Dollar amounts are reported in millions, except per share dollar amounts, unless otherwise noted.

These reportable segments were determined in accordance with how our chief operating decision maker and our executive managers develop and execute our global strategies to drive growth and profitability of our personal care, consumer tissue and K-C Professional operations. 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.

Products for household use are sold directly to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores and other retail outlets, as well as through other distributors and e-commerce. Products for away-from-home use are sold through distributors, directly to manufacturing, lodging, office building, food service, and high-volume public facilities, and through e-commerce.

Net sales toOur largest customer, Walmart Inc. as a, represented approximately 13 percent in 2022, 14 percent in 2021 and 15 percent in 2020 of our consolidated net sales were approximately 14 percent in 2021, 15 percent in 2020 and 14 percent in 2019.sales. Net sales to Walmart Inc. were primarily in the Personal Care and Consumer Tissue segments.

On October 1, 2020,February 24, 2022, we acquired Softex Indonesia,completed our acquisition of a majority and controlling share of Thinx Inc. (“Thinx”), an industry leader in the fast-growing Indonesian personal care market, in an all-cash transactionreusable period and incontinence underwear category, for approximately $1.2 billion. This transaction significantly expandedtotal consideration of $181 consisting of cash of $53, the fair value of our presence in an important developingpreviously held equity investment of $127, and emerging market and is a strong strategic fit with our core business.certain share-based award costs of $1. See Item 8, Note 3 to the consolidated financial statements for details.details on the Thinx acquisition.

Polypropylene and other synthetics and chemicals are the primary raw materials for manufacturing nonwoven fabrics, which are used in disposable diapers, training and youth pants, wet wipes, feminine pads, incontinence care products, and away-from-home wipers and apparel. Superabsorbent materials are important components of disposable diapers, training and youth pants and incontinence care products.

Raw materials are purchased from third parties, and we consider the supply to be adequate to meet the needs of our businesses. See Item 1A, "Risk Factors."

We are obligated to comply with regulations that cover product safety, efficacy, manufacturing, advertising, labeling and safety reporting. These include requirements that we provide a label that highlights perceived concerns about a product or warns consumers of risks of using our products. In some cases, it may be necessary to initiate product recalls if safety risks are considered to exist. All our facilities and other operations are subject to various environmental protection statutes and regulations, including those relating to the use of water resources and the discharge of wastewater. We are also subject to various laws and regulations related to data privacy and protection, including the European Union’s General Data Protection Regulation ("GDPR"), Brazil's General Data Protection Law ("LGPD"), China's Personal Information Protection Law ("PIPL"), and the California Consumer Privacy Act of 2018 which became effective on January 1, 2020.

Our policy is to abide by all applicable laws and regulations, and we have internal programs in place to manage global compliance with these various requirements. We monitor each of these areas for new or changed regulatory requirements, particularly in the rapidly evolving area of data privacy and protection. We have made, and plan to continue making, necessary expenditures for compliance with applicable laws and regulations; however, total capital expenditures and operating expenses related to compliance are not expected to have a material effect on our total capital and operating expenditures, consolidated earnings or competitive position.

In order to recruit, retain, develop, protect and fairly compensate our employees, we focus on four key areas: inclusion, equity and diversity, health and safety, development and employee engagement, and compensation and benefits.

A number of our products, such as diapers, training and youth pants, feminine pads, incontinence care products and disposable wipes, contain certain materials that are principally derived from petroleum. These materials are subject to price fluctuations based on changes in petroleum prices, availability and other factors, with these prices experiencing significant volatility in recent years. We purchase these materials from a number of suppliers. Significant increases in prices for these materials could adversely affect our earnings if selling prices for our finished products are not adjusted, if these adjustments significantly trail the increases in prices for these materials, or if we do not utilize lower priced substitutes for these materials.

Our manufacturing operations utilize electricity, natural gas and petroleum-based fuels. To help ensure we use all forms of energy efficiently and cost-effectively, we maintain energy efficiency improvement programs at our manufacturing sites. Our contracts with energy suppliers vary as to price, payment terms, quantities and duration. Our energy costs are also affected by various market factors including the availability of supplies of particular forms of energy, energy prices and local and national regulatory decisions (including actions taken to address climate change and related market responses). and geopolitical factors. There can be no assurance that we will be fully protected against substantial changes in the price or availability of energy sources.

There can be no assurance that our efforts to minimize the impact of increased costs, including increasing selling prices, in response to the increased costs will be successful.

The inability to effectively manage foreign market risk could adversely affect our business, consolidated financial condition, results of operations or liquidity. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and Item 8, Note 1 to the consolidated financial statements for information regarding our adoption of highly inflationary accounting in Argentina.Argentina and Turkey.

We have a complex network of suppliers, including a number of sole-source and single-source suppliers for certain commodities and raw material inputs. In addition, third parties manufacture some of our products and provide certain administrative services. Disruptions or delays at these suppliers, third-party manufacturers or service providers due to the reasons above or the failure of these parties, manufacturers or service providers to otherwise satisfactorily perform, could adversely impact our operations, sales, payments to our suppliers, employees, and others, and our ability to report financial and management information on a timely and accurate basis. In the case of our sole-source suppliers, failure to successfully negotiate satisfactory purchase terms could adversely impact our business.

We may periodically divest product lines or businesses. These divestitures may adversely impact our results if we are unable to offset the dilutive impacts from the loss of revenue associated with the divested products or businesses, or mitigate overhead costs allocated to those businesses. Furthermore, the divestitures could adversely affect our ongoing business operations, including by enhancing our competitors' positions or reducing consumer confidence in our ongoing brands and products.

The inability to effectively and efficiently manage acquisitions and divestitures with the results we expect or in the timeframe we anticipate could adversely affect our business, consolidated financial condition, results of operations or liquidity.

There is also increased focus, including by governmental and non-governmental organizations, investors, customers, consumers, our employees and other stakeholders on these and other sustainability matters, including responsible sourcing and deforestation, the use of plastic, energy and water, the recyclability or recoverability of packaging, including single-use and other plastic packaging and ingredient transparency. Our reputation could be damaged if we do not (or are perceived not to) act responsibly with respect to sustainability matters, which could adversely affect our business.

We may be unable to anticipate or adequately respond to changes in consumer demand for our products. Demand for our products may change based on many factors, including shifting consumer purchasing patterns to lower cost options such as private-label products and mid to lower-tier value products, low birth rates in certain countries due to slow economic growth or other factors, negative customer or consumer response to pricing actions, consumer shifts in distribution from traditional retailers to e-tailers, subscription services and direct to consumer businesses, changing consumer preferences due to increased concerns in regard to post-consumer waste and packaging materials and their impact on environmental sustainability, or other changes in consumer trends or habits. If we experience lower sales due to changes in consumer demand for our products, our earnings could decrease.

Our ability to develop new products is affected by whether we can successfully anticipate consumer needs and preferences, develop and fund technological innovations, and receive and maintain necessary patent and trademark protection. In addition, we incur substantial development and marketing costs in introducing new and improved products and technologies. The introduction of a new consumer product (whether improved or newly developed) usually requires substantial expenditures for advertising and marketing to gain recognition in the marketplace. If a product gains consumer acceptance, it normally requires continued advertising and promotional support to maintain its relative market position. Some of our competitors may spend more aggressively on advertising and promotional activities, introduce competing products more quickly and respond more effectively to changing business and economic conditions. We may not be successful in developing new or improved products and technologies necessary to compete successfully in the industry, and we may not be successful in advertising, marketing, timely launching and selling our products. Also, if we fail to perfect or successfully assert our intellectual property rights, we may be less competitive, which could adversely affect our business, financial results and financial condition.

We could be subject to significant legal liability and litigation or administrative actions.

In addition, new or revised laws, regulations or regulationstheir interpretation may alter the environment in which we do business which could adversely impact our financial results. For example, new legislation or regulations may result in increased costs to us, directly for our compliance, or indirectly to the extent suppliers increase prices of goods and services because of increased compliance costs, excise taxes or reduced availability of raw materials.

Kimberly-Clark common stock is listed on the New York Stock Exchange. The ticker symbol is KMB.

Quarterly dividends have been paid continually since 1935. Dividends have been paid on or about the second business day of January, April, July and October.

For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12 of this Form 10-K.

We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During 2021,2022, we repurchased 3.0 million779 thousand shares of our common stock at a cost of $400$100 through a broker in the open market.

The following table contains information for shares repurchased during the fourth quarter of 2021.2022. None of the shares in this table were repurchased directly from any of our officers or directors.

The following will be discussed and analyzed:

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 to 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 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:

In operating our business, we seek to:

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.

On October 1, 2020,February 24, 2022, we acquired Softex Indonesia,completed our acquisition of a majority and controlling share of Thinx, an industry leader in the fast-growing Indonesian personal care market, in an all-cash transactionreusable period and incontinence underwear category, for approximately $1.2 billion. This transaction significantly expandedtotal consideration of $181 consisting of cash of $53, the fair value of our presence in an important developingpreviously held equity investment of $127, and emerging market and is a strong strategic fit with our core business.certain share-based award costs of $1. See Item 8, Note 3 to the consolidated financial statements for details.

accelerating and investing in our commercial capabilities through digital marketing, revenue growth management, consumer-inspired innovation and strong in-market execution.

Our strong legacy of financial discipline supports our growth strategy by driving ongoing supply chain productivity through our FORCE (Focused On Reducing Costs Everywhere) program, controlling discretionary spending, driving down working capital and maintaining the top-tier return on invested capital. Our capital allocation strategy is consistent with our historical approach of disciplined capital spending, payment of a top tier dividend, evaluation of acquisition opportunities and allocation of excess cash flow to share repurchases.

We are subject to risks and uncertainties, which can affect our business operations and financial results. See Item 1A, "Risk Factors" in this Form 10-K for additional information.

We participate in fixed consumption categories where demand is generally very stable. Over the last twoIn recent years, our sales have fluctuated, especially in Consumer Tissue and K-C Professional, because of COVID-19-related demand spikes, inventory destocking, and consumer usage pattern disruption. Additionally, consumer incomes have generally been impacted negatively impacted by the pandemic leading to lower usage, trade-down on price tiers and slower entry into some of our categories.which can impact their purchasing patterns. COVID-19 outbreaks and patterns are difficult to predict and therefore volatility of demand for our products may continue in the near term.predict.

The pandemic has significantly disrupted supply chains across the globe. A steep drop in aggregate demand at the beginning of the pandemic caused aggregate supply to sharply contract. When demand for goods resumed at the end of 2020, supply shortages led to record levels of inflation in commodities and other costs. In addition to inflation, logistics and distribution networks, especially in the U.S., have been severely impacted by container and truck shortages and significant labor supply issues. These effects have caused challenges getting input materials into our production facilities, production delays, and delays and meaningfully higher costs to get products from our production facilities to our customers. The net effect of the global supply chain disruption led to an unprecedented increase in costs in 2022 and 2021. The underlying causes of the disruption and higher costs will take time to be resolved.

Net sales in North America increased 25 percent. Changes in net selling prices and product mix increased sales by 6 percent and 1 percent, respectively, and changes in foreign currency exchange rates was slightly favorable.respectively. The acquisition of Thinx increased sales by 1 percent. Volumes decreased 63 percent, reflecting continuing lower awaywhich included the impact from home demand and challenging business conditions following the outbreaka planned exit of COVID-19.a private label contract in 2022.

Net sales in D&E Markets increased 53 percent. Changes in net selling prices and product mix increased sales by approximately 12 percent and 3 percent, and volumes increased 2respectively. The improvements in product mix were primarily in China. Volumes decreased 6 percent led by Latin America.declines in Eastern Europe, Indonesia and Brazil. Changes in foreign currency exchange rates decreased sales by 5 percent.

Net sales in Developed Markets outside North America were even withslightly down compared to the prior year. Changes in foreign currency exchange rates decreased sales by 11 percent. Volumes decreased 11increased 5 percent reflecting continuing lower away from home demand and challenging business conditions following the outbreak of COVID-19, primarily in Western and Central Europe.with growth across all markets. Changes in net selling prices and foreign currency exchange rates increased sales by 6 percent and 5 percent, respectively, also in Western and Central Europe, while changes in product mix increased sales slightly.by 5 percent and 1 percent, respectively.

Operating profit of $806 decreased 9 percent. The comparison was negatively impacted by higher input costs, higher marketing, research and general expenses and lower volumes, partially offset by higher net selling prices, cost savings and lower marketing, research and general expenses and other manufacturing costs.

based on historic operating performance and forecasted future cash flows, we believe exposure to losses, if any, under these arrangements is not material.

The table does not include amounts where payments are discretionary or the timing is uncertain. The following payments are not included in the table:

Our short-term debt, which consists of U.S. commercial paper with original maturities up to 90 days and/or other similar short-term debt issued by non-U.S. subsidiaries, was $118$373 as of December 31, 20212022 (included in debt payable within one year on the consolidated balance sheet). The average month-end balance of short-term debt for the twelve months ended December 31, 20212022 was $1.0 billion.$757. These short-term borrowings provide supplemental funding to support our operations. The level of short-term debt generally fluctuates depending upon the amount of operating cash flows and the timing of customer receipts and payments for items such as pension contributions, dividends and income taxes.

We paid $1.5$1.6 billion in dividends in 2021.2022. The Board of Directors approved a dividend increase of 1.81.7 percent for 2022.2023. We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During 2021,2022, we repurchased 3.0 million779 thousand shares of our common stock at a cost of $400$100 through a broker in the open market. We are targeting full-year 20222023 share repurchases of approximately $100 to $150, subject to market conditions.

We believe that our ability to generate cash from operations and our capacity to issue short-term and long-term debt are adequate to fund working capital, capital spending, pension contributions, dividends and other needs for the foreseeable future.

Further, we do not expect restrictions or taxes on repatriation of cash held outside of the U.S. to have a material effect on our overall business, liquidity, financial condition or results of operations for the foreseeable future.

Changes in certain assumptions could affect pension expense and the benefit obligations, particularly the estimated long-term rate of return on plan assets and the discount rate used to calculate the obligations:

Events and conditions that could result in impairment include a sustained drop in the market price of our common shares, increased competition or loss of market share, obsolescence, product claims that result in a significant loss of sales or profitability over the product life, deterioration in macroeconomic conditions, or declining financial performance in comparison to projected results.

Our related accounting policies, acquisitionacquisitions of Thinx and Softex Indonesia, and goodwill and other intangible assets account balances are discussed in Item 8, Notes 1, 3 and 4, respectively, to the consolidated financial statements.

Our estimate of the fair value of our brand assets is based on a discounted cash flow model and a market-based approach using inputs which include projected revenues from our long-range plan, assumed royalty rates that could be payable if we did not own the brands, and a discount rate. The cash flows used in the discounted cash flow model are consistent with those we use in our internal planning, which gives consideration to actual business trends experienced and the long-term business strategy.

We performed our 20212022 impairment assessment of our intangible assets as of the first day of the third quarter, and based upon a qualitative assessment, no impairment indicators were found to be present.