Now before we begin, let me remind you we'll be making forward-looking statements today. There can be no assurance that future events will occur as anticipated or that our results will be as estimated. Please see the Risk Factors section of our latest annual report on Form 10-K for a further discussion of forward-looking statements.I'd also like to point out that we will be referring to adjusted results and outlook, both of which exclude certain items described in this morning's news release. For further information on these adjustments and reconciliations to comparable financial measures determined in accordance with GAAP, please see today's news release. And now, I'll turn it over to Mark. Mark A. Buthman Thanks, Paul, and good morning. Let's start with the headlines: first, we delivered organic sales growth of 6%. It was highlighted by 13% growth in K-C International; second, we generated strong improvements in both our adjusted gross and operating margins, as well as double-digit growth in adjusted earnings per share; and third, we reinvested significantly behind our brands, with higher levels of strategic marketing and R&D investment. Now let's cover the details of the quarter. Overall, sales increased 4% to $5.2 billion. Organic sales rose 6%, driven by higher net selling prices of 3%, increased sales volumes of 2% and favorable mix of 1%. On the other hand, lost sales in connection with our pulp and tissue restructuring, as well as changes in foreign currency rates, each reduced sales by 1%. Moving down to P&L. Adjusted gross margin was 33.2%. That's up 250 basis points year-on-year. The improvement was driven by organic sales growth and $60 million of FORCE cost savings. On an adjusted basis, first quarter operating profit rose 12%, with an operating margin of 14%. That's up 90 basis points compared to the prior year. Between-the-line spending increased versus last year, including a $45 million step-up in strategic marketing to support our product innovations and targeted growth initiatives. Additionally, administrative and research spending increased as we continue to build capabilities to support future growth.
First quarter adjusted earnings per share were $1.24 as compared to $1.09 last year. The improvement came despite lower net income from equity companies. And in terms of the tax rate, our adjusted effective rate for the quarter was 29.3%. That was similar to the year-ago quarter. We continue to expect our full year rate to be in the range of 30% to 32%.Cash provided by operations in the first quarter was solid at $585 million. That's up nicely from $250 million in the prior year. The increase was driven by lower pension contributions and higher cash earnings. So our balance sheet and cash generation remain strong, and we continue to allocate our capital in shareholder-friendly ways. In February, we announced our 40th consecutive annual increase in the dividend. The 6% increase should help us maintain our top-tier dividend payout ratio in the CPG space. In addition, during the first quarter, we repurchased 6.3 million shares of KMB stock at a cost of $460 million. We continue to expect full year share repurchases of $900 million to $1.1 billion. Altogether, full year share repurchases plus dividend payments should total at least $2 billion returned to shareholders for the second consecutive year. Now I'll highlight a few areas from our segment results for the quarter. In Personal Care, organic sales rose 9%, with volumes up 6% and net selling prices advancing 3%. Volume performance benefited from strong growth in K-C International, including double-digit growth in each of our major regions. In addition, our European business delivered broad-based growth in the quarter. The increase in net selling prices was driven by K-C International, as well as our Infant Care and Baby Wipes businesses in North America. I'm encouraged by the price realization in our North American Diaper business, which as you know, is a key focus for us this year.
First quarter Personal Care operating margins of 16.9% were 90 basis points below the prior year. Nonetheless, our margins did improve 150 basis points sequentially compared to the fourth quarter of 2011. This bodes well for our expectation that full year 2012 Personal Care margins will be similar to the 2011 full year average.Turning to Consumer Tissue. Organic sales were up more than 2%, net selling prices rose 4% and product mix was favorable by 1 point, while organic volumes fell about 2%. Price realization was excellent in both North America and across K-C International. Consumer Tissue operating margins rose 410 basis points versus last year. And I was really pleased to see that our global tissue teams continue to capture the benefits from our strategies to improve revenue realization and drive cost savings. Moving to K-C Professional & Other. Organic sales were up about 5%. The increase was driven by improved volumes of 3%, higher net selling prices of 2% and slightly favorable mix. Volumes were up high-single digits in K-C International, while North American and European volumes were up low-single digits. Operating margins of 15.7% were up 220 basis points versus last year. That was driven by benefits from sales growth and cost savings. Read the rest of this transcript for free on seekingalpha.com