KIMBERLY-CLARK CORPORATION Introduction
This management's discussion and analysis ("MD&A") of financial condition and
results of operations is intended to provide investors with an understanding of
our recent performance, financial condition and prospects. Dollar amounts are
reported in millions, except per share dollar amounts, unless otherwise noted.
The following will be discussed and analyzed:
•Overview of Third Quarter 2020 Results
•Impact of COVID-19
•Results of Operations and Related Information
•Liquidity and Capital Resources
•Information Concerning Forward-Looking Statements
We describe our business outside North America in two groups - Developing and
Emerging Markets ("D&E") and Developed Markets. D&E markets comprise Eastern
Europe , the Middle East and Africa , Latin America and Asia-Pacific , excluding
Australia and South Korea . Developed Markets consist of Western and Central
Europe , Australia and South Korea . We have three reportable business segments:
Personal Care, Consumer Tissue and K-C Professional. These business segments are
described in greater detail in Note 9 to the unaudited interim consolidated
financial statements.
This section presents a discussion and analysis of our third quarter 2020 net
sales, operating profit and other information relevant to an understanding of
the results of operations. In addition, we provide commentary regarding organic
sales growth, which describes the impact of changes in volume, net selling
prices and product mix on net sales. Change in foreign currency exchange rates
and exited businesses also impact the year-over-year change in net sales. Our
analysis compares the three and nine months ended September 30, 2020 results to
the same periods in 2019.
Throughout this MD&A, we refer to financial measures that have not been
calculated in accordance with accounting principles generally accepted in the
U.S. , or GAAP, and are therefore referred to as non-GAAP financial measures.
These measures include adjusted gross and operating profit, adjusted net income,
adjusted earnings per share, adjusted other (income) and expense, net and
adjusted effective tax rate. We believe these measures provide our investors
with additional information about our underlying results and trends, as well as
insight into some of the financial measures used to evaluate management.
Non-GAAP financial measures are not meant to be considered in isolation or as a
substitute for the comparable GAAP measures, and they should be read only in
conjunction with our unaudited interim consolidated financial statements
prepared in accordance with GAAP. There are limitations to these non-GAAP
financial measures because they are not prepared in accordance with GAAP and may
not be comparable to similarly titled measures of other companies due to
potential differences in methods of calculation and items being excluded. We
compensate for these limitations by using these non-GAAP financial measures as a
supplement to the GAAP measures and by providing reconciliations of the non-GAAP
and comparable GAAP financial measures.
The non-GAAP financial measures exclude the following items for the relevant
time periods as indicated in the reconciliations included later in this MD&A:
•2018 Global Restructuring Program - In 2018, we initiated this restructuring
program to reduce our structural cost base by streamlining and simplifying our
manufacturing supply chain and overhead organization. See Item 1, Note 2 to the
unaudited interim consolidated financial statements for details.
•Acquisition-Related Costs - One-time transaction and integration costs
associated with the acquisition of Softex Indonesia. See Item 1, Note 11 to the
unaudited interim consolidated financial statements for details.
Overview of Third Quarter 2020 Results
•Net sales of $4.7 billion increased 1 percent compared to the year-ago period.
Organic sales increased 3 percent, while changes in foreign currency exchange
rates reduced sales by 2 percent.
•Operating profit was $666 in 2020 and $915 in 2019. Net Income Attributable to
Kimberly-Clark Corporation was $472 in 2020 compared to $671 in 2019, and
diluted earnings per share were $1.38 in 2020 compared to $1.94 in 2019. Results
in both periods include charges related to the 2018 Global Restructuring
Program. Results in 2020 include acquisition-related costs associated with the
acquisition of Softex Indonesia, and results in 2019 also include a gain on the
sale of a manufacturing facility as part of the restructuring.
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Impact of COVID-19
We continue to actively address the COVID-19 situation and its impact globally.
We believe that we will emerge from these events well positioned for long-term
growth, though we cannot reasonably estimate the duration and severity of this
global pandemic or its ultimate impact on the global economy and our business
and results.
We have experienced increased volatility in demand for some of our products as
consumers adapt to the evolving environment. Beginning in the first quarter,
particularly in March, demand across all business segments and major geographies
increased as consumers increased home inventory levels in response to COVID-19.
We expect the increase to be followed by periods of potential demand softness
and volatility as consumers use existing home inventories and demand potentially
returns to more normal levels. Demand for our consumer tissue products has been
elevated this year as more people spend more time at home. Our K-C Professional
business experienced accelerated volume declines in the third quarter reflecting
the reduction in away from home demand.
During 2020, we have experienced temporary closures of certain facilities,
though we have not experienced a material impact from a plant closure to date
and our facilities have largely been exempt or partially exempt from government
closure orders. At many of our facilities, we have been experiencing increased
employee absences, which may continue in the current situation.
During 2020, we also experienced increased volatility in foreign currency
exchange rates and commodity prices, as certain countries experienced increased
macro-economic volatility from the COVID-19 situation.
Results of Operations and Related Information
This section presents a discussion and analysis of our third quarter 2020 net
sales, operating profit and other information relevant to an understanding of
the results of operations.
Consolidated
Nine Months Ended September
Selected Financial Results Three Months Ended September 30 30
Percent
2020 2019 Change 2020 2019 Percent Change
Net Sales:
North America $ 2,562 $ 2,476 +3 % $ 7,786 $ 7,296 +7 %
Outside North America 2,188 2,227 -2 % 6,724 6,777 -1 %
Intergeographic sales (67) (63) N.M. (206) (206) N.M.
Total Net Sales 4,683 4,640 +1 % 14,304 13,867 +3 %
Operating Profit:
North America 626 638 -2 % 2,054 1,818 +13 %
Outside North America 265 292 -9 % 1,012 855 +18 %
Corporate & Other(a) (220) (190) N.M. (544) (599) N.M.
Other (income) and expense, net(a) 5 (175) N.M. 27 (166) N.M.
Total Operating Profit 666 915 -27 % 2,495 2,240 +11 %
Share of net income of equity companies 31 31 - 104 91 +14 %
Net Income Attributable to Kimberly-Clark
Corporation 472 671 -30 % 1,813 1,610 +13 %
Diluted Earnings per Share 1.38 1.94 -29 % 5.30 4.65 +14 %
(a) Corporate & Other and Other (income) and expense, net include income and
expense not associated with the business segments, including adjustments as
indicated in the Non-GAAP Reconciliations.
N.M. - Not Meaningful
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--------------------------------------------------------------------------------GAAP to Non-GAAP Reconciliations of Selected Financial Results
Three Months Ended
2018 Global Softex Indonesia As
As Restructuring Acquisition-Related Adjusted
Reported Program Costs Non-GAAP
Cost of products sold $ 3,093 $ 107 $ - $ 2,986
Gross Profit 1,590 (107) - 1,697
Marketing, research and general expenses 919 25 9 885
Other (income) and expense, net 5 (1) - 6
Operating Profit 666 (131) (9) 806
Nonoperating expense (40) (26) - (14)
Provision for income taxes (114) 50 - (164)
Effective tax rate 20.1 % - - 22.4 %
Share of net income of equity companies 31 - - 31
Net income attributable to noncontrolling
interests (11) - - (11)
Net Income Attributable to Kimberly-Clark
Corporation 472 (107) (9) 588
Diluted Earnings per Share(a) 1.38 (0.31) (0.03) 1.72
Three
Months Ended
2018 Global As
As Restructuring Adjusted
Reported Program Non-GAAP
Cost of products sold $ 3,085 $ 104 $ 2,981
Gross Profit 1,555 (104) 1,659
Marketing, research and general expenses 815 21 794
Other (income) and expense, net (175) (181) 6
Operating Profit 915 56 859
Provision for income taxes (192) (23) (169)
Effective tax rate 22.8 % - 21.5 %
Net Income Attributable to Kimberly-Clark
Corporation 671 33 638
Diluted Earnings per Share(a) 1.94 0.10 1.84
Nine Months Ended
2018 Global Softex Indonesia As
As Restructuring Acquisition-Related Adjusted
Reported Program Costs Non-GAAP
Cost of products sold $ 9,146 $ 237 $ - $ 8,909
Gross Profit 5,158 (237) - 5,395
Marketing, research and general expenses 2,636 75 9 2,552
Other (income) and expense, net 27 (1) - 28
Operating Profit 2,495 (311) (9) 2,815
Nonoperating expense (57) (26) - (31)
Provision for income taxes (510) 83 - (593)
Effective tax rate 22.6 % - - 22.8 %
Share of net income of equity companies 104 (1) - 105
Net income attributable to noncontrolling
interests (37) 2 - (39)
Net Income Attributable to Kimberly-Clark
Corporation 1,813 (253) (9) 2,075
Diluted Earnings per Share(a) 5.30 (0.74) (0.03) 6.06
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Nine
Months Ended
2018 Global As
As Restructuring Adjusted
Reported Program Non-GAAP
Cost of products sold $ 9,398 $ 331 $ 9,067
Gross Profit 4,469 (331) 4,800
Marketing, research and general expenses 2,395 66 2,329
Other (income) and expense, net (166) (182) 16
Operating Profit 2,240 (215) 2,455
Provision for income taxes (467) 35 (502)
Effective tax rate 23.2 % - 22.5 %
Share of net income of equity companies 91 (2) 93
Net income attributable to noncontrolling interests (31) 1 (32)
Net Income Attributable to Kimberly-Clark
Corporation 1,610 (181) 1,791
Diluted Earnings per Share(a) 4.65 (0.52) 5.18
(a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding.
Analysis of Consolidated Results
Adjusted Operating
Net Sales Percent Change Profit Percent Change
Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30 September 30 September 30 September 30
Volume 2 4 Volume 3 10
Net Price 1 1 Net Price 3 5
Mix/Other 1 1 Input Costs 3 9
Currency (2) (3) Cost Savings(c) 16 18
Total(a) 1 3 Currency Translation (1) (2)
Other(d) (30) (25)
Organic(b) 3 6 Total (6) 15
(a) Total may not equal the sum of volume, net price, mix/other and currency due
to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE (Focused On Reducing Costs Everywhere)
program and 2018 Global Restructuring Program.
(d) Includes impact of changes in product mix, marketing, research and general
expenses, foreign currency transaction effects and other manufacturing costs.
Net sales in the third quarter of $4.7 billion increased 1 percent compared to
the year-ago period. Organic sales increased 3 percent, while changes in foreign
currency exchange rates reduced sales by 2 percent. Volumes increased 2 percent
and the combined impact of changes in net selling prices and product mix
increased sales by 1 percent. In North America , organic sales increased 8
percent in consumer products but fell 15 percent in K-C Professional. Outside
North America , organic sales rose 2 percent in D&E markets and 3 percent in
developed markets.
Operating profit in the third quarter was $666 in 2020 and $915 in 2019. Results
in both periods include charges related to the 2018 Global Restructuring
Program. Results in 2020 include acquisition-related costs associated with the
acquisition of Softex Indonesia, and results in 2019 also include a gain on the
sale of a manufacturing facility as part of the restructuring. Third quarter
adjusted operating profit was $806 in 2020 and $859 in 2019. Results benefited
from organic sales growth, $125 of cost savings from our FORCE program and $15
of cost savings from the 2018 Global Restructuring Program. Input costs
decreased $25 , driven by pulp and other raw materials. Other manufacturing costs
increased year-on-year, including costs related to COVID-19. Advertising
spending increased significantly and general and administrative costs were also
higher, including capability-building investments and increased incentive
compensation expense. Foreign currency translation effects reduced operating
profit by $10 and transaction effects also negatively impacted the comparison.
The third quarter effective tax rate was 20.1 percent in 2020 and 22.8 percent
in 2019. The third quarter adjusted effective tax rate was 22.4 percent in 2020
and 21.5 percent in 2019.
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Our share of net income of equity companies in the third quarter was $31 in both
2020 and 2019.
Diluted net income per share for the third quarter of 2020 was $1.38 in 2020 and
$1.94 in 2019. Third quarter adjusted earnings per share were $1.72 in 2020, a
decrease of 7 percent compared to $1.84 in 2019.
Year-to-date net sales of $14.3 billion increased 3 percent compared to the year
ago period. Organic sales increased 6 percent, as volumes rose 4 percent and
changes in net selling prices and product mix each increased sales by 1 percent.
Changes in foreign currency exchange rates reduced sales by 3 percent and
business exits in conjunction with the 2018 Global Restructuring Program reduced
sales slightly. Year-to-date operating profit was $2,495 in 2020 and $2,240 in
2019. Results in both periods include charges related to the 2018 Global
Restructuring Program. Results in 2020 include acquisition-related costs
associated with the acquisition of Softex Indonesia, and results in 2019 also
include a gain on the sale of a manufacturing facility as part of the
restructuring. Year-to-date adjusted operating profit was $2,815 in 2020 and
$2,455 in 2019. Results benefited from organic sales growth, $345 of FORCE cost
savings and $95 of cost savings from the 2018 Global Restructuring Program.
Input costs decreased $215 , driven by pulp. The comparison was impacted by other
manufacturing cost increases, unfavorable foreign currency effects, higher
general and administrative costs and increased advertising spending. Through
nine months, diluted net income per share was $5.30 in 2020 and $4.65 in 2019.
Year-to-date adjusted earnings per share were $6.06 in 2020 and $5.18 in 2019.
Results by Business Segments
Personal Care
Three Months Ended September Three Months Ended September
30 Nine Months Ended September 30 30 Nine Months Ended September 30
2020 2019 2020 2019 2020 2019 2020 2019
Net Sales $ 2,339 $ 2,305 $ 6,990 $ 6,866 Operating Profit $ 486 $ 490 $ 1,532 $ 1,459
Net Sales Percent Change
Percent Change Operating Profit Percent Change Percent Change Volume 4 4 Volume 7 8Net Price - -Net Price (1) 2 Mix/Other 1 2 Input Costs 3 3 Currency (4) (4) Cost Savings(c) 14 14 Total(a) 1 2 Currency Translation (2) (2) Other(d) (22) (20) Organic(b) 5 6 Total (1) 5 (a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding. (b) Combined impact of changes in volume, net price and mix/other. (c) Combined benefits of the FORCE program and 2018 Global Restructuring Program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. Third quarter net sales inNorth America increased 6 percent. Volumes increased 5 percent, driven by baby and child care, and the combined impact of changes in net selling prices and product mix increased sales by 1 percent. Net sales in D&E markets decreased 4 percent. Changes in foreign currency exchange rates reduced sales by 11 percent. Volumes rose 5 percent, including increases inChina ,Eastern Europe ,India andLatin America , and changes in product mix increased sales by more than 1 percent. Net sales in developed markets outsideNorth America increased 1 percent. Changes in foreign currency exchange rates increased sales by 2 percent. Changes in net selling prices decreased sales by 3 percent while changes in product mix increased sales by 2 percent. Operating profit of$486 decreased 1 percent. Results were impacted by unfavorable foreign currency effects, higher advertising spending, other manufacturing cost increases and higher general and administrative costs. The comparison benefited from organic sales growth, cost savings and lower input costs. 19 -------------------------------------------------------------------------------- Consumer Tissue Three Months Ended September Three Months Ended 30 Nine Months EndedSeptember 30 September 30 Nine Months Ended September 30 2020 2019 2020 2019 2020 2019 2020 2019 Net Sales$ 1,623 $ 1,484 $ 4,991 $ 4,482 Operating Profit$ 318 $ 264$ 1,111 $ 726 Net Sales Percent Change
Percent Change Operating Profit Percent Change Percent Change Volume 10 13 Volume 24 30Net Price - 1Net Price 3 6 Mix/Other (1) (1) Input Costs 5 21 Currency - (2) Cost Savings(c) 18 23 Total(a) 9 11 Currency Translation - (1) Other(d) (30) (26) Organic(b) 10 13 Total 20 53 (a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding. (b) Combined impact of changes in volume, net price and mix/other. (c) Combined benefits of the FORCE program and 2018 Global Restructuring Program. (d) Includes impact of changes in marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. Third quarter net sales inNorth America increased 11 percent. Volumes rose 11 percent and changes in net selling prices increased sales by 2 percent, while changes in product mix decreased sales by 2 percent. Volumes increased high-single digits to low-double digits in all major product categories. The volume increase was driven by increased shipments to support higher consumer and customer demand related to the global outbreak of COVID-19. Net sales in D&E markets decreased 4 percent including a 7 percent negative impact from changes in foreign currency exchange rates. Volumes increased 3 percent and changes in product mix increased sales by 2 percent, while changes in net selling prices decreased sales by 2 percent. Net sales in developed markets outsideNorth America increased 17 percent. Volumes rose 14 percent, driven bySouth Korea and Western/Central Europe . The volume increase was driven by increased shipments to support higher consumer and customer demand related to the global outbreak of COVID-19. Changes in foreign currency exchange rates increased sales by 4 percent, while changes in net selling prices decreased sales by 1 percent. Operating profit of$318 increased 20 percent. Results benefited from organic sales growth, cost savings and lower input costs. The comparison was impacted by increased advertising spending, other manufacturing cost increases, higher general and administrative costs and unfavorable foreign currency effects. 20 -------------------------------------------------------------------------------- K-C Professional Three Months Ended Three Months Ended SeptemberSeptember 30 Nine Months EndedSeptember 30 30 Nine Months EndedSeptember 30 2020 2019 2020 2019 2020 2019 2020 2019Net Sales $ 705 $ 839 $ 2,277 $ 2,477 Operating Profit$ 87 $ 176 $ 423 $ 488 Net Sales Percent Change Percent Change Operating Profit Percent Change Percent Change Volume (21) (11) Volume (41) (20)Net Price 3 3Net Price 13 14 Mix/Other 3 2 Input Costs (4) 3 Currency - (1) Cost Savings(c) 11 13 Total(a) (16) (8) Currency Translation - (1) Other(d) (30) (22) Organic(b) (15) (6) Total (51) (13) (a) Total may not equal the sum of volume, net price, mix/other, exited businesses and currency due to rounding. (b) Combined impact of changes in volume, net price and mix/other. (c) Combined benefits of the FORCE program and 2018 Global Restructuring Program. (d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs. Third quarter net sales inNorth America decreased 15 percent. Volumes decreased 21 percent, reflecting the reduction in demand for away from home products related to the global outbreak of COVID-19, with sales down significantly in washroom products but up double-digits in wipers, safety and other products. Changes in net selling prices and product mix each increased sales by 3 percent. Net sales in D&E markets decreased 28 percent including a 5 percent negative impact from changes in foreign currency exchange rates. Volumes fell 24 percent, reflecting the reduction in demand for away from home products related to the global outbreak of COVID-19, with significant declines in all major geographies. Changes in product mix decreased sales by 2 percent., while changes in net selling prices increased sales by 3 percent. Net sales in developed markets outsideNorth America decreased 8 percent. Volumes decreased 18 percent, reflecting the reduction in demand for away from home products related to the global outbreak of COVID-19, while changes in product mix and net selling prices increased sales by 4 percent and 3 percent, respectively. Changes in foreign currency exchange rates increased sales by 3 percent. Operating profit of$87 decreased 51 percent. The comparison was impacted by lower organic sales, other manufacturing cost increases including inefficiencies from lower production volumes and higher input costs. Results benefited from cost savings. 2018 Global Restructuring Program As a result of the outbreak of COVID-19 and the related uncertainty and complexity of the environment, consistent with our Form 10-Q filed onApril 22, 2020 , we expect that some restructuring activity and the related charges will extend into 2021 rather than being completed at the end of 2020 as previously planned. Total restructuring charges to implement the program are expected to be toward the high end of the range of$1.7 billion to$1.9 billion pre-tax ($1.3 billion to$1.4 billion after tax). We continue to expect the program will generate annual pre-tax cost savings of$500 to$550 . We target to achieve those savings by the end of 2021, although it is possible the full realization could occur in 2022 because of the uncertainties related to COVID-19. Savings for the first nine months of 2020 were$95 , bringing cumulative savings to$395 . See Item 1, Note 2 to the unaudited interim consolidated financial statements for additional information. Subsequent Event - Acquisition On October 1 2020, we acquired Softex Indonesia, a leader in the fast-growing Indonesian personal care market, in an all-cash transaction for approximately$1.2 billion . This transaction significantly expands our presence in an important developing and emerging market and is a strong strategic fit with our core business. Softex Indonesia generated net sales of approximately$420 in 2019. We financed the transaction through a combination of short-term commercial paper, cash on hand, and the issuance of a$600 bond. See Item 1, Note 11 to the unaudited interim consolidated financial statements for additional information. 21 -------------------------------------------------------------------------------- Liquidity and Capital Resources Cash Provided by Operations Cash provided by operations was$2.8 billion for the first nine months of 2020 compared to$1.8 billion in the prior year. The increase was driven by improved working capital and higher earnings. Investing During the nine months endedSeptember 30, 2020 , our capital spending was$894 compared to$867 in the prior year. We anticipate that full year capital spending will be$1.2 billion to$1.3 billion . Proceeds from disposition of property in 2019 include approximately$200 from the previously mentioned sale of a manufacturing facility in the third quarter as part of the 2018 Global Restructuring Program. Financing Our short-term debt, which consists ofU.S. commercial paper with original maturities up to 90 days and/or other similar short-term debt issued by non-U.S. subsidiaries, was$260 as ofSeptember 30, 2020 (included in Debt payable within one year on the consolidated balance sheet). The average month-end balance of short-term debt for the third quarter of 2020 was$156 . These short-term borrowings provide supplemental funding for supporting our operations. The level of short-term debt generally fluctuates depending upon the amount of operating cash flows and the timing of customer receipts and payments for items such as dividends and income taxes. AtSeptember 30, 2020 andDecember 31, 2019 , total debt was$8.4 billion and$7.7 billion , respectively. InSeptember 2020 , we issued$600 aggregate principal amount of 1.05% notes dueSeptember 15, 2027 . Proceeds from the offering together with cash on hand and borrowings under our commercial paper program were used to fund the acquisition of Softex Indonesia. InMarch 2020 , we issued$750 aggregate principal amount of 3.10% notes dueMarch 26, 2030 . Proceeds from the offering were used for general corporate purposes including the repayment of a portion of our commercial paper indebtedness. InFebruary 2020 , we issued$500 aggregate principal amount of 2.875% notes dueFebruary 7, 2050 . Proceeds from the offering were used for general corporate purposes including the repayment of a portion of our commercial paper indebtedness. We maintain a$2.0 billion revolving credit facility which expires inJune 2023 and a$750 revolving credit facility which expires inJune 2021 . These facilities, currently unused, support our commercial paper program, and would provide liquidity in the event our access to the commercial paper markets is unavailable for any reason. InJuly 2017 , theUnited Kingdom's Financial Conduct Authority , which regulates the London Interbank Offered Rate (LIBOR), announced that it intends to phase out LIBOR by the end of 2021. We are currently evaluating the potential effect of the eventual replacement of the LIBOR, but we do not expect the effect to be material. Accounting guidance has been recently issued to ease the transition to alternative reference rates from a financial reporting perspective. See Item 1, Note 1 to the unaudited interim consolidated financial statements for details. We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During the first nine months of 2020, we repurchased 3.2 million shares of our common stock at a cost of$457 through a broker in the open market. We expect our full-year repurchases will be$700 . K-C Argentina began accounting for their operations as highly inflationary effectiveJuly 1, 2018 , as required by GAAP. Under highly inflationary accounting, K-C Argentina's functional currency became theU.S. dollar, and its income statement and balance sheet have been measured inU.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 ofSeptember 30, 2020 , K-C Argentina had a small net peso monetary position. Net sales of K-C Argentina were approximately 1 percent of our consolidated net sales for the three and nine months endedSeptember 30, 2020 . We believe that our ability to generate cash from operations and our capacity to issue short-term and long-term debt are adequate to fund working capital, payments for our 2018 Global Restructuring Program, capital spending, pension contributions, dividends and other needs for the foreseeable future. Further, we do not expect restrictions or taxes on repatriation of cash held outside of theU.S. to have a material effect on our overall business, liquidity, financial condition or results of operations for the foreseeable future. 22 -------------------------------------------------------------------------------- Information Concerning Forward-Looking Statements Certain matters contained in this report concerning the business outlook, including the anticipated cost savings from our FORCE program, costs and savings from the 2018 Global Restructuring Program, cash flow and uses of cash, growth initiatives, innovations, marketing and other spending, net sales, anticipated currency rates and exchange risks, including the impact inArgentina , raw material, energy and other input costs, effective tax rate, contingencies and anticipated transactions of Kimberly-Clark, including dividends, share repurchases and pension contributions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based upon management's expectations and beliefs concerning future events impacting Kimberly-Clark. There can be no assurance that these future events will occur as anticipated or that our results will be as estimated. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. The assumptions used as a basis for the forward-looking statements include many estimates that, among other things, depend on the achievement of future cost savings and projected volume increases. In addition, many factors outside our control, including pandemics (including the ongoing COVID-19 outbreak), epidemics, failure to realize the expected benefits or synergies from the SoftexIndonesia acquisition, fluctuations in foreign currency exchange rates, the prices and availability of our raw materials, potential competitive pressures on selling prices for our products, energy costs, our ability to maintain key customer relationships and retail trade customer actions, as well as general economic and political conditions globally and in the markets in which we do business, could affect the realization of these estimates. For a description of certain factors that could cause our future results to differ from those expressed in these forward-looking statements, see Item 1A entitled "Risk Factors" in each of our Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2020 and our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Other factors not presently known to us or that we presently consider immaterial could also affect our business operations and financial results. Item 4. Controls and Procedures As ofSeptember 30, 2020 , an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as ofSeptember 30, 2020 . There were no changes in our internal control over financial reporting during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 23
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