SecProbe.io

CORRESP
1
filename1.htm

    seccommentltr033109.htm

Mark A.
Buthman

Senior Vice President and

Chief Financial Officer

    April
2, 2009

    Ms. Tia
Jenkins

    Senior
Assistant Chief Accountant

    Office
of Beverages, Apparel, and

       Health
Care Services

    Division
of Corporation Finance

    Securities
and Exchange Commission

    One
Station Place, Mail Stop 3561

    100 F
Street, NE

    Washington,
D.C.  20549

              Re:

              Response
      of Kimberly-Clark Corporation to
the

              Staff's
      Comment Letter Dated March 18, 2009

              File
      No. 001-00225

    Dear
Ms. Jenkins:

    On
behalf of Kimberly-Clark Corporation (the “Corporation”), I am submitting this
letter, together with the enclosed document entitled “Response of Kimberly-Clark
Corporation to the Staff’s Comment Letter Dated March 18, 2009” (the
“Response”), in response to the comments contained in the letter dated March 18,
2009 from the Staff of the Securities and Exchange Commission (the “Commission”)
to the Corporation.

    The
Corporation acknowledges (as requested in your letter of March 18, 2009)
that:

              (1)

              the
      Corporation is responsible for the adequacy and accuracy of the disclosure
      in the filing;

              (2)

              Staff
      comments or changes to disclosure in response to Staff comments do not
      foreclose the Commission from taking any action with respect to the
      filing; and

              (3)

              the
      Corporation may not assert Staff comments as a defense in any proceeding
      initiated by the Commission or any person under the federal securities
      laws of the United States.

    If you
have any questions concerning this letter or the Response, please contact the
undersigned at (972) 281-1375.

    Very
truly yours,

    /s/ Mark A.
Buthman

    Senior
Vice President and Chief Financial Officer

    Enclosure

      RESPONSE
OF KIMBERLY-CLARK CORPORATION TO THE STAFF’S COMMENT LETTER DATED MARCH 18,
2009

      This
document responds to the Staff’s letter dated March 18, 2009 to Kimberly-Clark
Corporation in which the Staff commented on the Corporation’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2008, filed February 27, 2009
(the “Form 10-K”).  In the responses below, references to “We”, “Our”,
“K-C” or the “Corporation” in this letter mean Kimberly-Clark
Corporation.

      We note
that on page 2 of the Staff’s Comment Letter, the Staff requests that we amend
our filing as appropriate.  In view of the Staff’s comments, which only
requested supplemental information, and for the reasons set forth in our
responses, we respectfully submit that no amendment to our prior filing is
necessary.

      For
convenience, the Staff's comments are retyped below.

      Staff Comments and
Corporation Responses

      Form 10-K for the Year Ended
December 31, 2008

      Notes to Consolidated
Financial Statements

      Note
2.  Monetization Financing Entities, page 48

      Staff
Comment No. 1:

      We note
that on June 30, 2008, the maturity dates of the lending arrangements with the
Third Party were extended, which you determined to be a reconsideration
event.  Please provide a detailed discussion of the changes in
characteristics of the lending arrangement that led you to determine this event
as a reconsideration event under paragraph 7 of FIN 46(R).  Tell
us in detail how you analyzed the design of the financing entities using
paragraph five of FSP FIN 46(R)-6 and explain your
assumptions.  Please provide a summary of your analysis that led you
to conclude that you are the primary beneficiary.

      Corporation’s
Response:

      Summary

      The
Corporation holds a significant interest in two financing entities that were
used to monetize long-term notes received from the sale of certain nonstrategic
timberlands and related assets to nonaffiliated buyers.  These
transactions qualified for the installment method of accounting for income tax
purposes and met the criteria for immediate profit recognition for financial
reporting purposes contained in SFAS No. 66, Accounting for Sales of Real
Estate.  These sales involved notes receivable with an
aggregate face value of $617 million.   The notes receivable
are backed by irrevocable standby letters of credit issued by money center
banks, which aggregated $617 million at December 31, 2008.

      Because
the Corporation desired to monetize the $617 million of notes receivable and
continue the deferral of current income taxes on the gains, it transferred the
notes received from the sales to noncontrolled financing entities (the
“Financing Entities”).  In conjunction with the transfer of the notes,
the Financing Entities became obligated for $617 million in third-party lending
arrangements.

            Page 1 of 7

      The underlying economic substance of the
lending arrangements, and resulting basis for our accounting conclusions, can be
summarized as follows.  This summary will provide context for the more
detailed description of the transactions that follows.

      Prior to the June 30, 2008
reconsideration event, we did not consolidate the Financing
Entities.  Upon our adoption of FIN 46(R), Consolidation of
Variable Interest Entities
(“FIN 46(R)”), in 2003, we concluded that the Financing Entities were variable
interest entities, but that we were not the primary beneficiary of
them.  As explained in greater detail below, the primary sources of
variability of the Financing Entities are credit risk (due to the potential for
default of the investments held by the Financing Entities) and interest rate
risk (due to the floating interest rates of the assets and liabilities of the
Financing Entities).  As the Financing Entities were structured with
adequate collateralization, the variability associated with interest rate risk
is substantially greater than the variability associated with credit
risk.  The variability associated with interest rate risk is primarily
absorbed by a Nonaffiliated Financial Institution that provided variable rate
loans to the Financing Entities.  Accordingly, the Nonaffiliated
Financial Institution was determined to be the primary beneficiary upon our
initial adoption of FIN 46(R).

      Because the lending arrangements with the
Nonaffiliated Financial Institution were nearing their maturity, the Corporation
and the Nonaffiliated Financial Institution extended their maturity dates beyond those anticipated at the
inception of the Financing Entities, which increased the Financing Entities’
expected losses.   These June 30, 2008 contractual amendments
resulted in a reconsideration event for the Financing Entities under paragraph 7(c)
of FIN 46(R). 1

      Upon the occurrence of the June 30, 2008
reconsideration event, we were required to reevaluate the design of the
Financing Entities and perform a new primary beneficiary
analysis.  While the basic structure of the Financing Entities
remained unchanged (apart from the extension in maturity dates), the accounting
literature that governs the evaluation of the variability of an entity had
changed since our original consideration of these entities at the time we
adopted FIN 46(R).  Specifically, FSP FIN 46(R)-6, Determining the
Variability to be Considered in Applying FASB Interpretation No.
46(R) (“FSP 46(R)-6”), was
issued in April 2006.  While transition is prospective, the FSP states
that it applies “to all
entities previously required to be analyzed under Interpretation 46(R) when a
reconsideration event has occurred pursuant to paragraph 7 of Interpretation
46(R) beginning the first day of the first reporting period beginning after June 15,
2006.”  Accordingly, we incorporated the provisions of FSP 46(R)-6 in
our primary beneficiary analysis at June 30, 2008.

      Paragraph 12 of FSP 46(R)-6 states that
“Periodic interest
receipts/payments should be excluded from the variability to consider if the
entity was not designed to create and pass along the interest rate risk
associated with such interest receipts/payments to its interest
holders.”  The Financing Entities were designed with a requirement
that all interest rates are variable as

        1 FIN
46 (R) paragraph 7 (c) states,. “An entity that previously was not subject to
this Interpretation shall not become subject to it simply because of losses in
excess of its expected losses that reduce the equity investment. The initial
determination of whether an entity is a variable interest entity shall be
reconsidered if one or more of the following occur:

        (c) The
entity undertakes additional activities or acquires additional assets, beyond
those that were anticipated at the later of the inception of the entity or the
latest reconsideration event, that increase the entity’s expected
losses.”

            Page 2 of 7

      discussed in Note (1)
below.  Accordingly, the Financing Entities were not designed to
create interest rate risk, and we were required to exclude interest rate risk
from the analysis of variability in our June 30, 2008 analysis.  As
discussed above, interest rate risk was previously considered to be the primary
source of variability of the Financing Entities.  The variability
associated with interest rate risk is primarily absorbed by a Nonaffiliated
Financial Institution that provided variable rate loans to the Financing
Entities, and accordingly, the Nonaffiliated Financial Institution was
previously determined to be the primary beneficiary of the Financing
Entities.  In our June 30, 2008 analysis, upon exclusion of interest
rate risk pursuant to the requirements of FSP 46(R)-6, we concluded that the
primary source of variability of the Financing Entities was credit
risk.  Based on the collateralization in the structure, along with the
cash flow waterfall provisions of the various agreements, K-C absorbs a majority
of the credit risk.  This was the primary basis for our conclusion
that we are the primary beneficiary of the Financing Entities upon the
occurrence of the June 30, 2008 reconsideration event.

      Detailed
Description and Analysis

      The June 30, 2008 contractual amendments
resulted in a reconsideration event for the Financing Entities under paragraph 7(c)
of FIN 46(R).  As
a result of these amendments, the maturity dates of the lending
arrangements with the Nonaffiliated Financial Institution were extended beyond those
anticipated at the inception of the Financing Entities.  Extending the term of these lending arrangements
also had the effect of
increasing the Financing Entities’ expected losses because the longer the term, the greater the likelihood of a
default scenario by the issuers of notes held by the Financing Entities as
discussed further below.  Accordingly, under paragraph
7(c) of FIN 46(R), these changes in the characteristics of the lending
arrangements resulted in a reconsideration event.

      In
accordance with paragraph 7 of FSP 46(R)-6, we identified the variability that
the Financing Entities were designed to create and pass along to variable
interest holders.  We used the required “by design” approach that
considered (1) the nature of the risks in the Financing Entities and (2) the
purpose for which the Financing Entities were created to determine the
variability that the Financing Entities were designed to create and pass along
to variable interest holders.  Once we determined the variability that
the Financing Entities were designed to create and pass along to variable
interest holders, we then identified the variable interests that absorbed or
received the variability created by the Financing Entities’ assets, liabilities
or other contracts.

      The
following chart summarizes our analysis of the potential variability in the
Financing Entities:

                Description
      of Interest

                Holder
      of Interest

                Description
      of Potential Risk

                Note

                Class
      II Equity

                (controlling
      voting interest) issued by the Financing Entities

                Nonaffiliated
      Financial Institution

                Designed
      to absorb
      variability associated with the credit risk of K-C and the Third-Party
      Note Issuers

                (i.e.,
      K-C's ability to repay the K-C intercompany notes and preferred stock held
      by the Financing Entities, and the Third-Party Note Issuers’ ability to
      repay their notes held by the Financing Entities).

            Page 3 of 7

                Description
      of Interest

                Holder
      of Interest

                Description
      of Potential Risk

                Note

                Class
      I Equity

                (noncontrolling
      voting interest) issued by the Financing Entities

                K-C

                Designed
      to absorb
      variability associated with the credit risk of K-C and the Third-Party
      Note Issuers

                (i.e.,
      K-C's ability to repay the K-C intercompany notes and preferred stock held
      by the Financing Entities, and the Third-Party Note Issuers’ ability to
      repay their notes held by the Financing Entities).

                Monetization
      Loans

                Nonaffiliated
      Financial Institution

                Designed
      to absorb
      variability associated with the credit risk of the Financing Entities and
      the assets held by the Financing Entities but mitigated by
      collateralization.

                (1)

                Letters
      of Credit Issued by Money Center Banks Backing the

                Third-Party
      Notes

                Financing
      Entities

                Designed
      to absorb
      variability associated with the credit risk of the Third-Party Note
      Issuers.

                (2)

                K-C
      Intercompany Notes and Preferred Stock

                Financing
      Entities

                Designed
      to create
      variability in Financing Entities based on K-C’s ability to pay the
      interest/dividends and principal on the K-C intercompany notes and
      preferred stock (i.e., credit risk).

                (1)

                Third-Party
      Notes

                Financing
      Entities

                Designed
      to create
      variability in the Financing Entities based on the Third-Party Note
      Issuers’ ability to pay the interest and principal on the notes (i.e.,
      credit risk).  See also related Letters of Credit issued by
      Money Center Banks referenced above.

                (1)

      Note (1):  The
variable interest rate risks associated with the Third-Party Notes, K-C
intercompany notes and preferred stock, and the Monetization Loans were excluded
from the variability assessment pursuant to paragraph 12 of FSP 46(R)-6, since
the Financing Entities were not designed to create and pass along the interest
rate risk associated with the interest, dividend receipts and payments
distributed to their interest holders (i.e., the governing documents required
that all interest rates were variable interest rates and that the interest
income received significantly exceeded the interest expense paid with the excess
net interest income being distributed primarily to K-C’s benefit).

      Note (2):  The money
center banks are not considered to
have variable interests in the Financing Entities since if they were required to
pay on the letters of credit, they would use their irrevocable rights to
simultaneously take ownership of the certificates of deposit that serve as
collateral for the letters of credit (i.e., the money center banks’ net cash
position would be unchanged).

            Page 4 of 7

      Under
FIN 46(R), the primary beneficiary of a variable interest entity (“VIE”) is
required to consolidate the VIE.  The primary beneficiary is