Kimberly-Clark 2015 Annual Report Download - page 39

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 . Accounting Policies
BasisofPresentation
TheConsolidatedFinancialStatementspresenttheaccountsofKimberly-ClarkCorporationandallsubsidiariesinwhichithasacontrollingfinancialinterestasif
they were a single economic entity in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany
transactionsandaccountsareeliminatedinconsolidation.Theterms"Corporation,""Kimberly-Clark,""we,""our,"and"us"refertoKimberly-ClarkCorporation
andallsubsidiariesinwhichithasacontrollingfinancialinterest.Dollaramountsarereportedinmillions,exceptpersharedollaramounts,unlessotherwisenoted.
In2014,wecompletedthespin-offofourhealthcarebusiness,creatingastand-alone,publiclytradedhealthcarecompany,HalyardHealth,Inc.("Halyard"),by
distributing100percentoftheoutstandingsharesofHalyardtoholdersofourcommonstock.SeeNote3formoreinformation.Thespun-offhealthcarebusiness
is presented as discontinued operations on the Consolidated Income Statement for all periods presented. The health care business' balance sheet, other
comprehensive income and cash flows are included within our Consolidated Balance Sheet, Consolidated Statement of Stockholders' Equity, Consolidated
StatementofComprehensiveIncomeandConsolidatedCashFlowStatementthroughOctober31,2014.
AccountingforVenezuelanOperations
Prior to December 31, 2015, we accounted for our operations in Venezuela using highly inflationary accounting. Since February 2013, the Central Bank of
Venezuela's regulated currency exchange system rate has been 6.3 bolivars per U.S. dollar. During March 2013, the Venezuelan government announced a
complementarycurrencyexchangesystem,SICAD.InFebruary2014,thepresidentofVenezuelaannouncedthatanotherfloatingrateexchangesystem(referred
toasSICADII)wouldbeinitiated.OnFebruary10,2015,theVenezuelangovernmentannouncedtheadditionofanewforeigncurrencyexchangesystemreferred
toastheMarginalCurrencySystem,orSIMADI,alongwiththeeliminationoftheSICADIIsystem.
WehavehistoricallymeasuredresultsinVenezuelaattherateinwhichwetransactourbusiness.Wehavequalifiedforaccesstotheofficialexchangeratebecause
we manufacture and sell price-controlled products. Since March 2013, exchange transactions have taken place through letters of credit which resulted in an
effectiveexchangerateof6.3bolivarsperU.S.dollarandthroughapprovedtransactionsusingtheregulatedcurrencyexchangesystem,whichwerealsoata6.3
exchangerate.Todate,wehavenotbeeninvitedtoparticipateinSICAD,andcurrencyexchangesobtainedusingtheSIMADIsystemhavebeenminimal.The
SIMADIexchangerateatDecember31,2015was199bolivarsperU.S.dollar.
We continued to measure resultsat the 6.3rate throughDecember 31, 2014 ; however, given the level of uncertainty and lack of liquidity in Venezuela, we
remeasuredourlocalcurrency-denominatedbalancesheetasofDecember31,2014attheyear-endfloatingSICADIIexchangerateof50bolivarsperU.S.dollar
as we believed this was the most accessible rate available in the  absence of exchange at 6.3 bolivars per U.S. dollar. This remeasurement resulted in a
nondeductible charge of $462of which $421is recorded in other (income) and expense, net and $41is recorded in cost of products sold for the year ended
December31,2014.
WiththeeliminationofSICADIIinFebruary2015,weremeasuredourlocalcurrency-denominatedbalancesheetduringthefirstquarterof2015attheapplicable
floatingSIMADIexchangerateaswebelievedthiswasthemostaccessiblerateavailabletousintheabsenceofexchangeat6.3bolivarsperU.S.dollar.This
remeasurementresultedinanondeductiblechargeof$45intheConsolidatedIncomeStatementforthethreemonthsendedMarch31,2015,with$5recordedin
costofproductssoldand$40recordedinother(income)andexpense,net.Wecontinuedto usetheapplicablefloatingSIMADIexchangeratetomeasure our
resultsofoperationsfortheremainderof2015.RemeasurementchargessinceMarch31,2015werenotsignificant.
Asaresult ofthe continueddeterioration ofconditionsin thecountry, includingaslowdown intheavailability offoreign exchange,weconcluded thatwe no
longermeettheaccountingcriteriaforcontroloverourbusinessinVenezuelaandwedeconsolidatedourVenezuelanoperationsonDecember31,2015.Asa
result of deconsolidating our Venezuelan operations, we recorded an after tax charge of $102,$108pre-tax, in other (income) and expense,net in the fourth
quarterof2015.Thischargeincludedthewrite-offofourinvestmentinourVenezuelanoperations,relatedunrealizedtranslationadjustmentsandeliminationof
intercompany
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35 KIMBERLY-CLARKCORPORATION - 2015 Annual Report