What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-20 compared with 2025-02-24 · 671 added, 586 removed, 1455 unchanged (46% of the section changed)

62 unchanged sentences

Cash and cash equivalents $ 1,062 $ 1,070

Trade receivables, less allowances for credit losses ($ 26 and $ 25 as of December 29, 2024 and December 31, 2023, respectively)

Trade receivables, less allowances for credit losses ($ 26 as of both December 28, 2025 and December 29, 2024)

Inventories 1,666 1,591

Prepaid expenses and other receivables 432 494

28 unchanged sentences

Additional paid-in capital 16,348 16,130

16,130 16,147

Treasury stock, 20,387 and 11,208 shares at cost as of December 28, 2025 and December 29, 2024, respectively

( 439 ) ( 242 )

(Accumulated deficit) Retained earnings ( 93 ) 429

Accumulated deficit ( 204 ) ( 93 )

Accumulated other comprehensive loss ( 4,959 ) ( 6,146 )

7 unchanged sentences

Fiscal Twelve Months Ended

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025 December 29, 2024 December 31, 2023

Net sales $ 15,124 $ 15,455 $ 15,444

4 unchanged sentences

Impairment charges 23 578 —

Other operating expense (income), net 26 ( 10 ) ( 35 )

Other operating (income) expense, net ( 23 ) 26 ( 10 )

Operating income 2,414 1,841 2,512

14 unchanged sentences

Fiscal Twelve Months Ended

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025 December 29, 2024 December 31, 2023

Net income $ 1,470 $ 1,030 $ 1,664

Other comprehensive (loss) income, net of taxes

Other comprehensive income (loss), net of taxes

Foreign currency translation 1,178 ( 783 ) 219

( 783 ) 219 ( 1,045 )

Employee benefit plans:

Prior service cost, net of amortization ( 4 ) ( 2 ) 8

Loss (gain), net of amortization 32 ( 101 ) 58

Gain (loss), net of amortization 24 32 ( 101 )

Effect of exchange rates ( 15 ) 7 ( 9 )

37 ( 102 ) 63

Net change 5 37 ( 102 )

Derivatives and hedges:

Other comprehensive (loss) income before reclassifications ( 6 ) 66 12

Other comprehensive income (loss) before reclassifications 27 ( 6 ) 66

Amounts reclassified to the Consolidated Statements of Operations ( 23 ) ( 17 ) ( 28 )

( 17 ) ( 28 ) ( 2 )

Other comprehensive (loss) income ( 769 ) 155 ( 972 )

Net change 4 ( 23 ) 38

Other comprehensive income (loss) 1,187 ( 769 ) 155

Comprehensive income $ 2,657 $ 261 $ 1,819

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in Millions;

(Dollars in Millions, Except Per Share Data;

Shares in Thousands)

Fiscal Twelve Months Ended December 29, 2024, December 31, 2023, and January 1, 2023 (1)

Fiscal Twelve Months Ended December 28, 2025, December 29, 2024, and December 31, 2023 (1)

Common Stock Additional Paid-In Capital Treasury Stock Retained Earnings (Accumulated Deficit) Net Investment from J&J

1 unchanged sentence

Shares Amount Shares Amount

Balance, January 2, 2022

— $ — $ — — $ — $ — $ 24,974 $ ( 4,483 ) $ 20,491

Net income — — — — — — 2,064 — 2,064

Other comprehensive loss — — — — — — — ( 972 ) ( 972 )

Net transfers to J&J — — — — — — ( 1,750 ) — ( 1,750 )

Stock-based compensation

— — — — — — 137 — 137

Balance, January 1, 2023

— — — — — — 25,425 ( 5,455 ) 19,970

January 1, 2023 — $ — $ — — $ — $ — $ 25,425 $ ( 5,455 ) $ 19,970

Net income — — — — — 1,195 469 — 1,664

Other comprehensive income — — — — — — — 155 155

Cash dividends on common stock — — — — — ( 766 ) — — ( 766 )

Cash dividends on common stock ($ 0.40 per share)

— — — — — ( 766 ) — — ( 766 )

Net transfers to J&J — — — — — — ( 308 ) — ( 308 )

3 unchanged sentences

Issuance of common stock under the Kenvue 2023 Plan, net 513 — 8 — — — — — 8

513 — 8 — — — — — 8

Purchase of treasury stock ( 350 ) — — 350 ( 7 ) — — — ( 7 )

1 unchanged sentence

Separation-related adjustments — — ( 160 ) — — — 91 ( 77 ) ( 146 )

Balance, December 31, 2023

1,915,057 19 16,147 350 ( 7 ) 429 — ( 5,377 ) 11,211

December 31, 2023 1,915,057 19 16,147 350 ( 7 ) 429 — ( 5,377 ) 11,211

Net income — — — — — 1,030 — — 1,030

Other comprehensive loss — — — — — — — ( 769 ) ( 769 )

Cash dividends on common stock — — — — — ( 1,552 ) — — ( 1,552 )

Cash dividends on common stock ($ 0.81 per share)

— — — — — ( 1,552 ) — — ( 1,552 )

Stock-based compensation — — 254 — — — — — 254

Issuance of common stock under the Kenvue 2023 Plan, net 9,569 — 69 — — — — — 69

9,569 — 69 — — — — — 69

Purchase of treasury stock ( 10,858 ) — — 10,858 ( 235 ) — — — ( 235 )

Separation-related adjustments — — ( 340 ) — — — — — ( 340 )

Balance, December 29, 2024 1,913,768 $ 19 $ 16,130 11,208 $ ( 242 ) $ ( 93 ) $ — $ ( 6,146 ) $ 9,668

December 29, 2024 1,913,768 19 16,130 11,208 ( 242 ) ( 93 ) — ( 6,146 ) 9,668

Net income — — — — — 1,470 — — 1,470

Other comprehensive income — — — — — — — 1,187 1,187

Cash dividends on common stock ($ 0.825 per share)

— — — — — ( 1,581 ) — — ( 1,581 )

Stock-based compensation — — 136 — — — — — 136

Issuance of common stock under the Kenvue 2023 Plan, net 11,526 — 82 — — — — — 82

Purchase of treasury stock ( 9,179 ) — — 9,179 ( 197 ) — — — ( 197 )

December 28, 2025 1,916,115 $ 19 $ 16,348 20,387 $ ( 439 ) $ ( 204 ) $ — $ ( 4,959 ) $ 10,765

(1) Prior to April 4, 2023, the Company operated as a segment of J&J and not as a separate entity.

5 unchanged sentences

Fiscal Twelve Months Ended

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025 December 29, 2024 December 31, 2023

Cash flows from operating activities

5 unchanged sentences

Impairment charges 23 578 —

Losses (gains) on investments 72 7 ( 1 )

Losses on investments — 72 7

Other 67 69 ( 1 )

4 unchanged sentences

Accounts payable and accrued liabilities 41 ( 536 ) 1,454

( 536 ) 1,454 35

Employee-related obligations 43 27 ( 78 )

Accrued taxes on income ( 27 ) ( 61 ) ( 331 )

( 61 ) ( 331 ) ( 5 )

Other liabilities ( 3 ) 52 ( 212 )

4 unchanged sentences

Proceeds from J&J upon repayment of the Facility Agreement — — 8,941

(Costs associated with) proceeds from sale of assets ( 6 ) 21 8

Proceeds from (costs associated with) sale of assets 24 ( 6 ) 21

Other investing activities 15 15 ( 40 )

1 unchanged sentence

Cash flows used in financing activities

Proceeds from (payments of) loans and notes payables 2 ( 14 ) 14

Proceeds from Commercial Paper Program, net of issuance cost 157 574 —

Proceeds from issuance of Senior Notes, net of issuance cost — 7,686 —

(Repayments of) proceeds from commercial paper program, net of (proceeds) repayments and issuance costs ( 146 ) 157 574

Proceeds from issuance of Senior Notes, net of issuance costs

Proceeds from Kenvue IPO, net — — 4,241

Repayment of Senior Notes ( 750 ) — —

Distribution to J&J in connection with the Separation — — ( 13,788 )

Dividends paid

( 1,581 ) ( 1,552 ) ( 766 )

Net transfers to J&J — — ( 274 )

Purchase of treasury stock ( 197 ) ( 235 ) ( 7 )

( 235 ) ( 7 ) —

Other financing activities

91 65 ( 193 )

Net cash flows used in financing activities ( 1,837 ) ( 1,565 ) ( 2,527 )

7 unchanged sentences

Cash paid for interest $ 440 $ 439 $ 224

$ 439 $ 224 $ —

(1) Net cash paid includes payments to J&J under the Tax Matters Agreements (as defined in Note 12, “Relationship with J&J”) for income tax liabilities, which J&J has paid on the Company’s behalf post-Kenvue IPO to the tax authorities.

(2) See Note 14, “Income Taxes” for additional information on net cash paid for income taxes for the fiscal twelve months ended December 28, 2025 in accordance with ASU 2023-09 (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Recently Adopted Accounting Standards”).

See accompanying Notes to Consolidated Financial Statements.

2 unchanged sentences

Description of the Company and Business Segments

(“Kenvue” or the “Company”) is a pure-play consumer health company with iconic brands including Aveeno ® , BAND-AID ® Brand, Johnson’s ® , Listerine ® , Neutrogena ® , Tylenol ® , and Zyrtec ® .

(“Kenvue” or the “Company”) is a pure-play consumer health company with iconic brands including Aveeno ® , BAND-AID ® Brand, Johnson’s ® , Listerine ® , Neutrogena ® , Nicorette ® , Tylenol ® , and Zyrtec ® .

The Company is organized into three reportable business segments:

Self Care, Skin Health and Beauty, and Essential Health.

The Self Care segment includes a broad product range such as pain care;

cough, cold, and allergy;

The Self Care segment includes a broad product range such as cough, cold, and allergy;

digestive health;

5 unchanged sentences

In November 2021, J&J announced its intention to separate its Consumer Health segment (the “Consumer Health Business”) into a new, publicly traded company (the “Separation”).

Prior to the Kenvue IPO (as defined below), the Company primarily represented J&J’s Consumer Health Business.

The Company also included certain other product lines previously reported in another segment of J&J.

On April 4, 2023, in connection with the Separation, J&J completed in all material respects the transfer of the assets and liabilities of the Consumer Health Business to the Company and its subsidiaries (such transfer, the “Consumer Health Business Transfer”), other than the transfer of certain Deferred Local Businesses (as defined below in “—Variable Interest Entities and Net Economic Benefit Arrangements”).

On May 3, 2023, the registration statement related to the initial public offering of Kenvue’s common stock was declared effective, and on May 4, 2023, Kenvue’s common stock began trading on the New York Stock Exchange under the ticker symbol “KVUE” (the “Kenvue IPO”).

On May 8, 2023, the Kenvue IPO was completed through the sale of 198,734,444 shares of common stock, par value $ 0.01 per share, including the underwriters’ full exercise of their option to purchase 25,921,884 shares to cover over-allotments, at an initial public offering price of $ 22 per share for net proceeds of $ 4.2 billion after deducting underwriting discounts and commissions of $ 131 million.

On May 8, 2023, in conjunction with the Consumer Health Business Transfer, the Company distributed $ 13.8 billion to J&J from 1) the net proceeds received from the sale of the common stock in the Kenvue IPO, 2) the net proceeds received from the Debt Financing Transactions as defined in Note 5, “Borrowings—Commercial Paper Program,” and 3) any cash and cash equivalents in excess of the $ 1.17 billion retained by the Company immediately following the Kenvue IPO.

As of the closing of the Kenvue IPO, J&J owned 1,716,160,000 shares of Kenvue common stock, or approximately 89.6 % of the total outstanding shares of Kenvue common stock.

On July 24, 2023, J&J announced an exchange offer (the “Exchange Offer”) under which its shareholders could exchange shares of J&J common stock for shares of Kenvue common stock owned by J&J.

On August 23, 2023, J&J completed the Exchange Offer through which J&J accepted an aggregate of 190,955,435 shares of J&J common stock in exchange for 1,533,830,450 shares of Kenvue common stock, representing approximately 80.1 % of Kenvue’s outstanding common stock as of August 23, 2023.

As a result, Kenvue became a fully independent company, and as of the completion of the Exchange Offer, J&J owned approximately 9.5 % of the outstanding shares of Kenvue common stock.

On August 23, 2023, J&J completed the Exchange Offer, completing the Separation and Kenvue’s transition to being a fully independent company.

On May 17, 2024, J&J completed an additional exchange offer (the “Debt-for-Equity Exchange”) through which J&J exchanged indebtedness of J&J for shares of Kenvue common stock owned by J&J.

Following the completion of the Debt for Equity Exchange, J&J no longer owned any shares of Kenvue common stock.

Following the completion of the Debt-for-Equity Exchange, J&J did not own any shares of Kenvue common stock.

Proposed Transaction with Kimberly-Clark

On November 2, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Kimberly-Clark Corporation, a Delaware corporation (“K-C” or, with reference to the post-closing period, the “combined company”), Vesta Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of K-C (“First Merger Sub”), and Vesta Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of K-C (“Second Merger Sub”).

Pursuant to the Merger Agreement, among other things, 1) First Merger Sub will merge with and into the Company (the “First Merger”), with the Company surviving as a direct wholly owned subsidiary of K-C (the “Initial Surviving Company”) (the time the First Merger becomes effective being the “First Effective Time”), and 2) immediately following the First Merger, and as part of the same overall transaction as the First Merger, the Initial Surviving Company will merge with and into Second Merger Sub (collectively, the “Proposed Transaction”), with the Second Merger Sub surviving as a direct wholly owned subsidiary of K-C.

At the First Effective Time, pursuant to the terms and subject to the conditions of the Merger Agreement, each share of Company common stock issued and outstanding immediately prior to the First Effective Time (other than shares of Company common stock that (x) are owned by K-C or the Company or any wholly owned subsidiary of K-C or the Company (or are held in treasury by the Company) or (y) are held by any Company shareholder who is entitled to demand and properly demands appraisal of such shares pursuant to, and who complies in all respects with, Section 262 of the General Corporation Law of the State of Delaware) will be converted into the right to receive 1) 0.14625 shares of K-C common stock, par value $ 1.25 per share (the “K-C Common Stock” and the shares of K-C Common Stock to be issued in connection with the First Merger, the “Stock Consideration”), plus 2) $ 3.50 in cash (the “Cash Consideration” and, together with the Stock Consideration, the “Merger Consideration”).

Upon completion of the Proposed Transaction, current Company shareholders are expected to own approximately 46 % and current K-C shareholders are expected to own approximately 54 % of the combined company on a fully diluted basis.

K-C has agreed to take all necessary actions to cause, effective as of the First Effective Time, the K-C board of directors to consist of

three Company designees, with the remainder consisting of existing members of the K-C board of directors as of immediately prior to the First Effective Time.

On January 29, 2026, Company shareholders approved the adoption of the Merger Agreement and K-C’s shareholders approved the issuance of K-C common stock in connection with the Proposed Transaction, in each case at a special meeting of shareholders held for that purpose.

Additionally, the waiting period applicable to the Proposed Transaction under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on February 4, 2026.

The Proposed Transaction remains subject to the satisfaction or waiver of other customary closing conditions, including the receipt of a number of foreign regulatory approvals.

Basis of Presentation

3 unchanged sentences

The Consolidated Financial Statements include the accounts of the Company and its affiliates and entities consolidated under the variable interest and voting models.

During the fiscal twelve months ended December 29, 2024, the Company recorded out-of-period adjustments primarily related to the Separation, which corrected an overstatement in Additional paid-in capital of $ 340 million, including the $ 84 million

($ 65 million net of tax) related to certain cloud computing arrangements described below.

This amount did not have an impact on the operating results for the fiscal twelve months ended December 29, 2024.

The Company concluded that these adjustments were not material to the Consolidated Financial Statements for either the current period or prior periods.

The Company concluded that these adjustments were not material to the Consolidated Financial Statements for the prior period.

As of December 29, 2024, the Consolidated Balance Sheet reflects an adjustment for a change in classification from Property, plant, and equipment, net of $ 288 million to Other assets and Additional paid-in capital of $ 169 million and $ 84 million, respectively, related to certain cloud computing arrangements, net of amortization of $ 35 million.

The Company concluded that this adjustment was not material to the Consolidated Financial Statements for either the current period or prior periods.

The Company concluded that this adjustment was not material to the Consolidated Financial Statements for the prior period.

Correction of Immaterial Prior Period Misstatements

During the fiscal twelve months ended December 28, 2025, the Company identified an immaterial misstatement in its previously issued financial statements related to the amounts disclosed for Advertising expenses, which were understated due to inconsistent classification of certain retail media spend within Selling, general, and administrative expenses in the Consolidated Statements of Operations.

The Advertising expenses disclosures for the fiscal twelve months ended December 29, 2024 and December 31, 2023 were adjusted to correct understatements of $ 234 million and $ 228 million, respectively.

The Company concluded that these disclosure-only adjustments were not material to the Consolidated Financial Statements for the prior periods and had no effect on the Company’s financial position, results of operations, or cash flows.

The amount disclosed for the fiscal twelve months ended December 28, 2025 also includes certain retail media spend that has been included in the adjusted amounts disclosed for the fiscal twelve months ended December 29, 2024 and December 31, 2023;

refer to “ — Advertising.”

During the fiscal twelve months ended December 28, 2025, the Company also identified an immaterial misstatement in its previously issued financial statements related to amounts disclosed for foreign currency exchange gains and losses on transactions occurring in a currency other than an operation’s functional currency.

The misstatement overstated the loss disclosed by $ 19 million for the fiscal twelve months ended December 29, 2024.

The disclosure for this period was adjusted to correct the overstatement.

The Company concluded that this disclosure-only adjustment was not material to the Consolidated Financial Statements for the prior period and had no effect on the Company’s financial position, results of operations, or cash flow;

refer to “ — Foreign Currency.”

Periods Prior to the Consumer Health Business Transfer

2 unchanged sentences

Prior to the Kenvue IPO, the Company relied on J&J’s corporate and other support functions.

Therefore, certain corporate and shared costs were allocated to the Company including the assets, liabilities, revenues, and expenses that J&J’s management determined were specifically or primarily identifiable to the Company, as well as direct and indirect costs that were attributable to the operations of the Company.

Therefore, certain corporate and shared costs were allocated to the Company including the assets, liabilities, revenues, and expenses that J&J’s management

determined were specifically or primarily identifiable to the Company, as well as direct and indirect costs that were attributable to the operations of the Company.

Indirect costs are the costs of support functions that were provided on a centralized or geographic basis by J&J and its affiliates, which included, but were not limited to, facilities, insurance, logistics, quality, compliance, finance, human resources, benefits administration, procurement support, information technology, legal, corporate strategy, corporate governance, other professional services, and general commercial support functions.

7 unchanged sentences

J&J calculated foreign currency translation on its consolidated assets and liabilities, which included assets and liabilities of the Company prior to April 4, 2023.

Foreign currency translation recorded during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 was based on currency movements specific to the Consolidated Financial Statements.

Foreign currency translation recorded during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 was based on currency movements specific to the Consolidated Financial Statements.

The income tax amounts in the Consolidated Financial Statements prior to the Kenvue IPO have been calculated based on a separate return methodology and presented as if the Company’s operations were reported by separate taxpayers in the jurisdictions in which the Company operates.

1 unchanged sentence

Prior to the Kenvue IPO, all transactions between the Company and J&J were considered to be effectively settled for cash in the Consolidated Financial Statements at the time the transaction was recorded.

The effects of the settlement of these transactions between the Company and J&J were reflected in the Consolidated Statements of Cash Flows as “Net transfers to J&J” within financing activities, and in the Consolidated Statements of Stockholders' Equity as “Net transfers to J&J.”

The effects of the settlement of these transactions between the Company and J&J were reflected in the Consolidated Statement of Cash Flows for the fiscal twelve months ended December 31, 2023 as “Net transfers to J&J” within financing activities, and in the Consolidated Statement of Stockholders’ Equity for the fiscal twelve months ended December 31, 2023 as “Net transfers to J&J.”

Reclassifications

15 unchanged sentences

Fiscal year 2024 refers to the fiscal twelve months ended December 29, 2024.

Fiscal year 2022 refers to the fiscal twelve months ended January 1, 2023.

Reportable Segments

Fiscal year 2023 refers to the fiscal twelve months ended December 31, 2023.

Reportable Business Segments

The Company operates in the following reportable business segments:

2 unchanged sentences

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents.

Cash equivalents are included in the Company’s Cash and cash equivalents on the Consolidated Balance Sheets.

Trade Receivable and Allowance for Credit Losses

Cash equivalents are included in Cash and cash equivalents on the Consolidated Balance Sheets.

Trade Receivables and Allowance for Credit Losses

Trade receivables, net are stated net of certain sales provisions and the allowance for credit losses.

The Company estimates the current expected credit loss on its receivables based on various factors, including historical credit loss experience, customer credit-worthiness, value of collaterals (if any), and any relevant current and reasonably supportable future economic factors.

The Company estimates the current expected credit loss on its receivables based on various factors, including historical credit loss experience, customer creditworthiness, value of collaterals (if any), and any relevant current and reasonably supportable future economic factors.

Trade receivable balances are written off against the allowance when it is deemed probable that the trade receivable will not be collected.

A summary of the change in the allowance for credit losses during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 is presented below:

The following table summarizes the activity related to the allowance for credit losses during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

Allowance for credit losses, beginning of period $ ( 25 ) $ ( 35 ) $ ( 32 )

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Allowance for credit losses, beginning of fiscal year

$ ( 26 ) $ ( 25 ) $ ( 35 )

Provision ( 11 ) ( 6 ) ( 4 )

Utilization 12 4 14

Currency translation adjustment 1 — 1

Allowance for credit losses, end of period $ ( 26 ) $ ( 25 ) $ ( 35 )

Currency translation

Allowance for credit losses, end of fiscal year

$ ( 26 ) $ ( 26 ) $ ( 25 )

Inventories are stated at the lower of cost or net realizable value and are accounted for using the first-in, first-out method.

4 unchanged sentences

The Company utilizes the straight-line method of depreciation over the estimated useful lives.

The approximate ranges for estimated useful lives are as follows:

The following table summarizes the approximate ranges for estimated useful lives as of December 28, 2025:

Machinery and equipment 2 – 13 years

5 unchanged sentences

Upon retirement or other disposal of property, plant, and equipment, the costs and related amounts of accumulated depreciation or amortization are eliminated from the asset and accumulated depreciation accounts, respectively.

The difference, if any, between the net asset value and the proceeds are recorded in Other operating expense (income), net.

The difference, if any, between the net asset value and the proceeds are recorded in Other operating (income) expense, net in the Consolidated Statements of Operations.

Capitalized Internal-Use Software

19 unchanged sentences

The Consolidated Balance Sheets reflect goodwill established based on past transactions allocated to the Company’s operations by J&J prior to the Kenvue IPO.

Goodwill is not amortized but is subjected to annual tests of impairment at the reporting unit level

on the first day of the fiscal fourth quarter, or more frequently if events or changes in circumstances between annual tests indicate that goodwill may be impaired.

Goodwill is not amortized but is subjected to annual tests of impairment at the reporting unit level on the first day of the fiscal fourth quarter, or more frequently if events or changes in circumstances between annual tests indicate that goodwill may be impaired.

The Company has the option to first assess qualitative factors to determine whether the quantitative goodwill impairment test is necessary.

If the Company determines the estimated fair value of goodwill is more likely than not greater than its carrying amount based on the results of the qualitative test, no additional testing is necessary.

If the Company determines the estimated fair value of goodwill is more likely than not less than the carrying value based on the results of the qualitative test, a quantitative fair value test is performed.

the Company determines the estimated fair value of goodwill is more likely than not less than the carrying value based on the results of the qualitative test, a quantitative fair value test is performed.

The Company may bypass the qualitative assessment in any period and proceed directly to performing the quantitative fair value test.

1 unchanged sentence

See Note 4, “Intangible Assets and Goodwill,” for more information on goodwill.

Cloud Computing Arrangements

Certain of the Company’s information technology contracts have been deemed to be cloud computing arrangements, which include software as a service, platform as a service, and infrastructure as a service contracts.

Certain costs incurred for the implementation of the cloud computing arrangements are capitalized and amortized on a straight-line basis over the term of the contract.

For each component of the cloud computing arrangements, amortization begins when the component becomes ready for its intended use.

Capitalized implementation costs are presented in Other assets on the Consolidated Balance Sheets, which is the same financial statement line item in which a prepayment of the fees for the associated cloud computing arrangements would be presented.

Amortization expense recorded on capitalized implementation costs is presented in Selling, general, and administrative expenses and Cost of sales in the Consolidated Statements of Operations, which are the same financial statement line items in which the expense for fees related to the associated cloud computing arrangements are presented.

Impairment of Long-Lived Assets

2 unchanged sentences

If the net undiscounted cash flows are less than the carrying value of the asset group, the Company then performs the next step, which is to determine the fair value of the asset group, and record an impairment, if any.

If quoted market prices are not available, the Company estimates fair value using a discounted value of estimated future cash flows.

Impairment charges for the fiscal twelve months ended December 29, 2024 and January 1, 2023 consisted of:

If quoted market prices are not available, the Company estimates the fair value of the asset group using a discounted value of estimated future cash flows.

Impairment charges for the fiscal twelve months ended December 28, 2025 and December 29, 2024 consisted of:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024

Dr.Ci:Labo ® asset impairment (1)

1 unchanged sentence

Other asset impairment (3)

Impairment charges

Total impairment charges $ 23 $ 578

(1) Represents the impairment charge recognized during the fiscal three months ended June 30, 2024 in relation to Dr.Ci:Labo ® long-lived assets.

See “—Dr.Ci:Labo ® Asset Impairment” below and Note 4, “Intangible Assets and Goodwill,” for more information.

(2) Represents the impairment charge recorded during the fiscal three months ended March 31, 2024 on the held for sale asset associated with the Company’s interim corporate headquarters in Skillman, New Jersey.

(2) Represents the impairment charge recorded during the fiscal three months ended March 31, 2024 on the held for sale asset associated with the Company’s former corporate headquarters in Skillman, New Jersey.

See “—Assets Held for Sale” below.

(3) Represents the impairment charge recognized during the fiscal three months ended June 30, 2024 related to certain software development assets and the impairment charge recognized during the fiscal twelve months ended January 1, 2023 related to certain definite-lived trademarks deemed as irrecoverable.

(3) Represents the impairment charge recognized during the fiscal three months ended December 28, 2025 related to the ORSL ® trade name following regulatory changes in India and the impairment charge recognized during the fiscal three months ended June 30, 2024 related to certain software development assets.

No impairments were recognized for the fiscal twelve months ended December 31, 2023.

2 unchanged sentences

Following the change to the Company’s strategy for the brand, the Company made revisions to the internal forecasts relating to the Dr.Ci:Labo ® asset group and concluded that the changes in circumstances, which impacted the forecasted cash flows in relation to this business, resulted in a triggering event, requiring an interim impairment review of the Dr.Ci:Labo ® asset group.

As a result of the interim impairment test, the Company concluded that the carrying value of long-lived assets of the asset group, consisting primarily of intangible assets, including trademarks and other intangibles, and property, plant, and equipment, exceeded their estimated fair value, resulting in impairment charges of $ 488 million recognized in the fiscal three months ended June 30, 2024, of which $ 463 million related to definite-lived intangible assets and $ 25 million related to property, plant, and equipment.

As a result of the interim impairment test, the Company concluded that the carrying value of long-lived assets of the asset group, consisting primarily of intangible assets, including trademarks

and other intangibles, and property, plant, and equipment, exceeded their estimated fair value, resulting in impairment charges of $ 488 million recognized in the fiscal three months ended June 30, 2024, of which $ 463 million related to definite-lived intangible assets and $ 25 million related to property, plant, and equipment.

Following the impairment charge, the carrying value of the Dr.Ci:Labo ® asset group was $ 118 million.

The Company estimated the fair value of the definite-lived intangible assets within the Dr.Ci:Labo ® asset group based on an income approach using the relief-from-royalty method.

This valuation required significant judgments and estimates by management regarding several key inputs, including future cash flows consistent with management’s plans, sales growth rates,

the selection of royalty rates, and a discount rate.

This valuation required significant judgments and estimates by management regarding several key inputs, including future cash flows consistent with management’s plans, sales growth rates, the selection of royalty rates, and a discount rate.

The Company selected the assumptions used in the financial forecasts of cash flows specific to the remaining useful lives of the trademarks ranging from six to 15 years using historical data, supplemented by current and anticipated market conditions and estimated growth rates.

4 unchanged sentences

1) management has committed to a plan to sell the assets, 2) the assets are available for immediate sale, 3) there is an active program to locate a buyer, and 4) the sale and transfer of the asset is probable within one year.

On February 21, 2024, the Company listed its interim corporate headquarters in Skillman, New Jersey for sale, which met the criteria to be classified as held for sale at that date.

The held for sale asset is measured at the lower of the carrying amount or the fair value less costs to sell.

On February 21, 2024, the Company listed its former corporate headquarters in Skillman, New Jersey, for sale, which met the criteria to be classified as held for sale at that date.

The held for sale asset was measured at the lower of the carrying amount or the fair value less costs to sell.

The results of the impairment test performed upon classification as held for sale indicated that the carrying value of the Skillman, New Jersey, facility exceeded its estimated fair value less costs to sell by $ 68 million.

2 unchanged sentences

The inputs utilized in the analysis are classified as Level 3 inputs within the fair value hierarchy.

The Company recorded the remaining asset held for sale balance related to the Skillman, New Jersey facility within Other current assets on the Consolidated Balance Sheet as of December 29, 2024.

The Company recorded the remaining asset held for sale balance related to the Skillman, New Jersey, facility within Other current assets on the Consolidated Balance Sheet as December 29, 2024.

During the fiscal three months ended December 28, 2025, the Company completed the sale of the Skillman, New Jersey, facility and recognized a gain of $ 17 million, which was recorded in Other operating (income) expense, net in the Consolidated Statement of Operations.

Debt Discounts and Premiums, Issuance Costs, and Deferred Financing Costs

4 unchanged sentences

The effects of foreign currency derivatives were allocated to the Company based on the portion that was deemed to be associated with the Company’s operations.

The Company uses various types of derivative financial instruments including forward foreign exchange contracts, interest rate swaps, and cross currency interest rate swap contracts to manage its exposure to the variability of forecasted cash flows, changes in the fair value of foreign-denominated intercompany debt attributable to foreign exchange rate fluctuations, interest rate risk related to future debt issuances, and foreign subsidiaries with local functional currency.

The Company uses various types of derivative financial instruments including forward foreign exchange contracts, forward starting interest rate swaps, and cross currency swap contracts to manage its exposure to the variability of forecasted cash flows, changes in the fair value of foreign-denominated intercompany debt attributable to foreign exchange rate fluctuations, interest rate risk related to future debt issuances, and foreign subsidiaries with local functional currency.

As required by U.S.

2 unchanged sentences

The authoritative literature establishes a three-level hierarchy to prioritize the inputs used in measuring fair value, with Level 1 having the highest priority and Level 3 having the lowest.

Changes in the fair value of derivatives designated as cash flow hedges are recorded within Gain (Loss) on Derivatives and Hedges as a component of Other comprehensive (loss) income until the underlying transaction affects earnings and are then reclassified to earnings in the same account as the hedged transaction.

Changes in the fair value of derivatives designated as net investment hedges are recorded within Currency Translation Adjustments (“CTA”) as a component of Other comprehensive (loss) income until the hedged investment is either sold or substantially liquidated and are then reclassified to earnings.

Changes in the fair value of derivatives designated as cash flow hedges are recorded within Gain on Derivatives and Hedges as a component of Other comprehensive income (loss) until the underlying transaction affects earnings and are then reclassified to earnings in the same account as the hedged transaction.

Changes in the fair value of derivatives designated as net investment hedges are recorded

within Cumulative Translation Adjustments (“CTA”) as a component of Other comprehensive income (loss) until the hedged investment is either sold or substantially liquidated and are then reclassified to earnings.

Any changes in the fair value of derivatives designated as fair value hedges are recorded in Net income.

4 unchanged sentences

The Company’s defined benefit retirement plan costs are valued using actuarial valuations.

The Company recognizes the funded or unfunded status of its defined benefit pension plans on the Consolidated Balance Sheets and recognizes changes in the funded status that are not recognized as components of net periodic benefit cost within Other comprehensive (loss) income, net of income taxes.

The projected benefit obligation represents the actuarial present value of benefits expected to be paid upon an employee’s expected date of separation or retirement.

26 unchanged sentences

Trade promotions, comprised of coupons, product listing allowances, cooperative advertising arrangements, volume-based incentive programs, as well as discounts to customers, rebates, sales incentives, and product returns, are accounted for as variable consideration and recorded as a reduction in sales in the same period as the related sale.

To estimate variable consideration, the Company may apply both the “expected value” method and the “most likely amount” method based on the form of variable consideration, after considering which method would provide the best prediction of consideration to be received from the Company’s customers.

received from the Company’s customers.

The redemption cost of consumer coupons is based on historical redemption experience by product and value.

10 unchanged sentences

Separation-Related Costs

The Company and J&J incurred certain non-recurring separation-related costs in the establishment of Kenvue as a standalone public company (“Separation-related costs”).

Costs incurred by the Company and those costs that were incurred by J&J prior to April 4, 2023 determined to be for the benefit of the Company were included in the Consolidated Financial Statements.

These Separation-related costs were $ 296 million, $ 468 million, and $ 213 million for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

The Separation-related costs are included in Cost of sales and Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Advertising expenses worldwide, which comprised television, radio, print media, and digital advertising, were $ 1,635 million, $ 1,349 million, and $ 1,356 million for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively, and are included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

The Company and J&J incurred certain non-recurring separation-related costs in connection with the establishment of Kenvue as a standalone public company (“Separation-related costs”).

Costs incurred by the Company and those costs that were incurred by J&J prior to April 4, 2023 determined to be for the benefit of the Company are included in Cost of sales and Selling, general, and administrative expenses in the Consolidated Statement of Operations.

Separation-related costs associated with information technology and other activities, primarily related to the disentanglement of systems and the discontinuance of certain information technology assets, are substantially completed.

However, costs related to legal entity name changes and certain other separation-related activities are expected to continue for a longer period than originally anticipated.

Separation-related costs for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 consisted of:

Fiscal Twelve Months Ended

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Information technology and other (1)

$ 68 $ 255 $ 468

Legal entity name change

Total Separation-related costs

$ 88 $ 296 $ 468

(1) Primarily related to the disentanglement of systems and the costs associated with the discontinuation of certain information technology assets.

These costs also include depreciation expense on Separation-related assets for the fiscal twelve months ended December 29, 2024.

Advertising expenses worldwide, which comprised television, radio, print media, and digital advertising, were $ 1,836 million, $ 1,869 million, and $ 1,577 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, and are included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Shipping and Handling Costs

Shipping and handling costs, which includes costs for shipping, handling, and distribution, were $ 505 million, $ 508 million, and $ 547 million for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively, and are included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Shipping and handling costs, which include costs for shipping, handling, and distribution, were $ 482 million, $ 505 million, and $ 508 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, and are included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Product Liability

1 unchanged sentence

The accruals are adjusted periodically as additional information becomes available.

The Company accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be reasonably estimated.

The Company accrues an estimate of the legal defense costs needed to defend each matter when those costs are probable and can be

reasonably estimated.

To the extent adverse verdicts have been rendered against the Company, the Company does not record an accrual until a loss is determined to be probable and can be reasonably estimated.

1 unchanged sentence

Research and development expenses are expensed as incurred and included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Research and development costs were $ 408 million, $ 399 million, and $ 375 million for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Research and development expenses were $ 382 million, $ 408 million, and $ 399 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

Income taxes are recorded based on amounts refundable or payable for the current fiscal year and include the results of any differences between U.S.

4 unchanged sentences

Prior to the Kenvue IPO, U.S.

federal, state and foreign income tax payables and receivables for entities that file a combined, consolidated, or group income tax return with J&J were deemed settled with J&J and were included in “Net Investment from J&J.”

federal, state, and foreign income tax payables and receivables for entities that were included in the filing of a combined, consolidated, or group income tax return with J&J were deemed settled with J&J and were included in Net Investment from J&J.

Management establishes valuation allowances on deferred tax assets when it is determined to be “more likely than not” that some portion or all of the deferred tax assets may not be realized.

4 unchanged sentences

The estimates for these positions are regularly assessed based upon all available information.

These estimates may be revised in the future and such changes may have a material additional expense or benefit to the Company’s financial results and its effective tax rate.

These estimates may be revised in the future and such changes may result in a material additional expense or benefit to the Company’s financial results and its effective tax rate.

See Note 14, “Income Taxes,” for more information on income taxes.

24 unchanged sentences

The net assets of international operations where the local currencies have been determined to be the functional currencies are translated into U.S.

dollars, the reporting currency, using period-end exchange rates and at the average exchange rates for the

reporting period for revenue and expense accounts.

dollars, the reporting currency, using period-end exchange rates and at the average exchange rates for the reporting period for revenue and expense accounts.

The cumulative foreign currency translation adjustment is recorded as a component of Accumulated other comprehensive loss on the Consolidated Balance Sheets.

3 unchanged sentences

Foreign currency exchange gains and losses on transactions occurring in a currency other than an operation’s functional currency are recognized as a component of Other expense, net in the Consolidated Statements of Operations.

Net currency transaction losses were $ 26 million, $ 64 million, and $ 105 million for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Net currency transaction losses were $ 41 million, $ 7 million, and $ 64 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

Supplier Finance Program

3 unchanged sentences

Invoices from suppliers participating in the supplier finance program are recorded in Accounts payable on the Consolidated Balance Sheets.

The rollforward of the Company’s outstanding obligations confirmed as valid under its supplier finance program for the fiscal twelve months ended December 29, 2024 is as follows:

The following table summarizes the changes in the Company’s outstanding obligations confirmed as valid under its supplier finance program during the fiscal twelve months ended December 28, 2025 and December 29, 2024:

(Dollars in Millions)

December 29, 2024

December 28, 2025 December 29, 2024

Confirmed obligations outstanding at the beginning of the fiscal year $ 260 $ 227

1 unchanged sentence

Confirmed invoices paid during the fiscal year

( 1,098 ) ( 1,060 )

Confirmed obligations outstanding at the end of the fiscal year $ 314 $ 260

11 unchanged sentences

When the precedent conditions are met, the Deferred Local Businesses will be transferred as per the terms of the arrangement with J&J.

The Company determined that certain Deferred Local Businesses that are legal entities (“Deferred Legal Entities”) are VIEs for which Kenvue is the primary beneficiary, since Kenvue has the power to direct the activities that most significantly impact such Deferred Legal Entities’ economic performance, as well as to obtain all the economic benefits and losses of such entities.

These significant activities include, but are not limited to, product pricing, marketing and sales strategy, supply chain strategy, material supply and vendor management, budget planning, and labor and overhead management.

Accordingly, the assets and liabilities of these entities are recognized on the Consolidated Balance Sheets at their historical carrying amounts as of the date when the Company entered into the arrangement, since the primary beneficiary of the VIEs and the VIEs themselves were under common control.

Additionally, the results of the operations and cash flows are included within the Consolidated Financial Statements.

All Deferred Legal Entities are exposed to similar operational risks and are therefore monitored and evaluated on a similar basis by management.

Accordingly, the financial information for Deferred Legal Entities has been aggregated and the following table summarizes the consolidated assets and liabilities of these entities on the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023.

The amounts represented in this table are only those assets of the VIEs that can be used to settle only the VIE’s obligations and the VIE’s creditors (or beneficial interest holders) have no recourse against the general credit of the primary beneficiary.

(Dollars in Millions) December 29, 2024 December 31, 2023

The Company determined that certain Deferred Local Businesses that are legal entities (“Deferred Legal Entities”) were VIEs for which Kenvue was the primary beneficiary, since Kenvue had the power to direct the activities that most significantly impacted such Deferred Legal Entities’ economic performance, as well as to obtain all the economic benefits and losses of such entities.

These significant activities included, but were not limited to, product pricing, marketing and sales strategy, supply chain strategy, material supply and vendor management, budget planning, and labor and overhead management.

Accordingly, the assets and liabilities of these entities were recognized on the Consolidated Balance Sheet at their historical carrying amounts as of the date when the Company entered into the arrangement, since the primary beneficiary of the VIEs and the VIEs themselves were under common control.

Additionally, the results of the operations and cash flows were included within the Consolidated Financial Statements.

In the fiscal three months ended December 28, 2025, J&J transferred the equity interests of the remaining Deferred Legal Entities to the Company that previously had been consolidated as VIEs in the Company’s Consolidated Financial Statements.

All Deferred Legal Entities were exposed to similar operational risks and were therefore monitored and evaluated on a similar basis by management.

The amounts represented in this table are only those assets of the VIEs that could be used to settle only the VIE’s obligations and the VIE’s creditors (or beneficial interest holders) had no recourse against the general credit of the primary beneficiary.

(Dollars in Millions) December 29, 2024

Current assets

5 unchanged sentences

Deferred taxes on income 3

Other assets — 1

Total assets $ 194

3 unchanged sentences

Accrued rebates, returns, and promotions 16

Accrued taxes on income — 3

Total current liabilities 30

Total liabilities $ 30

The Company recognized Net income of $ 17 million and $ 85 million for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, related to the Deferred Legal Entities in the Consolidated Statements of Operations.

The Company recognized Net income of $ 20 million, $ 17 million, and $ 85 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, related to the Deferred Legal Entities in the Consolidated Statements of Operations.

Net Economic Benefit Arrangements

With respect to certain Deferred Legal Entities and the Deferred Local Businesses that are not legal entities (“Deferred Markets”), the Company and J&J entered into net economic benefit arrangements effective on April 4, 2023, pursuant to which, among other things, J&J will transfer to the Company the net profits from the operations of each of the Deferred Markets (or, in the event the operations of any such Deferred Markets result in net losses to J&J, the Company will reimburse J&J for the amount of such net losses).

The Company recognized a net payable to J&J of $ 23 million and $ 39 million as of December 29, 2024 and December 31, 2023, respectively, in relation to the net economic benefit arrangements on the Consolidated Balance Sheets.

The Company recognized Net income of $ 51 million and $ 36 million for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, in relation to the net economic benefit arrangements in the Consolidated Statements of Operations.

The Company had a net liability to J&J of $ 44 million and $ 23 million as of December 28, 2025 and December 29, 2024, respectively, in relation to the net economic benefit arrangements on the Consolidated Balance Sheets.

The Company recognized Net income of $ 28 million, $ 51 million, and $ 36 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, in relation to the net economic benefit arrangements in the Consolidated Statements of Operations.

Recently Adopted Accounting Standards

Accounting Standards Update (“ASU”) 2023-07 — Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07 — Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 scopes in entities with a single reportable segment and requires those entities to provide all disclosures required in Topic 280.

Among other various new disclosures, ASU 2023-07 additionally requires that current annual disclosures about a reportable segment’s profit or loss and assets also be provided in interim periods.

Enhanced reporting requirements for all entities include disclosure of 1) significant segment expenses, 2) the title and position of the chief operating decision maker (the “CODM”), and 3) how the CODM uses disclosed measure(s) of a segment’s profit or loss in assessing segment performance and allocating resources.

This guidance is effective for public entities for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024.

Companies are required to apply the amendments retrospectively to all prior periods presented in the financial statements, and early adoption is permitted.

The adoption in the fiscal three months ended December 29, 2024 has resulted in additional disclosures, including the disclosure of significant segment expenses, within Note 18, “Segments of Business and Geographic Areas.” There was no effect on the Company’s financial position, results of operations, or cash flows.

ASU 2022 — 04:

Liabilities — Supplier Finance Programs (Subtopic 405-50)–Disclosure of Supplier Finance Program Obligations

In September 2022, the FASB issued ASU 2022-04 — Liabilities — Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”).

ASU 2022-04 requires that a buyer in a supplier finance program disclose sufficient information about the program for financial statement users.

This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with the exception for the amendment on rollforward information.

This amendment requires entities to present rollforward information in each annual reporting period, which is effective for fiscal years beginning after December 15, 2023.

The adoption in the fiscal three months ended December 29, 2024 has resulted in additional disclosures for rollforward information of the Company’s outstanding obligations confirmed as valid under its supplier finance program for the fiscal twelve months ended December 29, 2024.

There was no effect on the Company’s financial position, results of operations, or cash flows.

Refer to “ — Supplier Finance Program” above for additional information.

Recent Accounting Standards Not Yet Adopted

ASU 2023-09—Income Taxes (Topic 740):

Accounting Standards Update (“ASU”) 2023-09—Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 — Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-09 — Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”) .

ASU 2023-09 enhances the transparency of income tax disclosures, primarily by requiring public business entities to disclose 1) consistent categories and greater disaggregation of information in the rate reconciliations and 2) the disclosure of income taxes paid disaggregated by jurisdiction, among other requirements.

This guidance is effective for public entities for the fiscal years beginning after December 15, 2024, and early adoption is permitted.

The amendments are applicable on a prospective basis, although retrospective basis is also permitted.

The Company is currently evaluating this guidance and the impact on its income tax disclosures.

This guidance is effective for public business entities for the fiscal years beginning after December 15, 2024.

The Company adopted the amendments on a prospective basis.

The adoption in the fiscal three months ended December 28, 2025 resulted in changes to the annual income tax disclosures, including greater disaggregation of information related to rate

reconciliations and income taxes paid, within Note 14, “Income Taxes.” There was no effect on the Company’s financial position, results of operations, or cash flows.

Recent Accounting Standards Not Yet Adopted

ASU 2024-03—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

2 unchanged sentences

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

Among other various new disclosures, ASU 2024-03 requires public entities to disaggregate operating expenses included in certain expense captions presented on the face of the income statement into specific categories (including purchases of inventory, employee compensation, depreciation, and intangible asset amortization) to provide enhanced transparency into the nature of expenses.

This guidance is effective for public entities for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Among other various new disclosures, ASU 2024-03 requires public business entities to disaggregate operating expenses included in certain expense captions presented on the face of the income statement into specific categories (including purchases of inventory, employee compensation, depreciation, and intangible asset amortization) to provide enhanced transparency into the nature of expenses.

This guidance is effective for public business entities for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Companies are required to apply the amendments either 1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or 2) retrospectively to all periods presented in the financial statements.

1 unchanged sentence

The Company is currently evaluating this guidance and the impact on its disclosures.

ASU 2025-06—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software

In September 2025, the FASB issued ASU 2025-06 —Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”).

ASU 2025-06 simplifies capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods.

The amendment requires entities to start capitalizing software costs when both of the following occur:

1) management has authorized and committed to funding the software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended.

This guidance is effective for all entities for fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years.

Companies are permitted to apply the amendments using a prospective, retrospective, or modified transition approach.

Early adoption is permitted.

The Company is currently evaluating this guidance and the impact on its financial statements and related disclosures.

ASU 2025-09—Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements

In November 2025, the FASB issued ASU 2025-09— Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements (“ASU 2025-09”).

The amendments included in the five issues addressed in ASU 2025-09 are intended to more closely align hedge accounting with the economics of an entity’s risk management activities and to simplify the application of certain existing hedge accounting guidance.

This guidance is effective for all public business entities for fiscal years beginning after December 15, 2026, and for interim periods within those fiscal years.

Companies are required to apply the amendments prospectively and may elect to adopt the amendments for hedging relationships that exist as of the date of adoption.

Early adoption is permitted.

The Company is currently evaluating this guidance and the impact on its financial statements and related disclosures.

No other new accounting standards that were issued or became effective during the fiscal twelve months ended December 28, 2025 had, or are expected to have, a significant impact on the Consolidated Financial Statements.

As of December 29, 2024 and December 31, 2023, inventories were comprised of:

As of December 28, 2025 and December 29, 2024, inventories consisted of:

(Dollars in Millions) December 28, 2025 December 29, 2024

17 unchanged sentences

(1) As of December 29, 2024, the Consolidated Balance Sheet reflects an adjustment for a change in classification from Property, plant, and equipment, net of $ 288 million to Other assets and Additional paid-in capital of $ 169 million and $ 84 million, respectively, related to certain cloud computing arrangements, net of amortization of $ 35 million.

The Company concluded that this adjustment was not material to the Consolidated Financial Statements for either the current period or prior periods.

The Company concluded that this adjustment was not material to the Consolidated Financial Statements for the prior period.

Cloud Computing Arrangements

Certain costs incurred for the implementation of the cloud computing arrangements are capitalized and amortized on a straight-line basis over the term of the contract.

For each component of the cloud computing arrangements, amortization begins when the component becomes ready for its intended use.

Capitalized implementation costs and accumulated amortization related to the Company’s cloud computing arrangements were as follows as of December 29, 2024:

As of December 28, 2025 and December 29, 2024, capitalized implementation costs and accumulated amortization related to the Company’s cloud computing arrangements were as follows:

(Dollars in Millions)

December 29, 2024

December 28, 2025 December 29, 2024

Cloud computing arrangements, gross

$ 1,363 $ 1,277

accumulated amortization

( 1,186 ) ( 1,088 )

Total cloud computing arrangements, net

See “—Property, Plant, and Equipment” above for information related to cloud computing arrangements for the fiscal twelve months ended December 31, 2023.

Depreciation Expense

Depreciation expense for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 was as follows:

Depreciation expense for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 was as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Depreciation expense (1)

$ 300 $ 353 $ 305

(1) Depreciation for the fiscal twelve months ended December 29, 2024 includes $ 145 million of amortization of integration and development costs capitalized in connection with cloud computing arrangements, as discussed in “—Cloud Computing Arrangements” above.

(1) Depreciation for the fiscal twelve months ended December 28, 2025 and December 29, 2024 includes $ 99 million and $ 145 million, respectively, of amortization of integration and development costs capitalized in connection with cloud computing arrangements, as discussed in “—Cloud Computing Arrangements” above.

See “—Property, Plant, and Equipment” above for information related to cloud computing arrangements for the fiscal twelve months ended December 31, 2023.

14 unchanged sentences

(1) The majority of the other intangible assets balance relates to the acquisition of Pfizer Consumer Health in 2006.

Gross carrying amount changes for the fiscal twelve months ended December 29, 2024 were primarily driven by the impact of $ 479 million in intangible asset impairments, of which $ 463 million related to impairment charges recognized in relation to Dr.Ci:Labo ® definite-lived intangible assets, including trademarks and other intangibles, as described in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets.” The change was further driven by the impact of currency translations.

The Company recognized an intangible asset impairment of $ 12 million related to certain definite-lived trademarks deemed as irrecoverable in the Impairment charges line item in the Consolidated Statement of Operations for the fiscal twelve months

ended January 1, 2023.

Gross carrying amount changes for the fiscal twelve months ended December 28, 2025 were driven by the impact of currency translations, as well as the impact of a $ 23 million intangible asset impairment related to the ORSL ® trade name following regulatory changes in India.

For the fiscal twelve months ended December 29, 2024, the Company recognized $ 479 million in intangible asset impairments, of which $ 463 million related to impairment charges recognized in relation to Dr.Ci:Labo ® definite-lived intangible assets, including trademarks and other intangibles, as described in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets.”

No intangible asset impairments were recognized for the fiscal twelve months ended December 31, 2023.

Amortization expense for the Company’s amortizable assets, which is included in Cost of sales, was $ 269 million, $ 322 million, and $ 348 million for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Amortization expense for the Company’s amortizable assets, which is included in Cost of sales, was $ 257 million, $ 269 million, and $ 322 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

The schedule of amortization expense for the five succeeding fiscal years is as follows:

2 unchanged sentences

$ 260 $ 252 $ 252 $ 248 $ 245

Goodwill by reportable business segment was as follows:

(Dollars in Millions) Self Care Skin Health and Beauty Essential Health Total (1)

Goodwill as of January 1, 2023

$ 5,194 $ 2,365 $ 1,626 $ 9,185

The following table summarizes the changes in the carrying amount of goodwill by reportable business segment during the fiscal twelve months ended December 28, 2025 and December 29, 2024:

(Dollars in Millions)

Self Care Skin Health and Beauty Essential Health Total Goodwill (1)

December 31, 2023 $ 5,308 $ 2,315 $ 1,648 $ 9,271

Currency translation

( 254 ) ( 130 ) ( 44 ) ( 428 )

Goodwill as of December 31, 2023

5,308 2,315 1,648 9,271

December 29, 2024 5,054 2,185 1,604 8,843

Currency translation 508 78 80 666

( 254 ) ( 130 ) ( 44 ) ( 428 )

Goodwill as of December 29, 2024

$ 5,054 $ 2,185 $ 1,604 $ 8,843

December 28, 2025 $ 5,562 $ 2,263 $ 1,684 $ 9,509

(1) The majority of the Goodwill balance relates to the acquisition of Pfizer Consumer Health in 2006.

The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants.

The Company estimates the fair value of a reporting unit using a discounted cash flow model.

The Company estimates the fair value of a reporting unit using a combination of a discounted cash flow model and a market-based approach.

The discounted cash flow model relies on assumptions regarding revenue and net income growth rates, projected working capital needs, capital expenditures, and discount rates.

To estimate fair value, the Company discounts the forecasted cash flows of each reporting unit.

Forecasted cash flows are developed using long-term growth rates and then discounted to present value to estimate the fair value.

The discount rate the Company uses represents the estimated weighted-average cost of capital, which reflects the overall level of inherent risk involved in the reporting unit’s operations and the rate of return a market participant would expect to earn.

The quantitative fair value test is performed utilizing long-term growth rates and discount rates applied to the estimated cash flows in estimation of fair value.

Under the market-based approach, the Company utilizes the guideline public company method and market transaction method.

These methods utilize valuation multiples derived from comparable publicly traded companies and relevant industry transactions, which are then applied to the reporting unit’s operating performance metrics.

To forecast a reporting unit’s cash flows, the Company takes into consideration economic conditions and trends, estimated future operating results, management’s projections, a market participant’s view of growth rates and product lives, and anticipated future economic conditions.

Revenue growth rates inherent in these forecasts are based on input from internal and external market research that compare factors such as growth in global economies, recent industry trends, and product lifecycles.

Macroeconomic factors such as changes in economies, changes in the competitive landscape, changes in government legislation, product lifecycles, industry consolidations, and other changes beyond the Company’s control could have a positive or negative impact on achieving its targets.

Macroeconomic factors such as changes in global economies, changes in the competitive landscape, changes in government legislation, product lifecycles, industry consolidations, and other changes beyond the Company’s control could have a positive or negative impact on achieving its targets.

Accordingly, if market conditions deteriorate, or if the Company is unable to execute its strategies, it may be necessary to record impairment charges in the future.

Annual Goodwill Impairment Tests

The Company completed its annual goodwill impairment tests for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 by performing a quantitative assessment on each of the reporting units and concluded that no impairment to goodwill was necessary as the fair value of each reporting unit was in excess of its respective carrying value.

Goodwill Impairment Tests

The Company completed its annual goodwill impairment tests for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023.

For the fiscal twelve months ended December 28, 2025, the Company performed a qualitative assessment on each of the reporting units on the annual test date and concluded that no impairment to goodwill was necessary as it was more likely than not that the estimated fair value of each reporting unit was in excess of its respective carrying value.

For the fiscal twelve months ended December 29, 2024 and December 31, 2023, the Company performed a quantitative assessment on each of the reporting units and concluded that no impairment to goodwill was necessary, as the estimated fair value of each reporting unit was in excess of its respective carrying value.

In addition to the qualitative assessment performed as of the annual test date for the fiscal twelve months ended December 28, 2025, there was a reassessment of the long-term outlook for the Skin Health and Beauty business during the fiscal three months ended September 28, 2025.

The revised outlook aimed to address slower growth in the broader skincare categories, as well as the recent decline in profitability of the Skin Health and Beauty reporting unit.

Management revised the internal forecasts to reflect the updated outlook.

These changes in circumstances were determined to be a triggering event, which resulted in a quantitative interim impairment assessment of the fair value of the Skin Health and Beauty reporting unit.

The Company also elected to perform a quantitative interim impairment assessment for the Self Care and Essential Health reporting units in conjunction with the assessment performed for the Skin Health and Beauty reporting unit.

Based on the results of the assessment, the estimated fair value of the Skin Health and Beauty reporting unit exceeded the carrying value by approximately 10 %;

therefore, no impairment charge was recorded for the fiscal three months ended September 28, 2025.

If all other assumptions were held constant, an increase of approximately 100 basis points in the selected discount rate would have resulted in an impairment charge.

No impairment to goodwill was necessary for any of the Company’s reporting units, as the estimated fair value of each reporting unit exceeded its respective carrying value.

A decline in forecasted Net sales or net income, or adverse macroeconomic developments such as rising interest rates, could significantly reduce the excess between fair value and carrying value.

Management will continue to monitor the performance of the Skin Health and Beauty business;

further deterioration of market conditions or an inability of the Company to execute on its strategies could lead to an impairment charge of the goodwill associated with the Skin Health and Beauty reporting unit in the future.

The components of the Company’s debt as of December 28, 2025 and December 29, 2024 were as follows:

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5.05 % Senior Notes due 2053

5.20 % Senior Notes due 2063

Discounts and debt issuance costs ( 63 ) ( 64 )

Total 7,821 7,805

Current portion of long-term debt—principal amount, net of discounts and debt issuance costs ( 750 ) ( 750 )

5 unchanged sentences

Total debt $ 8,524 $ 8,607

(1) As of December 29, 2024, Other includes $ 113 million of finance lease liabilities associated with the Global and North America Headquarters Lease.

(1) Other consists primarily of finance lease liabilities.

See Note 8, “Leases,” for more information.

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See “—Facility Agreement” below for additional details.

In connection with the issuance of the Senior Notes, the Company entered into a registration rights agreement with the initial purchasers, pursuant to which the Company was obligated to use commercially reasonable efforts to file with the Securities and Exchange Commission (the “SEC”) and cause to become effective a registration statement with respect to an offer to exchange each series of Senior Notes for registered notes with terms that are substantially identical in all material respects to the notes of such series.

On October 19, 2023, the Company completed an exchange offer of its outstanding unregistered Senior Notes (the “Original Senior Notes”) for new notes registered pursuant to the Securities Act (the “Exchange Senior Notes”).

The terms of each series of the Exchange Senior Notes are substantially identical to the terms of the applicable series of Original Senior Notes, except the Exchange Senior Notes are registered under the Securities Act, and certain transfer restrictions, registration rights, and provisions relating to additional interest relating to the Company’s registrations do not apply to the Exchange Senior Notes.

As a result of this exchange, the Company incurred filing and legal fees that were not significant, which the Company capitalized as debt issuance costs.

The weighted-average effective interest rate of the Company’s long-term debt was 5.1 % and 5.1 % as of December 29, 2024 and December 31, 2023, respectively.

The weighted-average effective interest rate of the Company’s current portion of long-term debt was 5.5 % as of December 29, 2024.

The interest payments are due on March 22 and September 22 of each year and commenced on September 22, 2023.

The interest payments on the 2023 Senior Notes are due on March 22 and September 22 of each year and commenced on September 22, 2023.

The 2023 Senior Notes were initially fully and unconditionally guaranteed on a senior unsecured basis by J&J.

Such guarantees of the Senior Notes were automatically and unconditionally terminated upon the completion of the Consumer Health Business Transfer and the Kenvue IPO.

In connection with the issuance of the 2023 Senior Notes, the Company entered into a registration rights agreement with the initial purchasers, pursuant to which the Company was obligated to use commercially reasonable efforts to file with the Securities and Exchange Commission (the “SEC”) and cause to become effective a registration statement with respect to an offer to exchange each series of the 2023 Senior Notes for registered notes with terms that are substantially identical in all material respects to the notes of such series.

restrictions, registration rights, and provisions relating to additional interest relating to the Company’s registrations do not apply to the Exchange Senior Notes.

As a result of this exchange, the Company incurred filing and legal fees that were not significant, which the Company capitalized as debt issuance costs.

On May 22, 2025, the Company issued a series of senior unsecured notes maturing in 2032 (the “2025 Senior Notes” and, collectively with the 2023 Senior Notes, the “Senior Notes”) in an aggregate principal amount of $ 750 million, which bear an interest rate of 4.850 % per annum.

The interest payments on the 2025 Senior Notes are due on May 22 and November 22 of each year and commenced on November 22, 2025.

The Company may redeem any series of the Senior Notes at its option, in whole or in part, at any time and from time to time by paying a “make whole” premium, plus accrued and unpaid interest to, but excluding, the applicable redemption date.

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The Senior Notes will rank equally in right of payment with the Company’s other existing and future senior unsecured indebtedness.

The Company’s Senior Notes are governed by an indenture and supplemental indenture between the Company and a trustee (collectively, the “Indenture”).

The Company’s Senior Notes are governed by an indenture and supplemental indentures between the Company and a trustee (collectively, the “Indenture”).

The Indenture contains certain covenants, including limitations on the Company and certain of its subsidiaries’ ability to incur liens or engage in certain sale-leaseback transactions.

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In addition, the Indenture contains other customary terms, including certain events of default, upon the occurrence of which the Senior Notes may be declared immediately due and payable.

The weighted-average effective interest rate of the Company’s long-term debt was 5.1 % as of both December 28, 2025 and December 29, 2024.

The weighted-average effective interest rate of the Company’s current portion of long-term debt was 5.4 % and 5.5 % as of December 28, 2025 and December 29, 2024, respectively.

The schedule of principal payments required on the Company’s Senior Notes for the five succeeding fiscal years, and thereafter, is as fol lows:

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Commercial Paper Program

On March 3, 2023, the Company entered into a commercial paper program (the “Commercial Paper Program”).

On March 3, 2023, the Company entered into a commercial paper program.

The Company’s Board of Directors (the “Board”) has authorized the issuance of up to $ 4.0 billion in an aggregate principal amount of commercial paper under the commercial paper program.

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dollars and Euros.

Interest is payable on the loans under the Revolving Credit Facility at 1) in the case of borrowings denominated in U.S.

Interest is payable on the loans under the Revolving Credit Facility at 1) in the case of borrowings denominated in

dollars, adjusted Term Secured Overnight Financing Rate (“Term SOFR”) (or, at the Company’s option, the adjusted base rate), 2) in the case of borrowings denominated in Euros, adjusted Euro Interbank Offered Rate (“EURIBOR”), and 3) in the case of swingline borrowings, the daily simple Euro Short-Term Rate, plus, in each case, a margin determined pursuant to a pricing grid based on the Company’s credit ratings.

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Interest payments are due 1) in the case of Term SOFR or EURIBOR borrowings, on the last day of each interest period applicable to the borrowing (or, in the case of any borrowing with an interest period of more than three months’ duration, every three months), 2) in the case of an adjusted base rate borrowing, on the last day of each March, June, September, and December, and 3) in the case of swingline borrowings, on the fifth business day after the borrowing.

connection with entering the Revolving Credit Facility, the Company paid an immaterial amount of debt issuance costs.

In connection with entering the Revolving Credit Facility, the Company paid an immaterial amount of debt issuance costs.

These costs related to securing the Revolving Credit Facility are presented within Other assets on the Consolidated Balance Sheets.

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Kenvue unconditionally guarantees all of the obligations of the borrowers (other than itself) under the Revolving Credit Facility on an unsecured basis.

As of both December 29, 2024 and December 31, 2023, the Company had no outstanding balances under its Revolving Credit Facility.

On January 30, 2025, the Company requested an extension of the maturity date of its Revolving Credit Facility from March 6, 2028 to March 6, 2029, and on February 21, 2025, such extension became effective with respect to all lenders under the Revolving Credit Facility, each of which accepted such request.

The terms of the Revolving Credit Facility otherwise remain unchanged.

As of both December 28, 2025 and December 29, 2024, the Company had no outstanding balances under its Revolving Credit Facility.

Facility Agreement

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The cash flows for the lending, and repayment, of the principal balance of the Facility Agreement are presented within cash flows from investing activities within the Consolidated Statement of Cash Flows.

Cash inflows from the interest earned on the Facility Agreement are presented within Interest expense, net in the Consolidated Statements of Operations and are presented as cash inflows from operations within the Consolidated Statement of Cash Flows.

Cash inflows from the interest earned on the Facility Agreement are presented within Interest expense, net in the Consolidated Statement of Operations and are presented as cash inflows from operations within the Consolidated Statement of Cash Flows.

Interest Expense, Net

The amount included in Interest expense, net in the Consolidated Statements of Operations consists of the following:

The amount included in Interest expense, net in the Consolidated Statements of Operations for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 consisted of the following:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Interest expense $ 430 $ 431 $ 358

1 unchanged sentence

( 51 ) ( 53 ) ( 108 )

Total interest expense, net $ 378 $ 250

Interest expense, net $ 379 $ 378 $ 250

(1) Includes interest income of $ 33 million for the fiscal twelve months ended December 31, 2023 recognized in relation to the Facility Agreement.

No Interest expense, net was recognized for the fiscal twelve months ended January 1, 2023.

Fair Value of Debt

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The estimated fair value of the Company’s Senior Notes was $ 7.6 billion and $ 7.5 billion as of December 28, 2025 and December 29, 2024, respectively.

Fair value was estimated using market prices using quoted prices in active markets which would be considered Level 2 in the fair value hierarchy.

Fair value was estimated based upon quoted market prices in active markets which would be considered Level 2 in the fair value hierarchy.

The carrying value of the commercial paper notes approximated the fair value as of December 28, 2025 and December 29, 2024 due to the nature and short-term duration of the instrument.

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current benefits in Accrued liabilities ( 53 ) ( 37 )

Employee-related obligations — non-current

Total employee-related obligations—non-current

In connection with the completion of the Separation, the Company converted all multiemployer pension plans to a multiple-employer pension plan or a single-employer pension plan.

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The Company uses December 31 as the fiscal year-end measurement date for the Plans, which are located outside the United States.

Net periodic benefit costs for the Plans sponsored by the Company for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 included the following components:

During the fiscal three months ended December 28, 2025, the trustees of the Consumer United Kingdom Pension Plan, a pension plan providing benefits to certain current and former employees in the United Kingdom (the “UK Pension Plan”), completed a full scheme buy-in transaction with a third-party insurance company.

As part of the buy-in, previously held assets were liquidated and transferred to the insurance company in exchange for an annuity policy to mitigate future investment and longevity risk.

The buy-in annuity policy remains an asset of the UK Pension Plan and is considered a Level 3 investment (as described below).

The policy provides substantially all future benefit plan payments to the UK Pension Plan participants.

However, the Company continues to retain the primary benefit obligation until a plan wind-up and buy-out is completed.

Upon the completion of a buy-out, the Company would transfer full responsibility of the UK Pension Plan obligations to the insurance company, at which time the Company would derecognize the assets and liabilities of the UK Pension Plan and realize a settlement loss as a component of net periodic benefit cost.

The Company intends to execute the buy-out conversion in fiscal year 2027.

Net periodic benefit costs for the Plans sponsored by the Company for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 included the following components:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Service cost $ 32 $ 30 $ 21

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Total net periodic benefit cost $ 40 $ 33 $ 30

$ 33 $ 30 $ 15

The service cost component of net periodic benefit cost is presented in the same line items in the Consolidated Statements of Operations where other employee compensation costs are reported, including Cost of sales and Selling, general, and administrative expenses.

The special events component of net periodic benefit cost for the fiscal twelve months ended December 29, 2024 is presented as part of Restructuring expenses in the Consolidated Statement of Operations.

All other components of net periodic benefit costs are presented as part of Other expense, net in the Consolidated Statements of Operations.

During the fiscal twelve months ended December 29, 2024, the Company recognized a settlement loss of $ 6 million associated with global workforce reductions in connection with the 2024 Multi-Year Restructuring Initiative (as defined in Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives”).

(1) During the fiscal twelve months ended December 28, 2025 and December 29, 2024, the Company recognized settlement losses of $ 8 million and $ 6 million, respectively, associated with global workforce reductions in connection with the 2024 Multi-Year Restructuring Initiative (as defined in Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives”).

During the fiscal twelve months ended December 31, 2023, the Company converted a defined benefit plan to a defined contribution plan, which resulted in a settlement loss of $ 14 million, partially offset by a curtailment gain of $ 4 million.

This net balance, as well as the settlement loss recognized in the fiscal twelve months ended December 29, 2024, are disclosed in “Special events” within Net periodic benefit cost.

The following table provides the weighted-average actuarial assumptions related to the Plans sponsored by the Company for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023:

The service cost component of net periodic benefit cost is presented in the same financial statement line items in the Consolidated Statements of Operations where other employee compensation costs are reported, including Cost of sales and Selling, general, and administrative expenses.

The special events component of net periodic benefit cost for the fiscal twelve months ended December 28, 2025 and December 29, 2024 is presented as part of Restructuring expenses in the Consolidated Statement of Operations.

All other components of net periodic benefit cost are presented as part of Other expense, net in the Consolidated Statements of Operations.

The following table provides the weighted-average actuarial assumptions related to the Plans sponsored by the Company for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025 December 29, 2024 December 31, 2023

Net Periodic Benefit Cost

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Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024

Change in Benefit Obligation

Projected benefit obligation—beginning of year

Projected benefit obligation—beginning of fiscal year

Service cost 32 30

Interest cost 28 28

Actuarial (gain) loss (1)

Actuarial gain (1)

( 26 ) ( 39 )

Plan participants’ contributions

1 unchanged sentence

( 41 ) ( 39 )

Benefits paid from plan ( 15 ) ( 22 )

Benefits paid from plan assets

( 18 ) ( 15 )

Effect of exchange rates 80 ( 42 )

Projected benefit obligation — end of year

Projected benefit obligation—end of fiscal year

Change in Plan Assets

Plan assets at fair value—beginning of year

Plan assets at fair value—beginning of fiscal year

Company contributions 28 31

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Effect of exchange rates 48 ( 23 )

Transfers — 552

Plan assets at fair value — end of year

Funded status — end of year

Plan assets at fair value—end of fiscal year

Funded status—end of fiscal year

$ ( 260 ) $ ( 260 )

3 unchanged sentences

Employee-related obligations ( 335 ) ( 335 )

Total recognized on the Consolidated Balance Sheets — end of year

Total recognized on the Consolidated Balance Sheets—end of fiscal year

$ ( 260 ) $ ( 260 )

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Total before tax effects $ 158 $ 165

Accumulated benefit obligations — end of year

(1) The actuarial gain in the fiscal twelve months ended December 29, 2024 was primarily related to an increase in the discount rate.

The actuarial loss in the fiscal twelve months ended December 31, 2023 was primarily related to a decrease in the discount rates and an increase in the rate of compensation.

The amounts recognized in net periodic benefit cost and Other comprehensive (loss) income related to the Plans sponsored by the Company for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 were as follows:

Accumulated benefit obligations—end of fiscal year

(1) The actuarial gain in the fiscal twelve months ended December 28, 2025 and December 29, 2024 were both primarily related to an increase in the discount rate.

The amounts recognized in net periodic benefit cost and Other comprehensive income (loss) related to the Plans sponsored by the Company for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Net periodic benefit cost $ 40 $ 33 $ 30

Net actuarial (gain) loss

( 8 ) ( 36 ) 118

Amortization of net actuarial (gain) loss

( 14 ) ( 9 ) 4

Effect of exchange rates 15 ( 7 ) 9

Total (income) loss recognized in Other comprehensive (loss) income, before tax $ ( 52 ) $ 131 $ ( 92 )

Total recognized in net periodic benefit cost and Other comprehensive (loss) income $ ( 19 ) $ 161 $ ( 77 )

Total (income) loss recognized in Other comprehensive income (loss), before tax ( 7 ) ( 52 ) 131

Total recognized in net periodic benefit cost and Other comprehensive income (loss) $ 33 $ ( 19 ) $ 161

The Plans are funded in accordance with local regulations.

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For certain plans, funding is not a common practice, as funding provides no economic benefit, and consequently, these plans are not funded.

The schedule of projected future benefit payments from the Plans for the ten succeeding fiscal years is as follows:

The schedule of projected future benefit payments from the Plans sponsored by the Company for the ten succeeding fiscal years is as follows:

(Dollars in Millions)

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Plan assets are diversified by asset class in order to reduce volatility of overall results and to take advantage of various investment opportunities.

The Company’s retirement plan assets as of December 29, 2024 were primarily comprised of debt, equity, and other assets.

The Company’s retirement plan assets as of December 28, 2025 were primarily comprised of debt instruments, equity securities, buy-in annuity policies, and other assets.

Other assets are mainly comprised of monetary assets such as cash, insurance contracts, and insured benefits to employees allocated from a pension trustee.

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Investment risk exposure is carefully controlled with plan assets rebalanced to target allocations on a periodic basis and continued monitoring through investment portfolio reviews.

The asset allocation as of December 29, 2024 and December 31, 2023 and target allocations for 2025 related to the Plans are as follows:

The asset allocation as of December 28, 2025 and December 29, 2024 and target allocations for 2026 related to the Plans sponsored by the Company are as follows:

Percent of Plan Assets Target Allocation

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Debt instruments

49 % 54 % 58 %

Equity securities

14 % 19 % 13 %

Other assets 37 % 27 % 29 %

Buy-in annuity policies

Total plan assets 100 % 100 % 100 %

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Substantially all equity securities are classified within Level 1 of the valuation hierarchy.

• Buy-in annuity policies —Buy-in annuity policy values are determined on a replacement policy value basis by discounting the projected cash flows of the plan members using a discount rate based upon the risk-free rate adjusted for the estimated insurer premium and credit risk.

Fair value of the UK Pension Plan buy-in annuity is set equal to the estimated contract value.

These assets are categorized as Level 3.

• Other assets —Other assets include cash and money markets held within an account that guarantee a fixed percentage return.

Substantially all cash and monetary assets are classified within Level 1 of the valuation hierarchy.

As of December 29, 2024, insurance contracts with a defined return are classified as Level 3 assets within the valuation hierarchy.

Other assets also included insured benefits to employees allocated from a pension Trustee.

As of December 28, 2025 and December 29, 2024, insurance contracts with a defined return are classified as Level 3 assets within the valuation hierarchy.

Other assets also include insured benefits to employees allocated from a pension trustee.

The value of these assets is determined based on the vested value of the underlying employee obligations multiplied by the publicly available coverage ratio of the trustee.

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Assets in the Level 2 category have a quoted market price.

The following table sets forth the Plans’ investments measured at fair value as of December 29, 2024 and December 31, 2023:

The following tables set forth the Plans’ investments measured at fair value as of December 28, 2025 and December 29, 2024:

Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

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Equity securities

Buy-in annuity policies

— — 256 — 256

80 — 175 — 255

Commingled funds

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$ 81 $ 52 $ 431 $ 8 $ 572

(1) The activity of the Level 3 other assets was not significant.

Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (1)

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Commingled funds

— 101 — 8 109

Total investments at fair value

$ 52 $ 315 $ 151 $ 8 $ 526

(1) The activity of the Level 3 other assets consists of $ 127 million transfers from J&J and $ 19 million of returns during the year resulting from additional vested benefits and the trustee’s coverage ratio.

(1) The activity of the Level 3 other assets was not significant.

The changes in plan assets valued using significant unobservable inputs (Level 3) were as follows for the fiscal twelve months ended December 28, 2025:

Buy-in Annuity Policy Contract Plan Assets

Fiscal Twelve Months Ended

(Dollars in Millions) December 28, 2025

Fair value of plan assets, beginning of fiscal year

Net realized and unrealized gains

Net purchases, issuances, and settlements (1)

Currency translation

Fair value of plan assets, end of fiscal year

(1) Net purchases, issuances, and settlements primarily related to the purchase of the UK Pension Plan buy-in annuity policy.

Participation in J&J Plans

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retirees and their dependents, through its other postretirement benefit plans.

J&J’s defined benefit pension plans were accounted for as multiemployer pension plans, and assets and liabilities associated with these plans were not reflected on the Consolidated Balance Sheets.

J&J’s defined benefit pension plans were accounted

for as multiemployer pension plans, and assets and liabilities associated with these plans were not reflected on the Consolidated Balance Sheets.

After the Separation, the Company no longer had any multiemployer plans, as they were all converted to a multiple-employer pension plan or a single-employer pension plan.

The Consolidated Statements of Operations for the fiscal twelve months ended December 31, 2023 and January 1, 2023 include expense allocations for these benefits, which were determined using a proportional allocation method.

Total benefit plan expense allocated to the Company amounted to $ 17 million and $ 54 million for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively.

The Consolidated Statement of Operations for the fiscal twelve months ended December 31, 2023 includes expense allocations for these benefits, which were determined using a proportional allocation method.

Total benefit plan expense allocated to the Company amounted to $ 17 million for the fiscal twelve months ended December 31, 2023.

No allocations were made subsequent to the fiscal three months ended July 2, 2023, during which Kenvue became a fully independent company.

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The Company matches a percentage of each employee’s contributions consistent with the provisions of the plan for which they are eligible.

Total contributions attributable to the Company’s employees were $ 108 million, $ 46 million, and $ 14 million for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Total contributions attributable to the Company’s employees were $ 121 million, $ 108 million, and $ 46 million for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

Post-Employment Benefit Plans

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As a result, J&J recognized the cost of this benefit as it was earned by the employee as required by ASC 712, Compensation—non-retirement post-employment benefits.

The cost of this benefit allocated to the Company in the fiscal twelve months ended December 31, 2023 and January 1, 2023 was approximately $ 18 million and $ 46 million, respectively, and is reflected as an expense in the Consolidated Statements of Comprehensive Income.

The cost of this benefit allocated to the Company in the fiscal twelve months ended December 31, 2023 was approximately $ 18 million and is reflected as an expense in the Consolidated Statement of Comprehensive Income.

No allocations were made subsequent to the fiscal three months ended July 2, 2023, during which Kenvue became a fully independent company.

The Company has operating leases for space, vehicles, manufacturing equipment, and data processing equipment.

The Company has operating leases primarily for space, vehicles, and manufacturing equipment.

In connection with the Separation, J&J and Kenvue also entered into various lease agreements, in which the Company subleased properties from J&J.

The Company has finance leases, which primarily include the Company’s new global and North America corporate headquarters in Summit, New Jersey (as described in the “—Global and North America Headquarters Lease” section below).

The Company did not have significant finance leases during the fiscal twelve months ended December 31, 2023 and January 1, 2023.

The Company did not have significant finance leases during the fiscal twelve months ended December 31, 2023.

The Company’s lease agreements do not contain any significant residual value guarantees or restrictive covenants.

1 unchanged sentence

On April 20, 2023, the Company entered into a long-term lease for a newly renovated global and North America corporate headquarters building and a newly constructed research and development building in Summit, New Jersey (the “Global and North America Headquarters Lease”).

The Company expects to officially open the new global and North America corporate headquarters in March 2025.

In March 2025, the Company began operating out of the new global and North America corporate headquarters.

The relocation to this new campus from multiple U.S.-based locations will continue through 2026 when the new research and development building is expected to be complete.

When construction is completed, the campus will encompass approximately 290,000 square feet.

The Global and North America Headquarters Lease collectively includes the lease associated with the global and North America corporate headquarters building (the “Corporate Office Lease”), the lease associated with the land where the research and development building is under construction (the “State-of-the-Art Lab Facility Lease”), and the lease associated with land to be used for amenities (the “Amenities Lease”).

The Corporate Office Lease and the State-of-the-Art Lab Facility Lease, each accounted for as a finance lease, commenced in January 2024 and May 2024, respectively.

1 unchanged sentence

Each finance lease liability was calculated utilizing an incremental borrowing rate of 4.75 % to discount lease payments over the expected term.

The Amenities Lease is expected to commence in January 2026.

The Amenities Lease, also accounted for as a finance lease, commenced in October 2025.

ROU Assets and Lease Liabilities

ROU assets and lease liabilities associated with the Company's operating leases and finance leases are included on the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023 as follows:

As of December 28, 2025 and December 29, 2024, ROU assets and lease liabilities associated with the Company’s operating leases and finance leases were included on the Consolidated Balance Sheets as follows:

Operating Leases Finance Leases

12 unchanged sentences

Total lease liabilities $ 150 $ 112 $ 135 $ 121

* The Company did not have significant finance leases as of December 31, 2023.

(1) Includes leases with J&J of $ 26 million of ROU assets, $ 11 million of current lease liabilities, and $ 15 million of non-current lease liabilities.

(2) Includes leases with J&J of $ 35 million of ROU assets, $ 11 million of current lease liabilities, and $ 24 million of non-current lease liabilities.

The operating lease costs for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 were as follows:

The operating lease costs for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Operating lease costs $ 50 $ 48 $ 48

$ 48 $ 48 $ 42

For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, sublease income and variable operating lease costs were not significant.

For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, finance lease costs, including amortization of ROU assets and interest on lease liabilities, were not significant.

For the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, sublease income and variable operating lease costs were not significant.

For the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, finance lease costs, including amortization of ROU assets and interest on lease liabilities, were not significant.

Maturity of Lease Liabilities

1 unchanged sentence

Fiscal Twelve Months Ended

(Dollars in Millions) Operating Leases

Finance Leases

(Dollars in Millions) Operating Leases Finance Leases Total

2026 $ 48 $ 1 $ 49

4 unchanged sentences

Other Information

Cash paid for amounts included in the measurement of lease liabilities related to operating leases for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 was as follows:

Cash paid for amounts included in the measurement of lease liabilities related to operating leases for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 was as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Cash paid for amounts included in the measurement of lease liabilities:

Operating leases $ 59 $ 50 $ 49

$ 50 $ 49 $ 43

For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, cash paid for amounts included in the measurements of lease liabilities related to finance leases was not significant.

ROU assets obtained in exchange for new lease liabilities related to operating leases and finance leases for the fiscal twelve months ended December 29, 2024 and December 31, 2023 was as follows:

For the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, cash paid for amounts included in the measurements of lease liabilities related to finance leases was not significant.

ROU assets obtained in exchange for new lease liabilities related to operating leases and finance leases for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 was as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

ROU assets obtained in exchange for new lease liabilities:

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* The Company did not have significant finance leases during the fiscal twelve months ended December 31, 2023.

For the fiscal twelve months ended January 1, 2023, the amount of ROU assets obtained in exchange for new lease liabilities was not material.

Lease Term and Discount Rate

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's operating and finance leases, excluding short-term leases:

December 29, 2024 December 31, 2023 January 1, 2023

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company’s operating and finance leases, excluding short-term leases, as of December 28, 2025, December 29, 2024, and December 31, 2023.

December 28, 2025 December 29, 2024 December 31, 2023

Weighted-average remaining lease term:

Operating leases

5 years 5 years 7 years

Finance leases

Operating leases 6 years 5 years 5 years

Finance leases 34 years 35 years *

Weighted-average discount rate:

Operating leases 4.8 % 3.9 % 3.6 %

3.9 % 3.6 % 2.3 %

Finance leases 4.9 % 5.0 % *

* The Company did not have significant finance leases during the fiscal twelve months ended December 31, 2023 and January 1, 2023.

* The Company did not have significant finance leases during the fiscal twelve months ended December 31, 2023.

Accrued and Other Liabilities

Accrued liabilities consisted of:

As of December 28, 2025 and December 29, 2024, Accrued liabilities and Other liabilities, respectively, consisted of:

(Dollars in Millions) December 28, 2025 December 29, 2024

6 unchanged sentences

$ 1,159 $ 1,132

Other liabilities, non-current, consisted of:

(Dollars in Millions) December 28, 2025 December 29, 2024

7 unchanged sentences

Accumulated Other Comprehensive Loss

Components of Accumulated other comprehensive loss consisted of the following:

(Dollars in Millions) Foreign Currency Translation

Employee Benefit Plans (1)

Gain (Loss) on Derivatives and Hedges (2)

The following table summarizes the changes in the accumulated balances for each component of Accumulated other comprehensive loss during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

(Dollars in Millions) Foreign

Currency Translation Employee Benefit Plans (1)

Gain on Derivatives and Hedges (2)

Total Accumulated Other Comprehensive Loss

January 1, 2023 $ ( 5,476 ) $ 12 $ 9 $ ( 5,455 )

Other comprehensive (loss) income before reclassifications ( 1,045 ) 66 12 ( 967 )

Amounts reclassified to the Consolidated Statement of Operations

— ( 3 ) ( 2 ) ( 5 )

Net current period Other comprehensive (loss) income ( 1,045 ) 63 10 ( 972 )

January 1, 2023 ( 5,476 ) 12 9 ( 5,455 )

Other comprehensive income (loss) before reclassifications 219 ( 181 ) 66 104

Amounts reclassified to the Consolidated Statement of Operations — 2 ( 28 ) ( 26 )

— 2 ( 28 ) ( 26 )

Net current period Other comprehensive income (loss) 219 ( 179 ) 38 78

2 unchanged sentences

Amounts reclassified to the Consolidated Statement of Operations — 8 ( 17 ) ( 9 )

— 8 ( 17 ) ( 9 )

Net current period Other comprehensive (loss) income ( 783 ) 37 ( 23 ) ( 769 )

December 29, 2024 ( 6,040 ) ( 130 ) 24 ( 6,146 )

Other comprehensive income (loss) before reclassifications 1,178 ( 9 ) 27 1,196

Amounts reclassified to the Consolidated Statement of Operations — 14 ( 23 ) ( 9 )

Net current period Other comprehensive income 1,178 5 4 1,187

December 28, 2025 $ ( 4,862 ) $ ( 125 ) $ 28 $ ( 4,959 )

(1) Net change for the fiscal twelve months ended December 31, 2023 includes Separation adjustments of $ 77 million in connection with transfers of certain pension plans by J&J to the Company.

(2) For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, the Company recorded a total after-tax change in Accumulated other comprehensive loss of $( 23 ) million, $ 38 million, and $ 10 million, respectively, related to its cash flow hedge portfolio.

(2) For the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, the Company recorded a total after-tax change in Accumulated other comprehensive loss of $ 4 million, $( 23 ) million, and $ 38 million, respectively, related to its cash flow hedge portfolio.

Amounts in Accumulated other comprehensive loss are presented net of the related tax impact.

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For additional details on comprehensive income, see the Consolidated Statements of Comprehensive Income.

The provision (benefit) for taxes allocated to the components of Accumulated other comprehensive loss before reclassification was as follows:

The provision (benefit) for taxes allocated to the components of Accumulated other comprehensive loss before reclassification for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 was as follows:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Foreign currency translation $ ( 13 ) $ ( 6 ) $ ( 12 )

$ ( 6 ) $ ( 12 ) $ ( 91 )

Employee benefit plans 2 14 50

The provision (benefit) for taxes allocated to gain (loss) on derivatives and hedges before reclassification was $ 11 million for the fiscal twelve months ended December 29, 2024.

The provision (benefit) for taxes allocated to gain (loss) on derivatives and hedges before reclassification was not significant for the fiscal twelve months ended December 31, 2023 and January 1, 2023.

The provision (benefit) for taxes allocated to the reclassifications from Accumulated other comprehensive loss to the

Consolidated Statements of Operations was not significant for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023.

The provision (benefit) for taxes allocated to gain on derivatives and hedges before reclassifications was $ 4 million and $ 11 million for the fiscal twelve months ended December 28, 2025 and December 29, 2024, respectively.

The provision (benefit) for taxes allocated to gain on derivatives and hedges before reclassifications was not significant for the fiscal twelve months ended December 31, 2023.

The provision (benefit) for taxes allocated to the reclassifications from Accumulated other comprehensive loss to the Consolidated Statements of Operations was not significant for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023.

Stock-Based Compensation

7 unchanged sentences

On August 23, 2023 (the “Conversion Date”), J&J equity-based awards held by Kenvue employees were accounted for as if they were forfeited by J&J and generally replaced by Kenvue equity-based awards under the Kenvue 2023 Plan (see “—Kenvue 2023 Plan” below for additional details) with terms consistent to those applicable to the J&J awards, subject to adjustments to the number of underlying awards and option exercise prices to preserve the award’s value, except for certain performance-based awards that were replaced with Kenvue RSU awards.

The awards were converted using the conversion ratio that was determined in accordance with the Employee Matters Agreement (as defined in Note 12, “Relationship with J&J—Transactions with J&J, Including the Separation Agreement”).

The awards were converted using the conversion ratio that was determined in accordance with the employee matters agreement entered into with J&J.

This change in the awards was considered to be a modification for accounting purposes.

As part of the deemed forfeiture of the J&J awards, the J&J performance criteria applicable to any outstanding performance-based awards was deemed satisfied at the target level, unless two years of service were completed in the performance period, in which case performance was deemed satisfied at the level of actual performance for such years.

As part of the deemed forfeiture of the J&J awards, the J&J performance criteria applicable to any outstanding performance-based awards were deemed satisfied at the target level, unless two years of service were completed in the performance period, in which case performance was deemed satisfied at the level of actual performance for such years.

All other vesting terms and conditions were not affected by the conversion.

9 unchanged sentences

These stock options were deemed granted with an exercise price equal to the original exercise price provided within the original J&J awards, as modified by the conversion ratio described above.

All stock options will be vested by January 2027.

options will be vested by January 2027.

These stock options provide for accelerated vesting in certain change-in-control scenarios.

21 unchanged sentences

Kenvue 2023 Plan

In March 2023, the Company’s Board approved the 2023 Long-Term Incentive Plan (the “Kenvue 2023 Plan”) which provides for the grant of non-qualified stock options, incentive stock options, stock appreciation rights, RSUs, PSUs, other stock-based awards, and cash awards to eligible employees, non-employee directors, independent contractors, and consultants of the Company and its subsidiaries and affiliated entities.

In March 2023, the Company’s Board approved the 2023 Long-Term Incentive Plan (the “Kenvue 2023 Plan”) which provides for the grant of non-qualified stock options, incentive stock options, RSUs, PSUs, other stock-based awards, and cash awards to eligible employees, non-employee directors, independent contractors, and consultants of the Company and its subsidiaries and affiliated entities.

Stock-based compensation granted pursuant to the Kenvue 2023 Plan is denominated in shares of Kenvue common stock.

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The expense will be amortized over the requisite service period of the awards, which ranges from one to three years .

The components and classification of stock-based compensation expense for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, were as follows:

The components and classification of stock-based compensation expense for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, were as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023 (4)

Stock options $ 41 $ 84 $ 90

RSUs 97 152 76

PSUs 18 22 20

Total stock-based compensation expense (2)

1 unchanged sentence

Cost of sales (3)

$ 26 $ 100 $ 67

Selling, general, and administrative expenses (3)

1 unchanged sentence

$ 136 $ 254 $ 188

Stock-based compensation expense includes $ 2 million and $ 26 million for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively, of allocated charges from J&J based on percentage attribution related to J&J employees providing services to the Company.

(1) The reversal in stock-based compensation expense attributable to PSUs during the fiscal twelve months ended December 28, 2025 is primarily driven by a reduction in the estimated achievement of the specified performance metrics for certain Performance PSUs.

(2) The decrease in stock-based compensation expense during the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024 was driven primarily by forfeitures of unvested stock-based awards and the vesting of J&J stock-based awards that were converted into Kenvue awards, which had a higher grant date fair value and shorter expense attribution period as compared to stock-based awards outstanding as of December 28, 2025.

(3) During the fiscal three months ended March 30, 2025, the Company made a refinement to the methodology of its stock-based compensation expense allocations, which resulted in a reduction to Cost of sales and an increase to Selling, general, and administrative expenses for the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024 and December 31, 2023.

(4) Stock-based compensation expense includes $ 2 million for the fiscal twelve months ended December 31, 2023 of allocated charges from J&J based on percentage attribution related to J&J employees providing services to the Company.

No allocations were made subsequent to the fiscal three months ended July 2, 2023, during which Kenvue became a fully independent company.

1 unchanged sentence

(Dollars in Millions)

Stock Options

December 29, 2024

Stock Options December 28, 2025

Unrecognized stock-based compensation expense $ 38

Weighted-average remaining requisite service period

Weighted-average remaining requisite service period 1.09 years

Unrecognized stock-based compensation expense $ 100

Weighted-average remaining requisite service period

Weighted-average remaining requisite service period 1.45 years

Unrecognized stock-based compensation expense $ 5

Weighted-average remaining requisite service period

(1) Unrecognized stock-based compensation expense for the Performance PSUs (as defined in “—Restricted Stock Units and Performance Stock Units” below) is calculated based on the Company’s best estimate of achievement of the specified performance metrics.

Weighted-average remaining requisite service period 0.79 years

(1) Unrecognized stock-based compensation expense and the related weighted-average remaining requisite service period for the Performance PSUs is calculated based on the Company’s best estimate of achievement of the specified performance metrics.

Stock Options

2 unchanged sentences

The grant date fair value of each stock option granted is estimated on the grant date using the Black-Scholes option valuation model.

The weighted-average assumptions used in calculating the grant date fair value of stock options granted during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, were as follows:

The weighted-average assumptions used in calculating the grant date fair value of stock options granted during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, were as follows:

Fiscal Twelve Months Ended

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025 December 29, 2024 December 31, 2023

Expected volatility (1)

12 unchanged sentences

Treasury yield curve in effect as of the grant date for stock options granted under both the Kenvue 2023 Plan and the J&J Plans.

(4) For stock options granted under the Kenvue 2023 Plan during the fiscal twelve months ended December 29, 2024, expected term is calculated as the average of the vesting periods and the contractual terms of the stock options given the lack of trading history of Kenvue common stock as of the time of valuation.

(4) For stock options granted under the Kenvue 2023 Plan during the fiscal twelve months ended December 28, 2025 and December 29, 2024, expected term is calculated as the average of the vesting periods and the contractual terms of the stock options given the lack of trading history of Kenvue common stock as of the time of valuation.

For stock options granted under the Kenvue 2023 Plan during the fiscal twelve months ended December 31, 2023, expected term was consistent with the historical experiences of J&J for awards similar to those in the Kenvue population.

6 unchanged sentences

(Dollars in Millions)

Options outstanding as of December 31, 2023

64,188 $ 20.60 7.2 years $ 83

Options outstanding as of December 29, 2024 66,885 $ 20.42 6.9 years $ 95

Options granted 9,826 23.29

1 unchanged sentence

Options canceled/forfeited ( 7,177 ) 21.37

( 5,338 ) 21.27

Options outstanding as of December 29, 2024

66,885 $ 20.42 6.9 years $ 95

Options exercisable as of December 29, 2024

29,100 $ 19.94 5.0 years $ 54

The weighted-average grant date fair value of stock options granted was $ 3.17 , $ 3.82 , and $ 23.23 in the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

The total intrinsic value of stock options exercised was $ 21 million, $ 96 million, and $ 64 million in the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Options outstanding as of December 28, 2025 63,121 $ 20.85 6.2 years $ 5

Options exercisable as of December 28, 2025 39,814 $ 20.68 5.1 years $ 5

The weighted-average grant date fair value of stock options granted was $ 4.20 , $ 3.17 , and $ 3.82 in the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

The total intrinsic value of stock options exercised was $ 24 million, $ 21 million, and $ 96 million in the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

Cash proceeds received from the exercise of stock options was $ 122 million in the fiscal twelve months ended December 28, 2025.

The tax benefit associated with cash proceeds received from the exercise of stock options in the fiscal twelve months ended December 29, 2024 was $ 4 million.

The tax benefit associated with cash proceeds received from the exercise of stock options was $ 5 million in the fiscal twelve months ended December 28, 2025.

Restricted Stock Units and Performance Stock Units

11 unchanged sentences

The grant date fair value of each Performance PSU granted, inclusive of the fair value associated with the achievement of the specified performance metrics and the relative total shareholder return goal, is estimated on the grant date using the Monte Carlo valuation model.

The weighted-average assumptions used in calculating the fair value of Performance PSUs granted during the fiscal twelve months ended December 29, 2024 were as follows:

The weighted-average assumptions used in calculating the fair value of Performance PSUs granted during the fiscal twelve months ended December 28, 2025 and December 29, 2024 were as follows:

Fiscal Twelve Months Ended

December 29, 2024

December 28, 2025 December 29, 2024

Expected volatility (1)

22.5 % 21.3 %

Risk-free rate (2)

12 unchanged sentences

The grant date fair value for the net income per share goal of each PSU was estimated on the grant date using the fair market value of J&J shares at the grant date, discounted by the expected dividend yield, as the PSUs did not have dividend participation rights during the vesting period, and the fair value for the relative total shareholder return of each PSU was estimated on the grant date using the Monte Carlo valuation model.

As discussed in “—J&J Plans and Conversion of J&J Awards” above, the PSUs granted under the J&J Plans were replaced with Kenvue RSU awards, and as such, there are none outstanding as of December 29, 2024.

As discussed in “—J&J Plans and Conversion of J&J Awards” above, the PSUs granted under the J&J Plans were replaced with Kenvue RSU awards, and as such, there are none outstanding following the Conversion Date.

Restricted Stock Unit and Performance Stock Unit Activity

5 unchanged sentences

Shares as of December 29, 2024 13,633 $ 20.77 2,675 $ 21.43

13,298 $ 22.49 1,630 $ 23.58

Granted 4,966 23.16 1,319 25.44

( 5,540 ) 22.64 ( 1 ) 23.22

Issued ( 7,121 ) 21.46 ( 2 ) 23.22

Canceled/forfeited ( 1,537 ) 21.32 ( 1,093 ) 22.80

( 2,207 ) 20.74 ( 181 ) 22.15

Change due to performance and/or market condition achievement — — ( 1,809 ) 21.97

Shares as of December 28, 2025 9,941 $ 21.31 1,090 $ 22.61

13,633 $ 20.77 $ 2,675 $ 21.43

The weighted-average grant date fair value of RSUs granted was $ 20.37 and $ 153.69 in the fiscal twelve months ended December 31, 2023, and January 1, 2023, respectively.

The aggregate fair value of RSUs issued was $ 1 million and $ 44 million in the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively.

The weighted-average grant date fair value of PSUs granted was $ 23.57 and $ 178.45 in the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively.

The aggregate fair value of PSUs issued was $ 0 million and $ 4 million in the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively.

The weighted-average grant date fair value of RSUs granted was $ 19.10 and $ 20.37 in the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively.

The aggregate fair value of RSUs issued was $ 125 million and $ 1 million in the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively.

The weighted-average grant date fair value of PSUs granted was $ 18.61 and $ 23.57 in the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively.

The aggregate fair value of PSUs issued was $ 0 million for both the fiscal twelve months ended December 29, 2024 and December 31, 2023.

Relationship with J&J

5 unchanged sentences

Similarly, certain of the Company’s operations provided support to J&J’s affiliates and related costs for support were charged to J&J’s affiliates.

Allocated costs included in Cost of sales in the Consolidated Statements of Operations related to enterprise-wide support primarily consisting of facilities, insurance, logistics, quality, and compliance, which were predominantly allocated based on Net sales.

Allocated costs included in Cost of sales in the Consolidated Statement of Operations related to enterprise-wide support primarily consisting of facilities, insurance, logistics, quality, and compliance, which were predominantly allocated based on Net sales.

Allocated costs included in Selling, general, and administrative expenses primarily related to finance, human resources, benefits administration, procurement support, information technology, legal, corporate strategy, corporate governance, other professional services, and general commercial support functions, and were predominantly allocated based on Net sales or headcount.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Basis of Presentation.”

Prior to Kenvue becoming a fully independent company, the allocations (excluding stock-based compensation expense), net of costs charged to J&J’s affiliates reflected in the Consolidated Statements of Operations for the fiscal twelve months ended December 31, 2023 and January 1, 2023 were as follows:

Prior to Kenvue becoming a fully independent company, the allocations (excluding stock-based compensation expense), net of costs charged to J&J’s affiliates reflected in the Consolidated Statement of Operations for the fiscal twelve months ended December 31, 2023 were:

Fiscal Twelve Months Ended

(Dollars in Millions) December 31, 2023 January 1, 2023

(Dollars in Millions) December 31, 2023

Cost of sales $ 25

2 unchanged sentences

Management believes these cost allocations are a reasonable reflection of the utilization of services provided to, or the benefit derived by, the Company during the periods presented.

The allocations may not, however, be indicative of the actual expenses that would have been incurred had the Company operated as a standalone public company.

Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen

organizational structure, whether functions were outsourced or performed by the Company’s employees, and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology, and infrastructure.

The allocations may not, however, be indicative of the actual expenses

that would have been incurred had the Company operated as a standalone public company.

Actual costs that may have been incurred if the Company had been a standalone public company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by the Company’s employees, and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology, and infrastructure.

No allocations were made subsequent to the fiscal three months ended July 2, 2023, during which Kenvue became a fully independent company.

Net Transfers to J&J

Net transfers to J&J are included in Net Investment from J&J in the Consolidated Statements of Stockholders' Equity and within financing activities in the Consolidated Statements of Cash Flows and represent the net effect of transactions between the Company and J&J.

Net transfers to J&J are included in Net Investment from J&J in the Consolidated Statement of Stockholders’ Equity and within financing activities in the Consolidated Statement of Cash Flows and represent the net effect of transactions between the Company and J&J.

No transactions were recorded in Net transfers to J&J subsequent to the fiscal three months ended July 2, 2023, during which Kenvue became a fully independent company.

The components of Net transfers to J&J for the fiscal twelve months ended December 31, 2023 and January 1, 2023 were as follows:

The components of Net transfers to J&J for the fiscal twelve months ended December 31, 2023 were:

Fiscal Twelve Months Ended

(Dollars in Millions) December 31, 2023 January 1, 2023

(Dollars in Millions) December 31, 2023

Cash pooling and general financing activities $ ( 446 )

1 unchanged sentence

Taxes deemed settled with J&J

Allocated derivative and hedging gains — 65

Net transfers to J&J as reflected in the Consolidated Statements of Cash Flows

$ ( 274 ) $ ( 1,597 )

( 34 ) ( 153 )

Net transfers to J&J as reflected in the Consolidated Statements of Stockholders' Equity

$ ( 308 ) $ ( 1,750 )

(1) Other primarily relates to the impact of the change in accounting principle for Global Intangible Low-Tax Income (“GILTI”) in the fiscal twelve months ended December 31, 2023 and January 1, 2023.

Net transfers to J&J as reflected in the Consolidated Statement of Cash Flows

Net transfers to J&J as reflected in the Consolidated Statement of Stockholders’ Equity

(1) Other primarily relates to the impact of the change in accounting principle for Global Intangible Low-Tax Income (“GILTI”).

Transactions with J&J, Including the Separation Agreement

In connection with the Separation, Kenvue entered into various agreements with J&J, including the Separation Agreement.

In connection with the Separation, Kenvue entered into various agreements with J&J, including the Separation Agreement, which created a framework for the Company’s ongoing relationship with J&J following the completion of the Kenvue IPO.

In connection with the terms of the Separation Agreement, certain assets and liabilities included on the pre-Separation balance sheet were retained by J&J and certain assets and liabilities not included on the pre-Separation balance sheet were transferred to Kenvue.

1 unchanged sentence

The impact on net assets primarily represents 1) recognition of balances with J&J including indemnification matters, 2) changes to income tax assets and liabilities as a result of change in the basis of presentation, 3) contribution of certain liabilities including pension and employee-related obligations from J&J, 4) the retention of assets and liabilities by J&J of certain Deferred Local Businesses (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Variable Interest Entities and Net Economic Benefit Arrangements”), and 5) other assets and liability transfers between Kenvue and J&J in connection with the Separation.

The Separation Agreement sets forth certain agreements between J&J and Kenvue regarding, among other matters:

• the principal corporate actions and internal reorganization pursuant to which J&J transferred the Consumer Health Business to Kenvue;

• the allocation of assets and liabilities to J&J and Kenvue;

• J&J’s and Kenvue’s respective rights and obligations with respect to the Kenvue IPO;

• certain matters with respect to any subsequent distribution or other disposition by J&J of the shares of Kenvue common stock owned by J&J following the Kenvue IPO (the “Distribution”);

• other agreements governing aspects of Kenvue’s relationship with J&J following the Kenvue IPO.

In connection with the Kenvue IPO, J&J and Kenvue also entered into various other material agreements.

These agreements were entered into on May 3, 2023, unless otherwise indicated, and consist of the following:

The agreements entered into with J&J include, but are not limited to:

• the Separation Agreement, which governs aspects of Kenvue’s relationship with J&J following the Kenvue IPO;

• a tax matters agreement (the “Tax Matters Agreement”), which governs J&J’s and Kenvue’s respective rights, responsibilities, and obligations with respect to all tax matters, including tax liabilities, tax attributes, tax contests, and tax returns (see “—Tax Indemnification” below);

• an employee matters agreement (the “Employee Matters Agreement”), which addresses certain employment, compensation, and benefits matters, including the allocation and treatment of certain assets and liabilities relating to Kenvue’s employees and compensation and benefit plans and programs in which Kenvue’s employees participate prior to the date of the Distribution;

• an intellectual property agreement, which governs J&J’s and Kenvue’s respective rights, responsibilities, and obligations with respect to intellectual property matters, excluding certain intellectual property matters with respect to trademarks;

• a trademark phase-out license agreement, dated as of April 3, 2023, and pursuant to which J&J granted to Kenvue a license to use certain trademarks owned by J&J on a transitional basis following the completion of the Kenvue IPO;

• a transition services agreement (the “Transition Services Agreement”), pursuant to which J&J provides to Kenvue certain services for terms of varying duration following the Kenvue IPO;

• a transition manufacturing agreement (the “Transition Manufacturing Agreement”), pursuant to which J&J provides to Kenvue certain manufacturing services for terms of varying duration following the Kenvue IPO.

• a registration rights agreement, pursuant to which Kenvue granted to J&J certain registration rights with respect to the shares of Kenvue common stock owned by J&J following the completion of the Kenvue IPO.

In connection with the Separation, J&J and Kenvue also entered into various operating lease agreements, in which the Company subleased properties from J&J.

See Note 8, “Leases,” for more information.

The Company had the following balances and transactions with J&J and its affiliates, primarily in connection with the Tax Matters Agreement, Transition Services Agreement, and the Transition Manufacturing Agreement, reported in the Consolidated Financial Statements:

5 unchanged sentences

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Cost of sales $ 168 $ 203 $ 148

Selling, general, and administrative expenses $ 9 $ 203 $ 189

In April 2025, the Company completed its Transition Services Agreement program.

Consistent with the program’s plan, the Company finalized the exit of more than 2,300 transition services.

Tax Indemnification

1 unchanged sentence

Allocation of Taxes

With respect to taxes other than those incurred in connection with the Separation and the Distribution, the Tax Matters Agreement provides that Kenvue will generally indemnify J&J for 1) any taxes of Kenvue for all periods after the Distribution and 2) any taxes of Kenvue or J&J for periods prior to the Distribution to the extent attributable to the Consumer Health Business.

With respect to taxes other than those incurred in connection with the Separation and any subsequent distribution or the disposition by J&J of the shares of Kenvue stock owned by J&J following the Kenvue IPO (the “Distribution”), the Tax Matters Agreement provides that Kenvue will generally indemnify J&J for 1) any taxes of Kenvue for all periods after the Distribution and 2) any taxes of Kenvue or J&J for periods prior to the Distribution to the extent attributable to the Consumer Health Business.

J&J will generally indemnify Kenvue for 1) any taxes of J&J for all periods after the Distribution and 2) any taxes of Kenvue or J&J for periods prior to the Distribution to the extent attributable to the business and operations conducted by J&J other than the Consumer Health Business.

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With respect to taxes incurred in connection with the Separation and the Distribution, Kenvue will generally be required to indemnify J&J for any taxes resulting from the failure of certain steps of the Separation and the Distribution to qualify for their intended tax treatment, where such taxes are attributable to actions or omissions by Kenvue.

In addition, during the time period ending two years after the date of the Distribution, August 23, 2025, covenants are in place that will limit or restrict certain actions, including share issuances, business combinations, sales of assets, and similar transactions by Kenvue.

The Company does not believe that the above covenants have a material impact on the Company to date.

The Company believes that it has complied with these requirements to date.

The Company recorded a net liability totaling approximately $ 104 million and $ 168 million for income and non-income indemnification tax payables and refunds, unrecognized tax benefits, and associated interest due to J&J as Prepaid expenses and other receivables and Accrued liabilities for current assets and current liabilities, respectively, and to Other assets and Other liabilities for non-current assets and non-current liabilities, respectively, on the Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023, respectively.

In addition, during the time period ending two years after the date of the Distribution, August 23, 2025, covenants were in place that limited or restricted certain actions, including share issuances, business combinations, sales of assets, and similar transactions by Kenvue.

The above covenants did not have a material impact on the Company, and the Company believes that it complied with these requirements through August 23, 2025.

The Company had a net liability to J&J totaling approximately $ 61 million and $ 104 million for income and non-income indemnification tax payables and refunds, unrecognized tax benefits, and associated interest due as Prepaid expenses and other receivables and Accrued liabilities for current assets and current liabilities, respectively, and to Other assets and Other liabilities for non-current assets and non-current liabilities, respectively, on the Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024, respectively.

Debt Financing Transactions and Kenvue IPO Consideration

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The Company loaned the total proceeds to J&J through the Facility Agreement.

Upon the completion of the Kenvue IPO on May 8, 2023, the Facility Agreement was terminated and the balance of the loans, and all accrued interest, were repaid by J&J for a total cash inflow of $ 9.0 billion.

Upon the completion of the Kenvue IPO on May 8,

2023, the Facility Agreement was terminated and the balance of the loans, and all accrued interest, were repaid by J&J for a total cash inflow of $ 9.0 billion.

The Company remitted this cash back to J&J as a distribution in connection with the Separation.

Other Operating Expense (Income), Net and Other Expense, Net

Other operating expense (income), net for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 consisted of:

Other Operating (Income) Expense, Net and Other Expense, Net

Other operating (income) expense, net for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 consisted of:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

Litigation expense (income) $ 4 $ 26 $ ( 7 )

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Litigation expense $ 5 $ 4 $ 26

Royalty income ( 37 ) ( 34 ) ( 35 )

Loss (gain) on disposal of fixed assets 6 ( 9 ) 8

Impact of Deferred Markets (1)

Contingent liability reversal (2)

Total Other operating expense (income), net $ 26 $ ( 10 ) $ ( 35 )

Gain on Skillman held for sale asset (3)

( 12 ) ( 3 ) 16

Total other operating (income) expense, net $ ( 23 ) $ 26 $ ( 10 )

(1) Includes the provision for taxes, minority interest expense, and service fees to be paid to J&J under the net economic benefit arrangements.

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(2) Includes the reversal of a contingent liability that was no longer considered to be probable.

(3) Other consists primarily of other miscellaneous operating (income) expenses for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023.

Other also includes the impact of foreign derivative contracts for the fiscal twelve months ended December 31, 2023.

Other expense, net for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 consisted of:

(3) Relates to the gain recognized on the sale of the Skillman, New Jersey, facility during the fiscal three months ended December 28, 2025.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets—Assets Held for Sale,” for more information.

(4) Other consists primarily of other miscellaneous operating (income) expenses.

Other also includes the release of tax indemnification reserves that were no longer considered to be probable for the fiscal twelve months ended December 28, 2025 and the impact of foreign derivative contracts for the fiscal twelve months ended December 31, 2023.

Other expense, net for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 consisted of:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Currency losses on transactions $ 46 $ 1 $ 58

Losses (gains) on investments 72 7 ( 1 )

Losses on investments — 72 7

Tax indemnification release (1)

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(2) Other consists primarily of net periodic benefit costs other than service cost components and miscellaneous non-operating (income) expenses.

For the purposes of the Consolidated Financial Statements, income taxes and related income tax accounts have been calculated using the separate return method as if the Company filed income tax returns on a standalone basis for the fiscal twelve months ended December 31, 2023 and January 1, 2023.

Other also includes the receipt of a government subsidy for the fiscal twelve months ended December 28, 2025 and December 29, 2024.

Beginning in the fiscal three months ended December 28, 2025, the Company adopted the guidance in ASU 2023-09 on a prospective basis.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Recently Adopted Accounting Standards,” for additional information.

Prior to the Kenvue IPO, the Company’s operations were calculated on a carve-out basis and included certain hypothetical foreign tax credit benefits.

Following the Kenvue IPO, these hypothetical foreign tax credit benefits are not available for future utilization by the Company and were removed from the tax provision.

Furthermore, the Company operated as part of J&J until the completion of the Exchange Offer on August 23, 2023, and therefore the Company was included in J&J’s U.S.

Furthermore, the

Company operated as part of J&J until the completion of the Exchange Offer on August 23, 2023, and therefore the Company was included in J&J’s U.S.

federal consolidated income tax return until that date.

The Company filed a standalone U.S.

Federal consolidated income tax return and a standalone return in most other jurisdictions in which it operates for the remainder of fiscal year 2023 and will continue to file a standalone return for all fiscal years thereafter.

Certain current income tax liabilities related to the Company’s activities included in J&J’s income tax returns were assumed to be immediately settled with J&J through the Net Investment from J&J or Additional paid-in capital accounts on the Consolidated Balance Sheets and reflected in the Consolidated Statements of Cash Flows as a financing activity for the fiscal twelve months ended December 31, 2023 and January 1, 2023.

federal consolidated income tax return and a standalone return in most other jurisdictions in which it operated for the remainder of fiscal year 2023 and has continued to file a standalone return for all fiscal years thereafter.

Certain current income tax liabilities related to the Company’s activities included in J&J’s income tax returns were assumed to be immediately settled with J&J through the Net Investment from J&J or Additional paid-in capital accounts on the Consolidated Balance Sheets and reflected in the Consolidated Statement of Cash Flows as a financing activity for the fiscal twelve months ended December 31, 2023.

Following the Exchange Offer, the Company’s operating footprint, as well as tax return elections and assertions, are different, and therefore, the Company’s income taxes, as presented in the Consolidated Financial Statements, may differ in future periods.

The Provision for taxes on income for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 consisted of:

Income before taxes was attributable to the following geographic regions for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023 January 1, 2023

taxes $ 287 $ 266 $ 75

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

$ 585 $ 352 $ 825

International

1,414 1,063 1,365

Income before taxes $ 1,999 $ 1,415 $ 2,190

The Provision for taxes on income for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 consisted of:

Fiscal Twelve Months Ended

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

$ 201 $ 287 $ 266

International taxes 436 383 374

Total current taxes 637 670 640

taxes ( 178 ) ( 39 ) 228

( 90 ) ( 178 ) ( 39 )

International taxes ( 18 ) ( 107 ) ( 75 )

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Provision for taxes $ 529 $ 385 $ 526

(1) The current portion of the Provision for taxes includes $ 148 million for U.S.

federal taxes and $ 53 million for U.S.

state and local taxes for the fiscal twelve months ended December 28, 2025.

(2) The deferred portion of the Provision for taxes includes $( 50 ) million for U.S.

federal taxes and $( 40 ) million for U.S.

state and local taxes for the fiscal twelve months ended December 28, 2025.

Net cash paid for income taxes was attributable to the following jurisdictions in accordance with ASU 2023-09 for the fiscal twelve months ended December 28, 2025:

Fiscal Twelve Months Ended

(Dollars in Millions) December 28, 2025

state and local

International

Total cash paid for income taxes, net of refunds (1)(2)

(1) Individual jurisdictions equaling 5% or more of the total cash paid for income taxes, net of refunds, includes U.S.

federal at $ 153 million, India at $ 40 million, China at $ 32 million, and Sweden at $ 30 million.

(2) Total cash paid for income taxes, net of refunds, includes payments to J&J under the Tax Matters Agreements (as defined in Note 12, “Relationship with J&J”) for income tax liabilities, which J&J has paid on the Company’s behalf post-Kenvue IPO to the tax authorities.

A comparison of the Provision for taxes at the U.S.

statutory rate of 21 % in the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, to the Company’s effective tax rate is as follows:

federal statutory rate of 21 % to the Company’s effective tax rate in accordance with ASU 2023-09 in the fiscal twelve months ended December 28, 2025 was as follows:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025

(Dollars in Millions) Amount

federal statutory tax rate

Effect of cross-border tax laws (1)

( 32 ) ( 1.6 )

International 1,063 1,365 1,399

Income before taxes $ 1,415 $ 2,190 $ 2,637

statutory rate 21.0 % 21.0 % 21.0 %

taxes on international income (1)

Nontaxable or nondeductible items

Changes in valuation allowances

Other adjustments

( 4 ) ( 0.2 )

International operations (2)

State and local income taxes, net of federal income tax effect (2)

Foreign tax effects (3)

Rate differential

( 38 ) ( 1.9 )

Other foreign jurisdictions

Worldwide changes in unrecognized tax benefits (4)

Effective tax rate

(1) Effect of cross-border tax laws is presented net of related foreign tax credits.

(2) State taxes in New York, Indiana, New Jersey, Maryland, Illinois, and Texas made up the majority (greater than 50%) of the tax effect in this category.

(3) Foreign tax effects reflect the impacts of operations in jurisdictions with statutory tax rates that are different than the United States.

For the fiscal twelve months ended December 28, 2025, the Company had operations in Singapore under various tax incentives.

(4) Includes the effect of current year increases to unrecognized tax benefits.

A comparison of the Provision for taxes at the U.S.

federal statutory rate of 21 % to the Company’s effective tax rate in the fiscal twelve months ended December 29, 2024 and December 31, 2023 was as follows:

Fiscal Twelve Months Ended

December 29, 2024 December 31, 2023

federal statutory tax rate

21.0 % 21.0 %

taxes on international income (1)

International operations (2)

State ( 0.4 ) 2.0

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tax code as well as tax implications of repatriating foreign earnings.

(2) International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the U.S.

For each of the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, the Company had operations in Singapore under various tax incentives.

(2) International operations reflect the impacts of operations in jurisdictions with statutory tax rates different than the United States.

For each of the fiscal twelve months ended December 29, 2024 and December 31, 2023, the Company had operations in Singapore under various tax incentives.

The Company’s largest international operations are in Canada, China, Japan, Singapore, and Switzerland.

The amounts for the fiscal twelve months ended December 29, 2024 and December 31, 2023 include a $ 4 million net increase in uncertain tax benefits and a $ 46 million net reduction in uncertain tax benefits, respectively.

The worldwide effective income tax rates for the fiscal twelve months ended December 29, 2024 was 27.2 % and is higher than the U.S.

corporate tax rate primarily due to the following:

The worldwide effective income tax rate for the fiscal twelve months ended December 28, 2025 was 26.5 % and is higher than the U.S.

federal statutory tax rate primarily due to the following:

• Increase in unrecognized tax benefits driven by new developments in ongoing tax audits during the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024, as well as U.S.

taxes on foreign inclusions with limited capacity for full foreign tax credit utilization.

This increase from the statutory tax rate was partially offset by favorable return-to-provision adjustments, as well as the income tax benefits derived from the remeasurement of state deferred taxes for the fiscal twelve months ended December 28, 2025.

The worldwide effective income tax rate for the fiscal twelve months ended December 29, 2024 was 27.2 % and is higher than the U.S.

federal statutory tax rate primarily due to the following:

taxes on foreign inclusions are driven by reduced foreign tax credit utilization, as well as unfavorable return-to-provision adjustments, which was primarily driven by non-deductible expenses.

This increase from the statutory tax rate was partially offset by the impairment to the Dr.Ci:Labo ® skin health business and the corresponding reversal of a deferred tax liability at the higher Japanese tax rate, the remeasurement of the state deferred tax liability as a result of a change in the Company’s state tax rate, and regional cash planning resulting in a partial release of a valuation allowance.

The worldwide effective income tax rates for the fiscal twelve months ended December 31, 2023 was 24.0 % and is higher than the U.S.

corporate tax rate primarily due to the following:

The worldwide effective income tax rate for the fiscal twelve months ended December 31, 2023 was 24.0 % and is higher than the U.S.

federal statutory tax rate primarily due to the following:

• The issuance of debt in the fiscal three months ended April 2, 2023 resulted in an increase in annual interest expense and reduced the Company’s capacity to utilize foreign tax credits against U.S.

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taxes on international income within the rate reconciliation.

The worldwide effective income tax rates for the fiscal twelve months ended January 1, 2023 was 21.7 % and is higher than the U.S.

corporate tax rate primarily due to the following:

• The overall domestic loss from the fiscal twelve months ended January 2, 2022 is being recaptured in the United States in the fiscal twelve months ended January 1, 2023, thereby allowing the Company to claim additional U.S.

foreign tax credits against the Company’s U.S.

tax on foreign earnings.

The additional U.S.

foreign tax credit benefit is reflected

taxes on international income within the rate reconciliation.

This benefit is offset by state taxes on current U.S.

income and valuation allowances on state net operating loss carryforwards.

The decrease in the worldwide effective income tax rate for the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024 was primarily the result of changes to the jurisdictional mix of income and favorable return-to-provision adjustments.

The decrease was partially offset by income tax benefits recognized during the fiscal

twelve months ended December 29, 2024 resulting from the impairment to the Dr.Ci:Labo ® skin health business and the corresponding reversal of a deferred tax liability at the higher Japanese rate, as well as an increase in unrecognized tax benefits driven by new developments in ongoing tax audits during the fiscal twelve months ended December 28, 2025 as compared to the fiscal twelve months ended December 29, 2024.

The increase in the worldwide effective income tax rate for the fiscal twelve months ended December 29, 2024 as compared to the fiscal twelve months ended December 31, 2023 was primarily the result of fewer releases of uncertain tax positions due to the expiration of certain statutes of limitations and reduced tax benefits derived from the Separation as compared to the fiscal twelve months ended December 31, 2023, unfavorable return-to-provision adjustments and shortfall on stock-based compensation recorded during the fiscal twelve months ended December 29, 2024, as well as changes to the jurisdictional mix of income.

These increases were offset by the impairment to the Dr.Ci:Labo ® skin health business and the corresponding reversal of a deferred tax liability, the remeasurement of the state deferred tax liability as a result of a change in the Company’s state tax rate, and a partial release of a valuation allowance.

The increase in the worldwide effective income tax rate for the fiscal twelve months ended December 31, 2023 as compared to the fiscal twelve months ended January 1, 2023 was primarily the result of higher U.S.

taxes on foreign income.

With the issuance of debt in the fiscal three months ended April 2, 2023, the resulting increase in annual interest expense reduced the Company’s capacity to utilize foreign tax credits against U.S.

foreign source income.

As a result, the Company recorded a $ 52 million valuation allowance against a deferred tax asset related to anticipated foreign tax credit benefits.

Furthermore, the recapture of an overall domestic loss allowing the Company to claim additional U.S.

foreign tax credit benefits against the Company's U.S.

tax on foreign earnings only existed through the Kenvue IPO date during the fiscal twelve months ended December 31, 2023 in comparison to the entire fiscal twelve months ended January 1, 2023.

The tax rate was further increased by international operations as result of earnings mix changes, tax leakage on repatriation of foreign earnings from lower tier subsidiaries, and return-to-provision adjustments offset by reductions in unrecognized tax benefits.

Temporary differences and carryforwards as of December 29, 2024 and December 31, 2023 were as follows:

As of December 28, 2025 and December 29, 2024, temporary differences and carryforwards were as follows:

December 28, 2025 December 29, 2024

(Dollars in Millions)

(Dollars in Millions) Asset Liability Asset Liability

Employee-related obligations

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state NOLs generally expire between 2035 and 2045.

Tax credit carryforwards of the Company’s Puerto Rico subsidiary do not expire.

The Company assessed NOLs, tax credit

carryforwards, and other deferred tax assets for realizability and, based upon all available evidence, recorded valuation allowances against deferred tax assets on a “more likely than not” standard.

As of December 29, 2024, December 31, 2023, and January 1, 2023, valuation allowances of $ 89 million, $ 75 million, and $ 250 million have been recorded against certain NOLs and foreign tax credit carryforwards respectively.

The Company recognized a net change in valuation allowance of $ 14 million, $( 175 ) million, and $ 64 million in the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 respectively.

For the fiscal twelve months ended December 29, 2024, the net change was primarily related to an increase in foreign NOL carryforwards that the Company does not expect to utilize in future periods and a release of a valuation allowance on the Company’s foreign tax credit carryforwards.

The Company assessed NOLs, tax credit carryforwards, and other deferred tax assets for realizability and, based upon all available evidence, recorded valuation allowances against deferred tax assets on a “more likely than not” standard.

As of December 28, 2025, December 29, 2024, and December 31, 2023, valuation allowances of $ 73 million, $ 89 million, and $ 75 million have been recorded against certain NOLs and foreign tax credit carryforwards, respectively.

The Company recognized a net change in valuation allowance of $( 16 ) million, $ 14 million, and $( 175 ) million in the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

For the fiscal twelve months ended December 28, 2025, the net change was primarily related to the write-off of Puerto Rico tax credits that expired due to changes in tax law that were previously fully valued and a release of a valuation allowance on the Company’s foreign tax credit carryforwards, partially offset by an increase in foreign NOL carryforwards that the Company does not expect to utilize in future periods.

The Company has recorded deferred tax liabilities on all undistributed earnings of its international subsidiaries through the fiscal twelve months ended December 31, 2017 and certain undistributed earnings arising after the fiscal twelve months ended December 31, 2017.

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The Company estimates that the tax effect of this repatriation would be approximately $ 158 million under currently enacted tax laws and regulations and at current currency exchange rates.

The following table summarizes the activity related to unrecognized tax benefits for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023:

The following table summarizes the activity related to unrecognized tax benefits for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Beginning of fiscal year

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With respect to the United States, per the Tax Matters Agreement between J&J and the Company, J&J remains liable for all liabilities related to the final settlement of any U.S.

federal income tax audits in which the Company is part of J&J’s federal consolidated tax return.

federal income tax audits in which the Company was part of J&J’s federal consolidated tax return.

The Company has therefore reduced its unrecognized tax benefits for U.S.

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In other major jurisdictions where the Company conducts business, the years that are under tax audit or remain open to tax audits range from 2015 and forward.

The Company believes it is possible that certain tax audits in major jurisdictions where the Company conducts business outside of the United States may be completed over the next 12 months by their respective taxing authorities.

However, the Company is not able to provide a reasonably reliable estimate of the timing of any future tax payments or the amount of possible changes to the total unrecognized tax benefits associated with any audit closures or other events.

The Company classifies liabilities for unrecognized tax benefits and related interest and penalties as long-term liabilities on the Consolidated Balance Sheets.

Interest expense and penalties related to unrecognized tax benefits are classified as Provision for taxes in the Consolidated Statements of Operations.

The Company recognized after-tax interest expense (benefit) of $ 5 million, $( 8 ) million, and $ 13 million in the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

The Company recognized after-tax interest expense (benefit) of $ 10 million, $ 5 million, and $( 8 ) million in the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively.

The total amount of accrued interest was $ 31 million and $ 23 million as of December 28, 2025 and December 29, 2024, respectively.

On August 16, 2022, the United States enacted the Inflation Reduction Act of 2022 (“IRA”), which, among other things, introduced a 15% minimum tax based on adjusted financial statement income of certain large corporations with a three-year average adjusted financial statement income in excess of $1 billion, an excise tax on corporate stock buybacks, and several tax incentives to promote clean energy.

Based on the Company’s current analysis, as well as recently published guidance by the U.S.

Treasury and by the Internal Revenue Service, the IRA did not have a significant impact on the Consolidated Financial Statements.

The Company will continue to evaluate the impact of this law as additional guidance and clarification become available.

The Company has included the impact of enacted legislation related to the Organization for Economic Co-operation Development’s (“OECD”) Pillar Two Inclusive Framework in its provision for taxes beginning in the current fiscal year.

While the impact of currently enacted laws for Pillar Two is not significant, it is possible that further OECD implementation guidance, or legislation in countries in which the Company operates, could have a material effect on the Company’s provision for taxes in the future.

The Company has included the impact of enacted legislation related to the Organization for Economic Co-operation and Development’s (the “OECD”) Pillar Two Inclusive Framework (“Pillar Two”) in its provision for taxes beginning in fiscal year 2024.

While the impact of currently enacted laws for Pillar Two is not significant, it is possible that further administrative guidance from the OECD or new legislation in countries where the Company operates could have a material effect on the Company’s provision for taxes in the future.

In addition, in January 2025, the United States issued an executive order expressing disagreement with certain aspects of Pillar Two.

In June 2025, the Group of Seven issued a statement supporting the exclusion of U.S.

parented groups from certain aspects of Pillar Two in exchange for the United States not imposing certain retaliatory taxes.

On January 5, 2026, the OECD announced the Side-by-Side (“SbS”) package, implemented as administrative guidance and modifying the operation of the Pillar Two rules.

The package introduces simplifications and new safe harbors for U.S.

and other multinational companies where domestic and international tax systems meet robust requirements to coexist with Pillar Two, which would fully exempt U.S.-parented groups from the application of the Income Inclusion Rule and Undertaxed Profits Rule Pillar Two top up taxes.

The SbS package also extends the current Transitional Country-by-Country Reporting

Safe Harbor by one year.

The SbS package is not expected to have a material impact on the Company’s effective tax rate.

The Company will continue to monitor any additional changes to Pillar Two.

On July 4, 2025, the reconciliation bill commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”) was signed into law.

The OBBBA made a number of changes to U.S.

federal income tax law, including the permanent suspension of the requirement to capitalize and amortize domestic research and experimental expenditures, changes to certain deductions available for deemed inclusions, and a permanent extension of certain corporate international income tax provisions.

The enactment of the OBBBA did not have a material impact on the Company’s current fiscal year effective tax rate.

Net Income Per Share

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For all periods prior to the Kenvue IPO, the shares issued through the subscription agreement are being treated akin to shares attributable to a stock split and, as a result, are being retrospectively presented for all of the periods.

Diluted net income per share is computed by giving effect to all potentially dilutive equity instruments or equity-based awards that are outstanding during the period.

The Company had 52,113,910 and 44,745,842 shares during the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, that were determined to be anti-dilutive under the treasury stock method and therefore were excluded from the diluted net income per share calculation.

For both the fiscal twelve months ended December 29, 2024 and December 31, 2023, the majority of anti-dilutive shares related to stock options.

There were no equity-based awards of the Company outstanding prior to the Kenvue IPO and no dilutive equity instruments of the Company outstanding prior to the Exchange Offer.

Net income per share for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 was calculated as follows:

Diluted net income per share is computed by giving effect to all potentially dilutive equity instruments or equity awards that are outstanding during the period.

The following table summarizes the shares held by the Company that were determined to be anti-dilutive under the treasury stock method and therefore excluded from the diluted net income per share calculation during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Shares in Millions)

December 28, 2025 December 29, 2024 December 31, 2023

Anti-dilutive shares (1)

(1) For the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, the majority of anti-dilutive shares related to stock options.

Net income per share for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 was calculated as follows:

Fiscal Twelve Months Ended

(In Millions, Except Per Share Data)

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025 December 29, 2024 December 31, 2023

Net income $ 1,470 $ 1,030 $ 1,664

Basic weighted-average number of shares outstanding 1,917 1,915 1,846

1,915 1,846 1,716

Diluted effects of stock-based awards 8 4 —

Dilutive effects of stock-based awards

Diluted weighted-average number of shares outstanding 1,924 1,923 1,850

1,923 1,850 1,716

Net income per share:

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The intent of this repurchase program is to offset dilution from the vesting or exercise of equity-based awards under the Kenvue 2023 Plan.

The Company repurchased 10,858,444 shares of outstanding common stock for $ 235 million under the program during the fiscal twelve months ended December 29, 2024.

On November 2, 2025, the Company entered into the Merger Agreement pursuant to which K-C will acquire all of the outstanding shares of the Company for a combination of stock and cash in a series of transactions, as described in Note 1, “Description of the Company and Summary of Significant Accounting Policies—Proposed Transaction with Kimberly-Clark.”

In accordance with the terms of the Merger Agreement, and subject to the exceptions therein, the Company is not permitted to repurchase, redeem, or otherwise acquire any of its equity interests without the prior written consent of K-C.

Prior to entering into the Merger Agreement, the Company repurchased approximately 9,179,000 shares of outstanding common stock for $ 197 million under the program during the fiscal twelve months ended December 28, 2025.

No shares have been repurchased subsequent to the execution of the Merger Agreement.

Fair Value Measurements

Fair value measurements are estimated based on valuations techniques and inputs categorized as follows:

Fair value measurements are estimated based on valuation techniques and inputs categorized as follows:

• Level 1—Quoted prices in active markets for identical assets or liabilities

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Cross currency swap contracts 20 — 20 — 71 — 71 —

71 — 71 — — — — —

$ 152 $ — $ 152 $ — $ 63 $ — $ 63 $ —

Total assets $ 93 $ — $ 93 $ — $ 152 $ — $ 152 $ —

Forward foreign exchange contracts $ ( 63 ) $ — $ ( 63 ) $ — $ ( 76 ) $ — $ ( 76 ) $ —

$ ( 76 ) $ — $ ( 76 ) $ — $ ( 50 ) $ — $ ( 50 ) $ —

Cross currency swap contracts ( 111 ) — ( 111 ) — ( 1 ) — ( 1 ) —

Total liabilities $ ( 174 ) $ — $ ( 174 ) $ — $ ( 77 ) $ — $ ( 77 ) $ —

$ ( 77 ) $ — $ ( 77 ) $ — $ ( 75 ) $ — $ ( 75 ) $ —

Net amount presented in Prepaid expenses and other receivables:

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$ — $ — $ — $ — $ 36 $ — $ 36 $ —

As of December 29, 2024 and December 31, 2023, cash equivalents were $ 118 million and $ 329 million, respectively, which were primarily comprised of time deposits and money market funds.

Net amount presented in Other liabilities:

$ ( 44 ) $ — $ ( 44 ) $ — $ — $ — $ — $ —

As of December 28, 2025 and December 29, 2024, cash equivalents were $ 79 million and $ 118 million, respectively, which were primarily composed of time deposits and money market funds.

The carrying amount of Cash and cash equivalents, Trade receivables, Prepaid expenses and other receivables, and Loans and notes payable approximated fair value as of December 28, 2025 and December 29, 2024.

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dollar at the current spot foreign exchange rate.

The cross currency swap contracts are recorded at fair value that is derived from observable market data, including foreign exchange rates and yield curves.

The fair value of the Company’s derivative assets is included in Prepaid expenses and other receivables and Other assets on the Consolidated Balance Sheets.

The fair value of the Company’s derivative liabilities is included in Accounts payable on the Consolidated Balance Sheets.

The cross currency swap contracts are each recorded at fair value derived from observable market data, including foreign exchange rates and yield curves.

There were no transfers between Level 1, Level 2, or Level 3 during the fiscal twelve months ended December 28, 2025 and the fiscal twelve months ended December 29, 2024.

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December 28, 2025 December 29, 2024

(Dollars in Millions) Forward foreign exchange contracts Cross currency swap contracts

Total notional amount

Forward foreign exchange contracts Cross currency swap contracts

Total notional amount

(Dollars in Millions) Forward Foreign Exchange Contracts Cross Currency Swap Contracts Total Notional Amount Forward Foreign Exchange Contracts Cross Currency Swap Contracts Total Notional Amount

Cash flow hedges

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Cash Flow Hedges

For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, the Company recorded a total after-tax change in Accumulated other comprehensive loss of $( 23 ) million, $ 38 million, and $ 10 million, respectively, related to its cash flow hedge portfolio.

For the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, the Company recorded a total after-tax change in Accumulated other comprehensive loss of $ 4 million, $( 23 ) million, and $ 38 million, respectively, related to its cash flow hedge portfolio.

Forward Foreign Exchange Contracts

In certain jurisdictions, the Company uses forward foreign exchange contracts to manage its exposures to the variability of foreign exchange rates.

Changes in the fair value of derivatives are recorded each period in earnings or Other comprehensive (loss) income, depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction.

Since 2022, the Company has entered into forward foreign exchange contracts to hedge a portion of forecasted cash flows denominated in foreign currency.

In certain jurisdictions, the Company uses forward foreign exchange contracts to manage its exposure to the variability of foreign exchange rates.

Changes in the fair value of derivatives are recorded each period in earnings or Other comprehensive income (loss), depending on whether the derivative is designated as part of a hedge transaction, and if so, the type of hedge transaction.

The Company enters into forward foreign exchange contracts to hedge a portion of forecasted cash flows denominated in foreign currency.

The terms of these contracts are generally no longer than 12 to 18 months.

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At inception, all designated hedging relationships are expected to be highly effective.

These contracts are accounted for using the forward method, and all gains/losses associated with these contracts are recorded in Other comprehensive (loss) income.

These contracts are accounted for using the forward method, and all gains/losses associated with these contracts are recorded in Other comprehensive income (loss).

The Company reclassifies the gains and losses related to these contracts at the time the inventory is sold to the customer into Net sales or Cost of sales and Other expense, net in the Consolidated Statements of Operations, as applicable.

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Realized gains and losses are ultimately determined by actual exchange rates at maturity of the derivative.

The following table is a summary of the gains and losses recognized on forward foreign exchange contracts designated as cash flow hedges within Other comprehensive (loss) income and the gains and losses reclassified into earnings for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023:

The following table summarizes the gains and losses recognized on forward foreign exchange contracts designated as cash flow hedges within Other comprehensive income (loss) and the gains and losses reclassified into earnings for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023 January 1, 2023

Gain recognized in Other comprehensive (loss) income $ 5 $ 18 $ 11

Gain (loss) reclassified from Other comprehensive (loss) income into earnings $ 13 $ 28 $ ( 2 )

The following tables present a summary of the gains and losses reclassified from Other comprehensive (loss) income into earnings related to the forward foreign exchange contracts for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023:

December 28, 2025 December 29, 2024 December 31, 2023

Gain recognized in Other comprehensive income (loss) $ 24 $ 5 $ 18

Gain reclassified from Other comprehensive income (loss) into earnings $ 21 $ 13 $ 28

The following tables summarize the gains and losses reclassified from Other comprehensive income (loss) into earnings related to the forward foreign exchange contracts designated as cash flow hedges for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

December 28, 2025

(Dollars in Millions) Net sales Cost of sales Other expense, net

(Loss) gain reclassified from Other comprehensive (loss) income into earnings $ ( 1 ) $ 15 $ ( 1 )

(Dollars in Millions) Net Sales

Cost of Sales

Other Expense, Net

Gain reclassified from Other comprehensive income (loss) into earnings $ 1 $ 12 $ 8

Fiscal Twelve Months Ended

December 29, 2024

(Dollars in Millions) Net sales Cost of sales Other expense, net

Gain (loss) reclassified from Other comprehensive (loss) income into earnings $ 1 $ 30 $ ( 3 )

(Dollars in Millions) Net Sales

Cost of Sales

Other Expense, Net

(Loss) gain reclassified from Other comprehensive income (loss) into earnings $ ( 1 ) $ 15 $ ( 1 )

Fiscal Twelve Months Ended

January 1, 2023

(Dollars in Millions) Net sales Cost of sales Other expense, net

Gain reclassified from Other comprehensive (loss) income into earnings $ 21 $ 12 $ 30

December 31, 2023

(Dollars in Millions) Net Sales

Cost of Sales

Other Expense, Net

Gain (loss) reclassified from Other comprehensive income (loss) into earnings $ 1 $ 30 $ ( 3 )

Forward Starting Interest Rate Swaps

Beginning in the fiscal three months ended January 1, 2023, the Company entered into forward starting interest rate swaps in contemplation of securing long-term financing for the Separation or for other long-term financing purposes in the event the Separation did not occur.

The Company designated these derivatives as cash flow hedges to reduce future interest rate exposure related to changes in the benchmark interest rate on forecasted 5-year , 10-year , and 30-year bonds that the Company issued in 2023.

During the fiscal twelve months ended December 31, 2023, the Company recorded a gain of $ 48 million in Accumulated other comprehensive loss, of which $ 38 million was related to the settlement of its forward starting interest rate swaps upon the issuance of the forecasted debt.

The $ 38 million gain in Accumulated other comprehensive loss will be amortized and recorded in Interest expense, net in the Consolidated Statements of Operations over the life of the 5-year , 10-year , and 30-year bonds.

For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, the amounts reclassified from Other comprehensive (loss) income to the Consolidated Statements of Operations were not significant.

The Company enters into forward starting interest rate swaps to manage future interest rate exposure related to changes in the benchmark rate on forecasted debt issuances.

These contracts are designated as cash flow hedging relationships at the date of contract inception, in accordance with the appropriate accounting guidance.

During the fiscal twelve months ended December 28, 2025, the Company recorded a gain of $ 7 million in Accumulated other comprehensive loss related to the settlement of its forward starting interest rate swaps upon the issuance of long-term debt.

The gains in Accumulated other comprehensive loss related to the settlement of forward starting interest rate swaps upon the issuance of long-term debt will be amortized and recorded in Interest expense, net in the Consolidated Statements of Operations as the hedged items impact earnings.

For the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023, the amounts reclassified from Other comprehensive income (loss) to the Consolidated Statements of Operations were not significant.

Fair Value Hedges

Forward Foreign Exchange Contracts

Beginning in the fiscal three months ended March 31, 2024, the Company entered into forward foreign exchange contracts to hedge against the risk of changes in the fair value of foreign-denominated intercompany debt attributable to foreign exchange rate fluctuations.

The Company entered into forward foreign exchange contracts beginning in the fiscal three months ended March 31, 2024 to hedge against the risk of changes in the fair value of foreign-denominated intercompany debt attributable to foreign exchange rate fluctuations.

These contracts are designated as fair value hedging relationships at the date of contract inception, in accordance with the appropriate accounting guidance.

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The Company has elected to exclude the changes in the fair value attributable to the difference between the spot price and the forward price, as well as any cross currency basis spread, from the assessment of hedge effectiveness (the “Excluded Components”).

The Excluded Components are excluded from the assessment of the hedge effectiveness.

The value of the Excluded Components was not significant to the Consolidated Financial Statements in the current period.

The changes in fair value attributable to the Excluded Components are recorded in Accumulated other comprehensive loss and are recognized in Other expense, net in the Consolidated Statements of Operations on a systematic and rational basis over the life of the hedging instrument.

The value of the Excluded Components was not significant to the Consolidated Financial Statements in the current fiscal period or prior fiscal period.

The changes in fair value attributable to the Excluded Components are recorded in

Accumulated other comprehensive loss and are recognized in Other expense, net in the Consolidated Statements of Operations on a systematic and rational basis over the life of the hedging instrument.

Net Investment Hedges

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The Company designated these forward foreign exchange contracts as a net investment hedge to sell foreign currency (denominated in the local currency of the affiliate) at specified forward rates.

These contracts were accounted for using the spot method with changes in the fair value of the contracts attributable to changes in spot rates recorded within CTA as a component of Other comprehensive (loss) income.

The Company elected to exclude the changes in the fair value attributable to time value (the “Excluded Net Investment Hedge Components on Forward Foreign Exchange Contracts”) from the assessment of the hedge effectiveness.

The changes in fair value attributable to the Excluded Net Investment Hedge Components on Forward Foreign Exchange Contracts were initially recorded within CTA as a component of Other comprehensive (loss) income and were recognized into Other expense, net in the Consolidated Statements of Operations ratably over the life of the contract.

The changes in fair value attributable to the Excluded Net Investment Hedge Components on Forward Foreign Exchange Contracts were initially recorded within CTA as a component of Other comprehensive income (loss) and were recognized into Other expense, net in the Consolidated Statement of Operations ratably over the life of the contract.

The forward foreign exchange contracts designated as a net investment hedge were settled during the fiscal three months ended October 1, 2023.

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These contracts are designated as net investment hedges at the date of contract inception, in accordance with the appropriate accounting guidance.

These contracts are accounted for using the spot method with changes in the fair value of the contracts attributable to changes in spot rates recorded within CTA as a component of Other comprehensive (loss) income and will remain there until the hedged net investments are sold or substantially liquidated.

These contracts are accounted for using the spot method with changes in the fair value of the contracts attributable to changes in spot rates recorded within CTA as a component of Other comprehensive income (loss) and will remain there until the hedged net investments are sold or substantially liquidated.

The Company has elected to exclude the changes in the fair value attributable to time value and spot-forward rate differences (the “Excluded Net Investment Hedge Components on Cross Currency Swap Contracts”) from the assessment of the hedge effectiveness.

The value of the Excluded Net Investment Hedge Components on Cross Currency Swap Contracts was not significant to the Consolidated Financial Statements in the current period.

The value of the Excluded Net Investment Hedge Components on Cross Currency Swap Contracts was not significant to the Consolidated Financial Statements in the current fiscal period or prior fiscal period.

The changes in fair value attributable to the Excluded Net Investment Hedge Components on Cross Currency Swap Contracts are recognized into Interest expense, net in the Consolidated Statements of Operations on a systematic and rational basis through the swap accrual over the life of the hedging instrument.

The following table is a summary of the gains and losses recognized within Other comprehensive (loss) income related to the cross currency swap contracts designated as net investment hedges for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023:

The following table summarizes the gains and losses recognized within Other comprehensive income (loss) related to the cross currency swap contracts designated as net investment hedges for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023 January 1, 2023

Gain (loss) recognized in CTA within Other comprehensive (loss) income $ 99 $ ( 25 ) $ —

Other than amounts excluded from effectiveness testing, the Company did not reclassify any gains or losses from CTA within Other comprehensive (loss) income to earnings during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 related to the cross currency swap contracts.

December 28, 2025 December 29, 2024 December 31, 2023

(Loss) gain recognized in CTA within Other comprehensive income (loss) $ ( 158 ) $ 99 $ ( 25 )

Other than amounts excluded from effectiveness testing, the Company did not reclassify any gains or losses from CTA within Other comprehensive income (loss) to earnings during the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 related to the cross currency swap contracts designated as net investment hedges.

Undesignated Hedging Instruments

Undesignated Forward Foreign Exchange Contracts

Since 2022, the Company has entered into forward foreign exchange contracts to offset the foreign currency exposure related to the monetary assets and liabilities in non-functional currencies.

These contracts are not designated as cash flow hedging relationships, and the net allocated gains and losses related to these contracts are recognized within Other expense, net in the Consolidated Statements of Operations.

As of December 29, 2024 and December 31, 2023, respectively, the Company held forward foreign exchange contracts that were not designated in cash flow hedging relationships with a fair value of $ 0 million and $ 4 million, respectively.

The following table is a summary of the gains and losses recognized within Other expense, net related to the undesignated forward foreign exchange contracts for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023:

The Company enters into forward foreign exchange contracts to offset the foreign currency exposure related to the monetary assets and liabilities in non-functional currencies.

of Operations.

As of December 28, 2025 and December 29, 2024, the Company held forward foreign exchange contracts that were not designated in cash flow hedging relationships with a fair value of $ 0 million and $ 0 million, respectively.

The following table summarizes the gains and losses recognized within Other expense, net related to the undesignated forward foreign exchange contracts for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024 December 31, 2023 January 1, 2023

December 28, 2025 December 29, 2024 December 31, 2023

(Loss) gain recognized in Other expense, net $ ( 2 ) $ ( 7 ) $ 10

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These agreements do not require the posting of collateral.

Investments in Equity Securities

The Company measures equity investments without readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

During the fiscal twelve months ended December 29, 2024, the Company recorded $ 72 million of impairment charges within Other expense, net in the Consolidated Statement of Operations to fully write off the equity investment balance.

As of December 29, 2024 and December 31, 2023, such investments totaled $ 0 million and $ 71 million, respectively, and were included in Other assets on the Consolidated Balance Sheets.

Commitments and Contingencies

The Company and/or certain of its subsidiaries are involved from time to time in various lawsuits and claims relating to product liability, labeling, marketing, advertising, pricing, intellectual property, commercial contracts, foreign exchange controls, antitrust and trade regulation, labor and employment, indemnification, data privacy and cybersecurity, environmental, health and safety, tax matters, governmental investigations, and other legal proceedings that arise in the ordinary course of their business.

The Company and/or certain of its subsidiaries are involved from time to time in various lawsuits and claims relating to product liability, labeling, marketing, advertising, pricing, intellectual property, commercial contracts, foreign exchange controls, antitrust and trade regulation, labor and employment, securities transactions and related disclosures, indemnification, information technology systems, data privacy and cybersecurity, environmental, health and safety, tax matters, governmental investigations, and other legal proceedings that arise in the ordinary course of their business.

The Company records accruals for loss contingencies associated with these legal matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

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The ability to make such estimates and judgments can be affected by various factors including whether, among other things, damages sought in the proceedings are unsubstantiated or indeterminate;

scientific and legal

discovery has commenced or is complete;

scientific and legal discovery has commenced or is complete;

proceedings are in early stages;

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The Company and/or certain of its subsidiaries are involved in numerous product liability claims and lawsuits involving multiple products.

Claimants in these cases seek substantial compensatory and, where available, punitive damages.

Claimants in these cases seek substantial compensatory and, where available, punitive or exemplary damages or legal fees.

While the Company believes it has substantial defenses, it is not feasible to predict the ultimate outcome of litigation.

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Product liability lawsuits continue to be filed, and the Company continues to receive information with respect to potential costs and the anticipated number of cases.

In addition, lawsuits have been filed in state court against JJCI, the Company, and J&J, and trial dates are being set.

In addition, lawsuits have been filed in state court against JJCI, the Company, and J&J.

Lawsuits have also been filed in Canada against the Company’s subsidiary Johnson & Johnson Inc.

(Canadian affiliate) (“JJI”) and J&J.

(Canadian affiliate), now known as Kenvue Canada Inc.

(“JJI”), and J&J.

At this stage in these proceedings, the Company is unable to reasonably estimate either the likelihood or the magnitude of its potential liability arising out of these claims and lawsuits.

In October 2025, the State of Texas filed a petition in the District Court of Panola County, Texas, against the Company, Kenvue Brands LLC (formerly known as Johnson & Johnson Consumer Inc.) and J&J, alleging violations of the Texas Deceptive Trade Practices-Consumer Protection Act (the “DTPA”) and the Texas Uniform Fraudulent Transfer Act (the “TUFTA”) relating to allegations that prenatal and early-childhood exposure to acetaminophen is associated with autism spectrum disorder and attention-deficit/hyperactivity disorder in children.

The complaint seeks injunctive relief, civil penalties, disgorgement of assets, and other remedies.

In November 2025, the TUFTA and DTPA claims against the Company and J&J were dismissed and the TUFTA claims against Kenvue Brands LLC were dismissed.

A Notice of Appeal was filed in December 2025.

At this stage in these proceedings, the Company is unable to reasonably estimate the likelihood or magnitude of potential liability arising from this matter.

In October 2025, claims for personal injury and, in some cases, consequential death, were brought in the Business and Property Courts in Manchester (Circuit Commercial Court, KBD) against Kenvue UK Limited, J&J, and J&J’s subsidiary, Johnson & Johnson Management Limited, in respect of Johnson’s ® Baby Powder.

In December 2025, the claims were transferred to the Civil List of the King’s Bench Division in London.

The claimants allege they developed mesothelioma, ovarian cancer, lung granulomata, lung fibrosis, and/or uterine fibroids as a result of exposure to Johnson’s ® Baby Powder.

The claimants claim that the defendants are liable for negligence and the tort of deceit.

Additionally, in February 2026, an Australian law firm announced it has commenced a proceeding in the Supreme Court of Australia against J&J and the Company’s affiliates Johnson & Johnson Pty Ltd and Johnson & Johnson Pacific Pty Limited.

The claimants allege they developed cancer as a result of exposure to talc-based products.

The proceedings have not been served.

At this stage in these proceedings, the Company is unable to reasonably estimate either the likelihood or the magnitude of its potential liability arising out of these claims.

General Litigation

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sales from and after December 2006.

J&J received indemnification from BI and gave Pfizer indemnification in connection with the transfer of the Zantac business to BI from Pfizer, through J&J.

J&J received indemnification from BI and gave Pfizer indemnification in connection with the transfer of

the Zantac business to BI from Pfizer, through J&J.

In November 2019, J&J received a demand for indemnification from Pfizer, pursuant to the 2006 Stock and Asset Purchase Agreement between J&J and Pfizer.

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In 2016, JJI sold the Canadian Zantac business to Sanofi Consumer Health, Inc.

Under the 2016 Asset Purchase Agreement between JJI and Sanofi (the “2016 Purchase Agreement”), Sanofi assumed certain liabilities including those pertaining to Zantac (ranitidine) product sold by Sanofi after closing and losses arising from or relating to recalls, withdrawals, replacements, or related market actions or post-sale warning in respect of products sold by Sanofi after the closing, and JJI is

required to indemnify Sanofi for certain other excluded liabilities.

In November 2019, JJI received a notice reserving rights to claim indemnification from Sanofi pursuant to the 2016 Purchase Agreement.

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Beginning in 2019, multiple putative class actions naming J&J and/or JJI were filed in Canada with similar allegations regarding Zantac or ranitidine use.

J&J and/or JJI are named in two of the five outstanding putative class actions.

Of the two outstanding putative class actions naming J&J and/or JJI, the Quebec Superior Court action has been stayed, and the Ontario Superior Court of Justice action is pending, but not currently active.

JJI is named in one of the two outstanding putative class actions.

The outstanding putative class action naming JJI has been stayed in the Quebec Superior Court.

The Ontario Superior Court of Justice action, which named J&J and JJI and was previously pending, was discontinued by court order in May 2025.

JJI was also named as a defendant, along with other manufacturers, in various personal injury actions in Canada related to Zantac products.

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In November 2024, the FDA issued a proposed order to remove the ingredient from the OTC monograph.

The public now has the opportunity to comment for 180 days before the FDA issues a final order.

Beginning in September 2023, following the NDAC vote, putative class actions were filed against the Company and its affiliates, along with other third-party sellers and manufacturers of PE-containing products, asserting various causes of action including violation of consumer protection statutes, negligence, and unjust enrichment.

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District Court for the Eastern District of New York dismissed plaintiffs’ streamlined complaint, and a Notice of Appeal was filed in December 2024.

Separately, putative Canadian class actions were filed beginning in September 2023 against the Company’s affiliates, along with other third-party sellers and manufacturers of PE-containing products, alleging false, misleading representations, and seeking damages and declaratory relief based on similar causes of action.

In December 2024, a representative action was filed in the Federal Court of Australia, Victoria Registry, against the Company’s subsidiary Johnson & Johnson Pacific Pty Limited alleging false and misleading representations and seeking damages and associated relief based on broadly similar causes of action to those in the United States.

Separately, putative Canadian class actions were filed beginning in September 2023 against the Company, JJI, and JJCI, along with other third-party sellers and manufacturers of PE-containing products, alleging false, misleading representations, and seeking damages and declaratory relief based on similar causes of action.

In December 2024, a representative action was filed in the Federal Court of Australia, Victoria Registry, against the Company’s subsidiary Johnson & Johnson Pacific Pty Limited alleging contraventions of the consumer guarantees regime and seeking damages and associated relief based on broadly similar causes of action to those in the United States.

In February 2025, a representative action was filed in the High Court of New Zealand, Auckland Registry against Johnson & Johnson (New Zealand) Limited and the Company’s subsidiaries JNTL Consumer Health (New Zealand) Limited and Johnson & Johnson Pacific Pty Limited, alleging breaches of the Fair Trading Act 1986 and the Consumer Guarantees Act 1993.

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It alleges that the Company’s registration statements and prospectuses filed with the SEC in connection with the Kenvue IPO on Form S-1 and the Exchange Offer on Form S-4 contained misleading statements and omissions about PE.

It seeks damages for all shareholders who acquired shares pursuant to the Kenvue IPO and the Exchange Offer registration statements and prospectuses.

seeks damages for all shareholders who acquired shares pursuant to the Kenvue IPO and the Exchange Offer registration statements and prospectuses.

In January 2024, shareholder derivative complaints were filed in the U.S.

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District Court for the District of New Jersey, seek damages and injunctive relief.

At this stage in these proceedings, the

Company is unable to reasonably estimate either the likelihood or the magnitude of its potential liability arising out of these claims and lawsuits.

At this stage in these proceedings, the Company is unable to reasonably estimate either the likelihood or the magnitude of its potential liability arising out of these claims and lawsuits.

JJCI, along with more than 120 other companies, is a defendant in a cost recovery action brought by Occidental Chemical Corporation in June 2018 in the U.S.

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A Notice of Appeal was filed in January 2025.

The case has been administratively closed but can be re-opened upon request.

The cost recovery case has been administratively closed but can be re-opened upon request.

The Company or its subsidiaries are also parties to various proceedings brought under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, and comparable state, local, or foreign laws in which the primary relief sought is the Company’s agreement to implement environmental investigation and remediation activities at designated hazardous waste sites or to reimburse the government or third parties for the costs they have incurred in performing investigation, oversight, or remediation at such sites.

A significant number of personal injury claims alleging that talc causes cancer were made against J&J and certain of its affiliates arising out of the use of body powders containing talc, primarily Johnson’s ® Baby Powder.

These personal injury suits were filed primarily in state and federal courts in the United States and in Canada.

Pursuant to the Separation Agreement, J&J has retained all liabilities on account of or relating to harm arising out of, based upon or resulting from, directly or indirectly, the presence of or exposure to talc or talc-containing products sold by J&J or its affiliates in the United States and Canada (the “Talc-Related Liabilities”) and, as a result, has agreed to indemnify the Company for the Talc-Related Liabilities and any costs associated with resolving such claims, including matters that have commenced in the United States naming the Company or its affiliates.

A significant number of personal injury claims alleging that talc causes cancer were made against J&J and certain of its current and former affiliates, including the Company, arising out of the use of body powders containing talc, primarily Johnson’s ® Baby Powder.

These personal injury suits were and continue to be filed primarily in state and federal courts in the United States and in Canada, although suits have been filed in other jurisdictions as well.

Pursuant to the Separation Agreement, J&J has retained all liabilities on account of or relating to harm arising out of, based upon, or resulting from, directly or indirectly, the presence of or exposure to talc or talc-containing products sold by J&J or its affiliates in the United States and Canada (the “Talc-Related Liabilities”) and, as a result, has agreed to indemnify the Company for the Talc-Related Liabilities and any costs associated with resolving such claims, including matters that have commenced in the United States and Canada naming the Company or its affiliates.

The Company will, however, remain responsible for all liabilities on account of or relating to harm arising out of, based upon, or resulting from, directly or indirectly, the presence of or exposure to talc or talc-containing products sold outside the United States or Canada.

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Self Care, Skin Health and Beauty, and Essential Health.

The Company’s CODM, the Chief Executive Officer, uses Segment adjusted operating income as the measure of profit or loss and to evaluate the performance of the Company’s segments.

The Company’s Chief Operating Decision Maker (the “CODM”), the Chief Executive Officer, uses Segment adjusted operating income as the measure of profit or loss and to evaluate the performance of the Company’s segments.

For each segment, the CODM uses this information to assist in evaluating underlying trends, to monitor budget and forecast versus actual results, to make investment decisions to allocate resources both in total, and between the segments, and to make key segment personnel decisions.

Segment profit is based on Operating income, excluding depreciation, amortization of intangible assets, Separation-related costs, restructuring and operating model optimization initiatives, impairment charges, the impact of the conversion of stock-based awards, issuance of Founder Shares, Other operating expense (income), net, and unallocated general corporate administrative expenses (referred to herein as “Segment adjusted operating income”), as the CODM excludes these items in assessing segment financial performance.

Segment profit is based on Operating income, excluding depreciation, amortization of intangible assets, Separation-related costs, restructuring expenses and operating model optimization initiatives, impairment charges, the impact of the conversion of stock-based awards, issuance of Founder Shares, Proposed Transaction costs (as defined below), Other operating (income) expense, net, and unallocated general corporate administrative expenses (referred to herein as “Segment adjusted

operating income”), as the CODM excludes these items in assessing segment financial performance.

General corporate/unallocated expenses, which include expenses related to treasury, legal operations, and certain other expenses, along with gains and losses related to the overall management of the Company, are not allocated to the segments.

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Other Essential Health (Women’s Health, Wound Care, and Other)

The Company’s product categories as a percentage of Net sales for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 were as follows:

The Company’s product categories as a percentage of Net sales for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

Product Categories

December 29, 2024 December 31, 2023 January 1, 2023

Product Categories December 28, 2025 December 29, 2024 December 31, 2023

Cough, Cold, and Allergy 13 % 14 % 13 %

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Segment Net Sales and Segment Adjusted Operating Income

Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 were as follows:

Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) Self Care

Skin Health and Beauty

Essential Health

Self Care Skin Health and Beauty

Essential Health Total Self Care Skin Health and Beauty

December 28, 2025 December 29, 2024 December 31, 2023

(Dollars in Millions) Self Care Skin Health and Beauty Essential Health Total Self Care Skin Health and Beauty Essential Health Total Self Care Skin Health and Beauty

Essential Health Total

$ 6,527 $ 4,240 $ 4,688 $ 15,455 $ 6,451 $ 4,378 $ 4,615 $ 15,444 $ 6,030 $ 4,350 $ 4,570 $ 14,950

Net sales $ 6,378 $ 4,114 $ 4,632 $ 15,124 $ 6,527 $ 4,240 $ 4,688 $ 15,455 $ 6,451 $ 4,378 $ 4,615 $ 15,444

Segment adjusted Cost of sales (1)

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Separation-related costs (5)

Restructuring and operating model optimization initiatives 221 32 100

Restructuring expenses and operating model optimization initiatives (6)

Impairment charges (7)

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Founder Shares (9)

Other operating expense (income), net 26 ( 10 ) ( 35 )

Proposed Transaction costs (10)

Other operating (income) expense, net ( 23 ) 26 ( 10 )

General corporate/unallocated expenses 329 314 296

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(1) The Company defines Segment adjusted cost of sales as Cost of sales adjusted for amortization of intangible assets, Separation-related costs, conversion of stock-based awards, Founder Shares, operating model optimization initiatives, and general corporate/unallocated expenses.

(2) Other segment expense items for each reportable segment include employee-related costs, brand support, shipping and handling costs, research and development costs, and certain other operating expenses (income).

(3) Depreciation includes the amortization of integration and development costs capitalized in connection with cloud computing arrangements.

(2) Other segment expense items for each reportable business segment include brand support, employee-related costs, shipping and handling costs, research and development costs, and certain other operating expenses (income).

(3) Depreciation consists of depreciation of property, plant, and equipment and amortization of integration and development costs capitalized in connection with cloud computing arrangements.

(4) Relates to the amortization of definite-lived intangible assets (primarily trademarks, trade names, and customer lists) over their estimated useful lives.

(5) Separation-related costs includes depreciation expense on Separation-related assets for the fiscal twelve months ended December 29, 2024.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Separation-Related Costs,” for additional information regarding Separation-related costs.

(6) Restructuring expenses and operating model optimization initiatives relate to the 2024 Multi-Year Restructuring Initiative in the fiscal twelve months ended December 29, 2024 and December 28, 2025 (as defined in Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives”).

See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” for additional information.

(7) Impairment charges for the fiscal twelve months ended December 28, 2025 includes $ 23 million recognized in connection with the ORSL ® trade name following regulatory changes in India.

Impairment charges for the fiscal twelve months ended December 29, 2024 includes $ 488 million recognized in relation to Dr.Ci:Labo ® long-lived assets, $ 68 million recognized on the held for sale asset associated with the Company’s former corporate headquarters in Skillman, New Jersey, and $ 22 million recognized on certain software development assets.

See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Impairment of Long-Lived Assets,” for additional information.

(8) Segment adjusted operating income excludes the impact of the conversion of stock-based awards that occurred on August 23, 2023 (see Note 11, “Stock-Based Compensation” for additional information).

The adjustment represents the net impact of the gain on reversal of previously recognized stock-based compensation expense, offset by stock-based compensation expense recognized in the fiscal twelve months ended December 29, 2024 and December 31, 2023 relating to employee services provided prior to the Separation.

(6) On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and PSUs to executive officers and either stock options and PSUs or RSUs to non-executive individuals (see Note 11, “Stock-Based Compensation” for additional information).

The adjustment represents the net impact of the gain on reversal of previously recognized stock-based compensation expense, offset by stock-based compensation expense recognized in the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 relating to employee services provided prior to the Separation.

(9) On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and PSUs to executive officers and either stock options and PSUs or RSUs to non-executive individuals.

(10) Proposed Transaction costs primarily consist of expenses incurred in connection with the Proposed Transaction, including advisory fees, legal costs, and other professional service costs (the “Proposed Transaction costs”).

Depreciation and Amortization

Depreciation and amortization by reportable segment for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 were as follows:

Depreciation and amortization by reportable business segment for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

Self Care $ 204 $ 217 $ 202

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$ 557 $ 622 $ 627

(1) Depreciation includes the amortization of integration and development costs capitalized in connection with cloud computing arrangements.

(1) Depreciation consists of depreciation of property, plant, and equipment and amortization of integration and development costs capitalized in connection with cloud computing arrangements.

Amortization relates to the amortization of intangible assets.

Geographic Information

Net sales are attributed to a geographic region based on the location of the customer and for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 were as follows:

Net sales are attributed to a geographic region based on the location of the customer and for the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) December 29, 2024 December 31, 2023 January 1, 2023

(Dollars in Millions) December 28, 2025 December 29, 2024 December 31, 2023

North America (1)

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Total Net sales $ 15,124 $ 15,455 $ 15,444

$ 15,455 $ 15,444 $ 14,950

(1) Includes U.S.

Net sales in the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 of $ 6,719 million, $ 6,767 million, and $ 6,599 million, respectively.

Net sales in the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023 of $ 6,460 million, $ 6,719 million, and $ 6,767 million, respectively.

Long-lived assets consisting of property, plant, and equipment, net of accumulated depreciation as of December 28, 2025 and December 29, 2024 were as follows:

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North America (1)

$ 1,156 $ 922

Europe, Middle East, and Africa 536 432

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Major Customers

One of the Company’s customers accounted for approximately 12 %, 12 %, and 13 % of total Net sales for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

One of the Company’s customers accounted for approximately 12 % of total Net sales in each of the fiscal twelve months ended December 28, 2025, December 29, 2024, and December 31, 2023.

Restructuring Expenses and Operating Model Optimization Initiatives

2024 Multi-Year Restructuring Initiative

As part of the Company’s continued transformation to a fit-for-purpose consumer company, during the fiscal year 2024, the Company began strategic initiatives intended to enhance organizational efficiencies and better position Kenvue for future growth (“Our Vue Forward”).

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The 2024 Multi-Year Restructuring Initiative primarily includes global workforce reductions, changes in management structure, and the transition to centralized shared-service functions in lower-cost locations.

The 2024 Multi-Year Restructuring Initiative is expected to result in pre-tax restructuring expenses and other charges totaling approximately $ 550 million, consisting of information technology and project-related costs (approximately 50 %), employee-related costs (approximately 40 %), and other implementation costs (approximately 10 %).

These charges are expected to be funded primarily through cash flows generated from operations.

The Company planned to incur approximately $ 275 million in pre-tax restructuring expenses and other charges in each of fiscal year 2024 and fiscal year 2025.

The Company incurred lower than expected spend in fiscal year 2024 due to the shift in timing of certain information technology and project-related costs to fiscal year 2025 and lower than expected employee-related costs relating to severance spend due to employee redeployment and voluntary exits.

The following table summarizes the classification of pre-tax restructuring expenses and other charges incurred related to the 2024 Multi-Year Restructuring Initiative during the fiscal twelve months ended December 29, 2024:

The Company incurred lower than expected spend in fiscal year 2024 due to the shift in timing of certain information technology and project-related costs to fiscal year 2025.

As of the end of fiscal year 2025, the Company has substantially completed all actions under the 2024 Multi-Year Restructuring Initiative.

The 2024 Multi-Year Restructuring Initiative resulted in pre-tax restructuring expenses and other charges totaling $ 556 million, consisting of information technology and project-related costs (approximately 56 %), employee-related costs (approximately 39 %), and other implementation costs (approximately 5 %) through the fiscal twelve months ended December 28, 2025.

These charges have been, and are expected to continue to be, funded primarily through cash flows generated from operations.

Fiscal Twelve Months Ended

(Dollars in Millions)

December 29, 2024

(Dollars in Millions) December 28, 2025 December 29, 2024

Restructuring expenses $ 290 $ 185

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Total pre-tax restructuring expenses and other charges $ 335 $ 221

The following table summarizes the pre-tax restructuring expenses and other charges incurred by cost type related to the 2024 Multi-Year Restructuring Initiative during the fiscal twelve months ended December 29, 2024 and inception to date through December 29, 2024:

The following table summarizes the pre-tax restructuring expenses and other charges incurred by cost type related to the 2024 Multi-Year Restructuring Initiative during the fiscal twelve months ended December 28, 2025 and December 29, 2024 and inception-to-date through December 28, 2025:

Fiscal Twelve Months Ended Inception-To-Date Through December 28, 2025

(Dollars in Millions)

December 29, 2024

(Dollars in Millions) December 28, 2025 December 29, 2024

Employee-related costs (1)

$ 109 $ 106 $ 215

Information technology and project-related costs (2)

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Total pre-tax restructuring expenses and other charges

$ 335 $ 221 $ 556

(1) Employee-related costs primarily include severance and other termination benefits.

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(3) Other implementation costs primarily include costs to terminate contracts, impairments of assets, and other associated costs to exit.

The following table summarizes the activity related to accrued restructuring expenses and other charges for the 2024 Multi-Year Restructuring Initiative during the fiscal twelve months ended December 29, 2024:

(Dollars in Millions)

Employee-related Costs (1)

(Dollars in Millions) Employee-Related Costs (1)

Information Technology and Project-Related Costs (2)

Other Implementation Costs (3)

Accrued restructuring expenses and other charges as of December 31, 2023

$ — $ — $ — $ —

Total Accrued Costs

December 31, 2023 $ — $ — $ — $ —

Charges to earnings 106 99 16 221

106 99 16 221

Cash payments ( 75 ) ( 34 ) ( 7 ) ( 116 )

( 75 ) ( 34 ) ( 7 ) ( 116 )

Non-cash charges ( 6 ) — ( 6 ) ( 12 )

( 6 ) — ( 6 ) ( 12 )

Accrued restructuring expenses and other charges as of December 29, 2024

$ 25 $ 65 $ 3 $ 93

December 29, 2024 25 65 3 93

Charges to earnings 109 216 10 335

Cash payments ( 89 ) ( 191 ) ( 9 ) ( 289 )

Non-cash charges ( 8 ) ( 2 ) ( 4 ) ( 14 )

December 28, 2025 $ 37 $ 88 $ — $ 125

(1) Employee-related costs primarily include severance and other termination benefits.

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(3) Other implementation costs primarily include costs to terminate contracts, impairments of assets, and other associated costs to exit.

S upply Chain Optimization Initiatives

Restructuring charges associated with supply chain optimization initiatives, and directly attributed to the Company, were primarily related to contractors/outside services, asset write-downs, and accelerated depreciation.

The initiatives were completed in the fiscal fourth quarter of fiscal year 2022 and as such, no costs were recognized for these initiatives in the fiscal twelve months ended December 29, 2024 and December 31, 2023.

Costs have been recognized in the Consolidated Statement of Operations in the fiscal twelve months ended January 1, 2023 as follows:

Fiscal Twelve Months Ended

(Dollars in Millions) January 1, 2023

Cost of sales $ 55

Selling, general, and administrative expenses 45

Subsequent Events

On February 17, 2026, the Company’s Board approved an initiative that aims to optimize its operating model, transform its supply chain, reduce complexity, and drive operational efficiencies, while strengthening core capabilities.

The initiative is expected to result in pre-tax restructuring expenses and other charges totaling approximately $ 250 million in fiscal year 2026, consisting of information technology and project-related costs (approximately 59 %), employee-related costs (approximately 35 %), and other implementation costs (approximately 6 %).

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data