Introduction

This management's discussion and analysis of financial condition and results of operations is intended to provide investors with an understanding of the Corporation's recent performance, its financial condition and its prospects. The following will be discussed and analyzed:

· Overview of First Quarter 2009 Results

· Results of Operations and Related Information

· Liquidity and Capital Resources

· New Accounting Standards

· Environmental Matters

· Business Outlook

Overview of First Quarter 2009 Results

· Net sales decreased 6.6 percent.

· Operating profit and net income attributable to Kimberly-Clark Corporation decreased 5.4 percent and 7.7 percent, respectively.

· Cash provided by operations was $692 million, an increase of 55.9 percent over last year.

Results of Operations and Related Information

This section presents a discussion and analysis of the Corporation's first quarter of 2009 net sales, operating profit and other information relevant to an understanding of the results of operations.

First Quarter of 2009 Compared With First Quarter of 2008

Analysis of Net Sales

By Business Segment
(Millions of dollars)

Net Sales                 2009      2008

Personal Care            $ 1,977   $ 2,046
Consumer Tissue            1,574     1,707
K-C Professional & Other     651       761
Health Care                  298       298
Corporate & Other             13        22
Intersegment sales           (20 )     (21 )

Consolidated             $ 4,493   $ 4,813



Commentary:

                                  Percent Change in Net Sales Versus Prior Year
                                                            Changes Due To
                              Total           Volume         Net                    Mix/
                             Change           Growth        Price      Currency    Other

Consolidated                    (6.6 )          (3 )         6            (10 )       -

Personal Care                   (3.4 )           1           6            (11 )       1
Consumer Tissue                 (7.8 )          (5 )         6            (10 )       1
K-C Professional & Other       (14.5 )          (9 )         5             (9 )      (1 )
Health Care                        -             4           -             (4 )       -

· Personal care net sales in North America increased about 2 percent versus the year-ago quarter, as improvements in net selling prices and product mix of 5 percent and 1 percent, respectively, were partially offset by decreases in sales volumes and unfavorable currency effects of 2 percent each. The higher net selling prices resulted from increases implemented during 2008 across all categories, net of increased competitive promotional activity, mainly for Huggies diapers. Although product innovations contributed to solid volume gains for Depend and Poise adult care products, sales volumes for the Corporation's child care and baby wipes brands were down high single digits, due in part to a slowdown in category sales. Meanwhile, first quarter sales volumes of Huggies diapers and Kotex feminine care products declined slightly.

In Europe, personal care net sales fell approximately 22 percent in the quarter. Unfavorable currency exchange rates accounted for almost 19 percentage points of the decrease. Sales volumes were down about 3 percent compared with the prior year primarily as a result of lower sales of child care products, and net selling prices were down less than 1 percent. Although sales volumes for Huggies diapers were little changed across the region, they were up in the growing Central European markets, but down in the Corporation's four core markets of the U.K., France, Italy and Spain.

In developing and emerging markets, personal care net sales decreased about 5 percent, as continued growth in organic sales was more than offset by negative currency effects of 20 percent. Sales volumes increased approximately 5 percent, while net selling prices improved nearly 9 percent and product mix was better by approximately 1 percent. The growth in organic sales was broad-based, with particular strength in China, South Korea, Russia, Turkey, South Africa, Vietnam, Brazil and the Andean region in Latin America.

· In North America, net sales of consumer tissue products increased about 1 percent in the first quarter, as an increase in net selling prices of more than 5 percent and improved product mix of about 2 percent were mostly offset by a 5 percent decline in sales volumes and negative currency effects of 1 percent. The improvement in net selling prices reflects list price increases implemented across the bathroom tissue, paper towel and facial tissue categories during 2008, partially offset by an increase in competitive promotional activity. The lower sales volumes reflect the Corporation's focus on improving revenue realization, as well as slower category growth and consumer trade-down. For the quarter, volume levels were down high-single digits across the Viva and Scott paper towel brands and mid-single digits for Kleenex facial tissue. Overall bathroom tissue sales volumes were down low-single digits, as higher Scott Tissue volumes were more than offset by lower Cottonelle volumes.

In Europe, consumer tissue net sales dropped nearly 21 percent compared with the first quarter of 2008 on weaker foreign currency exchange rates of approximately 18 percent. Sales volumes were down more than 6 percent, due mainly to lower sales of Andrex and Scottex bathroom tissue in response to higher prices and continued softness in category sales, particularly in the U.K. Net selling prices improved 3 percent, primarily for bathroom tissue in most markets across the region, and product mix also was better by 1 percent.

Consumer tissue net sales in developing and emerging markets were lower by more than 11 percent, driven by unfavorable currency effects of approximately 19 percent and a 4 percent decline in sales volumes. These factors more than offset a double-digit increase in net selling prices, as the Corporation raised prices in most markets over the past year to recover higher raw materials costs.

· Net sales of K-C Professional ("KCP") & other products decreased 14.5 percent compared with the first quarter of 2008. Overall sales volumes fell more than 9 percent; changes in foreign currency rates also reduced sales by 9 percent and product mix was unfavorable by about 1 percent, partially offset by a 5 percent improvement in net selling prices. Economic weakness and rising unemployment levels in North America and Europe had a significant effect on KCP's categories in the first quarter. In North America, net sales declined approximately 10 percent. While net selling prices rose by 5 percent, sales volumes declined nearly 13 percent, and product mix and currency effects both were negative by about 1 percent. In Europe, KCP's sales went down 24 percent in the first quarter, as sales volumes were almost 10 percent lower, product mix was off 1 percent and weaker currencies depressed sales by about 17 percent. These factors were partially offset by a 4 percent benefit from price increases implemented during 2008. Across developing and emerging markets, net sales were down about 12 percent, primarily reflecting adverse currency effects of almost 19 percent, while sales volumes and net selling prices were higher by approximately 2 percent and 6 percent, respectively.

· Net sales of health care products were unchanged in the first quarter, as growth in sales volumes of 4 percent was offset by unfavorable currency exchange rates. The improvement in sales volumes was driven by mid-single digit growth in North America, with particular strength in sales of exam gloves, and double-digit growth in developing and emerging markets. Sales volumes in Europe, however, were down mid-single digits.

By Geography
(Millions of dollars)

Net Sales              2009      2008

North America         $ 2,539   $ 2,551
Outside North America   2,105     2,432
Intergeographic sales    (151 )    (170 )

Consolidated          $ 4,493   $ 4,813

Commentary:

· Net sales in North America were less than one percent lower compared with the prior year as higher net selling prices were offset by lower sales volumes.

· Net sales outside North America decreased 13.4 percent as higher net selling prices were more than offset by unfavorable currency effects, particularly in Europe, South Korea, Australia and Brazil.

Analysis of Operating Profit

By Business Segment
(Millions of dollars)

Operating Profit                      2009    2008

Personal Care                         $ 442   $ 428
Consumer Tissue                         194     156
K-C Professional & Other                 80      97
Health Care                              48      46
Other income and (expense), net(a)(b)   (77 )     7
Corporate & Other(b)                    (59 )   (70 )

Consolidated                          $ 628   $ 664

Notes:

(a) 2009 includes $76 million of currency transaction losses versus $12 million of currency transaction gains in 2008.

(b) For the period ended March 31, 2008, Other income and (expense), net includes $(1) million and Corporate & Other includes $(23) million of pretax amounts for the strategic cost reductions.

Commentary:

                           Percentage Change in Operating Profit Versus Prior Year
                                                              Changes Due To
              Total                           Net        Input       Production
              Change              Volume     Price     Costs(a)      Curtailment     Currency      Other

Consolidated            (5.4 )       (6 )      40            11            (14 )         (23 )     (13 )

Personal Care            3.3          1        28             2             (7 )         (10 )     (11 )
Consumer Tissue         24.4        (18 )      71            23            (23 )          (9 )     (20 )
K-C Professional &
Other                  (17.5 )      (15 )      38            21            (26 )          (7 )     (29 )
Health Care              4.3          6         -            22              -            (5 )     (19 )

(a) Includes raw materials cost deflation and energy and distribution variations.

Consolidated operating profit for the first quarter of 2009 was 5.4 percent lower than in the prior year. Operating profit in 2008 included $24 million of charges for the strategic cost reduction plan that was completed at December 31, 2008. See Note 3 to the Consolidated Financial Statements. In addition to the effects of higher net selling prices and lower sales volumes, several other significant factors affected year-over-year operating profit comparisons. Lower commodity costs and successful cost savings efforts benefited first quarter 2009 results. Deflation in key cost inputs amounted to approximately $75 million overall versus 2008, including about $65 million in lower fiber costs, $20 million for raw materials other than fiber, primarily polymer resins and other oil-based materials and $10 million in distribution costs, partially offset by about $20 million of higher energy costs. Cost savings in the quarter from the Corporation's FORCE (Focused On Reducing Costs Everywhere) program and strategic cost reduction plan totaled $24 million and $21 million, respectively. At the same time, production curtailments to control inventory levels reduced operating profit by approximately $90 million compared with the year-ago quarter. The downtime helped the Corporation decrease inventories, which went down by more than $300 million during the quarter. Pension expense rose by $46 million in the first quarter of 2009, as expected, with a majority of the increase reflected in cost of sales.

Meanwhile, currency losses reduced first quarter operating profit by approximately $150 million in 2009 versus 2008. Translation losses arising from changes in currency exchange rates totaled more than $65 million, with a number of key currencies weakening by more than 20 percent versus the U.S. dollar. In addition, other (income) and expense, net in the first quarter was a net expense of $77 million in 2009 compared with income of $7 million in 2008. The change was driven by currency transaction losses totaling $76 million in the current year, whereas currency gains of $12 million were mainly responsible for the net benefit in the prior year. Approximately two-thirds of the transaction losses incurred in 2009 related to conversion of local currency cash balances to U.S. dollars at the Corporation's Venezuelan subsidiary ("K-C Venezuela"). Currency exchange restrictions have been in place in Venezuela since 2003. In order to pay for imported finished goods for which U.S. dollars were unavailable at the official rate and to comply with the currency exchange restrictions K-C Venezuela exchanged bolivars for U.S. dollars through a parallel exchange mechanism. Actions are underway to deliver further improvement in business results at K-C Venezuela in order to mitigate the effects of the restrictions.

· Personal care segment operating profit increased 3.3 percent as the benefits from higher net selling prices, cost savings and materials cost deflation were tempered by production curtailments and unfavorable currency effects. In North America, operating profit increased primarily due to higher net selling prices, partially offset by production curtailments. In Europe, operating results declined as lower sales volumes and production curtailments more than offset cost savings. Operating profit in the developing and emerging markets increased because of higher net selling prices tempered by unfavorable currency effects and increased selling expenses.

· Consumer tissue segment operating profit increased 24.4 percent. Increased net selling prices, cost deflation and cost savings more than offset production curtailments and unfavorable currency effects. In both North America and Europe, operating profit increased as higher net selling prices, cost deflation and cost savings more than offset production curtailments. Results in Europe were also negatively impacted by unfavorable currency effects. Operating profit in the developing and emerging markets increased principally because of higher net selling prices.

· Operating profit for K-C Professional & Other products decreased 17.5 percent as higher net selling prices and cost deflation were more than offset by production curtailments, lower sales volumes and unfavorable currency effects.

· Health care segment operating profit increased 4.3 percent as cost deflation, cost savings and higher sales volumes more than offset increased cost of products sold.

· The variation in Other income (expense), net is due to the previously mentioned unfavorable effect of currency transaction losses.

By Geography
(Millions of dollars)

Operating Profit                       2009    2008

North America                          $ 505   $ 469
Outside North America                    259     258
Other income and (expense), net (a)(b)   (77 )     7
Corporate & Other(b)                     (59 )   (70 )

Consolidated                           $ 628   $ 664

Notes:

(a) 2009 includes $76 million of currency transaction losses versus $12 million of currency transaction gains in 2008.

(b) For the period ended March 31, 2008, Other income and (expense), net includes $(1) million and Corporate & Other includes $(23) million of pretax amounts for the strategic cost reductions.

Commentary:

· Operating profit in North America increased 7.7 percent because higher net selling prices, cost deflation and cost savings more than offset production curtailment.

· Operating profit outside North America was essentially even with last year as higher net selling prices were offset by production curtailments and unfavorable currency effects.

Additional Income Statement Commentary

· Interest expense for the first quarter of 2009 was $1 million lower than the prior year primarily due to lower interest rates partially offset by a higher average level of debt.

· The Corporation's effective income tax rate was 29.1 percent in 2009 compared with 27.6 percent in 2008. The increase in the effective tax rate in 2009 versus 2008 is primarily related to nondeductible currency transaction losses in Latin America in 2009.

· The Corporation's share of net income of equity companies in the first quarter decreased to $32 million from $43 million in 2008, mainly as a result of lower net income at Kimberly-Clark de Mexico, S.A.B. de C.V. ("KCM"). Although KCM delivered high single-digit organic sales growth and improved its gross profit margin, net sales, operating profit and net income comparisons were adversely affected by currency translation and transaction losses, including losses on U.S. dollar-denominated liabilities. Compared with the first quarter of 2008, the Mexican peso depreciated by an average of approximately 25 percent versus the U.S. dollar. The Corporation's share of currency effects at KCM totaled about $18 million for the quarter, equivalent to approximately 4 cents per share. KCM has recently taken steps to hedge a significant portion of its U.S. dollar liability exposure.

· Net income attributable to noncontrolling interests (formerly minority owners' share of subsidiaries' net income) was $24 million in the first quarter of 2009 compared with $35 million in the prior year. The decrease was primarily due to noncontrolling interests' share of the previously mentioned currency losses in Latin America, along with the acquisition of the remaining interest in the Corporation's Andean subsidiary in late January 2009.

Liquidity and Capital Resources

· Cash provided by operations in the first quarter totaled $692 million, an increase of 55.9 percent from $444 million in the prior year. The improvement was driven by a significant reduction in the Corporation's investment in working capital, particularly inventories, compared with the year-ago quarter, partially offset by lower cash earnings. First quarter contributions to the Corporation's defined benefit pension plans totaled $90 million in 2009 versus $36 million in 2008.

· Capital spending for the quarter was $211 million compared with $221 million in the prior year and in line with the Corporation's target for spending of $800 to $850 million for the full year of 2009.

· During the first quarter of 2009, the Corporation purchased the remaining approximate 31 percent ownership in its Andean region subsidiary for $289 million bringing the Corporation's ownership to 100 percent of the shares of Colombiana Kimberly Colpapel S.A.

· Total debt and redeemable securities of subsidiaries was $7.2 billion at March 31, 2009 compared with $7.0 billion at the end of 2008.

· Management believes that the Corporation's ability to generate cash from operations and its capacity to issue short-term and long-term debt are adequate to fund working capital, capital spending, payment of dividends and other needs in the foreseeable future.

New Accounting Standards

See Note 1 to the Consolidated Financial Statements for information on recently issued accounting standards.

Environmental Matters

The Corporation has been named a potentially responsible party under the provisions of the federal Comprehensive Environmental Response, Compensation and Liability Act, or analogous state statutes, at a number of waste disposal sites, none of which, individually or in the aggregate, in management's opinion, is likely to have a material adverse effect on the Corporation's business, financial condition, results of operations, or liquidity.

Business Outlook

While declining commodity costs have begun to positively affect the Corporation's gross margins, economic weakness is negatively impacting demand for its products. In addition, currency effects are having a more negative effect than anticipated at the beginning of 2009. The Corporation intends to further improve inventory levels which will result in production curtailment being higher than previously anticipated. The Corporation believes it will generate incremental savings, particularly in product sourcing and supply chain costs, and is in the process of developing plans to drive greater efficiencies throughout its organization. While there have been changes to certain of its original 2009 planning assumptions, the Corporation continues to expect that earnings per share in 2009 will be in a range of $4.00 to $4.20.

Information Concerning Forward-Looking Statements

Certain matters discussed in this report concerning, among other things, the business outlook, including currency effects, inventory levels, cost savings, anticipated costs and benefits related to product sourcing and supply chain initiatives and organization optimization efforts, anticipated financial and operating results, strategies, contingencies and contemplated transactions of the Corporation, constitute forward-looking statements and are based upon management's expectations and beliefs concerning future events impacting the Corporation. There can be no assurance that these events will occur or that the Corporation's results will be as estimated. 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 levels. In addition, many factors outside the control of the Corporation, including the prices of the Corporation's raw materials, energy and distribution costs, potential competitive pressures on selling prices or advertising and promotion expenses for the Corporation's products, and fluctuations in foreign currency exchange rates and foreign currency exchange restrictions, as well as general economic conditions in the markets in which the Corporation does business, could impact the realization of such estimates.

For a description of these and other factors that could cause the Corporation's future results to differ materially from those expressed in any such forward-looking statements, see Part I, Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2008 entitled "Risk Factors."