What changed in Kimberly-Clark's 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Kimberly-Clark's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+239 added−212 removedSource: 10-K (2024-02-08) vs 10-K (2023-02-09)
Top changes in Kimberly-Clark's 2023 10-K
239 paragraphs added · 212 removed · 179 edited across 8 sections
- Item 7. Management's Discussion & Analysis+108 / −99 · 82 edited
- Item 1A. Risk Factors+57 / −44 · 33 edited
- Item 1. Business+34 / −32 · 28 edited
- Item 4. Mine Safety Disclosures+22 / −19 · 19 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+8 / −8 · 8 edited
Item 1. Business
Business — how the company describes what it does
28 edited+6 added−4 removed23 unchanged
Item 1. Business
Business — how the company describes what it does
28 edited+6 added−4 removed23 unchanged
2022 filing
2023 filing
Biggest changeOn October 24, 2022, we entered into an agreement to sell our Neve tissue brand and related consumer and K-C Professional tissue assets in Brazil for $175, subject to certain working capital and other closing adjustments.
Biggest changeSee Item 8, Note 3 to the consolidated financial statements for details. 1 KIMBERLY-CLARK CORPORATION - 2023 Annual Report On June 1, 2023, we completed the sale transaction, announced on October 24, 2022, of our Neve tissue brand and related consumer and K-C Professional tissue assets in Brazil for $212, including the base purchase price of $175 and working capital and other closing adjustments of $37.
Our environmental priorities include reducing our use of new fossil fuel-based plastic, while enabling circular systems to recover the materials in our products and packaging; reducing our products’ use of natural forest fiber, while protecting forest biodiversity and supporting forest dependent communities; reducing greenhouse gas emissions along our value chain, with goals approved by the Science Based Targets initiative ("SBTi"); and building resilience to water risk at our facilities and in our communities in water-stressed regions around the world.
Our environmental priorities include reducing our use of new fossil fuel-based plastic, while enabling circular systems to recover the materials in our products and packaging; reducing our products’ use of natural forest fiber, while supporting forest biodiversity and forest dependent communities; reducing greenhouse gas emissions along our value chain, with goals approved by the Science Based Targets initiative ("SBTi"); and building resilience to water risk at our facilities and in our communities in water-stressed regions around the world.
Our ERGs promote career development by allowing employees to connect with and learn from one another and help amplify our inclusion, equity and diversity efforts. Further, in regard to employee engagement, we hold regular Town Hall meetings where employees can ask questions of executives and make their voice heard.
Our ERGs promote career development by allowing employees to connect with and learn from one another and help amplify our inclusion, equity and diversity efforts. In regard to employee engagement, we hold regular Town Hall meetings where employees can ask questions of executives and make their voice heard.
As a company who serves consumers and communities, we work to cultivate a workforce comprised of people who look, think, and behave like the people who use our products – now and in the future. As such, we support workforce inclusion, equity and diversity and consider it a fundamental business strategy.
As a company who serves global consumers and communities, we work to cultivate a workforce comprised of people who look, think, and behave like the people who use our products – now and in the future. As such, we support workforce inclusion, equity and diversity and consider it a fundamental business strategy.
We engage in continuous listening via global surveys, on an ongoing basis, that offer our employees the ability to provide feedback and valuable insight to help address potential issues and identify opportunities to improve and support employee engagement. • Compensation and benefits – We provide market-based competitive compensation through our salary, annual incentive and long-term incentive programs and robust benefits packages that promote employee well-being across all aspects of their lives.
We engage in continuous listening via global surveys, on an ongoing basis, that offer our employees the ability to provide feedback and valuable insights to help address potential issues and identify opportunities to improve and support employee engagement. • Compensation and benefits – We provide market-based competitive compensation through our salary, annual incentive and long-term incentive programs and robust benefits packages that promote employee well-being across all aspects of their lives.
We are principally engaged in the manufacturing and marketing of a wide range of products mostly made from natural or synthetic fibers using advanced technologies in fibers, nonwovens and absorbency. Unless the context indicates otherwise, the terms "Corporation," "Kimberly-Clark," "K-C," "we," "our" and "us" refer to Kimberly-Clark Corporation and its consolidated subsidiaries.
We are principally engaged in the manufacturing and marketing of a wide range of products made from natural or synthetic fibers and materials using advanced technologies in fibers, nonwovens and absorbency. Unless the context indicates otherwise, the terms "Corporation," "Kimberly-Clark," "K-C," "we," "our" and "us" refer to Kimberly-Clark Corporation and its consolidated subsidiaries.
We prioritize the need to cultivate a workforce where all are included and empowered to do their best work. Employing people from disparate backgrounds, cultures, and experiences amplifies our ability to gather insights, foster innovation and understand the culture, context, and mindset of consumers around the world.
We prioritize the need to cultivate a workforce where our employees are included and empowered to do their best work. Employing people from disparate backgrounds, cultures, and experiences amplifies our ability to gather insights, foster innovation and understand the culture, context, and mindset of consumers around the world.
For additional discussion of the competitive environment in which we conduct our business, see Item 1A, "Risk Factors." Foreign Market Risks We operate and market our products globally, and our business strategy includes targeted growth in Latin America, Asia, Eastern Europe, the Middle East and Africa.
For additional discussion of the competitive environment in which we conduct our business, see Item 1A, "Risk Factors." Foreign Market Risks We operate and market our products globally, and our business strategy includes targeted growth in Latin America, Asia, the Middle East and Africa.
Our largest customer, Walmart Inc., represented approximately 13 percent in 2022, 14 percent in 2021 and 15 percent in 2020 of our consolidated net sales. Net sales to Walmart Inc. were primarily in the Personal Care and Consumer Tissue segments. On February 24, 2022, we completed our acquisition of a majority and controlling share of Thinx Inc.
Our largest customer, Walmart Inc., represented approximately 13 percent in 2023 and 2022 and 14 percent in 2021 of our consolidated net sales. Net sales to Walmart Inc. were primarily in the Personal Care and Consumer Tissue segments. On February 24, 2022, we completed our acquisition of a majority and controlling share of Thinx Inc.
Products in this segment include facial and bathroom tissue, paper towels, napkins and related products, and are sold under the Kleenex, Scott, Cottonelle, Andrex, Viva, 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.
Products in this segment include facial and bathroom tissue, paper towels, napkins and related products, and are sold under the Kleenex, Scott, Cottonelle, Andrex, Viva, Scottex 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, personal protective equipment, soaps and sanitizers.
Total operating expenses for environmental compliance, including pollution control equipment operation and maintenance costs, governmental fees, and research and engineering costs, are expected to be approximately $115 in 2023 and $100 in 2024. Total environmental capital expenditures and operating expenses are not expected to have a material effect on our total capital and operating expenditures, consolidated earnings or competitive position.
Total operating expenses for environmental compliance, including pollution control equipment operation and maintenance costs, governmental fees, and research and engineering costs, are expected to be approximately $100 in 2024 and $110 in 2025. Total environmental capital expenditures and operating expenses are not expected to have a material effect on our total capital and operating expenditures, consolidated earnings or competitive position.
Corporate Responsibility and Sustainability Better care for a better world begins with working to ensure the health and safety of our customers, consumers, and employees, promoting inclusion, equity and diversity within our business, and making efforts to protect the rights of workers across our supply chain.
Corporate Responsibility and Sustainability Better care for a better world begins with focusing on the health and safety of our customers, consumers, and employees; promoting the value of inclusion, equity and diversity within our business; and making efforts to protect the rights of workers across our supply chain.
We implement this commitment by considering our sustainability goals during our business and capital planning processes, aligning the priorities of our supply chain, brand and innovation teams, and establishing meaningful performance indicators.
We implement this effort by considering our sustainability goals during our business and capital planning processes, coordinating the priorities of our supply chain, brand and innovation teams, and establishing meaningful performance indicators.
We maintain talent and succession planning processes and have leadership and management development programs as well as broad learning opportunities for all employees to support their career growth and advance their skills. We also offer employees the opportunity to join Employee Resource Groups ("ERGs"). These groups foster professional development, social connectivity, and celebrate diversity throughout our company.
We maintain talent and succession planning processes and have leadership and management development programs as well as broad learning opportunities to support career growth and skill advancement. We also offer all employees the opportunity to join any of our Employee Resource Groups ("ERGs"). These groups foster professional development, social connectivity, and celebrate diversity throughout our company.
Human Capital Management We had approximately 44,000 employees as of December 31, 2022 in our consolidated operations. Approximately 30 percent of our employees were located in North America and the remainder were in approximately 60 countries outside of North America. Overall, approximately 60 percent of our workforce was directly involved in manufacturing and distribution operations.
Human Capital Management We had approximately 41,000 employees as of December 31, 2023 in our consolidated operations. Approximately 35 percent of our employees were located in North America and the remainder were in approximately 60 countries outside of North America. Overall, approximately 55 percent of our workforce was directly involved in manufacturing and distribution operations.
We consider the patents and trademarks that we own and the trademarks under which we sell certain of our products to be material to our business. Consequently, we seek patent and trademark protection by all available means, including registration.
Patents and Trademarks We own various patents and trademarks registered domestically and in many foreign countries. We consider the patents and trademarks that we own and the trademarks under which we sell certain of our products to be material to our business. Consequently, we seek patent and trademark protection by all available means, including registration.
Our sustainability strategy puts our brand, supply chain and innovation teams to work with the goal of creating shared value by addressing global challenges and is focused on addressing impactful climate-related risks and opportunities throughout our value chain . We are committed to making lives better while working to safeguard the earth’s natural systems.
Our sustainability strategy puts our brand, supply chain and innovation teams to work with the goal of creating shared value by addressing relevant global challenges and is focused on addressing key climate-related risks and opportunities throughout our value chain. We strive to make lives better while also working to help safeguard the earth’s natural systems.
In order to recruit, retain, develop, protect and fairly compensate our employees, we focus on four key areas: inclusion, equity and diversity, health and safety, development and employee engagement, and compensation and benefits. • Inclusion, equity and diversity – We believe our business success is intricately tied to creating workplaces, communities and experiences where inclusion, equity and diversity are evident and thriving.
In order to recruit, retain, develop, protect and fairly compensate our employees, we focus on the following four key areas: • Inclusion, equity and diversity – We believe our business success is tied to creating workplaces, communities and experiences where inclusion, equity and diversity are evident and thriving.
(“Thinx”), an industry leader in the reusable period and incontinence underwear category, for total consideration of $181 consisting of cash of $53, the fair value of our previously held equity investment of $127, and certain share-based award costs of $1. See Item 8, Note 3 to the consolidated financial statements for details on the Thinx acquisition.
(“Thinx”), an industry leader in the reusable period and incontinence underwear category, for total consideration of $181 consisting of cash of $53, the fair value of our previously held equity investment of $127, and certain share-based award costs of $1.
Progress on our strategy is outlined in our sustainability and Task Force on Climate-Related Disclosure ("TCFD") reports . 2 KIMBERLY-CLARK CORPORATION - 2022 Annual Report For 2023 and 2024, we expect total capital expenditures for voluntary environmental controls or controls necessary to comply with legal requirements relating to the protection of the environment at our facilities to be approximately $45 and $55, respectively.
Progress on our strategy is outlined in our Global Sustainability reports. 2 KIMBERLY-CLARK CORPORATION - 2023 Annual Report For 2024 and 2025, we expect total capital expenditures for voluntary environmental controls or controls necessary to comply with legal requirements relating to the protection of the environment at our facilities to average approximately $50 on an annual basis.
We also believe we can make meaningful contributions to gender equality, clean water and sanitation, climate action and responsible consumption and production.
We believe we can make meaningful contributions through our business activities and operations to clean water and sanitation, climate action and responsible consumption and production.
The Management Development and Compensation Committee (“MDC”) of the Board of Directors is responsible for reviewing our inclusion, equity and diversity strategy and related metrics. • Health and safety – We are committed to the health and safety of our employees.
The Management Development and Compensation Committee (“MDC”) of the Board of Directors is responsible for reviewing our inclusion, equity and diversity strategy. 3 KIMBERLY-CLARK CORPORATION - 2023 Annual Report • Health and safety – We strive to protect the health and safety of our employees.
We are also subject to various laws and regulations related to data privacy and protection, including the European Union’s General Data Protection Regulation ("GDPR"), Brazil's General Data Protection Law ("LGPD"), China's Personal Information Protection Law ("PIPL"), and the California Consumer Privacy Act of 2018 ("CCPA").
We are also subject to expanding laws and regulations related to sustainability-related matters, non-financial reporting and diligence, labor and employment, trade, taxation and data privacy and protection, including the European Union’s General Data Protection Regulation, Brazil's General Data Protection Law, China's Personal Information Protection Law, and the California Consumer Privacy Act of 2018.
Regulatory Compliance We are subject to many laws and regulations across all the countries in which we do business, and we are particularly impacted by those relating to product safety, environmental protection and data privacy and protection. We are obligated to comply with regulations that cover product safety, efficacy, manufacturing, advertising, labeling and safety reporting.
Regulatory Compliance We are subject to many laws and regulations across all the countries in which we do business, and we are particularly impacted by those relating to product safety, environmental protection and data privacy and protection. We are also subject to anti-corruption laws and regulations, such as the U.S.
Our policy is to abide by all applicable laws and regulations, and we have internal programs in place to manage global compliance with these various requirements. We monitor each of these areas for new or changed regulatory requirements, particularly in the rapidly evolving area of data privacy and protection.
Our policy is to abide by all applicable laws and regulations, and we have internal programs in place to manage global compliance with these various requirements.
As the circumstances and impacts of COVID-19 evolve, we continue to evaluate our response and adapt to protect the health and safety of our employees. • Development and employee engagement – Developing talent and leaders at all levels of the organization and engaging our employees is critical to our long-term success.
We review and monitor our performance closely to drive continuous improvement in our safety programs. • Development and employee engagement – Developing talent and leaders at all levels of the organization and engaging our employees is critical to our long-term success.
The transaction also includes a licensing agreement to allow the acquirer to manufacture and market in Brazil the Kleenex, Scott and Wypall brands to consumers and away-from-home customers for a period of time. The transaction is pending customary conditions and 1 KIMBERLY-CLARK CORPORATION - 2022 Annual Report regulatory approval and is expected to close in the first half of 2023.
This transaction also included a licensing agreement to allow the acquirer to manufacture and market in Brazil the Kleenex, Scott and Wypall brands to consumers and away-from-home customers for a period of time. See Item 8, Note 3 to the consolidated financial statements for details.
The United Nations' Sustainable Development Goals are accepted as the best shared definition of what needs to be done over the next decade, and we have aligned our goals with that framework.
We have aligned our goals with the United Nations' Sustainable Development Goals framework.
Removed
The assets included in the sale agreement have been reclassified to Other current assets as of December 31, 2022. Patents and Trademarks We own various patents and trademarks registered domestically and in many foreign countries.
Added
In the first quarter of 2023, we delivered a redemption notice to the third-party minority owner with respect to a portion of the remaining common securities of Thinx. This redemption closed in the second quarter of 2023, and we acquired additional ownership of Thinx for $48, increasing our ownership in Thinx to 70 percent.
Removed
We continue to make progress on our short-and long-term goals for women and U.S. People of Color in all management roles.
Added
As part of the completion of a negotiated final redemption, we acquired the remaining 30 percent ownership of Thinx for $47 in the fourth quarter of 2023.
Removed
We review and monitor our performance closely to drive continuous improvement in our safety programs. 3 KIMBERLY-CLARK CORPORATION - 2022 Annual Report In response to the ongoing COVID-19 pandemic, we have implemented additional workplace safety programs and processes in all our facilities.
Added
Foreign Corrupt Practices Act, and antitrust and competition laws and regulations that govern our dealings with suppliers, customers, competitors and government officials. We are obligated to comply with regulations that cover product safety, efficacy, manufacturing, advertising, labeling and safety reporting.
Removed
We also host global conversations about racism, bias and other important topics.
Added
We also expect that our many suppliers, consultants and other third parties working on our behalf share our commitment to compliance, and we have policies and procedures in place to manage these relationships, though they inherently involve a lesser degree of control over operations and governance.
Added
We monitor each of these areas for new or changed regulatory requirements, particularly in the rapidly evolving area of data privacy and protection.
Added
We host a series of conversations to drive employee and leadership engagement across a variety of topics on inclusion.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
33 edited+24 added−11 removed44 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
33 edited+24 added−11 removed44 unchanged
2022 filing
2023 filing
Biggest changeWe are in the process of upgrading our enterprise resource planning system (known as SAP) to enhance operating efficiencies and provide more effective management of our business operations. The upgrade poses several challenges, including training of personnel, communication of new rules and procedures, migration of data, and the potential instability of the new system.
Biggest changeThese laws and regulations also may result in us incurring additional expenses and liabilities in the event of unauthorized access to or disclosure of personal data. We are in the process of upgrading our enterprise resource planning system (known as SAP) to enhance operating efficiencies and provide more effective management of our business operations.
The ongoing COVID-19 pandemic has had and could continue to have negative impacts on our business, including causing significant volatility in demand for our products, changes in consumer behavior and preference, disruptions in our manufacturing and supply chain operations, disruptions to our cost saving programs, limitations on our employees’ ability to work and travel, significant changes in the economic or political conditions in markets in which we operate and related currency and commodity volatility.
The COVID-19 pandemic has had and could continue to have negative impacts on our business, including causing significant volatility in demand for our products, changes in consumer behavior and preference, disruptions in our manufacturing and supply chain operations, disruptions to our cost saving programs, limitations on our employees’ ability to work and travel, significant changes in the economic or political conditions in markets in which we operate and related currency and commodity volatility.
As a global company, we are subject to a wide variety of laws and governmental regulations across all of the countries in which we do business, including laws and regulations involving marketing, antitrust, anti-bribery or anti-corruption, data privacy, product liability, product composition or formulation, packaging content or corporate responsibility after consumer purchase, environmental impact, intellectual property, employment, healthcare or other matters.
As a global company, we are subject to a wide variety of laws and governmental regulations across all of the countries in which we do business, including laws and regulations involving marketing, antitrust, anti-bribery or anti-corruption, data privacy, product liability, product composition or formulation, packaging content or corporate responsibility after consumer purchase, environmental impact, intellectual property, employment, healthcare, tax or other matters.
Intense competition for sales of our products, changes in consumer purchasing patterns and the inability to innovate or market our products effectively could have an adverse effect on our financial results. We operate in highly competitive domestic and international markets against well-known, branded products and low-cost or private label products.
Marketing and Competition Intense competition for sales of our products, changes in consumer purchasing patterns and the inability to innovate or market our products effectively could have an adverse effect on our financial results. We operate in highly competitive domestic and international markets against well-known, branded products and low-cost or private label products.
Our results may be substantially affected by a number of foreign market risks: • Exposure to the movement of various currencies against each other and the U.S. dollar. A portion of the exposures, arising from transactions and commitments denominated in non-local currencies, is systematically managed through foreign currency forward and swap contracts where available and economically advantageous.
Our results may be adversely affected by a number of foreign market risks: • Exposure to the movement of various currencies against each other and the U.S. dollar. A portion of the exposures, arising from transactions and commitments denominated in non-local currencies, is systematically managed through foreign currency forward and swap contracts where available and economically advantageous.
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and Item 8, Note 1 to the consolidated financial statements for information regarding our adoption of highly inflationary accounting in Argentina and Turkey. Our operations in Russia and the surrounding region are impacted by the war in Ukraine .
See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and Item 8, Note 1 to the consolidated financial statements for information regarding our adoption of highly inflationary accounting in Argentina and Türkiye . Our operations in Russia and the surrounding region are impacted by the war in Ukraine .
There is also increased focus, including by governmental and non-governmental organizations, investors, customers, consumers, our employees and other stakeholders on these and other sustainability matters, including responsible sourcing and deforestation, the use of plastic, energy and water, the recyclability or recoverability of packaging, including single-use and other plastic packaging and ingredient transparency.
There is also increased focus, including by governmental and non-governmental organizations, investors and investment managers, customers, suppliers, consumers, our employees and other stakeholders on these and other sustainability matters, including responsible sourcing and deforestation, the use of plastic, energy and water, the recyclability or recoverability of packaging, including single-use and other plastic packaging and ingredient transparency.
Demand for our products may change based on many factors, including shifting consumer purchasing patterns to lower cost options such as private-label products and mid to lower-tier value products, low birth rates in certain countries due to slow economic growth or other factors, negative customer or consumer response to pricing actions, consumer shifts in distribution from traditional retailers to e-tailers, subscription services and direct to consumer businesses, changing consumer preferences due to increased concerns in regard to post-consumer waste and packaging materials and their impact on environmental sustainability, or other changes in consumer trends or habits.
Demand for our products may change based on many factors, including shifting consumer purchasing patterns to lower cost options such as private-label products and mid to lower-tier value products, low birth rates in certain countries due to slow economic growth or 9 KIMBERLY-CLARK CORPORATION - 2023 Annual Report other factors, negative customer or consumer response to pricing actions, consumer shifts in distribution from traditional retailers to e-tailers, subscription services and direct to consumer businesses, changing consumer preferences due to increased concerns in regard to post-consumer waste and packaging materials and their impact on environmental sustainability, or other changes in consumer trends or habits.
Despite our efforts to manage these impacts, their ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of any such outbreak and actions taken to contain its spread and mitigate its public health effects. 6 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Damage to the reputation of Kimberly-Clark or to one or more of our brands could adversely affect our business.
Despite our efforts to manage these impacts, their ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of any such outbreak and actions taken to contain its spread and mitigate its public health effects. Damage to the reputation of Kimberly-Clark or to one or more of our brands could adversely affect our business.
Increases in pulp prices or limits in the availability of recycled fiber could adversely affect our earnings if selling prices for our finished products are not adjusted or if these adjustments significantly trail the increases in pulp prices. We utilize a variety of pricing structures to manage these risks but have not used derivative instruments.
Increases in pulp prices or limits in the availability of recycled fiber could adversely affect our earnings if selling prices for our finished products are not adjusted or if these adjustments significantly trail the increases in pulp prices. We utilize a variety of pricing structures and revenue growth management strategies to manage these risks but have not used derivative instruments.
Risks related to political instability (including the war in Ukraine), expropriation, new or revised legal or regulatory constraints, difficulties in enforcing contractual and intellectual property rights, and potentially adverse tax consequences could adversely affect our financial results. • Increases in dollar-based input costs for operations outside the U.S. due to weaker foreign exchange rates versus the U.S. dollar.
Risks related to political instabilities and hostilities (including the wars in Ukraine and Israel), expropriation, new or revised legal or regulatory constraints, difficulties in enforcing contractual and intellectual property rights, and potentially adverse tax consequences could adversely affect our financial results. • Increases in dollar-based input costs for operations outside the U.S. due to weaker foreign exchange rates versus the U.S. dollar.
Increases in the cost and availability of raw materials, including pulp and petroleum-based materials, the cost of energy, transportation and other necessary services, supplier constraints, supplier consolidation which could limit our sources of supply 4 KIMBERLY-CLARK CORPORATION - 2022 Annual Report for these items, an inability to maintain favorable supplier arrangements and relations or an inability to avoid disruptions in production output could have an adverse effect on our financial results.
Increases in the cost and availability of raw materials, including pulp and petroleum-based materials, the cost of energy, transportation and other necessary services, supplier constraints, supplier consolidation which could limit our sources of supply for these items, an inability to maintain favorable supplier arrangements and relations or an inability to avoid disruptions in production output could have an adverse effect on our financial results.
Despite our sustainability efforts, any failure to achieve our sustainability goals, including those aimed to reduce our impact on, improve or preserve the environment, or the perception (whether or not valid) that we have failed to act responsibly with respect to such matters or to effectively respond to new legal or regulatory requirements regarding climate change, could adversely affect our business and reputation.
Any failure to achieve our sustainability goals, including those aimed to reduce our impact on, improve or preserve the environment, or the perception (whether or not valid) that we have failed to act responsibly with respect to such matters or to effectively respond to new legal or regulatory requirements regarding climate change, could adversely affect our business and reputation, including the loss of customers or business opportunities and legal or regulatory proceedings.
We do not generally hedge our income statement translation exposure with respect to foreign operations. • Increases in currency exchange restrictions. These restrictions could limit our ability to repatriate earnings from outside the U.S. or obtain currency exchange for U.S. dollar inputs to continue operating in certain countries. • Adverse political conditions.
We do not generally hedge our income statement translation exposure with respect to foreign operations. • Increases in currency exchange restrictions. These restrictions could limit our ability to repatriate earnings from outside the U.S. or obtain currency exchange for U.S. dollar inputs to continue operating in certain countries. 6 KIMBERLY-CLARK CORPORATION - 2023 Annual Report • Adverse political conditions.
Even if we believe a claim is covered by 9 KIMBERLY-CLARK CORPORATION - 2022 Annual Report insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if they prevail, the amount of our recovery. New or revised tax regulations could have an adverse effect on our financial results.
Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if they prevail, the amount of our recovery. New or revised tax regulations could have an adverse effect on our financial results.
These activities are subject to inherent risks such as natural disasters, power outages, fires or explosions, labor strikes or labor shortages, terrorism, epidemics, pandemics (including the ongoing COVID-19 pandemic), import restrictions, regional economic, business, environmental or political events (including the war in Ukraine), governmental regulatory requirements or nongovernmental voluntary actions in response to global climate change or other concerns regarding the sustainability of our business, which could disrupt our supply chain and impair our ability to manufacture or sell our products.
These activities are subject to inherent risks such as natural disasters, power outages, fires or explosions, labor strikes or labor shortages, terrorism, epidemics, pandemics 7 KIMBERLY-CLARK CORPORATION - 2023 Annual Report (including the COVID-19 pandemic), import restrictions, regional economic, business, environmental or political events (including the wars in Ukraine and Israel), governmental regulatory requirements or nongovernmental voluntary actions in response to global climate change or other concerns regarding the sustainability of our business, which could disrupt our supply chain and impair our ability to manufacture or sell our products.
Inherent risks in our competitive strategy include uncertainties concerning trade and consumer acceptance, the effects of consolidation within retailer and distribution channels, a growing e-commerce marketplace, and customers' and competitors' actions. Our competitors for these markets include global, regional and local manufacturers, 8 KIMBERLY-CLARK CORPORATION - 2022 Annual Report including private label manufacturers.
Inherent risks in our competitive strategy include uncertainties concerning trade and consumer acceptance, the effects of consolidation within retailer and distribution channels, a growing e-commerce marketplace, and customers' and competitors' actions. Our competitors for these markets include global, regional and local manufacturers, including private label manufacturers.
Our financial performance, our short- and long-term debt credit ratings, interest rates, the stability of financial institutions with which we partner, geopolitical or national political developments (including those related to the ability of Congress to raise the U.S. federal debt ceiling), the stability and liquidity of the overall global capital markets and the state of the global economy, could affect our access to, and the availability and cost of, financing on acceptable terms and conditions and our ability to pay dividends in the future.
Our financial performance, our short- and long-term debt credit ratings, interest rates, the stability of financial institutions with which we partner, geopolitical or national political developments, the stability and liquidity of the overall global capital markets and the state of the global economy, could affect our access to, and the availability and cost of, financing on acceptable terms and conditions and our ability to pay dividends in the future.
Disruptions in the credit markets, limitations on our ability to borrow, a reduction in our liquidity or an increase in our borrowing costs could materially and adversely affect our financial condition and results of operations. Climate change and other sustainability matters may adversely affect our business and operations.
Disruptions in the credit markets, limitations on our ability to borrow, a reduction in our liquidity or an increase in our borrowing costs could materially and adversely affect our financial condition and results of operations. 8 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Climate change and other sustainability matters may adversely affect our business and operations.
Our inability to address adverse publicity or other issues, including concerns about product safety, quality, efficacy, environmental impacts (including packaging, energy and water use and waste management), inclusion, equity and diversity, human rights and other sustainability or similar matters, or breaches of consumer, customer, supplier, employee or other confidential information, real or perceived, could negatively impact sentiment towards us and our products and brands, and our business and financial results could suffer.
Our inability to address adverse publicity or other issues, including with respect to product safety, quality, efficacy, environmental impacts (including packaging, energy and water use and waste management), substances and ingredients of potential concern, inclusion, equity and diversity, human rights and other social responsibility or similar matters, or breaches of consumer, customer, supplier, employee or other confidential information, real or perceived, could negatively impact sentiment towards us and our products and brands, and our business and financial results could suffer.
We may not be successful in developing new or improved products and technologies necessary to compete successfully in the industry, and we may not be successful in advertising, marketing, timely launching and selling our products.
We may not be successful in developing new or improved products and technologies necessary to compete successfully in the industry, and we may not be successful in advertising, marketing, timely launching and selling our products, including through the use of digital and social media.
Moreover, there is no assurance that the new system will meet our current and future business needs or that it will operate as 5 KIMBERLY-CLARK CORPORATION - 2022 Annual Report designed. Any significant failure or delay in the system upgrade could cause an interruption to our business and adversely affect our operations and financial results.
Moreover, there is no assurance that the new enterprise resource planning system will meet our current and future business needs or that it will operate as designed. Any significant failure or delay in system upgrades could cause an interruption to our business and adversely affect our operations and financial results.
Our ability to continue our reduced operations in Russia may change as we continue to experience increased input costs, supply chain complexities, reduced consumer demand, restricted access to financial institutions and increased monetary, currency and payment controls.
Our ability to continue our reduced operations in Russia may change as we continue to experience increased input costs, supply chain complexities, reduced consumer demand, restricted access to raw materials and production assets, restricted access to financial institutions and increased supply chain, professional services, monetary, currency, trade and payment/investment sanctions and related controls.
In addition, these items could cause our future results to differ from those in any of our forward-looking statements. These risks are not the only ones we face. Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us.
In addition, these items could cause our future results to differ from those in any of our forward-looking statements. These risks are not the only ones we face.
There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. We have transition risks related to the transition to a lower-carbon economy and physical risks related to the physical impacts of climate change.
There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns, water availability and quality, and the frequency and severity of extreme weather and natural disasters.
If we lose a significant customer or if sales of our products to a significant customer materially decrease, our business, financial condition and results of operations may be adversely affected.
If we lose a significant customer or if sales of our products to a significant customer materially decrease, our business, financial condition and results of operations may be adversely affected. Legal and Regulatory Government regulations and enforcement, and potential litigation, could have an adverse effect on our financial results.
In addition, concern over climate change may result in new legal and regulatory requirements to reduce or mitigate the effects of climate change on the environment.
In addition, concern over climate change by governments and regulators globally have resulted and may continue to result in new legal and regulatory requirements to reduce or mitigate the effects of climate change on the environment (or conversely, to restrict activities to address or consider climate change and related matters).
Furthermore, the divestitures could adversely affect our ongoing business operations, including by enhancing our competitors' positions or reducing consumer confidence in our ongoing brands and products.
Furthermore, the divestitures could adversely affect our ongoing business operations, including by enhancing our competitors' positions or reducing consumer confidence in our ongoing brands and products. The inability to effectively and efficiently manage acquisitions and divestitures with the results we expect or in the timeframe we anticipate could adversely affect our business, consolidated financial condition, results of operations or liquidity.
Business Operations Significant increases in prices for raw materials, energy, transportation or other necessary supplies or services, without corresponding increases in our selling prices, could adversely affect our financial results.
Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us. 4 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Business Operations Significant increases in prices for raw materials, energy, transportation or other necessary supplies or services, without corresponding increases in our selling prices, could adversely affect our financial results.
Transition risks include increased costs of carbon emission, increased cost to produce products in compliance with future regulations, increased raw materials cost, shifts in customer/consumer values and other legal, regulatory and technological risks. Physical risks include the risk of direct damage to assets or supply chain disruption caused by severe weather events such as floods, storms, wildfires and droughts.
Physical risks include the risk of direct damage to assets or supply chain disruption caused by severe weather events such as floods, storms, wildfires and droughts.
Also, if we fail to perfect or successfully assert our intellectual property rights, we may be less competitive, which could adversely affect our business, financial results and financial condition. Legal and Regulatory Government regulations and enforcement, and potential litigation, could have an adverse effect on our financial results.
Also, if we fail to perfect or successfully assert our intellectual property rights, we may be less competitive, which could adversely affect our business, financial results and financial condition. Increasing dependence on key retailers in Developed Markets and the emergence of new sales channels may adversely affect our business.
For example, new legislation or regulations may result in increased costs to us, directly for our compliance, or indirectly to the extent suppliers increase prices of goods and services because of increased compliance costs, excise taxes or reduced availability of raw materials.
For example, new legislation or regulations may result in increased costs to us, directly for our compliance, or indirectly to the extent suppliers increase prices of goods and services because of increased compliance costs, excise taxes or reduced availability of raw materials. 10 KIMBERLY-CLARK CORPORATION - 2023 Annual Report While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable.
We access the long-term and short-term capital markets to obtain financing.
Disruptions in the credit markets or changes to our credit ratings may adversely affect our business. We access the long-term and short-term capital markets to obtain financing.
Removed
Cyber-attacks, privacy breaches, data breaches or a failure of key information technology systems could disrupt our business operations and cause us financial and reputational damage.
Added
Failure of key technology systems, cyberattacks, privacy breaches or data breaches could have a material adverse effect on our business, financial condition, results of operations and reputation. To conduct our business, we rely extensively on information and operational technology systems, many of which are managed, hosted, provided and/or used by third parties and their vendors.
Removed
Increased cyber-security threats and computer crime pose a potential risk to the security of our information technology systems, including those of third-party service providers with whom we have contracted, as well as the confidentiality, integrity and availability of the data stored on those systems.
Added
These systems include, but are not limited to, programs and processes relating to internal communications and communicating with customers, consumers, vendors, investors and other parties; ordering and managing materials from suppliers; converting materials to finished products; receiving and processing purchase orders and shipping products to customers; processing transactions; storing, processing and transmitting data, including personal confidential information and payment card industry data; supporting employee data processing for our global workforce; hosting, processing and sharing confidential and proprietary research, business and financial information; and complying with financial reporting, regulatory, legal and tax requirements.
Removed
Further, data privacy is subject to frequently changing rules and regulations regarding the handling of personal data, such as the GDPR, LGPD, PIPL and CCPA.
Added
Furthermore, we sell certain products directly to consumers online and through websites, mobile apps and connected devices, and we also engage in online activities, including data collection, promotions, rebates and customer loyalty and other programs, through which we may receive personal information.
Removed
Any breach in our information technology security systems could result in the disclosure or misuse of confidential or proprietary information, including sensitive customer, supplier, employee or investor information maintained in the ordinary course of our business.
Added
A breach or other breakdown in our technology, including a cyberattack, privacy incident, data incident or other event involving us or any of our third-party service providers or vendors could adversely affect our financial condition and results of operations.
Removed
Any such event, or any failure to comply with these data privacy requirements or other laws in this area, could cause damage to our reputation, loss of valuable information or loss of revenue and could result in legal liability , or regulatory or other penalties.
Added
Despite the security measures we have in place, the information and operational technology systems, including those of our customers, vendors, suppliers and other third-party service providers with whom we have contracted, have, in the past, and may, in the future, be vulnerable to cyber-threats such as computer viruses or other malicious codes, ransomware, cyber extortion, security incidents, denial of service attacks, unauthorized access, phishing attacks, social engineering and other disruptions from employee error, unauthorized uses, system failures, including Internet outages, unintentional or malicious actions of employees or contractors or cyberattacks by hackers, criminal groups, nation-states and nation-state-sponsored 5 KIMBERLY-CLARK CORPORATION - 2023 Annual Report organizations and social-activist organizations.
Removed
In addition, we may incur large expenditures to investigate or remediate, to recover data, to repair or replace networks or information systems, or to protect against similar future events. Our information technology systems, some of which are dependent on services provided by third parties, serve an important role in the efficient and effective operation and administration of our business.
Added
We have seen and may continue to see an increase in the number of such attacks, especially as we continue operating under a hybrid working model under which employees can work and access our technology infrastructure remotely.
Removed
These systems could be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, user or system errors, computer viruses or cyber-based attacks. The risk of cyber-based attacks is heightened with many of our employees working and accessing our technology infrastructure remotely.
Added
In addition, while we have purchased cybersecurity insurance, costs related to a cyberattack may exceed the amount of insurance coverage or be excluded under the terms of our cybersecurity insurance policy. As cyberattacks increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as appropriate for our operations.
Removed
While we have contingency plans in place to prevent or mitigate the impact of these events, if they were to occur and our disaster recovery plans do not effectively address the issues on a timely basis, we could suffer interruptions in our ability to manage our operations, which may adversely affect our business and financial results.
Added
Our security efforts and the efforts of our third-party providers may not prevent or timely detect future attacks and resulting breaches or breakdowns of our, or third-party service providers’, databases or systems.
Removed
The inability to effectively and efficiently manage acquisitions and divestitures with the results we expect or in the timeframe we anticipate could adversely affect our business, consolidated financial condition, results of operations or liquidity. 7 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Disruptions in the credit markets or changes to our credit ratings may adversely affect our business.
Added
In addition, if we or our third-party providers are unable to effectively resolve such breaches or breakdowns on a timely basis, we may experience interruptions in our ability to manage or conduct business, as well as reputational harm, governmental fines, penalties, regulatory proceedings, and litigation and remediation expenses.
Removed
Our reputation could be damaged if we do not (or are perceived not to) act responsibly with respect to sustainability matters, which could adversely affect our business. Marketing and Competition Increasing dependence on key retailers in Developed Markets and the emergence of new sales channels may adversely affect our business.
Added
In addition, such incidents could result in unauthorized disclosure and misuse of material confidential information, including personal identifying information. Cyber-threats are becoming more sophisticated, are constantly evolving and are being made by groups and individuals with a wide range of expertise and motives, and this increases the difficulty of detecting and successfully defending against them.
Removed
While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable.
Added
We have incurred, and will continue to incur, expenses to comply with privacy and data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations.
Added
Increased regulation of data collection, use, and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, including reporting requirements, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm our business.
Added
In addition, data incidents or theft of personal information collected by us and our third-party service providers as well as data incidents or theft of our information may occur.
Added
We are subject to the laws and regulations of various countries where we operate or do business related to solicitation, collection, processing, transferring, storing or use of consumer, customer, vendor or employee information or related data.
Added
These laws and regulations change frequently, and new legislation continues to be introduced and may be interpreted and applied differently from jurisdiction to jurisdiction and may create inconsistent or conflicting requirements. The changes introduced by data privacy and protection regulations increase the complexity of regulations enacted to protect business and personal data and they subject us to additional costs.
Added
We also use various other hardware, software and operating systems that may need to be upgraded or replaced in the near future as such systems cease to be supported by third-party service providers, and may be vulnerable to increased risks, including the risk of security breaches, system failures and disruptions.
Added
System upgrades take time, require oversight and may be costly, and pose several challenges, including training of personnel, communication of new rules and procedures, migration of data, increased risk of security breaches, and the potential instability of the new system.
Added
We have transition risks related to the transition to a lower-carbon economy and physical risks related to the physical impacts of climate change. Transition risks include increased costs of carbon emission, increased cost to produce products in compliance with future regulations, increased raw materials cost, shifts in customer/consumer values and other legal, regulatory and technological risks.
Added
Compliance with these requirements may increase our costs of doing business, including to the extent these reporting regimes are inconsistent.
Added
At the same time, there is growing opposition to initiatives on these matters, and our public reporting on our sustainability initiatives, expectations, and progress, including our ambitions for 2030, may not satisfy the expectations of all stakeholders.
Added
These stakeholders may rely on their assessment or perception (or a third-party’s assessment) of our sustainability practices to inform their future engagement with our company, products, and securities.
Added
Our inability to attract and retain key personnel could adversely impact our business . We must attract, hire, retain and develop effective leaders and a highly skilled and diverse global workforce. We are experiencing an increasingly tight and competitive labor market and, should conditions worsen, we could experience greater turnover.
Added
A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs over time, such as increased overtime to meet demand, and increased wages to attract and retain employees.
Added
Additionally, with our rapidly changing environment, it is critical to ensure we have the right skills, capabilities and experience needed to respond to evolving consumer and customer needs. Failure to attract and develop personnel with key emerging capabilities could disrupt our institutional knowledge base and erode our competitiveness.
Item 2. Properties
Properties — owned and leased real estate
3 edited+0 added−0 removed1 unchanged
Item 2. Properties
Properties — owned and leased real estate
3 edited+0 added−0 removed1 unchanged
2022 filing
2023 filing
Biggest changeThe locations of our and our equity affiliates' principal production facilities by major geographic areas of the world are as follows: Geographic Area : Number of Facilities North America (in 14 states in the U.S.) 28 Outside North America 55 Total (in 33 c ountries) 83 Many of these facilities produce multiple products, some across multiple segments.
Biggest changeThe locations of our and our equity affiliates' principal production facilities by major geographic areas of the world are as follows: Geographic Area : Number of Facilities North America (in 14 states in the U.S.) 28 Outside North America 54 Total (in 33 countries) 82 Many of these facilities produce multiple products, some across multiple segments.
ITEM 2. PROPERTIES As of December 31, 2022, we own or lease: • our principal executive office located in the Dallas, Texas metropolitan area; • five operating segment and geographic headquarters at three U.S. and two international locations; and • four global business service centers at one U.S. and three international locations.
ITEM 2. PROPERTIES As of December 31, 2023, we own or lease: • our principal executive office located in the Dallas, Texas metropolitan area; • five operating segment and geographic headquarters at three U.S. and two international locations; and • four global business service centers at one U.S. and three international locations.
Consumer tissue and K-C Professional products are produced in 48 facilities and personal care products are produced in 48 facilities. We believe t hat our and our equity affiliates' facilities are suitable for their purpose, adequate to support their businesses and well maintained. ITEM 3.
Consumer tissue and K-C Professional products are produced in 47 f acilities and personal care products are produced in 48 facilities. We believe t hat our and our equity affiliates' facilities are suitable for their purpose, adequate to support their businesses and well maintained. ITEM 3.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
2 edited+0 added−0 removed0 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
2 edited+0 added−0 removed0 unchanged
2022 filing
2023 filing
Biggest changeItem 3. Legal Proceedings 10 Item 4. Mine Safety Disclosures 10 Information About Our Executive Officers 11 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 13 Item 6. Selected Financial Data 13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 15 Item 7A.
Biggest changeItem 3. Legal Proceedings 13 Item 4. Mine Safety Disclosures 13 I nf ormation A bout O ur Executive Officers 14 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 16 Item 6. Selected Financial Data 16 Item 7.
Quantitative and Qualitative Disclosures About Market Risk 28 Item 8. Financial Statements and Supplementary Data 30
Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 30 Item 8. Financial Statements and Supplementary Data 32
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
19 edited+3 added−0 removed13 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
19 edited+3 added−0 removed13 unchanged
2022 filing
2023 filing
Biggest changeMelucci joined Kimberly-Clark from General Electric, where he served in multiple roles of increasing responsibility, most recently as General Counsel - Aviation Systems and Aviation Business Development. Paula S. Vaz Ramos , 43, was elected Chief Strategy and Transformation Officer in October 2021. From March 2021 to October 2021 she served as Chief Strategy Officer.
Biggest changeHe also served as Chief Transformation Officer from November 2020 to October 2021, Corporate Secretary from 2014 to 2017 and General Counsel of Kimberly-Clark International from 2013 to 2016. Mr. Melucci joined Kimberly-Clark from General Electric, where he served in multiple roles of increasing responsibility, most recently as General Counsel - Aviation Systems and Aviation Business Development. Paula S.
Urdaneta joined Mondelēz in 2005 and served in multiple roles of increasing responsibility, including Senior Vice President, Corporate Controller and Chief Accounting Officer and Vice President Finance, Asia Pacific. Prior to joining Mondelēz, he was the Director, Financial Planning and Analysis at Ryder System, Inc. Gonzalo Uribe , 51, was elected President, K-C Latin America in 2020.
Urdaneta joined Mondelēz in 2005 and served in multiple roles of increasing responsibility, including Senior Vice President, Corporate Controller and Chief Accounting Officer and Vice President Finance, Asia Pacific. Prior to joining Mondelēz, he was the Director, Financial Planning and Analysis at Ryder System, Inc. Gonzalo Uribe , 52, was elected President, K-C Latin America in 2020.
Uribe joined Kimberly-Clark from Mondelēz International, where he served in multiple roles of increasing responsibility, most recently as Western Andean, Central America and Caribbean General Manager. Tristram Wilkinson , 54, w as elected President, K-C Asia Pacific in 2021. He is responsible for our consumer business in our Asia Pacific region.
Uribe joined Kimberly-Clark from Mondelēz International, where he served in multiple roles of increasing responsibility, most recently as Western Andean, Central America and Caribbean General Manager. Tristram Wilkinson , 55, w as elected President, K-C Asia Pacific in 2021. He is responsible for our consumer business in our Asia Pacific region.
Lewis joined Kimberly-Clark from Johnson & Johnson, where she served as Chief Marketing Officer of the Global Consumer business since 2013. Prior to her role at Johnson & Johnson, Ms. Lewis served as Chief Marketing Officer, Senior Vice President, North America at The Coca-Cola Company. Robert Long , 65, was elected Chief Research and Development Officer in 2021.
Lewis joined Kimberly-Clark from Johnson & Johnson, where she served as Chief Marketing Officer of the Global Consumer business since 2013. Prior to her role at Johnson & Johnson, Ms. Lewis served as Chief Marketing Officer, Senior Vice President, North America at The Coca-Cola Company. Robert Long , 66, was elected Chief Research and Development Officer in 2021.
Doug Cunningham , 51 , was elected President, K-C Europe, Middle East & Africa ("EMEA") in 2021. He is responsible for our consumer business in our EMEA region. Prior to that, he served as Vice President and Managing Director, Australia & New Zealand since 2019. Mr.
Doug Cunningham , 52 , was elected President, K-C Europe, Middle East & Africa ("EMEA") in 2021. He is responsible for our consumer business in our EMEA region. Prior to that, he served as Vice President and Managing Director, Australia & New Zealand since 2019. Mr.
He also serves on the board of directors of Signet Jewelers Ltd. Michael D. Hsu , 58, has served as Chairman of the Board since January 2020 and as Chief Executive Officer since January 2019.
He also serves on the board of directors of Signet Jewelers Ltd. Michael D. Hsu , 59, has served as Chairman of the Board since January 2020 and as Chief Executive Officer since January 2019.
Prior to that, Mr. Torres served as a senior executive at Mondelēz International in its North America Business Unit from 2011 to 2013. Nelson Urdaneta , 50, was elected Senior Vice President and Chief Financial Officer in April 2022. Prior to joining Kimberly-Clark, he served as Senior Vice President, Treasurer at Mondelēz International since September 2021. Mr.
Torres served as a senior executive at Mondelēz International in its North America Business Unit from 2011 to 2013. Nelson Urdaneta , 51, was elected Senior Vice President and Chief Financial Officer in 2022. Prior to joining Kimberly-Clark, he served as Senior Vice President, Treasurer at Mondelēz International since September 2021. Mr.
He has global responsibility for the company's research and development, quality and regulatory functions, and is charged with accelerating growth through innovation that addresses opportunities to elevate Kimberly-Clark’s trusted brands. Mr.
He has global responsibility for our research and development, quality and regulatory functions, and is charged with accelerating growth through innovation that addresses opportunities to elevate Kimberly-Clark’s trusted brands. Mr.
Cunningham joined Kimberly-Clark from Johnson & Johnson, a health care products company, where he served in multiple roles of increasing responsibility across Asia Pacific, North America and Africa, most recently as Managing Director, Johnson & Johnson Pacific. Tamera Fenske , 44, was elected Senior Vice President and Chief Supply Chain Officer in September 2022.
Cunningham joined Kimberly-Clark from Johnson & Johnson, a health care products company, where he served in multiple roles across Asia Pacific, North America and Africa, most recently as Managing Director, Johnson & Johnson Pacific. Tamera Fenske , 45, was elected Senior Vice President and Chief Supply Chain Officer in 2022.
Prior to joining Tenet, she served as Senior Vice President and Chief Human Resources Officer for United Surgical Partners International, which operates surgical facilities, since 2013. 11 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Alison Lewis , 55, was elected Chief Growth Officer in 2019. Ms.
Prior to joining Tenet, she served as Senior Vice President and Chief Human Resources Officer for United Surgical Partners International, which operates surgical facilities, since 2013. 14 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Alison Lewis , 56, was elected Chief Growth Officer in 2019. Ms.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 10 KIMBERLY-CLARK CORPORATION - 2022 Annual Report INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names and ages of our executive officers as of February 9, 2023, together with certain biographical information, are as follows: Ehab Abou-Oaf , 56, was elected President of K-C Professional in January 2022.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 13 KIMBERLY-CLARK CORPORATION - 2023 Annual Report INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names and ages of our executive officers as of February 8, 2024, together with certain biographical information, are as follows: Ehab Abou-Oaf , 57, was elected President of K-C Professional in 2022.
From 2020 to 2021, he served as President of K-C Professional. Mr. Torres joined Kimberly-Clark from Newell Brands Inc., a consumer goods company, where he served as Group President since 2018 and as Chief Transformation Officer from 2016 to 2018. Prior to joining Newell Brands, Mr. Torres was a partner at Bain & Company from 2013 to 2016.
Torres joined Kimberly-Clark from Newell Brands Inc., a consumer goods company, where he served as Group President since 2018 and as Chief Transformation Officer from 2016 to 2018. Prior to joining Newell Brands, Mr. Torres was a partner at Bain & Company from 2013 to 2016. Prior to that, Mr.
Zackery Hicks , 59, was elected Chief Digital and Technology officer in July 2022. He is responsible for all aspects of the company’s information technology and digital functions, including building brands and creating differentiated capability. Mr.
Zackery Hicks , 60, was elected Chief Digital and Technology Officer in 2022. He is responsible for all aspects of our information technology and digital functions, including building brands and creating differentiated capability. Mr.
From April 2020 to November 2020, he served as Senior Vice President, Business Development and General Counsel and from September 2017 to April 2020, he served as Senior Vice President - General Counsel. From January 2017 to September 2017, he served as Vice President, Senior Deputy General Counsel and General Counsel of Kimberly-Clark’s Global Operations.
From January 2017 to September 2017, he served as Vice President, Senior Deputy General Counsel and General Counsel of Kimberly-Clark’s Global Operations. From 2013 to 2017, he served as Vice President and Deputy General Counsel.
She has global responsibility for our enterprise strategy and transformation activities. Ms. Ramos joined Kimberly-Clark from McKinsey & Company where she served in multiple roles of increasing responsibility over 18 years, most recently as a Partner. Russell Torres , 51, was elected Group President, K-C North America in 2021. He is responsible for our consumer business in North America.
Ramos joined Kimberly-Clark from McKinsey & Company where she served in multiple roles of increasing responsibility over 18 years, most recently as a Partner. Russell Torres , 52, was elected Group President, K-C North America in 2021. He is responsible for our consumer business in North America. From 2020 to 2021, he served as President of K-C Professional. Mr.
Wilkinson joined Kimberly-Clark in 1995. 12 KIMBERLY-CLARK CORPORATION - 2022 Annual Report PART II
Wilkinson joined Kimberly-Clark in 1995. 15 KIMBERLY-CLARK CORPORATION - 2023 Annual Report PART II
Long joined Kimberly-Clark from the Coca-Cola Company where he served in multiple roles of increasing responsibility, most recently as Senior Vice President for Global R&D and Chief Innovation Officer from 2016 to March 2021. Jeffrey Melucci , 52, was elected Chief Business Development and Legal Officer in November 2020.
Long joined Kimberly-Clark from the Coca-Cola Company where he served in multiple roles of increasing responsibility, most recently as Senior Vice President for Global R&D and Chief Innovation Officer from 2016 to 2021. Grant B. McGee , 43, was elected Senior Vice President and General Counsel in February 2024. Mr.
Hsu served as President and Chief Operating Officer, Foodservice at H. J. Heinz Company. He also serves on the board of directors of Texas Instruments Incorporated. Sandra R.A. Karrmann , 57, was elected Senior Vice President and Chief Human Resources Officer in 2020.
Hsu served as President and Chief Operating Officer, Foodservice at H. J. Heinz Company. Sandra R.A. Karrmann , 58, was elected Senior Vice President and Chief Human Resources Officer in 2020.
From 2013 to 2017, he served as Vice President and Deputy General Counsel. He also served as Chief Transformation Officer from November 2020 to October 2021, Corporate Secretary from 2014 to 2017 and General Counsel of Kimberly-Clark International from 2013 to 2016. Mr.
From November 2020 to January 2024, he served as Chief Business Development and Legal Officer, from April 2020 to November 2020, he served as Senior Vice President, Business Development and General Counsel and from September 2017 to April 2020, he served as Senior Vice President - General Counsel.
Added
McGee rejoined Kimberly-Clark from American Airlines, where he served as Vice President, Deputy General Counsel and Corporate Secretary from 2022 to February 2024. From 2015 to 2022, Mr. McGee served in various roles of increasing responsibility at Kimberly-Clark, most recently as Vice President and Senior Deputy General Counsel.
Added
Jeffrey Melucci , 53, was elected Chief Business and Transformation Officer in January 2024.
Added
Vaz Ramos , 44, was elected Chief Strategy and Transformation Officer in October 2021. From March 2021 to October 2021 she served as Chief Strategy Officer. She has global responsibility for our enterprise strategy and transformation activities. Ms.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+1 added−1 removed1 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+1 added−1 removed1 unchanged
2022 filing
2023 filing
Biggest changePeriod (2022) 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) October 1 to October 31 71,600 $ 115.67 38,960,781 41,039,219 November 1 to November 30 81,900 128.85 39,042,681 40,957,319 December 1 to December 31 46,200 137.06 39,088,881 40,911,119 Total 199,700 (a) Share repurchases were made pursuant to a share repurchase program authorized by our Board of Directors on November 13, 2014.
Biggest changePeriod (2023) 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) October 1 to October 31 135,225 $ 119.78 39,963,754 40,036,246 November 1 12,292 119.39 39,976,046 40,000,000 November 1 to November 30 507,399 121.25 507,399 39,492,601 December 1 to December 31 396,139 121.15 903,538 39,096,462 Total 1,051,055 (a) Share repurchases were made pursuant to share repurchase programs authorized by our Board of Directors on November 13, 2014 (the "2014 Program") and January 22, 2021 (the "2021 Program").
As of January 31, 2023, we had 16,810 holders of record of our common stock. For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12 of this Form 10-K. We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs.
As of January 31, 2024, we had 16,019 holders of record of our common stock. For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12 of this Form 10-K. We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs.
This program allows for the repurchase of 40 million shares in an amount not to exceed $5 billion (the "2014 Program").
The 2014 Program allowed for the repurchase of 40 million shares in an amount not to exceed $5 billion, and the 2021 Program allows for the repurchase of 40 million shares in an amount not to exceed $5 billion.
During 2022, we repurchased 779 thousand shares of our common stock at a cost of $100 through a broker in the open market. The following table contains information for shares repurchased during the fourth quarter of 2022. None of the shares in this table were repurchased directly from any of our officers or directors.
During 2023, we repurchased 1.8 million shares of our common stock at a cost of $225 through a broker in the open market. The following table contains information for shares repurchased during the fourth quarter of 2023. None of the shares in this table were repurchased directly from any of our officers or directors.
Removed
(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. 13 KIMBERLY-CLARK CORPORATION - 2022 Annual Report
Added
Purchases on November 1 of 12,292 shares exhausted the 2014 Program's $5 billion limit and, as a result, that program has expired. All remaining purchases in the fourth quarter of 2023 were made pursuant to the 2021 Program. (b) Includes shares under both the 2014 Program (through November 1, 2023), and the 2021 Program.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
82 edited+26 added−17 removed50 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
82 edited+26 added−17 removed50 unchanged
2022 filing
2023 filing
Biggest changeGAAP to Non-GAAP Reconciliations of Selected Financial Results Twelve Months Ended December 31, 2022 As Reported Acquisition of Controlling Interest in Thinx Pension Settlements As Adjusted Non-GAAP Marketing, research and general expenses $ 3,581 $ 21 $ — $ 3,560 Other (income) and expense, net (43) (85) — 42 Operating Profit 2,681 64 — 2,617 Nonoperating expense (73) — (52) (21) Provision for income taxes (495) 4 13 (512) Effective tax rate 21.2 % — — 22.0 % Net Income Attributable to Kimberly-Clark Corporation 1,934 68 (39) 1,905 Diluted Earnings per Share (a) 5.72 0.20 (0.12) 5.63 19 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Twelve Months Ended December 31, 2021 As Reported 2018 Global Restructuring Program As Adjusted Non-GAAP Cost of products sold $ 13,452 $ 154 $ 13,298 Gross Profit 5,988 (154) 6,142 Marketing, research and general expenses 3,399 111 3,288 Other (income) and expense, net 28 10 18 Operating Profit 2,561 (275) 2,836 Nonoperating expense (86) (79) (7) Provision for income taxes (479) 75 (554) Effective tax rate 21.5 % — 21.5 % Share of net income of equity companies 98 (7) 105 Net income attributable to noncontrolling interests (30) 5 (35) Net Income Attributable to Kimberly-Clark Corporation 1,814 (281) 2,095 Diluted Earnings per Share (a) 5.35 (0.83) 6.18 (a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding.
Biggest changeGAAP to Non-GAAP Reconciliations of Selected Financial Results Twelve Months Ended December 31, 2023 As Reported Sale of Brazil Tissue and K-C Professional Business Impairment of Intangible Assets Pension Settlements As Adjusted Non-GAAP Cost of products sold $ 13,399 $ 15 $ — $ — $ 13,384 Gross Profit 7,032 (15) — — 7,047 Marketing, research and general expenses 3,961 15 — — 3,946 Impairment of intangible assets 658 — 658 — — Other (income) and expense, net 69 (74) — — 143 Operating Profit 2,344 44 (658) — 2,958 Nonoperating expense (96) — — (35) (61) Provision for income taxes (453) (18) 175 9 (619) Effective tax rate 22.4 % — — — 23.2 % Net income attributable to noncontrolling interests — — 20 — (20) Net Income Attributable to Kimberly-Clark Corporation 1,764 26 (463) (26) 2,227 Diluted Earnings per Share (a) 5.21 0.08 (1.36) (0.08) 6.57 21 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Twelve Months Ended December 31, 2022 As Reported Acquisition of Controlling Interest in Thinx Pension Settlements As Adjusted Non-GAAP Marketing, research and general expenses $ 3,581 $ 21 $ — $ 3,560 Other (income) and expense, net (43) (85) — 42 Operating Profit 2,681 64 — 2,617 Nonoperating expense (73) — (52) (21) Provision for income taxes (495) 4 13 (512) Effective tax rate 21.2 % — — 22.0 % Net Income Attributable to Kimberly-Clark Corporation 1,934 68 (39) 1,905 Diluted Earnings per Share (a) 5.72 0.20 (0.12) 5.63 (a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding.
The factors described under Item 1A, "Risk Factors" in this Form 10-K, or in our other SEC filings, among others, could cause our future results to differ from those expressed in any forward-looking statements made by us or on our behalf.
The factors described under Item 1A, "Risk Factors" in our Form 10-K, or in our other SEC filings, among others, could cause our future results to differ from those expressed in any forward-looking statements made by us or on our behalf.
The following will be discussed and analyzed: • Overview of Business • Overview of 2022 Results • Business Environment and Trends • Results of Operations and Related Information • Liquidity and Capital Resources • Critical Accounting Policies and Use of Estimates • New Accounting Standards • Information Concerning Forward-Looking Statements 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.
The following will be discussed and analyzed: • Overview of Business • Overview of 2023 Results • Business Environment and Trends • Results of Operations and Related Information • Liquidity and Capital Resources • Critical Accounting Policies and Use of Estimates • New Accounting Standards • Information Concerning Forward-Looking Statements 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.
In setting these assumptions, we consider a number of factors including projected future returns by asset class relative to the target asset allocation. Actual asset allocations are regularly reviewed and they are periodically rebalanced to the targeted allocations when considered appropriate. As of December 31, 2022, the Principal Plans had cumulative unrecognized investment and actuarial losses of approximately $1.0 billion.
In setting these assumptions, we consider a number of factors including projected future returns by asset class relative to the target asset allocation. Actual asset allocations are regularly reviewed and they are periodically rebalanced to the targeted allocations when considered appropriate. As of December 31, 2023, the Principal Plans had cumulative unrecognized investment and actuarial losses of approximately $1.0 billion.
The discount (or settlement) rate used to determine the present value of our future U.S. pension obligation at December 31, 2022 was based on a portfolio of high quality corporate debt securities with cash flows that largely match the expected benefit payments of the plan.
The discount (or settlement) rate used to determine the present value of our future U.S. pension obligation at December 31, 2023 was based on a portfolio of high quality corporate debt securities with cash flows that largely match the expected benefit payments of the plan.
Earnings of $3.7 billion were previously subject to U.S. federal income tax. Any additional taxes due with respect to such previously-taxed foreign earnings, if repatriated, would generally be limited to foreign and U.S. state income taxes. Deferred taxes have been recorded on $0.7 billion of earnings of foreign consolidated subsidiaries expected to be repatriated.
Earnings of $3.3 billion were previously subject to U.S. federal income tax. Any additional taxes due with respect to such previously-taxed foreign earnings, if repatriated, would generally be limited to foreign and U.S. state income taxes. Deferred taxes have been recorded on $0.8 billion of earnings of foreign consolidated subsidiaries expected to be repatriated.
For 2022, we completed the required annual assessment of goodwill for impairment for all of our reporting units using a qualitative assessment as of the first day of the third quarter, and we determined that it is more likely than not that the fair value of goodwill significantly exceeds the carrying amount for each of our reporting units.
For 2023 , we completed the required annual assessment of goodwill for impairment for all of our reporting units using a qualitative assessment as of the first day of the third quarter, and we determined that it is more likely than not that the fair value of goodwill significantly exceeds the carrying amount for each of our reporting units.
For a discussion that compares our 2021 results to 2020, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2021 Annual Report on Form 10-K. The reference to "N.M." indicates that the calculation is not meaningful.
For a discussion that compares our 2022 results to 2021, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2022 Annual Report on Form 10-K. The reference to "N.M." indicates that the calculation is not meaningful.
Other (income) and expense, net was $43 of income in 2022, which primarily reflected the non-recurring, non-cash gain recognized upon the acquisition of a controlling interest in Thinx related to the remeasurement of the carrying value of our previously held equity investment to fair value. Other (income) and expense, net was $28 of expense in 2021.
Other (income) and expense, net was $43 of income in 2022, which primarily reflected the non-recurring, non-cash gain recognized upon the acquisition of a controlling interest in Thinx related to the remeasurement of the carrying value of our previously held equity investment to fair value.
If the discount rate assumptions for these plans were reduced by 0.25 percent, the impact to 2023 other postretirement benefit expense and the increase in the December 31, 2022 benefit liability would not be material. • Health care cost trend rate .
If the discount rate assumptions for these plans were reduced by 0.25 percent, the impact to 2024 other postretirement benefit expense and the increase in the December 31, 2023 benefit liability would not be material. • Health care cost trend rate .
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction This MD&A is intended to provide investors with an understanding of our recent performance, financial condition and prospects. This discussion and analysis compares 2022 results to 2021.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction This MD&A is intended to provide investors with an understanding of our recent performance, financial condition and prospects. This discussion and analysis compares 2023 results to 2022.
If the expected long-term rate of return on assets for the Principal Plans were lowered by 0.25 percent, the impact on annual pension expense would not be material in 2023 . • Discount rate .
If the expected long-term rate of return on assets for the Principal Plans were lowered by 0.25 percent, the impact on annual pension expense would not be material in 2024 . • Discount rate .
We are also monitoring the increased risk of cyber-based attacks as a result of the war in Ukraine and have implemented additional cybersecurity measures designed to address the evolving threat landscape. 18 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Results of Operations and Related Information This section presents a discussion and analysis of net sales, operating profit and other information relevant to an understanding of 2022 results of operations.
We are also monitoring the increased risk of cyber-based attacks as a result of the war in Ukraine and have implemented additional cybersecurity measures designed to address the evolving threat landscape. 20 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Results of Operations and Related Information This section presents a discussion and analysis of net sales, operating profit and other information relevant to an understanding of 2023 results of operations.
Evolving Consumer Product and Shopping Preferences - The retail landscape in many of our markets continues to evolve due to the rapid growth of eCommerce retailers, changing consumer preferences (as consumers increasingly shop online) and the increased presence of alternative retail channels, such as subscription services and direct-to-consumer businesses.
Evolving Consumer Product and Shopping Preferences - The retail landscape in many of our markets continues to evolve due to the rapid growth of e-commerce retailers, changing consumer preferences (as consumers increasingly shop online) and the increased presence of alternative retail channels, such as subscription services and direct-to-consumer businesses.
The average month-end balance of short-term debt for the twelve months ended December 31, 2022 was $757. These short-term borrowings provide supplemental funding to support our operations. The level of short-term debt generally fluctuates depending upon the amount of operating cash flows and the timing of customer receipts and payments for items such as pension contributions, dividends and income taxes.
The average month-end balance of short-term debt for the twelve months ended December 31, 2023 was $139. These short-term borrowings provide supplemental funding to support our operations. The level of short-term debt generally fluctuates depending upon the amount of operating cash flows and the timing of customer receipts and payments for items such as pension contributions, dividends and income taxes.
A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. • Undistributed earnings . A s of December 31, 2022, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $7.4 billion.
A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. • Undistributed earnings . A s of December 31, 2023, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $7.2 billion.
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, 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 and Turkey, 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. 27 KIMBERLY-CLARK CORPORATION - 2022 Annual Report There can be no assurance that these future events will occur as anticipated or that our results will be as estimated.
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, 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 and Türkiye , 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. 29 KIMBERLY-CLARK CORPORATION - 2023 Annual Report There can be no assurance that these future events will occur as anticipated or that our results will be as estimated.
We do not intend to distribute the remaining $3.0 billion of previously-taxed foreign earnings and therefore have not recorded deferred taxes for foreign and U.S. state income taxes on such earnings. We consider any excess of the amount for financial reporting over tax basis in our foreign subsidiaries to be indefinitely reinvested.
We do not intend to distribute the remaining $2.5 billion of previously-taxed foreign earnings and therefore have not recorded deferred taxes for foreign and U.S. state income taxes on such earnings. We consider any excess of the amount for financial reporting over tax basis in our foreign subsidiaries to be indefinitely reinvested.
Business Environment and Trends Our results of operations have been, and we expect them to continue to be, affected by the following factors and key trends, which may cause our future results of operations to differ from our historical results discussed under “Results of Operations and Related Information.” COVID-19 - The macro business environment experienced unprecedented volatility in recent years related to the continuing effect the global COVID-19 pandemic has had on supply and demand dynamics.
Business Environment and Trends Our results of operations have been, and we expect them to continue to be, affected by the following factors and key trends, which may cause our future results of operations to differ from our historical results discussed under “Results of Operations and Related Information.” COVID-19 - The macro business environment has experienced unprecedented volatility in recent years reflecting the effects of the global COVID-19 pandemic on supply and demand dynamics.
The determination of deferred tax liabilities on the amount of financial reporting over tax basis or the $3.0 billion of previously-taxed foreign earnings is not practicable. • Uncertain tax positions . We record our global tax provision based on the respective tax rules and regulations for the jurisdictions in which we operate.
The determination of deferred tax liabilities on the amount of financial reporting over tax basis or the $2.5 billion of previously-taxed foreign earnings is not practicable. • Uncertain tax positions . We record our global tax provision based on the respective tax rules and regulations for the jurisdictions in which we operate.
We believe our strategic growth focus, sustainability initiatives and continued investment in eCommerce capabilities has us well positioned relative to these changing dynamics. Volatility of Global Markets - Our growth strategy depends in part on our ability to expand our operations, including in D&E Markets.
We believe our strategic growth focus, sustainability initiatives, innovation pipeline and continued investment in e-commerce capabilities has us well positioned relative to these changing dynamics. Volatility of Global Markets - Our growth strategy depends in part on our ability to expand our operations, including in D&E Markets.
Pension expense beyond 2023 will depend on future investment performance, our contributions to the pension trusts, changes in discount rates and various other factors related to the covered participants in the plans. Substantially all U.S. retirees and employees have access to our unfunded health care and life insurance benefit plans.
Pension expense beyond 2024 will depend on future investment p erformance, our contributions to the pension trusts, changes in discount rates and various other factors related to the covered participants in the plans. Substantially all U.S. retirees and employees have access to our unfunded health care and life insurance benefit plans.
We manage these costs through cost saving and productivity initiatives, sourcing and hedging programs, and pricing actions. To remain competitive on our operating structure, we continue to work on programs to expand our profitability, such as our FORCE program.
We manage these costs through cost saving and productivity initiatives, sourcing and hedging programs, and pricing actions. To remain competitive on our operating structure, we continue to work on programs to expand our profitability.
These liabilities may be affected by changing interpretations of laws, rulings by tax authorities or the expiration of the statute of limitations. 26 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Goodwill and Other Intangible Assets Goodwill and other indefinite-lived intangible assets are not subject to amortization and are tested for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred.
These liabilities may be affected by changing interpretations of laws, rulings by tax authorities or the expiration of the statute of limitations. Goodwill and Other Intangible Assets Goodwill and other indefinite-lived intangible assets are not subject to amortization and are tested for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred.
If the discount rate assumptions for these same plans were reduced by 0.25 percent, the increase in annual pension expense would not be material in 2023, and the December 31, 2022 pension liability would increase by about $60. 25 KIMBERLY-CLARK CORPORATION - 2022 Annual Report • Other assumptions .
If the discount rate assumptions for these same plans were reduced by 0.25 percent, the increase in annual pension expense would not be material in 2024, and the December 31, 2023 pension liability would increase by about $60. • Other assumptions .
(b) Combined impact of changes in volume, net price and mix/other. (c) Benefits of the FORCE program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. Net sales in North America increased 5 percent.
(b) Combined impact of changes in volume, net price and mix/other. (c) Benefits of the FORCE program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
Price changes may affect net sales, earnings and market share in the near term as the market adjusts to new pricing and other market conditions. 17 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Operating Costs - Our operating costs include raw materials, labor, selling, general and administrative expenses, taxes, currency impacts and financing costs.
Price changes may affect net sales, earnings and market share in the near term as the market adjusts to new pricing and other market conditions. Operating Costs - Our operating costs include raw materials, labor, selling, general and administrative expenses, general business taxes, currency impacts and financing costs.
Other (income) and expense, net (a) (43) 28 N.M.
Other (income) and expense, net (a) 69 (43) N.M.
Our related accounting policies, acquisitions of Thinx and Softex Indonesia, and goodwill and other intangible assets account balances are discussed in Item 8, Notes 1, 3 and 4, respectively, to the consolidated financial statements.
Our related accounting policies, acquisition of Thinx and goodwill and other intangible assets account balances and other intangible asset impairment charges are discussed in Item 8, Notes 1, 3 and 4, respectively, to the consolidated financial statements.
Intangible assets that are deemed to have finite lives are amortized over their useful lives, generally ranging from 4 to 2 0 years. We typically obtain the assistance of third-party valuation specialists to measure the acquisition date fair values of goodwill and other intangible assets acquired.
Intangible assets that are deemed to 28 KIMBERLY-CLARK CORPORATION - 2023 Annual Report have finite lives are amortized over their useful lives, generally ranging from 4 to 20 years. We typically obtain the assistance of third-party valuation specialists to measure the acquisition date fair values of goodwill and other intangible assets acquired.
(b) Combined impact of changes in volume, net price and mix/other. (c) Benefits of the FORCE program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. Net sales in North America increased 7 percent.
(b) Combined impact of changes in volume, net price and mix/other. (c) B enefits of the FORCE program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
Organic sales increased 7 percent, while changes in foreign currency exchange rates decreased sales by 4 percent. • In North America, organic sales increased 5 percent in consumer products and increased 9 percent in K-C Professional. • Outside North America, organic sales increased 8 percent in D&E Markets and increased 10 percent in Developed Markets. • Operating Profit and Net Income Attributable to Kimberly-Clark were $2,681 and $1,934 in 2022, respectively. • Diluted earnings per share were $5.72 in 2022 compared to $5.35 in 2021.
Organic sales increased 5 percent, while changes in foreign currency exchange rates decreased sales by 3 percent and exited business decreased sales by 1 percent. • In North America, organic sales increased 4 percent in consumer products and increased 8 percent in K-C Professional. • Outside North America, organic sales increased 5 percent in D&E Markets and increased 4 percent in Developed Markets. • Operating Profit and Net Income Attributable to Kimberly-Clark were $2,344 and $1,764 in 2023, respectively. • Diluted earnings per share were $5.21 in 2023 compared to $5.72 in 2022.
As a result of this transaction, a net benefit was recognized, primarily due to the non-recurring, non-cash gain recognized related to the remeasurement of the carrying value of our previously held equity investment to fair value partially offset by transaction and integration costs.
As a result of this transaction, a net benefit was recognized, primarily due to the non-recurring, non-cash gain recognized related to the remeasurement of the carrying value of our previously held equity investment to fair value, partially offset by transaction and integration costs. See Item 8, Note 3 to the consolidated financial statements for details.
Based upon those projections, we anticipate making annual payments for these obligations of approximately $50 through 2032. • Accrued income tax liabilities for uncertain tax positions, deferred taxes and noncontrolling interests. Investing Our capital spending wa s $876 in 2022 and $1,007 in 2021 .
Based upon those projections, we anticipate making annual payments for these obligations of approximately $50 through 2033. • Accrued income tax liabilities for uncertain tax positions, deferred taxes and noncontrolling interests. Investing Our capital spending was $766 in 2023 and $876 in 2022 .
In addition, we provide commentary regarding organic sales growth, which describes the impact of changes in volume, product mix and net selling prices on net sales. Changes in foreign currency exchange rates, acquisitions and exited businesses also impact the year-over-year change in net sales. Dollar amounts are reported in millions, except per share dollar amounts, unless otherwise noted.
In addition, we provide commentary regarding organic sales growth, which describes the impact of changes in volume, product mix and net selling prices on net sales. Changes in foreign currency exchange rates, acquisitions and exited businesses also impact the year-over-year change in net sales.
Adjusted other (income) and expense, net was $42 and $18 of expense in 2022 and 2021, respectively. The effective tax rate of 21.2 percent in 2022 compared to the effective tax rate of 21.5 percent in 2021.
Adjusted other (income) and expense, net was $143 and $42 of expense in 2023 and 2022, respectively. The effective tax rate was 22.4 percent in 2023 compared to the effective tax rate of 21.2 percent in 2022.
Total Operating Profit 2,681 2,561 +5 % Provision for income taxes (495) (479) +3 % Share of net income of equity companies 116 98 +18 % Net Income Attributable to Kimberly-Clark Corporation 1,934 1,814 +7 % Diluted Earnings per Share 5.72 5.35 +7 % (a) Corporate & Other and Other (income) and expense, net includes income and expenses not associated with the business segments, including adjustments as indicated in the Non-GAAP Reconciliations.
Total Operating Profit 2,344 2,681 -13 % Provision for income taxes (453) (495) -8 % Share of net income of equity companies 196 116 +69 % Net Income Attributable to Kimberly-Clark Corporation 1,764 1,934 -9 % Diluted Earnings per Share 5.21 5.72 -9 % (a) Corporate & Other and Other (income) and expense, net includes income and expenses not associated with the business segments, including adjustments as indicated in the Non-GAAP Reconciliations.
In addition, many factors outside our control, including the war in Ukraine (including the related responses of consumers, customers, and suppliers and sanctions issued by the U.S., the European Union, Russia or other countries), 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, failure to realize the expected benefits or synergies from our acquisition and disposition activity (including our pending agreement to sell our Neve tissue brand and associated assets in Brazil), changes in customer preferences, severe weather conditions, 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, could affect the realization of these estimates.
In addition, many factors outside our control, including the war in Ukraine (including the related responses of consumers, customers, and suppliers and sanctions issued by the U.S., the European Union, Russia or other countries), pandemics, epidemics, fluctuations in foreign currency exchange rates, the prices and availability of our raw materials, supply chain disruptions , disruptions in the capital and credit markets, counterparty defaults (including customers, suppliers and financial institutions with which we do business), failure to realize the expected benefits or synergies from our acquisition and disposition activity, impairment of goodwill and intangible assets and our projections of operating results and other factors that may affect our impairment testing , changes in customer preferences, severe weather conditions, regional instabilities and hostilities (including the war in Israel), 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, could affect the realization of these estimates.
Results in 2022 include pension settlement charges of $0.12 and a net benefit of $0.20 associated with the acquisition of Thinx, primarily due to the non-recurring, non-cash gain recognized related to the remeasurement of the carrying value of our previously held equity investment to fair value partially offset by transaction and integration costs.
Results in 2022 include a net benefit of $0.20 associated with the acquisition of Thinx, primarily due to the non-recurring, non-cash gain recognized related to the 18 KIMBERLY-CLARK CORPORATION - 2023 Annual Report remeasurement of the carrying value of our previously held equity investment to fair value, partially offset by transaction and integration costs, and pension settlement charges of $0.12. • We continue to focus on generating cash flow and allocating capital to shareholders.
Our business in Russia is experiencing increased input costs, supply chain complexities, reduced consumer demand and restricted access to financial institutions, as well as increased monetary, currency and payment controls.
Our business in Russia is experiencing increased input costs, supply chain complexities, reduced consumer demand, restricted access to raw materials and production assets, and restricted access to financial institutions, as well as increased supply chain, professional services, monetary, currency, trade and payment/investment sanctions and related controls.
There are a number of other assumptions involved in the calculation of pension expense and benefit obligations, primarily related to participant demographics and benefit elections. Pension expense for defined benefit pension plans is estimated to approximate $100 in 2023, including estimated pension settlement charges.
There are a number of other assumptions involved in the calculation of pension expense and benefit obligations, primarily related to participant demographics and benefit elections. 27 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Pension expense for defined benefit pension plans is estimated to approximate $50 in 2024.
Altogether, share repurchases and dividends in 2022 amounted to $1.7 billion. In 2023, we plan to continue to execute our strategies for long-term success which include delivering balanced, sustainable growth by growing our brands in-line with or ahead of category growth, leveraging our cost and financial discipline to fund growth and improve margins, and allocating capital in value-creating ways.
In 2024, we plan to continue to execute our strategies for long-term success which include delivering balanced, sustainable growth by growing our brands in-line with or ahead of category growth, leveraging our cost and financial discipline to fund growth and improve margins, and allocating capital in value-creating ways. Our growth strategy is built on two pillars.
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 $373 as of December 31, 2022 (included in debt payable within one year on the consolidated balance sheet).
See Item 8, Note 6 to the consolidated financial statements for details. 25 KIMBERLY-CLARK CORPORATION - 2023 Annual Report 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 $2 as of December 31, 2023 (included in debt payable within one year on the consolidated balance sheet).
(b) Combined impact of changes in volume, net price and mix/other. (c) Benefits of the FORCE program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. Net sales in North America increased by 9 percent.
(b) Combined impact of changes in volume, net price and mix/other. (c) Benefits of the FORCE program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. (e) Impact of the sale of Brazil tissue and K-C Professional business.
The comparison was favorably impacted by higher net selling prices, cost savings and lower other manufacturing costs, partially offset by higher input costs, lower volumes and higher marketing, research and general expenses. Liquidity and Capital Resources Cash Provided by Operations Cash provided by operations was $2,733 in 2022 compared to $2,730 in 2021.
Results benefited from higher net selling prices, cost savings and lower input costs, partially offset by lower volumes, higher other manufacturing costs, higher marketing research and general expenses and unfavorable foreign currency effects. Liquidity and Capital Resources Cash Provided by Operations Cash provided by operations was $3,542 in 2023 compared to $2,733 in 2022.
While the global marketplace in which we operate has always been highly competitive, we continue to experience increased concentration and the growing presence of large-format retailers, discounters and e-tailers. This market environment has resulted in increased pressure on pricing and other competitive factors, and we expect these pressures to continue in the coming year.
While the global marketplace in which we operate has always been highly competitive, we continue to experience increased concentration and the growing presence of large-format retailers, discounters and e-tailers.
Pricing - Our net sales growth and profitability may be affected as we adjust prices to address market conditions. We adjust our product prices based on a number of variables including demand, the competitive environment, technological improvements and changes in our raw material, distribution, energy and other input costs.
We adjust our product prices based on a number of variables including demand, the competitive environment, technological improvements, product innovations and changes in our raw material, distribution, energy and other input costs.
See Item 8, Note 3 to the consolidated financial statements for details. • We will fund our defined benefit pension plans to meet or exceed statutory requirements and currently expect to contribute approximately $25 to these plans in 2023. • Other postretirement benefit payments are estimated using actuarial assumptions, including expected future service, to project the future obligations.
The following payments are not included in the table: • We will fund our defined benefit pension plans to meet or exceed statutory requirements and currently expect to contribute approximately $20 to these plans in 2024. • Other postretirement benefit payments are estimated using actuarial assumptions, including expected future service, to project the future obligations.
Proceeds from the offerings are used for general corporate purposes, including repayment of maturing debt or outstanding commercial paper indebtedness. See Item 8, Note 6 to the consolidated financial statements for details.
Proceeds from the offerings are used for general corporate purposes, including repayment of maturing debt or outstanding commercial paper indebtedness.
The transaction also includes a licensing agreement to allow the acquirer to manufacture and market in Brazil the Kleenex, Scott and Wypall brands to consumers and away-from-home customers for a period of time. The transaction is pending customary conditions and regulatory approval and is expected to close in the first half of 2023.
This transaction also included a licensing agreement to allow the acquirer to manufacture and market in Brazil the Kleenex, Scott and Wypall brands to consumers and away-from-home customers for a period of time.
Although we are primarily liable for payments on the above operating leases and unconditional purchase obligations, 23 KIMBERLY-CLARK CORPORATION - 2022 Annual Report based on historic operating performance and forecasted future cash flows, we believe exposure to losses, if any, under these arrangements is not material.
Although we are primarily liable for payments on the above operating leases and unconditional purchase obligations, based on historic operating performance and forecasted future cash flows, we believe exposure to losses, if any, under these arrangements is not material. The open purchase orders displayed in the table represent amounts for goods and services we have negotiated for delivery.
Acquisition of business, net of cash acquired of $46 in 2022 reflected the acquisition of a controlling interest of Thinx. We expect capital spending to be approximately $800 to $900 in 2023. Financing We issue long-term debt in the public market periodically.
Proceeds from asset and business dispositions of $245 primarily reflected the sale of our Brazil tissue and K-C Professional business. Acquisition of business, net of cash acquired of $46 in 2022 reflected the acquisition of a controlling interest of Thinx. We expect capital spending to be approximately $900 in 2024. Financing We issue long-term debt in the public market periodically.
Our products are sold under well-known brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend. We have three reportable business segments: Personal Care, Consumer Tissue and K-C Professional. These business segments are described in greater detail in Item 8, Note 15 to the consolidated financial statements.
We have three reportable business segments: Personal Care, Consumer Tissue and K-C Professional. These business segments are described in greater detail in Item 8, Note 15 to the consolidated financial statements.
Business Segments Personal Care 2022 2021 2022 2021 Net Sales $ 10,622 $ 10,267 Operating Profit $ 1,787 $ 1,856 Net Sales Percent Change Operating Profit Percent Change 2022 vs. 2021 2022 vs. 2021 Volume (3) Volume (7) Net Price 8 Net Price 45 Mix/Other 2 Input Costs (34) Currency (3) Cost Savings (c) 7 Total (a) 3 Currency Translation (3) Other (d) (12) Organic (b) 7 Total (4) (a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
Business Segments Personal Care 2023 2022 2023 2022 Net Sales $ 10,691 $ 10,622 Operating Profit $ 1,890 $ 1,787 Percent Change in Net Sales 2023 vs. 2022 Volume Net Price Mix/Other Currency Total (a) Organic (b) Total Personal Care (1) 5 1 (5) 1 5 North America 1 2 — — 4 4 D&E Markets (4) 9 2 (11) (4) 7 Developed Markets (5) 6 1 (2) — 3 Percent Change in Operating Profit 2023 vs. 2022 Volume Net Price Input Costs Cost Savings (c) Currency Translation Other (d) Total Twelve months ended (1) 31 (3) 8 (6) (23) 6 (a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding and excludes intergeographic sales.
See Item 8, Note 3 to the consolidated financial statements for details. On October 24, 2022, we entered into an agreement to sell our Neve tissue brand and related consumer and K-C Professional tissue assets in Brazil for $175, subject to certain working capital and other closing adjustments.
See Item 8, Note 3 to the consolidated financial statements for details. On June 1, 2023, we completed the sale transaction, announced on October 24, 2022, of our Neve tissue brand and related consumer and K-C Professional tissue assets in Brazil for $212, including the base purchase price of $175 and working capital and other closing adjustments of $37.
Climate Change - We operate in many regions around the world where our businesses could be disrupted by climate change. Our climate change risk categories include risks related to the transition to a lower-carbon economy (“Transition Risks”) and risks related to the physical impacts of climate change (“Physical Risks”).
Our climate change risk categories include risks related to the transition to a lower-carbon economy (“Transition Risks”) and risks related to the physical impacts of climate change (“Physical Risks”).
Analysis of Consolidated Results Net Sales Percent Change Adjusted Operating Profit Percent Change 2022 vs. 2021 2022 vs. 2021 Volume (3) Volume (9) Net Price 9 Net Price 59 Mix/Other 1 Input Costs (52) Currency (4) Cost Savings (c) 10 Total (a) 4 Currency Translation (3) Other (d) (13) Organic (b) 7 Total (8) (a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
Analysis of Consolidated Results Percent Change in Net Sales 2023 vs. 2022 Volume Net Price Mix/Other Exited Business (e) Currency Total (a) Organic (b) Consolidated (2) 6 1 (1) (3) 1 5 North America — 4 — — — 5 5 Developed & Emerging (5) 8 2 (2) (8) (6) 5 Developed Markets (6) 9 1 — (1) 3 4 Percent Change in Adjusted Operating Profit 2023 vs. 2022 Volume Net Price Input Costs Cost Savings (c) Currency Translation Other (d) Total Twelve months ended (6) 49 (2) 12 (5) (35) 13 (a) Total may not equal the sum of volume, net price, mix/other, exited business and currency due to rounding and excludes intergeographic sales.
The comparison was negatively impacted by higher input costs, higher marketing, research and general expenses, lower volumes, unfavorable currency effects, and higher other manufacturing costs, partially offset by higher net selling prices, cost savings, and improved product mix. 21 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Consumer Tissue 2022 2021 2022 2021 Net Sales $ 6,243 $ 6,034 Operating Profit $ 806 $ 888 Net Sales Percent Change Operating Profit Percent Change 2022 vs. 2021 2022 vs. 2021 Volume (1) Volume (5) Net Price 8 Net Price 55 Mix/Other — Input Costs (66) Currency (4) Cost Savings (c) 12 Total (a) 3 Currency Translation (1) Other (d) (4) Organic (b) 7 Total (9) (a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
Results benefited from higher net selling prices, cost savings and improved product mix, partially offset by higher marketing research and general expenses and unfavorable foreign currency effects. 23 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Consumer Tissue 2023 2022 2023 2022 Net Sales $ 6,290 $ 6,243 Operating Profit $ 976 $ 806 Percent Change in Net Sales 2023 vs. 2022 Volume Net Price Mix/Other Exited Business (e) Currency Total (a) Organic (b) Total Consumer Tissue (3) 6 — (2) (1) 1 3 North America — 5 — — — 5 5 D&E Markets (9) 7 — (8) (3) (13) (2) Developed Markets (5) 9 — — (1) 4 4 Percent Change in Operating Profit 2023 vs. 2022 Volume Net Price Input Costs Cost Savings (c) Currency Translation Other (d) Total Twelve months ended (7) 48 (8) 14 — (26) 21 (a) Total may not equal the sum of volume, net price, mix/other, exited business and currency due to rounding and excludes intergeographic sales.
Consolidated Selected Financial Results Year Ended December 31 2022 2021 Change 2022 vs. 2021 Net Sales: North America $ 10,663 $ 10,052 +6 % Outside North America 9,799 9,697 +1 % Intergeographic sales (287) (309) -7 % Total Net Sales 20,175 19,440 +4 % Operating Profit: North America 2,071 2,066 — Outside North America 979 1,082 -10 % Corporate & Other (a) (412) (559) N.M.
Consolidated Selected Financial Results Year Ended December 31 2023 2022 Change 2023 vs. 2022 Net Sales: North America $ 11,132 $ 10,663 +4 % Outside North America 9,552 9,799 -3 % Intergeographic sales (253) (287) -12 % Total Net Sales 20,431 20,175 +1 % Operating Profit: North America 2,475 2,071 +20 % Outside North America 1,056 979 +8 % Corporate & Other (a) (1,118) (412) N.M.
We increased our prices in 2022 in response to continuing in flation related to the ongoing impacts of the COVID-19 pandemic and other market conditions, including the war in Ukraine. In 2023, we anticipate challenging market conditions to continue to impact pricing.
In 2022 and early 2023, certain price increases were in response to continuing in flation related to the ongoing impacts of the COVID-19 pandemic and other market conditions, including the war in Ukraine. In 2024, we anticipate that challenging market conditions, including those related to inflation and foreign currency exchange rate fluctuations, may continue to impact pricing.
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.
We maintain a $2.0 billion revolving credit facility which expires in June 2028 and a $750 revolving credit facility which expires in May 2024. 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.
We performed our 2022 impairment assessment of our intangible assets as of the first day of the third quarter, and based upon a qualitative assessment, no impairment indicators were found to be present.
We performed our 2023 impairment assessment of our intangible assets as of the first day of the third quarter, subsequent to the impairments recognized in the second quarter of 2023, and based upon a qualitative assessment, no additional impairment indicators were found to be present. See Item 8, Note 4 to the consolidated financial statements for details.
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: • Pension settlements - In 2022, pension settlement charges were recognized related to lump-sum distributions from pension plan assets exceeding the total of annual service and interest costs resulting in a recognition of deferred actuarial losses. • Acquisition of controlling interest in Thinx – In the first quarter of 2022, we increased our investment in Thinx.
See Item 8, Note 4 to the consolidated financial statements for details. • Pension settlements - In 2023 and 2022, pension settlement charges were recognized related to lump-sum distributions from pension plan assets exceeding the total of annual service and interest costs resulting in a recognition of deferred actuarial losses. 17 KIMBERLY-CLARK CORPORATION - 2023 Annual Report • Acquisition of controlling interest in Thinx – In the first quarter of 2022, we increased our investment in Thinx.
(b) Combined impact of changes in volume, net price and mix/other. (c) Benefits of the FORCE program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. Net sales of $20.2 billion increased 4 percent compared to the year ago period.
(b) Combined impact of changes in volume, net price and mix/other. (c) Benefits of the FORCE (Focused On Reducing Costs Everywhere) program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. (e) Impact of the sale of Brazil tissue and K-C Professional business.
In 2022, our results were impacted by an unprecedented increase in our costs, particularly for pulp, resin, distribution and energy, primarily related to COVID-19 pandemic driven effects and the effects of the war in Ukraine. We expect the higher cost environment will continue in 2023.
While some costs moderated in 2023, they still remained elevated and our results were impacted by increased costs, particularly for pulp, resin, distribution, labor and energy, primarily related to COVID-19 pandemic driven effects and the effect of the war in Ukraine.
The adjusted effective tax rate was 22.0 percent in 2022 compared to 21.5 percent in 2021. 20 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Our share of net income of equity companies was $116 in 2022 and $98 in 2021. Results were positively impacted by higher net selling prices partially offset by higher input costs and lower volumes.
The adjusted effective tax rate was 23.2 percent in 2023 compared to 22.0 percent in 2022. 22 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Our share of net income of equity companies was $196 in 2023 and $116 in 2022.
Some D&E Markets have greater political, economic and currency volatility and greater vulnerability to infrastructure and labor disruptions. Volatility in these markets affects our production costs and the demand for our products. Volatility in global consumer, commodity and foreign currency exchange rates increased significantly over the past few years and is expected to continue in the near term.
Some D&E Markets have greater political, economic and currency volatility and greater vulnerability to infrastructure and labor disruptions. Volatility in these markets affects our production costs and the demand for our products and may impact our supply chain and distribution networks.
See Item 8, Note 2 to the consolidated financial statements for details. 15 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Overview of Business We are a global company focused on delivering products and solutions that provide better care for a better world, with manufacturing facilities in 33 countries, including our equity affiliates, and products sold in more than 175 countries and territories.
Overview of Business We are a global company focused on delivering products and solutions that provide better care for a better world, with manufacturing facilities in 33 countries, including our equity affiliates, and products sold in more than 175 countries and territories. Our products are sold under well-known brands such as Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend.
Critical Accounting Policies and Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period.
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. 26 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Critical Accounting Policies and Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period.
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, capital spending, pension contributions, dividends and other needs for the foreseeable future. 24 KIMBERLY-CLARK CORPORATION - 2022 Annual Report 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.
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, capital spending, pension contributions, dividends and other needs for the foreseeable future.
Our growth strategy is built on two pillars. Elevate our core business is our first pillar and is driven by delivering value-added innovations and driving category opportunities. Expanding our markets is our second pillar and emphasizes Personal Care.
Elevate our core business is our first pillar and is driven by delivering value-added innovations and driving category opportunities. Expanding our markets is our second pillar and emphasizes Personal Care. Both strategies are enabled by our focus on accelerating and investing in our commercial capabilities through digital marketing, revenue growth management, consumer-inspired innovation and strong in-market execution.
Obligations The following table presents our total contractual obligations for which cash flows are fixed or determinable.
The increase was driven by the increase in operating profit, excluding the effect of non-cash charges, and improvements in working capital. Obligations The following table presents our total contractual obligations for which cash flows are fixed or determinable.
The open purchase orders displayed in the table represent amounts for goods and services we have negotiated for delivery. The table does not include amounts where payments are discretionary or the timing is uncertain.
The table does not include amounts where payments are discretionary or the timing is uncertain.
Changes in net selling prices and product mix increased sales by 11 percent and 1 percent, respectively. Volumes decreased 3 percent. Net sales in D&E Markets increased 4 percent. Changes in net selling prices and product mix increased sales by approximately 7 percent and 2 percent, respectively. Changes in foreign currency exchange rates decreased sales by 4 percent.
Net sales of $10.7 billion increased 1 percent compared to the year ago period, while organic sales increased 5 percent driven by changes in net selling prices and product mix of 5 percent and 1 percent, respectively, partially offset by lower volumes of approximately 1 percent. Changes in foreign currency exchange rates decreased sales by approximately 5 percent.
Diluted earnings per share were $5.72 in 2022 and $5.35 in 2021. Adjusted earnings per share of $5.63 in 2022 decreased 9 percent compared to $6.18 in 2021. The decrease was primarily driven by lower adjusted operating profit.
Adjusted earnings per share of $6.57 in 2023 increased 17 percent compared to $5.63 in 2022. The increase was primarily driven by higher adjusted operating profit and improved net income from our equity companies.
The comparison was negatively impacted by higher input costs, higher marketing, research and general expenses and lower volumes, partially offset by higher net selling prices, cost savings and lower other manufacturing costs. 22 KIMBERLY-CLARK CORPORATION - 2022 Annual Report K-C Professional 2022 2021 2022 2021 Net Sales $ 3,256 $ 3,072 Operating Profit $ 457 $ 404 Net Sales Percent Change Operating Profit Percent Change 2022 vs. 2021 2022 vs. 2021 Volume (4) Volume (17) Net Price 12 Net Price 89 Mix/Other 1 Input Costs (65) Currency (4) Cost Savings (c) 13 Total (a) 6 Currency Translation (4) Other (d) (3) Organic (b) 9 Total 13 (a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
K-C Professional 2023 2022 2023 2022 Net Sales $ 3,404 $ 3,256 Operating Profit $ 665 $ 457 Percent Change in Net Sales 2023 vs. 2022 Volume Net Price Mix/Other Exited Business (e) Currency Total (a) Organic (b) Total K-C Professional (5) 10 1 (1) (1) 5 7 North America (2) 9 — — — 8 8 D&E Markets (5) 10 1 (6) (6) (5) 6 Developed Markets (13) 13 4 — — 4 4 Percent Change in Operating Profit 2023 vs. 2022 Volume Net Price Input Costs Cost Savings (c) Currency Translation Other (d) Total Twelve months ended (14) 73 10 13 (3) (33) 46 (a) Total may not equal the sum of volume, net price, mix/other, exited business and currency due to rounding and excludes intergeographic sales.
During 2022, we repurchased 779 thousand shares of our common stock at a cost of $100 through a broker in the open market. We are targeting full-year 2023 share repurchases of approximately $100 to $150, subject to market conditions.
We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During 2023, we repurchased 1.8 million shares of our common stock at a cost of $225 through a broker in the open market.
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.
The United Kingdom’s Financial Conduct Authority, which regulated the London Interbank Offered Rate (“LIBOR”), has completed its phase out of LIBOR as of June 30, 2023. The effect of the elimination of LIBOR was not material. We paid $1.6 billion in dividends in 2023. The Board of Directors approved a dividend increase of 3.4 percent for 2024.
The assets included in the sale agreement have been reclassified to Other current assets as of December 31, 2022. Overview of 2022 Results • Net sales of $20.2 billion increased 4 percent.
The assets included in the sale agreement were reclassified to Other current assets as of December 31, 2022, and upon closure of the transaction, a gain of $74 pre-tax was recognized in Other (income) and expense, net.
Changes in net selling prices and product mix increased sales by approximately 12 percent and 3 percent, respectively. The improvements in product mix were primarily in China. Volumes decreased 6 percent led by declines in Eastern Europe, Indonesia and Brazil. Changes in foreign currency exchange rates decreased sales by 5 percent.
Net sales of $6.3 billion increased 1 percent compared to the year ago period, while organic sales increased 3 percent driven by changes in net selling prices of 6 percent, partially offset by lower volumes of 3 percent. Exited business decreased sales by approximately 2 percent, and changes in foreign currency exchange rates decreased sales by approximately 1 percent.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
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2022 filing
2023 filing
Biggest changeAs of December 31, 2022, K-C Argentina had a small net peso monetary position and a 10 percent unfavorable change in the exchange rate would not be material. As of April 1, 2022, we elected to adopt highly inflationary accounting for our operations in Turkey (“K-C Turkey”), and their functional currency is also the U.S. dollar.
Biggest changeAs of December 31, 2023, K-C Argentina had an immaterial net peso monetary position and a 10 percent unfavorable change in the exchange rate would not be material. As of April 1, 2022, we elected to adopt highly inflationary accounting for our operations in Türkiye (“K-C Türkiye ”), and their functional currency is also the U.S. dollar.
As of December 31, 2022, a 10 percent unfavorable change in the exchange rate of the U.S. dollar against the prevailing market rates of foreign currencies involving balance sheet transactional exposures would not be material to our consolidated financial position, results of operations or cash flows.
As of December 31, 2023, a 10 percent unfavorable change in the exchange rate of the U.S. dollar against the prevailing market rates of foreign currencies involving balance sheet transactional exposures would not be material to our consolidated financial position, results of operations or cash flows.
Interest Rate Risk Interest rate risk is managed through the maintenance of a portfolio of variable and fixed-rate debt composed of short and long-term instruments. The objective is to maintain a cost-effective mix that management deems appropriate. At December 31, 2022, the long-term debt portfolio was comprised of primarily fixed-rate debt.
Interest Rate Risk Interest rate risk is managed through the maintenance of a portfolio of variable and fixed-rate debt composed of short and long-term instruments. The objective is to maintain a cost-effective mix that management deems appropriate. At December 31, 2023, the long-term debt portfolio was comprised of primarily fixed-rate debt.
This hypothetical loss on transactional exposures is based on the difference between the December 31, 2022 rates and the assumed rates. 28 KIMBERLY-CLARK CORPORATION - 2022 Annual Report Our operations in Argentina ("K-C Argentina") are reported using highly inflationary accounting and their functional currency is the U.S. dollar.
This hypothetical loss on transactional exposures is based on the difference between the December 31, 2023 rates and the assumed rates. 30 KIMBERLY-CLARK CORPORATION - 2023 Annual Report Our operations in Argentina ("K-C Argentina") are reported using highly inflationary accounting and their functional currency is the U.S. dollar.
As of December 31, 2022, a 10 percent unfavorable change in the exchange rate of the U.S. dollar against the prevailing market rates of our foreign currency translation exposures would have reduced stockholders' equity by approximately $650.
As of December 31, 2023, a 10 percent unfavorable change in the exchange rate of the U.S. dollar against the prevailing market rates of our foreign currency translation exposures would have reduced stockholders' equity by approximately $600.
In addition, we are subject to price risk for utilities and manufacturing inputs, used in our manufacturing operations. Derivative instruments are used in accordance with our risk management policy to hedge a portion of the price risk. 29 KIMBERLY-CLARK CORPORATION - 2022 Annual Report
In addition, we are subject to price risk for utilities and manufacturing inputs, used in our manufacturing operations. Derivative instruments are used in accordance with our risk management policy to hedge a portion of the price risk. 31 KIMBERLY-CLARK CORPORATION - 2023 Annual Report
At December 31, 2022, a 10 percent decrease in interest rates would have increased the fair value of fixed-rate debt by about $338, which would not have a significant impact on our financial statements as we do not record debt at fair value.
At December 31, 2023, a 10 percent decrease in interest rates would have increased the fair value of unhedged fixed-rate debt by about $347, which would not have a significant impact on our financial statements as we do not record unhedged fixed-rate debt at fair value.
As of December 31, 2022, K-C Turkey had a small net lira monetary position and a 10 percent unfavorable change in the exchange rate would not be material. The translation of the balance sheets of non-U.S. operations from local currencies into U.S. dollars is also sensitive to changes in foreign currency exchange rates.
As of December 31, 2023, K-C Türkiye had an immaterial net lira monetary position and a 10 percent unfavorable change in the exchange rate would not be material. The translation of the balance sheets of non-U.S. operations from local currencies into U.S. dollars is also sensitive to changes in foreign currency exchange rates.