Fair values were estimated based on quoted prices for financial instruments for which all significant inputs were observable, either directly or indirectly.
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Note 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 September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||
| (Millions of shares) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||
| Dilutive effect of stock options and restricted share unit awards | ||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||
The impact of options outstanding that were not included in the computation of diluted EPS because their exercise price was greater than the average market price of the common shares was insignificant. The number of common shares outstanding as of September 30, 2021 and 2020 was 336.7 million and 340.4 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 nine months ended September 30, 2021 was primarily due to the weakening of foreign currencies versus the U.S. dollar, particularly the Korean won, the euro, the Australian dollar and the Peruvian sol.
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 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | ||||||||||||||||||||||||
| (Income) loss reclassified from AOCI | (a) | ( | (a) | ( | ||||||||||||||||||||||
| Net current period other comprehensive income (loss) | ( | |||||||||||||||||||||||||
| Balance as of September 30, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Balance as of December 31, 2020 | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ||||||||||||||||||||||||
| (Income) loss reclassified from AOCI | (a) | ( | (a) | |||||||||||||||||||||||
| Net current period other comprehensive income (loss) | ( | ( | ||||||||||||||||||||||||
| Balance as of September 30, 2021 | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
(a) Included in computation of net periodic benefit costs.
Note 7. Objectives and Strategies for Using Derivatives
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At September 30, 2021 and December 31, 2020, derivative assets were $79 and $44 , respectively, and derivative liabilities were $39 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 September 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 $638 , respectively. For the nine months ended September 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 September 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 September 30, 2021, the aggregate notional value of outstanding foreign exchange derivative contracts designated as cash flow hedges was $709 . For the nine months ended September 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 September 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 September 30, 2021 is September 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 September 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
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investment hedges are recorded in AOCI and offset the change in the value of the net investment being hedged. For the nine months ended September 30, 2021, unrealized gains of $69 related to net investment hedge fair value changes were recorded in AOCI and no significant amounts were reclassified from AOCI to Interest expense.
No significant amounts were excluded from the assessment of net investment, fair value or cash flow hedge effectiveness as of September 30, 2021.
Undesignated Hedging Instruments
Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in Other (income) and expense, net. A loss of $2 and a gain of $23 were recorded in the three months ended September 30, 2021 and 2020, respectively. A loss of $8 and a gain of $31 were recorded in the nine months ended September 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 September 30, 2021, the notional value of these undesignated derivative instruments was approximately $2.1 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.
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Information concerning consolidated operations by business segment is presented in the following tables:
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | |||||||||||||||||||||||||||||||||
| NET SALES | ||||||||||||||||||||||||||||||||||||||
| Personal Care | $ | $ | + | % | $ | $ | + | % | ||||||||||||||||||||||||||||||
| Consumer Tissue | - | % | - | % | ||||||||||||||||||||||||||||||||||
| K-C Professional | + | % | + | % | ||||||||||||||||||||||||||||||||||
| Corporate & Other | N.M. | N.M. | ||||||||||||||||||||||||||||||||||||
| TOTAL NET SALES | $ | $ | + | % | $ | $ | + | % | ||||||||||||||||||||||||||||||
| OPERATING PROFIT | ||||||||||||||||||||||||||||||||||||||
| Personal Care | $ | $ | + | % | $ | $ | - | % | ||||||||||||||||||||||||||||||
| Consumer Tissue | - | % | - | % | ||||||||||||||||||||||||||||||||||
| K-C Professional | + | % | - | % | ||||||||||||||||||||||||||||||||||
Corporate & Other(a) | ( | ( | N.M. | ( | ( | N.M. | ||||||||||||||||||||||||||||||||
Other (income) and expense, net(a) | + | % | - | % | ||||||||||||||||||||||||||||||||||
| TOTAL OPERATING PROFIT | $ | $ | - | % | $ | $ | - | % | ||||||||||||||||||||||||||||||
(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 and Softex Indonesia acquisition-related costs. Restructuring charges related to the Personal Care, Consumer Tissue and K-C Professional business segments were $32 , $42 and $10 , respectively, for the three months ended September 30, 2021, $57 , $59 , and $15 , respectively, for the three months ended September 30, 2020, $71 , $84 and $19 , respectively, for the nine months ended September 30, 2021, and $131 , $135 and $41 , respectively for the nine months ended September 30, 2020 .
Sales of Principal Products:
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||
| (Billions of dollars) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Baby and child care products | ||||||||||||||||||||||||||
| Consumer tissue products | ||||||||||||||||||||||||||
| Away-from-home professional products | ||||||||||||||||||||||||||
| All other | ||||||||||||||||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||||||||||||
Note 9. Supplemental Balance Sheet Data
| September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||
| LIFO | Non-LIFO | Total | LIFO | Non-LIFO | Total | |||||||||||||||||||||||||||||||||
| Raw materials | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Work in process | ||||||||||||||||||||||||||||||||||||||
| Finished goods | ||||||||||||||||||||||||||||||||||||||
| Supplies and other | ||||||||||||||||||||||||||||||||||||||
| Excess of FIFO or weighted-average cost over LIFO cost | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
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.
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| September 30, 2021 | December 31, 2020 | ||||||||||
| Land | $ | $ | |||||||||
| Buildings | |||||||||||
| Machinery and equipment | |||||||||||
| Construction in progress | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Total | $ | $ | |||||||||
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction
This management's discussion and analysis ("MD&A") of financial condition and results of operations is intended to provide investors with an understanding of our recent performance, financial condition and prospects. Dollar amounts are reported in millions, except per share dollar amounts, unless otherwise noted. The following will be discussed and analyzed:
•Overview of Third 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 third 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 nine months ended September 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 items 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.
•Acquisition-Related Costs – In the third quarter of 2020, we incurred one-time transaction and integration costs associated with the acquisition of Softex Indonesia. See Item 1, Note 3 to the unaudited interim consolidated financial statements for details.
Overview of Third Quarter 2021 Results
•Net sales of $5.0 billion increased 7 percent compared to the year-ago period, including an organic sales increase of 4 percent.
•Operating profit was $657 in 2021 and $666 in 2020. Net Income Attributable to Kimberly-Clark Corporation was $469 in 2021 compared to $472 in 2020, and diluted earnings per share were $1.39 in 2021 compared to $1.38 in 2020. Results in 2021 and 2020 include charges related to the 2018 Global Restructuring Program and in 2020 include acquisition-related costs associated with the acquisition of Softex Indonesia.
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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, we experienced a high level of demand in our Consumer Tissue business segment across several major geographies, particularly the U.S., as consumers increased home inventory levels in response to COVID-19. The demand increase was followed by a period of demand softness in the first nine months of 2021 as consumers used existing home inventories and retailers lowered their inventory levels. Our K-C Professional business experienced volume declines during 2020 and the first six months of 2021 reflecting the reduction in away from home demand, particularly for our washroom tissue products.
During 2020 and the first nine months of 2021, we experienced temporary closures of certain facilities and reductions in capacity related to COVID-19. We continue to experience ongoing incidents of supply chain disruption related to the continuing impact of COVID-19 on employees, labor shortages, raw material supply and transportation challenges, particularly in markets where COVID-19 case levels are elevated.
During 2020 and the first nine months of 2021, we also experienced increased volatility in foreign currency exchange rates and commodity prices. The global pandemic disrupted supply and demand dynamics in commodity markets. In 2020, we experienced modest commodity deflation and in the first nine months of 2021, we experienced record levels of commodity inflation.
Results of Operations and Related Information
This section presents a discussion and analysis of our third 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 September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||||||
| 2021 | 2020 | Percent Change | 2021 | 2020 | Percent Change | ||||||||||||||||||||||||||||||
| Net Sales: | |||||||||||||||||||||||||||||||||||
| North America | $ | 2,692 | $ | 2,562 | +5 | % | $ | 7,436 | $ | 7,786 | -4 | % | |||||||||||||||||||||||
| Outside North America | 2,399 | 2,188 | +10 | % | 7,274 | 6,724 | +8 | % | |||||||||||||||||||||||||||
| Intergeographic sales | (81) | (67) | +21 | % | (235) | (206) | +14 | % | |||||||||||||||||||||||||||
| Total Net Sales | 5,010 | 4,683 | +7 | % | 14,475 | 14,304 | +1 | % | |||||||||||||||||||||||||||
| Operating Profit: | |||||||||||||||||||||||||||||||||||
| North America | 564 | 626 | -10 | % | 1,561 | 2,054 | -24 | % | |||||||||||||||||||||||||||
| Outside North America | 250 | 265 | -6 | % | 889 | 1,012 | -12 | % | |||||||||||||||||||||||||||
Corporate & Other(a) | (150) | (220) | N.M. | (386) | (544) | N.M. | |||||||||||||||||||||||||||||
Other (income) and expense, net(a) | 7 | 5 | +40 | % | 24 | 27 | -11 | % | |||||||||||||||||||||||||||
| Total Operating Profit | 657 | 666 | -1 | % | 2,040 | 2,495 | -18 | % | |||||||||||||||||||||||||||
| Share of net income of equity companies | 21 | 31 | -32 | % | 88 | 104 | -15 | % | |||||||||||||||||||||||||||
Net Income Attributable to Kimberly-Clark Corporation | 469 | 472 | -1 | % | 1,457 | 1,813 | -20 | % | |||||||||||||||||||||||||||
| Diluted Earnings per Share | 1.39 | 1.38 | +1 | % | 4.31 | 5.30 | -19 | % | |||||||||||||||||||||||||||
(a) Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including adjustments as indicated in the Non-GAAP Reconciliations.
N.M. - Not Meaningful
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GAAP to Non-GAAP Reconciliations of Selected Financial Results
| Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||
| As Reported | 2018 Global Restructuring Program | As Adjusted Non-GAAP | ||||||||||||||||||||||||
| Cost of products sold | $ | 3,527 | $ | 48 | $ | 3,479 | ||||||||||||||||||||
| Gross Profit | 1,483 | (48) | 1,531 | |||||||||||||||||||||||
| Marketing, research and general expenses | 819 | 39 | 780 | |||||||||||||||||||||||
| Other (income) and expense, net | 7 | 1 | 6 | |||||||||||||||||||||||
| Operating Profit | 657 | (88) | 745 | |||||||||||||||||||||||
| Nonoperating expense | (10) | (9) | (1) | |||||||||||||||||||||||
| Provision for income taxes | (126) | 16 | (142) | |||||||||||||||||||||||
| Effective tax rate | 21.6 | % | — | 20.9 | % | |||||||||||||||||||||
| Net income attributable to noncontrolling interests | (10) | 2 | (12) | |||||||||||||||||||||||
| Net Income Attributable to Kimberly-Clark Corporation | 469 | (79) | 548 | |||||||||||||||||||||||
Diluted Earnings per Share(a) | 1.39 | (0.23) | 1.62 | |||||||||||||||||||||||
| Three Months Ended September 30, 2020 | ||||||||||||||||||||||||||
| As Reported | 2018 Global Restructuring Program | Softex Indonesia Acquisition-Related Costs | As Adjusted Non-GAAP | |||||||||||||||||||||||
| Cost of products sold | $ | 3,093 | $ | 107 | $ | — | $ | 2,986 | ||||||||||||||||||
| Gross Profit | 1,590 | (107) | — | 1,697 | ||||||||||||||||||||||
| Marketing, research and general expenses | 919 | 25 | 9 | 885 | ||||||||||||||||||||||
| Other (income) and expense, net | 5 | (1) | — | 6 | ||||||||||||||||||||||
| Operating Profit | 666 | (131) | (9) | 806 | ||||||||||||||||||||||
| Nonoperating expense | (40) | (26) | — | (14) | ||||||||||||||||||||||
| Provision for income taxes | (114) | 50 | — | (164) | ||||||||||||||||||||||
| Effective tax rate | 20.1 | % | — | — | 22.4 | % | ||||||||||||||||||||
| Net Income Attributable to Kimberly-Clark Corporation | 472 | (107) | (9) | 588 | ||||||||||||||||||||||
Diluted Earnings per Share(a) | 1.38 | (0.31) | (0.03) | 1.72 | ||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||
| As Reported | 2018 Global Restructuring Program | As Adjusted Non-GAAP | ||||||||||||||||||||||||
| Cost of products sold | $ | 9,923 | $ | 98 | $ | 9,825 | ||||||||||||||||||||
| Gross Profit | 4,552 | (98) | 4,650 | |||||||||||||||||||||||
| Marketing, research and general expenses | 2,488 | 78 | 2,410 | |||||||||||||||||||||||
| Other (income) and expense, net | 24 | 9 | 15 | |||||||||||||||||||||||
| Operating Profit | 2,040 | (185) | 2,225 | |||||||||||||||||||||||
| Nonoperating expense | (71) | (65) | (6) | |||||||||||||||||||||||
| Provision for income taxes | (386) | 48 | (434) | |||||||||||||||||||||||
| Effective tax rate | 21.7 | % | — | 21.4 | % | |||||||||||||||||||||
| Net income attributable to noncontrolling interests | (26) | 3 | (29) | |||||||||||||||||||||||
| Net Income Attributable to Kimberly-Clark Corporation | 1,457 | (199) | 1,656 | |||||||||||||||||||||||
Diluted Earnings per Share(a) | 4.31 | (0.59) | 4.89 | |||||||||||||||||||||||
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| Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||
| As Reported | 2018 Global Restructuring Program | Softex Indonesia Acquisition-Related Costs | As Adjusted Non-GAAP | |||||||||||||||||||||||
| Cost of products sold | $ | 9,146 | $ | 237 | $ | — | $ | 8,909 | ||||||||||||||||||
| Gross Profit | 5,158 | (237) | — | 5,395 | ||||||||||||||||||||||
| Marketing, research and general expenses | 2,636 | 75 | 9 | 2,552 | ||||||||||||||||||||||
| Other (income) and expense, net | 27 | (1) | — | 28 | ||||||||||||||||||||||
| Operating Profit | 2,495 | (311) | (9) | 2,815 | ||||||||||||||||||||||
| Nonoperating expense | (57) | (26) | — | (31) | ||||||||||||||||||||||
| Provision for income taxes | (510) | 83 | — | (593) | ||||||||||||||||||||||
| Effective tax rate | 22.6 | % | — | — | 22.8 | % | ||||||||||||||||||||
| Share of net income of equity companies | 104 | (1) | — | 105 | ||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (37) | 2 | — | (39) | ||||||||||||||||||||||
| Net Income Attributable to Kimberly-Clark Corporation | 1,813 | (253) | (9) | 2,075 | ||||||||||||||||||||||
Diluted Earnings per Share(a) | 5.30 | (0.74) | (0.03) | 6.06 | ||||||||||||||||||||||
(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 September 30 | Nine Months Ended September 30 | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||
| Volume | — | (5) | Volume | (3) | (14) | |||||||||||||||||||||||||||
| Net Price | 3 | 2 | Net Price | 20 | 9 | |||||||||||||||||||||||||||
| Mix/Other | 1 | 1 | Input Costs | (59) | (34) | |||||||||||||||||||||||||||
Acquisition/Exited Businesses(e) | 2 | 2 | Cost Savings(c) | 18 | 14 | |||||||||||||||||||||||||||
| Currency | 1 | 2 | Currency Translation | 1 | 2 | |||||||||||||||||||||||||||
Total(a) | 7 | 1 | Other(d) | 15 | 2 | |||||||||||||||||||||||||||
Organic(b) | 4 | (2) | Total | (8) | (21) | |||||||||||||||||||||||||||
(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 third quarter of $5.0 billion increased 7 percent versus the prior year. Changes in foreign currency exchange rates increased sales by 1 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 increased 4 percent as changes in net selling prices and product mix increased sales by 3 percent and 1 percent, respectively.
In North America, organic sales increased 3 percent in consumer products and 16 percent in K-C Professional. Outside North America, organic sales increased 6 percent in D&E markets and were even with the prior year in developed markets.
Operating profit in the third quarter was $657 in 2021 and $666 in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program and in 2020 include acquisition-related costs associated with the acquisition of Softex Indonesia. Third quarter adjusted operating profit was $745 in 2021 and $806 in 2020. Results were impacted by $480 of higher input costs, driven by pulp and polymer-based materials, distribution and energy costs. Results benefited from organic sales growth, $115 of cost savings from our FORCE program, $35 of cost savings from the 2018 Global Restructuring Program and lower marketing, research and general expense.
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The third quarter effective tax rate was 21.6 percent in 2021 and 20.1 percent in 2020. The third quarter adjusted effective tax rate was 20.9 percent in 2021 and 22.4 percent in 2020.
Kimberly-Clark’s share of net income of equity companies in the third quarter was $21 in 2021 and $31 in 2020. Kimberly-Clark de Mexico, S.A.B. de C.V. results in 2021 were negatively impacted by higher input costs but benefited from organic sales growth, favorable currency effects and cost savings.
Diluted net income per share for the third quarter was $1.39 in 2021 and $1.38 in 2020. Third quarter adjusted earnings per share were $1.62 in 2021, a decrease of 6 percent compared to $1.72 in 2020.
Year-to-date net sales of $14.5 billion increased 1 percent compared to the year ago period. Organic sales decreased 2 percent as volumes declined 5 percent while changes in net selling prices and product mix increased sales by 2 percent and 1 percent, respectively. 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 $2,040 in 2021 and $2,495 in 2020. Results in both periods include charges related to the 2018 Global Restructuring Program and in 2020 include acquisition-related costs associated with the acquisition of Softex Indonesia. Year-to-date adjusted operating profit was $2,225 in 2021 and $2,815 in 2020. Results were impacted by lower sales volumes, $960 of higher input costs and elevated other manufacturing costs. Results benefited from higher net selling prices, $295 of FORCE savings, $105 of cost savings from the 2018 Global Restructuring Program and reduced marketing, research and general expense. Through nine months, diluted net income per share was $4.31 in 2021 and $5.30 in 2020. Year-to-date adjusted earnings per share were $4.89 in 2021 and $6.06 in 2020.
Results by Business Segments
Personal Care
| Three Months Ended September 30 | Nine Months Ended September 30 | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net Sales | $ | 2,656 | $ | 2,339 | $ | 7,635 | $ | 6,990 | Operating Profit | $ | 496 | $ | 486 | $ | 1,431 | $ | 1,532 | |||||||||||||||||||||||||||||||||||||||
| Net Sales | Percent Change | Percent Change | Operating Profit | Percent Change | Percent Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Volume | 3 | 1 | Volume | 4 | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Price | 4 | 1 | Net Price | 21 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Mix/Other | 2 | 2 | Input Costs | (46) | (27) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition/Exited Businesses(e) | 3 | 4 | Cost Savings(c) | 9 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency | 1 | 1 | Currency Translation | 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total(a) | 14 | 9 | Other(d) | 13 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Organic(b) | 9 | 4 | Total | 2 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||
(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.
Third quarter net sales in North America increased 11 percent. Changes in net selling prices increased sales by 5 percent, volumes rose 4 percent and changes in product mix increased sales by 2 percent. Changes in foreign currency exchange rates increased sales by 1 percent, while exited business related to the 2018 Global Restructuring program reduced sales by 1 percent.
Net sales in D&E markets increased 18 percent. The Softex Indonesia acquisition increased sales by approximately 11 percent while changes in foreign currency exchange rates increased sales by 1 percent. Changes in net selling prices and product mix increased sales by 4 percent and 3 percent, respectively. Organic sales increased in Argentina, Brazil, China, Eastern Europe, India and South Africa but declined in ASEAN and most of the rest of Latin America.
Net sales in developed markets outside North America increased 11 percent including a 4 percent favorable impact from changes in foreign currency exchange rates. Volumes increased 5 percent, and changes in net selling prices increased sales by 2 percent.
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Operating profit of $496 increased 2 percent. Results benefited from organic sales growth, cost savings and reduced marketing, research and general expense. The comparison was impacted by input cost inflation.
Consumer Tissue
| Three Months Ended September 30 | Nine Months Ended September 30 | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net Sales | $ | 1,541 | $ | 1,623 | $ | 4,475 | $ | 4,991 | Operating Profit | $ | 222 | $ | 318 | $ | 687 | $ | 1,111 | |||||||||||||||||||||||||||||||||||||||
| Net Sales | Percent Change | Percent Change | Operating Profit | Percent Change | Percent Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Volume | (7) | (12) | Volume | (15) | (24) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Price | 1 | — | Net Price | 6 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Mix/Other | — | (1) | Input Costs | (53) | (31) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency | 1 | 2 | Cost Savings(c) | 29 | 18 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total(a) | (5) | (10) | Currency Translation | 1 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Organic(b) | (6) | (12) | Other(d) | 2 | (5) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | (30) | (38) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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.
Third quarter net sales in North America decreased 8 percent. Volumes fell 8 percent and changes in product mix decreased sales by 1 percent, while changes in net selling prices increased sales by 1 percent.
Net sales in D&E markets increased 5 percent including a 1 percent favorable impact from changes in foreign currency exchange rates. Changes in net selling prices and product mix increased sales by 3 percent and approximately 1 percent, respectively, while volumes were down 3 percent. The Softex Indonesia acquisition increased sales by 4 percent.
Net sales in developed markets outside North America decreased 6 percent. Volumes were down 6 percent, while changes in net selling prices increased sales by 1 percent. Exited businesses related to the 2018 Global Restructuring program reduced sales by 4 percent, while changes in foreign currency exchange rates increased sales by 3 percent.
Operating profit of $222 decreased 30 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 and reduced marketing, research and general expense.
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K-C Professional
| Three Months Ended September 30 | Nine Months Ended September 30 | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net Sales | $ | 797 | $ | 705 | $ | 2,314 | $ | 2,277 | Operating Profit | $ | 96 | $ | 87 | $ | 332 | $ | 423 | |||||||||||||||||||||||||||||||||||||||
| Net Sales | Percent Change | Percent Change | Operating Profit | Percent Change | Percent Change | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Volume | 6 | (7) | Volume | 3 | (24) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Price | 5 | 6 | Net Price | 41 | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Mix/Other | — | 1 | Input Costs | (98) | (47) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency | 1 | 2 | Cost Savings(c) | 12 | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total(a) | 13 | 2 | Currency Translation | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Organic(b) | 12 | — | Other(d) | 50 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 10 | (22) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) 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.
Third quarter net sales in North America increased 16 percent. Volumes increased approximately 10 percent and changes in net selling prices increased sales by 6 percent. Changes in product mix and foreign currency exchange rates each increased sales slightly. Sales were up significantly in washroom products reflecting comparison to a weak year-ago period.
Net sales in D&E markets increased 14 percent including a 1 percent benefit from changes in foreign currency exchange rates. Volumes rose approximately 10 percent, compared to a soft year-ago period, and changes in net selling prices and product mix increased sales by 3 percent and 1 percent, respectively.
Net sales in developed markets outside North America increased 3 percent including a 3 percent benefit from changes in foreign currency exchange rates. Changes in net selling prices increased sales by 5 percent while volumes decreased 5 percent.
Operating profit of $96 increased 10 percent. Results benefited from organic sales growth, cost savings, lower other manufacturing costs, and reduced marketing, research and general expense. The comparison was impacted by higher input costs.
2018 Global Restructuring Program
Third quarter 2021 pre-tax savings from the 2018 Global Restructuring Program were $35, bringing cumulative savings to $525. 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 $1.7 billion for the first nine months of 2021 compared to $2.8 billion 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 nine months ended September 30, 2021, our capital spending was $734 compared to $894 in the prior year. We anticipate that full year capital spending will be $1.0 billion to $1.1 billion, down from our prior estimate of $1.1 to $1.2 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 $1.1 billion as of September 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 third quarter of 2021 was $1.3 billion. These short-term borrowings provide supplemental funding for supporting our operations. The level of short-term debt
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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 September 30, 2021 and December 31, 2020, total debt was $8.9 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.
The United Kingdom’s Financial Conduct Authority, which regulates the London Interbank Offered Rate (“LIBOR”), is in the process of phasing out LIBOR with completion of the phase out expected by June 30, 2023. We have evaluated the potential effect of the elimination of LIBOR and do not expect the effect to be material. Accounting guidance has been issued to ease the transition to alternative reference rates from a financial reporting perspective.
We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During the first nine months of 2021, we repurchased 3.0 million shares of our common stock at a cost of $393 through a broker in the open market. We expect our full-year repurchases will be approximately $400, at the low end of the previously estimated range of $400 to $450.
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 September 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 nine months ended September 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.
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Item 4. Controls and Procedures
As of September 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 September 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 third quarter of 2021 were made through a broker in the open market.
The following table contains information for shares repurchased during the third 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) | ||||||||||||||||||||||
| July 1 to July 31 | 310,500 | $ | 135.07 | 38,142,476 | 41,857,524 | |||||||||||||||||||||
| August 1 to August 31 | 58,807 | 135.91 | 38,201,283 | 41,798,717 | ||||||||||||||||||||||
| September 1 to September 30 | 55,500 | 136.60 | 38,256,783 | 41,743,217 | ||||||||||||||||||||||
| Total | 424,807 | |||||||||||||||||||||||||
(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. (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. (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
25
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 S. Drexler | |||||||
| Andrew S. Drexler | ||||||||
| Vice President and Controller | ||||||||
| (principal accounting officer) | ||||||||
October 25, 2021
26
Exhibit (31)a
CERTIFICATIONS
I, Michael D. Hsu, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Kimberly-Clark Corporation (the “registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ Michael D. Hsu | ||||||||
| Michael D. Hsu | ||||||||
| Chief Executive Officer | ||||||||
| October 25, 2021 | ||||||||
Exhibit (31)b
CERTIFICATIONS
I, Maria Henry, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Kimberly-Clark Corporation (the “registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ Maria Henry | ||||||||
| Maria Henry | ||||||||
| Chief Financial Officer | ||||||||
| October 25, 2021 | ||||||||
Exhibit (32)a
Certification of Chief Executive Officer
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
I, Michael D. Hsu, Chief Executive Officer of Kimberly-Clark Corporation, certify that, to my knowledge:
(1)the Form 10-Q, filed with the Securities and Exchange Commission on October 25, 2021 (“accompanied report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the accompanied report fairly presents, in all material respects, the financial condition and results of operations of Kimberly-Clark Corporation.
| /s/ Michael D. Hsu | ||||||||
| Michael D. Hsu | ||||||||
| Chief Executive Officer | ||||||||
| October 25, 2021 | ||||||||
Exhibit (32)b
Certification of Chief Financial Officer
Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code
I, Maria Henry, Chief Financial Officer of Kimberly-Clark Corporation, certify that, to my knowledge:
(1)the Form 10-Q, filed with the Securities and Exchange Commission on October 25, 2021 (“accompanied report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the accompanied report fairly presents, in all material respects, the financial condition and results of operations of Kimberly-Clark Corporation.
| /s/ Maria Henry | ||||||||
| Maria Henry | ||||||||
| Chief Financial Officer | ||||||||
| October 25, 2021 | ||||||||