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)		2018				2017				2016
Net Sales		$	18,486			$	18,348			$	18,287
Cost of products sold		12,889				11,761				11,596
Gross Profit		5,597				6,587				6,691
Marketing, research and general expenses		3,367				3,202				3,300
Other (income) and expense, net		1				27				8
Operating Profit		2,229				3,358				3,383
Nonoperating expense		(163		)		(59		)		(66		)
Interest income		10				10				11
Interest expense		(263		)		(318		)		(319		)
Income Before Income Taxes and Equity Interests		1,813				2,991				3,009
Provision for income taxes		(471		)		(776		)		(922		)
Income Before Equity Interests		1,342				2,215				2,087
Share of net income of equity companies		103				104				132
Net Income		1,445				2,319				2,219
Net income attributable to noncontrolling interests		(35		)		(41		)		(53		)
Net Income Attributable to Kimberly-Clark Corporation		$	1,410			$	2,278			$	2,166
Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic		$	4.05			$	6.44			$	6.03
Diluted		$	4.03			$	6.40			$	5.99

See notes to the consolidated financial statements.

	26	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Year Ended December 31
(Millions of dollars)		2018				2017				2016
Net Income		$	1,445			$	2,319			$	2,219
Other Comprehensive Income (Loss), Net of Tax
Unrealized currency translation adjustments		(428		)		517				(107		)
Employee postretirement benefits		140				118				(113		)
Other		51				(45		)		15
Total Other Comprehensive Income (Loss), Net of Tax		(237		)		590				(205		)
Comprehensive Income		1,208				2,909				2,014
Comprehensive income attributable to noncontrolling interests		(22		)		(76		)		(44		)
Comprehensive Income Attributable to Kimberly-Clark Corporation		$	1,186			$	2,833			$	1,970

See notes to the consolidated financial statements.

	27	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

		December 31
(Millions of dollars)		2018				2017
ASSETS
Current Assets
Cash and cash equivalents		$	539			$	616
Accounts receivable, net		2,164				2,315
Inventories		1,813				1,790
Other current assets		525				490
Total Current Assets		5,041				5,211
Property, Plant and Equipment, Net		7,159				7,436
Investments in Equity Companies		224				233
Goodwill		1,474				1,576
Other Assets		620				695
TOTAL ASSETS		$	14,518			$	15,151
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year		$	1,208			$	953
Trade accounts payable		3,190				2,834
Accrued expenses		1,793				1,730
Dividends payable		345				341
Total Current Liabilities		6,536				5,858
Long-Term Debt		6,247				6,472
Noncurrent Employee Benefits		931				1,184
Deferred Income Taxes		458				395
Other Liabilities		328				299
Redeemable Preferred Securities of Subsidiaries		64				61
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, 2018 and 2017		473				473
Additional paid-in capital		548				594
Common stock held in treasury, at cost - 33.6 and 27.5 million shares at December 31, 2018 and 2017, respectively		(3,956		)		(3,288		)
Retained earnings		5,947				5,769
Accumulated other comprehensive income (loss)		(3,299		)		(2,919		)
Total Kimberly-Clark Corporation Stockholders' Equity		(287		)		629
Noncontrolling Interests		241				253
Total Stockholders' Equity		(46		)		882
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	14,518			$	15,151

See notes to the consolidated financial statements.

	28	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Millions of dollars, shares in thousands, except per share amounts)		Common Stock Issued							Additional Paid-in Capital				Treasury Stock							Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests
	Shares			Amount				Shares			Amount
Balance at December 31, 2015		378,597			$	473			$	601			17,737			$	(2,004	)		$	4,034			$	(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		—			—				(104		)		(1,906	)		211				—				—				—
Income tax benefits on stock-based compensation		—			—				19				—			—				—				—				—
Shares repurchased		—			—				—				6,198			(778		)		—				—				—
Recognition of stock-based compensation		—			—				77				—			—				—				—				—
Dividends declared ($3.68 per share)		—			—				—				—			—				(1,322		)		—				(36		)
Other		—			—				7				—			—				(8		)		—				—
Balance at December 31, 2016		378,597			473				600				22,029			(2,571		)		4,870				(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		—			—				(89		)		(1,926	)		210				—				—				—
Shares repurchased		—			—				—				7,388			(927		)		—				—				—
Recognition of stock-based compensation		—			—				76				—			—				—				—				—
Dividends declared ($3.88 per share)		—			—				—				—			—				(1,371		)		—				(37		)
Other		—			—				7				—			—				(8		)		—				—
Balance at December 31, 2017		378,597			473				594				27,491			(3,288		)		5,769				(2,919		)		253
Net income in stockholders' equity		—			—				—				—			—				1,410				—				31
Other comprehensive income, net of tax		—			—				—				—			—				—				(224		)		(12		)
Stock-based awards exercised or vested		—			—				(90		)		(1,351	)		152				—				—				—
Shares repurchased		—			—				—				7,495			(820		)		—				—				—
Recognition of stock-based compensation		—			—				39				—			—				—				—				—
Dividends declared ($4.00 per share)		—			—				—				—			—				(1,391		)		—				(32		)
Other		—			—				5				—			—				159				(156		)		1
Balance at December 31, 2018		378,597			$	473			$	548			33,635			$	(3,956	)		$	5,947			$	(3,299	)		$	241

See notes to the consolidated financial statements.

	29	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENT

		Year Ended December 31
(Millions of dollars)		2018				2017				2016
Operating Activities
Net income		$	1,445			$	2,319			$	2,219
Depreciation and amortization		882				724				705
Asset impairments		74				—				2
Stock-based compensation		41				76				77
Deferred income taxes		2				(69		)		(15		)
Net losses on asset dispositions		52				21				6
Equity companies' earnings (in excess of) less than dividends paid		18				26				(4		)
Operating working capital		389				(148		)		334
Postretirement benefits		(25		)		2				(50		)
Other		92				(22		)		(42		)
Cash Provided by Operations		2,970				2,929				3,232
Investing Activities
Capital spending		(877		)		(785		)		(771		)
Proceeds from dispositions of property		51				3				23
Investments in time deposits		(353		)		(214		)		(221		)
Maturities of time deposits		272				183				188
Other		5				(38		)		49
Cash Used for Investing		(902		)		(851		)		(732		)
Financing Activities
Cash dividends paid		(1,386		)		(1,359		)		(1,311		)
Change in short-term debt		(34		)		360				(908		)
Debt proceeds		507				937				1,293
Debt repayments		(407		)		(1,481		)		(598		)
Proceeds from exercise of stock options		62				121				107
Acquisitions of common stock for the treasury		(800		)		(911		)		(739		)
Other		(57		)		(88		)		(29		)
Cash Used for Financing		(2,115		)		(2,421		)		(2,185		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(30		)		36				(11		)
Change in Cash and Cash Equivalents		(77		)		(307		)		304
Cash and Cash Equivalents - Beginning of Year		616				923				619
Cash and Cash Equivalents - End of Year		$	539			$	616			$	923

See notes to the consolidated financial statements.

	30	KIMBERLY-CLARK CORPORATION - 2018 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.

In prior years, we followed an accounting practice whereby costs associated with sales of K-C Professional dispensers were classified as a reduction in revenue, similar to sales incentives. Effective January 1, 2018, we changed this practice and now classify these costs as cost of products sold. This change resulted in an immaterial increase in net sales and cost of products sold and all applicable prior period amounts included in this filing have been recast accordingly.

Subsequent to the issuance of the December 31, 2017 financial statements, we identified an error in the recording of treasury stock retirements and disbursement transactions. We have assessed these errors and determined they are immaterial as the correction does not result in any change to total stockholders’ equity or in the number of treasury shares reported and does not impact the consolidated statements of income, comprehensive income or cash flow for any period presented. The correction of the cumulative error has been recorded as an adjustment to December 31, 2015 retained earnings, treasury stock and additional paid in capital in the amounts of $960, $968 and $8, respectively, and the prior period financial statements have been revised to reflect the correct amounts.

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

	31	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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, including goodwill, with its fair value. If the reporting unit carrying amount, including goodwill, exceeds its fair value, a goodwill impairment charge for the excess amount above fair value 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 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 2018, 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 control 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, effective January 1, 2018 for interim reporting, the estimated redemption value of consumer coupons and related expense are recorded when the related revenue from customers is realized. Rebate and promotion accruals are based on estimates of the quantity of customer sales. In prior years, these costs were recognized at the time of coupon issuance. 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.

	32	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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. Other income of $11 was recognized in 2016 related to the shut down of operations in that country and the finalization of the write-off of our investment in K-C Venezuela.

Adoption of Highly Inflationary Accounting in Argentina

GAAP guidance requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100 percent. In the second quarter of 2018, published inflation indices indicated that the three-year cumulative inflation in Argentina exceeded 100 percent, and as of July 1, 2018, we elected to adopt highly inflationary accounting for our subsidiaries in Argentina (“K-C Argentina”). Under highly inflationary accounting, K-C Argentina’s functional currency became the U.S. dollar, and its income statement and balance sheet have been measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in Other (income) and expense, net and was not material. As of December 31, 2018, K-C Argentina had a small net peso monetary position. Net sales of K-C Argentina were less than 2 percent of our consolidated net sales in 2018, 2017 and 2016.

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 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. 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. Cash flows from derivatives are classified within the consolidated statement of cash flows in the same category as the items being hedged. Cash flows from derivatives are classified within Operating Activities, except for derivatives designated as net investment hedges which are classified in Investing Activities. See Note 11 for disclosures about derivative instruments and hedging activities.

Accounting Standards - Adopted During 2018

In 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20). The new guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. For public companies, the

	33	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

amendments in this ASU are effective for fiscal years beginning after December 15, 2020, with early adoption permitted. We early adopted this ASU as of December 31, 2018, and applied it on a retrospective basis to all periods presented.

In 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This new standard permits entities to reclassify to retained earnings the tax effects stranded in accumulated other comprehensive income ("AOCI") as a result of U.S. tax reform. We early adopted this ASU as of April 1, 2018 and reclassified $156 of stranded tax effects related to the U.S. tax reform change in the federal corporate tax rate from AOCI to retained earnings. This reclassification is included in Other in our consolidated statement of stockholders' equity.

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 benefit cost are required to be presented in the income statement separately from the service cost component and outside of operating profit (presented as Nonoperating expense in our consolidated income statement). We adopted this standard as of January 1, 2018 and applied the amendments retrospectively, and all applicable amounts included in this filing have been recast accordingly. We used the practical expedient that allowed us to use the amounts previously disclosed in our employee postretirement benefits note for the prior comparative periods as the basis for applying the retrospective presentation requirements.

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 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. We adopted this standard as of January 1, 2018 on a modified retrospective basis and recorded an immaterial cumulative adjustment to retained earnings.

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. We adopted this ASU effective January 1, 2018 on a full retrospective basis. Adoption of this standard did not result in significant changes to our accounting policies, business processes, systems or controls, or have a material impact on our financial position, results of operations and cash flows or related disclosures. As such, prior period financial statements were not recast.

Accounting Standards Issued - Not Adopted as of December 31, 2018

In 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), amended by ASU 2018-11, Leases (Topic 842): Targeted Improvements. 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, along with additional disclosures. Current GAAP recognizes, measures and presents expenses and cash flows arising from a lease by a lessee primarily depending on its classification as a finance or operating lease. The ASU requires adoption using a modified retrospective transition approach with either 1) periods prior to the adoption date being recast or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. We adopted this standard on January 1, 2019 using the cumulative-effect adjustment method and elected certain practical expedients allowed under the standard. No cumulative-effect adjustment was recognized as the amount was not material. We implemented processes and a lease accounting system to ensure adequate internal controls were in place to assess our contracts and enable proper accounting and reporting of financial information upon adoption. The increase in total assets and total liabilities was approximately $0.5 billion. The impact on our results of operations and cash flows was not material.

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 non-financial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess hedge 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. This ASU requires adoption using a modified retrospective transition approach with a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. We adopted this standard on January 1, 2019 with no cumulative-effect adjustment as the amount was not material. The effects of this standard on our financial position, results of operations and cash flows were not material.

In 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820). The new guidance modifies disclosure requirements related to fair value measurement. The amendments in this ASU are effective for fiscal years, and interim periods

	34	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this ASU while delaying adoption of the additional disclosures until their effective date.

In 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). The new guidance reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). For public companies, the amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. Implementation should be applied either retrospectively or prospectively to all implementation cost incurred after the date of adoption. The effects of this standard on our financial position, results of operations or cash flows are not expected to be material.

Note 2. 2018 Global Restructuring Program

In January 2018, we announced a 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, asset write-offs and pension settlement and curtailment charges. Restructuring charges in 2019 are expected to be $600 to $750 pre-tax ($470 to $570 after tax).

	35	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

The following charges were incurred in connection with the 2018 Global Restructuring Program:

	Twelve Months Ended December 31, 2018
Cost of products sold:
Charges for workforce reductions	$	149
Asset impairments	74
Asset write-offs	112
Incremental depreciation	172
Other exit costs	34
Total	541
Marketing, research and general expenses:
Charges for workforce reductions	243
Other exit costs	137
Total	380
Other (income) and expense, net	(12		)
Nonoperating expense(a)	127
Total charges	1,036
Provision for income taxes	(243		)
Net charges	793
Net impact related to equity companies and noncontrolling interests	(10		)
Net charges attributable to Kimberly-Clark Corporation	$	783

(a)	Represents non-cash pension settlement and curtailment charges resulting from restructuring actions, primarily in the U.S., United Kingdom and Canada.

The asset impairments charge measurement was based on the excess of the carrying value of the impacted asset groups over their fair values. These fair values were measured by using discounted cash flows expected over the limited time the assets would remain in use and as a result, the assets were essentially written off. The use of discounted cash flows represents a level 3 measure under the fair value hierarchy.

The following summarizes the restructuring liabilities activity:

		2018
Restructuring liabilities at January 1		$	—
Charges for workforce reductions and other cash exit costs		559
Cash payments		(325		)
Currency and other		(24		)
Restructuring liabilities at December 31		$	210

As of December 31, 2018, restructuring liabilities of $118 are recorded in Accrued expenses and $92 are recorded in Other Liabilities. The impact related to restructuring charges is recorded in Operating working capital and Other Operating Activities, as appropriate, in our consolidated cash flow statement.

Note 3. 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.

	36	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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

Note 4. Fair Value Information

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

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

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

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

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

During 2018 and 2017, 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, 2018 and 2017, derivative assets were $30 and $27, respectively, and derivative liabilities were $18 and $51, 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 11 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 $64 and $61 at December 31, 2018 and 2017, 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 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 a discounted cash flow valuation model. Measurement of the redeemable preferred securities is considered a level 3 measurement.

Company-owned life insurance ("COLI") assets are measured on a recurring basis at fair value. COLI assets were $64 and $68 at December 31, 2018 and 2017, 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.

	37	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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, 2018								December 31, 2017
Assets
Cash and cash equivalents(a)	1		$	539			$	539			$	616			$	616
Time deposits(b)	1		256				256				185				185
Liabilities
Short-term debt(c)	2		495				495				547				547
Long-term debt(d)	2		6,960				7,192				6,878				7,398

(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 5. Debt and Redeemable Preferred Securities of Subsidiaries

Long-term debt is composed of the following:

	Weighted- Average Interest Rate		Maturities		December 31
	2018				2017
Notes and debentures	3.3%		2019 - 2047		$	6,756			$	6,577
Industrial development revenue bonds	1.9%		2023 - 2045		169				264
Bank loans and other financings in various currencies	7.0%		2019 - 2025		35				37
Total long-term debt					6,960				6,878
Less current portion					713				406
Long-term portion					$	6,247			$	6,472

Scheduled maturities of long-term debt for the next five years are $716 in 2019, $758 in 2020, $256 in 2021, $304 in 2022 and $464 in 2023.

In October 2018, we issued $500 aggregate principal amount of 3.95% notes due November 1, 2028. Proceeds were used for general corporate purposes, including repayment of a portion of our outstanding commercial paper indebtedness.

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.

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.

	38	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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 June 2018, we entered into a $2.0 billion revolving credit facility which expires in June 2023 and a $500 revolving credit facility which expires in June 2019. These facilities, currently unused, replaced a similar $2.0 billion facility, support 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 6. 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, 2018, the number of shares of common stock available for grants under the Plans aggregated 14 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 $41, $76 and $77 and related deferred income tax benefits of $13, $26 and $28 were recognized for 2018, 2017 and 2016, 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.

The weighted-average fair value of options granted was estimated at $13.56, $12.21 and $10.95, in 2018, 2017 and 2016, respectively, per option on the date of grant based on the following assumptions:

	Year Ended December 31
	2018			2017			2016
Dividend yield	3.9	%		3.2	%		3.1	%
Volatility	20.8	%		15.6	%		16.0	%
Risk-free interest rate	2.8	%		1.8	%		1.2	%
Expected life - years	4.6			4.6			4.6

	39	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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

	December 31, 2018				Weighted-Average Service Years
Stock options	$	14			1.3
Restricted shares and time-vested restricted share units	3				1.4
Performance-based restricted share units	41				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, 2018	6,688			$	109.69
Granted	1,644			103.23
Exercised	(748	)		82.83
Forfeited or expired	(398	)		122.96
Outstanding at December 31, 2018	7,186			110.27				6.43		$	68
Exercisable at December 31, 2018	4,384			106.96				4.97		$	51

The total intrinsic value of options exercised during 2018, 2017 and 2016 was $22, $48 and $55, 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, 2018	102			$	123.19			1,562			$	123.97
Granted	54			107.14				796			106.65
Vested	(64	)		114.27				(607	)		113.99
Forfeited	(17	)		129.47				(186	)		121.07
Nonvested at December 31, 2018	75			117.99				1,565			119.37

The total fair value of restricted share units that were distributed to participants during 2018, 2017 and 2016 was $65, $80 and $83, respectively.

Note 7. Employee Postretirement Benefits

Substantially all regular employees in the U.S. and the United Kingdom are covered by defined contribution retirement plans and certain U.S. and United Kingdom employees previously earned benefits covered by defined benefit pension plans that currently provide no future service benefit (the "Principal 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.

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 5.8 percent in 2019 and to decline to 4.5 percent in 2028 and thereafter. Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans.

As a result of restructuring actions related to the 2018 Global Restructuring Program, aggregate pension settlement charges of $110 and curtailment charges of $17 were recognized in Nonoperating expense during 2018, primarily related to the defined benefit pension plans in the U.S., United Kingdom and Canada (see Note 2 for further information about the 2018 Global Restructuring Program).

	40	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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

	Pension Benefits								Other Benefits
	Year Ended December 31
	2018				2017				2018				2017
Change in Benefit Obligation
Benefit obligation at beginning of year	$	4,296			$	4,126			$	765			$	758
Service cost	36				41				11				12
Interest cost	128				129				28				32
Actuarial (gain) loss(a)	(256		)		20				(79		)		16
Currency and other	(96		)		221				(5		)		(3		)
Benefit payments from plans	(198		)		(218		)		—				—
Direct benefit payments	(8		)		(8		)		(48		)		(50		)
Settlements and curtailments	(215		)		(15		)		1				—
Benefit obligation at end of year	3,687				4,296				673				765
Change in Plan Assets
Fair value of plan assets at beginning of year	3,897				3,534				—				—
Actual return on plan assets	(132		)		333				—				—
Employer contributions	166				53				—				—
Currency and other	(116		)		204				—				—
Benefit payments	(198		)		(218		)		—				—
Settlements	(219		)		(9		)		—				—
Fair value of plan assets at end of year	3,398				3,897				—				—
Funded Status	$	(289	)		$	(399	)		$	(673	)		$	(765	)

(a) The actuarial gains in 2018 were primarily due to discount rate increases.

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.

Information for the Principal Plans and All Other Pension Plans

	Principal Plans								All Other Pension Plans								Total
	Year Ended December 31
	2018				2017				2018				2017				2018				2017
Projected benefit obligation (“PBO”)	$	3,094			$	3,567			$	593			$	729			$	3,687			$	4,296
Accumulated benefit obligation (“ABO”)	3,094				3,513				521				658				3,615				4,171
Fair value of plan assets	2,936				3,312				462				585				3,398				3,897

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
	2018				2017
ABO	$	1,826			$	2,134
Fair value of plan assets	1,547				1,699

	41	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

Information for Pension Plans with a PBO in Excess of Plan Assets

	December 31
	2018				2017
PBO	$	2,038			$	2,480
Fair value of plan assets	1,727				2,011

Components of Net Periodic Benefit Cost

	Pension Benefits												Other Benefits
	Year Ended December 31
	2018				2017				2016				2018				2017				2016
Service cost	$	36			$	41			$	42			$	11			$	12			$	11
Interest cost	128				129				148				28				32				33
Expected return on plan assets(a)	(166		)		(156		)		(158		)		—				—				—
Recognized net actuarial loss	47				57				52				1				1				—
Settlements and curtailments	136				7				1				—				—				—
Other	(7		)		(9		)		(9		)		(3		)		(2		)		(1		)
Net periodic benefit cost	$	174			$	69			$	76			$	37			$	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.

The components of net periodic benefit cost other than the service cost component are included in the line item Nonoperating expense in our consolidated income statement.

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

	Pension Benefits												Other Benefits
	Projected 2019			2018			2017			2016			2018			2017			2016
Discount rate	3.40	%		3.23	%		3.19	%		3.91	%		3.91	%		4.29	%		4.59	%
Expected long-term return on plan assets	4.39	%		4.50	%		4.46	%		4.84	%		—			—			—
Rate of compensation increase	3.08	%		2.27	%		2.29	%		2.32	%		—			—			—

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

	Pension Benefits						Other Benefits
	2018			2017			2018			2017
Discount rate	3.40	%		3.10	%		4.50	%		3.91	%
Rate of compensation increase	3.08	%		2.27	%		—			—

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 2019 target plan asset allocation for the Principal Plans is approximately 80 percent fixed income securities and 20 percent equity securities.

	42	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

The expected long-term rate of return is generally 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 4.75 percent in 2018, 4.72 percent in 2017 and 5.10 percent in 2016, and will be 4.59 percent in 2019.

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, 2018
	Total Plan Assets				Assets at Quoted Prices in Active Markets for Identical Assets (Level 1)				Assets at Significant Observable Inputs (Level 2)				Assets at Significant Unobservable Inputs (Level 3)
Cash and Cash Equivalents
Held directly	$	15			$	15			$	—			$	—
Held through mutual and pooled funds measured at net asset value	45				—				—				—
Fixed Income
Held directly
U.S. government and municipals	161				145				16				—
U.S. corporate debt	196				—				196				—
International bonds	13				—				13				—
Held through mutual and pooled funds measured at net asset value
U.S. government and municipals	479				—				—				—
U.S. corporate debt	593				—				—				—
International bonds	494				—				—				—
Equity
Held directly
U.S. equity	30				30				—				—
International equity	31				31				—				—
Held through mutual and pooled funds measured at net asset value
Non-U.S. equity	73				—				—				—
Global equity	448				—				—				—
Insurance Contracts	347				—				—				347
Other	11				9				—				—
Total Plan Assets	$	2,936			$	230			$	225			$	347

Futures contracts are used when appropriate to manage duration targets. As of December 31, 2018 and 2017, the U.S. plan held directly Treasury futures contracts with a total notional value of approximately $281 and $225, respectively, and an insignificant fair value. As of December 31, 2018 and 2017, the United Kingdom plan held through a pooled fund future contracts with a total notional value of approximately $287 and $272, and an insignificant fair value.

During 2018 and 2017, the plan assets did not include a significant amount of Kimberly-Clark common stock.

	43	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

	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.

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. government securities are determined based on trading activity in the marketplace.

Fair values of U.S. corporate debt, U.S. municipals 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, 2018, 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 2018 or 2017, other than an insurance contract purchase in 2017. Fair values of insurance contracts are based on an evaluation of various factors, including purchase price.

	44	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

We expect to contribute approximately $25 to our defined benefit pension plans in 2019. Over the next ten years, we expect that the following gross benefit payments will occur:

	Pension Benefits				Other Benefits
2019	$	209			$	60
2020	219				62
2021	218				63
2022	224				64
2023	219				63
2024-2028	1,096				275

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 $120 in 2018, $128 in 2017, and $126 in 2016. Approximately 30 percent of these costs were for plans outside the U.S.

Note 8. Stockholders' Equity

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

		Unrealized Translation				Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Cash Flow Hedges and Other
Balance as of December 31, 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		)
Other comprehensive income (loss) before reclassifications		(416		)		(51		)		58				42
(Income) loss reclassified from AOCI		1				135			(a)	(2		)	(a)	9
Net current period other comprehensive income (loss)		(415		)		84				56				51
Tax effects reclassified from AOCI		(18		)		(125		)		(5		)		(8		)
Balance as of December 31, 2018		$	(2,297	)		$	(1,017	)		$	12			$	3

(a)	Included in computation of net periodic pension and other postretirement benefits costs (see Note 7).

Included in the above defined benefit pension plans and other postretirement benefit plans balances as of December 31, 2018 is $1,022 and $17 of unrecognized net actuarial loss and unrecognized net prior service credit, respectively.

	45	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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

	Year Ended December 31
	2018				2017				2016
Unrealized translation	$	(408	)		$	398			$	(88	)
Tax effect(a)	(25		)		89				(11		)
	(433		)		487				(99		)
Defined benefit pension plans
Unrecognized net actuarial loss and transition amount
Funded status recognition	(57		)		159				(230		)
Amortization	47				56				52
Settlements and curtailments	134				7				1
Currency and other	29				(66		)		80
	153				156				(97		)
Unrecognized prior service cost/credit
Funded status recognition	(22		)		2				(1		)
Amortization	(8		)		(8		)		(8		)
Curtailments	2				—				—
Currency and other	(1		)		3				(6		)
	(29		)		(3		)		(15		)
Tax effect(a)	(165		)		(32		)		28
	(41		)		121				(84		)
Other postretirement benefit plans
Unrecognized net actuarial loss and transition amount and other	79				(11		)		(45		)
Tax effect(a)	(28		)		3				17
	51				(8		)		(28		)
Cash flow hedges and other
Recognition of effective portion of hedges	56				(76		)		44
Amortization	12				18				(20		)
Currency and other	(2		)		(2		)		(4		)
Tax effect(a)	(23		)		15				(5		)
	43				(45		)		15
Change in AOCI	$	(380	)		$	555			$	(196	)

(a) The Tax effect for Unrealized translation, Defined benefit pension plans, Other postretirement benefit plans and Cash flow hedges and other includes reductions of $18, $125, $5 and $8, respectively, for stranded tax effects reclassified from AOCI to Retained earnings in 2018.

Amounts are reclassified from AOCI into Cost of products sold, Nonoperating expense, 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 2018 is primarily due to the weakening of most foreign currencies versus the U.S. dollar, including the Australian dollar, Brazilian real and British pound sterling. 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.

	46	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

Note 9. 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
2019	$	160
2020	123
2021	85
2022	57
2023	41
Thereafter	72
Future minimum obligations	$	538

Consolidated rental expense under operating leases was $280, $281 and $271 in 2018, 2017 and 2016, 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 $841 in 2019, $161 in 2020, $37 in 2021, $38 in 2022, $38 in 2023, and $123 beyond the year 2023.

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 10. 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.

We are party to certain legal proceedings relating to our former health care business, Avanos Medical, Inc. ("Avanos", previously Halyard Health, Inc.), which we spun-off on October 31, 2014, including civil actions, consumer class actions, qui tam matters, a shareholder derivative suit, a securities class action and certain subpoena and document requests from the federal government.

The health care matters include Bahamas Surgery Center v. Kimberly-Clark Corporation, et al., a California consumer class action relating to the sale of surgical gowns. In April 2017, the jury awarded the plaintiff class $3.9 in compensatory damages and $350 in punitive damages against us. During the first quarter of 2018, the Court reduced the punitive damages award to approximately $19. As a result, the total compensatory and punitive damages plus pre-judgment interest awarded against Kimberly-Clark is approximately $25. We intend to continue our vigorous defense of the Bahamas matter.

We also have received subpoenas from the United States Department of Justice (DOJ) concerning allegations of potential criminal and civil violations of federal laws, including the Food, Drug, and Cosmetic Act, in connection with the manufacturing, marketing and sale of surgical gowns by our former health care business. We continue to produce documents and cooperate in this ongoing investigation. At this stage, we are unable to predict an outcome or estimate the potential range of outcomes to resolve this matter.

Under the terms of the distribution agreement we entered into with Avanos in connection with the spin-off, Avanos is obligated to indemnify us for legal proceedings, claims and other liabilities primarily related to our former health care business. Avanos and Kimberly-Clark have each filed suits against the other seeking declaratory judgment regarding the scope of these indemnification obligations. We intend to vigorously pursue our case against Avanos and to vigorously defend their case against us.

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.

	47	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

Note 11. 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 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 $573 at December 31, 2018. Changes in fair value of net investment hedges are recorded in AOCI as part of the cumulative translation adjustment.

At December 31, 2018 and 2017, derivative assets were $30 and $27, respectively, and derivative liabilities were $18 and $51, 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, 2018, 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, 2018, and gains or losses recognized in interest expense for interest rate swaps were not significant. For each of the three years ended December 31, 2018, 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 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, 2018, outstanding commodity forward contracts were in place to hedge a limited portion of our estimated requirements of the related underlying commodities in 2019 and future periods. As of December 31, 2018, the aggregate notional values of outstanding foreign exchange and interest rate derivative contracts designated as cash flow hedges were $620 and $100, respectively. Cash flow hedges resulted in no significant ineffectiveness in each of the three years ended December 31, 2018, 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, 2018, 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, 2018 is December 2020.

Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in other (income) and expense, net. A loss of $52, a gain of $37 and a loss of $30 were recorded in the years ending December 31, 2018, 2017 and 2016, respectively. The effect on earnings from the use of these non-designated derivatives is substantially neutralized by the transactional gains and

	48	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

losses recorded on the underlying assets and liabilities. At December 31, 2018, the notional amount of these undesignated derivative instruments was approximately $1.5 billion.

Note 12. 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 changes to the U.S. tax code, which included (1) a reduced U.S. corporate tax rate from 35 percent to 21 percent, (2) implementation of a base erosion and anti-abuse tax, (3) general elimination of U.S. federal income taxes on dividends from foreign subsidiaries, (4) a new provision designed to tax global intangible low-taxed income ("GILTI") of foreign subsidiaries which allows for the possibility of utilizing foreign tax credits to offset the tax liability (subject to some limitations), (5) a lower effective U.S. tax rate on certain revenues from sources outside the U.S., and (6) a one-time transition tax on certain undistributed earnings of foreign subsidiaries. In the period ended December 31, 2017, we recorded a provisional discrete net tax benefit associated with the Tax Act and related matters. The provisional amounts recorded in 2017 related to the transition tax, remeasurement of deferred taxes, our reassessment of permanently reinvested earnings, uncertain tax positions and valuation allowances, and actions taken in anticipation of the Tax Act were finalized and a net expense of $36 was recorded during 2018.

During 2018, we also recorded discrete net tax expense of $81 primarily related to new guidance issued during 2018 affecting tax benefits we recorded in the period ended December 31, 2017 for the transition tax and certain tax planning actions taken in anticipation of the Tax Act.

At December 31, 2018, we finalized our policy and have elected to use the period cost method for GILTI provisions and therefore have not recorded deferred taxes for basis differences expected to reverse in future periods.

An analysis of the provision for income taxes follows:

	Year Ended December 31
	2018				2017				2016
Current income taxes
United States	$	177			$	463			$	523
State	63				52				53
Other countries	229				330				361
Total	469				845				937
Deferred income taxes
United States	16				(68		)		(40		)
State	22				(3		)		31
Other countries	(36		)		2				(6		)
Total	2				(69		)		(15		)
Total provision for income taxes	$	471			$	776			$	922

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

	Year Ended December 31
	2018				2017				2016
United States	$	1,606			$	1,995			$	2,088
Other countries	207				996				921
Total income before income taxes	$	1,813			$	2,991			$	3,009

	49	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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

		December 31
		2018				2017
Deferred tax assets
Pension and other postretirement benefits		$	252			$	312
Tax credits and loss carryforwards		387				470
Derivatives and unrealized exchange gains and losses		37				63
Other		412				355
		1,088				1,200
Valuation allowances		(220		)		(176		)
Total deferred tax assets		868				1,024
Deferred tax liabilities
Property, plant and equipment, net		789				818
Investments in subsidiaries		102				117
Goodwill		72				83
Other		143				186
Total deferred tax liabilities		1,106				1,204
Net deferred tax assets (liabilities)		$	(238	)		$	(180	)

Valuation allowances at the end of 2018 primarily relate to tax credits, capital loss carryforwards, and income tax loss carryforwards of $766. If these items are not utilized against taxable income, $473 of the income tax loss carryforwards will expire from 2019 through 2038. The remaining $293 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
	2018			2017			2016
U.S. statutory rate applied to income before income taxes	21.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit	3.7			1.1			1.8
Statutory rates other than U.S. statutory rate	0.2			(3.1	)		(2.7	)
Routine tax incentives	(5.4	)		(2.7	)		(4.0	)
Net tax (benefit) cost on foreign income	1.4			(0.7	)		0.1
Net impact of the Tax Act	6.4			(2.5	)		—
Valuation allowance	1.6			(0.1	)		0.2
Other - net(a)	(2.9	)		(1.1	)		0.2
Effective income tax rate	26.0	%		25.9	%		30.6	%

(a)	Other - net is composed of numerous items, none of which is greater than 1.05 percent and 1.75 percent of income before income taxes in 2018 and 2017- 2016, respectively.

As of December 31, 2018, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $8.4 billion. Earnings of $5.6 billion were previously subject to tax, primarily due to the one-time transition tax on foreign earnings required by the Tax Act. Any additional taxes due with respect to such previously-taxed earnings, if repatriated, would generally be limited to foreign and U.S. state income taxes. Deferred taxes have been recorded for foreign and U.S. state income taxes on $0.7 billion of earnings of foreign consolidated subsidiaries expected to be repatriated. We do not intend to distribute the remaining

	50	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

$4.9 billion of previously-taxed foreign earnings and therefore have not recorded deferred taxes for foreign and U.S. state income taxes on such earnings.

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 on such earnings. Prior to the transition 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 a reduction of the excess of the amount for financial reporting over the tax basis in our foreign subsidiaries, any remaining amount of financial reporting over tax basis after such reduction could be subject to additional taxes, if repatriated. However, we consider any excess to be indefinitely reinvested. At this time, the determination of deferred tax liabilities on the amount of financial reporting over tax basis or the $4.9 billion of previously-taxed foreign earnings is not practicable.

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

	2018				2017				2016
Balance at January 1	$	354			$	321			$	406
Gross increases for tax positions of prior years	75				50				20
Gross decreases for tax positions of prior years	(86		)		(23		)		(104		)
Gross increases for tax positions of the current year	41				37				39
Settlements	(70		)		(19		)		(29		)
Other	(16		)		(12		)		(11		)
Balance at December 31	$	298			$	354			$	321

Of the amounts recorded as unrecognized tax benefits at December 31, 2018, $241 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, 2018, the net impact in interest and penalties was not significant. Total accrued penalties and net accrued interest was $20 and $35 at December 31, 2018 and 2017, 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 $100, 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, 2018, the following tax years remain subject to examination for the major jurisdictions where we conduct business:

Jurisdiction	Years
United States	2016 to 2018
United Kingdom	2016 to 2018
Brazil	2013 to 2018
South Korea	2014 to 2018
China	2008 to 2018

Our U.S. federal income tax returns have been audited through 2015. We have various federal income tax return positions in administrative appeals for 2004, 2005, 2007 and 2014 through 2015.

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.

	51	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

Note 13. 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)		2018			2017			2016
Basic		348.0			353.6			359.4
Dilutive effect of stock options and restricted share unit awards		1.6			2.3			2.3
Diluted		349.6			355.9			361.7

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, 2018, 2017 and 2016 was 345.0 million, 351.1 million and 356.6 million, respectively.

Note 14. 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 ongoing operations of the business segments, including the costs of corporate decisions related to the 2018 Global Restructuring Program described in Note 2.

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

•

Personal Care brands offer our consumers a trusted partner in caring for themselves and their families by delivering confidence, protection and discretion through a wide variety of innovative solutions and products such as disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products. Products in this segment are sold under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, 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 responsibly improve everyday living for families around the world. Products in this segment include facial and bathroom tissue, paper towels, napkins and related products, and are sold under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve and other brand names.

•

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

Net sales to Walmart Inc. as a percent of our consolidated net sales were approximately 14 percent in 2018, 2017 and 2016.

	52	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

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

Consolidated Operations by Business Segment

	Year Ended December 31
	2018				2017				2016
NET SALES(a)
Personal Care	$	9,037			$	9,078			$	9,046
Consumer Tissue	6,015				5,932				5,967
K-C Professional	3,382				3,297				3,235
Corporate & Other	52				41				39
TOTAL NET SALES	$	18,486			$	18,348			$	18,287
OPERATING PROFIT(b)
Personal Care	$	1,833			$	1,933			$	1,884
Consumer Tissue	875				1,052				1,136
K-C Professional	634				645				616
Corporate & Other(c)	(1,112		)		(245		)		(245		)
Other (income) and expense, net(d)	1				27				8
TOTAL OPERATING PROFIT	$	2,229			$	3,358			$	3,383

(a)	Net sales in the U.S. to third parties totaled $8,803, $8,741 and $8,918 in 2018, 2017 and 2016, 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 of $921 related to the 2018 Global Restructuring Program in 2018, and charges related to the 2014 Organization Restructuring of $38 in 2016. Restructuring charges for the 2018 Global Restructuring Program related to the personal care, consumer tissue and K-C Professional business segments were $528, $229 and $125, respectively, for 2018.

(d)	Other (income) and expense, net for 2018 includes income of $12 related to the 2018 Global Restructuring Program, 2017 includes a charge of $24 for the early redemption of debt and 2016 includes income of $11 related to the deconsolidation of our Venezuelan operations.

	53	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

	Personal Care				Consumer Tissue				K-C Professional				Corporate & Other				Total
Depreciation and Amortization
2018	$	426			$	331			$	121			$	4			$	882
2017	324				283				112				5				724
2016	305				280				116				4				705
Capital Spending
2018	415				299				157				6				877
2017	405				281				92				7				785
2016	421				250				95				5				771
Goodwill(a)
2018	564				522				388				—				1,474
2017	617				559				400				—				1,576
2016	549				538				393				—				1,480
Assets
2018	6,208				4,738				2,285				1,287				14,518
2017	6,592				5,007				2,255				1,297				15,151
2016	6,141				4,761				2,151				1,549				14,602

(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)		2018				2017				2016
Consumer tissue products		$	6.0			$	5.9			$	6.0
Baby and child care products		6.3				6.3				6.4
Away-from-home professional products		3.4				3.3				3.2
All other		2.8				2.8				2.7
Consolidated		$	18.5			$	18.3			$	18.3

Note 15. Supplemental Data

Supplemental Income Statement Data

	Year Ended December 31
	2018				2017				2016
Advertising expense	$	655			$	648			$	665
Research expense	317				309				326

	54	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

Equity Companies' Data

	Net Sales				Gross Profit				Operating Profit				Net Income				Corporation's Share of Net Income
2018	$	2,264			$	635			$	388			$	215			$	103
2017	2,191				627				378				214				104
2016	2,138				720				454				276				132
	Current Assets				Non-Current Assets				Current Liabilities				Non-Current Liabilities				Stockholders' Equity
2018	$	921			$	1,247			$	578			$	1,237			$	353
2017	828				1,232				415				1,125				520
2016	963				1,168				531				1,046				554

Equity companies are principally engaged in operations in the personal care and consumer tissue businesses. At December 31, 2018, 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, 2018, our investment in this equity company was $163, and the estimated fair value of the investment was $2.3 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, 2018, undistributed net income of equity companies included in consolidated retained earnings was $1.0 billion.

Supplemental Balance Sheet Data

	December 31
Summary of Accounts Receivable, Net	2018				2017
From customers	$	2,050			$	2,203
Other	167				168
Less allowance for doubtful accounts and sales discounts	(53		)		(56		)
Total	$	2,164			$	2,315

	December 31
	2018												2017
Summary of Inventories by Major Class	LIFO				Non- LIFO				Total				LIFO				Non- LIFO				Total
Raw materials	$	99			$	263			$	362			$	87			$	258			$	345
Work in process	120				94				214				110				103				213
Finished goods	461				692				1,153				421				684				1,105
Supplies and other	—				275				275				—				303				303
	680				1,324				2,004				618				1,348				1,966
Excess of FIFO or weighted-average cost over LIFO cost	(191		)		—				(191		)		(176		)		—				(176		)
Total	$	489			$	1,324			$	1,813			$	442			$	1,348			$	1,790

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.

	55	KIMBERLY-CLARK CORPORATION - 2018 Annual Report

	December 31
Summary of Property, Plant and Equipment, Net	2018				2017
Land	$	169			$	173
Buildings	2,787				2,830
Machinery and equipment	14,059				14,612
Construction in progress	699				300
	17,714				17,915
Less accumulated depreciation	(10,555		)		(10,479		)
Total	$	7,159			$	7,436

Property, plant and equipment, net in the U.S. as of December 31, 2018 and 2017 was $3,625 and $3,591, respectively.

	December 31
Summary of Accrued Expenses	2018				2017
Accrued advertising and promotion	$	399			$	394
Accrued salaries and wages	369				449
Accrued rebates	239				227
Accrued taxes - income and other	260				249
Accrued restructuring	118				—
Accrued interest	75				68
Derivatives	14				45
Other	319				298
Total	$	1,793			$	1,730

Supplemental Cash Flow Statement Data

Summary of Cash Flow Effects of Operating Working Capital	Year Ended December 31
2018				2017				2016
Accounts receivable	$	33			$	(44	)		$	(23	)
Inventories	(127		)		(33		)		230
Trade accounts payable	392				174				(61		)
Accrued expenses	115				(102		)		26
Accrued income taxes	64				(176		)		121
Derivatives	30				(47		)		43
Currency and other	(118		)		80				(2		)
Total	$	389			$	(148	)		$	334

	Year Ended December 31
Other Cash Flow Data	2018				2017				2016
Interest paid	$	264			$	354			$	315
Income taxes paid	395				961				744

	56	KIMBERLY-CLARK CORPORATION - 2018 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, 2018 and 2017, 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, 2018, 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, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, 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, 2018, 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 7, 2019, 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 7, 2019

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

	57	KIMBERLY-CLARK CORPORATION - 2018 Annual Report