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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
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-20200630_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 filer
x
  Accelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No x
As of July 16, 2020, there were 341,047,156 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)2020201920202019
Net Sales$4,612  $4,594  $9,621  $9,227  
Cost of products sold2,835  3,108  6,053  6,313  
Gross Profit1,777  1,486  3,568  2,914  
Marketing, research and general expenses844  811  1,717  1,580  
Other (income) and expense, net8  5  22  9  
Operating Profit925  670  1,829  1,325  
Nonoperating expense(6) (11) (17) (22) 
Interest income2  2  4  5  
Interest expense(65) (67) (126) (132) 
Income Before Income Taxes and Equity Interests856  594  1,690  1,176  
Provision for income taxes(199) (132) (396) (275) 
Income Before Equity Interests657  462  1,294  901  
Share of net income of equity companies35  33  73  60  
Net Income692  495  1,367  961  
Net income attributable to noncontrolling interests(11) (10) (26) (22) 
Net Income Attributable to Kimberly-Clark Corporation$681  $485  $1,341  $939  
Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic$2.00  $1.41  $3.93  $2.73  
Diluted$1.99  $1.40  $3.92  $2.71  
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)2020201920202019
Net Income$692  $495  $1,367  $961  
Other Comprehensive Income (Loss), Net of Tax
   Unrealized currency translation adjustments125  (4) (274) 22  
   Employee postretirement benefits5  26  39  22  
   Other(24) (3) 8  (20) 
Total Other Comprehensive Income (Loss), Net of Tax106  19  (227) 24  
Comprehensive Income798  514  1,140  985  
   Comprehensive (income) loss attributable to noncontrolling interests(15) (9) (18) (16) 
Comprehensive Income Attributable to Kimberly-Clark Corporation$783  $505  $1,122  $969  
See notes to the unaudited interim consolidated financial statements.

2


KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(2020 Data is Unaudited)

(Millions of dollars)June 30, 2020December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents$1,448  $442  
Accounts receivable, net2,024  2,263  
Inventories1,825  1,790  
Other current assets607  562  
Total Current Assets5,904  5,057  
Property, Plant and Equipment, Net7,366  7,450  
Investments in Equity Companies319  268  
Goodwill1,401  1,467  
Other Assets1,183  1,041  
TOTAL ASSETS$16,173  $15,283  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year$850  $1,534  
Trade accounts payable3,032  3,055  
Accrued expenses and other current liabilities2,252  1,978  
Dividends payable360  352  
Total Current Liabilities6,494  6,919  
Long-Term Debt7,223  6,213  
Noncurrent Employee Benefits859  897  
Deferred Income Taxes527  511  
Other Liabilities546  520  
Redeemable Preferred Securities of Subsidiaries29  29  
Stockholders' Equity
Kimberly-Clark Corporation
Preferred stock - no par value - authorized 20.0 million shares, none issued    
Common stock - $1.25 par value - authorized 1.2 billion shares; issued 378.6 million shares at June 30, 2020 and December 31, 2019
473  473  
Additional paid-in capital554  556  
Common stock held in treasury, at cost - 37.6 and 37.1 million shares at June 30, 2020 and December 31, 2019, respectively
(4,545) (4,454) 
Retained earnings7,299  6,686  
Accumulated other comprehensive income (loss)(3,513) (3,294) 
Total Kimberly-Clark Corporation Stockholders' Equity268  (33) 
Noncontrolling Interests227  227  
Total Stockholders' Equity495  194  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $16,173  $15,283  
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, 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  4  106  
Stock-based awards exercised or vested—  —  (38) (557) 66  —  —  —  28  
Shares repurchased—  —  —  370  (49) —  —  —  (49) 
Recognition of stock-based compensation—  —  38  —  —  —  —  —  38  
Dividends declared ($1.07 per share)—  —  —  —  —  (365) —  —  (365) 
Other—  —  (5) —  —  5  —  —    
Balance at June 30, 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, 2019378,597  $473  $556  37,149  $(4,454) $6,686  $(3,294) $227  $194  
Net income in stockholders' equity, excludes redeemable interests' share—  —  —  —  —  1,341  —  24  1,365  
Other comprehensive income, net of tax, excludes redeemable interests' share—  —  —  —  —  —  (219) (8) (227) 
Stock-based awards exercised or vested—  —  (52) (1,622) 187  —  —  —  135  
Shares repurchased—  —  —  2,047  (278) —  —  —  (278) 
Recognition of stock-based compensation—  —  53  —  —  —  —  —  53  
Dividends declared ($2.14 per share)—  —  —  —  —  (730) —  (17) (747) 
Other—  —  (3) —  —  2  —  1    
Balance at June 30, 2020378,597  $473  $554  37,574  $(4,545) $7,299  $(3,513) $227  $495  
See notes to the unaudited interim consolidated financial statements.
4


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




Three Months Ended June 30, 2019
(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, 2019378,597  $473  $538  34,657  $(4,075) $6,048  $(3,289) $223  $(82) 
Net income in stockholders' equity, excludes redeemable interests' share—  —  —  —  —  485  —  9  494  
Other comprehensive income, net of tax, excludes redeemable interests' share—  —  —  —  —  —  20  (2) 18  
Stock-based awards exercised or vested—  —  (60) (1,672) 192  —  —  —  132  
Shares repurchased—  —  —  1,396  (179) —  —  —  (179) 
Recognition of stock-based compensation—  —  31  —  —  —  —  —  31  
Dividends declared ($1.03 per share)—  —  —  —  —  (355) —  —  (355) 
Other—  —  1  —  —  (8) —  (2) (9) 
Balance at June 30, 2019378,597  $473  $510  34,381  $(4,062) $6,170  $(3,269) $228  $50  


Six Months Ended June 30, 2019
(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, 2018378,597  $473  $548  33,635  $(3,956) $5,947  $(3,299) $241  $(46) 
Net income in stockholders' equity, excludes redeemable interests' share—  —  —  —  —  939  —  20  959  
Other comprehensive income, net of tax, excludes redeemable interests' share—  —  —  —  —  —  30  (7) 23  
Stock-based awards exercised or vested—  —  (87) (2,159) 247  —  —  —  160  
Shares repurchased—  —  —  2,905  (353) —  —  —  (353) 
Recognition of stock-based compensation—  —  48  —  —  —  —  —  48  
Dividends declared ($2.06 per share)—  —  —  —  —  (709) —  (24) (733) 
Other—  —  1  —  —  (7) —  (2) (8) 
Balance at June 30, 2019378,597  $473  $510  34,381  $(4,062) $6,170  $(3,269) $228  $50  
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)20202019
Operating Activities
Net income$1,367  $961  
Depreciation and amortization414  470  
Stock-based compensation54  48  
Deferred income taxes12  26  
Net (gains) losses on asset dispositions13  17  
Equity companies' earnings (in excess of) less than dividends paid(47) (30) 
Operating working capital490  (525) 
Postretirement benefits(15) (21) 
Other(5) (20) 
Cash Provided by Operations2,283  926  
Investing Activities
Capital spending(636) (569) 
Investments in time deposits(323) (186) 
Maturities of time deposits254  229  
Other15  4  
Cash Used for Investing(690) (522) 
Financing Activities
Cash dividends paid(722) (700) 
Change in short-term debt(667) 543  
Debt proceeds1,241  696  
Debt repayments(252) (703) 
Proceeds from exercise of stock options135  160  
Acquisitions of common stock for the treasury(263) (330) 
Other(39) (79) 
Cash Used for Financing(567) (413) 
Effect of Exchange Rate Changes on Cash and Cash Equivalents(20) 4  
Change in Cash and Cash Equivalents1,006  (5) 
Cash and Cash Equivalents - Beginning of Period442  539  
Cash and Cash Equivalents - End of Period$1,448  $534  
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, 2019. 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, 2020, 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, 2020 and 2019.
Recently Adopted Accounting Standards
The Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).  The new guidance reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).  We adopted this standard as of January 1, 2020 on a prospective basis.  The effects of this standard on our financial position, results of operations and cash flows were not material.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied through December 31, 2022. The effects of this standard on our financial position, results of operations and cash flows are not expected to be material.
Accounting Standards Issued - Not Yet Adopted
The FASB issued ASU 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 methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences.  It also clarifies and simplifies other aspects of the accounting for income taxes.  For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.  Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period.  Additionally, entities that elect early adoption must adopt all the amendments in the same period.  Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings.  The effects of this standard on our financial position, results of operations or cash flows are not expected to be material.
7


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 5,000 to 5,500. Certain capital appropriations under the 2018 Global Restructuring Program are being finalized. Accounting for actions related to each appropriation will commence when the appropriation is authorized for execution.
The restructuring is expected to be completed in 2021, with total costs anticipated to be toward the high end of the range of $1.7 billion to $1.9 billion pre-tax ($1.3 billion to $1.4 billion after tax). Cash costs are expected to be $900 to $1.0 billion, primarily related to workforce reductions.  Non-cash charges are expected to be $800 to $900 pre-tax and will primarily consist of incremental depreciation, asset write-offs and pension settlement and curtailment charges.
The following net charges were incurred in connection with the 2018 Global Restructuring Program:
Three Months Ended
June 30
Six Months Ended
June 30
2020201920202019
Cost of products sold:
Charges for workforce reductions$1  $2  $1  $32  
Asset write-offs3  15  9  27  
Incremental depreciation33  65  68  132  
Other exit costs23  20  52  36  
Total60  102  130  227  
Marketing, research and general expenses:
Charges (adjustments) for workforce reductions1  (12) (2) (8) 
Other exit costs26  29  52  53