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KIMBERLY CLARK CORP - Quarter Report: 2020 March (Form 10-Q)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________  
Commission file number 1-225
kmb-20200331_g1.jpg
KIMBERLY CLARK CORPORATON
(Exact name of registrant as specified in its charter)

Delaware 39-0394230
(State or other jurisdiction of
incorporation)		 (I.R.S. Employer
Identification No.)
P.O. Box 619100
Dallas, TX
75261-9100
(Address of principal executive offices)
(Zip code)
(972) 281-1200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockKMBNew York Stock Exchange
0.625% Notes due 2024KMB24New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
x
  Accelerated filer☐
Non-accelerated filer☐  Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No x
As of April 15, 2020, there were 340,547,119 shares of the Corporation's common stock outstanding.

Table of Contents
 









PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Unaudited)

Three Months Ended March 31
(Millions of dollars, except per share amounts)20202019
Net Sales$5,009  $4,633  
Cost of products sold3,218  3,205  
Gross Profit1,791  1,428  
Marketing, research and general expenses873  769  
Other (income) and expense, net14  4  
Operating Profit904  655  
Nonoperating expense(11) (11) 
Interest income2  3  
Interest expense(61) (65) 
Income Before Income Taxes and Equity Interests834  582  
Provision for income taxes(197) (143) 
Income Before Equity Interests637  439  
Share of net income of equity companies38  27  
Net Income675  466  
Net income attributable to noncontrolling interests(15) (12) 
Net Income Attributable to Kimberly-Clark Corporation$660  $454  
Per Share Basis
Net Income Attributable to Kimberly-Clark Corporation
Basic$1.93  $1.32  
Diluted$1.92  $1.31  
See notes to the unaudited interim consolidated financial statements.

1

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 Three Months Ended March 31
(Millions of dollars)20202019
Net Income$675  $466  
Other Comprehensive Income (Loss), Net of Tax
   Unrealized currency translation adjustments(399) 26  
   Employee postretirement benefits34  (4) 
   Other32  (17) 
Total Other Comprehensive Income (Loss), Net of Tax(333) 5  
Comprehensive Income342  471  
   Comprehensive (income) loss attributable to noncontrolling interests(3) (7) 
Comprehensive Income Attributable to Kimberly-Clark Corporation$339  $464  
See notes to the unaudited interim consolidated financial statements.

2

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(2020 Data is Unaudited)

(Millions of dollars)March 31, 2020December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents$979  $442  
Accounts receivable, net2,519  2,263  
Inventories1,539  1,790  
Other current assets609  562  
Total Current Assets5,646  5,057  
Property, Plant and Equipment, Net7,226  7,450  
Investments in Equity Companies314  268  
Goodwill1,361  1,467  
Other Assets1,130  1,041  
TOTAL ASSETS$15,677  $15,283  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Debt payable within one year$1,238  $1,534  
Trade accounts payable2,876  3,055  
Accrued expenses and other current liabilities2,008  1,978  
Dividends payable361  352  
Total Current Liabilities6,483  6,919  
Long-Term Debt7,210  6,213  
Noncurrent Employee Benefits859  897  
Deferred Income Taxes512  511  
Other Liabilities538  520  
Redeemable Preferred Securities of Subsidiaries29  29  
Stockholders' Equity
Kimberly-Clark Corporation
Preferred stock - no par value - authorized 20.0 million shares, none issued—  —  
Common stock - $1.25 par value - authorized 1.2 billion shares; issued 378.6 million shares at March 31, 2020 and December 31, 2019
473  473  
Additional paid-in capital559  556  
Common stock held in treasury, at cost - 37.8 and 37.1 million shares at March 31, 2020 and December 31, 2019, respectively
(4,562) (4,454) 
Retained earnings6,978  6,686  
Accumulated other comprehensive income (loss)(3,615) (3,294) 
Total Kimberly-Clark Corporation Stockholders' Equity(167) (33) 
Noncontrolling Interests213  227  
Total Stockholders' Equity46  194  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15,677  $15,283  
See notes to the unaudited interim consolidated financial statements.
3

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

Three Months Ended March 31, 2020
(Millions of dollars, shares in thousands, except per share amounts)Common Stock
Issued		Additional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling InterestsTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at December 31, 2019378,597  $473  $556  37,149  $(4,454) $6,686  $(3,294) $227  $194  
Net income in stockholders' equity, excludes redeemable interests' share—  —  —  —  —  660  —  14  674  
Other comprehensive income, net of tax,
excludes redeemable interests' share		—  —  —  —  —  —  (321) (12) (333) 
Stock-based awards exercised or vested—  —  (14) (1,065) 121  —  —  —  107  
Shares repurchased—  —  —  1,677  (229) —  —  —  (229) 
Recognition of stock-based compensation—  —  15  —  —  —  —  —  15  
Dividends declared ($1.07 per share)—  —  —  —  —  (365) —  (17) (382) 
Other—  —  2  —  —  (3) —  1  —  
Balance at March 31, 2020378,597  $473  $559  37,761  $(4,562) $6,978  $(3,615) $213  $46  


Three Months Ended March 31, 2019
(Millions of dollars, shares in thousands, except per share amounts)Common Stock
Issued		Additional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Non-controlling InterestsTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at December 31, 2018378,597  $473  $548  33,635  $(3,956) $5,947  $(3,299) $241  $(46) 
Net income in stockholders' equity, excludes redeemable interests' share—  —  —  —  —  454  —  11  465  
Other comprehensive income, net of tax,
excludes redeemable interests' share		—  —  —  —  —  —  10  (5) 5  
Stock-based awards exercised or vested—  —  (27) (487) 55  —  —  —  28  
Shares repurchased—  —  —  1,509  (174) —  —  —  (174) 
Recognition of stock-based compensation—  —  17  —  —  —  —  —  17  
Dividends declared ($1.03 per share)—  —  —  —  —  (354) —  (24) (378) 
Other—  —  —  —  —  1  —  —  1  
Balance at March 31, 2019378,597  $473  $538  34,657  $(4,075) $6,048  $(3,289) $223  $(82) 

See notes to the unaudited interim consolidated financial statements.
4

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited)
 
Three Months Ended March 31
(Millions of dollars)20202019
Operating Activities
Net income$675  $466  
Depreciation and amortization213  234  
Stock-based compensation15  16  
Deferred income taxes(9) 11  
Net (gains) losses on asset dispositions7  6  
Equity companies' earnings (in excess of) less than dividends paid(38) (27) 
Operating working capital(144) (375) 
Postretirement benefits(14) (12) 
Other(1) (2) 
Cash Provided by Operations704  317  
Investing Activities
Capital spending(352) (316) 
Investments in time deposits(105) (80) 
Maturities of time deposits96  72  
Other2  —  
Cash Used for Investing(359) (324) 
Financing Activities
Cash dividends paid(357) (345) 
Change in short-term debt(282) 851  
Debt proceeds  1,241  —  
Debt repayments(252) (402) 
Proceeds from exercise of stock options108  26  
Acquisitions of common stock for the treasury(214) (164) 
Other(24) (8) 
Cash Used for Financing220  (42) 
Effect of Exchange Rate Changes on Cash and Cash Equivalents(28) 1  
Change in Cash and Cash Equivalents537  (48) 
Cash and Cash Equivalents - Beginning of Period442  539  
Cash and Cash Equivalents - End of Period$979  $491  
See notes to the unaudited interim consolidated financial statements.


5

KIMBERLY-CLARK CORPORATION AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Dollar amounts are reported in millions, except per share dollar amounts, unless otherwise noted.
For further information, refer to the consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2019. The terms "Corporation," "Kimberly-Clark," "K-C," "we," "our" and "us" refer to Kimberly-Clark Corporation and its consolidated subsidiaries.
Highly Inflationary Accounting in Argentina
GAAP guidance requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100 percent. In the second quarter of 2018, published inflation indices indicated that the three-year cumulative inflation in Argentina exceeded 100 percent, and as of July 1, 2018, we elected to adopt highly inflationary accounting for our subsidiaries in Argentina (“K-C Argentina”). Under highly inflationary accounting, K-C Argentina’s functional currency became the U.S. dollar, and its income statement and balance sheet have been measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in Other (income) and expense, net and was not material.  As of March 31, 2020, K-C Argentina had a small net peso monetary position. Net sales of K-C Argentina were approximately 1 percent of our consolidated net sales for the three months ended March 31, 2020 and 2019.
Recently Adopted Accounting Standards
The Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).  The new guidance reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).  We adopted this standard as of January 1, 2020 on a prospective basis.  The effects of this standard on our financial position, results of operations and cash flows were not material.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and exceptions to accounting guidance on contract modifications and hedge accounting to ease entities’ financial reporting burdens as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied through December 31, 2022. The effects of this standard on our financial position, results of operations and cash flows are not expected to be material.
Accounting Standards Issued - Not Yet Adopted
The FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The new guidance simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences.  It also clarifies and simplifies other aspects of the accounting for income taxes.  For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.  Early adoption is permitted in interim or annual periods with any adjustments reflected as of the beginning of the annual period that includes that interim period.  Additionally, entities that elect early adoption must adopt all the amendments in the same period.  Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings.  The effects of this standard on our financial position, results of operations or cash flows are not expected to be material.
6

Note 2. 2018 Global Restructuring Program
In January 2018, we announced the 2018 Global Restructuring Program to reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. We expect to close or sell approximately 10 manufacturing facilities and expand production capacity at several others. We expect to exit or divest some lower-margin businesses that generate approximately 1 percent of our net sales. The restructuring is expected to impact our organizations in all major geographies. Workforce reductions are expected to be in the range of 5,000 to 5,500. Certain capital appropriations under the 2018 Global Restructuring Program are being finalized. Accounting for actions related to each appropriation will commence when the appropriation is authorized for execution.
The restructuring is expected to be completed in 2021, with total costs anticipated to be toward the high end of the previously estimated range of $1.7 billion to $1.9 billion pre-tax ($1.3 billion to $1.4 billion after tax). Cash costs are expected to be $900 to $1.0 billion, primarily related to workforce reductions.  Non-cash charges are expected to be $800 to $900 pre-tax and will primarily consist of incremental depreciation, asset write-offs and pension settlement and curtailment charges.
The following net charges were incurred in connection with the 2018 Global Restructuring Program:
Three Months Ended March 31
20202019
Cost of products sold:
Charges for workforce reductions$—  $30  
Asset write-offs6  12  
Incremental depreciation35  67  
Other exit costs29  16  
Total70  125  
Marketing, research and general expenses:
Charges (adjustments) for workforce reductions(3) 4  
Other exit costs26  24  
Total23  28  
Other (income) and expense, net—  (1) 
Total charges93  152  
Provision for income taxes(18) (31) 
Net charges75  121  
Net impact related to equity companies and noncontrolling interests(1) 1  
Net charges attributable to Kimberly-Clark Corporation$74  $122  

The following summarizes the restructuring liabilities activity:
20202019
Restructuring liabilities at January 1$132  $210  
Charges for workforce reductions and other cash exit costs50  74  
Cash payments(64) (71) 
Currency and other(7) 6  
Restructuring liabilities at March 31$111  $219  
Restructuring liabilities of $77 and $132 are recorded in Accrued expenses and other current liabilities and $34 and $87 are recorded in Other Liabilities as of March 31, 2020 and 2019, respectively. The impact related to restructuring charges is recorded in Operating working capital and Other Operating Activities, as appropriate, in our consolidated cash flow statements.
Through March 31, 2020, cumulative pre-tax charges for the 2018 Global Restructuring Program were $1.5 billion ($1.1 billion after tax).
7

Note 3. Fair Value Information
The following fair value information is based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels in the hierarchy used to measure fair value are:
Level 1 – Unadjusted quoted prices in active markets accessible at the reporting date for identical assets and liabilities.
Level 2 – Quoted prices for similar assets or liabilities in active markets. Quoted prices for identical or similar assets and liabilities in markets that are not considered active or financial instruments for which all significant inputs are observable, either directly or indirectly.
Level 3 – Prices or valuations that require inputs that are significant to the valuation and are unobservable.
A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
During the three months ended March 31, 2020 and for the full year 2019, there were no significant transfers to or from level 3 fair value determinations.
Derivative assets and liabilities are measured on a recurring basis at fair value. At March 31, 2020 and December 31, 2019, derivative assets were $166 and $34, respectively, and derivative liabilities were $44 and $44, respectively. The fair values of derivatives used to manage interest rate risk and commodity price risk are based on LIBOR rates and interest rate swap curves and NYMEX price quotations, respectively. The fair values of hedging instruments used to manage foreign currency risk are based on published quotations of spot currency rates and forward points, which are converted into implied forward currency rates. Measurement of our derivative assets and liabilities is considered a level 2 measurement. Additional information on our classification and use of derivative instruments is contained in Note 6.
Redeemable preferred securities of subsidiaries are measured on a recurring basis at fair value and were $29 at March 31, 2020 and December 31, 2019. They are not traded in active markets. As of March 31, 2020, the fair values of the redeemable securities were based on a discounted cash flow valuation model. Measurement of the redeemable preferred securities is considered a level 3 measurement.
Company-owned life insurance ("COLI") assets are measured on a recurring basis at fair value. COLI assets were $65 and $76 at March 31, 2020 and December 31, 2019, respectively. The COLI policies are a source of funding primarily for our nonqualified employee benefits and are included in Other Assets. The COLI policies are measured at fair value using the net asset value per share practical expedient, and therefore, are not classified in the fair value hierarchy.
The following table includes the fair value of our financial instruments for which disclosure of fair value is required:
Fair Value Hierarchy LevelCarrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
March 31, 2020December 31, 2019
Assets
Cash and cash equivalents(a)
1$979  $979  $442  $442  
Time deposits(b)
1269  269  275  275  
Liabilities
Short-term debt(c)
2481  481  775  775  
Long-term debt(d)
27,967  8,864  6,972  7,877  
(a)Cash equivalents are composed of certificates of deposit, time deposits and other interest-bearing investments with original maturity dates of 90 days or less. Cash equivalents are recorded at cost, which approximates fair value.
(b)Time deposits are composed of deposits with original maturities of more than 90 days but less than one year and instruments with original maturities of greater than one year, included in Other current assets or Other Assets in the consolidated balance sheet, as appropriate. Time deposits are recorded at cost, which approximates fair value.
(c)Short-term debt is composed of U.S. commercial paper and/or other similar short-term debt issued by non-U.S. subsidiaries, all of which are recorded at cost, which approximates fair value.
(d)Long-term debt includes the current portion of these debt instruments. Fair values were estimated based on quoted prices for financial instruments for which all significant inputs were observable, either directly or indirectly.
8

Note 4. Earnings Per Share ("EPS")
There are no adjustments required to be made to net income for purposes of computing EPS. The average number of common shares outstanding is reconciled to those used in the basic and diluted EPS computations as follows:
Three Months Ended March 31
(Millions of shares)20202019
Basic341.4  344.3  
Dilutive effect of stock options and restricted share unit awards2.7  1.7  
Diluted344.1  346.0  
The impact of options outstanding that were not included in the computation of diluted EPS because their exercise price was greater than the average market price of the common shares was insignificant. The number of common shares outstanding as of March 31, 2020 and 2019 was 340.8 million and 343.9 million, respectively.
Note 5. Stockholders' Equity
Net unrealized currency gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries, except those in highly inflationary economies, are recorded in Accumulated Other Comprehensive Income ("AOCI"). For these operations, changes in exchange rates generally do not affect cash flows; therefore, unrealized translation adjustments are recorded in AOCI rather than net income. Upon sale or substantially complete liquidation of any of these subsidiaries, the applicable unrealized translation would be removed from AOCI and reported as part of the gain or loss on the sale or liquidation.
Also included in unrealized translation amounts are the effects of foreign exchange rate changes on intercompany balances of a long-term investment nature and transactions designated as hedges of net foreign investments.
The change in net unrealized currency translation for the three months ended March 31, 2020 was primarily due to weakening of foreign currencies versus the U.S. dollar.
The changes in the components of AOCI attributable to Kimberly-Clark, net of tax, are as follows:
Unrealized TranslationDefined Benefit Pension PlansOther Postretirement Benefit PlansCash Flow Hedges and Other
Balance as of December 31, 2018$(2,297) $(1,017) $12  $3  
Other comprehensive income (loss) before reclassifications
31  (7) —  (12) 
(Income) loss reclassified from AOCI—  3  (a)—  (5) 
Net current period other comprehensive income (loss)31  (4) —  (17) 
Balance as of March 31, 2019$(2,266) $(1,021) $12  $(14) 
Balance as of December 31, 2019$(2,271) $(979) $(13) $(31) 
Other comprehensive income (loss) before
reclassifications		(386) 19  5  31  
(Income) loss reclassified from AOCI—  10  (a)—  —  
Net current period other comprehensive income (loss)(386) 29  5  31  
Balance as of March 31, 2020$(2,657) $(950) $(8) $—  
(a) Included in computation of net periodic benefit costs.
Note 6. Objectives and Strategies for Using Derivatives
As a multinational enterprise, we are exposed to financial risks, such as changes in foreign currency exchange rates, interest rates, and commodity prices. We employ a number of practices to manage these risks, including operating and financing activities and, where appropriate, the use of derivative instruments.
At March 31, 2020 and December 31, 2019, derivative assets were $166 and $34, respectively, and derivative liabilities were $44 and $44, respectively, primarily comprised of foreign currency exchange contracts. Derivative assets are recorded in Other current assets or Other Assets, as appropriate, and derivative liabilities are recorded in Accrued expenses and other current liabilities or Other Liabilities, as appropriate.
9

Foreign Currency Exchange Rate Risk
Translation adjustments result from translating foreign entities' financial statements into U.S. dollars from their functional currencies. The risk to any particular entity's net assets is reduced to the extent that the entity is financed with local currency borrowings. A portion of our balance sheet translation exposure for certain affiliates, which results from changes in translation rates between the affiliates’ functional currencies and the U.S. dollar, is hedged with cross-currency swap contracts and certain foreign denominated debt which are designated as net investment hedges. The foreign currency exposure on certain non-functional currency denominated monetary assets and liabilities, primarily intercompany loans and accounts payable, is hedged with primarily undesignated derivative instruments.
Derivative instruments are entered into to hedge a portion of forecasted cash flows denominated in foreign currencies for non-U.S. operations' purchases of raw materials, which are priced in U.S. dollars, and imports of intercompany finished goods and work-in-process priced predominantly in U.S. dollars and euros. The derivative instruments used to manage these exposures are designated as cash flow hedges.
Interest Rate Risk
Interest rate risk is managed using a portfolio of variable and fixed-rate debt composed of short and long-term instruments. Interest rate swap contracts may be used to facilitate the maintenance of the desired ratio of variable and fixed-rate debt and are designated as fair value hedges. From time to time, we also hedge the anticipated issuance of fixed-rate debt, and these contracts are designated as cash flow hedges.
Commodity Price Risk
We use derivative instruments, such as forward contracts, to hedge a limited portion of our exposure to market risk arising from changes in prices of certain commodities. These derivatives are designated as cash flow hedges of specific quantities of the underlying commodity expected to be purchased in future months. In addition, we utilize negotiated short-term contract structures, including fixed price contracts, to manage volatility for a portion of our commodity costs.
Fair Value Hedges
Derivative instruments that are designated and qualify as fair value hedges are predominantly used to manage interest rate risk. The fair values of these interest rate derivative instruments are recorded as an asset or liability, as appropriate, with the offset recorded in Interest expense. The offset to the change in fair values of the related debt is also recorded in Interest expense. Any realized gain or loss on the derivatives that hedge interest rate risk is amortized to Interest expense over the life of the related debt. As of March 31, 2020, the aggregate notional values and carrying values of outstanding interest rate contracts designated as fair value hedges were $300 and $322, respectively. For the three months ended March 31, 2020 and 2019, gains or losses recognized in Interest expense for interest rate swaps were not significant.
Cash Flow Hedges
For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instrument is initially recorded in AOCI, net of related income taxes, and recognized in earnings in the same income statement line and period that the hedged exposure affects earnings. As of March 31, 2020, outstanding commodity forward contracts were in place to hedge a limited portion of our estimated requirements of the related underlying commodities in the remainder of 2020 and future periods. As of March 31, 2020, the aggregate notional value of outstanding foreign exchange derivative contracts designated as cash flow hedges was $698. For the three months ended March 31, 2020 and 2019, no significant gains or losses were reclassified into Interest expense, Cost of products sold or Other (income) and expense, net as a result of the discontinuance of cash flow hedges due to the original forecasted transaction no longer being probable of occurring. At March 31, 2020, amounts to be reclassified from AOCI into Interest expense, Cost of products sold or Other (income) and expense, net during the next twelve months are not expected to be material. The maximum maturity of cash flow hedges in place at March 31, 2020 is March 2022.
10

Net Investment Hedges
For derivative instruments that are designated and qualify as net investment hedges, the aggregate notional value was $1.6 billion at March 31, 2020. We exclude the interest accruals on cross-currency swap contracts and the forward points on foreign exchange forward contracts from the assessment and measurement of hedge effectiveness.  We recognize the interest accruals on cross-currency swap contracts in earnings within Interest expense.  We amortize the forward points on foreign exchange contracts into earnings within Interest expense over the life of the hedging relationship.  Changes in fair value of net investment hedges are recorded in AOCI and offset the change in the value of the net investment being hedged.  For the three months ended March 31, 2020, unrealized gains of $93 related to net investment hedge fair value changes were recorded in AOCI and no significant amounts were reclassified from AOCI to Interest expense.
No significant amounts were excluded from the assessment of net investment, fair value or cash flow hedge effectiveness as of March 31, 2020.
Undesignated Hedging Instruments
Gains or losses on undesignated foreign exchange hedging instruments are immediately recognized in Other (income) and expense, net. Losses of $4 and $8 were recorded in the three months ended March 31, 2020 and 2019, respectively. The effect on earnings from the use of these non-designated derivatives is substantially neutralized by the transactional gains and losses recorded on the underlying assets and liabilities. At March 31, 2020, the notional value of these undesignated derivative instruments was approximately $1.9 billion.
Note 7. Business Segment Information
We are organized into operating segments based on product groupings. These operating segments have been aggregated into three reportable global business segments: Personal Care, Consumer Tissue and K-C Professional. The reportable segments were determined in accordance with how our chief operating decision maker and our executive managers develop and execute global strategies to drive growth and profitability. These strategies include global plans for branding and product positioning, technology, research and development programs, cost reductions including supply chain management, and capacity and capital investments for each of these businesses. Segment management is evaluated on several factors, including operating profit. Segment operating profit excludes Other (income) and expense, net and income and expense not associated with ongoing operations of the business segments, including the costs of corporate decisions related to the 2018 Global Restructuring Program described in Note 2.
The principal sources of revenue in each global business segment are described below:
•Personal Care brands offer our consumers a trusted partner in caring for themselves and their families by delivering confidence, protection and discretion through a wide variety of innovative solutions and products such as disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, and other related products. Products in this segment are sold under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Kotex, U by Kotex, Intimus, Depend, Plenitud, Poise and other brand names.
•Consumer Tissue offers a wide variety of innovative solutions and trusted brands that responsibly improve everyday living for families around the world. Products in this segment include facial and bathroom tissue, paper towels, napkins and related products, and are sold under the Kleenex, Scott, Cottonelle, Viva, Andrex, Scottex, Neve and other brand names.
•K-C Professional partners with businesses to create Exceptional Workplaces, helping to make them healthier, safer and more productive through a range of solutions and supporting products such as wipers, tissue, towels, apparel, soaps and sanitizers. Our brands, including Kleenex, Scott, WypAll, Kimtech and KleenGuard are well known for quality and trusted to help people around the world work better.
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Information concerning consolidated operations by business segment is presented in the following tables:
Three Months Ended March 31
20202019Change
NET SALES
Personal Care$2,422  $2,275  +6 %
Consumer Tissue1,723  1,526  +13 %
K-C Professional848  817  +4 %
Corporate & Other16  15  N.M.  
TOTAL NET SALES$5,009  $4,633  +8 %
OPERATING PROFIT
Personal Care$527  $484  +9 %
Consumer Tissue365  241  +51 %
K-C Professional181  150  +21 %
Corporate & Other(a)
(155) (216) N.M.  
Other (income) and expense, net(a)
14  4  +250 %
TOTAL OPERATING PROFIT$904  $655  +38 %
(a) Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including charges related to the 2018 Global Restructuring Program. Restructuring charges related to the personal care, consumer tissue and K-C Professional business segments were $34, $42 and $15, respectively, for the three months ended March 31, 2020 and $89, $46 and $16, respectively, for the three months ended March 31, 2019.
N.M. - Not Meaningful
Sales of Principal Products
Three Months Ended March 31
(Billions of dollars)20202019
Baby and child care products$1.7  $1.6  
Consumer tissue products1.7  1.5  
Away-from-home professional products0.8  0.8  
All other0.8  0.7  
Consolidated$5.0  $4.6  
Note 8. Supplemental Balance Sheet Data
The following schedule presents a summary of inventories by major class:
March 31, 2020December 31, 2019
LIFONon-LIFOTotalLIFONon-LIFOTotal
Raw materials$87  $205  $292  $85  $236  $321  
Work in process102  75  177  113  93  206  
Finished goods417  535  952  451  696  1,147  
Supplies and other—  265  265  —  271  271  
606  1,080  1,686  649  1,296  1,945  
Excess of FIFO or weighted-average cost over
LIFO cost		(147) —  (147) (155) —  (155) 
Total$459  $1,080  $1,539  $494  $1,296  $1,790  
Inventories are valued at the lower of cost or net realizable value, determined on the FIFO or weighted-average cost methods, and at the lower of cost or market, determined on the LIFO cost method.
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The following schedule presents a summary of property, plant and equipment, net:
March 31, 2020December 31, 2019
Land$160  $165  
Buildings2,786  2,877  
Machinery and equipment13,610  13,946  
Construction in progress838  851  
17,394  17,839  
Less accumulated depreciation(10,168) (10,389) 
Total$7,226  $7,450  

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Introduction
This management's discussion and analysis ("MD&A") of financial condition and results of operations is intended to provide investors with an understanding of our recent performance, financial condition and prospects.  The following will be discussed and analyzed:
•Overview of First Quarter 2020 Results
•Impact of COVID-19
•Results of Operations and Related Information
•Liquidity and Capital Resources
•Information Concerning Forward-Looking Statements
We describe our business outside North America in two groups – Developing and Emerging Markets ("D&E") and Developed Markets. D&E markets comprise Eastern Europe, the Middle East and Africa, Latin America and Asia-Pacific, excluding Australia and South Korea. Developed Markets consist of Western and Central Europe, Australia and South Korea. We have three reportable business segments: Personal Care, Consumer Tissue and K-C Professional. These business segments are described in greater detail in Note 7 to the unaudited interim consolidated financial statements.
This section presents a discussion and analysis of our first quarter 2020 net sales, operating profit and other information relevant to an understanding of the results of operations. In addition, we provide commentary regarding organic sales growth, which describes the impact of changes in volume, net selling prices and product mix on net sales. Change in foreign currency exchange rates and exited businesses also impact the year-over-year change in net sales. Our analysis compares the three months ended March 31, 2020 results to the same period in 2019.
Throughout this MD&A, we refer to financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S., or GAAP, and are therefore referred to as non-GAAP financial measures. These measures include adjusted gross and operating profit, adjusted net income, adjusted earnings per share, adjusted other (income) and expense, net and adjusted effective tax rate. We believe these measures provide our investors with additional information about our underlying results and trends, as well as insight into some of the financial measures used to evaluate management.
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for the comparable GAAP measures, and they should be read only in conjunction with our unaudited interim consolidated financial statements prepared in accordance with GAAP.  There are limitations to these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items being excluded.  We compensate for these limitations by using these non-GAAP financial measures as a supplement to the GAAP measures and by providing reconciliations of the non-GAAP and comparable GAAP financial measures.
The non-GAAP financial measures exclude the following item for the relevant time periods as indicated in the reconciliations included later in this MD&A:
•2018 Global Restructuring Program - In 2018, we initiated this restructuring program to reduce our structural cost base by streamlining and simplifying our manufacturing supply chain and overhead organization. See Item 1, Note 2 to the unaudited interim consolidated financial statements for details.
Overview of First Quarter 2020 Results
•Net sales of $5.0 billion increased 8 percent compared to the year-ago period, including organic sales growth of 11 percent. Changes in foreign currency exchange rates reduced sales by 2 percent and business exits in conjunction with the 2018 Global Restructuring Program reduced sales slightly.
•Operating profit was $904 in 2020 and $655 in 2019. Net Income Attributable to Kimberly-Clark Corporation was $660 in 2020 compared to $454 in 2019, and diluted earnings per share were $1.92 in 2020 compared to $1.31 in 2019. Results in 2020 and 2019 include charges related to the 2018 Global Restructuring Program.
Impact of COVID-19
Over the past few months, we have seen the profound impact that the novel coronavirus (COVID-19) is having on human health, the global economy and society at large. Kimberly-Clark has been actively addressing the COVID-19 situation and its
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impact globally, with global crisis response teams working to mitigate the potential impacts to our people and business. The impact of COVID-19 and measures to prevent its spread are affecting our business in a number of ways.
We continue to believe that we will emerge from these events well positioned for long-term growth, though we cannot reasonably estimate the duration and severity of this global pandemic or its ultimate impact on the global economy and our business and results.
Health and Safety of our People and Consumers
From the beginning of the COVID-19 pandemic, our priority has been the safety of our employees and consumers. We are incredibly proud of the great teamwork exhibited by our approximately 40,000 employees around the world who are doing their best to provide a steady supply of product. We have taken extra precautions globally at our office, mill and distribution center operations, which were developed in line with guidance from global health authorities, including social distancing, thermal scanning and partitions in our facilities.
We have also provided employee appreciation bonuses to front-line workers and expanded certain sick leave policies to provide our employees with additional flexibility. In addition, we implemented global travel restrictions and work-from-home policies for employees who have the ability to work remotely.
Customer Demand
In the first quarter, particularly in March, we experienced increased demand across all business segments and major geographies as consumers increased home inventory levels in response to COVID-19. We expect to see continued strong demand in the beginning of the second quarter in some of our businesses as retailers rebuild inventory levels, which we expect will be followed by periods of potential demand softness and volatility as consumers use existing home inventories and demand potentially returns to more normal levels. The ultimate timing and impact of this demand volatility will depend on the duration and scope of the COVID-19 pandemic, overall economic conditions and consumer preferences.
The near-term increase in demand has created operational challenges for our distribution network, though none have had a material impact on our results to date. We have taken immediate action to accelerate production, including simplifying the number of specific product offerings we make in order to improve overall production levels, particularly in our Consumer Tissue business.
While our K-C Professional business experienced strong demand in the first quarter, we expect volume declines in this business in the near term given the reduction in global business activity with much of the population working from home. We expect these challenges to continue until business and economic conditions return to more normal levels.
Facilities and Supply Chain
During 2020, we have experienced temporary closures of certain facilities, though we have not experienced a material impact from a plant closure to date and our facilities have largely been exempt or partially exempt from government closure orders. At many of our facilities, we have been experiencing reduced productivity and increased employee absences, which we expect to continue in the current situation.
Throughout our supply chain, we are also facing increased operational and logistics costs, though these did not have a material impact on our first quarter results. We continue to place a priority on business continuity and contingency planning, including for potential extended closures of any key facilities or disruptions related to our key suppliers that might arise related to COVID-19. We may experience additional disruptions in our supply chain as the pandemic continues, though we cannot reasonably estimate the potential impact or timing of those events, and we may not be able to mitigate such impact.
As a result of the outbreak of COVID-19 and the related uncertainty and complexity of the situation, certain of our restructuring activities for our 2018 Global Restructuring Program have been delayed and we now expect these activities and the related charges will extend into 2021 rather than being completed at the end of 2020 as previously planned as further described in the “2018 Global Restructuring Program” section below.
Foreign Currency Exchange Rates and Commodity Prices
During the first quarter, we experienced increased volatility in foreign currency exchange rates and commodity prices, in part related to the uncertainty from COVID-19, as well as actions taken by governments and central banks in response to COVID-19. Certain foreign currency rates have depreciated significantly against the U.S. dollar this year, with numerous currencies in D&E markets down 20 percent through the first quarter. Commodity prices, including polymer resin and oil, have also declined year-to-date, providing some incremental benefits to our first quarter results. We expect continued volatility in foreign currency exchange rates and commodity prices during 2020, though we cannot reasonably estimate the duration or extent of that volatility.
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Liquidity and Capital Resources
Given our financial strength, we expect to be able to maintain adequate liquidity as we manage through the current environment. In the first quarter, we took additional actions to provide additional liquidity and flexibility, as described in “Liquidity and Capital Resources” section below, and we will continue to actively monitor the potential impacts of COVID-19 and related events on the commercial paper and credit markets.
As we continue to manage our business in this uncertain environment, our priorities will remain the health and safety of our people, providing our essential products to consumers around the world, and prudently managing our business to deliver long-term growth.
Results of Operations and Related Information
This section presents a discussion and analysis of our first quarter 2020 net sales, operating profit and other information relevant to an understanding of the results of operations.
Consolidated
Selected Financial ResultsThree Months Ended March 31
20202019Percent Change
Net Sales:
North America$2,601  $2,390  +9 %
Outside North America2,484  2,315  +7 %
Intergeographic sales(76) (72) N.M.  
Total Net Sales5,009  4,633  +8 %
Operating Profit:
North America659  572  +15 %
Outside North America414  303  +37 %
Corporate & Other(a)
(155) (216) N.M.  
Other (income) and expense, net(a)
14  4  N.M.  
Total Operating Profit904  655  +38 %
Share of net income of equity companies38  27  +41 %
Net Income Attributable to Kimberly-Clark Corporation
660  454  +45 %
Diluted Earnings per Share1.92  1.31  +47 %
(a) Corporate & Other and Other (income) and expense, net include income and expense not associated with the business segments, including adjustments as indicated in the Non-GAAP Reconciliations.
N.M. - Not Meaningful
GAAP to Non-GAAP Reconciliations of Selected Financial Results
Three Months Ended March 31, 2020
As
Reported		2018 Global
Restructuring
Program		As
Adjusted
Non-GAAP
Cost of products sold$3,218  $70  $3,148  
Gross Profit1,791  (70) 1,861  
Marketing, research and general expenses873  23  850  
Operating Profit904  (93) 997  
Provision for income taxes(197) 18  (215) 
Effective tax rate23.6 %—23.2 %
Net income attributable to noncontrolling interests(15) 1  (16) 
Net Income Attributable to Kimberly-Clark Corporation660  (74) 734  
Diluted Earnings per Share(a)
1.92  (0.22) 2.13  

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Three Months Ended March 31, 2019
As
Reported		2018 Global
Restructuring
Program		As
Adjusted
Non-GAAP
Cost of products sold3,205  125  3,080  
Gross Profit1,428  (125) 1,553  
Marketing, research and general expenses769  28  741  
Other (income) and expense, net4  (1) 5  
Operating Profit655  (152) 807  
Provision for income taxes(143) 31  (174) 
Effective tax rate24.6 %—23.7 %
Share of net income of equity companies27  (2) 29  
Net income attributable to noncontrolling interests(12) 1  (13) 
Net Income Attributable to Kimberly-Clark Corporation454  (122) 576  
Diluted Earnings per Share(a)
1.31  (0.35) 1.66  
(a) "As Adjusted Non-GAAP" may not equal "As Reported" plus "Adjustments" as a result of rounding.

Analysis of Consolidated Results
Net SalesPercent Change For the Three Months Ended March 31, 2020Adjusted Operating ProfitPercent Change For the Three Months Ended March 31, 2020
Volume8  Volume18  
Net Price1  Net Price6  
Mix/Other1  Input Costs14  
Currency(2) 
Cost Savings(c)
16  
Total(a)
8  Currency Translation(2) 
Other(d)
(28) 
Organic(b)
11  Total24  
(a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE (Focused On Reducing Costs Everywhere) program and 2018 Global Restructuring Program.
(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
Net sales of $5.0 billion increased 8 percent compared to the year-ago period. Changes in foreign currency exchange rates reduced sales by 2 percent and business exits in conjunction with the 2018 Global Restructuring Program reduced sales slightly. Organic sales increased 11 percent. Volumes increased more than 8 percent, driven by increased shipments to support consumer stock up related to the global outbreak of COVID-19. The stock up impacted all business segments, in particular consumer tissue, and all major geographies. Changes in net selling prices and product mix each improved sales by 1 percent. In North America, organic sales increased 11 percent in consumer products and 6 percent in K-C Professional. Outside North America, organic sales rose 9 percent in D&E markets and 15 percent in developed markets.
Operating profit in the first quarter was $904 in 2020 and $655 in 2019. Results in both periods include charges related to the 2018 Global Restructuring Program. First quarter adjusted operating profit was $997 in 2020 and $807 in 2019. Results benefited from organic sales growth, $100 of cost savings from our FORCE program and $25 of cost savings from the 2018 Global Restructuring Program. Input costs decreased $115, driven by pulp, while other manufacturing costs rose year-on-year. Advertising spending increased and selling, general and administrative costs were also higher compared to the prior year. Foreign currency translation effects reduced operating profit by $15 and transaction effects also negatively impacted the comparison.
The first quarter effective tax rate was 23.6 percent in 2020 and 24.6 percent in 2019. The first quarter adjusted effective tax rate was 23.2 percent in 2020 and 23.7 percent in 2019.
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Our share of net income of equity companies in the first quarter was $38 in 2020 and $27 in 2019. The improvement was driven by volume growth and lower input costs.
Diluted net income per share for the first quarter of 2020 was $1.92 in 2020 and $1.31 in 2019. First quarter adjusted earnings per share were $2.13 in 2020, an increase of 28 percent compared to $1.66 in 2019.

Results by Business Segments
Personal Care
Three Months Ended March 31


Three Months Ended March 31
2020201920202019
Net Sales$2,422  $2,275  Operating Profit$527  $484  
Net SalesPercent ChangeOperating ProfitPercent Change
Volume 7  Volume14  
Net Price1  Net Price4  
Mix/Other 2  Input Costs3  
Currency(3) 
Cost Savings(c)
13  
Total(a)
6  Currency Translation(2) 
Other(d)
(23) 
Organic(b)
9  Total9  
(a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring Program.
(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
Net sales in North America increased 10 percent. Volumes increased 7 percent, and changes in product mix and net selling prices increased sales by 2 percent and 1 percent, respectively. Volumes increased double-digits in adult care, high-single digits in feminine care and mid-single digits in baby and child care. The changes in product mix and net selling prices were driven by baby and child care.
Net sales in D&E markets increased 3 percent despite a 6 percent negative impact from changes in foreign currency exchange rates. Volumes increased 6 percent, and changes in product mix and net selling prices increased sales by 3 percent and 1 percent, respectively. Volumes increased in Asia-Pacific, Eastern Europe, the Middle East and South Africa.
Net sales in developed markets outside North America. increased 5 percent despite a 5 percent negative impact from changes in foreign currency exchange rates. Volumes increased 8 percent, driven by Australia and Western/Central Europe, and changes in net selling prices and product mix each increased sales by 1 percent.
Operating profit of $527 increased 9 percent. The comparison benefited from organic sales growth, cost savings and lower input costs. Results were impacted by higher advertising spending, increased selling, general and administrative costs, other manufacturing cost increases and unfavorable currency effects.
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Consumer Tissue
Three Months Ended March 31


Three Months Ended March 31
2020201920202019
Net Sales$1,723  $1,526  Operating Profit$365  $241  
Net SalesPercent ChangeOperating ProfitPercent Change
Volume 14  Volume26  
Net Price1  Net Price6  
Mix/Other —  Input Costs32  
Currency(2) 
Cost Savings(c)
19  
Total(a)
13  Currency Translation(1) 
Other(d)
(31) 
Organic(b)
14  Total51  
(a) Total may not equal the sum of volume, net price, mix/other and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring Program.
(d) Includes impact of changes in marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
Net sales in North America increased 12 percent. Volumes rose 10 percent and changes in net selling prices increased sales by 3 percent, while changes in product mix decreased sales by 1 percent. The volume increase included double-digit gains on bathroom tissue and facial tissue driven by increased shipments to support consumer stock up related to the global outbreak of COVID-19.
Net sales in D&E markets increased 10 percent despite a 3 percent negative impact from changes in foreign currency exchange rates. Volumes increased 12 percent and changes in product mix increased sales by 2 percent, while changes in net selling prices decreased sales by 1 percent. Volumes increased in all major geographies driven by increased shipments to support consumer stock up related to the global outbreak of COVID-19.
Net sales in developed markets outside North America increased 17 percent. Volumes rose 21 percent, with significant increases in all markets, driven by increased shipments to support consumer stock up related to the global outbreak of COVID-19. Changes in product mix increased sales by 1 percent. Changes in foreign currency exchange rates and net selling prices decreased sales by 4 percent and 1 percent, respectively.
Operating profit of $365 increased 51 percent. Results benefited from organic sales growth, lower input costs and cost savings. The comparison was impacted by other manufacturing cost increases, higher selling, general and administrative costs, increased advertising spending and unfavorable currency effects.


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K-C Professional
Three Months Ended March 31


Three Months Ended March 31
2020201920202019
Net Sales$848  $817  Operating Profit$181  $150  
Net SalesPercent ChangeOperating ProfitPercent Change
Volume 4  Volume8  
Net Price2  Net Price9  
Mix/Other 1  Input Costs13  
Exited Businesses(e)
(1) 
Cost Savings(c)
12  
Currency(2) Currency Translation(2) 
Total(a)
4  
Other(d)
(19) 
Organic(b)
7  Total21  
(a) Total may not equal the sum of volume, net price, mix/other, exited businesses and currency due to rounding.
(b) Combined impact of changes in volume, net price and mix/other.
(c) Combined benefits of the FORCE program and 2018 Global Restructuring Program.
(d) Includes impact of changes in product mix, marketing, research and general expenses, foreign currency transaction effects and other manufacturing costs.
(e) Exited businesses in conjunction with the 2018 Global Restructuring Program.
Net sales in North America increased 5 percent. Volumes increased 4 percent and changes in net selling prices and product mix each increased sales by 1 percent. Business exits in conjunction with the 2018 Global Restructuring Program reduced sales by 1 percent.
Net sales in D&E markets increased 2 percent despite a 4 percent negative impact from changes in foreign currency exchange rates. Higher volumes and changes in net selling prices each increased sales by 3 percent, while changes in product mix decreased sales by 1 percent.
Net sales in developed markets outside North America increased 5 percent. Changes in product mix increased sales by 4 percent and higher volumes and changes in net selling prices each increased sales by 3 percent, while changes in foreign currency exchange rates were unfavorable by 4 percent.
Operating profit of $181 increased 21 percent. Results benefited from organic sales growth, cost savings and lower input costs. The comparison was impacted by higher selling, general and administrative costs and other manufacturing cost increases.
2018 Global Restructuring Program
As a result of the outbreak of COVID-19 and the related uncertainty and complexity of the environment, we now expect that some restructuring activity and the related charges will extend into 2021 rather than being completed at the end of 2020 as previously planned. Total restructuring charges to implement the program are expected to be toward the high end of the previously estimated range of $1.7 billion to $1.9 billion pre-tax ($1.3 billion to $1.4 billion after tax). We continue to expect the program will generate annual pre-tax cost savings of $500 to $550. We continue to target to achieve those savings by the end of 2021, although it is possible the full realization could occur in 2022 because of the uncertainties related to COVID-19. Savings for the first three months of 2020 were $25, bringing cumulative savings to $325. See Item 1, Note 2 to the unaudited interim consolidated financial statements for additional information.
Liquidity and Capital Resources
Cash Provided by Operations
Cash provided by operations was $704 for the first three months of 2020 compared to $317 in the prior year. The increase was driven by higher earnings and improved working capital.
Investing
During the three months ended March 31, 2020, our capital spending was $352 compared to $316 in the prior year.
Financing
Our short-term debt, which consists of U.S. commercial paper with original maturities up to 90 days and/or other similar short-term debt issued by non-U.S. subsidiaries, was $0.5 billion as of March 31, 2020 (included in Debt payable within one year on the consolidated balance sheet). The average month-end balance of short-term debt for the first quarter of 2020 was
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$0.7 billion. These short-term borrowings provide supplemental funding for supporting our operations. The level of short-term debt generally fluctuates depending upon the amount of operating cash flows and the timing of customer receipts and payments for items such as dividends and income taxes.
At March 31, 2020 and December 31, 2019, total debt was $8.4 billion and $7.7 billion, respectively.
In February 2020, we issued $500 aggregate principal amount of 2.875% notes due February 7, 2050. Proceeds from the offering were used for general corporate purposes including the repayment of a portion of our commercial paper indebtedness.
In March 2020, we issued $750 aggregate principal amount of 3.10% notes due March 26, 2030. Proceeds from the offering were used for general corporate purposes including the repayment of a portion of our commercial paper indebtedness.
We maintain a $2.0 billion revolving credit facility which expires in June 2023 and a $750 revolving credit facility which expires in June 2020.  These facilities, currently unused, support our commercial paper program, and would provide liquidity in the event our access to the commercial paper markets is unavailable for any reason.
In July 2017, the United Kingdom's Financial Conduct Authority, which regulates the London Interbank Offered Rate (LIBOR), announced that it intends to phase out LIBOR by the end of 2021. We are currently evaluating the potential effect of the eventual replacement of the LIBOR, but we do not expect the effect to be material. Accounting guidance has been recently issued to ease the transition to alternative reference rates from a financial reporting perspective. See Item 1, Note 1 to the unaudited interim consolidated financial statements for details.
We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. During the first three months of 2020, we repurchased 1.6 million shares of our common stock at a cost of $224 through a broker in the open market. We are temporarily suspending our share repurchase program effective April 24, 2020 for at least the remainder of the second quarter to enhance flexibility in the current environment. We do not expect any change in our plans for our quarterly dividend, which was increased by 3.9 percent in January 2020. We will continue to monitor the environment and further assess our share repurchase program later in the year.
K-C Argentina began accounting for their operations as highly inflationary effective July 1, 2018, as required by GAAP.  Under highly inflationary accounting, K-C Argentina’s functional currency became the U.S. dollar, and its income statement and balance sheet have been measured in U.S. dollars using both current and historical rates of exchange.  The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in Other (income) and expense, net and was not material.  As of March 31, 2020, K-C Argentina had a small net peso monetary position.  Net sales of K-C Argentina were approximately 1 percent of our consolidated net sales for the three months ended March 31, 2020.
We believe that our ability to generate cash from operations and our capacity to issue short-term and long-term debt are adequate to fund working capital, payments for our 2018 Global Restructuring Program, capital spending, pension contributions, dividends and other needs for the foreseeable future. Further, we do not expect restrictions or taxes on repatriation of cash held outside of the U.S. to have a material effect on our overall business, liquidity, financial condition or results of operations for the foreseeable future.
Information Concerning Forward-Looking Statements
Certain matters contained in this report concerning the business outlook, including the anticipated cost savings from our FORCE program, costs and savings from the 2018 Global Restructuring Program, cash flow and uses of cash, growth initiatives, innovations, marketing and other spending, net sales, anticipated currency rates and exchange risks, including the impact in Argentina, raw material, energy and other input costs, effective tax rate, contingencies and anticipated transactions of Kimberly-Clark, including dividends, share repurchases and pension contributions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based upon management's expectations and beliefs concerning future events impacting Kimberly-Clark.  There can be no assurance that these future events will occur as anticipated or that our results will be as estimated.  Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update them. 
The assumptions used as a basis for the forward-looking statements include many estimates that, among other things, depend on the achievement of future cost savings and projected volume increases. In addition, many factors outside our control, including pandemics (including the ongoing COVID-19 outbreak), epidemics, fluctuations in foreign currency exchange rates, the prices and availability of our raw materials, potential competitive pressures on selling prices for our products, energy costs, our ability to maintain key customer relationships and retail trade customer actions, as well as general economic and political conditions globally and in the markets in which we do business, could affect the realization of these estimates.
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For a description of certain factors that could cause our future results to differ from those expressed in these forward-looking statements, see Item 1A of this report entitled "Risk Factors" and Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 entitled "Risk Factors." Other factors not presently known to us or that we presently consider immaterial could also affect our business operations and financial results.
Item 4. Controls and Procedures
As of March 31, 2020, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of March 31, 2020. There were no changes in our internal control over financial reporting during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1A. Risk Factors
Our business faces many risks and uncertainties that we cannot control. The risk factors described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, as revised below, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us.
The risk factor described below updates the risk factors disclosed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, to include additional information.
We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and cash flows.
Our business and financial results may be negatively impacted by health epidemics, pandemics and similar outbreaks. The recent and rapidly spreading COVID-19 pandemic could have negative impacts on our business, including causing significant volatility in demand for our products, changes in consumer behavior and preference, disruptions in our manufacturing and supply chain operations, disruptions to our cost saving programs and restructuring initiatives, limitations on our employees’
ability to work and travel, significant changes in the economic or political conditions in markets in which we operate and related currency and commodity volatility. Despite our efforts to manage these impacts, their ultimate impact also depends on factors beyond our knowledge or control, including the duration and severity of any such outbreak and actions taken to contain its spread and mitigate its public health effects.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We repurchase shares of Kimberly-Clark common stock from time to time pursuant to publicly announced share repurchase programs. All our share repurchases during the first quarter of 2020 were made through a broker in the open market.
The following table contains information for shares repurchased during the first quarter of 2020. None of the shares in this table were repurchased directly from any of our officers or directors.
Period (2020)
Total Number
of Shares
Purchased(a)
Average
Price Paid
Per Share		Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs		Maximum Number
of Shares That May
Yet Be Purchased
Under the Plans or
Programs
January 1 to January 31  474,784  $141.29  30,836,128  9,163,872  
February 1 to February 29  448,800  141.97  31,284,928  8,715,072  
March 1 to March 31  714,900  129.88  31,999,828  8,000,172  
Total1,638,484  
(a)Share repurchases were made pursuant to a share repurchase program authorized by our Board of Directors on November 13, 2014. This program allows for the repurchase of 40 million shares in an amount not to exceed $5 billion.


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Item 6. Exhibits
(a)Exhibits
Exhibit No. (3)a. Amended and Restated Certificate of Incorporation, dated April 30, 2009, incorporated by reference to Exhibit No. (3)a of the Corporation's Current Report on Form 8-K filed on May 1, 2009.
Exhibit No. (3)b. By-Laws, as amended May 2, 2019, incorporated by reference to Exhibit No. (3)b of the Corporation's Current Report on Form 8-K filed on May 3, 2019.
Exhibit No. (4). Copies of instruments defining the rights of holders of long-term debt will be furnished to the Securities and Exchange Commission on request.
Exhibit No. (10)q. Form of Award Agreements under 2011 Equity Participation Plan for Performance Restricted Stock Units, filed herewith.
Exhibit No. (10)s. First Amendment to 2011 Equity Participation Plan, effective February 12, 2020, incorporated by reference to Exhibit No. (10)s of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2019.
Exhibit No. (31)a. Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), filed herewith.
Exhibit No. (31)b. Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), filed herewith.
Exhibit No. (32)a. Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith.
Exhibit No. (32)b. Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith.
Exhibit No. (101).INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
Exhibit No. (101).SCH XBRL Taxonomy Extension Schema Document
Exhibit No. (101).CAL XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit No. (101).DEF XBRL Taxonomy Extension Definition Linkbase Document
Exhibit No. (101).LAB XBRL Taxonomy Extension Label Linkbase Document
Exhibit No. (101).PRE XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit No. 104 The cover page from this Current Report on Form 10-Q formated as Inline XBRL



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
KIMBERLY-CLARK CORPORATION
(Registrant)
By: /s/ Maria Henry
 Maria Henry
 Senior Vice President and
 Chief Financial Officer
 (principal financial officer)
By: /s/ Andrew S. Drexler
 Andrew S. Drexler
 Vice President and Controller
 (principal accounting officer)
April 22, 2020
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