Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT

		Year Ended December 31
(Millions of dollars, except per share amounts)		2017				2016				2015
Net Sales		$	18,259			$	18,202			$	18,591
Cost of products sold		11,706				11,551				11,967
Gross Profit		6,553				6,651				6,624
Marketing, research and general expenses		3,227				3,326				3,443
Other (income) and expense, net		27				8				1,568
Operating Profit		3,299				3,317				1,613
Interest income		10				11				17
Interest expense		(318		)		(319		)		(295		)
Income Before Income Taxes and Equity Interests		2,991				3,009				1,335
Provision for income taxes		(776		)		(922		)		(418		)
Income Before Equity Interests		2,215				2,087				917
Share of net income of equity companies		104				132				149
Net Income		2,319				2,219				1,066
Net income attributable to noncontrolling interests		(41		)		(53		)		(53		)
Net Income Attributable to Kimberly-Clark Corporation		$	2,278			$	2,166			$	1,013
Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic		$	6.44			$	6.03			$	2.78
Diluted		$	6.40			$	5.99			$	2.77
Cash Dividends Declared		$	3.88			$	3.68			$	3.52

See notes to the consolidated financial statements.

	26	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Year Ended December 31
(Millions of dollars)		2017				2016				2015
Net Income		$	2,319			$	2,219			$	1,066
Other Comprehensive Income (Loss), Net of Tax
Unrealized currency translation adjustments		517				(107		)		(922		)
Employee postretirement benefits		118				(113		)		942
Other		(45		)		15				5
Total Other Comprehensive Income (Loss), Net of Tax		590				(205		)		25
Comprehensive Income		2,909				2,014				1,091
Comprehensive income attributable to noncontrolling interests		(76		)		(44		)		(33		)
Comprehensive Income Attributable to Kimberly-Clark Corporation		$	2,833			$	1,970			$	1,058

See notes to the consolidated financial statements.

	27	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

		December 31
(Millions of dollars)		2017				2016
ASSETS
Current Assets
Cash and cash equivalents		$	616			$	923
Accounts receivable, net		2,315				2,176
Inventories		1,790				1,679
Other current assets		490				337
Total Current Assets		5,211				5,115
Property, Plant and Equipment, Net		7,436				7,169
Investments in Equity Companies		233				257
Goodwill		1,576				1,480
Other Assets		695				581
TOTAL ASSETS		$	15,151			$	14,602
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year		$	953			$	1,133
Trade accounts payable		2,834				2,609
Accrued expenses		1,730				1,775
Dividends payable		341				329
Total Current Liabilities		5,858				5,846
Long-Term Debt		6,472				6,439
Noncurrent Employee Benefits		1,184				1,301
Deferred Income Taxes		395				532
Other Liabilities		299				309
Redeemable Preferred Securities of Subsidiaries		61				58
Stockholders' Equity
Kimberly-Clark Corporation
Preferred stock - no par value - authorized 20.0 million shares, none issued		—				—
Common stock - $1.25 par value - authorized 1.2 billion shares; issued 378.6 million shares at December 31, 2017 and 2016		473				473
Additional paid-in capital		776				697
Common stock held in treasury, at cost - 27.5 and 22.0 million shares at December 31, 2017 and 2016, respectively		(4,431		)		(3,629		)
Retained earnings		6,730				5,831
Accumulated other comprehensive income (loss)		(2,919		)		(3,474		)
Total Kimberly-Clark Corporation Stockholders' Equity (Deficit)		629				(102		)
Noncontrolling Interests		253				219
Total Stockholders' Equity		882				117
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	15,151			$	14,602

See notes to the consolidated financial statements.

	28	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Millions of dollars, shares in thousands)		Common Stock Issued							Additional Paid-in Capital				Treasury Stock							Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests
	Shares			Amount				Shares			Amount
Balance at December 31, 2014		428,597			$	536			$	632			63,261			$	(5,597	)		$	8,470			$	(3,312	)		$	270
Net income in stockholders' equity		—			—				—				—			—				1,013				—				48
Other comprehensive income, net of tax		—			—				—				—			—				—				45				(20		)
Stock-based awards exercised or vested		—			—				(47		)		(2,888	)		186				—				—				—
Income tax benefits on stock-based compensation		—			—				32				—			—				—				—				—
Shares repurchased		—			—				—				7,364			(833		)		—				—				—
Shares retired		(50,000	)		(63		)		—				(50,000	)		3,272				(3,209		)		—				—
Recognition of stock-based compensation		—			—				75				—			—				—				—				—
Dividends declared		—			—				—				—			—				(1,280		)		—				(36		)
Shares purchased from noncontrolling interest		—			—				(94		)		—			—				—				(12		)		(45		)
Other		—			—				11				—			—				—				1				(3		)
Balance at December 31, 2015		378,597			473				609				17,737			(2,972		)		4,994				(3,278		)		214
Net income in stockholders' equity		—			—				—				—			—				2,166				—				49
Other comprehensive income, net of tax		—			—				—				—			—				—				(196		)		(8		)
Stock-based awards exercised or vested		—			—				(14		)		(1,906	)		121				—				—				—
Income tax benefits on stock-based compensation		—			—				19				—			—				—				—				—
Shares repurchased		—			—				—				6,198			(778		)		—				—				—
Recognition of stock-based compensation		—			—				77				—			—				—				—				—
Dividends declared		—			—				—				—			—				(1,322		)		—				(36		)
Other		—			—				6				—			—				(7		)		—				—
Balance at December 31, 2016		378,597			473				697				22,029			(3,629		)		5,831				(3,474		)		219
Net income in stockholders' equity		—			—				—				—			—				2,278				—				36
Other comprehensive income, net of tax		—			—				—				—			—				—				555				35
Stock-based awards exercised or vested		—			—				(5		)		(1,926	)		125				—				—				—
Shares repurchased		—			—				—				7,388			(927		)		—				—				—
Recognition of stock-based compensation		—			—				76				—			—				—				—				—
Dividends declared		—			—				—				—			—				(1,371		)		—				(37		)
Other		—			—				8				—			—				(8		)		—				—
Balance at December 31, 2017		378,597			$	473			$	776			27,491			$	(4,431	)		$	6,730			$	(2,919	)		$	253

See notes to the consolidated financial statements.

	29	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENT

		Year Ended December 31
(Millions of dollars)		2017				2016				2015
Operating Activities
Net income		$	2,319			$	2,219			$	1,066
Depreciation and amortization		724				705				746
Stock-based compensation		76				77				75
Deferred income taxes		(69		)		(15		)		(255		)
Equity companies' earnings (in excess of) less than dividends paid		26				(4		)		(10		)
Operating working capital		(148		)		334				(445		)
Postretirement benefits		2				(50		)		930
Adjustments related to Venezuelan operations		—				(11		)		153
Other		(1		)		(23		)		46
Cash Provided by Operations		2,929				3,232				2,306
Investing Activities
Capital spending		(785		)		(771		)		(1,056		)
Investments in time deposits		(214		)		(221		)		(146		)
Maturities of time deposits		183				188				164
Other		(35		)		72				(12		)
Cash Used for Investing		(851		)		(732		)		(1,050		)
Financing Activities
Cash dividends paid		(1,359		)		(1,311		)		(1,272		)
Change in short-term debt		360				(908		)		303
Debt proceeds		937				1,293				1,100
Debt repayments		(1,481		)		(598		)		(553		)
Proceeds from exercise of stock options		121				107				140
Acquisitions of common stock for the treasury		(911		)		(739		)		(861		)
Shares purchased from noncontrolling interest		—				—				(151		)
Other		(88		)		(29		)		(4		)
Cash Used for Financing		(2,421		)		(2,185		)		(1,298		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		36				(11		)		(128		)
Change in Cash and Cash Equivalents		(307		)		304				(170		)
Cash and Cash Equivalents - Beginning of Year		923				619				789
Cash and Cash Equivalents - End of Year		$	616			$	923			$	619

See notes to the consolidated financial statements.

	30	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Accounting Policies

Basis of Presentation

The consolidated financial statements present the accounts of Kimberly-Clark Corporation and all subsidiaries in which it has a controlling financial interest as if they were a single economic entity in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions and accounts are eliminated in consolidation. The terms "Corporation," "Kimberly-Clark," "we," "our," and "us" refer to Kimberly-Clark Corporation and all subsidiaries in which it has a controlling financial interest. Dollar amounts are reported in millions, except per share dollar amounts, unless otherwise noted.

Use of Estimates

The preparation of financial statements 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 periods. Actual results could differ from these estimates, and changes in these estimates are recorded when known. Estimates are used in accounting for, among other things, sales incentives and trade promotion allowances, employee postretirement benefits, and deferred income taxes and potential assessments.

Cash Equivalents

Cash equivalents are short-term investments with an original maturity date of three months or less.

Inventories and Distribution Costs

Most U.S. inventories are valued at the lower of cost, using the Last-In, First-Out ("LIFO") method, or market. The balance of the U.S. inventories and inventories of consolidated operations outside the U.S. are valued at the lower of cost or net realizable value using either the First-In, First-Out ("FIFO") or weighted-average cost methods. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Distribution costs are classified as cost of products sold.

Property and Depreciation

Property, plant and equipment are stated at cost and are depreciated on the straight-line method. Buildings are depreciated over their estimated useful lives, primarily 40 years. Machinery and equipment are depreciated over their estimated useful lives, primarily ranging from 16 to 20 years. Purchases of computer software, including external costs and certain internal costs (including payroll and payroll-related costs of employees) directly associated with developing significant computer software applications for internal use, are capitalized. Computer software costs are amortized on the straight-line method over the estimated useful life of the software, which generally does not exceed 5 years.

Estimated useful lives are periodically reviewed and, when warranted, changes are made to them. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss would be indicated when estimated undiscounted future cash flows from the use and eventual disposition of an asset group, which are identifiable and largely independent of the cash flows of other asset groups, are less than the carrying amount of the asset group. Measurement of an impairment loss would be based on the excess of the carrying amount of the asset group over its fair value. Fair value is measured using discounted cash flows or independent appraisals, as appropriate. When property is sold or retired, the cost of the property and the related accumulated depreciation are removed from the consolidated balance sheet and any gain or loss on the transaction is included in income.

Goodwill and Other Intangible Assets

Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill is not amortized, but rather is assessed for impairment annually and whenever events and circumstances indicate that impairment may have occurred. Impairment testing compares the reporting unit carrying amount of goodwill with its fair value. If the reporting unit carrying amount of goodwill exceeds its fair value, an impairment charge would be recorded. In our evaluation of goodwill impairment, we have the option to first assess qualitative factors such as macroeconomic, industry and competitive conditions, legal and regulatory environments, historical and projected financial performance, significant changes in the reporting unit and

	31	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

the magnitude of excess fair value over carrying amount from the previous quantitative impairment testing. If the qualitative assessment determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative impairment test using discounted cash flows to estimate fair value must be performed. On the other hand, if the qualitative assessment determines that it is more likely than not that the fair value of a reporting unit is more than its carrying value, then further quantitative testing is not required. For 2017, 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 determined that it is more likely than not that the fair value is more than the carrying amount for each of our reporting units.

Intangible assets with finite lives are amortized over their estimated useful lives and are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss would be indicated when estimated undiscounted future cash flows from the use of the asset are less than its carrying amount. An impairment loss would be measured as the difference between the fair value (based on discounted future cash flows) and the carrying amount of the asset. Estimated useful lives range from 2 to 20 years for trademarks and 5 to 15 years for patents, developed technologies and other intangible assets.

Investments in Equity Companies

Investments in companies which we do not control but over which we have the ability to exercise significant influence and that, in general, are at least 20 percent-owned by us, are stated at cost plus equity in undistributed net income. These investments are evaluated for impairment when warranted. An impairment loss would be recorded whenever a decline in value of an equity investment below its carrying amount is determined to be other than temporary. In judging "other than temporary," we would consider the length of time and extent to which the fair value of the equity company investment has been less than the carrying amount, the near-term and longer-term operating and financial prospects of the equity company, and our longer-term intent of retaining the investment in the equity company.

Revenue Recognition

Sales revenue is recognized at the time of product shipment or delivery, depending on when title passes, to unaffiliated customers, and when all of the following have occurred: a firm sales agreement is in place, pricing is fixed or determinable, and collection is reasonably assured. Sales are reported net of returns, consumer and trade promotions, rebates and freight allowed. Taxes imposed by governmental authorities on our revenue-producing activities with customers, such as sales taxes and value-added taxes, are excluded from net sales.

Sales Incentives and Trade Promotion Allowances

The cost of promotion activities provided to customers is classified as a reduction in sales revenue. In addition, the estimated redemption value of consumer coupons is recorded at the time the coupons are issued and classified as a reduction in sales revenue. Rebate and promotion accruals are based on estimates of the quantity of customer sales. Promotion accruals also consider estimates of the number of consumer coupons that will be redeemed and timing and costs of activities within the promotional programs.

Advertising Expense

Advertising costs are expensed in the year the related advertisement or campaign is first presented by the media. For interim reporting purposes, advertising expenses are charged to operations as a percentage of sales based on estimated sales and related advertising expense for the full year.

Research Expense

Research and development costs are charged to expense as incurred.

Foreign Currency Translation

The income statements of foreign operations, other than those in highly inflationary economies, are translated into U.S. dollars at rates of exchange in effect each month. The balance sheets of these operations are translated at period-end exchange rates, and the differences from historical exchange rates are reflected in stockholders' equity as unrealized translation adjustments.

Accounting for Venezuelan Operations

Effective December 31, 2015, we deconsolidated the assets and liabilities of our business in Venezuela from our consolidated balance sheet. The change resulted in the recognition of an after tax charge of $102 in 2015 and other income of $11 related to

	32	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

an updated assessment in 2016. In addition, we recorded a non-deductible charge of $45 in 2015 related to a balance sheet remeasurement. In 2016, we wrote off our investment in K-C Venezuela and shut down operations in that country.

Derivative Instruments and Hedging

Our policies allow the use of derivatives for risk management purposes and prohibit their use for speculation. Our policies also prohibit the use of any leveraged derivative instrument. Consistent with our policies, foreign currency derivative instruments, interest rate swaps and locks, and the majority of commodity hedging contracts are entered into with major financial institutions. At inception we formally designate certain derivatives as cash flow, fair value or net investment hedges and establish how the effectiveness of these hedges will be assessed and measured. This process links the derivatives to the transactions or financial balances they are hedging. Changes in the fair value of derivatives not designated as hedging instruments are recorded in earnings as they occur. All derivative instruments are recorded as assets or liabilities on the balance sheet at fair value. Changes in the fair value of derivatives are either recorded in the income statement or other comprehensive income, as appropriate. The gain or loss on derivatives designated as fair value hedges and the offsetting loss or gain on the hedged item attributable to the hedged risk are included in income in the period that changes in fair value occur. The effective portion of the gain or loss on derivatives designated as cash flow hedges is included in other comprehensive income in the period that changes in fair value occur, and is reclassified to income in the same period that the hedged item affects income. The gain or loss on derivatives designated as hedges of investments in foreign subsidiaries is recognized in other comprehensive income to offset the change in value of the net investments being hedged. Any ineffective portion of cash flow hedges and net investment hedges is immediately recognized in income. Certain foreign-currency derivative instruments not designated as hedging instruments have been entered into to manage certain non-functional currency denominated monetary assets and liabilities. The gain or loss on these derivatives is included in income in the period that changes in their fair values occur. See Note 10 for disclosures about derivative instruments and hedging activities.

Accounting Standards - Adopted as of January 1, 2017

In 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation-Stock Compensation (Topic 718). The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We adopted this standard as of January 1, 2017. The adoption did not have a material impact on our financial position, results of operations or cash flows. Prior periods were not recast.

In 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), providing guidance on eight specific cash flow statement classification matters. We early adopted this standard as of January 1, 2017. The adoption of this standard did not have a material impact on our cash flow statement. Prior periods were not recast.

Accounting Standards Issued - Not Adopted as of December 31, 2017

In 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. In 2016, the FASB issued four amendments to the ASU. The standard is effective for public companies for annual and interim periods beginning after December 15, 2017. We adopted this ASU effective January 1, 2018. The guidance is required to be adopted on either a full or modified retrospective basis. As this standard did not have a material impact on our financial position, results of operations or cash flows on either a full or modified retrospective basis, we will not recast prior periods.

In 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The ASU is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those annual periods. The ASU is to be applied on a modified retrospective basis, recognizing the effects in retained earnings as of the beginning of the year of adoption. We adopted this standard as of January 1, 2018. The impact of this standard on our financial position, results of operations or cash flows was not material.

In 2017, the FASB issued ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The standard requires that an employer report the service cost component in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be presented in the income statement separately from the service cost component and outside of operating profit. The standard is effective for public companies for annual periods

	33	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

beginning after December 15, 2017, including interim periods within those annual periods. We adopted this standard as of January 1, 2018. Prior periods will be recast. See Note 6 for more information about the net periodic benefit cost for pensions and other postretirement benefits and related service cost for the years ended December 31, 2017, 2016 and 2015.

In 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The ASU requires additional disclosures. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The ASU requires adoption based upon a modified retrospective transition approach. We will adopt this standard as of January 1, 2019. The effects of this standard on our financial position, results of operations or cash flows are not yet known.

In 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The new standard makes more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period. The effects of this standard on our financial position, results of operations or cash flows are not yet known.

Note 2. 2014 Organization Restructuring

In 2014, we initiated a restructuring plan in order to improve organization efficiency and offset the impact of stranded overhead costs resulting from the spin-off of our health care business. The restructuring was intended to improve our underlying profitability and increase our flexibility to invest in targeted growth initiatives, brand building and other capabilities critical to delivering future growth. The restructuring impacted all of our business segments and our organizations in all major geographies.

The restructuring actions were completed by December 31, 2016, with total costs, primarily severance, of $164 after tax ($231 pre-tax). Charges were $27 and $42 after tax ($35 and $63 pre-tax) for the years ended December 31, 2016 and 2015, respectively. Cash payments of $60 and $86 were made during 2016 and 2015, respectively, related to the restructuring.

Note 3. Fair Value Information

The following fair value information is based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels in the hierarchy used to measure fair value are:

Level 1—Unadjusted quoted prices in active markets accessible at the reporting date for identical assets and liabilities.

Level 2—Quoted prices for similar assets or liabilities in active markets. Quoted prices for identical or similar assets and liabilities in markets that are not considered active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3—Prices or valuations that require inputs that are significant to the valuation and are unobservable.

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

During 2017 and 2016, there were no significant transfers among level 1, 2 or 3 fair value determinations.

Derivative assets and liabilities are measured on a recurring basis at fair value. At December 31, 2017 and 2016, derivative assets were $27 and $43, respectively, and derivative liabilities were $51 and $46, respectively. The fair values of derivatives used to manage interest rate risk and commodity price risk are based on LIBOR rates and interest rate swap curves and NYMEX price quotations, respectively. The fair values of hedging instruments used to manage foreign currency risk are based on published quotations of spot currency rates and forward points, which are converted into implied forward currency rates. Measurement of our derivative assets and liabilities is considered a level 2 measurement. See Note 10 for additional information on our use of derivative instruments.

Redeemable preferred securities of subsidiaries are measured on a recurring basis at fair value and were $61 and $58 at December 31, 2017 and 2016, respectively. They are not traded in active markets. For certain redeemable securities, fair values were calculated using a floating rate pricing model that compared the stated spread to the fair value spread to determine the price at

	34	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

which each of the financial instruments should trade. The model used the following inputs to calculate fair values: face value, current LIBOR rate, unobservable fair value credit spread, stated spread, maturity date and interest or dividend payment dates. The fair value of the remaining redeemable securities was based on various inputs, including an independent third-party appraisal, adjusted for current market conditions. Measurement of the redeemable preferred securities is considered a level 3 measurement.

Company-owned life insurance ("COLI") assets are measured on a recurring basis at fair value. COLI assets were $68 and $61 at December 31, 2017 and 2016, respectively. The COLI policies are a source of funding primarily for our nonqualified employee benefits and are included in other assets. The COLI policies are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy.

The following table includes the fair value of our financial instruments for which disclosure of fair value is required:

	Fair Value Hierarchy Level		Carrying Amount				Estimated Fair Value				Carrying Amount				Estimated Fair Value
		December 31, 2017								December 31, 2016
Assets
Cash and cash equivalents(a)	1		$	616			$	616			$	923			$	923
Time deposits and other(b)	1		185				185				138				138
Liabilities
Short-term debt(c)	2		547				547				170				170
Long-term debt(d)	2		6,878				7,398				7,402				7,886

(a)	Cash equivalents are composed of certificates of deposit, time deposits and other interest-bearing investments with original maturity dates of 90 days or less. Cash equivalents are recorded at cost, which approximates fair value.

(b)	Time deposits are composed of deposits with original maturities of more than 90 days but less than one year and instruments with original maturities of greater than one year, included in other current assets or other assets in the consolidated balance sheet, as appropriate. Time deposits are recorded at cost, which approximates fair value.

(c)	Short-term debt is composed of U.S. commercial paper and/or other similar short-term debt issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.

(d)	Long-term debt includes the current portion of these debt instruments. Fair values were estimated based on quoted prices for financial instruments for which all significant inputs were observable, either directly or indirectly.

Note 4. Debt and Redeemable Preferred Securities of Subsidiaries

Long-term debt is composed of the following:

	Weighted- Average Interest Rate		Maturities		December 31
	2017				2016
Notes and debentures	3.7%		2018 - 2047		$	6,577			$	7,101
Industrial development revenue bonds	1.6%		2018 - 2045		264				264
Bank loans and other financings in various currencies	7.3%		2018 - 2028		37				37
Total long-term debt					6,878				7,402
Less current portion					406				963
Long-term portion					$	6,472			$	6,439

Scheduled maturities of long-term debt for the next five years are $407 in 2018, $714 in 2019, $760 in 2020, $251 in 2021 and $298 in 2022.

In December 2017, we redeemed $500 aggregate principal amount of 7.50% notes originally due November 1, 2018. As a result, we recognized a charge of $24 in other (income) and expense, net.

In September 2017, we issued €500 aggregate principal amount of 0.625% notes due September 7, 2024. Proceeds from the offering were used to repay a portion of our outstanding commercial paper indebtedness.

	35	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

In May 2017, we issued $350 aggregate principal amount of 3.90% notes due May 4, 2047. Proceeds from the offering were used for general corporate purposes, including repayment of a portion of our outstanding commercial paper indebtedness.

In July 2016, we issued $500 aggregate principal amount of 3.20% notes due July 30, 2046. Proceeds from the offering were used for general corporate purposes, including repayment of a portion of our outstanding commercial paper indebtedness.

In February 2016, we issued $400 aggregate principal amount of 1.40% notes due February 15, 2019 and $400 aggregate principal amount of 2.75% notes due February 15, 2026. Proceeds from the offering were used for general corporate purposes, including repayment of a portion of our outstanding notes and commercial paper indebtedness.

In August 2015, we issued $250 aggregate principal amount of 2.15% notes due August 2020 and $300 aggregate principal amount of 3.05% notes due August 2025. Proceeds from the offering were used to repay $300 of notes due in August 2015 and to pay down a portion of our outstanding commercial paper balance.

In February 2015, we issued $250 aggregate principal amount of 1.85% notes due March 2020 and $250 aggregate principal amount of 2.65% notes due March 2025. Proceeds from the offering were used for general corporate purposes, including pension contribution payments.

We maintain a $2.0 billion revolving credit facility which expires in 2021. This facility, currently unused, supports our commercial paper program, and would provide liquidity in the event our access to the commercial paper markets is unavailable for any reason.

Our subsidiary in Central America has outstanding redeemable preferred securities that are held by a noncontrolling interest and another noncontrolling interest holds certain redeemable preferred securities issued by one of our subsidiaries in North America.

Note 5. Stock-Based Compensation

We have a stock-based Equity Participation Plan and an Outside Directors' Compensation Plan (the "Plans"), under which we can grant stock options, restricted shares and restricted share units to employees and outside directors. As of December 31, 2017, the number of shares of common stock available for grants under the Plans aggregated 16 million shares.

Stock options are granted at an exercise price equal to the fair market value of our common stock on the date of grant, and they have a term of 10 years. Stock options are subject to graded vesting whereby options vest 30 percent at the end of each of the first two 12-month periods following the grant and 40 percent at the end of the third 12-month period.

Restricted shares, time-vested restricted share units and performance-based restricted share units granted to employees are valued at the closing market price of our common stock on the grant date and vest generally at the end of three years. The number of performance-based share units that ultimately vest ranges from zero to 200 percent of the number granted, based on performance tied to return on invested capital ("ROIC") and net sales during the three-year performance period. ROIC and net sales targets are set at the beginning of the performance period. Restricted share units granted to outside directors are valued at the closing market price of our common stock on the grant date and vest when they are granted. The restricted period begins on the date of grant and expires on the date the outside director retires from or otherwise terminates service on our Board.

At the time stock options are exercised or restricted shares and restricted share units become payable, common stock is issued from our accumulated treasury shares. Dividend equivalents are credited on restricted share units on the same date and at the same rate as dividends are paid on Kimberly-Clark's common stock. These dividend equivalents, net of estimated forfeitures, are charged to retained earnings.

Stock-based compensation costs of $76, $77 and $75 and related deferred income tax benefits of $26, $28 and $29 were recognized for 2017, 2016 and 2015, respectively.

The fair value of stock option awards was determined using a Black-Scholes-Merton option-pricing model utilizing a range of assumptions related to dividend yield, volatility, risk-free interest rate, and employee exercise behavior. Dividend yield is based on historical experience and expected future dividend actions. Expected volatility is based on a blend of historical volatility and implied volatility from traded options on Kimberly-Clark's common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. We estimate forfeitures based on historical data.

	36	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

The weighted-average fair value of options granted was estimated at $12.21, $10.95 and $7.39, in 2017, 2016 and 2015, respectively, per option on the date of grant based on the following assumptions:

	Year Ended December 31
	2017			2016			2015
Dividend yield	3.2	%		3.1	%		3.5	%
Volatility	15.6	%		16.0	%		13.4	%
Risk-free interest rate	1.8	%		1.2	%		1.5	%
Expected life - years	4.6			4.6			4.8

Total remaining unrecognized compensation costs and amortization period are as follows:

	December 31, 2017				Weighted-Average Service Years
Nonvested stock options	$	12			1.3
Restricted shares and time-vested restricted share units	6				1.8
Nonvested performance-based restricted share units	45				1.8

A summary of stock-based compensation is presented below:

Stock Options	Shares (in thousands)			Weighted-Average Exercise Price				Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2017	6,793			$	101.16
Granted	1,605			132.77
Exercised	(1,323	)		91.04
Forfeited or expired	(387	)		119.49
Outstanding at December 31, 2017	6,688			109.69				7.61		$	100
Exercisable at December 31, 2017	3,711			95.93				5.97		$	94

The total intrinsic value of options exercised during 2017, 2016 and 2015 was $48, $55 and $83, respectively.

	Time-Vested Restricted Share Units							Performance-Based Restricted Share Units
Other Stock-Based Awards	Shares (in thousands)			Weighted- Average Grant-Date Fair Value				Shares (in thousands)			Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2017	111			$	117.63			1,642			$	116.53
Granted	73			116.98				628			131.68
Vested	(72	)		108.86				(544	)		112.16
Forfeited	(10	)		119.08				(164	)		119.84
Nonvested at December 31, 2017	102			123.19				1,562			123.97

The total fair value of restricted share units that were distributed to participants during 2017, 2016 and 2015 was $80, $83 and $99, respectively.

Note 6. Employee Postretirement Benefits

Substantially all regular employees in the U.S. and the United Kingdom are covered by defined benefit pension plans (the "Principal Plans") and/or defined contribution retirement plans. Certain other subsidiaries have defined benefit pension plans or, in certain countries, termination pay plans covering substantially all regular employees. The funding policy for our qualified defined benefit pension plans is to contribute assets at least equal in amount to regulatory minimum requirements. Nonqualified U.S. plans providing pension benefits in excess of limitations imposed by the U.S. income tax code are not funded.

	37	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Substantially all U.S. retirees and employees have access to our unfunded health care and life insurance benefit plans. The annual increase in the consolidated weighted-average health care cost trend rate is expected to be 6.0 percent in 2018 and to decline to 4.6 percent in 2028 and thereafter. Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans. A one-percentage-point change in assumed health care trend rates would not have a significant effect on our financial results.

Effective January 2015, the U.S. pension plan was amended to include a lump-sum pension benefit payout option for certain plan participants. In addition, in April 2015, the U.S. pension plan completed the purchase of group annuity contracts that transferred to two insurance companies the pension benefit obligations totaling $2.5 billion for approximately 21,000 Kimberly-Clark retirees in the U.S. As a result of these changes, we recognized pension settlement-related charges of $0.8 billion after tax ($1.4 billion pre-tax in other (income) and expense, net) during 2015. In 2015, we made cash contributions of $410 related to these changes to the U.S. plan.

Summarized financial information about postretirement plans, excluding defined contribution retirement plans, is presented below:

	Pension Benefits								Other Benefits
	Year Ended December 31
	2017				2016				2017				2016
Change in Benefit Obligation
Benefit obligation at beginning of year	$	4,126			$	3,959			$	758			$	717
Service cost	41				42				12				11
Interest cost	129				148				32				33
Actuarial loss	20				501				16				41
Currency and other	221				(304		)		(3		)		9
Benefit payments from plans	(218		)		(202		)		—				—
Direct benefit payments	(8		)		(15		)		(50		)		(53		)
Settlements	(15		)		(3		)		—				—
Benefit obligation at end of year	4,296				4,126				765				758
Change in Plan Assets
Fair value of plan assets at beginning of year	3,534				3,508				—				—
Actual return on plan assets	333				413				—				—
Employer contributions	53				108				—				—
Currency and other	204				(290		)		—				—
Benefit payments	(218		)		(202		)		—				—
Settlements	(9		)		(3		)		—				—
Fair value of plan assets at end of year	3,897				3,534				—				—
Funded Status	$	(399	)		$	(592	)		$	(765	)		$	(758	)

Substantially all of the funded status of pension and other benefits is recognized in the consolidated balance sheet in noncurrent employee benefits, with the remainder recognized in accrued expenses and other assets.

	38	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Information for the Principal Plans and All Other Pension Plans

	Principal Plans								All Other Pension Plans								Total
	Year Ended December 31
	2017				2016				2017				2016				2017				2016
Projected benefit obligation (“PBO”)	$	3,567			$	3,427			$	729			$	699			$	4,296			$	4,126
Accumulated benefit obligation (“ABO”)	3,513				3,378				658				622				4,171				4,000
Fair value of plan assets	3,312				3,011				585				523				3,897				3,534

Approximately one-half of the PBO and fair value of plan assets for the Principal Plans relate to the U.S. qualified and nonqualified pension plans.

Information for Pension Plans with an ABO in Excess of Plan Assets

	December 31
	2017				2016
PBO	$	2,146			$	3,807
ABO	2,134				3,736
Fair value of plan assets	1,699				3,243

Components of Net Periodic Benefit Cost

	Pension Benefits												Other Benefits
	Year Ended December 31
	2017				2016				2015				2017				2016				2015
Service cost	$	41			$	42			$	38			$	12			$	11			$	12
Interest cost	129				148				187				32				33				32
Expected return on plan assets(a)	(156		)		(158		)		(215		)		—				—				—
Recognized net actuarial loss	57				52				75				1				—				—
Settlements	7				1				1,357				—				—				—
Other	(9		)		(9		)		(10		)		(2		)		(1		)		(1		)
Net periodic benefit cost	$	69			$	76			$	1,432			$	43			$	43			$	43

(a)	The expected return on plan assets is determined by multiplying the fair value of plan assets at the remeasurement date, typically the prior year-end adjusted for estimated current year cash benefit payments and contributions, by the expected long-term rate of return.

Weighted-Average Assumptions Used to Determine Net Cost for Years Ended December 31

	Pension Benefits												Other Benefits
	Projected 2018			2017			2016			2015			2017			2016			2015
Discount rate	3.10	%		3.19	%		3.91	%		3.86	%		4.29	%		4.59	%		4.28	%
Expected long-term return on plan assets	4.54	%		4.46	%		4.84	%		5.21	%		—			—			—
Rate of compensation increase	2.27	%		2.29	%		2.32	%		2.63	%		—			—			—

	39	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Weighted-Average Assumptions Used to Determine Benefit Obligations at December 31

	Pension Benefits						Other Benefits
	2017			2016			2017			2016
Discount rate	3.10	%		3.19	%		3.91	%		4.29	%
Rate of compensation increase	2.27	%		2.29	%		—			—

Investment Strategies for the Principal Plans

Strategic asset allocation decisions are made considering several risk factors, including plan participants' retirement benefit security, the estimated payments of the associated liabilities, the plan funded status, and Kimberly-Clark's financial condition. The resulting strategic asset allocation is a diversified blend of equity and fixed income investments. Equity investments are typically diversified across geographies and market capitalization. Fixed income investments are diversified across multiple sectors including government issues and corporate debt instruments with a portfolio duration that is consistent with the estimated payment of the associated liability. Actual asset allocation is regularly reviewed and periodically rebalanced to the strategic allocation when considered appropriate. Our 2018 target plan asset allocation for the Principal Plans is 70 percent fixed income securities and 30 percent equity securities.

The expected long-term rate of return is evaluated on an annual basis. In setting this assumption, we consider a number of factors including projected future returns by asset class relative to the current asset allocation. The weighted-average expected long-term rate of return on pension fund assets used to calculate pension expense for the Principal Plans was 4.72 percent in 2017, 5.10 percent in 2016 and 5.35 percent in 2015, and will be 4.81 percent in 2018.

	40	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Set forth below are the pension plan assets of the Principal Plans measured at fair value, by level in the fair-value hierarchy. More than 70 percent of the assets are held in pooled funds and are measured using a net asset value (or its equivalent). Accordingly, such assets do not meet the Level 1, Level 2, or Level 3 criteria of the fair value hierarchy.

	Fair Value Measurements at December 31, 2017(a)
	Total Plan Assets				Assets at Quoted Prices in Active Markets for Identical Assets (Level 1)				Assets at Significant Unobservable Inputs (Level 3)
Cash and Cash Equivalents
Held directly	$	28			$	28			$	—
Held through mutual and pooled funds measured at net asset value	24				—				—
Fixed Income
Held directly
U.S. government and municipals	522				522				—
Held through mutual and pooled funds measured at net asset value
U.S. government and municipals	150				—				—
U.S. corporate debt	686				—				—
International bonds	665				—				—
Equity
Held directly
U.S. equity	41				41				—
International equity	47				47				—
Held through mutual and pooled funds measured at net asset value
Non-U.S. equity	85				—				—
Global equity	730				—				—
Insurance Contracts	334				—				334
Total Plan Assets	$	3,312			$	638			$	334

(a)	There were no plan assets measured at Level 2.

For the U.S. pension plan, Treasury futures contracts are used when appropriate to manage duration targets. As of December 31, 2017 and 2016, the U.S. plan had Treasury futures contracts in place with a total notional value of approximately $138 and $216, respectively, and an insignificant fair value. During 2017 and 2016, the plan assets did not include a significant amount of Kimberly-Clark common stock.

	41	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

	Fair Value Measurements at December 31, 2016(a)
	Total Plan Assets				Assets at Quoted Prices in Active Markets for Identical Assets (Level 1)
Cash and Cash Equivalents
Held directly	$	33			$	33
Held through mutual and pooled funds measured at net asset value	17				—
Fixed Income
Held directly
U.S. government and municipals	122				122
Held through mutual and pooled funds measured at net asset value
U.S. government and municipals	128				—
U.S. corporate debt	648				—
International bonds	1,223				—
Equity
Held directly
U.S. equity	41				41
International equity	44				44
Held through mutual and pooled funds measured at net asset value
Non-U.S. equity	68				—
Global equity	687				—
Total Plan Assets	$	3,011			$	240

(a)	There were no plan assets measured at Level 2 or Level 3.

Inputs and valuation techniques used to measure the fair value of plan assets vary according to the type of security being valued. Substantially all of the equity securities held directly by the plans are actively traded and fair values are determined based on quoted market prices. Fair values of U.S. Treasury securities are determined based on trading activity in the marketplace.

Fair values of U.S. corporate debt, U.S. securitized fixed income and international bonds are typically determined by reference to the values of similar securities traded in the marketplace and current interest rate levels. Multiple pricing services are typically employed to assist in determining these valuations.

Fair values of equity securities and fixed income securities held through units of pooled funds are based on net asset value of the units of the pooled fund determined by the fund manager. Pooled funds are similar in nature to retail mutual funds, but are typically more efficient for institutional investors. The fair value of pooled funds is determined by the value of the underlying assets held by the fund and the units outstanding.

Equity securities held directly by the pension trusts and those held through units in pooled funds are monitored as to issuer and industry. Except for U.S. Treasuries, concentrations of fixed income securities are similarly monitored for concentrations by issuer and industry. As of December 31, 2017, there were no significant concentrations of equity or debt securities in any single issuer or industry.

No level 3 transfers (in or out) were made in 2017 or 2016, other than an insurance contract purchase in 2017. Fair values of insurance contracts are based on an evaluation of various factors, including purchase price.

	42	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

We expect to contribute up to $100 to our defined benefit pension plans in 2018. Over the next ten years, we expect that the following gross benefit payments will occur:

	Pension Benefits				Other Benefits
2018	$	245			$	58
2019	259				60
2020	263				60
2021	261				62
2022	272				63
2023-2027	1,322				299

Defined Contribution Pension Plans

Our 401(k) profit sharing plan and supplemental plan provide for a matching contribution of a U.S. employee's contributions and accruals, subject to predetermined limits, as well as a discretionary profit sharing contribution, in which contributions will be based on our profit performance. We also have defined contribution pension plans for certain employees outside the U.S. Costs charged to expense for our defined contribution pension plans were $128 in 2017, $126 in 2016, and $107 in 2015. Approximately one-fourth of these costs were for plans outside the U.S.

Note 7. Stockholders' Equity

The changes in the components of accumulated other comprehensive income ("AOCI") attributable to Kimberly-Clark, net of tax, are as follows:

		Unrealized Translation				Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Cash Flow Hedges and Other
Balance as of December 31, 2015		$	(2,252	)		$	(1,013	)		$	(3	)		$	(10	)
Other comprehensive income (loss) before reclassifications		(99		)		(115		)		(27		)		33
(Income) loss reclassified from AOCI		—				31			(a)	(1		)	(a)	(18		)
Net current period other comprehensive income (loss)		(99		)		(84		)		(28		)		15
Balance as of December 31, 2016		(2,351		)		(1,097		)		(31		)		5
Other comprehensive income (loss) before reclassifications		487				85				(7		)		(56		)
(Income) loss reclassified from AOCI		—				36			(a)	(1		)	(a)	11
Net current period other comprehensive income (loss)		487				121				(8		)		(45		)
Balance as of December 31, 2017		$	(1,864	)		$	(976	)		$	(39	)		$	(40	)

(a)	Included in computation of net periodic pension and other postretirement benefits costs (see Note 6).

Included in the defined benefit pension plans and other postretirement benefit plans balances as of December 31, 2017 is $1,050 and $35 of unrecognized net actuarial loss and unrecognized net prior service credit, respectively, of which $50 and $10 pre-tax, respectively, are expected to be recognized as a component of net periodic benefit cost in 2018.

	43	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

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

	Year Ended December 31
	2017				2016				2015
Unrealized translation	$	398			$	(88	)		$	(882	)
Tax effect	89				(11		)		(23		)
	487				(99		)		(905		)
Defined benefit pension plans
Unrecognized net actuarial loss and transition amount
Funded status recognition	159				(230		)		(4		)
Amortization included in net periodic benefit cost	63				52				75
2015 U.S. plan settlements (recorded in Other (income) and expense, net)	—				—				1,355
Currency and other	(66		)		81				42
	156				(97		)		1,468
Unrecognized prior service cost/credit
Funded status recognition	2				(1		)		4
Amortization included in net periodic benefit cost	(8		)		(8		)		(12		)
Currency and other	3				(6		)		(2		)
	(3		)		(15		)		(10		)
Tax effect	(32		)		28				(547		)
	121				(84		)		911
Other postretirement benefit plans
Unrecognized net actuarial loss and transition amount and other	(11		)		(45		)		55
Tax effect	3				17				(21		)
	(8		)		(28		)		34
Cash flow hedges and other
Recognition of effective portion of hedges	(76		)		44				66
Amortization included in net income	18				(20		)		(53		)
Currency and other	(2		)		(4		)		(7		)
Tax effect	15				(5		)		(1		)
	(45		)		15				5
Other	—				—				(11		)
Change in AOCI	$	555			$	(196	)		$	34

Amounts are reclassified from AOCI into cost of products sold, marketing, research and general expenses, interest expense or other (income) and expense, net, as applicable, in the consolidated income statement.

Net unrealized currency gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries, except those in highly inflationary economies, are recorded in AOCI. For these operations, changes in exchange rates generally do not affect cash flows; therefore, unrealized translation adjustments are recorded in AOCI rather than net income. Upon sale or substantially complete liquidation of any of these subsidiaries, the applicable unrealized translation adjustment would be removed from AOCI and reported as part of the gain or loss on the sale or liquidation. The change in unrealized translation in 2017 is primarily due to the strengthening of most foreign currencies versus the U.S. dollar, including the euro, South Korean won, British pound sterling, and Australian dollar. Also included in unrealized translation amounts are the effects of foreign exchange rate changes on intercompany balances of a long-term investment nature and transactions designated as hedges of net foreign investments.

	44	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

During 2015, we acquired the remaining 49.9 percent interest in our subsidiary in Israel, Hogla-Kimberly, Ltd., for $151. As our subsidiary in Turkey was wholly-owned by our subsidiary in Israel, through this acquisition we also effectively acquired the remaining 49.9 percent interest in our subsidiary in Turkey, Kimberly-Clark Tuketim Mallari Sanayi ve Ticaret A.s.

Note 8. Leases and Commitments

We have entered into operating leases for certain facilities, automobiles and equipment. The future minimum obligations under operating leases having a noncancelable term in excess of one year are as follows:

	Year Ending December 31
2018	$	170
2019	130
2020	99
2021	65
2022	48
Thereafter	98
Future minimum obligations	$	610

Consolidated rental expense under operating leases was $281, $271 and $279 in 2017, 2016 and 2015, respectively.

We have entered into long-term contracts for the purchase of superabsorbent materials, pulp and certain utilities. Commitments under these contracts based on current prices are $699 in 2018, $206 in 2019, $204 in 2020, $8 in 2021, $5 in 2022, and $51 beyond the year 2022.

Although we are primarily liable for payments on the above-mentioned leases and purchase commitments, our exposure to losses, if any, under these arrangements is not material.

Note 9. Legal Matters

We are subject to various legal proceedings, claims and governmental inquiries, inspections, audits or investigations pertaining to issues such as contract disputes, product liability, tax matters, patents and trademarks, advertising, pricing, business practices, governmental regulations, employment and other matters. Although the results of litigation and claims cannot be predicted with certainty, we believe that the ultimate disposition of these matters, to the extent not previously provided for, will not have a material adverse effect, individually or in the aggregate, on our business, financial condition, results of operations or liquidity.

We are subject to federal, state and local environmental protection laws and regulations with respect to our business operations and are operating in compliance with, or taking action aimed at ensuring compliance with, these laws and regulations. We have been named a potentially responsible party under the provisions of the U.S. federal Comprehensive Environmental Response, Compensation and Liability Act, or analogous state statutes, at a number of sites where hazardous substances are present. None of our compliance obligations with environmental protection laws and regulations, individually or in the aggregate, is expected to have a material adverse effect on our business, liquidity, financial condition or results of operations.

Note 10. Objectives and Strategies for Using Derivatives

As a multinational enterprise, we are exposed to financial risks, such as changes in foreign currency exchange rates, interest rates, and commodity prices. We employ a number of practices to manage these risks, including operating and financing activities and, where appropriate, the use of derivative instruments. We enter into derivative instruments to hedge a portion of forecasted cash flows denominated in foreign currencies for non-U.S. operations' purchases of raw materials, which are priced in U.S. dollars, and imports of intercompany finished goods and work-in-process priced predominantly in U.S. dollars and euros. The derivative instruments used to manage these exposures are designated and qualify as cash flow hedges. The foreign currency exposure on certain non-functional currency denominated monetary assets and liabilities, primarily intercompany loans and accounts payable, is hedged with primarily undesignated derivative instruments.

Interest rate risk is managed using a portfolio of variable and fixed-rate debt composed of short and long-term instruments. Interest rate swap contracts may be used to facilitate the maintenance of the desired ratio of variable and fixed-rate debt and are designated

	45	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

and qualify as fair value hedges. From time to time, we also hedge the anticipated issuance of fixed-rate debt and those contracts are designated as cash flow hedges.

We use derivative instruments, such as forward swap contracts, to hedge a limited portion of our exposure to market risk arising from changes in prices of certain commodities. These derivatives are designated as cash flow hedges of specific quantities of the underlying commodity expected to be purchased in future months.

Translation adjustments result from translating foreign entities' financial statements into U.S. dollars from their functional currencies. The risk to any particular entity's net assets is reduced to the extent that the entity is financed with local currency borrowings. A portion of our balance sheet translation exposure for certain affiliates, which results from changes in translation rates between the affiliates’ functional currencies and the U.S. dollar, is hedged with financial instruments. These instruments are designated as net investment hedges and have an aggregate notional value of $870 at December 31, 2017. Changes in fair value of net investment hedges are recorded in AOCI as part of the cumulative translation adjustment.

At December 31, 2017 and 2016, derivative assets were $27 and $43, respectively, and derivative liabilities were $51 and $46, respectively, primarily comprised of foreign currency exchange contracts.

The derivative assets are included in the consolidated balance sheet in other current assets and other assets, as appropriate. The derivative liabilities are included in the consolidated balance sheet in accrued expenses and other liabilities, as appropriate.

Derivative instruments that are designated and qualify as fair value hedges are predominantly used to manage interest rate risk. The fair values of these derivative instruments are recorded as an asset or liability, as appropriate, with the offset recorded in current earnings. The offset to the change in fair values of the related hedged items also is recorded in current earnings. Any realized gain or loss on the derivatives that hedge interest rate risk is amortized to interest expense over the life of the related debt. At December 31, 2017, the aggregate notional values of outstanding interest rate contracts designated as fair value hedges were $300. Fair value hedges resulted in no significant ineffectiveness in each of the three years ended December 31, 2017, and gains or losses recognized in interest expense were not significant. For each of the three years ended December 31, 2017, no gain or loss was recognized in earnings as a result of a hedged firm commitment no longer qualifying as a fair value hedge.

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is initially recorded in AOCI, net of related income taxes, and recognized in earnings in the same period that the hedged exposure affects earnings. As of December 31, 2017, outstanding commodity forward contracts were in place to hedge a limited portion of our estimated requirements of the related underlying commodities in 2018 and future periods. As of December 31, 2017, the aggregate notional values of outstanding foreign exchange and interest rate derivative contracts designated as cash flow hedges were $795 and $200, respectively. Cash flow hedges resulted in no significant ineffectiveness in each of the three years ended December 31, 2017, and no gains or losses were reclassified into earnings as a result of the discontinuance of cash flow hedges due to the original forecast transaction no longer being probable of occurring. At December 31, 2017, amounts to be reclassified from AOCI during the next twelve months are not expected to be material. The maximum maturity of cash flow hedges in place at December 31, 2017 is January 2020.

Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in other (income) and expense, net. A gain of $37 and losses of $30 and $188 were recorded in the years ending December 31, 2017, 2016 and 2015, respectively. The effect on earnings from the use of these non-designated derivatives is substantially neutralized by the transactional gains and losses recorded on the underlying assets and liabilities. At December 31, 2017, the notional amount of these undesignated derivative instruments was approximately $2.4 billion.

Note 11. Income Taxes

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code which impacted 2017 including, but not limited to, reducing the U.S. federal corporate tax rate and requiring a one-time transition tax on certain undistributed earnings of foreign subsidiaries.

The Tax Act also puts in place new tax laws that will apply prospectively, which include, but are not limited to, (1) implementing a base erosion and anti-abuse tax, (2) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (3) a new provision designed to tax currently in the U.S. global intangible low-taxed income ("GILTI") of foreign subsidiaries, which

	46	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

allows for the possibility of utilizing foreign tax credits to offset the income tax liability (subject to some limitations), and (4) a lower effective U.S. tax rate on certain revenues from sources outside the U.S.

GAAP requires the impact of tax legislation to be recorded in the period of enactment. Therefore, in connection with our initial analysis of the impact of the Tax Act, we recorded a discrete net tax expense of $76 in the period ended December 31, 2017. This amount consists of a net expense of $278 for the transition tax and a net benefit of $202 for the remeasurement of deferred taxes associated with the corporate rate reduction and our reassessment of permanently reinvested earnings. In addition, we recorded a net benefit of $152 for certain tax planning actions that were taken in the fourth quarter of 2017 in anticipation of the enactment of the Tax Act.

Other than the item noted below, we were able to make reasonable estimates of the impact of the Tax Act and have recorded provisional amounts for the transition tax, the remeasurement of deferred taxes, and our reassessment of permanently reinvested earnings, uncertain tax positions and valuation allowances. These estimates may be impacted by the need for further analysis and future clarification and guidance regarding available tax accounting methods and elections, earnings and profits computations, state tax conformity to federal tax changes and the impact of prospective tax related to the GILTI provisions.

At December 31, 2017, we were not able to reasonably estimate and, therefore, have not recorded deferred taxes for the GILTI provisions. We have not yet determined our policy election with respect to whether to record deferred taxes for basis differences expected to reverse as a result of the GILTI provisions in future years, or in the period in which that tax was incurred.

An analysis of the provision for income taxes follows:

	Year Ended December 31
	2017				2016				2015
Current income taxes
United States	$	463			$	523			$	223
State	52				53				56
Other countries	330				361				394
Total	845				937				673
Deferred income taxes
United States	(68		)		(40		)		(180		)
State	(3		)		31				(74		)
Other countries	2				(6		)		(1		)
Total	(69		)		(15		)		(255		)
Total provision for income taxes	$	776			$	922			$	418

Income before income taxes is earned in the following tax jurisdictions:

	Year Ended December 31
	2017				2016				2015
United States	$	1,995			$	2,088			$	451
Other countries	996				921				884
Total income before income taxes	$	2,991			$	3,009			$	1,335

	47	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Deferred income tax assets and liabilities are composed of the following:

		December 31
		2017				2016
Deferred tax assets
Pension and other postretirement benefits		$	312			$	499
Tax credits and loss carryforwards		470				450
Derivatives and unrealized exchange gains and losses		63				32
Share based compensation		47				86
Other		308				480
		1,200				1,547
Valuation allowances		(176		)		(225		)
Total deferred tax assets		1,024				1,322
Deferred tax liabilities
Property, plant and equipment, net		818				1,079
Investments in subsidiaries		117				190
Goodwill		83				83
Other		186				268
Total deferred tax liabilities		1,204				1,620
Net deferred tax assets (liabilities)		$	(180	)		$	(298	)

Valuation allowances at the end of 2017 primarily relate to tax credits, capital loss carryforwards, and income tax loss carryforwards of $743. If these items are not utilized against taxable income, $481 of the income tax loss carryforwards will expire from 2018 through 2037. The remaining $262 have no expiration date.

Realization of income tax loss carryforwards is dependent on generating sufficient taxable income prior to expiration of these carryforwards. Although realization is not assured, we believe it is more likely than not that all of the deferred tax assets, net of applicable valuation allowances, will be realized. The amount of the deferred tax assets considered realizable could be reduced or increased due to changes in the tax environment or if estimates of future taxable income change during the carryforward period.

Presented below is a reconciliation of the income tax provision computed at the U.S. federal statutory tax rate to the actual effective tax rate:

	Year Ended December 31
	2017			2016			2015
U.S. statutory rate applied to income before income taxes	35.0	%		35.0	%		35.0	%
Rate of state income taxes, net of federal tax benefit	1.1			1.8			(0.9	)
Statutory rates other than U.S. statutory rate	(3.1	)		(2.7	)		(6.9	)
Venezuela deconsolidation, balance sheet remeasurement and inflationary impacts	—			(0.1	)		4.5
Uncertain tax positions adjustment(a)	—			—			3.7
Routine tax incentives	(2.7	)		(4.0	)		(7.4	)
Net tax (benefit) cost on foreign income	(0.7	)		0.1			5.1
Net impact of the Tax Act	(2.5	)		—			—
Other - net(b)	(1.2	)		0.5			(1.8	)
Effective income tax rate	25.9	%		30.6	%		31.3	%

(a)	In 2015, we updated our assessment of uncertain tax positions for certain international operations and as a result we recorded an immaterial income tax charge of $49 related to prior years.

(b)	Other - net is composed of numerous items, none of which is greater than 1.75 percent of income before income taxes.

Prior to the Tax Act, we considered essentially all historical earnings in our non-U.S. subsidiaries to be indefinitely reinvested, except related to certain equity investments, and, accordingly, recorded insignificant deferred income taxes. Prior to the transition

	48	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

tax, we had an excess of the amount for financial reporting over the tax basis in our foreign subsidiaries. While the transition tax resulted in the reduction of the excess of the amount for financial reporting over the tax basis in our foreign subsidiaries, an actual repatriation from our non-U.S. subsidiaries could be subject to additional foreign and U.S. state income taxes.

Deferred taxes have been recorded for foreign and U.S. state income taxes on $1.0 billion of earnings of foreign consolidated subsidiaries expected to be repatriated. We do not intend to distribute $4.5 billion of earnings of foreign consolidated subsidiaries taxed as part of the transition tax and have not recorded any deferred taxes related to such amounts for foreign and U.S. state income taxes. We consider any excess of the amount for financial reporting over the tax basis of our investment in our foreign subsidiaries to be indefinitely reinvested. At this time, the determination of deferred tax liabilities on this amount is not practicable.

Presented below is a reconciliation of the beginning and ending amounts of unrecognized income tax benefits:

	2017				2016				2015
Balance at January 1	$	321			$	406			$	416
Gross increases for tax positions of prior years	50				20				80
Gross decreases for tax positions of prior years	(23		)		(104		)		(61		)
Gross increases for tax positions of the current year	37				39				59
Settlements	(19		)		(29		)		(63		)
Other	(12		)		(11		)		(25		)
Balance at December 31	$	354			$	321			$	406

Of the amounts recorded as unrecognized tax benefits at December 31, 2017, $297 would reduce our effective tax rate if recognized.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During each of the three years ended December 31, 2017, the net impact in interest and penalties was not significant. Total accrued penalties and net accrued interest was $35 and $47 at December 31, 2017 and 2016, respectively.

It is reasonably possible that a number of uncertainties could be resolved within the next 12 months. The aggregate resolution of the uncertainties could be up to $220, while none of the uncertainties is individually significant. Resolution of these matters is not expected to have a material effect on our financial condition, results of operations or liquidity.

As of December 31, 2017, the following tax years remain subject to examination for the major jurisdictions where we conduct business:

Jurisdiction	Years
United States	2014 to 2017
United Kingdom	2012 to 2017
Brazil	2012 to 2017
South Korea	2014 to 2017
China	2008 to 2017

Our U.S. federal income tax returns have been audited through 2013. We have various federal income tax return positions in administrative appeals for 2004, 2005, 2007 and 2010 through 2013.

State income tax returns are generally subject to examination for a period of 3 to 5 years after filing of the respective return. The state effect of any changes to filed federal positions remains subject to examination by various states for a period of up to two years after formal notification to the states. We have various state income tax return positions in the process of examination, administrative appeals or litigation.

	49	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Note 12. Earnings Per Share ("EPS")

There are no adjustments required to be made to net income for purposes of computing basic and diluted EPS. The average number of common shares outstanding is reconciled to those used in the basic and diluted EPS computations as follows:

(Millions of shares)		2017			2016			2015
Basic		353.6			359.4			363.8
Dilutive effect of stock options and restricted share unit awards		2.3			2.3			2.5
Diluted		355.9			361.7			366.3

Options outstanding that were not included in the computation of diluted EPS because their exercise price was greater than the average market price of the common shares were insignificant. The number of common shares outstanding as of December 31, 2017, 2016 and 2015 was 351.1 million, 356.6 million and 360.9 million, respectively.

Note 13. Business Segment Information

We are organized into operating segments based on product groupings. These operating segments have been aggregated into three reportable global business segments: Personal Care, Consumer Tissue and KCP. The reportable segments were determined in accordance with how our chief operating decision maker and our executive managers develop and execute global strategies to drive growth and profitability. These strategies include global plans for branding and product positioning, technology, research and development programs, cost reductions including supply chain management, and capacity and capital investments for each of these businesses. Segment management is evaluated on several factors, including operating profit. Segment operating profit excludes other (income) and expense, net and income and expense not associated with the business segments.

The principal sources of revenue in each global business segment are described below:

•

Personal Care brands offer our consumers a trusted partner in caring for themselves and their families by delivering confidence, protection and discretion through a wide variety of innovative solutions and products such as disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products. Products in this segment are sold under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex, U by Kotex, Intimus, Depend, Plenitud, Poise and other brand names.

•	Consumer Tissue offers a wide variety of innovative solutions and trusted brands that touch and improve people's lives every day. Products in this segment include facial and bathroom tissue, paper towels, napkins and related products, and are sold under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve and other brand names.

•

K-C Professional partners with businesses to create Exceptional Workplaces, helping to make them healthier, safer and more productive through a range of solutions and supporting products such as wipers, tissue, towels, apparel, soaps and sanitizers. Our brands, including Kleenex, Scott, WypAll, Kimtech and Jackson Safety, are well-known for quality and trusted to help people around the world work better.

Net sales to Walmart Inc. as a percent of our consolidated net sales were approximately 14 percent in 2017, 2016 and 2015.

	50	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Information concerning consolidated operations by business segment is presented in the following tables:

Consolidated Operations by Business Segment

	Year Ended December 31
	2017				2016				2015
NET SALES(a)
Personal Care	$	9,078			$	9,046			$	9,204
Consumer Tissue	5,932				5,967				6,121
K-C Professional	3,208				3,150				3,219
Corporate & Other	41				39				47
TOTAL NET SALES	$	18,259			$	18,202			$	18,591
OPERATING PROFIT(b)
Personal Care	$	1,907			$	1,857			$	1,885
Consumer Tissue	1,034				1,117				1,073
K-C Professional	633				603				590
Corporate & Other(c)	(248		)		(252		)		(367		)
Other (income) and expense, net(d)	27				8				1,568
TOTAL OPERATING PROFIT	$	3,299			$	3,317			$	1,613

(a)	Net sales in the U.S. to third parties totaled $8,698, $8,874 and $8,819 in 2017, 2016 and 2015, respectively. No other individual country's net sales exceeds 10 percent of total net sales.

(b)	Segment operating profit excludes other (income) and expense, net and income and expenses not associated with the business segments.

(c)	Corporate & Other includes charges related to the 2014 Organization Restructuring of $38 and $63 in 2016 and 2015, respectively, and $5 related to the remeasurement of the Venezuelan balance sheet in 2015. Corporate & Other also includes charges of $23 for restructuring in Turkey in 2015.

(d)

Other (income) and expense, net for 2017 includes a charge of $24 for the early redemption of debt, 2016 and 2015 includes income of $11 and a charge of $108, respectively, related to the deconsolidation of our Venezuelan operations, and 2015 includes charges of $40 related to the remeasurement of the Venezuelan balance sheet. In addition, 2015 includes $1,358 for charges related to pension settlements.

	51	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

	Personal Care				Consumer Tissue				K-C Professional				Corporate & Other				Total
Depreciation and Amortization
2017	$	324			$	283			$	112			$	5			$	724
2016	305				280				116				4				705
2015	340				282				121				3				746
Capital Spending
2017	405				281				92				7				785
2016	421				250				95				5				771
2015	590				344				116				6				1,056
Goodwill(a)
2017	617				559				400				—				1,576
2016	549				538				393				—				1,480
2015	533				524				389				—				1,446
Assets
2017	6,592				5,007				2,255				1,297				15,151
2016	6,141				4,761				2,151				1,549				14,602
2015	6,330				5,050				2,264				1,198				14,842

(a)	In 2017, we acquired the remaining 50 percent of our joint venture in India, which resulted in the recognition of $35 of personal care goodwill. All other changes in goodwill are related to currency.

Sales of Principal Products

(Billions of dollars)		2017				2016				2015
Consumer tissue products		$	5.9			$	6.0			$	6.1
Baby and child care products		6.3				6.4				6.6
Away-from-home professional products		3.2				3.1				3.2
All other		2.9				2.7				2.7
Consolidated		$	18.3			$	18.2			$	18.6

Note 14. Supplemental Data

Supplemental Income Statement Data

	Year Ended December 31
	2017				2016				2015
Advertising expense	$	648			$	665			$	710
Research expense	311				328				324

	52	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Equity Companies' Data

	Net Sales				Gross Profit				Operating Profit				Net Income				Corporation's Share of Net Income
2017	$	2,191			$	627			$	378			$	214			$	104
2016	2,138				720				454				276				132
2015	2,255				773				497				308				149
	Current Assets				Non-Current Assets				Current Liabilities				Non-Current Liabilities				Stockholders' Equity
2017	$	828			$	1,232			$	415			$	1,125			$	520
2016	963				1,168				531				1,046				554
2015	1,103				993				508				1,068				520

Equity companies are principally engaged in operations in the personal care and consumer tissue businesses. At December 31, 2017, our ownership interest in KCM and subsidiaries was 47.9 percent. KCM is partially owned by the public, and its stock is publicly traded in Mexico. At December 31, 2017, our investment in this equity company was $170, and the estimated fair value of the investment was $2.6 billion based on the market price of publicly traded shares. Our other equity ownership interests are not significant to our consolidated balance sheet or financial results.

At December 31, 2017, undistributed net income of equity companies included in consolidated retained earnings was $1.1 billion.

Supplemental Balance Sheet Data

	December 31
Summary of Accounts Receivable, Net	2017				2016
From customers	$	2,203			$	2,077
Other	168				167
Less allowance for doubtful accounts and sales discounts	(56		)		(68		)
Total	$	2,315			$	2,176

	December 31
	2017												2016
Summary of Inventories by Major Class	LIFO				Non- LIFO				Total				LIFO				Non- LIFO				Total
Raw materials	$	87			$	258			$	345			$	93			$	236			$	329
Work in process	110				103				213				114				89				203
Finished goods	421				684				1,105				430				600				1,030
Supplies and other	—				303				303				—				280				280
	618				1,348				1,966				637				1,205				1,842
Excess of FIFO or weighted-average cost over LIFO cost	(176		)		—				(176		)		(163		)		—				(163		)
Total	$	442			$	1,348			$	1,790			$	474			$	1,205			$	1,679

Inventories are valued at the lower of cost or net realizable value, determined on the FIFO or weighted-average cost methods, and at the lower of cost or market, determined on the LIFO cost method.

	53	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

	December 31
Summary of Property, Plant and Equipment, Net	2017				2016
Land	$	173			$	163
Buildings	2,830				2,612
Machinery and equipment	14,612				13,591
Construction in progress	300				488
	17,915				16,854
Less accumulated depreciation	(10,479		)		(9,685		)
Total	$	7,436			$	7,169

Property, plant and equipment, net in the U.S. as of December 31, 2017 and 2016 was $3,591 and $3,638, respectively.

	December 31
Summary of Accrued Expenses	2017				2016
Accrued advertising and promotion	$	394			$	373
Accrued salaries and wages	449				426
Accrued rebates	227				220
Accrued taxes - income and other	249				259
Accrued interest	68				96
Derivatives	45				44
Other	298				357
Total	$	1,730			$	1,775

Supplemental Cash Flow Statement Data

Summary of Cash Flow Effects of Operating Working Capital	Year Ended December 31
2017				2016				2015
Accounts receivable	$	(44	)		$	(23	)		$	60
Inventories	(33		)		230				(28		)
Trade accounts payable	174				(61		)		44
Accrued expenses	(102		)		26				(110		)
Accrued income taxes	(176		)		121				(81		)
Derivatives	(47		)		43				(63		)
Currency and other	80				(2		)		(267		)
Total	$	(148	)		$	334			$	(445	)

	Year Ended December 31
Other Cash Flow Data	2017				2016				2015
Interest paid	$	354			$	315			$	308
Income taxes paid	961				744				695

	54	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

Note 15. Subsequent Events - Announcement of 2018 Global Restructuring Program

On January 23, 2018, we announced a new global restructuring program. The 2018 Global Restructuring Program will reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. The program will make our overhead organization structure and manufacturing supply chain less complex and more efficient. We expect to close or sell approximately 10 manufacturing facilities and expand production capacity at several others. We expect to exit or divest some lower-margin businesses that generate approximately 1 percent of our net sales. The sales are concentrated in our consumer tissue business segment. The restructuring is expected to impact all of our business segments and our organizations in all major geographies. Workforce reductions are expected to be in the range of 5,000 to 5,500. Certain capital appropriations under the 2018 Global Restructuring Program are being finalized. Accounting for actions related to each appropriation will commence when the appropriation is authorized for execution.

The restructuring is expected to be completed by the end of 2020, with total costs anticipated to be $1.7 billion to $1.9 billion pre-tax ($1.35 billion to $1.5 billion after tax). Cash costs are expected to be $900 to $1.0 billion, primarily related to workforce reductions. Non-cash charges are expected to be $800 to $900 pre-tax and will primarily consist of incremental depreciation and asset impairments. Restructuring charges in 2018 are expected to be $1.2 billion to $1.35 billion pre-tax ($950 to $1.05 billion after tax).

	55	KIMBERLY-CLARK CORPORATION - 2017 Annual Report

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of

Kimberly-Clark Corporation:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Kimberly-Clark Corporation and subsidiaries (the "Corporation") as of December 31, 2017 and 2016, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2017, and the related notes and the financial statement schedule listed in the Table of Contents at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Corporation’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 8, 2018, expressed an unqualified opinion on the Corporation’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Dallas, Texas
February 8, 2018

We have served as the Corporation’s auditor since 1928.

	56	KIMBERLY-CLARK CORPORATION - 2017 Annual Report