Mike Masseth – VP, IR Tom Falk – Chairman and CEO Mark Buthman – SVP and CFO Randy Vest – VP and Controller

Ali Dibadj – Sanford Bernstein Chris Ferrara – Bank of America Connie Maneaty – BMO Capital Lauren Lieberman – Barclays Capital Alice Longely – Buckingham Research John Faucher – J.P. Morgan Andrew Sawyer – Goldman Sachs Linda Bolton Weiser – Caris Alec Patterson – RCM Bill Schmitz – Deutsche Bank Jason Gere – RBC Capital Markets

Excuse me, everyone. We now have your speakers in conference. Please be aware each of your line is in a listen-only mode. At the conclusion of the presentation, we will open the floor for your questions. At that time, instructions will be given as to the procedures you'll follow if you’d like to ask a question. I would now like to turn the conference over to Mr. Mike Masseth. Mr. Masseth, you may begin, sir.

Thanks, David. Good morning, everyone. We appreciate your interest in Kimberly-Clark. And with us today are Tom Falk, Chairman and CEO; Mark Buthman, Senior VP and CFO; and Randy Vest, Vice President and Controller. Here is the agenda for our call today. Mark will start with a review of the first quarter results. Then Tom will provide his perspective on the results for the quarter and then also discuss our 2009 outlook. That will leave us plenty of time for Q&A. For those wishing to follow along, we have a presentation of today’s materials in the investor’s section of our Web site kimberlyclark.com. First, let me remind you that we’ll be making forward-looking statements during the call today. There can be no assurance that future events will occur as anticipated, or that the company’s results will be as estimated. Please refer to the risk factors section of our latest annual report on Form 10-K for a description of factors that could cause our future results to differ materially from those expressed in any forward-looking statements. I’d also like to point out that when discussing 2009 results, we’ll be comparing to adjusted results in 2008. And those results exclude charges for the strategic cost reduction plan that we completed last year. Management believes that reporting in this manner enables investors to better understand and analyze our ongoing results of operations. For additional information on why we made these adjustments and reconciliation to comparable financial measures determine in accordance with GAAP, see today’s new release and additional information on our Web site. Now, I’ll turn it over to Mark.

Thanks, Mike, and good morning. I hope you had a chance to review our news release this morning with all the details of our results. Let me briefly review the quarter and then I’d like to start with a few headlines. First, organic sales growth was over 3% a quarter. It was more than off set by the impact of the stronger US dollar. Second, we delivered strong gross margin improvement of about 200 basis points of our operating profit at bottom line EPS, each decline 9% or way down by significant currency losses and incremental pension expense. Third, cash provided by operations rose 56%, driven by strong benefits from our focus on improved working capital. Now, let me get into the detail of the quarter and I’ll start with top line. Overall, sales decreased about 7% to $4.5 billion, including a currency drag of 10%. Organic growth of more than 3% was driven by our focus on improving net realized revenue, which led to an approximate six point gain in net selling prices and slightly better product mix. Total sales volumes were down about 3%, reflecting the challenging business environment as well as our continued emphasis on price realization. Now, turning to top line for each of our segments, in personal care, sales were down more than 3% including an eleven-point currency headwind. Organic growth of approximately 8% was driven by higher net selling prices of about 6% and a one point improvement from both volume and mix. In North America, organic sales increased about 3%. Net selling prices rose about 5% due to increases implemented in 2008. It was partially offset by competitive promotional activity, primarily, diapers. Overall, sales volumes were down about 2% mostly due to softness in child care and the baby wipes categories. Regarding Huggies diapers, although volumes were off slightly versus a year ago, I was pleased to see our market shares improved to point sequentially compared to the fourth quarter. Meanwhile, our adult care business delivered 7% buying growth including benefits from the launch of gender-specific depend underwear. Now, moving to Europe, personal care organic sales were off nearly 4%, buy and sell about 3% driven by lower results in our child care business, while Huggies diaper volumes were about equal to last year. Net selling prices were down less than 1% overall. In developing and emerging markets, although personal care sales were off about 5%, organic growth was strong at nearly 16%. Price and mix contributed more than ten points of growth and volumes increased 5%. Volume highlights included low-teens growth in the fast growing BRICIT countries, as well as double-digit growth in Vietnam, Israel, and South Africa. Turning to consumer tissue, sales were down about 8%, including a ten point drag from currency. Net selling prices were up about 6% with product mix delivering an additional point growth. Buy and sell about 5% were broadly impacted by our continued focus on revenue realization, some category weakness, and consumer trade-down. In North America, net sales increased 1% and net gain was driven by higher net selling prices of more than 5% in improved mix of 2%, mostly offset by lower volumes of about 5%.On the pricing front, we have continued solid realization from the increases taken last year, partially offset by somewhat higher promotional spending. Regarding volumes, branded volumes were down across all categories with relatively softer performance in towels and facial tissue than in our bathroom tissue business. Switching to Europe, consumer tissue organic sales were up 3%, net selling price has rose 3%. And product mix contributed another point of growth. Those gains were more than offset by a drop in sales volumes of more than 6%. In the developing emerging markets, consumer tissue sales were lower by more than 11% including a currency drag of approximately 19%. Selling prices increased in most markets and improved mix contributed a total of 12 points of growth while sales volume fell about 4%. Moving to K-C Professional and other, sales decreased more than 14%, including nine points from currency. While we generated five point of growth from increase net selling prices, sales volume were down by more than 5%. Now, K-CP results were impacted more than our other businesses by the challenging economic environment, particularly in North America and Europe where sales volume were down 13% and 10%, respectively. Lastly, healthcare segment sales were even with last year’s organic growth of 4% was off set by weaker currency rates. Sales volumes advanced 4% in the quarter including double-digit gains in exam gloves. Our glove business has seen good early results from our new lower costs Lavender nitrile glove that launched in the fourth quarter. Now, moving to operating profit margin and cost savings, gross margins improved nicely from 30.5% a year ago to 32.4% as we benefited from price realization, cost saving efforts, and lower input costs of about $75 million in the quarter. First quarter, operating profit fell approximately 9% to $628 million with an operating margin of 14%. Results included currency transaction losses and other incumbent expenses $76 million; negative currency translation of about $65 million; and as expected, an increased in pension expense of $46 million in the quarter. In addition, we incurred production curtailment that reduced operating profit by about $90 million as we continue to drive lower inventory levels. Although margins are still down year-over-year, I was encouraged that we delivered our second consecutive quarter of sequential improvement despite the drag from currencies and pension expense. Meanwhile, we continue to invest in our brands with strategic marketing investment up in local currency terms. Now turning to cost savings, total savings were $45 million in the first quarter. Our ongoing Force program generated savings of $24 million. In terms of strategic cost reduction plan, we realized $21 million of benefit from activities completed in 2008. Brought to a good start with our cost savings effort so we continue to target 2009 total savings of about $150 million. Now, let’s briefly look at first quarter segment operating margins. Our margins improved year-and-year and sequentially in personal care, consumer tissue, and our health care business. Input cost decline benefited all three segments or higher selling price has also boosted profitability in personal care and consumer tissue. Heath care margin also reflect the step-up focus on cost reduction in that business. Lastly, K-CP profitability was somewhat lower than prior year as a result of lower sales volumes and production curtailment related to managing inventories. Turning to equity company results, net income from equity companies declined 26% in the quarter, primarily due to lower earnings of K-C de Mexico. K-CM delivered high single-digit organic sales growth and improved gross profit margin, but operating net income was significantly reduced by currency losses stemming from the weaker Peso. Our share of K-CM currency translation and transaction losses in the quarter totaled about $18 million. That’s equivalent to about $0.04 per share. K-CM has recently taken steps to significantly reduced to US dollar balance sheet exposure going forward. Now moving to cash flow in the balance sheet, cash provided by operations was $692 million that’s up 56% from a year ago. The increase was driven by improved working capital performance, partially offset by lower cash earnings. Our businesses have done a terrific job taking aggressive action to deliver a 7-day decline in inventory levels compared to the end of 2008. Now, with that said, we still have room to further improve our working capital. And we'll continue to aggressively pursue opportunities to generate additional cash flow. Looking at capital spending, we invested $211 million in the quarter. That's in line with our plan for the full year spending to be in the range of $800 million to $850 million. So that wraps up the financial review. To recap the quarter, we achieved 3% organic sales growth driven by improved revenue realization while sales volumes were impacted by the challenging economic environment. Gross and operating margins continue to improve sequentially. And importantly, we delivered excellent cash flow. Now, I’ll turn it over to Tom.

Thanks, Mark, and good morning, everyone. I'll give you my perspective on our first quarter results and then I'll review the outlook for the rest of the year. Then we'll move on and get to your questions. In summary, we were managing through a very difficult environment. We’re aggressively moving to address the near term challenges that we face while at the same time, maintaining a strong focus on the strategies that will ensure our long term success. So let me begin with our first quarter results. As you just heard from Mark, our results reflect the weak economic conditions that I'm sure you are all very familiar with. The recession has impacted our demand in North America and Europe, most notably in our K-C professional business, but also in our consumer tissue and child care businesses. In addition, consumer trade-down has affected our market shares in some categories. On that front, I'm cautiously optimistic that private label market shares in the first quarter were flat or down slightly in most major US categories, compared to the fourth quarter of 2008. And then lastly, bottom line results were significantly reduced by currency losses and by increased pension expense. Together, those two items reduced our first quarter earnings per share by about 35%, compared to last year. So despite the difficult environment, we made progress with several of the priorities that we’ve talked with you about in our January earnings call. First, we continue to pursue our targeted growth initiatives. In developing and emerging markets, our organic sales rose 12% in the quarter and that was highlighted by 18% growth in the BRICIT countries. So although growth has moderated somewhat in developing and emerging markets, we remain optimistic about our prospects in these parts of the world. In addition, last week we announced the acquisition of Jackson Safety. This transaction is consistent with our strategy to extend K-C professional in to higher margin segments. Second, we continue to strengthen our brands. Innovations such as new Depend underwear for men and women are off to a good start. And we have more product news coming in this year. We also continue to support our brand building in product initiatives with strong marketing programs. Third, our focus on improving profitability is beginning to pay off. I was pleased to see our gross margin improved in the first quarter. Although in some cases, our sales volumes continue to impact by our focus on revenue realization. That’s a trade off we’re making to get our margins moving in the right direction. We also generated improved operating margins in three of our four businesses segments and we're off to a good start this year with our cost-saving efforts. And then fourth, we delivered a strong improvement in cash provided by operations, with outstanding progress in driving down our inventories. As Mark said, we’ll continue to push hard in this area to allow us to free up additional cash. So overall, while results are down, I'm encouraged by our performance in a number of areas. Now, let me cover the outlook. Based on what we experienced so far, we expect business conditions to remain challenging this year. In this environment, we remain focus on improving our margins, maximizing our cash flow, pursuing our targeted growth initiatives, and further building our brands and key capabilities that support sustainable growth. Moreover, we’re accelerating cost reductions and driving organizational efficiency. In fact, we’ve just announced two actions that affect much of our US workforce. First, we’ve decided to free the defined benefit pension plans at the end of this year for all non-union employees. This will reduce 2009 defined benefit pension expense by about $40 million, compared to our previous estimate with virtually all of that improvement coming in the second half of the year. In addition, expense for future years will be less sensitive to changes and discount rates in actual plan returns. And then second, we’ve announced a voluntary severance program for salaried and hourly non-production employees. This is a first step in our plan to further improve our cost position and optimize the effectiveness of our organization. We expect that there will be additional headcount reductions during the second and third quarters after each business units and functional area have completed their detailed plans and made final decisions. Although at this point, it’s not possible to quantify the potential cost through ongoing savings that will resolve. These are difficult decisions, but they’re necessary to improve Kimberly-Clark's competitive position that’ll help us submerge from this challenging environment at a stronger competitive position. This morning's news release included several updated planning assumptions for the year. Let me review the key points starting with the top line. We’re now planning for overall sales volume to be flat to down modestly this year. This reflects a more severe down turn in K-C professional and slightly lower expectations elsewhere. And we continue to be disciplined to strike the appropriate balance between sales volumes and profitability and we’re carefully monitoring market shares to competitive environment and the financial health of the consumer. We continue to target 2% to 3% benefit from higher net selling prices and bringing estimated organic growth in the 1% to 2% range. We are not assuming any broad-based price rollbacks, but we are planning for somewhat higher promotional spending, some of which has already begun. With an estimated negative currency effect of 8% to 9%, total sales are expected to be down 6% to 8% this year. This is since currency rates for the balance of the year are pretty similar to where they were in the first quarter. In terms of cost and operating profit drivers, at this point, cost deflation is estimated to be $600 million to $700 million for the year. That compares to our previous plan for deflation of about 300 million and is based on oil and pulp prices generally in line with current levels for the rest of 2009. We’re anticipating more currency losses than previously estimated. Although, in certain markets were taking action to reduce the bottom line impact where we can. In addition, we remain committed to improve our inventory levels and drive our cash flow even as we’ve slightly lowered our expectations for sales volumes. As a result, production curtailment will be more significant than we’ve previously anticipated. So putting it all together, although some of our individual assumptions have changed significantly from three months ago, we’re on track overall with our plan for the year and we continue to expect our earnings per share will be in a range of $4 to $4.20. As we’ve discussed in our January communication, there is more uncertainty around these estimates than normal and we recognize that the environment could cause significant changes in key variables including consumer demands, net selling prices, currency exchange rates, and input costs. We continue to expect that earnings per share in the first half of the year are likely be down versus adjusted earnings in 2008 with improvement expected in the second half of the year. So we will carefully monitor the environment and we’ll adjust our plans as appropriate to deliver the best possible results in this environment. So to summarize, while the current environment remains challenging, we'll continue to do the right things for the long term health of our businesses and manage those things that we can control. In short, Kimberly-Clark teams around the world continue to execute our global business plan and are committed to improving our performance. I am confident we're building a leaner, stronger, faster company and that we have the right strategies in place to drive sustainable growth and deliver shareholder value over the long term. That wraps up our prepared remarks, and we’ll be happy to begin to take your questions.

Ladies and gentlemen, at this time the floor is now open for your questions. (Operator instructions) Our first question comes from Ali Dibadj from Sanford Bernstein. Ali Dibadj – Sanford Bernstein: Hey, guys. How are you?

Hi, Ali. How are you? Ali Dibadj – Sanford Bernstein: Could you help us – well, can you talk to about the currency impact on the bottom line a little bit? You have said in the past several times, I think (inaudible) is the last time I’ve heard it, at least. That the impact, percentage wise from the top line versus the bottom line will be roughly one-to-one. And we call it – there’s no multiplier. It looked like this quarter was like negative 10 on the top line, negative 23 on the bottom line, so it’s 2.3 times multiplier. What should we expect going forward? And maybe a part of that answer have to be that $76 million and figuring out when that $76 million disappears going forward?

Yes. A good chunk of that, about probably two-thirds of that $76 million really relates to exploit between the official rate and the unofficial rate for certain Latin American currencies. And so, part of that was related to moving cash balances from local currencies to US dollars so we took a transactional hit on that. But part of it was related to importing at the unofficial rate and selling at the official rate. And so that negative spread winds up another expense. Ali Dibadj – Sanford Bernstein: But then beyond that, beyond just that, what is the impact on the bottom line versus the top line? It sounds like it probably would be more than one-to-one, more to like 1:1.5 or 1:1.7, something like that. Is that a reasonable way to think about it?

Well, I think, certainly in the first quarter, when you have situations like that, it’s a question on how quickly your pricing catches up in the local market. And so, in the quarter, we are able to import some part of the official rate and some of the unofficial rate. And that going to ultimately lead to price increases, but we didn’t get that fully realized in the quarter. Ali Dibadj – Sanford Bernstein: Okay.

The planned effect – Ideally you’d like to get it back to one-to-one. But if you’re having the currency fall away from you, you’re going to be short of that in any given quarter. Ali Dibadj – Sanford Bernstein: Okay. One of the other things you’ve mentioned at (inaudible) as very important for this year is trying to get a sense of the authenticities – in the potential changes in authenticity curves. Can you give us a little bit of what you’re learning in personal care consumer tissue K-CP, about that?

Yes. If you look at the categories where you’re meeting people’s probably, most basic needs like diapers and bathroom tissue, using the category in unit volume, has been pretty flat. So you’re not seeing a lot of demand change which is not – is what you’d expect. There you’re seeing a bit more sensitivity around absolute cash outlay as opposed to price per unit. And so, we’re making sure we’ve got the right packings at the right promoted price points. And some of the other categories that you might argue are more discretionary. Household towels are a little soft, flushable moist wipes are a little soft, facial tissue category was down. We had a weaker cold and flu season, but I also think that’s the category that could be a little bit more discretionary. You’re seeing category weakness there. And so, how do we make sure we’ve the right offering and the right price? I think for us, the encouraging thing in the quarter is that private label shares sequentially were flat in most of our categories. I think they’re flat in five, down in two, and up in one. And the only one that they’re up in was adult care. And really, we didn’t have much of a promotional program for Depend in the first quarter because we were getting ready to transition to our pants for men and women that we’re launching late first quarter, early second quarter. Ali Dibadj – Sanford Bernstein: Are you seeing any change in the curve, particularly in the emerging markets? I’m saying change of elasticity between the emerging markets.

No, not at this point. I think you’re seeing things slow down and it’s a question of how many new households come in to the middle class and can afford your products. And so, it’s more about changes in category penetration rates as opposed to individual usage. Ali Dibadj – Sanford Bernstein: Okay. And this is my last one around downtime. It looks like about 200 this quarter. And you said it was going to be more than we previously anticipated, I think, of exact cost. What shall we expect that’s on our base points to be going forward?

Well, I guess I’d say we’re going to probably have a similar level in the second quarter, for example. We’re going to continue to push inventories down. Do it early so we get the benefit this year of the lower working capital and the improved cash flow. We got obviously big pension contributions coming so we know we’ve got to generate cash early in the year to be able to fund those, and we’ll just see how demand goes. But we’re committed to getting inventories under better control, and we’ll take as much downtime as we need to get where we need to be on that front. Ali Dibadj – Sanford Bernstein: Okay. Thanks very much.

Thanks.

Our next question comes from Chris Ferrara with Bank of America. Chris Ferrara – Bank of America: Hey guys. Tom, on the FX transaction issues again. Can you just talk a little bit about how it’s flown to, I guess, so far. Besides the translation of cash in Venezuela, how about the rest of the business and the effect on gross margin for feeling the US dollar-based commodities causing a margin drag internationally. Has that – because of FIFO accounting, has that flown through the full effect or are we seeing incremental FX drag from a transaction perspective over the next couple of quarters?

I think it really depends with market-by-market and where you’re able to get price to offset it and where you’re not. You have a lot of markets where the currencies are up 20 or 25%. Commodities in some cases aren’t up quite as much. You’re not able to get price, so you’re seeing a little bit more margin pressure on that front. So in terms of the other expense line, most of it that you described was the transaction exposure in Valenzuela. In fact, beyond that, it’s difficult to tell. Chris Ferrara – Bank of America: But I guess, purely related to timing. Have we seen the higher – the highest of cost inventory driven by that strong US dollar hit the P&L already, or might we see more of that – assuming currency rates flat and no change for pricing? I guess all else equal, have we seen that flow to our inventory levels?

Yes, I would say for the most part. Yes. The commodity costs have come down substantially in the fourth quarter. So that should have flowed to most of our inventory at this point. Chris Ferrara – Bank of America: Okay, great. And then, I guess, last quarter you’ve been pretty clear that commodity cost coming in lower than what you’d expect would alter a little bit of a balance in your guidance. Meaning, if commodity costs come in lower, pricing may be more risk than you guys have thought? And obviously, you guys have more than double the commodity deflation estimate, and pricing still hold the same. So, has pricing held up better than you thought? I assume it has. Why do you think that is? Is there anything going on by geography to call out on that?

So far, the pricing has held up probably better than we would have expected. I think obviously we were certainly planning forward to hold and have been doing everything we can to try and reinforce that on the marketplace. I think like most other companies, we’re using other strategic levers from marketing standpoint to reinforce the value equation. Making sure promoted price points right, that we get the right packings in distribution. Trying to drive innovation wherever we can to justify the value of our products to the consumer. And so those are the levers that we much rather pull than the price decline lever. And we’re also watching private label shares. And so the fact that they stabilized at this point, or seem to have for the most part is encouraging to us. Chris Ferrara – Bank of America: So just finally. Do you feel like that second derivative is better now? Things you’re seeing are going to continue to remain challenging. But from you business perspective, even into April, things don’t seem to be getting worse from your perspective, globally?

No. I think that’s difficult to tell. I would say early in the first quarter, you probably saw a bit more of inventory pull-down across the board as everybody was preparing for it to get worse. It felt like things – like momentum picked up a little bit during the quarter, but it’s also difficult to tell on a month-to-month basis. Chris Ferrara – Bank of America: Great. Thanks a lot. Appreciate it.

Thanks.

Our next question comes from Connie Maneaty of BMO Capital. Connie Maneaty – BMO Capital: Good morning.

Good morning, Connie. Connie Maneaty – BMO Capital: Morning. Could you describe a little bit the kind of increased promotional activity that you’re starting to see? And I think you also said it’s on their way. So what is it that you’re doing differently now than maybe, a couple of months ago?

Yes. For example in diapers, we’re probably doing a little bit more direct mail couponing [ph] to make sure that we’ve got the coupons in mom’s hand at the right time. So where there are size changes, to make sure that we have the right prenatal sampling so that her new baby is starting with Huggies right from the start. So we’re doing more strategic marketing on that front to make sure consumers see the value equation. But we’re also launching a super premium product like Pure and Natural because we know that mom will still pay more for a truly better product for her baby. And so, being willing to do that even in the face of a challenging environment, it’s something that we’re continuing to focus on. In tissue, it’s really getting the right packings on the shelf at the right price point and finding – if a $5 price point is what moves the volume more effectively with some accounts, making sure you can get there with the right product – a reasonable margin for us as well as a reasonable value for the consumer and maybe less of the big bundle-pack promotions. So it is trying to focus on that, to get the mix right. Connie Maneaty – BMO Capital: How different is Huggies Pure and Natural than– I’ve read the text and everything, but there’s something out there called gDiapers which are flushable and organic. Is the industry moving in that direction?

Well, what mom tells us is that she wants us to take even a small step toward a better part environmentally. She recognizes there are challenges in getting to a perfect solution. But if we can do something so making it more hypo-allergenic, doing it without dyes and fragrances, using some organic cotton in the product, just something that she feels like she’s doing her part to try and contribute to a better environment. Yes, looking at putting recycled polymer in the packaging. All of those things are small steps that can make a difference collectively over time. Connie Maneaty – BMO Capital: And what’s the price premium of Pure and Natural?

It’s about 15%. Connie Maneaty – BMO Capital: And what’s retailer at (inaudible)?

So far it’s been great. I think retailers are all looking for innovation right now. And in the early days, I was just talking with our team and Nina earlier this week, and thinking the first week we were out there we had 200,000 hits to our Web site. So moms' interested in it as well, which is what the – is really exciting. Connie Maneaty – BMO Capital: Okay. And just one final question on FX. If currency rates still where they are going forward, will there be a balance sheet impact from FX transaction? Or is the transaction impact that's coming, that's going to be running through the cost of goods?

The most of the balance sheet impact, as we translate the balance sheet at the end of every quarter at the then current rate floats through the unrealized translation adjustments. So beyond that, there shouldn't be a big balance sheet impact except those big shift in a particular market we're holding local currency cash. There you'll see some impact there. But that's about the only other thing you'd see. Connie Maneaty – BMO Capital: Okay. Many thanks.

Thanks, Connie.

The next question comes from Lauren Lieberman with Barclays Capital. Lauren Lieberman – Barclays Capital: Thanks. Good morning.

Good morning, Lauren. Lauren Lieberman – Barclays Capital: First thing, was just if the, if the incremental headcount reduction, I knew you just kept this quantified for our purposes, but is that sort of already assumed in your planning assumptions for the full year?

No. We haven't put any cost or benefit from the headcount changes in our current guidance assumptions. Lauren Lieberman – Barclays Capital: Okay.

So we’ll give you a more complete update on that once we have the details of how many, how much, and when the savings will occur. Lauren Lieberman – Barclays Capital: Okay. And you think you'll know that sort of around the time of second quarter earnings? Or is it like an inter-quarter saying that–?

Sometime between now and then. Lauren Lieberman – Barclays Capital: Okay. And then the second thing was you mentioned you were taking steps to mitigate transaction losses going forward. So outside of the K-C de Mexico lease announcing, can you explain a little bit of what it is that you're doing? And then, of course, would that mean that within the current outlook for FX is there maybe a little flex there? That if some deduction’s actually going into effect? In that it seems a little bit less that?

Well, I think part of it is, looking at our hedging to see if there are other things we could do there. Looking at more local manufacturing in markets where we've had bigger currency impact from imported products. So things like that could have a mitigating impact. It's a question of how quickly we'll be able to do those. And I think the guidance range that we've given you for the year is a pretty reasonable guesstimate based on what we know now as to where it will come out. Lauren Lieberman – Barclays Capital: Okay. So this mitigating step is more so that, from a longer term perspective, to mitigate exposure to currency more than something that was about the here and now?

Yes. I would say, Lauren, that if you think about it as just increasing our cost of goods we're looking at pricing actions to offset it at certain markets too.

Yes. Lauren Lieberman – Barclays Capital: Okay. All right. That's great. That was really all I had. Thank you.

Thank you.

Our next question comes from Alice Longley with Buckingham Research. Alice Longley – Buckingham Research: Hi. I have a follow up to that. Are you seeing pricing accelerating in developing markets into the June quarter compared to the March quarter?

In some cases. It’ll a little bit depends by categories. You saw where you had real currency weakness you're seeing more, more pricing activity. Brazil, for example, we were pretty aggressive on price in some categories. You’d see it more, more across most of Latin America, with the areas that we'd be focused on. Alice Longley – Buckingham Research: Would it make sense to assume that to the course of the year that pricing in developing markets accelerate and volume decelerates a little?

Well, if you think about it year over year it really started in fourth quarter of last year. So as you start to get late this year we'll be lapping that. So you may actually see on a year-over-year change faces a little bit of deceleration. Alice Longley – Buckingham Research: Okay. And on, as far as private label is concerned here can you tell us what you think might happen in the untracked channels? Importantly Wal-Mart, we keep hearing they're going to be pushing private label a lot more aggressively. Can you tell us what you're seeing there into the quarter?

Our estimate is an all outlet estimate. So we had private label shares in the – versus prior quarter, we we're flat or down in most of our categories. The only one that was up a couple of share points was in adult care. If you look at year-over-year the ones that were up significantly were, I think, feminine care was up a point and half; adult care was up about three points; bath and towels and facial tissue were each up a point and a half. So– Alice Longley – Buckingham Research: Do you think going ahead that’s going to get that they'll gain more share because Wal-Mart et cetera is going to push private label more than they have in the first quarter?

Well, I think a lot of the private label discussion you're hearing from retailers is primarily aimed at food although, we certainly aren't taking that for granted in our categories. I think the thing that makes us feel cautiously optimistic is that at least fourth quarter to first quarter it seems to have stabilized. But it's something that we watch month- by-month basis. Alice Longley – Buckingham Research: Okay. And then my last question is on – I think you said organic growth in developing markets for your overall was 12% in this quarter?

Right. Alice Longley – Buckingham Research: What was it in the US, North America, and Europe putting all those sectors together?

Yes. I'll let Mike comment on that.

We’ll have to do that offline. We don't look at it that way, Alice. Alice Longley – Buckingham Research: Okay.

We can give it to you by category.

On business. Alice Longley – Buckingham Research: Yes, I could do it by category. Okay. Thank you.

Our next question comes from John Faucher with J.P. Morgan. John Faucher – J.P. Morgan: Yes. Good morning. Quick question about the safety acquisition you guys talked about. If you look at the performance of the professional business it’s definitely is more cyclical, more volatility, what have you. I mean, I think from an investor's standpoint it might be a little bit of a drag on the business. So I guess, the question is why try to improve the margins through acquisitions as opposed to saying, is this the business we want to get bigger in relative to the rest of our portfolio? So can you talk about this philosophically how you're looking at professional business given the volatility and the drag on overall returns and results?

Yes. Sure. I think the focus for the professional business has been to grow in the higher margin segments and some of those are less cyclical than some of our traditional business. So really that's the, the help with safety and with some of our, our higher margin products that are sold more into the higher end places in the marketplace. So safety is a good example of that. It certainly will have some economic impact, but it should be less than the average of our overall K-CP portfolio. And so is the chance to buy a good company with a good portfolio at an attractive price. John Faucher – J.P. Morgan: Well, I guess then is it less, you mean, how much more cyclical and how much lower margin it is than let’s say, outside the overall portfolio? I mean, is it still – it sounds like the issue is its better mix than professional than negative mix relatively? So I'm still trying to get an idea. You improve one business but still hurt the overall.

No. I think our vision is that the mix will be a credit to the Kimberly-Clark portfolio overall. And there's a good global opportunity here where you build a balanced portfolio of those products around the world. And you should be able to do pretty well with that in most reasonable economic scenarios. John Faucher – J.P. Morgan: Okay. Thanks.

Thanks.

Next question comes from Andrew Sawyer with Goldman Sachs. Andrew Sawyer – Goldman Sachs: Yes. Sure. Thanks, guys. I’ll just ran in quickly if you could touch on how you'll think about share buy backs as you go to the balance of the year specially with free cash coming in pretty strongly? When will those decisions be made and how should we think about the way you're approaching that?

Well we had to write a pretty big check to our pension plan before the end of the year. So I think we only had about, I don't know, $60 million of pension contribution in the first quarter. We're going to be close to $500 million for the full year. So we’ve got to deliver cash early in the year to be able to fund our pension plan commitment. So, we're watching that as we go through the year. We'll make those pension plan contributions. We also didn't have, really, a tax payment in the first quarter because – or significant one because of some of the pension plan contributions that we have coming. So our tax payments will be higher in the balance of the year than they were on the first quarter, I would guess so the combination of that. I would say that it's unlikely that we'll probably do any share repurchases this year, but we'll give you updated guidance as we go through the year. Obviously, if we generate significantly more cash in the business than we need we haven't historically accumulated it in the balance sheet. Andrew Sawyer – Goldman Sachs: And just following up on the transactional FOREX, I hate to beat the dead horse too much here, but I guess you’re stepping up the impact from that in your guidance by about $175 million as far as the drag goes. And I guess currency exchange rates haven’t changed that dramatically, so this is really a reflection of capital controls being imposed in a few countries, particularly Venezuela?

Yes. It’s more of a difficulty in getting exchange at the official rate for imported products. Andrew Sawyer – Goldman Sachs: And then my guess, if you’re stepping up by $175 million for the year and you had $75 million impact in the quarter, we should think about this moderating cross here. Can you give us a sense of how much of that $76 million was purely the cash balance moving? And how much of that $94 million in cash you had at year end in Venezuela did you translate back into US dollars?

Yes. I mean that’s a difficult – we didn’t bring it all back into dollars or brought a portion of it back into dollars. And of the $76 million of other expense, about two-thirds was related to the Latin American currency issues and a portion of that was related to the cash balance shift. Andrew Sawyer – Goldman Sachs: In principle, in Venezuela the $400 million business for you guys in a revenue sense in current exchange rates. And if you use the black market exchange rate it’s only $150 million. It’s not a very big business but it’s causing a pretty outsized negative earnings and cash flow impact on your business this year. How do you evaluate whether you want to shrink that business and make those sorts of strategic decisions in light of what’s going on?

Well, I guess the only thing I’ll you is that running a business with and developing an emerging market is an exciting and challenging opportunity everyday. So I get up and read the Financial Times just to see what new thing happened that I get to worry about. So whether it’s a coup in Thailand or something going on in Venezuela, there is risk. I think the good thing for us is we don’t have a disproportionate amount of business in any one market. We’re spread across a number of markets. There are going to be hiccups and surprises in various places. But overall, we’ve been there for a long time. We think we know how to operate there. We’ll operate through this and come out the other side with a strong healthy market position in Venezuela. Andrew Sawyer – Goldman Sachs: All right. Well, thanks a lot, Tom.

Thanks.

Our next question comes from Linda Bolton Weiser with Caris. Linda Bolton Weiser – Caris: Hi. I was just curious about your cost savings in the quarter. It seemed pretty good and yet I though that production curtailment actually would tend to reduce those amounts. Are you just really trying to achieve a lot in the beginning of the year or should we think about even excluding the additional headcount reductions? Should we think about a possibly higher number than $150 million for the year?

I think it’s a good question, Linda. And I think last year we talked about how we don’t charge the absorbed overhead from down time in against our FORCE savings. We tried that separately but we talked about when were down, we were doing more maintenance. We probably didn’t manage the cost of those as effectively, and so we wound up hurting our FORCE savings. We did a little better job of managing that in the first quarter. And so our teams are focused on delivering both their inventory objectives and their cost savings for the year. So I’m pleased to see we’re off to a good start and expect that to continue and perhaps even build a bit this year as we go through the year. Linda Bolton Weiser – Caris: Okay. And then, I’m just curious about the new Depends product for men and women.

You should try them. Their great. Linda Bolton Weiser – Caris: I may need them. I’m just curious about them. It just seems to increase the number of SKUs at retail quite a bit because you’ve got the different absorbencies and then the men and the women. Is that a push back by retailers or is that not really an issue in getting acceptance?

I think whenever we go into our retail partners with a new program that has got increase SKU count, we’ve already thought through what the issue are going to be. Typically, they’ve been exposed to the innovation. We’ve done some things with compressed packaging to try to fit the product lineup into the same linear feet on the shelf. And so obviously, you’d like to have an infinite amount of excess shelf space available for you. You know you’re not going to get that. So we think through how we’re going to execute our innovation at retail and usually have had discussions with our driver customers up front so that they’re working through how to fit it onto the shelf. Linda Bolton Weiser – Caris: And then on the K-C Professional and other operating margin in the quarter, I guess it was the only business unit that had a decline year-over-year. And I would have expected the commercial tissue – the tissue piece to actually have margin improvement. Was that the case? Or were both parts of the business down in terms of operating margin?

K-C Professional, it’s such a volume hit in the quarter. But that was really the – the overwhelming impact of it was from that. So when you’re down 10 plus percent in some markets, that’s a pretty big deal. Linda Bolton Weiser – Caris: Okay. All right. That’s all. Thank you very much.

Thanks, Linda.

Our next question comes from Alec Patterson with RCM Alec Patterson – RCM: Yes. Good morning.

Good morning, Alec. Alec Patterson – RCM: Good morning. I’m sorry. I just want to make sure I’m clear on the FX impact on operating profit. So you have the $75 million or so that was transactional, flowing through other income. And then you talked about $150 million hit to operating profit from FX. Was that purely translational at the operating profit line?

Yes. I think the balance was translation. Alec Patterson – RCM: Balance of?

Of the $76 million was in other expense which is all transaction. Alec Patterson – RCM: Right.

Alex, this is Mike. In addition to translation, there’s the impact that Mark talked about at K-C de Mexico. Alec Patterson – RCM: Which is also a non-EBIT line item right, that’s below the line?

That’s correct.

Below the line. That’s correct. Alec Patterson – RCM: And so, is there an FX hit to the cost of goods line that you guys have?

There is some level – yes, there is some level of transactional hit there where in local currencies you’re buying different currency denominated inputs. Alec Patterson – RCM: Right. And I know what it is. I was wondering how much impact it had on cost of goods?

I would say it increase it. It’s not something that we disclose specifically. Alec Patterson – RCM: Okay. I’ll circle back to you on that.

It’s not as big as the other factors that we laid out in terms of the changes in operating profit for the quarter. So we really talked about the big swingers; the pension expense increase, the curtailment costs, and the inflation, the deflationary impacts as well. Alec Patterson – RCM: Okay. Fair enough. And then just lastly, the production curtailment cost. Is that occurring across all segments fairly evenly? I’m sorry if I missed it. There was an area of focus on this?

I would say the consumer tissue, personal care, and K-C Professional had most of their curtailment cost. Health care, their curtailment – they took more of their curtailment in second and third quarter last year. So you saw the impact on their margins last year. You saw some of the rebound in their other margins this year, as they didn’t have as big of an impact. Alec Patterson – RCM: Okay. Fair enough. Thank you.

Thanks.

Our next question comes from Bill Schmitz with the Deutsche Bank.

Good morning, Bill. Bill Schmitz – Deutsche Bank: Hey, guys. Good morning. Can we get some more color on the production down time? Maybe some guidance on how that’s going to trend as the year progresses? Because at some point, inventory’s obviously going to catch up with consumption.

No, I think we would probably say we’re going to take more of it in the first half of the year, as much of it as we can. And hopefully, get our inventory in good position. Some color would be, we had a number of outside warehouses when we started the year that we had overflow storage. We were out of virtually all of those by the end of the first quarter in the US. So that was an opportunity. I’d say D&E is still an area that’s got some work to do in that front. So D&E has probably got more opportunity to take inventory out in the second quarter and third quarter. K-C Professional made good progress, but their volumes were falling at the same time as they were curtailing. So they didn’t make as much progress as they would have hoped. And so, they’re going to continue to push to get their inventory in line. At the same time, were also starting and continuing to reduce SKU so that as we simplify our product lineup, we can also run with less inventory; run with a more efficient-backed manufacturing operation. And I’d say that SKU reduction is probably at the early stages, so there’ll be more benefit coming from that as the year progress as well. Bill Schmitz – Deutsche Bank: Okay. Are you going to take on any production capacity?

I don’t think that that’s the nature of where we’re at. I mean, given the volume declines that we’re seeing are fairly modest. So I think it’s more of managing your down time across the organization. Bill Schmitz – Deutsche Bank: Okay. Got you. And then you sort of hinted at it, but do you have any implications of the planogram changes we see – we saw at Wal-Mart and Walgreens? They’re talking about 15% to 17% reduction in SKUs. Has your business been impacted by that at all?

I think it depends on the strength of your brands. Typically, it either helps you or hurts you. If you’re the big brand and you come out with more share of the shelf and better pack out and better in-stock, it can help you. Obviously, if you’re in a weaker position you can lose distribution and it will hurt you in those particular areas. So I think it’s a trend that’s been continuing for a long time. It seems to be accelerating a bit lately, as retailers are really trying to be more focused on what they carry. Bill Schmitz – Deutsche Bank: But has it impacted you guys specifically? I would think that Huggies is probably in pretty good shape. But you would probably question Kotex and some of the you know, with their SKU of proliferation in some of the smaller brands.

Actually, probably the areas that – we’ve generally done fine in personal care. Facial tissue’s been fine. The areas we’ve probably worked on a little bit are in the towel category, making sure that Viva and Scott towels are represented where we want them to be and have had some wins and some losses in those fronts. Bill Schmitz – Deutsche Bank: Okay. Great. And then if I can ask just one more, have you changed your hedging activity at all? Because it sounds like you’ve a lot more confidence I guess in some of the planning assumptions on the commodities side. Have you locked in oil prices more than you have in the past, than say with natural gas?

No. With natural gas we’re a little bit more hedged than we have been. We’re probably – we’re 80% hedged in the first quarter. I think were 75% hedged for the balance of the year at prices that are above the current market price. But we’ve limited some of the volatility. On the oil front, we really – we don’t have a lot of direct oil. So we haven’t been able to do much there. And so, I think it’s more just a momentum. Feels like it’s moving in the right direction right now. Bill Schmitz – Deutsche Bank: Okay. Great. Thanks again.

Thanks, Bill.

Our next question comes from Jason Gere with RBC Capital Markets. Jason Gere – RBC Capital Markets: Good morning.

Good morning, Jason. Jason Gere – RBC Capital Markets: Just a question on the developing and emerging markets. Clearly the headline news that we see, softer economies, GDP slowing across the board. Certainly, it doesn’t seem like it’s filtered into the consumption trends yet. I was just wondering, how much has really trickled down to the consumption? Do you think high single digits sales growth is more of the floor on this business as you look out to 2009? And then, I just have a follow up.

First, it depends on the market. If you looked at Korea or Australia, which are in our developing and emerging markets bucket, you saw a pretty flat category volumes there. Those are very developed economies. And as they slow down a little bit, they’ll look more like the US probably, in terms of how they respond. Other markets like China – for us we’re still picking up cities as we go. We’re still only represented in a small part of China. So there’s a huge growth opportunity for us to continue to push out. Brazil will be somewhere in between. We’ve got a good presence there. We think there’s a lot more opportunity. We see even parts of Brazil, we’re not represented the way we’d like to be. So we’re continuing to focus on maximizing growth opportunities in places like that. Jason Gere – RBC Capital Markets: And then separately, I know you’ve talked about taking pricing to offset currency. Can you just talk about in those areas where you’re facing local competition who don’t have to take pricing, what you’ve seen in terms of the trends there?

It depends on the market place. If everybody’s buying pulp that’s priced in dollars, then we’re all dealing with the same approach. In other cases where you’re bringing in – in high-end diapers and high-end training pants in some markets where there really isn’t a relevant local competitor, it hasn’t been a problem. But it’s a bit like the private label issue in the US. You want to watch it and make sure you get your value equation right and that you’re not too far off from where the consumer sees the value difference. So it is a market by market approach. Vietnam was a good example. There’s been a very high inflation in Vietnam and our products have certainly reflected that. Not every local competitor has followed and we’re watching that price value equation closely to see if something happens with share and – with both volume share and dollar share. Jason Gere – RBC Capital Markets: Well, great. Thank you very much.

Thanks.

Our next question comes from Ali Dibadj with Sanford Bernstein. Ali Dibadj – Sanford Bernstein: Hey. Thank you for taking my follow up. I was hoping you could help me figure something out and it’s building on Alec’s question from before a little bit. If you just look at the difference in your gross margin, quota 190 basis points, something like this on a recurring basis; you have FORCE and FTR, which are about 100 basis points; pricing which probably gave you 400 basis points plus; commodities gave you quota 170 basis points; de-leverage was quota negative 200 basis points; pensions was somewhere in the negative 100 basis points range. And then you have a gap, right, to get to 187, so as high as maybe 300 basis points. How much of that is currency? I know you say you don’t want to disclose it but I think it’s a bigger deal than a small thing. So I want to understand what else may be going on in there that I’m not understanding.

There’s a number of other things in that analysis. I think some of it is going to be product improvements where we’ve added cost back to the product. In some cases we’re driving a little bit better mix. So that will be another variable that you’re not modeling. But I don’t know. Mike, if you want to add anything to that? Ali Dibadj – Sanford Bernstein: That’s an upward move, right? I’m looking for more negative.

No. That’s a negative, adding cost to the product.

There are higher costs in a number of areas. There’s labor, inflation for an example. There’s the currency transaction which we have discussed as well. Ali Dibadj – Sanford Bernstein: How big impact on that part is really what I’m saying.

They’re all contributing to the total, although none is individually that significant

Okay. I can’t get that, but okay. That’s fine. All right. Thanks.

Mr. Masseth, at this time we have no further questions.

All right, David. We’ll wrap up. And Tom, just to leave us with a couple of comments please.

Yes. Once again, we’re addressing the priorities that we laid out for you earlier in the year. We think we’re operating well in a difficult environment, and we continue to appreciate your support of Kimberly-Clark. Thank you.