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Restructuring expenses and operating model optimization initiatives relate to the 2026 Restructuring Initiative for the fiscal three and six months ended June 28, 2026 and the 2024 Multi-Year Restructuring Initiative for the fiscal three and six months ended June 29, 2025. See (6) Note 15, “Restructuring Expenses and Operating Model Optimization Initiatives,” for additional information. Restructuring expenses and operating model optimization initiatives include accelerated depreciation expense on assets related to the 2026 Restructuring Initiative for the fiscal three and six months ended June 28, 2026.
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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 (6) defined in Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives”). See Note 19, “Restructuring Expenses and Operating Model Optimization Initiatives,” for additional information.
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The following table summarizes the activity related to accrued restructuring expenses and other charges for the 2026 Restructuring Initiative during the fiscal six months ended June 28, 2026:
Read in the filing ↗ Also in 8-K of Sep 28, 2026
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 three and six months ended June 29, 2025:
Read in the filing ↗ Also in 8-K of Sep 28, 2026
As of the end of fiscal year 2025, the Company completed all actions under the 2024 Multi-Year Restructuring Initiative, and no additional costs will be incurred. The 2024 Multi-Year Restructuring Initiative resulted in pre-tax restructuring expenses and other charges totaling $556 million through the fiscal twelve months ended December 28, 2025. The Company will continue to make cash payments for restructuring expenses and other charges already incurred, with the majority of these payments anticipated to occur by the end of fiscal year 2026. These payments have been, and are expected to continue to be, funded primarily through cash flows generated from operations.
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The following table summarizes the pre-tax restructuring expenses and other charges incurred by cost type related to the 2026 Restructuring Initiative during the fiscal three and six months ended June 28, 2026, which also represents inception-to-date through June 28, 2026:
Read in the filing ↗ Also in 8-K of Sep 28, 2026
Certain costs incurred associated with restructuring activities, including one-time termination benefits and employee-related costs, are accounted for in accordance with ASC 420, Exit or Disposal Cost Obligations. The Company recognizes a liability and the related expense for these restructuring costs when the liability is incurred and can be measured. In accordance with existing benefit arrangements, future employee termination costs to be incurred in conjunction with involuntary separations are accrued when such separations are probable and estimable. The related expense for these restructuring costs is recorded in the Restructuring expenses line item in the Consolidated Statements of Operations. Other charges are recorded in the Cost of sales or Selling, general, and administrative expenses line items in the Consolidated Statements of Operations, as applicable. Segment profit is based on Operating income and management excludes restructuring expenses and other charges in assessing segment financial performance.
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On February 17, 2026, the Company’s Board approved an initiative (the “2026 Restructuring 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%). These charges are expected to be funded primarily through cash flows generated from operations. 27 The following table summarizes the classification of pre-tax restructuring expenses and other charges incurred related to the 2026 Restructuring Initiative during the fiscal three and six months ended June 28, 2026:
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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.
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(2l) Reclassification of "Restructuring expenses" to " Costs of products sold" and "Marketing, research and general expenses".
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In conjunction with the disposal of the IFP Business, K-C undertook various pre-sale restructuring steps that resulted in additional tax (3) expense. After completion of the final restructuring steps, the sale of the IFP Business resulted in a tax benefit of approximately $6.3 million and is included in the preliminary gain on disposal reflected above.
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(2u) Reclassification of "Restructuring expenses" to "Costs of products sold", "Marketing, research and general expenses", and "Other (income) and expense, net".
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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 (1) 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.
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Equity Company Adjustments – Kimberly-Clark’s proportionate share of charges recognized by the Joint Venture formed as part of the completion of the IFP Transaction for certain acquisition-related accounting impacts and restructuring charges.
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• Equity Company Adjustments - Kimberly-Clark's proportionate share of charges recognized by the Arbex Joint Venture formed as part of the completion of the IFP Transaction for certain acquisition-related accounting impacts and restructuring charges.
Read in the filing ↗ Also in 10-Q of Nov 5, 2026
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”). To further Our Vue Forward, on May 6, 2024, the Company’s Board approved a multi-year initiative (the “2024 Multi-Year Restructuring Initiative”) to build on the Company’s strengths, improve underlying information technology infrastructure, and optimize its cost structure by rebalancing resources to better position the Company for future growth. 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 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.
Read in the filing ↗ Also in 8-K of Sep 28, 2026
Cash provided by operations for the year ended December 31, 2025 was $2.8 billion compared to $3.2 billion in the prior year. The decrease was driven by lower operating profit and timing impacts to working capital, including incremental restructuring and IFP Transaction separation cost payments of approximately $110.
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Cash provided by operations was $1.8 billion during the nine months ended September 30, 2025 compared to $2.4 billion in the prior year. The decrease was driven by lower operating profit and timing impacts to working capital, including incremental restructuring and IFP Transaction separation cost payments of approximately $120.
Read in the filing ↗ Also in 10-Q of Nov 5, 2026
Net income of equity companies was $29 million compared to $46 million in the prior year. The decrease was primarily driven by our share of the Arbex Joint Venture's net loss of $20 million, which was inclusive of $51 million pre-tax ($38 million after-tax) of acquisition accounting and restructuring charges.
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Net income of equity companies of $137 million was flat versus the prior y ear, as our share of the Arbex Joint Venture's net loss of $20 million, inclusive of acquisition accounting and restructuring charges discussed in the third quarter results above, was offset by higher earnings from Kimberly-Clark de Mexico, S.A.B. de C.V., primarily reflecting favorable currency impacts.
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(1) We use “Adjusted EBITDA” to refer to Kenvue’s U.S. GAAP Net income adjusted for interest, provision for taxes on operating profit, and depreciation and amortization, further adjusted for restructuring expenses and operating model optimization initiatives, costs incurred in connection with Kenvue’s establishment as a standalone public company, conversion of stock-based awards, stock-based awards granted to individuals employed by Kenvue as of October 2, 2023 impairment charges and the impa... (2) We use “Unlevered Free Cash Flow” to refer to Adjusted EBITDA as defined above minus taxes on operating profit, minus capital expenditures, plus (or minus) decrease (increase) in net working capital, minus after-tax restructuring costs. Unlevered Free Cash Flow is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP, and no reconciliation is provided to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented.
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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%). 67
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December 31, 2029. The Program is expected to result in cumulative pre-tax charges of approximately $ 3.1 billion ($ 2.5 billion cash and $ 0.6 billion non-cash) over this period, with cash charges primarily related to supply chain network optimization (approximately $ 800 ), enterprise resource planning and technology integration (approximately $ 600 ), workforce optimization (approximately $ 400 ), advisory services (approximately $ 400 ) and program management and other restructuring and integration costs (approximately $ 300 ). Non-cash charges are primarily related to supply chain network optimization.
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(1) We use “Adjusted EBITDA” to refer to K-C’s earnings before interest, taxes, depreciation, and amortization, post stock-based compensation, further adjusted for restructuring expenses. Adjusted EBITDA is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP, and no reconciliation is provided to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented.
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(2) We use “Unlevered Free Cash Flow” to refer to Adjusted EBITDA as defined above, minus capital expenditures, minus change in net working capital, minus after-tax restructuring costs, minus taxes. Unlevered Free Cash Flow is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP, and no reconciliation is provided to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented.
Read in the filing ↗ Also in 8-K of Jan 16, 2026
Fiscal (Dollars in Twelve December December 29, Millions) Months Ended 28, 2025 2024 ────────────────────────────────────────────────────────────────────────────── Change in Benefit Obligation Projected benefit obligation… $ 786 $ 829 of fiscal year Service 32 30 cost Interest 28 28 cost Actuarial (26 ) (39 ) gain(1) Plan participan… 7 6 contributi… Curtailmen… settlement… (41 ) (39 ) and restructur… Benefits paid from (18 ) (15 ) plan assets Effect of exchange 80 (42 ) rates Other (16 ) 28 Projected benefit obligation… $ 832 $ 786 of fiscal year Change in Plan Assets Plan assets at fair value—begi… $ 526 $ 535 of fiscal year Company 28 31 contributi… Plan participan… 7 6 contributi… Benefits paid from (18 ) (15 ) plan assets Actual return on 22 21 plan assets Curtailmen… settlement… (41 ) (29 ) and restructur… Effect of exchange 48 (23 ) rates Plan assets at fair value—end $ 572 $ 526 of fiscal year Funded status—end $ (260 ) $ (260 ) of fiscal year Amounts recognized on the Consolidat… Balance Sheets consist of the following: Other $ 86 $ 84 assets Accrued (11 ) (9 ) liabilities Employee-r… (335 ) (335 ) obligations Total recognized on the Consolidat… $ (260 ) $ (260 ) Balance Sheets—end of fiscal year Amounts recognized in Accumulated other comprehens… loss consist of the following: Net actuarial $ 159 $ 170 loss Prior service (1 ) (5 ) cost Total before tax $ 158 $ 165 effects Accumulated benefit obligation… $ 746 $ 686 of fiscal year
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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.
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(2) We use “Unlevered Free Cash Flow” to refer to Adjusted EBITDA as defined above, minus taxes on operating profit, minus capital expenditures, plus (or minus) decrease (increase) change in net working capital, plus non-cash taxes, minus restructuring costs, minus taxes on operating profit. Unlevered Free Cash Flow is a non-GAAP financial measure. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP, and no reconciliation is provided to the most directly comparable financial measure calculated and presented in accordance with GAAP for any of the periods presented.
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Our share of net income of equity companies for the three and nine months ended September 30, 2026 was $29 and $137, respectively, compared to $46 and $137 in the prior year. The decrease for the three months ended September 30, 2026 was primarily driven by our share of the Arbex Joint Venture's net loss of $20, which was inclusive of $51 pre-tax ($38 after-tax) of acquisition accounting and restructuring charges. This loss was offset in the year to date period by higher earnings from Kimberly-Clark de Mexico, S.A.B. de C.V., primarily reflecting favorable currency impacts.
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On October 30, 2026, in connection with the Kenvue Acquisition, our Board of Directors approved the Kenvue Integration Program (the "Program") which is intended to achieve certain operating profit synergies by 2030. Actions contemplated under the Program commenced on November 2, 2026 and are expected to be completed by December 31, 2029. The Program is expected to result in cumulative pre-tax charges of approximately $3.1 billion ($2.5 billion cash and $0.6 billion non-cash) over this period, with cash charges primarily related to supply chain network optimization (approximately $800), enterprise resource planning and technology integration (approximately $600), workforce optimization (approximately $400), advisory services (approximately $400) and program management and other restructuring and integration costs (approximately $300). Non-cash charges are primarily related to supply chain network optimization.
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Represents estimated income tax impact of $30.9 million and $62.6 million related to the financing adjustments for the six months ended June 30, 2026, and for the year ended December 31, 2025, respectively. Tax-related adjustments are based upon an estimated blended statutory income tax rate of 24.6%. The estimated blended statutory tax rate used for the unaudited pro forma condensed combined financial information will likely vary from the actual (5bb) effective tax rates in periods as of and subsequent to the completion of the mergers depending on post-Transaction activities, including legal entity restructuring and integration with parent which can affect future US inclusions and the combined company’s ability to claim foreign tax credits, repatriation decisions, deductibility of transaction-related costs, changes in recognition and measurement of Kenvue’s uncertain tax positions and realizability of deferred tax assets, geographical mix of earnings, among other things.
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Represents the estimated income tax expense impact of K-C’s recognition of deferred revenue related to the license of intellectual property in Note (3e) and the adjustment for net TSA related income included in marketing, research and general expenses discussed in Note (3f) using statutory tax rates based on the applicable jurisdictions. The effective tax rate of the combined company following the transaction could be significantly different (either higher or lower) (3i) depending on the post-transaction activities, including legal entity restructuring and the geographical mix of earnings. The estimated incremental income tax expense impact of K-C’s proportional share of net income of the Joint Venture in Note (3g) and pro forma interest expense related to the IFP Term Loan Facility amounts retained by the Joint Venture in Note (3h) is not expected to be significant due to the taxation of such net income at the K-C ownership level.
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On October 30, 2026, in connection with the Mergers, the Board approved the Kenvue Integration Program (the “Program”), which is intended to achieve certain operating profit synergies by 2030. Actions contemplated under the Program commenced on November 2, 2026 and are expected to be completed by December 31, 2029. The Program is expected to result in cumulative pre-tax charges of approximately $3.1 billion ($2.5 billion cash and $0.6 billion non-cash) over this period, with cash charges primarily related to supply chain network optimization (approximately $0.8 billion), enterprise resource planning and technology integration (approximately $0.6 billion), workforce optimization (approximately $0.4 billion), advisory services (approximately $0.4 billion) and program management and other restructuring and integration costs (approximately $0.3 billion). Non-cash charges are primarily related to supply chain network optimization. Additionally, K-C expects to spend approximately $1.4 billion in capital related to the Program through December 31, 2029.
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Represents estimated income tax impact of $30.5 million and $289.8 million related to the transaction accounting adjustments for the six months ended June 30, 2026, and for the year ended December 31, 2025, after applying the applicable statutory income tax rates to pre-tax pro forma adjustments and adjusting for certain expected tax impacts. For the year ended December 31, 2025, the Company anticipates certain transaction costs will be nondeductible for income tax purposes. The estimated statutory tax rates used for the unaudited pro forma condensed combined financial information will likely vary from the actual effective tax rates in periods as of (4kk) and subsequent to the completion of the mergers depending on post-Transaction activities, including legal entity restructuring and integration with parent which can affect future US inclusions and the combined company’s ability to claim foreign tax credits, repatriation decisions, deductibility of transaction-related costs, changes in recognition and measurement of Kenvue’s uncertain tax positions and realizability of deferred tax assets, geographical mix of earnings, among other things.
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Represents the estimated increase of $5.1 billion to net deferred tax liabilities and $161.7 million net decrease to deferred tax assets related to temporary differences driven primarily from the fair value of Kenvue’s intangible assets. The net deferred tax adjustments are inclusive of offsets of $442.1 million to eliminate Kenvue’s historical deferred tax liability related to tax-deductible goodwill, and a reclass of $30.8 million from other current assets to deferred tax liabilities. Deferred taxes are established using statutory tax rates based on the applicable jurisdictions. The effective tax rate of the combined company following the transaction could be (4l) significantly different (either higher or lower) depending on the post-transaction activities, including legal entity restructuring and the geographical mix of earnings. The estimated deferred tax adjustments are preliminary and are subject to change based upon the final determination of the fair value of assets and liabilities, changes in judgment regarding realizability of deferred tax assets as a result of the combination, fair value adjustments related to Kenvue equity awards attributable to pre-combination services and other assumptions that will need to be finalized in conjunction with the consummation of the mergers. These changes in estimates could be material.
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… 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 …
Read in the filing ↗ Also in 8-K of Sep 28, 2026