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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
https://cdn.kscope.io/eda418fbe890c48dedcadc10ebbd6d81-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.
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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).
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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.
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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.
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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.
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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 process