Thomas J. Falk - Chairman and CEO Mark A. Buthman - SVP and CFO Paul J. Alexander - VP, IR

Ali Dibadj - Sanford Bernstein Gail Glazerman - UBS Christopher Ferrara - Wells Fargo Olivia Tong - Bank of America Merrill Lynch Lauren Lieberman - Barclays Brian Doyle - CLSA Russell William Schmidt - Deutsche Bank Javier Escalante - Consumer Edge Research John Faucher - JPMorgan

Ladies and gentlemen, thank you for your patience in holding, we now have your presenters in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of today’s presentation we will open the floor for your questions. At that time instructions will be given as to the procedure to follow if you would like to ask a question. It is now my pleasure to introduce today’s first presenter, Mr. Paul Alexander. Paul J. Alexander: Thank you and good morning everyone. Welcome to Kimberly-Clark’s first quarter earnings conference call. Here with me today in Dallas are Tom Falk, Chairman and CEO; Mark Buthman, Senior VP and CFO; and Mike Azbell, Vice President and Controller. Now here is the agenda for our call. Mark will begin with a review of first quarter results, Tom will then provide his perspectives on our results and the outlook for the full year. We’ll finish with Q&A. We have a presentation of today’s materials in the Investors section of our website. And as a reminder we will be making forward-looking statements today. Please see the Risk Factors section of our latest annual report on Form 10-K for further discussion of forward-looking statements. We’ll also be referring to adjusted results and outlook. Both exclude certain items described in this morning’s release. The news release has further information on these adjustments and reconciliations to comparable GAAP financial measures. And now I’ll turn it over to Mark. Mark A. Buthman: Thanks Paul and good morning. Let’s start with some headlines. First we achieved organic sales growth of 5%. It was highlighted by 11% growth in developing and emerging markets. Second, we delivered strong cost savings, margin improvements and growth in adjusted earnings per share. And third we continue to allocate capital in shareholder-friendly ways. So let’s cover the details of our results. First quarter sales were $4.7 billion, down 4% including a nine point drag from currency rates. Our underlying organic sales rose 5%. Adjusted gross margin was 35.6% in the first quarter, that’s up 140 basis points year-on-year. Adjusted operating profit was up 7% versus a year ago with an operating margin of 17.4%. That’s up a 180 basis points compared to the prior year. I am really encouraged by our margins and our cost savings performance, as we start the year. We delivered $90 million of FORCE cost savings and we are off to a very good start relative to our full year target for savings of at least $300 million. In addition our organizational restructuring is on track and generated $10 million of savings in the quarter. Commodities were at $10 million of savings in the quarter. Commodities were a $10 million benefit in the quarter, that’s the first time in more than two years that we experienced cost deflation. On the other hand we absorbed significant currency headwinds. The total earnings drag from currency was approximately $0.25 per share or about 19% in the quarter. On the bottom line first quarter adjusted earnings per share were a $1.42. That’s a strong start to the year and up 8% compared to last year. Now turning to cash flow, our cash provided by operations in the first quarter was $20 million. That’s compared to $437 million last year. The decline was primarily due to higher pension contributions, currency effects and operating working capital and the impact of last year’s spin-off of our healthcare business. In February we made contributions which we financed by a debt offering to our U.S. pension plan in conjunction with the annuity transaction that we announced. As a result of these contributions we now expect that cash provided operations in 2015 will be down somewhat year-on-year. In terms of primary working capital first quarter cash conversion cycle was down seven days compared to full year 2014. So we are ahead of our three to four day improvement objective for the year. Now moving to capital allocation, first quarter dividend payments and share repurchases totaled $0.5 billion. We continue to provide a top tier dividend payout among our peers and in February we announced our 43rd consecutive annual increase in the dividend. As we mentioned in this morning’s news release in the first quarter we acquired the remaining interest in our subsidiary in Israel for $150 million. As a result we are now targeting full year share repurchases in a range of $700 million to $900 million. Full year dividends and share repurchases should be at least $2 billion or about 5% of our current market capitalization. Now I will highlight a few areas from our segment results for the quarter, in Personal Care, organic sales rose 6%. Performance was led by developing and emerging markets with organic sales up 16%. Overall Personal Care operating margins were 19.7% in the quarter. That’s up 50 basis points year-on-year. Moving to Consumer Tissue, organic sales were up a point, including strong bathroom tissue volumes in North America. Consumer Tissue operating margins of 18.5% were up 330 basis points year-on-year, with a strong cost savings performance and lower between the line spending. And lastly, K-C Professional organic sales increased 7%. Organic sales were up 8% in developing in emerging markets and 4% in North America. The total KCP segment top line also benefited from sales of nonwovens to Halyard Health in conjunction with a limited term supply agreement. Overall KCP margins were 16.9%. That was even with a year ago. So that wraps up my comments. To recap we are off to a strong start in the first quarter led by organic sales growth at the high end of our 3% to 5% full year target. We delivered strong cost savings, improved margins and growth in adjusted earnings per share and we continue to focus on allocating capital in shareholder friendly ways. Now I will turn it over to Tom. Thomas J. Falk: Thanks Mark and good morning everyone. I will share my perspectives on our first quarter results and then I will address our full year outlook. But before I do that some of you may know this is Mark Buthman’s last conference call as CFO for Kimberly-Clark. We tried to figure this out the other day and we think he has done 49 or 50 of these earnings in a row and that’s an amazing record. In fact you should know that we had a box of our fine Kleenex facial tissues sitting next to Mark on the table in case, just in case a tear appears in the corner of his eye because I know how much he’s going to miss doing these. But seriously I would like to take a moment just to thank Mark for all the contributions he has made to Kimberly-Clark. He has been an outstanding Chief Financial Officer and a terrific leader and friend throughout his career. So I am pleased that Mark will be able to achieve his long-term goal of retiring later this year. Maria Henry, who is an experienced CFO, some of you may know her from her work at Hillshire brands will join Kimberly-Clark next Monday and will succeed Mark as Chief Financial Officer and Mark and Maria will work together over the balance of this year to ensure that we have a smooth transition. We are all looking forward to working with Maria as we continue to focus on creating shareholder value through our global business plan. So now let me turn back to our results and our outlook for the balance of the year. Overall we delivered very good financial results in the first quarter and we are executing well in a challenging environment. Organic sales growth in the quarter was 5% with benefits from our targeted growth initiatives from innovation and from selling price increases in some markets. As Mark just mentioned our business in developing and emerging markets had another strong quarter and it was led by our Personal Care segment. Organic sales in diapers rose high-teens in these markets as we continued to benefit from innovation, expansion of the diaper pant and category development overall. So this business has been growing rapidly for some time and you may not know but our diaper business in developing and emerging markets is more than 1.5 times the size of our diaper business in North America. In terms of key growth markets organic sales in diapers increased 55% in Eastern Europe, 35% in China and 15% in Brazil. Huggies volumes were up nicely in all three markets and we have innovation launching in the next few quarters to drive additional growth. We've also increased selling prices in Eastern Europe and Brazil to offset some of the currency declines that have happened in those places. We're also doing well in our other Personal Care businesses in developing and emerging markets. Organic sales in fem care were up mid-teens. That included very good performance in Latin America led by Brazil and also in China. Organic sales also increased double digits in baby wipes in our adult care business. And K-C Professional grew organic sales high single digits in developing and emerging markets in the first quarter, also a very good performance. So overall we're delivering excellent growth in the developing and emerging markets and I expect our momentum there to continue going forward. Turning to our developed markets business outside North America, organic sales in the quarter were even with the prior year. On the bottom line operating profit and operating margin increased significantly and that included very good results in Korea with additional progress in Western and Central Europe. Moving to our North American consumer business, sales volumes were up nicely across a number of our brands. That included Huggies baby wipes, Poise and Depend and adult care, goodnight suit pants, Cottonelle bathroom tissue and Scott and VIVA paper towels. On the innovation front in North America we introduced improved Huggies baby wipes, we started shipping new Poise pads and Depend briefs. And in March we began the re-launch of our mainline Huggies snug and dry diapers. This relaunch includes product upgrades, a new marketing campaign and increased promotion support and this new product should be out on the shelf in about 80% of our retail customers in North America by late April. In K-C Professional at North America we had solid volume growth in our higher margin faster growing wiper and safety products businesses. In wash room our volumes were up low single digits, which is a step in the right direction after a softer performance last year. In terms of the bottom line, as Mark mentioned we had an excellent quarter, improving margins, our focus on profitable volume growth, raising selling prices where we can and then driving cost savings helped us overcome some pretty significant currency headwinds. Then finally as Mark already highlighted we continue to allocate capital in shareholder friendly ways which is a key strategy of our global business plan. So all-in-all I am encouraged by our first quarter results. Now let me move to the outlook for the full year. Our teams continue to focus on delivering their plans for the year and creating additional flexibility to further invest as appropriate. While we’re only one quarter of the way through the year and the environment out there remains very volatile I'm pleased with our execution so far and despite a more negative currency outlook we're well positioned to achieve our earnings commitments for the year. On the top line we continue to target organic sales growth of 3% to 5% for 2015 and on the bottom line we continue to expect full year adjusted earnings per share in a range of $5.60 to $5.80 and while currency headwinds have increased over the last three months we have good momentum with our growth initiatives and with our cost savings programs. And the commodity cost outlook has improved slightly compared to where we were at the beginning of the year. Our updated currency and commodity cost assumptions are included in this morning's news release, if you want to refer to those. So in summary we're off to an excellent start to the year. We continue to focus on the fundamentals that drive our long term performance and we remain optimistic about our prospects to generate attractive shareholder returns. That wraps our prepared remarks and now we will 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 with Sanford Bernstein.

Hey guys, how are you. Thomas J. Falk: Hey Ali.

And Mark congratulations to you. I hope [indiscernible] joy not dealing with us any more on these calls, congratulations. Mark A. Buthman: That's exactly, Ali absolutely.

A couple of questions. One is, it looks like you are starting to enter this sweet spot, as we call it of commodities really being a tailwind and not having to put back a lot of that into pricing in the category, in promotions in the category. Historically you guys used to say 60% or 70% of the commodity tailwind you have to put back into the categories somehow or reinvest it. Is that what you are expecting going forward in this environment, is little bit more, is little bit less and are you yet at that run rate of reinvestment or should we continue to see an expansion in the sweet spot? Thomas J. Falk: I think that’s an interesting call. As you look around the world you are still seeing some inflation in some markets, and so as local currencies are really around places like Argentina for example or even Brazil, and so we had 10 million of deflation in the quarter which is good and we think that our guidance of 50 to 150 for the year is probably the right ballpark. I think given that last year we had close to $250 million of inflation and didn’t fully recover price on that front, I hope that prices will be a little sticky on the way down. I think the other big driver historically has been pulp, and pulp is not moving around as much as the oil-based commodities and pulp has probably driven pricing more than any of the other commodities overall.

So sounds like you think you will be able to hold on to more than historically given what’s happened over the recent history of prices? Thomas J. Falk: Yeah, that would certainly be our goal going into it.

Okay, so something that you said, actually linked to another question I had which is just FX and pricing. So if you look at Personal Care, developing and emerging you say negative 20% FX plus fixed price. If you look at developed non-U.S. there is a miss match there, negative eight FX pricing little lower than that, the same thing on consumer tissues. So looks like the GAAP between the currency headwind and the pricing you are able to take in those markets has widened a little bit and want to get your perspective on that as it relates to the health of the consumer that you are seeing broadly or competition as well. Thomas J. Falk: It’s tough to get full reflection of the translation impact of currency. So if you can get the most of the transaction impact covered you are doing reasonably well and so in most of these markets we are seeing that. We are getting the transaction partially or mostly covered, but we are not covering the full translation impact.

Okay. And then last thing on pricing in North America Personal Care and Consumer Tissue negative again, is there any risk of that becoming or is it already in this kind of irrational zone, I guess to use a heavy word or do you think this is just kind of normal competition? Thomas J. Falk: Lot of this is really stuff that happened last year and so it’s preferred [ph] to being annualized. It started in second quarter, we sort of stepped up in third quarter. So it’s really more the comparison. I wouldn’t say it’s gotten significantly or sequentially. You will see some pockets where there are some lower price points but overall I would say it’s been pretty consistent.

Okay, thanks again and congrats again, Mark. Mark A. Buthman: Thanks.

Our next question comes from Gail Glazerman with UBS.

Hi, good morning. Thomas J. Falk: Hi, Gail.

Hi. Can you talk a little bit about your operating performance in consumer tissue, is a fair bit stronger than I would have expected, you are looking at 2% volume, 1% price decline, it’s not intuitive where the improvement was coming from. Can you just talk about what really drove the earnings recovery? Mark A. Buthman: Yeah, I mean a lot of it was in the U.S. where we were plus five in volume. It was very strong quarter good execution, Cottonelle continued to do well, and some of it was in the non-measured outlets where you would see, or you wouldn’t necessarily see it in the Nielsen data and then we called out kind of a VIVA Vantage launch and so good strong growth there. And typically it’s a strong facial tissue selling season. Facial tissue was okay, although it was being driven more by Cottonelle’s Scott, Bath and Viva towels.

Okay and can you talk a little bit about the U.S. diaper market. Last quarter you kind of talked about having to step up and may be -- address some of this share loss. How do you think you are doing and when do you think you will see the full benefit and is the [indiscernible] volume decline a reflection of comp more than actions or is that a reflection of some of the actions you have taken to-date? Mark A. Buthman: No, it’s probably the comps are getting little easier. We are up about a share point sequentially, but the re-launch of our main line Huggies didn’t really start to roll until mid-March and it will roll through the end of April and so the better price getting on-shelf, we are getting better, better execution at store, stronger advertising claims are coming. So I think we'll have to see how that plays out over the balance of the year more than, than we saw in the first quarter.

Okay. And just the last question, just any comments on the U.S. consumer, any changes in behavior or buying pattern in terms of whether there is more willingness maybe to spend up on premium, purchasing in different channels, purchasing different sizes, just seeing any response to I guess improving confidence and lower gas pricing? Thomas J. Falk: Yes, I wouldn't say we've seen a ton yet, as I think a lot of retailers I've talked to, have said that a lot of the lower fuel prices either been saved or has been spent inside the gas station buying an extra cup of coffee or something like that and so I wouldn't say we've seen that in category demand. So the trends have been pretty stable. It's not getting worse but it's not, we're not seeing a big shift up either at this stage.

And are you seeing anything in the K-C Professional business, that might give you encouragement or is that pretty much more of the same? Thomas J. Falk: I'd say, I was talking to our KCP guys recently. We just had a big meeting with lot of their U.S. distributors and they were more bullish. I mean they're seeing the continued slow steady growth in the U.S. economy, the job growth maybe it's been disappointing to some but it's been positive and pretty consistent and so they were more bullish this year, and I think last year with the top weather in the Northeast which we call out as a reason why -- partly while we were down it was still a tough winter but it wasn't as bad as it was last year. So everybody had a little bit stronger start to the year which was good.

Okay. Thank you. Thomas J. Falk: Thanks Gail. Mark A. Buthman: Thanks Gail.

Our next question comes from Chris Ferrara with Wells Fargo.

Hey, thanks. Guys, hey how are you? Thomas J. Falk: Good. Mark A. Buthman: I'm really good, Chris.

Congratulations. Gross margin, look there has been a lot of question around pricing right and obviously pricing slowed a little bit sequentially but gross margin was up pretty substantially in the quarter and when you do the math on what currency must have done to gross margins, and you look at FORCE, FORCE is good, but it wasn't a particularly extraordinary FORCE number, cost savings, restructuring savings were okay $10 million but not moving the needle, right so can you talk a little bit more about where did all of the incremental gross margin expansion come from in the quarter and how sustainable is that, right because trends, if you look at where commodities are going, where currencies going you think that you probably build on that increase. So I was hoping you could talk that through a little bit. Thomas J. Falk: I'll let Mark dive into the cost savings numbers, just a little bit, but essentially Chris if you think about it gross profit essentially was flat year-on-year. Sales were down 4%. So gross margin was up 180 basis points. So essentially it took cost savings, volume benefits, selling price increases all of that collectively to cancel out the translation and transaction impact on currency and so we had a great start on cost savings and maybe Mark can add a little color on where we over delivered on the $90 million. Mark A. Buthman: Yes, Chris, as the year progresses typically we build our cost savings program, so to start a year $90 million is really a good result coming out of the gate and it's a combination of leveraging our global sourcing organization, productivity and waste improvements and then a big contributor in the quarter was product design, which are the three typical buckets that we have. I would say the other thing is our operations are performing very well. So if you think about tissue, when we run tissue machines full I know they have low waste and high productivity. There is really good absorption. We actually don't see that element coming through in FORCE. So I would say it's just a combination of good start to the year in cost savings and just overall good operations.

And I guess can we dig a little bit deeper into the state of U.S. diapers. So obviously we just had the mainline re-launch of Snug and Dry right and I guess are we seeing or will we be seeing in April the sum total of everything you're doing to get that turned and I guess how are you feeling about the brand equity there, right. How are retailers responding to it, have you gotten and have you held shelf space, have you maybe even gotten a little extra. I guess just any more detail on the prospects for that area of the business would be helpful. Thomas J. Falk: Well, I think a couple of things. The super-premium end of that business end of that business has grown really well and had a very strong first quarter. All of our share improvement sequentially was in the super premium and we saw great innovation, winning products out there and strong claims and saw that continue. I think on the Snug and Dry the mainline business we have a much stronger plan this year than we had last year, better product on shelf, stronger advertising claims and we have got a better retail execution plan with more distribution, more feature and display activity. And so we will watch and see how that plays out. Again we didn’t lose all the share in one swoop, and so I am sure it won’t all come back in one quarter, but I do expect to make steady progress and see some improvement in that business this year.

All right. Thanks guys. Thomas J. Falk: Thanks.

Our next question comes from Olivia Tong with Bank of America Merrill Lynch.

Good morning. Thomas J. Falk: Hey Olivia

How are you? Thomas J. Falk: Pretty good.

All right. Congrats Mark. Best of luck, first. Mark A. Buthman: Thank you.

And I guess first question just, you started the year at sort of a high end of the three to five range. So it sounds like you are keeping the range, at least at three to five, which you know in Q1 certainly makes sense. But can you talk to what’s going on for the remainder of the year, that could potentially just result in growth decelerating from where you started the year? Mark A. Buthman: We will get pretty good momentum, but the comps gets little tougher in the back half, as you recall we finished pretty strong in the second half of last year and so particularly in some of the emerging markets we will see that happen. While everyone is talking about the China slowdown we haven’t seen it yet in our business, but it is affecting some other competitors. So that’s something we will watch as well. We've got aggressive product innovation plans going there. First quarter on the volume front in places like Eastern Europe we had some big price increases that took place on April 1. So we had a little bit more volume that went in the first quarter. On the other hand we will get the benefit of those price increases in the subsequent quarters. So we still should see some organic growth a little bit more of volume in place. So overall I would say we feel pretty optimistic and we kept the same range. As you said it’s early in the year and this increases the confidence that we can achieve our plan for the year and maybe even give us the opportunity to think about areas that we could reinvest to set up for an even stronger 2016. So it’s nice place to be at this point in the year.

Got it, thanks. And then also you had mentioned that FORCE typically gets better as the year progresses and starting at a $90 million. If we just sort of roll back for the year that clearly suggests something quite a bit higher than just at least $300 million. So can you talk through some of the savings of the cost, I am sorry, the savings this year relative to years past and whether it just was a particularly good start to the year or there is quite a bit of potential upside to your existing FORCE target? Thomas J. Falk: Olivia you have taken a page out of the CFO handbook. Take good performance and just annualize it and so for us we did have a good start to the year, I would say, given that the nature of the environment that we are dealing in with all the currency challenges and competitive challenges around the world, the teams really were focused on savings as a lever that we control heading into the year and we sort of decided while it’s a good start to the year to hold our outlook for the year, phasing should typically get better, but we started a little faster. So we will give you an update when we get to the second quarter and it feels good to start but we are going to keep delivering. Mark A. Buthman: I think we made a really strong first quarter in the emerging markets on the cost savings front and so that was a big plus, for some places we have had big currency headwinds. Those teams are looking at price and cost savings to make sure they can try to give us cost to the US dollar [indiscernible] as they can and I think that also helped get us off to a good start.

Does the cost savings FORCE target include the impact of currencies relative to the dollar target? Mark A. Buthman: Yes, typically that’s what we would disclose that they would aim at. In some individual markets they may have local currency targets that they aim at but at a regional level they all are measured on a dollar basis.

Understood, thanks again. I appreciate it. Mark A. Buthman: Thanks.

Our next question comes from Lauren Lieberman of Barclays.

Thanks. Good morning. Thomas J. Falk: Good morning Lauren.

I was just curious, going back to the consumer tissue profitability or I just -- I looked -- my model goes back to 1999 and there is not a quarter with 18.5% margin, so… Mark A. Buthman: Well there is now

Don’t know, exactly, so just curious to what degree you think you’ve structurally changed the profitability of that business. I understand 5% volume in North America will help a lot, but still the base was already quite good, and I guess for that question for consumer tissue, but even for the company overall, because as you pointed out it’s been two years of inflation, you can’t even say deflation is driving this. So I am just curious your views on whether there’s structural possibility the portfolio is changing it. And if so how and why? Thomas J. Falk: Lauren I think as you know we have been -- we have really been working hard on this over the years and we did the tissue restructuring several years ago, that had us exit some businesses and close some tissue facilities. We did the European restructuring which had us exit diapers but also had us shape our tissue portfolio. So we have really been trying to focus our business in the higher margin targeted growth areas of that business and we have been making steady progress on the margin front. It feels pretty good to be here and I think the team is excited and is looking for areas where they can invest behind great brands in profitable ways to keep that momentum going.

Do you feel like -- is the margin profile of the emerging markets, what does that look like? I know we can see North America versus rest of world, but I am just wondering if the D&E market profitability is also a mixed benefit. Thomas J. Falk: In tissue specifically or broadly?

I guess both, since you offered it. Thomas J. Falk: I would say that we saw a good margin performance in emerging markets as well and the developing is still lower than developed, but they are narrowing the gap and it is a pretty solid performance. So I don’t know Mark if you want to add anything any other color there or you…? Mark A. Buthman: I mean that their goal is to grow at or better than the underlying growth rate in the local market and close the margin gap overtime. So I think you just saw us making progress on the first quarter.

Okay, and when you said that you have covered the transaction expense, with 9% FX headwinds at topline but 19 on the bottom line, I mean guessing you didn’t mean just the pricing, that when you say you covered transaction you also mean by virtue of the cost savings? Thomas J. Falk: Yeah, I would say because in many markets you have transaction impacts like in Western Europe and Australia it’s very difficult to get any selling price and there has been a pretty good size currency hit in markets like that. In places like Brazil and Russia and Ukraine we probably had a better opportunity to close the transaction gap, but overall a combination of cost saves, volume growth, pricing we have been able to offset the currency impact.

Okay, all right. Thank you. Thomas J. Falk: Thanks Lauren.

Our next question comes from Caroline Levy with CLSA.

Hi, this is actually Brian Doyle in for Caroline, just had a couple of questions. If you could comment on the just the share trends in the U.S. adult care overall and for the Poise brand in particular? And then the second question was if you just clarify the sales to Halyard in the release it read like you were saying that was most of the 6% segment organic growth. Is that accurate and how long does the agreement run? Thanks. Thomas J. Falk: All right, I will take the first one and I will throw Mark the second one on Halyard. On adult care trends, we probably would say we successfully defended [indiscernible] earlier this week that they successfully launched, and so we have lost less than our fair share. If you look sequentially I think we were down about a 0.5 point overall. I think if you look year-over-year Paul, we are down what? Paul J. Alexander: We are down about four points. Thomas J. Falk: A little bit more on the Poise side, less on the Depend side. We are launching more innovation this year and are aggressively competing and promoting as is our primary competitor. And so I think private label and the other small branded player have lost more than their fair share and the -- and the category growth has picked up. So we saw solid high single digit category growth which may be a little over stated because of the amount of couponing that’s out there in the marketplace, but it is still a strong performance. Mark A. Buthman: Yes, Brain on Halyard that 3% impact which we reported as mix and other in KCP as kind of less than half of their organic growth for this quarter. So it was an important component, but it wasn’t really the underlying driver and the agreement will run for two years and I'm sure there is a small markup on that. I'm sure the Halyard team’s looking for alternative supplies as quickly as they can but the agreement commitment is two years.

Great, thanks a lot. Thomas J. Falk: Thanks Brian

Our next question comes from Bill Schmidt of Deutsche Bank.

Hey good morning guys. The market’s been a great run. Yes, the [indiscernible] probably on you I hope. First question is where are you getting all this extra distribution in non-scan [ph] channels because again there is a big disconnect from some of the Nielsen stuff we’re getting but it seems like it’s pretty clear and I think you will agree that you’re doing very well on some of the non-track channel. So what are those channels and is that distribution gains or is it just better relative growth? Thomas J. Falk: You are talking about any market in particular?

In North America, I think, the U.S. stands out the most. Thomas J. Falk: Yes, I mean North America, it’s essentially Club is the biggest non-scan channel and we are probably underweight historically in Club and tissue products. And so that’s been an area that we’ve been trying to crack into with Cottonelle and VIVA and Scott Tissue and things like that and so had some success in the first quarter and that enabled some of that growth. If you look more broadly, particularly in Asia e-commerce is probably by far the biggest non-track channel that we’re outperforming in relative to the track channels. So Korea and China in particular would be places where we’d see a lot better growth in the track channel.

Got you and is there like a long term sort of defense strategy against kind of what the P&G is trying to do in Russia and China, Brazil and then is there any incremental impact from some of the Japanese guys, mostly Unicharm but maybe Kao [ph] as well are probably going to start using some of the currency to get more aggressive. So what have we done so far and kind of what’s the plan going forward? Thomas J. Falk: Yes, I mean it’s a tough competitive market place out there Bill as you’ve noted and pretty much everybody wants the ER launched somewhere. So we’ve got strong global competitors. We’ve got some strong local competitors and so we kind of have good innovation in the competitive on price and execute well everyday to keep it going, and so we see that with some other things that Procter is doing on diaper pants that we’d also would say Unicharm and Kao in many ways have still the best performing products that we benchmark against and so we’re up against those guys in lots of different places and I'm really proud of the way the teams have executed and got better performing products with good execution in market. Mark A. Buthman: And I would say Bill that our categories are largely local. Our stuff doesn’t ship long distances. So you might get some currency change like on commodity inputs and things but largely the battle is fought locally and I think with our model we’re set up to do that as well as anybody.

Okay, this makes sense and then just -- what’s my last one, oh, China. Can you just disaggregate, it’s impossible to figure out what is like the real comp store sales growth and how much of it is distribution expense and I think you are going to add another ten cities this year plus or minus, so is there any way to kind of look at that massive growth and separate between the two? Thomas J. Falk: It’s tough. I think if you look sequentially I think our city counts didn’t change much if you look versus the first quarter last year it’s 105 versus 90 last year. But I’ll also tell you e-com probably was the bigger growth factor than the city count change and so some of that is category penetration or channel growth that’s helping those consumers get products in a different way but Mark was just in China about a month ago, so he’s probably got more relevant snapshot of what you saw when you were over there so maybe you can give us some local color. Mark A. Buthman: Yes, I would say Bill to that the market is still growing at very healthy rates. I mean it’s down from where it was but our team still is very excited and executing well in bricks and mortar but e-com is the only place where they have -- we’ve invested a lot and were over indexed. And as Tom said that’s probably the place where we have driven more of the relative share gains. I think the category is still growing at high single to low double-digit. Thomas J. Falk: Yes, double-digits this year. Mark A. Buthman: Yes, so we’re growing at a multiple of that and city expansion is a piece of it but I would say e-com and channel expansion’s the bigger component.

Got you. Just a brief follow up to go, do you guys co-locate in China like some folks do in the U.S. with the e-commerce players. So I mean are they sharing the distribution space with your manufacturing? Thomas J. Falk: Yes, our China team is working with our e-com customers to figure out and cost out the whole supply chain. So we’ve done some of that in larger cities as well.

Great, thanks guys, I appreciate it. Thomas J. Falk: Thanks, Bill.

Our next question comes from Javier Escalante with Consumer Edge Research.

Hi, good morning everyone. My questions had to with the SG&A line item that were much lower work than a year ago. My calculation is $48 million down. Is that something that has to do with savings or is it has to do with market expanding because you are -- it’s an issue of timing ahead of their re-launch of the Huggies Snug and Dry diapers and then I have a couple of follow-ups? Thomas J. Falk: Our marketing, the SG&A overall, the top line I mean on advertising spend standpoint we were down 10 basis points versus as a percent of sales, versus prior year but it was basically 10 balance sheet higher than the average of advertising spend for the full year of last year. So it was in the ball park of what we would expect around 4% of sales. On the SG&A probably had a little bit of currency benefit that would affect it but maybe Mark’s got some additional color on that. Mark A. Buthman: Yeah, no, Javier, I think currency when you look at the absolute dollars, currency is a big, a big shift. We obviously, if you look at the difference between gross margin and operating margin we have got some between the lines efficiencies that the business are driven but currency’s probably the biggest impact.

And when you can see the launch of the Huggies diapers, is that because we already have data through mid-April and sales are down 6% in direct channels. So if there is timing issue with regards to again marketing spending that you are doing on shelf because this is the weakest quarterly, I mean monthly data that we have seen for you guys in a long time. Thomas J. Falk: I guess I’d say we have been getting the distribution started in mid-March and we should be in about 80% of channels by late April and that’s really when you will start to turn on more of that marketing effort at that point of time. We are probably seeing a little bit better consumption data then I would say, you are quoting from the data that you are seeing but it is still early days on the re-launch at this point.

And finally what drove the 55% growth in Eastern Europe, and how to think about that? Thomas J. Falk: Two factors, I mean yeah, I would say two-thirds of it was, or 25% of it was volume and the balance, the 30% of it was price. So some big price increases. Some of the volume was buying ahead of an April 1 price increase but I think if you talk to that team it’s a double-digit volume growth in Eastern Europe, is the right way to think about what they are aiming at for the year and then they attempting to get as much prices they can to offset the currency impact.

In the second quarter we should expect emerging markets to decelerate then? Thomas J. Falk: Eastern Europe you would see less volume growth but we will get the benefit of the price increase that went in. So I wouldn’t necessarily assume that you will see a big deceleration.

But is 55 the right number, is it 20 or 15 for Eastern Europe? Thomas J. Falk: 55 is probably higher than you typically expect to see going forward. So you will see some deceleration on Eastern Europe overall, but I think emerging markets should still have another strong quarter.

Thank you. Thomas J. Falk: Thanks, Javier.

Our next question comes from John Faucher with JPMorgan.

Yes, thanks. Mark congratulations and I wanted to sort of go back to the CFO playbook you mentioned because this is something -- a comment that comes up multiple times on calls which is if the productivity is heavier towards the end of the year why don’t we see that end of the year productivity carry over in the first-half. So you guys are alone in terms of saying that but it seems that it sort of good sustainable cost saves and I am not trying to question them. It just seems like that would end up sort of rolling over. And then my main question goes back to some of the comments about female incontinence and the category growth accelerating here and I guess sort of I understand that there is some couponing which is probably leading to some pantry loading, but I guess how long do you know sort of how big this category can be? You do hear that when you get a new product launch from a big competitor that can make the category bigger and I look at some of the advertising you guys have out and looks like you are encouraging some switching in terms of Poise. Can you talk about sort of A, how big the category can be? And B you know how do you feel about categories switching out fem care into incontinence. How does that work for you guys from an economic standpoint? Thanks. Thomas J. Falk: Let me take the cost savings one first. John, I think it’s how the math works and little bit of programming. So typically we will work out an annual budget cycle and the teams are focused on kind of annual incremental programs and you are exactly right. The programs that we had in place last year don’t stop. They are delivering but we also launch and think creatively about new programs to kind of help us hit our near-term target and I think it’s just a matter of the phasing as we go to those. The underlying programs sort of roll in to your base and then you are looking to build on top of that as we go. So you look at cumulative cost savings overtime, that’s a pretty big number, but they build on each other overtime. And it’s just kind of the way the planning process goes and how the businesses behave. Mark A. Buthman: Switching to Adult care, we know for a long time that a lot of women that have white water leakage issues, and one in three women at some point in their life experience white water leakage, that they have used fem care as a solution and so given that we have a much larger share with our Poise brand in that space than we do in fem care we would love to shift into that space as a better solution and it’s a place where we are going to get more than our fair share of those new consumers. And so you are seeing a little bit of that, of the growth and Poise has been a bit of a decline in the Fem Care category and overall we should benefit from that and consumers will get a better solution for the issues that they are trying to treat.

Okay, thanks. Thomas J. Falk: Thanks, John.

At this time we have no further questioners in the queue. Paul J. Alexander: All right. We thank everyone for the questions. And I will turn the call back to Tom. Thomas J. Falk: So usually I get the last word on these calls, but since this is Mark’s last call I am going to throw it to Mark and let Mark have the last word today. Mark A. Buthman: Well, I am just grateful to work for Kimberly-Clark. I have a cold today. So I have the world’s softest facial tissue right at hand and also have anti-viral, so I don’t transmit my germs to my fellow conference call mates. I have had a good fortune that to build a career at a great company like Kimberly-Clark and work with great leaders like Tom, who always got the best out of me, work with great people like our investors, our Board of Directors, the leadership team that Tom has, my leadership team and it’s been a very good one. I am really proud of what we have accomplished but I am also optimistic about the future. Tom has made a great selection for my successor. Maria is fantastic and she is going to see opportunities that quite frankly being around for long time, I just didn’t see. And so I am optimistic about the future and committed to helping Maria and the new GSLT [ph] get started up. So thanks for your support and thanks as always for your support of Kimberly-Clark. Thomas J. Falk: Thank you very much.

Ladies and gentlemen that concludes today’s presentation. You may disconnect your phone lines at this time and thank you for joining us.