Item 1. Financial Statements

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

						Three Months Ended September 30												Nine Months Ended September 30
(In millions, except per share amounts)						2024						2023						2024						2023
Net Sales						$	4,952					$	5,132					$	15,130					$	15,461
Cost of products sold						3,168						3,294						9,625						10,166
Gross Profit						1,784						1,838						5,505						5,295
Marketing, research and general expenses						1,097						1,029						3,202						2,968
Impairment of intangible assets						97						—						97						658
Other (income) and expense, net						(564)						35						(456)						(5)
Operating Profit						1,154						774						2,662						1,674
Nonoperating expense						(15)						(20)						(45)						(78)
Interest income						18						18						37						34
Interest expense						(67)						(74)						(206)						(223)
Income Before Income Taxes and Equity Interests						1,090						698						2,448						1,407
Provision for income taxes						(223)						(157)						(494)						(298)
Income Before Equity Interests						867						541						1,954						1,109
Share of net income of equity companies						48						50						172						143
Net Income						915						591						2,126						1,252
Net (income) loss attributable to noncontrolling interests						(8)						(4)						(28)						3
Net Income Attributable to Kimberly-Clark Corporation						$	907					$	587					$	2,098					$	1,255
Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic						$	2.70					$	1.74					$	6.23					$	3.71
Diluted						$	2.69					$	1.73					$	6.21					$	3.70

See notes to the unaudited interim condensed consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

						Three Months Ended September 30												Nine Months Ended September 30
(In millions)						2024						2023						2024						2023
Net Income						$	915					$	591					$	2,126					$	1,252
Other Comprehensive Income (Loss), Net of Tax
Unrealized currency translation adjustments						149						(144)						(48)						(103)
Employee postretirement benefits						(9)						1						12						17
Cash flow hedges and other						(62)						111						58						80
Total Other Comprehensive Income (Loss), Net of Tax						78						(32)						22						(6)
Comprehensive Income						993						559						2,148						1,246
Comprehensive (income) loss attributable to noncontrolling interests						(14)						(4)						(28)						8
Comprehensive Income Attributable to Kimberly-Clark Corporation						$	979					$	555					$	2,120					$	1,254

See notes to the unaudited interim condensed consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(2024 Data is Unaudited)

(In millions, except par value)						September 30, 2024						December 31, 2023
ASSETS
Current Assets
Cash and cash equivalents						$	1,111					$	1,093
Accounts receivable, net						2,229						2,135
Inventories						1,937						1,955
Other current assets						570						520
Total Current Assets						5,847						5,703
Property, Plant and Equipment, Net						7,703						7,913
Investments in Equity Companies						362						306
Goodwill						2,058						2,085
Other Intangible Assets, Net						97						197
Other Assets						1,098						1,140
TOTAL ASSETS						$	17,165					$	17,344
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year						$	569					$	567
Trade accounts payable						3,643						3,653
Accrued expenses and other current liabilities						2,449						2,316
Dividends payable						405						394
Total Current Liabilities						7,066						6,930
Long-Term Debt						6,882						7,417
Noncurrent Employee Benefits						641						669
Deferred Income Taxes						355						374
Other Liabilities						751						860
Redeemable Preferred Securities of Subsidiaries						26						26
Stockholders' Equity
Kimberly-Clark Corporation
Preferred stock - no par value - authorized 20.0 million shares, none issued						—						—
Common stock - $1.25 par value - authorized 1,200.0 million shares; issued 378.6 million shares as of September 30, 2024 and December 31, 2023						473						473
Additional paid-in capital						844						878
Common stock held in treasury, at cost - 45.1 and 41.6 million shares as of September 30, 2024 and December 31, 2023, respectively						(5,751)						(5,222)
Retained earnings						9,279						8,368
Accumulated other comprehensive income (loss)						(3,560)						(3,582)
Total Kimberly-Clark Corporation Stockholders' Equity						1,285						915
Noncontrolling Interests						159						153
Total Stockholders' Equity						1,444						1,068
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY						$	17,165					$	17,344

See notes to the unaudited interim condensed consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

						Three Months Ended September 30, 2024
(In millions, except per share amounts. Shares in thousands)						Common Stock Issued															Additional Paid-in Capital						Treasury Stock																		Retained Earnings						Accumulated Other Comprehensive Income (Loss)									Non-controlling Interests						Total Stockholders' Equity
			Shares						Amount												Shares						Amount
Balance at June 30, 2024						378,597						$	473								$	802					41,588						$	(5,241)											$	8,734					$	(3,632)								$	145					$	1,281
Net income in stockholders' equity, excludes redeemable interests' share						—						—									—						—						—												907						—									7						914
Other comprehensive income, net of tax, excludes redeemable interests' share						—						—									—						—						—												—						72									6						78
Stock-based awards exercised or vested						—						—									2						(695)						83												—						—									—						85
Shares repurchased						—						—									—						4,180						(594)												—						—									—						(594)
Recognition of stock-based compensation						—						—									38						—						—												—						—									—						38
Dividends declared ($1.22 per share)						—						—									—						—						—												(409)						—									1						(408)
Other						—						—									2						—						1												47						—									—						50
Balance at September 30, 2024						378,597						$	473								$	844					45,073						$	(5,751)											$	9,279					$	(3,560)								$	159					$	1,444

						Nine Months Ended September 30, 2024
(In millions, except per share amounts. Shares in thousands)						Common Stock Issued															Additional Paid-in Capital						Treasury Stock																		Retained Earnings						Accumulated Other Comprehensive Income (Loss)									Non-controlling Interests						Total Stockholders' Equity
			Shares						Amount												Shares						Amount
Balance at December 31, 2023						378,597						$	473								$	878					41,599						$	(5,222)											$	8,368					$	(3,582)								$	153					$	1,068
Net income in stockholders' equity, excludes redeemable interests' share						—						—									—						—						—												2,098						—									25						2,123
Other comprehensive income, net of tax, excludes redeemable interests' share						—						—									—						—						—												—						22									—						22
Stock-based awards exercised or vested						—						—									(148)						(1,927)						223												—						—									—						75
Shares repurchased						—						—									—						5,401						(753)												—						—									—						(753)
Recognition of stock-based compensation						—						—									107						—						—												—						—									—						107
Dividends declared ($3.66 per share)						—						—									—						—						—												(1,231)						—									(19)						(1,250)
Other						—						—									7						—						1												44						—									—						52
Balance at September 30, 2024						378,597						$	473								$	844					45,073						$	(5,751)											$	9,279					$	(3,560)								$	159					$	1,444

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

						Three Months Ended September 30, 2023
(In millions, except per share amounts. Shares in thousands)						Common Stock Issued															Additional Paid-in Capital						Treasury Stock																		Retained Earnings						Accumulated Other Comprehensive Income (Loss)									Non-controlling Interests						Total Stockholders' Equity
			Shares						Amount												Shares						Amount
Balance at June 30, 2023						378,597						$	473								$	697					40,382						$	(5,071)											$	8,040					$	(3,639)								$	151					$	651
Net income in stockholders' equity, excludes redeemable interests' share						—						—									—						—						—												587						—									9						596
Other comprehensive income, net of tax, excludes redeemable interests' share						—						—									—						—						—												—						(32)									(1)						(33)
Stock-based awards exercised or vested						—						—									(2)						(23)						2												—						—									—						—
Shares repurchased						—						—									—						255						(32)												—						—									—						(32)
Recognition of stock-based compensation						—						—									62						—						—												—						—									—						62
Dividends declared ($1.18 per share)						—						—									—						—						—												(399)						—									—						(399)
Other						—						—									4						—						—												(11)						1									1						(5)
Balance at September 30, 2023						378,597						$	473								$	761					40,614						$	(5,101)											$	8,217					$	(3,670)								$	160					$	840

						Nine Months Ended September 30, 2023
(In millions, except per share amounts. Shares in thousands)						Common Stock Issued															Additional Paid-in Capital						Treasury Stock																		Retained Earnings						Accumulated Other Comprehensive Income (Loss)									Non-controlling Interests						Total Stockholders' Equity
			Shares						Amount												Shares						Amount
Balance at December 31, 2022						378,597						$	473								$	679					41,135						$	(5,137)											$	8,201					$	(3,669)								$	153					$	700
Net income in stockholders' equity, excludes redeemable interests' share						—						—									—						—						—												1,255						—									29						1,284
Other comprehensive income, net of tax, excludes redeemable interests' share						—						—									—						—						—												—						(1)									(7)						(8)
Stock-based awards exercised or vested						—						—									(61)						(1,261)						133												—						—									—						72
Shares repurchased						—						—									—						740						(97)												—						—									—						(97)
Recognition of stock-based compensation						—						—									130						—						—												—						—									—						130
Dividends declared ($3.54 per share)						—						—									—						—						—												(1,196)						—									(16)						(1,212)
Other						—						—									13						—						—												(43)						—									1						(29)
Balance at September 30, 2023						378,597						$	473								$	761					40,614						$	(5,101)											$	8,217					$	(3,670)								$	160					$	840

See notes to the unaudited interim condensed consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

						Nine Months Ended September 30
(In millions)						2024						2023
Operating Activities
Net income						$	2,126					$	1,252
Depreciation and amortization						564						566
Asset impairments						114						676
Stock-based compensation						110						131
Deferred income taxes						(86)						(297)
Net (gains) losses on asset and business dispositions						(474)						(77)
Equity companies' earnings (in excess of) less than dividends paid						(93)						(74)
Operating working capital						154						111
Postretirement benefits						10						34
Other						(8)						5
Cash Provided by Operations						2,417						2,327
Investing Activities
Capital spending						(512)						(549)
Proceeds from asset and business dispositions						649						219
Investments in time deposits						(456)						(545)
Maturities of time deposits						428						605
Other						(15)						4
Cash Provided by (Used for) Investing						94						(266)
Financing Activities
Cash dividends paid						(1,220)						(1,189)
Change in short-term debt						2						(336)
Debt proceeds						—						357
Debt repayments						(554)						(350)
Proceeds from exercise of stock options						128						97
Acquisitions of common stock for the treasury						(752)						(95)
Cash paid for redemption of common securities of Thinx						—						(48)
Cash dividends paid to noncontrolling interests						(19)						(16)
Other						(65)						(40)
Cash Used for Financing						(2,480)						(1,620)
Effect of Exchange Rate Changes on Cash and Cash Equivalents						(13)						(54)
Change in Cash and Cash Equivalents						18						387
Cash and Cash Equivalents - Beginning of Period						1,093						427
Cash and Cash Equivalents - End of Period						$	1,111					$	814

See notes to the unaudited interim condensed consolidated financial statements.

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair statement of the results for the periods presented have been reflected. Amounts are reported in millions, except per share amounts, unless otherwise noted.

For further information, refer to the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2023. The terms "Corporation," "Kimberly-Clark," "K-C," "we," "our" and "us" refer to Kimberly-Clark Corporation and its consolidated subsidiaries.

Highly Inflationary Accounting

GAAP requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100%. Under highly inflationary accounting, the countries’ functional currency becomes the U.S. dollar, and its income statement and balance sheet are measured in U.S. dollars using both current and historical rates of exchange. In the second quarter of 2018, published inflation indices indicated that the three-year cumulative inflation in Argentina exceeded 100%, and as of July 1, 2018, we adopted highly inflationary accounting for our subsidiaries in Argentina (“K-C Argentina”). 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. As of September 30, 2024, K-C Argentina had an immaterial net peso monetary position. Net sales of K-C Argentina were approximately 1% of our consolidated net sales for the three and nine months ended September 30, 2024 and 2023.

In the first quarter of 2022, published inflation indices indicated that the three-year cumulative inflation in Türkiye exceeded 100%, and as of April 1, 2022, we adopted highly inflationary accounting for our subsidiary in Türkiye (“K‑C Türkiye”). The effect of changes in exchange rates on lira-denominated monetary assets and liabilities has been reflected in earnings in Other (income) and expense, net. As of September 30, 2024, K‑C Türkiye had an immaterial net lira monetary position. Net sales of K-C Türkiye were less than 1% of our consolidated net sales for the three and nine months ended September 30, 2024 and 2023.

Recently Adopted Accounting Standard

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) No. 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50). The new guidance requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. We adopted this ASU as of January 1, 2023, except for the amendment on roll forward information which was adopted January 1, 2024. As the guidance requires only additional disclosure, there were no effects of this standard on our financial position, results of operations or cash flows.

Recently Issued Accounting Standards

In 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280). The new guidance improves reportable segment disclosures primarily through enhanced disclosures about significant segment expenses and by requiring current annual disclosures to be provided in interim periods. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The new guidance is to be applied retrospectively to all prior periods presented unless impracticable to do so. As the guidance requires only additional disclosure, there will be no effects of this standard on our financial position, results of operations or cash flows.

In 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted, and the amendments should be

applied on a prospective basis with retrospective application permitted. As the guidance requires only additional disclosure, there will be no effects of this standard on our financial position, results of operations or cash flows.

In March 2024, the Securities and Exchange Commission (“SEC”) adopted final rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rules require disclosure of, among other things: climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition, and material direct greenhouse gas ("GHG") emissions from operations owned or controlled (Scope 1) and/or indirect GHG emissions from purchased energy consumed in operations (Scope 2). Additionally, the rules require disclosure of certain climate-related metrics subject to certain materiality thresholds, including the effects of severe weather events and other natural conditions. Disclosure requirements will begin phasing in prospectively for fiscal years beginning on or after January 1, 2025. Subsequent to issuance, the rules became the subject of litigation, and the SEC has issued a stay to allow the legal process to proceed. We are currently evaluating the impact of the rules on our disclosures and will monitor the litigation progress for possible impacts on the disclosure requirements under the rules.

Note 2. 2024 Transformation Initiative

On March 27, 2024, we announced the 2024 Transformation Initiative intended to improve our focus on growth and reduce our structural cost base by reorganizing into three new business segments, making the corporate and regional overhead cost structures more efficient and optimizing our global supply chain. The transformation is expected to impact our organization in all major geographies, and workforce reductions are expected to be in the range of 4% to 5%. Certain actions under the transformation initiative are being finalized for implementation, and accounting for such actions will commence when the actions are authorized for execution.

We expect to complete the transition to the new organizational structure by the end of 2024, and the transformation initiative is expected to be completed by the end of 2026, with total costs anticipated to be approximately $1.5 billion pre-tax. Cash costs are expected to be approximately half of that amount, primarily related to workforce reductions. Expected non-cash charges are primarily related to incremental depreciation and asset write-offs, including losses associated with the expected exit of certain markets.

The following charges were incurred in connection with the 2024 Transformation Initiative:

						Three Months Ended September 30, 2024						Nine Months Ended September 30, 2024
Cost of products sold:
Charges for workforce reductions						$	12					$	46
Asset write-offs						8						13
Incremental depreciation						10						13
Other exit costs						1						4
Total						31						76
Marketing, research and general expenses:
Charges for workforce reductions						48						117
Other exit costs						45						91
Total						93						208
Other (income) and expense, net(a)						—						75
Total charges						124						359
Provision for income taxes						(18)						(102)
Net charges						$	106					$	257

(a)Other (Income) and expense, net includes losses recognized for the exit of certain businesses and markets as part of the transformation initiative.

See Note 9 for charges by segment.

The following summarizes the transformation initiative liabilities activity:

						2024
Transformation initiative liabilities at January 1						$	—
Charges for workforce reductions and other cash exit costs						244
Cash payments						(79)
Currency and other						3
Transformation initiative liabilities at September 30						$	168

Transformation initiative liabilities of $168 are recorded in Accrued expenses and other current liabilities as of September 30, 2024. The charges related to the transformation initiatives are reflected within Operating Activities of our condensed consolidated statements of cash flows.

Note 3. Acquisitions and Divestitures

Acquisition

On February 24, 2022, we completed our acquisition of a majority and controlling share of Thinx Inc. (“Thinx”), an industry leader in the reusable period and incontinence underwear category, for total consideration of $181. We previously accounted for our ownership interest in Thinx as an equity method investment, but upon increasing our ownership to 58%, we began consolidating the operations of Thinx into our condensed consolidated financial statements at the end of the first quarter of 2022.

In the first quarter of 2023, we delivered a redemption notice to the third-party minority owner with respect to a portion of the remaining common securities of Thinx. The redemption closed in the second quarter of 2023, and we acquired additional ownership of Thinx for $48, increasing our controlling ownership to 70%. As part of the completion of a negotiated final redemption, we acquired the remaining 30% ownership of Thinx for $47 in the fourth quarter of 2023. As the purchase of additional ownership in an already controlled subsidiary represents an equity transaction, no gain or loss was recognized in consolidated net income or comprehensive income.

Divestitures

On July 1, 2024, we completed the sale transaction that was announced on April 7, 2024, of the personal protective equipment ("PPE") business included in our K-C Professional business segment for total consideration of $635, including the initial purchase price of $640 less working capital and other closing adjustments of $5. The transaction included Kimtech branded products, such as gloves, apparel and masks, and KleenGuard branded products, such as gloves, apparel, respirators and eyewear, which serve a variety of scientific and industrial industries globally. Upon closure of the transaction, a pre-tax gain of $566 ($453 after-tax) was recognized in Other (income) and expense, net. This gain is net of transaction costs of $14 that were determined to be directly attributable to the sale transaction.

On June 1, 2023, we completed the sale transaction, announced on October 24, 2022, of our Neve tissue brand and related consumer and K-C Professional tissue assets in Brazil for $212. Upon closure of the transaction, a gain of $74 pre-tax was recognized in Other (income) and expense, net. We incurred divestiture-related costs of $30 pre-tax, which were recorded in Cost of products sold and Marketing, research and general expenses, resulting in a net benefit of $44 pre-tax ($26 after-tax).

See Note 3, Acquisition and Divestiture, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for further information related to the Thinx acquisition and Brazil divestiture.

Note 4. Impairment of Intangible Assets

2024 Intangible Asset Impairment

During the third quarter of 2024, we revised internal financial projections for our Softex and Thinx businesses to reflect updated expectations of future financial performance in light of current performance and as part of our re-organization efforts discussed in Note 2. As part of these revisions, we performed impairment assessments for our indefinite-lived brand names and finite-lived intangible assets, primarily brand names and distributor relationships, all of which are included in the Personal Care business segment. As a result of these assessments, we recognized impairment charges of $97 pre-tax ($57 after-tax) to write-down these intangible assets to their respective fair values. The valuation methods used in the assessments included the relief from royalty and distributor relationships methods. These impairment charges were primarily caused by increased attrition in our distributor relationships valuation model and the continued challenges arising from modified consumer shopping behavior in the post-COVID-19 period coupled with revisions to our long-term strategy and outlook. These noncash charges were included in Impairment of intangible assets in our condensed consolidated statements of income and in Asset impairments within Operating Activities in our condensed consolidated statements of cash flows.

We believe our estimates and assumptions used in the valuations are reasonable and comparable to those that would be used by other market participants; however, actual events and results could differ substantially from those used in the valuation, and to the extent such factors result in a failure to achieve the projected cash flows used to estimate fair value, additional noncash impairment charges could be required in the future.

2023 Intangible Asset Impairment

In the second quarter of 2023, we conducted forecasting and strategic reviews and integration assessments of our Softex Indonesia business, acquired in the fourth quarter of 2020, and with performance below expectations since acquisition, we revised internal financial projections of the business to reflect updated expectations of future financial performance. As a result of separate management reviews, we also have revised internal financial projections associated with our acquisition of a controlling interest in Thinx as a result of performance below expectations.

These revisions were considered triggering events requiring interim impairment assessments to be performed relative to the intangible assets that had been recorded as part of these acquisitions. These intangible assets were recorded as part of the Personal Care business segment and included indefinite-lived and finite-lived brands and finite-lived distributor and customer relationships. As a result of the interim impairment assessments, we recognized impairment charges, principally arising from the impairment charge of $593 related to the Softex business, totaling $658 pre-tax ($483 after-tax) to write-down these intangible assets to their respective fair values aggregating to $188 as of June 30, 2023.

See Note 4, Goodwill and Other Intangible Assets, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for further information.

Note 5. Fair Value Information

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

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

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

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

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

During the nine months ended September 30, 2024 and for the full year 2023, there were no significant transfers to or from level 3 fair value determinations.

Derivative assets and liabilities are measured on a recurring basis at fair value. As of September 30, 2024 and December 31, 2023, derivative assets were $73 and $70, respectively, and derivative liabilities were $197 and $259, respectively. The fair values of derivatives used to manage interest rate risk and commodity price risk are based on the Secured Overnight Financing Rate ("SOFR") and interest rate swap curves and on commodity price quotations, respectively. The fair values of hedging instruments used to manage foreign currency risk are based on published quotations of spot currency rates and forward points, which are converted into implied forward currency rates. Measurement of our derivative assets and liabilities is considered a level 2 measurement. Additional information on our classification and use of derivative instruments is contained in Note 8.

Redeemable preferred securities of subsidiaries are measured on a recurring basis at their estimated redemption values, which approximate fair value. As of September 30, 2024 and December 31, 2023, the securities were valued at $26. The securities are not traded in active markets, and their measurement is considered a level 3 measurement.

Company-owned life insurance ("COLI") assets are measured on a recurring basis at fair value. COLI assets were $72 and $67 as of September 30, 2024 and December 31, 2023, respectively. The COLI policies are a source of funding primarily for our nonqualified employee benefits and are included in Other Assets. The COLI policies are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy.

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

			Fair Value Hierarchy Level						Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
						September 30, 2024												December 31, 2023
Assets
Cash and cash equivalents(a)			1						$	1,111					$	1,111					$	1,093					$	1,093
Time deposits(b)			1						197						197						169						169
Non-US government bonds(c)			2						20						20						—						—
Liabilities
Short-term debt(d)			2						4						4						2						2
Long-term debt(e)			2						7,447						7,152						7,982						7,569

(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 condensed consolidated balance sheets, as appropriate. Time deposits are recorded at cost, which approximates fair value.

(c)Non-US government bonds are composed of foreign issued debt securities that are classified as held-to-maturity because we have the positive intent and ability to hold the securities to maturity. These securities are recorded at amortized cost and are included in Other current assets or Other Assets in the condensed consolidated balance sheets, as appropriate.

(d)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.

(e)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 6. Earnings Per Share ("EPS")

There are no adjustments required to be made to net income for purposes of computing basic and diluted EPS. The dilutive effect of stock options and other stock-based awards is reflected in diluted EPS by application of the treasury stock method. The average number of common shares outstanding is reconciled to those used in the basic and diluted EPS computations as follows:

						Three Months Ended September 30												Nine Months Ended September 30
(Millions of shares)						2024						2023						2024						2023
Basic						335.7						338.1						336.6						337.9
Dilutive effect of stock options and restricted share unit awards						1.5						0.8						1.3						0.9
Diluted						337.2						338.9						337.9						338.8

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 September 30, 2024 and 2023 was 333.5 million and 338.0 million, respectively.

Note 7. Stockholders' Equity

Net unrealized currency gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries, except those in highly inflationary economies, are recorded in Accumulated Other Comprehensive Income ("AOCI"). For these operations, changes in exchange rates generally do not affect cash flows; therefore, unrealized translation adjustments are recorded in AOCI rather than net income. Upon sale or substantially complete liquidation of any of these subsidiaries, the applicable unrealized translation would be removed from AOCI and reported as part of the gain or loss on the sale or liquidation.

Also included in unrealized translation amounts are the effects of foreign currency exchange rate changes on intercompany balances of a long-term investment nature and transactions designated as hedges of net foreign investments.

The change in net unrealized currency translation for the nine months ended September 30, 2024 was primarily due to the weakening of certain foreign currencies versus the U.S. dollar.

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, 2022						$	(2,769)					$	(789)					$	52					$	(163)
Other comprehensive income (loss) before reclassifications						(96)						(28)						—						(50)
(Income) loss reclassified from AOCI						2						45			(a)			—			(a)			126
Net current period other comprehensive income (loss)						(94)						17						—						76
Balance as of September 30, 2023						$	(2,863)					$	(772)					$	52					$	(87)
Balance as of December 31, 2023						$	(2,678)					$	(791)					$	39					$	(152)
Other comprehensive income (loss) before reclassifications						(90)						(10)						1						19
(Income) loss reclassified from AOCI						43			(b)			23			(a)			(2)			(a)			38
Net current period other comprehensive income (loss)						(47)						13						(1)						57
Balance as of September 30, 2024						$	(2,725)					$	(778)					$	38					$	(95)

(a) Included in computation of net periodic benefit costs.

(b) Included in Other (income) and expense, net as part of the charges related to the 2024 Transformation Initiative (see Note 2).

Note 8. 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.

As of September 30, 2024 and December 31, 2023, derivative assets were $73 and $70, respectively, and derivative liabilities were $197 and $259, respectively, primarily comprised of foreign currency exchange and commodity price contracts. Derivative assets are recorded in Other current assets or Other Assets, as appropriate, and derivative liabilities are recorded in Accrued expenses and other current liabilities or Other Liabilities, as appropriate.

Foreign Currency Exchange Rate Risk

Translation adjustments result from translating foreign entities' financial statements into U.S. dollars from their functional currencies. The risk to any particular entity's net assets is reduced to the extent that the entity is financed with local currency borrowings. A portion of our balance sheet translation exposure for certain affiliates, which results from changes in translation rates between the affiliates’ functional currencies and the U.S. dollar, is hedged with cross-currency swap contracts and certain foreign denominated debt which are designated as net investment hedges. The foreign currency exposure on certain non-functional currency denominated monetary assets and liabilities, primarily intercompany loans and accounts payable, is hedged with primarily undesignated derivative instruments.

Derivative instruments are entered into to hedge a portion of forecasted cash flows denominated in foreign currencies for non-U.S. operations' purchases of raw materials, which are priced in U.S. dollars, and imports of intercompany finished goods and work-in-process priced predominantly in U.S. dollars and euros. The derivative instruments used to manage these exposures are designated as cash flow hedges.

Interest Rate Risk

Interest rate risk is managed using a portfolio of variable and fixed-rate debt composed of short and long-term instruments. Interest rate swap contracts may be used to facilitate the maintenance of the desired ratio of variable and fixed-rate debt and are designated as fair value hedges. From time to time, we also hedge the anticipated issuance of fixed-rate debt, and these contracts are designated as cash flow hedges.

Commodity Price Risk

We use derivative instruments, such as commodity forward and price swap contracts, to hedge a portion of our exposure to market risk arising from changes in prices of certain commodities. These derivatives are designated as cash flow hedges of specific quantities of the underlying commodity expected to be purchased in future months. In addition, we utilize negotiated contracts of varying durations along with strategic pricing mechanisms to manage volatility for a portion of our commodity costs.

Fair Value Hedges

Derivative instruments that are designated and qualify as fair value hedges are predominantly used to manage interest rate risk. The fair values of these interest rate derivative instruments are recorded as an asset or liability, as appropriate, with the offset recorded in Interest expense. The offset to the change in fair values of the related debt is also recorded in Interest expense. Any realized gain or loss on the derivatives that hedge interest rate risk is amortized to Interest expense over the life of the related debt. As of September 30, 2024, the aggregate notional values and carrying values of debt subject to outstanding interest rate contracts designated as fair value hedges were $525 and $493, respectively. For the nine months ended September 30, 2024 and 2023, gains or losses recognized in Interest expense for interest rate swaps were not significant.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is initially recorded in AOCI, net of related income taxes, and recognized in earnings in the same income statement line and period that the hedged exposure affects earnings. As of September 30, 2024, outstanding commodity forward and price swap contracts were in place to hedge a portion of our estimated requirements of the related underlying commodities in the remainder of 2024 and future periods. As of September 30, 2024, the aggregate notional value of outstanding foreign exchange derivative contracts designated as cash flow hedges was $3.1 billion. For the nine months ended September 30, 2024, and 2023, no significant gains or losses were reclassified into Interest expense, Cost of products sold or Other (income) and expense, net as a result of the discontinuance of cash flow hedges due to the original forecasted transaction no longer being probable of occurring.

As of September 30, 2024, net losses expected to be reclassified from AOCI into Interest expense, Cost of products sold or Other (income) and expense, net during the next twelve months are $48. The maximum maturity of cash flow hedges in place as of September 30, 2024 is August 2027.

Net Investment Hedges

For derivative instruments that are designated and qualify as net investment hedges, the aggregate notional value was $1.7 billion as of September 30, 2024. We exclude the interest accruals on cross-currency swap contracts and the forward points on foreign exchange forward contracts from the assessment and measurement of hedge effectiveness. We recognize the interest accruals on cross-currency swap contracts in earnings within Interest expense. We amortize the forward points on foreign exchange contracts into earnings within Interest expense over the life of the hedging relationship. Changes in fair value of net investment hedges are recorded in AOCI and offset the change in the value of the net investment being hedged. For the nine months ended September 30, 2024 and September 30, 2023, unrealized gains of $5 and $21, respectively, related to net investment hedge fair value changes were recorded in AOCI and no significant amounts were reclassified from AOCI to Interest expense.

For the nine months ended September 30, 2024, and 2023, no significant amounts were excluded from the assessment of net investment, fair value or cash flow hedge effectiveness.

Undesignated Hedging Instruments

Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in Other (income) and expense, net. Gains of $54 and losses of $16 were recorded in the three months ended September 30, 2024 and 2023, respectively. Gains of $22 and losses of $22 were recorded in the nine months ended September 30, 2024 and 2023, respectively. The effect on earnings from the use of these non-designated derivatives is substantially neutralized by the transactional gains and losses recorded on the underlying assets and liabilities. As of September 30, 2024, the notional value of these undesignated derivative instruments was approximately $2.8 billion.

Note 9. Business Segment Information

We are organized into operating segments based on product groupings. These operating segments have been aggregated into three reportable global business segments: Personal Care, Consumer Tissue and K-C Professional. The reportable segments were determined in accordance with how our Chief Executive Officer, who is 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 unallocated general corporate expenses, Other (income) and expense, net and income and expense not associated with ongoing operations of the segments, including the costs of corporate decisions related to the 2024 Transformation Initiative 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, reusable underwear and other related products. Products in this segment are sold under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Thinx, Poise, Depend, Plenitud, Softex 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, Andrex, Viva, Scottex and other brand names.

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

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

						Three Months Ended September 30																		Nine Months Ended September 30
						2024						2023						Change						2024						2023						Change
NET SALES
Personal Care						$	2,635					$	2,700					-2		%				$	8,040					$	8,089					-1		%
Consumer Tissue						1,539						1,567						-2		%				4,624						4,750						-3		%
K-C Professional						767						854						-10		%				2,431						2,588						-6		%
Corporate & Other						11						11						N.M.						35						34						N.M.
TOTAL NET SALES						$	4,952					$	5,132					-4		%				$	15,130					$	15,461					-2		%
OPERATING PROFIT
Personal Care						$	482					$	502					-4		%				$	1,567					$	1,461					+7		%
Consumer Tissue						265						267						-1		%				800						707						+13		%
K-C Professional						161						168						-4		%				535						514						+4		%
Corporate & Other(a)						(318)						(128)						N.M.						(696)						(1,013)						N.M.
Other (income) and expense, net(a)						(564)						35						N.M.						(456)						(5)						N.M.
TOTAL OPERATING PROFIT						$	1,154					$	774					+49		%				$	2,662					$	1,674					+59		%

(a) Corporate & Other and Other (income) and expense, net include income and expense not associated with the ongoing operations of the segments, including in 2024 the charges related to the 2024 Transformation Initiative, the impairment of intangible assets and the gain on sale of our PPE business. The 2024 Transformation Initiative charges related to the Personal Care, Consumer Tissue and K-C Professional business segments were $59, $37 and $21, respectively for the three months ended September 30, 2024 and $131, $65 and $46, respectively for the nine months ended September 30, 2024. In 2023, it includes the net benefit related to the sale of our Brazil tissue and K-C Professional business and the impairment of intangible assets.

N.M. - Not Meaningful

Sales of Principal Products:

						Three Months Ended September 30												Nine Months Ended September 30
						2024						2023						2024						2023
Baby and child care products						$	1,723					$	1,780					$	5,308					$	5,323
Consumer tissue products						1,539						1,567						4,624						4,750
Away-from-home professional products						767						854						2,431						2,588
All other						923						931						2,767						2,800
Consolidated						$	4,952					$	5,132					$	15,130					$	15,461

Note 10. Supplemental Balance Sheet Data

The following schedule presents a summary of inventories by major class:

						September 30, 2024																		December 31, 2023
						LIFO						Non-LIFO						Total						LIFO						Non-LIFO						Total
Raw materials						$	125					$	289					$	414					$	121					$	292					$	413
Work in process						115						84						199						116						95						211
Finished goods						545						657						1,202						520						692						1,212
Supplies and other						—						317						317						—						311						311
						785						1,347						2,132						757						1,390						2,147
Excess of FIFO or weighted-average cost over LIFO cost						(195)						—						(195)						(192)						—						(192)
Total						$	590					$	1,347					$	1,937					$	565					$	1,390					$	1,955

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.

The following schedule presents a summary of property, plant and equipment, net:

			September 30, 2024						December 31, 2023
Land			$	166					$	149
Buildings			3,069						3,067
Machinery and equipment			15,285						15,132
Construction in progress			799						803
			19,319						19,151
Less accumulated depreciation			(11,616)						(11,238)
Total			$	7,703					$	7,913

Supplier Finance Program

We have a supplier finance program managed through two global financial institutions under which we agree to pay the financial institutions the stated amount of confirmed invoices from our participating suppliers on the invoice due date. We, or the global financial institutions, may terminate our agreements at any time upon 30 days written notice. The global financial institutions may terminate our agreements at any time upon three days written notice in the event there are insufficient funds available for disbursement. We do not provide any forms of guarantees under these agreements. Supplier participation in the program is solely up to the supplier, and the participating suppliers negotiate their arrangements directly with the global financial institutions. We have no economic interest in a supplier’s decision to participate in the program, and their participation has no bearing on our payment terms or amounts due. The payment terms that we have with our suppliers under this program generally range from 75 to 180 days and are considered commercially reasonable. The outstanding amount related to the suppliers participating in this program was $1.0 billion as of September 30, 2024 and December 31, 2023, and was recorded within Trade accounts payable.