Kimberly-Clark 2015 Annual Report Download - page 8

adversely affected. In addition, the emergence of new sales channels may affect customer preferences and market dynamics and could adversely impact our
financialresults.Thesenewchannelsincludesalesofconsumerandotherproductsviae-commerce,aswellasthegrowthoflarge-formatretailersanddiscounters
thatexclusivelysellprivate-labelproducts.
Significant increases in prices for raw materials, energy, transportation and other necessary supplies and services, without corresponding increases in our
selling prices, could adversely affect our financial results.
Increases in the cost and availability of raw materials, including pulp and petroleum-based materials, the cost of energy, transportation and other necessary
services,supplierconstraints,aninabilitytomaintainfavorablesupplierarrangementsandrelationsoraninabilitytoavoiddisruptionsinproductionoutputcould
haveanadverseeffectonourfinancialresults.
Cellulosefiber,intheformofkraftpulporrecycledfiberfromrecoveredwastepaper,isusedextensivelyinourtissueproductsandissubjecttosignificantprice
fluctuations.Cellulosefiber,intheformoffluffpulp,isakeycomponentinourpersonalcareproducts.Inpastyears,pulppriceshaveexperiencedsignificant
volatility.Increasesinpulppricesorlimitsintheavailabilityofrecycledfibercouldadverselyaffectourearningsifsellingpricesforourfinishedproductsarenot
adjustedoriftheseadjustmentssignificantlytrailtheincreasesinpulpprices.Wehavenotusedderivativeinstrumentstomanagetheserisks.
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.Generally,wehavenotusedderivativeinstrumentstomanagethese
risks.
Ourmanufacturingoperationsutilizeelectricity,naturalgasandpetroleum-basedfuels.To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).Therecanbenoassurancethatwewillbefully
protectedagainstsubstantialchangesinthepriceoravailabilityofenergysources.Weusederivativeinstrumentstomanageaportionofnaturalgaspriceriskin
accordancewithourriskmanagementpolicy.
New or revised legal or regulatory requirements, potential litigation or administrative actions, or tax matters could have an adverse effect on our financial
results.
As a global company, we are subject to many laws and governmental regulations across all of the countries in which we do business, including laws and
regulations involving marketing, antitrust, anti-bribery or anti-corruption, product liability, environmental, intellectual property or other matters, as well as
potentiallitigationoradministrative actions.Additionally,oursales andresultsofoperationsmaybe adverselyimpactedbyneworrevised legalrequirements,
including excise or other taxes, financial reform legislation and regulations, export control and foreign sanctions legislation, and climate change and other
environmentallegislationandregulations.Thecostsandothereffectsofpendinglitigationandadministrativeactionsagainstusandnewlegalrequirementscannot
bedeterminedwithcertainty.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orreducedavailabilityofrawmaterials.Adverseregulatoryaction,including
arecall,regulatoryorothergovernmentalinvestigation,orproductliabilityorotherlitigationmayadverselyaffectourfinancialconditionandbusinessoperations.
WearesubjecttoincometaxrequirementsinvariousjurisdictionsintheU.S.andinternationally.Manyofthesejurisdictionsfacebudgetaryshortfallsorhave
unpredictableenforcementactivity.Increasesinapplicabletaxrates,implementationofnewtaxes,changesinapplicabletaxlawsandinterpretationsofthesetax
lawsandactionsbytaxauthoritiesinjurisdictionsinwhichweoperatecouldreduceourafter-taxincomeandhaveanadverseeffectonourresultsofoperations.
Althoughwebelievethatnoneoftheseproceedingsorrequirements willhaveamaterialadverseeffectonus,theoutcomeoftheseproceedingsmaynotbeas
expected.

5 KIMBERLY-CLARKCORPORATION - 2015 Annual Report