Form 8-K

8-K — KIMBERLY CLARK CORP

Accession: 0001104659-26-111354

Filed: 2026-09-28

Period: 2026-09-28

CIK: 0000055785

SIC: 2670 (CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES))

Item: Other Events

Item: Financial Statements and Exhibits

Documents

8-K — tm2625576d1_8k.htm (Primary)

EX-23.1 — EXHIBIT 23.1 (tm2625576d1_ex23-1.htm)

EX-99.1 — EXHIBIT 99.1 (tm2625576d1_ex99-1.htm)

EX-99.2 — EXHIBIT 99.2 (tm2625576d1_ex99-2.htm)

EX-99.3 — EXHIBIT 99.3 (tm2625576d1_ex99-3.htm)

EX-99.4 — EXHIBIT 99.4 (tm2625576d1_ex99-4.htm)

GRAPHIC (tm2625576d1_ex99-2img001.jpg)

XML — IDEA: XBRL DOCUMENT (R1.htm)

8-K — FORM 8-K

8-K (Primary)

Filename: tm2625576d1_8k.htm · Sequence: 1

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0000055785

KIMBERLY CLARK CORP

0000055785

2026-09-28

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UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13

or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date

of earliest event reported): September 28, 2026

KIMBERLY-CLARK CORPORATION

(Exact name of registrant

as specified in its charter)

Delaware

1-225

39-0394230

(State or other jurisdiction of

incorporation)

(Commission File Number)

(I.R.S. Employer Identification

No.)

P.O.

Box 619100

Dallas, Texas 75261-9100

(Address of Principal Executive Offices) (Zip Code)

(972)

281-1200

(Registrant’s telephone number, including area code)

Check the appropriate

box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the

following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b)

of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which

registered

Common Stock, $1.25 Par Value

KMB

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

¨ Emerging

growth company

an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period

for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 8.01 Other Events.

Exchange Offers and Consent Solicitations

As previously announced, on November 2, 2025,

Kimberly-Clark Corporation, a Delaware corporation (“Kimberly-Clark”), entered into an Agreement and Plan of Merger (the “Merger

Agreement”), with Kenvue Inc., a Delaware corporation (“Kenvue”), Vesta Sub I, Inc., a Delaware corporation and

a direct wholly owned subsidiary of Kimberly-Clark (“First Merger Sub”), and Vesta Sub II, LLC, a Delaware limited liability

company and a direct wholly owned subsidiary of Kimberly-Clark (“Second Merger Sub”). The Merger Agreement provides that,

among other things, (i) First Merger Sub will merge with and into Kenvue (the “First Merger”), with Kenvue surviving

as a direct wholly owned subsidiary of Kimberly-Clark (the “Initial Surviving Company”), and (ii) 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 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Second Merger

Sub surviving the Second Merger as a direct wholly owned subsidiary of Kimberly-Clark.

On September 28, 2026, Kimberly-Clark announced

the commencement, in connection with the Mergers, of an exchange offer for any and all outstanding notes (the “Kenvue Notes”)

issued by Kenvue, for up to $7.0 billion aggregate principal amount of new notes issued by Kimberly-Clark and cash. In conjunction with

the offers to exchange (each, an “Exchange Offer” and, collectively, the “Exchange Offers”) the Kenvue Notes,

Kimberly-Clark is concurrently soliciting consents (each, a “Consent Solicitation” and, collectively, the “Consent Solicitations”)

with respect to each series of Kenvue Notes to adopt certain proposed amendments to the indenture (the “Kenvue Indenture”)

governing the Kenvue Notes to (1) eliminate substantially all of the restrictive covenants in the Kenvue Indenture with respect to

each series of Kenvue Notes, (2) eliminate certain of the events which may lead to an “Event of Default” in the Kenvue

Indenture with respect to each series of Kenvue Notes (other than for the failure to pay principal, premium or interest), (3) eliminate

the Securities and Exchange Commission (the “SEC”) reporting covenant in the Kenvue Indenture with respect to each series

of Kenvue Notes and (4) eliminate certain restrictions on Kenvue in the Kenvue Indenture with respect to each series of Kenvue Notes

from consolidating with or merging into any other person or conveying, transferring or leasing all or any of its properties and assets

to any person.

The Exchange Offers and Consent Solicitations

are being made solely pursuant to the conditions set forth in the confidential offering memorandum and consent solicitation statement

dated September 28, 2026 in a private offering exempt from, or not subject to, registration under the Securities Act of 1933, as

amended, and are conditioned, among other things, upon the consummation of the First Merger, which is expected to occur in the fourth

quarter of calendar year 2026.

A copy of the press release issued by Kimberly-Clark

is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein in its entirety.

Financial Information Related to Mergers

Included in this Current Report on Form 8-K

are (a) Kenvue’s audited consolidated financial statements and related notes as of December 28, 2025 and December 29,

2024 and for each of the years in the three-year period ended December 28, 2025 and the related report of PricewaterhouseCoopers

LLP, Kenvue’s independent registered public accounting firm, (b) Kenvue’s unaudited consolidated financial statements

and related notes for the three and six months ended June 28, 2026 and June 29, 2025, and (c) Kimberly Clark’s unaudited

pro forma condensed combined financial information (“pro forma financial information”), giving effect to the Mergers and certain

related transactions as set forth therein, for the year ended December 31, 2025 and as of and for the six months ended June 30,

2026, and the related notes to the pro forma combined financial information.

Also included in this Current Report on Form 8-K

is the consent of PricewaterhouseCoopers LLP consenting to the incorporation by reference in certain of Kimberly Clark’s Registration

Statements of its report included in Exhibit 99.2, which is included as Exhibit 23.1.

The pro forma financial information

included in this Current Report on Form 8-K has been presented for informational purposes only and is not necessarily indicative

of the combined financial position or results of operations that would have been realized had the Mergers and related transactions occurred

as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations

that Kimberly-Clark will experience after the Mergers.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Kenvue

Kenvue’s audited consolidated financial

statements and related notes as of December 28, 2025 and December 29, 2024 and for each of the years in the three-year period

ended December 28, 2025 and the related report of PricewaterhouseCoopers LLP, Kenvue’s independent registered public accounting

firm, are filed herewith as Exhibit 99.2 and included herein.

Kenvue’s unaudited consolidated financial statements and related

notes for the three and six months ended June 28, 2026 and June 29, 2025, are filed herewith as Exhibit 99.3 and included

herein.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined financial

information of Kimberly-Clark, giving effect to the Mergers and certain related transactions as set forth therein, for the year ended

December 31, 2025 and as of and for the six months ended June 30, 2026, and the related notes to the pro forma combined financial

information, are filed as Exhibit 99.4 and included herein.

(d) Exhibits.

Exhibit No.

Description

23.1

Consent of PricewaterhouseCoopers LLP.

99.1

Press Release issued by Kimberly-Clark Corporation on September 28, 2026.

99.2

Kenvue’s audited consolidated financial statements and related notes as of December 28, 2025 and December 29, 2024 and for each of the years in the three-year period ended December 28, 2025 and the related report of PricewaterhouseCoopers LLP, Kenvue’s independent registered public accounting firm.

99.3

Kenvue’s unaudited consolidated financial statements and related notes for the three and six months ended June 28, 2026 and June 29, 2025.

99.4

Kimberly-Clark’s unaudited pro forma condensed combined financial information, giving effect to the Mergers and certain related transactions as set forth therein, for the year ended December 31, 2025 and as of and for the six months ended June 30, 2026, and the related notes.

104

The cover page from Kimberly-Clark Corporation’s Current Report on Form 8-K, formatted in Inline XBRL.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,

the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KIMBERLY-CLARK CORPORATION

Date: September 28, 2026

By:

/s/ Nelson Urdaneta

Name:

Nelson Urdaneta

Title:

Senior Vice President and Chief Financial Officer

EX-23.1 — EXHIBIT 23.1

EX-23.1

Filename: tm2625576d1_ex23-1.htm · Sequence: 2

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

FIRM

We hereby consent to the incorporation by reference in the Registration

Statements on Form S-3 (No. 333-284907), Form S-4 (No. 333-291928), and Form S-8 (Nos. 33-49050, 33-58402, 33-64689, 333-02607, 333-06996,

333-17367, 333-43647, 333-94139, 333-51922, 333-61010, 333-62358, 333-89314, 333-104099, 333-115347, 333-155380, 333-161986, 333-163891,

333-173725, 333-214818, 333-233917, 333-255625, 333-264323, and 333-267480) of Kimberly-Clark Corporation of our report dated February

20, 2026 relating to the financial statements of Kenvue Inc., which appears in this Current Report on Form 8-K.

/s/ PricewaterhouseCoopers LLP

Florham Park, New Jersey

September 28, 2026

EX-99.1 — EXHIBIT 99.1

EX-99.1

Filename: tm2625576d1_ex99-1.htm · Sequence: 3

Exhibit 99.1

Kimberly-Clark Corporation Announces Commencement of Exchange Offers

and Consent Solicitations for Kenvue Notes

DALLAS, September 28, 2026 – Kimberly-Clark Corporation

(NASDAQ: KMB) (“Kimberly-Clark”) announced today the commencement, in connection with its previously announced pending

acquisition (“Acquisition”) of Kenvue Inc. (NYSE: KVUE) (“Kenvue”), of an exchange offer (each an

“Exchange Offer” and, collectively, the “Exchange Offers”) for any and all outstanding notes (the

“Kenvue Notes”) issued by Kenvue for up to $7,000,000,000 aggregate principal amount of new notes to be issued by Kimberly-Clark

(the “Kimberly-Clark Notes”) and cash.

The following table sets forth the Exchange Consideration, Early Participation

Premium, Cash Payment and Total Consideration for each series of Kenvue Notes as set forth in the table below:

Early

Participation

Total

Consideration(2)(3)(4)(5)(6)

Title

of Series of

Kenvue Notes

CUSIP/ISIN

No.

of Kenvue

Notes(1)

Principal

Amount

Outstanding of

Kenvue Notes

Kimberly-Clark

Notes to be

Issued in

Exchange for

Kenvue Notes

Cash

Payment

(2)(3)

Exchange

Consideration –

Principal Amount

of Kimberly-Clark

Notes(2)(4)

Premium

–

Principal

Amount of

Kimberly-Clark

Notes(2)(4)(5)

Principal

Amount of

Kimberly-Clark

Notes

Cash

5.050% Senior Notes due 2028

49177JAF9 / US49177JAF93

$ 1,000,000,000

5.050% Senior Notes due 2028

$ 1.00

$ 970

$ 30

$ 1,000

$ 1.00

5.000% Senior Notes due 2030

49177JAH5 / US49177JAH59

$ 1,000,000,000

5.000% Senior Notes due 2030

$ 1.00

$ 970

$ 30

$ 1,000

$ 1.00

4.850% Senior Notes due 2032

49177JAS1 / US49177JAS15

$ 750,000,000

4.850% Senior Notes due 2032

$ 1.00

$ 970

$ 30

$ 1,000

$ 1.00

4.900% Senior Notes due 2033

49177JAK8 / US49177JAK88

$ 1,250,000,000

4.900% Senior Notes due 2033

$ 1.00

$ 970

$ 30

$ 1,000

$ 1.00

5.100% Senior Notes due 2043

49177JAM4 / US49177JAM45

$ 750,000,000

5.100% Senior Notes due 2043

$ 1.00

$ 970

$ 30

$ 1,000

$ 1.00

5.050% Senior Notes due 2053

49177JAP7 / US49177JAP75

$ 1,500,000,000

5.050% Senior Notes due 2053

$ 1.00

$ 970

$ 30

$ 1,000

$ 1.00

5.200% Senior Notes due 2063

49177JAR3 / US49177JAR32

$ 750,000,000

5.200% Senior Notes due 2063

$ 1.00

$ 970

$ 30

$ 1,000

$ 1.00

(1) No

representation is made as to the correctness or accuracy of the CUSIP numbers listed in this

press release or printed on the Kenvue Notes. Such CUSIP numbers are provided solely for

the convenience of the holders of Kenvue Notes.

(2) For

each $1,000 principal amount of Kenvue Notes accepted for exchange.

(3) The

Cash Payment (as defined herein) will be paid to Eligible Holders (as defined herein) on

the Settlement Date. In order to be eligible to receive the Cash Payment with respect to

a particular series of Kenvue Notes, Eligible Holders of such series of Kenvue Notes must,

at or prior to the Early Participation Date (as defined herein), validly tender (and not

validly withdraw) their Kenvue Notes of such series. Eligible Holders of Kenvue Notes that

tender such Kenvue Notes will be deemed to have given consent to the Proposed Amendments

(as defined herein) in respect of the applicable series of Kenvue Notes tendered.

(4) The

Kimberly-Clark Notes (as defined herein) will accrue interest from (and including) the most

recent date on which interest has been paid on the corresponding series of Kenvue Notes accepted

in the Exchange Offers; provided that the amount of accrued and unpaid interest shall

only be equal to the accrued and unpaid interest on the principal amount of Kenvue Notes

equal to the aggregate principal amount of Kimberly-Clark Notes an Eligible Holder receives,

which may be less than the principal amount of corresponding Kenvue Notes tendered for exchange

if such holder does not receive the Early Participation Premium (as defined herein).

(5) The

Early Participation Premium will be paid to Eligible Holders on the Settlement Date. In order

to be eligible to receive the Early Participation Premium with respect to a particular series

of Kenvue Notes, Eligible Holders of such series of Kenvue Notes must, at or prior to the

Early Participation Date, validly tender (and not validly withdraw) their Kenvue Notes of

such series.

(6) Includes

the Cash Payment and the Early Participation Premium.

Concurrently with the Exchange Offers, Kimberly-Clark (on behalf of

Kenvue) is soliciting consents (each, a “Consent Solicitation” and, collectively, the “Consent Solicitations”)

from Eligible Holders (as defined herein) to adopt certain proposed amendments to the indenture (the “Kenvue Indenture”)

governing the Kenvue Notes with respect to a particular series of Kenvue Notes to (i) eliminate substantially all of the restrictive

covenants in the Kenvue Indenture, (ii) eliminate certain of the events which may lead to an “Event of Default” in the

Kenvue Indenture (other than for the failure to pay principal, premium or interest), (iii) eliminate the SEC reporting covenant in

the Kenvue Indenture, and (iv) eliminate certain restrictions on Kenvue in the Kenvue Indenture from consolidating with or merging

into any other person or conveying, transferring or leasing all or any of its properties and assets to any person (collectively, the “Proposed

Amendments”). The Proposed Amendments to the Kenvue Indenture with respect to a particular series of Kenvue Notes require the

consent of the holders of at least a majority in principal amount of such series of the Kenvue Notes then outstanding under the Kenvue

Indenture each voting as a separate class (the “Requisite Consents”). If the Requisite Consents are obtained for a

particular series of Kenvue Notes, any remaining Kenvue Notes of such series not tendered and exchanged for Kimberly-Clark Notes will

be governed by the Kenvue Indenture as amended by the Proposed Amendments. If an Eligible Holder tenders Kenvue Notes in an Exchange Offer,

such Eligible Holder will be deemed to deliver its consent to the Proposed Amendments with respect to the principal amount of such tendered

Kenvue Notes.

The Exchange Offers and Consent Solicitations are being made pursuant

to the terms and subject to the conditions set forth in the confidential offering memorandum and consent solicitation statement dated

September 28, 2026, and are conditioned upon the consummation of the Acquisition, which condition may not be waived by Kimberly-Clark,

and certain other conditions that may be waived by Kimberly-Clark. The completion of the Acquisition is expected to take place in the

fourth quarter of 2026, subject to the satisfaction of certain customary closing conditions.

Each Exchange Offer will expire at 5:00 p.m., New York City time, on

October 27, 2026, unless extended or terminated (such date and time with respect to an Exchange Offer, as may be extended, the “Expiration

Date”). Each Consent Solicitation will expire at the Expiration Date. The settlement date (the “Settlement Date”)

for the Exchange Offers is expected to occur promptly after the Expiration Date.

For each $1,000 principal amount of Kenvue Notes

validly tendered (and not validly withdrawn before the Early Participation Date) and accepted by Kimberly-Clark (i) at or prior to

5:00 p.m., New York City time, on October 9, 2026, unless extended or terminated (the “Early Participation Date”),

participating holders of such Kenvue Notes will be eligible to receive $970 in principal amount of Kimberly-Clark Notes (the “Exchange

Consideration”), an early participation premium, payable in principal amount of Kimberly-Clark Notes, of $30 (the “Early

Participation Premium”), and $1.00 in cash (the “Cash Payment” and together with the Exchange Consideration

and the Early Participation Premium, the “Total Consideration”) and (ii) after the Early Participation Date but

at any time at or prior to the Expiration Date, participating holders of such Kenvue Notes will be eligible receive the Exchange Consideration

(the “Expiration Date Exchange Consideration”), subject to rounding as described herein. Tenders of Kenvue Notes may

not be withdrawn after 5:00 p.m., New York City time, on October 9, 2026 (the “Withdrawal Deadline”), except in

the limited circumstances where additional withdrawal rights are required by law. In addition, consents to the Proposed Amendments for

any particular series of Kenvue Notes may not be withdrawn or revoked after the Withdrawal Deadline. Consents may be revoked only by validly

withdrawing the associated tendered Kenvue Notes. Eligible Holders who validly tender at or prior to the Withdrawal Deadline and have

not validly withdrawn the tender of their Kenvue Notes of the applicable series before the Withdrawal Deadline will not be able to withdraw

their Kenvue Notes or revoke their consents after the Withdrawal Deadline. As used herein, a “valid withdrawal” means valid

withdrawal prior to the Withdrawal Deadline.

To be eligible to receive the Early Participation Premium and the Cash

Payment, Eligible Holders must (i) have validly tendered and not have validly withdrawn their Kenvue Notes of the applicable series

at or prior to the Early Participation Date and (ii) beneficially own such Kenvue Notes at the Expiration Date. The Early Participation

Premium and the Cash Payment will be paid on the Settlement Date to the noteholder of record on the Expiration Date. To be eligible to

receive the Expiration Date Exchange Consideration, Eligible Holders must validly tender (and not validly withdraw) their Kenvue Notes

after the Early Participation Date and at or prior to the Expiration Date. Because each Exchange Offer and Consent Solicitation is subject

to the satisfaction of certain conditions as described herein, including, among other things, the consummation of the Acquisition, Eligible

Holders of Kenvue Notes will not receive the Early Participation Premium, the Cash Payment, the Exchange Consideration or the Total Consideration,

as applicable, unless the Acquisition is consummated.

The Kimberly-Clark Notes will be issued in minimum denominations of

$2,000 and integral multiples of $1,000 in excess thereof. Kimberly-Clark will not accept any tender that would result in the issuance

of less than $2,000 principal amount of any series of Kimberly-Clark Notes. The aggregate principal amount of each series of Kimberly-Clark

Notes issued to each participating holder for each series of Kenvue Notes validly tendered (and not validly withdrawn) and accepted by

Kimberly-Clark will be rounded down, if necessary, to the nearest whole multiple of $1,000 in excess of $2,000. This rounded amount will

be the principal amount of Kimberly-Clark Notes you will receive, and Kimberly-Clark will pay a cash amount equal to the difference between

the principal amount of the Kimberly-Clark Notes to which you would otherwise be entitled and the principal amount of the Kimberly-Clark

Notes actually issued, plus any accrued and unpaid interest on such principal amount not received as a result of rounding down from the

last interest payment date and up to (but not including) the Settlement Date.

Each series of Kimberly-Clark Notes will have the same interest rate,

interest payment dates, maturity date and optional redemption prices as the corresponding series of Kenvue Notes. No accrued and unpaid

interest is payable upon acceptance of any Kenvue Notes for exchange in the Exchange Offers and Consent Solicitations. However, the first

interest payment on any Kimberly-Clark Notes will include the accrued and unpaid interest on the Kenvue Notes tendered in exchange therefor

so that a tendering Eligible Holder will receive the same interest payment it would have received had its Kenvue Notes not been tendered

in the Exchange Offers and Consent Solicitations; provided that the amount of accrued and unpaid interest shall only be equal to

the accrued and unpaid interest on the principal amount of Kenvue Notes equal to the aggregate principal amount of Kimberly-Clark Notes

an Eligible Holder receives, which may be less than the principal amount of corresponding Kenvue Notes tendered for exchange if such holder

does not receive the Early Participation Premium. For the avoidance of doubt, Kenvue will remain responsible for paying any interest that

accrues on any Kenvue Notes and is payable on any interest payment date occurring prior to the Settlement Date, as well as any interest

that is required to be paid on Kenvue Notes that remain outstanding following the Settlement Date. The Kimberly-Clark Notes will be general,

unsecured senior obligations of Kimberly-Clark and will rank equally in right of payment with all of Kimberly-Clark’s existing and

future unsecured senior indebtedness, liabilities and other obligations and will be effectively subordinated to all of Kimberly-Clark’s

existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness.

The Kimberly-Clark Notes have not been registered under the U.S. Securities

Act of 1933, as amended (the “Securities Act”), or securities laws of any state or any other jurisdiction. Unless registered,

the Kimberly-Clark Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except

pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Exchange Offers

and Consent Solicitations will only be made, and the Kimberly-Clark Notes are only being offered and will only be issued, (a) to

persons reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act)

in compliance with Rule 144A under the Securities Act and (b) outside the United States to non-U.S. persons in compliance with

Regulation S under the Securities Act, and (if a resident in a member state of the European Economic Area) such person is not a “EEA

retail investor” or (if a resident in the United Kingdom) such person is not a “UK retail investor” (as defined in the

confidential offering memorandum and consent solicitation statement) or (if resident in Canada) it is a “non-U.S. Canadian qualified

offeree” (such persons, “Eligible Holders”). Eligible Holders who are located or resident outside of the United States

may be subject to other eligibility criteria. Only Eligible Holders who properly complete and return the eligibility letter (the “Eligibility

Letter”), which is available from the Information Agent (as defined below), are authorized to receive and review the confidential

offering memorandum and consent solicitation statement and to participate in the Exchange Offers and Consent Solicitations.

Holders who desire to obtain a copy of the Eligibility Letter should

contact D.F. King & Co., Inc., the information and exchange agent for the Exchange Offers and Consent Solicitations (the

“Information Agent”), at: (800) 967-7635 (banks and brokers) or (646) 602-4897 (all others), at www.dfking.com/kmb-kvue

or by email at kmb-kvue@dfking.com. D.F. King & Co., Inc. will also provide copies of the confidential offering memorandum

and consent solicitation statement to Eligible Holders.

The Exchange Offers and Consent Solicitations are being made only pursuant

to the confidential offering memorandum and consent solicitation statement. The confidential offering memorandum and consent solicitation

statement and other documents relating to the Exchange Offers and Consent Solicitations will be distributed only to Eligible Holders.

The Exchange Offers are not being made to holders of Kenvue Notes in any jurisdiction in which the making or acceptance thereof would

not be in compliance with the securities, blue sky or other laws of such jurisdiction. The Kimberly-Clark Notes have not been approved

or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the confidential offering

memorandum and consent solicitation statement.

None of Kimberly-Clark, Kimberly-Clark’s subsidiaries, its and

their respective directors or officers, the dealer managers and solicitation agents, the exchange agent, the information agent, any trustee

for the Kimberly-Clark Notes or the Kenvue Notes, their respective affiliates, or any other person is making any recommendation as to

whether holders should tender their Kenvue Notes in the Exchange Offers or deliver consents to the Proposed Amendments.

This press release does not constitute an offer to sell or purchase,

or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, any security in any jurisdiction

in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such

jurisdiction.

The Kimberly-Clark Notes offered in the Exchange Offers have not

been registered under the Securities Act or any state securities laws. Therefore, the Kimberly-Clark Notes may not be offered or sold

in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable

state securities laws.

About Kimberly-Clark

Kimberly-Clark (NASDAQ: KMB) and its trusted brands are an indispensable

part of life for people in more than 175 countries and territories. Our portfolio of brands, including Huggies, Kleenex, Scott, Kotex,

Cottonelle, Poise, Depend, Pull-Ups, Goodnites, Intimus, Plenitud, Sweety, Softex, Viva and WypAll, hold No. 1 or No. 2

share positions in approximately 70 countries. Our company’s purpose is to deliver Better Care for a Better World. We are committed

to using sustainable practices designed to support a healthy planet, build strong communities, and enable our business to thrive for decades

to come.

Forward Looking Statements

Certain statements contained in this press release, including the expected

timing of completion of the Acquisition and the Exchange Offers and receipt of Requisite Consents in the Consent Solicitations, constitute

“forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities

Exchange Act of 1934, as amended, and are qualified by the inherent risks and uncertainties surrounding future expectations generally.

There can be no assurance that these future events will occur as anticipated or that our results will be as estimated. Actual results

could differ materially from those currently anticipated due to a number of risks and uncertainties, many of which are beyond our control.

Forward-looking statements are based upon the expectations and beliefs of the management of Kimberly-Clark as of the date they were made

and speak only as of the date they were made. We undertake no obligation to publicly update any forward-looking statements. Some of these

forward-looking statements can be identified by words like “anticipate,” “approximately,” “believe,”

“continue,” “could,” “estimate,” “expect,” “forecast,” “intend,”

“may,” “outlook,” “plan,” “possible,” “potential,” “predict,”

“project,” “seek,” “should,” “target,” “will” or “would,” the

negative of these words, other terms of similar meaning or the use of future dates.

The assumptions used as a basis for the forward-looking statements

include many estimates. Many factors outside our control, including risks and uncertainties around the Acquisition, could affect the realization

of these estimates. Additional information and factors concerning these risks, uncertainties and assumptions can be found in Kimberly-Clark’s

filings with the U.S. Securities and Exchange Commission (“SEC”), including the risk factors discussed in Kimberly-Clark’s

most recent Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q and future filings with the SEC. Forward-looking

statements included herein are made only as of the date hereof and Kimberly-Clark undertakes no obligation to update any forward-looking

statements, or any other information in this press release, as a result of new information, future developments or otherwise, or to correct

any inaccuracies or omissions in them which become apparent. All forward-looking statements in this press release are qualified in their

entirety by this cautionary statement.

EX-99.2 — EXHIBIT 99.2

EX-99.2

Filename: tm2625576d1_ex99-2.htm · Sequence: 4

Exhibit 99.2

Index

to Audited Consolidated Financial Statements

Page

No.

Report

of Independent Registered Public Accounting Firm PCAOB ID 238

Consolidated

Balance Sheets

Consolidated

Statements of Operations

Consolidated

Statements of Comprehensive Income

Consolidated

Statements of Stockholders’ Equity

Consolidated

Statements of Cash Flows

Notes

to Consolidated Financial Statements

Report of Independent Registered

Public Accounting Firm

To the Board of Directors and Stockholders of Kenvue Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Kenvue

Inc. and its subsidiaries (the "Company") as of December 28, 2025 and December 29, 2024, and the related

consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three

fiscal years in the period ended December 28, 2025, including the related notes (collectively referred to as the "consolidated

financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 28, 2025 and December 29, 2024, and the results of its operations and its cash

flows for each of the three fiscal years in the period ended December 28, 2025 in conformity with accounting principles generally

accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the

Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based

on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and

are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements

in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance

about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material

misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those

risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial

statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for

our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from

the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee

and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially

challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the

consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate

opinion on the critical audit matter or on the accounts or disclosures to which it relates.

PricewaterhouseCoopers LLP

400 Campus Drive

Florham Park, New Jersey 07932

www.pwc.com/us

(973) 236 4000

Revenue Recognition—U.S. Net Sales

As described in Notes 1 and 18 to the consolidated financial statements,

the Company’s net sales were $15.1 billion for the fiscal year ended December 28, 2025, of which, $6.5 billion is related to U.S.

net sales. Management recognizes the revenue from these sales at a single point in time when obligations under the terms of a contract

with the customer are satisfied; generally, this occurs with the transfer of control of the goods to customers, which can be on the date

of shipment or the date of receipt by the customer depending on the terms of the contract. 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.

The principal consideration for our determination that performing procedures

relating to U.S. net sales revenue recognition is a critical audit matter is a high degree of auditor effort in performing procedures

related to the Company’s U.S. net sales revenue recognition.

Addressing the matter involved performing procedures and evaluating

audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing

the effectiveness of controls relating to the revenue recognition process, including controls over the recording of U.S. net sales upon

transfer of control to the customer, and controls over the recording of trade promotions. These procedures also included, among others,

(i) evaluating U.S. net sales revenue transactions by testing the issuance and settlement of invoices and credit memos, (ii) tracing transactions

not settled to a detailed listing of accounts receivable, (iii) confirming a sample of outstanding customer invoice balances at fiscal

year end, and obtaining and inspecting source documents, including invoices, sales contracts, shipping documents, proof of delivery, and

subsequent cash receipts, where applicable, for confirmations not returned, (iv) testing the completeness and accuracy of data provided

by management, (v) testing trade promotions processed by the Company, on a sample basis, including evaluating those discounts for consistency

with contractual terms of the Company’s programs, (vi) testing credit memos on a sample basis and (vii) testing a sample of unsettled

trade promotions for completeness and accuracy.

/s/ PricewaterhouseCoopers LLP

Florham Park, New Jersey

February 20, 2026

We have served as the Company’s auditor since 2021.

KENVUE INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions, Except Per Share Data; Shares

in Thousands)

December 28, 2025

December 29, 2024

Assets

Current assets

Cash and cash equivalents

$ 1,062

$ 1,070

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

2,382

2,165

Inventories

1,666

1,591

Prepaid expenses and other receivables

432

494

Other current assets

155

205

Total current assets

5,697

5,525

Property, plant, and equipment, net

2,212

1,849

Intangible assets, net

8,694

8,474

Goodwill

9,509

8,843

Deferred taxes on income

237

184

Other assets

727

726

Total Assets

$ 27,076

$ 25,601

Liabilities and Stockholders’ Equity

Current liabilities

Loans and notes payable

$ 1,453

$ 1,552

Accounts payable

2,473

2,254

Accrued liabilities

1,159

1,132

Accrued rebates, returns, and promotions

755

727

Accrued taxes on income

105

Total current liabilities

5,945

5,739

Long-term debt

7,071

7,055

Deferred taxes on income

2,354

2,261

Employee-related obligations

340

342

Other liabilities

601

536

Total liabilities

16,311

15,933

Commitments and contingencies (Note 17)

Stockholders’ Equity

Preferred stock, $0.01 par value, 750,000 shares authorized; no shares issued and outstanding as of December 28, 2025 and December 29, 2024

—

Common stock, $0.01 par value, 12,500,000 shares authorized; 1,936,502 and 1,916,115 shares issued and outstanding as of December 28, 2025, respectively; 1,924,977 and 1,913,768 shares issued and outstanding as of December 29, 2024, respectively

Additional paid-in capital

16,348

16,130

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

(439 )

(242 )

Accumulated deficit

(204 )

(93 )

Accumulated other comprehensive loss

(4,959 )

(6,146 )

Total stockholders’ equity

10,765

9,668

Total Liabilities and Stockholders’ Equity

$ 27,076

$ 25,601

See accompanying Notes to Consolidated Financial

Statements.

KENVUE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Millions, Except Per Share Data; Shares

in Millions)

Fiscal Twelve Months Ended

December 28, 2025

December 29, 2024

December 31, 2023

Net sales

$ 15,124

$ 15,455

$ 15,444

Cost of sales

6,332

6,496

6,801

Gross profit

8,792

8,959

8,643

Selling, general, and administrative expenses

6,088

6,329

6,141

Restructuring expenses

290

185

—

Impairment charges

578

—

Other operating (income) expense, net

(23 )

(10 )

Operating income

2,414

1,841

2,512

Other expense, net

Interest expense, net

379

378

250

Income before taxes

1,999

1,415

2,190

Provision for taxes

529

385

526

Net income

$ 1,470

$ 1,030

$ 1,664

Net income per share

Basic

$ 0.77

$ 0.54

$ 0.90

Diluted

$ 0.76

$ 0.54

$ 0.90

Weighted-average number of shares outstanding

Basic

1,917

1,915

1,846

Diluted

1,924

1,923

1,850

See accompanying Notes to Consolidated Financial

Statements.

KENVUE INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in Millions)

Fiscal Twelve Months Ended

December 28, 2025

December 29, 2024

December 31, 2023

Net income

$ 1,470

$ 1,030

$ 1,664

Other comprehensive income (loss), net of taxes

Foreign currency translation

1,178

(783 )

219

Employee benefit plans:

Prior service cost, net of amortization

(4 )

(2 )

Gain (loss), net of amortization

(101 )

Effect of exchange rates

(15 )

(9 )

Net change

(102 )

Derivatives and hedges:

Other comprehensive income (loss) before reclassifications

(6 )

Amounts reclassified to the Consolidated Statements of Operations

(23 )

(17 )

(28 )

Net change

(23 )

Other comprehensive income (loss)

1,187

(769 )

155

Comprehensive income

$ 2,657

$ 261

$ 1,819

See accompanying Notes to Consolidated Financial

Statements.

KENVUE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

EQUITY

(Dollars in Millions, Except Per Share Data; Shares

in Thousands)

Fiscal Twelve Months Ended December 28, 2025, December 29, 2024, and

December 31, 2023(1)

Retained

Accumulated

Additional

Earnings

Net

Other

Total

Common Stock

Paid-In

Treasury Stock

(Accumulated

Investment

Comprehensive

Stockholders’

Amount

Capital

Amount

Deficit)

from J&J

Loss

Equity

January 1, 2023

—

$ —

—

$ —

$ 25,425

$ (5,455 )

$ 19,970

Net income

—

1,195

469

—

1,664

Other comprehensive income

—

155

Cash dividends on common stock ($0.40 per share)

—

(766 )

—

(766 )

Net transfers to J&J

—

(308 )

—

(308 )

Stock-based compensation

—

153

—

188

Distribution to J&J in connection with the Separation

—

(13,788 )

—

(13,788 )

Issuance of common stock in connection with the Kenvue IPO

1,914,894

4,222

—

4,241

Issuance of common stock under the Kenvue 2023 Plan, net

513

—

Purchase of treasury stock

(350 )

—

350

(7 )

—

(7 )

Reclassification of Net Investment from J&J

—

25,712

—

(25,712 )

—

Separation-related adjustments

—

(160 )

—

(77 )

(146 )

December 31, 2023

1,915,057

16,147

350

(7 )

429

—

(5,377 )

11,211

Net income

—

1,030

—

1,030

Other comprehensive loss

—

(769 )

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

—

Purchase of treasury stock

(10,858 )

—

10,858

(235 )

—

(235 )

Separation-related adjustments

—

(340 )

—

(340 )

December 29, 2024

1,913,768

16,130

11,208

(242 )

(93 )

—

(6,146 )

9,668

Net income

—

1,470

—

1,470

Other comprehensive income

—

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

—

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. The Company’s financial statements prior to April 4, 2023 were prepared on a combined

basis and were derived from J&J’s historical consolidated financial statements and accounting records as if the Company had

been operated on a standalone basis. See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Basis

of Presentation,” for more information.

See accompanying Notes to Consolidated Financial

Statements.

KENVUE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Millions)

Fiscal Twelve Months Ended

December 28, 2025

December 29, 2024

December 31, 2023

Cash flows from operating activities

Net income

$ 1,470

$ 1,030

$ 1,664

Adjustments to reconcile net income to cash flows from operating activities

Depreciation and amortization

557

622

627

Stock-based compensation

136

254

188

Deferred income taxes

(108 )

(285 )

(114 )

Impairment charges

578

—

Losses on investments

—

Other

(1 )

Net changes in assets and liabilities

Trade receivables

(112 )

(218 )

Inventories

(12 )

182

349

Other current and non-current assets

122

(17 )

(429 )

Accounts payable and accrued liabilities

(536 )

1,454

Employee-related obligations

(78 )

Accrued taxes on income

(27 )

(61 )

(331 )

Other liabilities

(3 )

(212 )

Net cash flows from operating activities

2,197

1,769

3,168

Cash flows used in investing activities

Purchases of property, plant, and equipment

(475 )

(434 )

(469 )

Transfer of funds to J&J pursuant to the Facility Agreement

—

(8,941 )

Proceeds from J&J upon repayment of the Facility Agreement

—

8,941

Proceeds from (costs associated with) sale of assets

(6 )

Other investing activities

(40 )

Net cash flows used in investing activities

(436 )

(425 )

(488 )

Cash flows used in financing activities

(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

746

—

7,686

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 )

Other financing activities

(193 )

Net cash flows used in financing activities

(1,837 )

(1,565 )

(2,527 )

Effect of exchange rate changes on cash and cash equivalents

(91 )

(2 )

Cash and cash equivalents, beginning of period

1,070

1,382

1,231

Net (decrease) increase in cash and cash equivalents

(8 )

(312 )

151

Cash and cash equivalents, end of period

$ 1,062

$ 1,070

$ 1,382

Supplemental disclosures of cash flow information

Net cash paid for income taxes(1)(2)

$ 595

$ 810

$ 699

Cash paid for interest

$ 440

$ 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.

KENVUE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of the Company and Summary of Significant Accounting

Policies

Description of the Company and Business Segments

Kenvue Inc. (“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 cough, cold, and allergy;

pain care; digestive health; smoking cessation; eye care; and other products. The Skin Health and Beauty segment is focused on face and

body care, as well as hair, sun, and other products. The Essential Health segment includes oral care, baby care, women’s health,

wound care, and other products.

Kenvue was initially formed as a wholly owned subsidiary of Johnson

& Johnson (“J&J”). 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”). 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 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, 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 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

Effective April 4, 2023, the Company’s financial statements

are presented on a consolidated basis, as J&J completed the Consumer Health Business Transfer on such date. The audited financial

statements for all periods presented, including the historical results of the Company prior to April 4, 2023, are referred to as

the “Consolidated Financial Statements.”

Intercompany balances and transactions have been eliminated. 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 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 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

Prior to April 4, 2023, the Company operated as a segment of J&J

and not as a separate entity. The Company’s financial statements prior to April 4, 2023 were prepared on a combined basis and

were derived from J&J’s historical consolidated financial statements and accounting records as if the Company had been operated

on a standalone basis.

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. 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.

Indirect costs were allocated to the Company for the purposes of preparing

the Consolidated Financial Statements prior to the Kenvue IPO, based on a specific identification basis or, when specific identification

was not practicable, a proportional cost allocation method, primarily based on Net sales, headcount, or other allocation methodologies

that were considered to be a reasonable reflection of the utilization of services provided or benefit received by the Company during the

periods presented, depending on the nature of the services received. Management considers that such allocations were made on a reasonable

basis consistent with benefits received but may not necessarily be indicative of the costs that would have been incurred if the Company

had been operated on a standalone basis for the periods presented.

Cash generated from the Company’s operations prior to April 4,

2023 was generally managed by J&J’s centralized treasury function and was swept into J&J and its affiliates’ bank

accounts. Cash and cash equivalents on the Consolidated Balance Sheet represented balances in accounts specifically identifiable to the

Company that were not swept into J&J and its affiliates’ bank accounts. J&J’s third-party interest expense was not

allocated for any of the periods prior to April 4, 2023 as the Company was not the legal obligor of the debt and the borrowings were

not directly attributable to the Company’s operations.

The Company’s equity balance in these financial statements prior

to April 4, 2023 represents the excess of total assets over total liabilities. Equity was impacted by changes in comprehensive income

and contributions from or to J&J prior to the Kenvue IPO, which was the result of treasury activities and net funding provided by

or distributed to J&J.

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 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. See Note 14, “Income Taxes,” for further

discussion.

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 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

Certain prior period amounts have been reclassified to conform to current

fiscal year presentation.

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity

with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the

date of the financial statements, and revenue and expenses during the periods reported. Estimates are used when accounting for, among

other things, sales discounts, trade promotions, rebates, allowances and incentives, product liabilities, income taxes and related valuation

allowances, withholding taxes, pensions, postretirement benefits, fair value of financial instruments, stock-based compensation assumptions,

depreciation, amortization, employee benefits, contingencies, allocations of cost and expenses from J&J and its affiliates, and the

valuation of goodwill, intangible assets, and liabilities. Actual results may or may not differ from those estimates.

Economic Uncertainty

Macroeconomic factors affect consumer spending patterns and thereby

the Company’s operations. These factors include general economic conditions, inflation, consumer confidence, employment rates, business

conditions, the availability of credit, interest rates, tax rates, and fuel and energy costs.

Annual Closing Date

The Company follows the concept of a fiscal year, which ends on the

Sunday nearest to the end of the month of December. Normally, each fiscal year consists of 52 weeks; however, the fiscal year consists

of 53 weeks every five or six years. For fiscal years which consist of 53 weeks, this results in additional shipping days, as was the

case in fiscal year 2020, and will be the case again in fiscal year 2026. Fiscal year 2025 refers to the fiscal twelve months ended December

28, 2025. Fiscal year 2024 refers to the fiscal twelve months ended December 29, 2024. 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:

1) Self Care, 2) Skin Health and Beauty, and 3) Essential Health.

Cash and Cash Equivalents

All highly liquid investments with original maturities of three months

or less are considered to be cash equivalents. 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 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. 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 28, 2025

December 29, 2024

December 31, 2023

Allowance for credit losses, beginning of fiscal year

$ (26 )

$ (25 )

$ (35 )

Provision

(11 )

(6 )

(4 )

Utilization

Currency translation

(1 )

—

Allowance for credit losses, end of fiscal year

$ (26 )

$ (25 )

Inventories

Inventories are stated at the lower of cost or net realizable value

and are accounted for using the first-in, first-out method. Cost is determined on a standard cost basis that approximates the first-in,

first-out method. Costs include direct materials, direct labor, and overhead costs.

Property, Plant, and Equipment and Depreciation

Property, plant, and equipment are stated at cost less accumulated

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

the approximate ranges for estimated useful lives as of December 28, 2025:

Machinery and equipment

2 – 13 years

Buildings and building equipment

20 – 40 years

Software

3 – 15 years

Land improvements

10 – 20 years

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 (income) expense, net

in the Consolidated Statements of Operations.

Capitalized Internal-Use Software

Internal-use software development costs are accounted for in accordance

with Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software. The costs incurred in the preliminary

stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs incurred

to develop internal-use software are capitalized. Capitalized internal-use software costs are amortized on a straight-line basis over

the estimated useful life of the software when the software is ready for its intended use. Maintenance and enhancement costs, including

those costs in the post-implementation stages, are typically expensed as incurred, unless such costs relate to substantial upgrades and

enhancements to the software that result in added functionality, in which case the costs are capitalized and amortized on a straight-line

basis over the estimated useful life of the software. The Company reviews the carrying value for impairment whenever facts and circumstances

exist that would suggest that assets might be impaired or that the useful lives should be modified.

Intangible Assets

Intangible assets are reported at cost, less accumulated amortization

and impairments, as applicable. The Company amortizes intangible assets with a finite life over their respective useful lives on a straight-line

basis. The estimated useful lives for patents, trademarks, and customer relationships range from 10 years to 40 years and for other intangibles

ranges from 20 years to 40 years. The useful life for customer relationships is estimated based on various customer attributes including

customer type, size, geography, length of relationships, and nature of relationships. Intangible assets deemed to have indefinite lives

are not amortized but are subjected to annual tests of impairment on the first day of the fiscal fourth quarter, or more frequently if

events or changes in circumstances between annual tests indicate that assets may be impaired. The Company has the option to first assess

qualitative factors to determine whether the quantitative indefinite-lived intangible asset impairment test is necessary. If the Company

determines the estimated fair value of the indefinite-lived intangible asset 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

the indefinite-lived intangible asset 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. If the Company determines the estimated fair value of the indefinite-lived intangible asset is less

than the carrying value based on the results of the quantitative fair value test, an indefinite-lived intangible asset impairment charge

will be recorded equal to the amount of the difference (up to the carrying value of the indefinite-lived intangible asset). See Note 4,

“Intangible Assets and Goodwill,” for more information on intangible assets.

Goodwill

Goodwill represents the excess of the consideration transferred over

the fair value of net assets of businesses acquired. 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. 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 may bypass the qualitative assessment

in any period and proceed directly to performing the quantitative fair value test. If the Company determines the estimated fair value

of goodwill is less than the carrying value based on the results of the quantitative fair value test, a goodwill impairment charge will

be recorded equal to the amount of the difference (up to the carrying value of goodwill). 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

Long-lived assets with finite lives are subjected to a test of impairment

whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If any indicators of

impairment are present, the asset group is tested for recoverability by comparing the carrying value of the asset group to the net undiscounted

future cash flows expected to be derived from the asset group, which includes the amount and timing of the projected future cash flows.

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 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 28, 2025

December 29, 2024

Dr.Ci:Labo® asset impairment(1)

$ —

$ 488

Skillman fixed asset impairment(2)

—

Other asset impairment(3)

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 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 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.

Dr.Ci:Labo® Asset Impairment

During the fiscal three months ended June 30, 2024, there was a significant

change in the senior leadership of the Dr.Ci:Labo® business, resulting in a new strategic plan with a key focus on increased expenses

related to brand support designed to allow the brand to reach more consumers and appropriately address evolving market dynamics, including

shifts in consumer sentiment in China as well as changing shopping patterns in the region. 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. 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. 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. The Company utilized a discount rate of 8%. As the fair value

measurements were based on significant inputs not observable in the market, they represented Level 3 measurements within the fair value

hierarchy.

Assets Held for Sale

The Company classifies assets as held for sale when: 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 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. As a result, the Company recorded an impairment charge equivalent to that amount within Impairment charges in the

Consolidated Statement of Operations for the fiscal three months ended March 31, 2024. The fair value of the held for sale asset was determined

utilizing third-party sales pricing as an input. 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 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

Discounts and debt issuance costs are presented as a reduction of Long-term

debt and Loans and notes payable on the Consolidated Balance Sheets and are amortized as a component within Interest expense, net in the

Consolidated Statements of Operations over the term on the related debt using the effective interest method.

Financial Instruments

The Company uses derivative financial instruments to manage exposure

to foreign currency fluctuations. Prior to the Kenvue IPO, the Company participated in J&J’s centralized hedging and offsetting

programs. 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, 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. GAAP, all derivative instruments held by the

Company are recorded on the Consolidated Balance Sheets at fair value. Fair value is a market-based measurement determined using

assumptions that market participants would use in pricing an asset or liability. 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 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.

The Company documents all relationships between hedged items and derivatives.

The overall risk management strategy includes reasons for undertaking hedge transactions and entering into derivatives. See Note 16, “Fair

Value Measurements,” for more information on financial instruments.

Defined Benefit Retirement Plans

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 income (loss), 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. Amounts related to the Company’s defined

benefit pension plans are recorded based on estimates and assumptions. Factors used in developing estimates of these liabilities include,

among other things, assumptions related to discount rates, rates of return on investments, healthcare cost trends, benefit payment patterns,

and other factors. See Note 7, “Pensions,” for more information.

Leases

The Company determines whether an arrangement is a lease at contract

inception by establishing if the contract conveys the right to control the use of identified property, plant, or equipment for a period

of time in exchange for consideration. For operating leases, right-of-use (“ROU”) assets are included in Other assets, and

lease liabilities are included in Accrued liabilities and Other liabilities on the Consolidated Balance Sheets. For finance leases, ROU

assets are included in Property, plant, and equipment, net, and lease liabilities are included in Loans and notes payable and Long-term

debt on the Consolidated Balance Sheets. The ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities

represent an obligation to make lease payments arising from the lease. Short-term leases with an initial term of 12 months or less are

not recorded on the Consolidated Balance Sheets. The related lease expense for such short-term leases is not significant.

ROU assets and lease liabilities are recognized at the lease commencement

date based on the present value of all minimum lease payments over the lease term. When the implicit rate of the lease is not readily

determinable, the Company uses its incremental borrowing rate for leases entered into after the Separation based on the information available

at the commencement date in determining the present value of lease payments. Prior to the Separation, the Company used J&J’s

incremental borrowing rate. The Company elected not to separate nonlease components from lease components; as such, lease and nonlease

components are combined as a single lease component.

Lease terms may include options to extend or terminate the lease. These

options are included in the lease term when it is reasonably certain that the Company will exercise that option. Operating lease expense

is recognized on a straight-line basis over the lease term. For finance leases, amortization of the ROU asset is recognized on a straight-line

basis over the shorter of the economic life of the asset or the lease term, and interest expense is recorded in connection with the lease

liability using the effective interest rate method. See Note 8, “Leases,” for more information.

Revenue Recognition

The Company’s revenue contracts represent a single performance

obligation to sell its products to customers. Revenue from the sale of products to customers is recognized at a single point in time when

obligations under the terms of a contract with the customer are satisfied; generally, this occurs with the transfer of control of the

goods to customers, which can be on the date of shipment or the date of receipt by the customer depending on the terms of the contract.

Net sales exclude taxes collected by the Company on behalf of governmental authorities. In addition, the Company has elected to account

for shipping and handling activities as fulfillment costs and includes the shipping and handling fees charged to the customers as a part

of the transaction price to be recognized when control of the product transfers. The Company’s global payment terms are typically

between 30 to 90 days.

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. The redemption cost of consumer coupons is based on historical redemption

experience by product and value. Volume-based incentive programs are based on the estimated sales volumes for the incentive period. The

related liability is recognized within Accrued rebates, returns, and promotions on the Consolidated Balance Sheets.

Sales returns are almost exclusively not resalable. The reserves related

to sales returns are recorded at full sales value and are estimated based on historical sales and returns information.

See Note 18, “Segments of Business and Geographic Areas,”

for disaggregation of Net sales.

Net Income Per Share

The Company determines net income per share in accordance with ASC

260, Earnings Per Share. Basic net income per share is computed by dividing net income by the weighted-average number of shares

outstanding for the applicable period. Diluted net income per share is computed by dividing net income by the weighted-average number

of shares plus the effect of dilutive potential shares outstanding for the applicable period using the treasury stock method. Dilutive

potential shares include shares from equity-based awards and have been excluded where their inclusion would be anti-dilutive.

Separation-Related Costs

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

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 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

Accruals for product liability claims are recorded, on an undiscounted

basis, when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on existing

information and actuarially determined estimates, where applicable. 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. 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.

Research and Development

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 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

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. GAAP accounting and tax reporting, recorded as deferred

tax assets or liabilities. The Company estimates deferred tax assets and liabilities based on enacted tax regulations and rates. Future

changes in tax laws and rates may affect recorded deferred tax assets and liabilities.

U.S. federal, state, and foreign income tax payables and receivables

are recognized on the Consolidated Balance Sheets for entities that file separate income tax returns and make direct payments to taxing

authorities. Prior to the Kenvue IPO, U.S. 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.

Management considers positive and negative evidence in evaluating the Company’s ability to realize its deferred tax assets, including

its historical results, forecasts of future ability to realize deferred tax assets, and forecasts of future taxable income on a jurisdiction-by-jurisdiction

basis.

The Company has unrecognized tax benefits for uncertain tax positions.

The Company follows U.S. GAAP, which prescribes a recognition threshold and measurement attribute for the financial statement recognition

and measurement of a tax position taken or expected to be taken in a tax return. 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 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.

Stock-Based Compensation

The Company recognizes compensation costs related to equity-based awards

granted ratably over the requisite service period, which is the vesting period of the award, based on the estimated grant date fair value

of the awards. The Company accounts for forfeitures during the period in which they occur. Stock-based compensation expense is recognized

in the Consolidated Statements of Operations and is classified as a non-cash activity in the Consolidated Statements of Cash Flows.

The grant date fair value of each stock option granted is estimated

on the grant date using the Black-Scholes option valuation model. Stock options generally vest over a three-year period with annual vesting.

The grant date fair value of each restricted stock unit (“RSU”)

granted is equivalent to the closing price of Kenvue common stock on the New York Stock Exchange on the grant date. RSUs generally vest

over a three-year period with annual vesting.

The Company grants performance stock units (“PSUs”) with

both performance vesting conditions and market-based vesting conditions (the “Performance PSUs”). During the performance period,

stock-based compensation expense for the Performance PSUs will be adjusted based on the Company’s best estimate of achievement of

the specified performance metrics. The cumulative effect on current and prior periods of a change in the estimated number of Performance

PSUs that are expected to be earned will be recognized as an adjustment to stock-based compensation expense in the period of the change.

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.

See Note 11, “Stock-Based Compensation—J&J Plans and

Conversion of J&J Awards,” for more information on the conversion of J&J awards to Kenvue awards in connection with the

completion of the Exchange Offer.

Prior to the Kenvue IPO, certain employees of the Company participated

in J&J’s stock-based compensation plans. Stock-based compensation expense related to these plans was recognized based on specific

identification of cost related to the Company’s employees. The Company also received allocated stock-based compensation expense

relating to employees of central support functions provided by J&J.

Restructuring Expenses

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.

Foreign Currency

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. The cumulative foreign currency translation

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

recorded in these Consolidated Financial Statements is based on currency movements specific to the Company’s assets and liabilities

included on the Consolidated Balance Sheets during the periods presented.

For translation of its international operations, the Company has determined

that the majority of its local currencies are the functional currencies except those in highly inflationary economies, which are defined

as those which have had compound cumulative rates of inflation of 100% or more during the past three years, or where a substantial portion

of its cash flows are not in the local currency. The Company has accounted for operations in Argentina, Turkey, and Egypt as highly inflationary.

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 $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

The Company has facilitated a voluntary supplier finance program to

provide some of its suppliers with the opportunity to sell receivables due from the Company (the Company’s accounts payables) to

participating financial institutions at the sole discretion of both the suppliers and the financial institutions. The Company is not a

party to the arrangements between the suppliers and the third-party financial institutions. The Company’s obligations to its suppliers,

including amounts due, and scheduled payment dates (which have general payment terms of between 30 and 120 days), are not affected by

a participating supplier’s decision to participate in the program. Invoices from suppliers participating in the supplier finance

program are recorded in Accounts payable on the Consolidated Balance Sheets.

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 28, 2025

December 29, 2024

Confirmed obligations outstanding at the beginning of the fiscal year

$ 260

$ 227

Invoices confirmed during the fiscal year

1,152

1,093

Confirmed invoices paid during the fiscal year

(1,098 )

(1,060 )

Confirmed obligations outstanding at the end of the fiscal year

$ 314

$ 260

Variable Interest Entities and Net Economic Benefit Arrangements

When the Company makes an initial investment in or establishes other

variable interests in an entity, the entity is first evaluated to determine if it is a Variable Interest Entity (“VIE”) and

if the Company is the primary beneficiary of the VIE, and therefore subject to consolidation regardless of percentage ownership. The primary

beneficiary of a VIE is a party that meets both of the following criteria: 1) it has the power to direct the activities that most significantly

impact the economic performance of the VIE; and 2) it has the obligation to absorb losses or the right to receive benefits that could

be potentially significant to the VIE. Periodically, the Company assesses whether any change in its interest in or relationship with the

entity affects the determination as to whether the entity is a VIE, and, if so, whether the Company is the primary beneficiary.

In connection with the Separation, J&J and Kenvue entered into

a separation agreement (the “Separation Agreement”) on May 3, 2023. Under the Separation Agreement, transfer of certain

assets and liabilities of the Consumer Health Business in certain jurisdictions (each, a “Deferred Local Business”) was not

completed prior to the Kenvue IPO and was deferred due to certain precedent conditions, which include ensuring compliance with applicable

law and obtaining necessary governmental approvals and other consents, and for other business reasons. At the Kenvue IPO and until the

Deferred Local Business transfers to the Company, J&J 1) holds and operates the Deferred Local Businesses on behalf of and for the

benefit of the Company and 2) will use reasonable best efforts to treat and operate, insofar as reasonably practicable and to the extent

permitted by applicable law, each such Deferred Local Business in the ordinary course of business in all material respects consistent

with past practice. The benefits and costs related to these Deferred Local Businesses will be assumed by the Company (see below “—Net

Economic Benefit Arrangements”). In addition, the Company and J&J will use reasonable best efforts to take all actions to transfer

each Deferred Local Business as promptly as reasonably practicable. 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”) 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. 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 Sheet as of December 29, 2024. 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

Assets

Current assets

Cash and cash equivalents

$ 99

Trade receivables, less allowances for credit losses

Inventories

Prepaid expenses and other receivables

Total current assets

188

Property, plant, and equipment, net

Deferred taxes on income

Total assets

$ 194

Liabilities

Current liabilities

Accounts payable

$ 3

Accrued liabilities

Accrued rebates, returns, and promotions

Total current liabilities

Total liabilities

$ 30

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 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”) 2023-09—Income

Taxes (Topic 740): Improvements to Income Tax Disclosures

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 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): Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03—Income Statement—Reporting

Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

(“ASU 2024-03”). 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. Early adoption is permitted. 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.

2. Inventories

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

of:

(Dollars in Millions)

December 28, 2025

December 29, 2024

Raw materials and supplies

$ 275

$ 274

Goods in process

103

101

Finished goods

1,288

1,216

Total inventories

$ 1,666

$ 1,591

3. Property, Plant, and Equipment and Cloud Computing Arrangements

Property, Plant, and Equipment

As of December 28, 2025 and December 29, 2024, property, plant, and

equipment at cost and the related accumulated depreciation were:

(Dollars in Millions)

December 28, 2025

December 29, 2024

Machinery and equipment

$ 2,496

$ 2,250

Buildings and building equipment

1,853

1,599

Software

227

102

Construction in progress

595

542

Land and land improvements

Total property, plant, and equipment, gross

5,231

4,550

Less: accumulated depreciation

(3,019 )

(2,701 )

Total property, plant, and equipment, net(1)

$ 2,212

$ 1,849

(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 the prior

period.

Cloud Computing Arrangements

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 28, 2025

December 29, 2024

Cloud computing arrangements, gross

$ 1,363

$ 1,277

Less: accumulated amortization

(1,186 )

(1,088 )

Total cloud computing arrangements, net

$ 177

$ 189

Depreciation Expense

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 28, 2025

December 29, 2024

December 31, 2023

Depreciation expense(1)

$ 300

$ 353

$ 305

(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.

4. Intangible Assets and Goodwill

As of December 28, 2025 and December 29, 2024, the gross and net amounts

of intangible assets were:

December 28, 2025

December 29, 2024

(Dollars in Millions)

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Definite-lived intangible assets:

Patents and trademarks

$ 4,406

$ (2,054 )

$ 2,352

$ 4,110

$ (1,780 )

$ 2,330

Customer relationships

2,049

(1,178 )

871

1,933

(1,074 )

859

Other intangibles(1)

1,329

(760 )

569

1,276

(694 )

582

Total definite-lived intangible assets

$ 7,784

$ (3,992 )

$ 3,792

$ 7,319

$ (3,548 )

$ 3,771

Indefinite-lived intangible assets:

Trademarks

$ 4,840

$ —

$ 4,840

$ 4,648

$ —

$ 4,648

Other

—

Total intangible assets, net

$ 12,686

$ (3,992 )

$ 8,694

$ 12,022

$ (3,548 )

$ 8,474

(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

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 $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:

(Dollars in Millions)

2026

2027

2028

2029

2030

$ 260

$ 252

$ 248

$ 245

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 )

December 29, 2024

5,054

2,185

1,604

8,843

Currency translation

508

666

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 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.

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. 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 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.

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.

5. Borrowings

The components of the Company’s debt as of December 28, 2025

and December 29, 2024 were as follows:

(Dollars in Millions)

December 28, 2025

December 29, 2024

Senior Notes

5.50% Senior Notes due 2025

$ —

$ 750

5.35% Senior Notes due 2026

750

5.05% Senior Notes due 2028

1,000

5.00% Senior Notes due 2030

1,000

4.85% Senior Notes due 2032

750

—

4.90% Senior Notes due 2033

1,250

5.10% Senior Notes due 2043

750

5.05% Senior Notes due 2053

1,500

5.20% Senior Notes due 2063

750

Other(1)

134

119

Discounts and debt issuance costs

(63 )

(64 )

Total

7,821

7,805

Less: Current portion of long-term debt—principal amount, net of discounts and debt issuance costs

(750 )

Total long-term debt

7,071

7,055

Current portion of long-term debt—principal amount

750

Commercial paper

700

800

Discounts and debt issuance costs

(2 )

(3 )

Other

Total loans and notes payable

1,453

1,552

Total debt

$ 8,524

$ 8,607

(1) Other consists primarily of finance lease liabilities. See Note

8, “Leases,” for more information.

Senior Notes

On March 22, 2023, the Company issued eight series of senior unsecured

notes (the “2023 Senior Notes”) in an aggregate principal amount of $7.75 billion. The net proceeds to the Company from

the 2023 Senior Notes were approximately $7.7 billion after deductions of discounts and issuance costs of $77 million. Upon

release from escrow, these funds were loaned to J&J through a facility agreement (the “Facility Agreement”) dated April

5, 2023. See “—Facility Agreement” below for additional details. 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. 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.

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. On and after the applicable par call date (between zero and six months prior to maturity,

based on the series), the Company may redeem any series of the Senior Notes in whole or in part, at a redemption price equal to 100% of

the principal amount of the notes of such series being redeemed plus accrued and unpaid interest thereon to, but excluding, the applicable

redemption date. 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

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.

The Indenture also contains restrictions on the Company’s ability to consolidate, merge, or sell substantially all of its assets.

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 follows:

(Dollars in Millions)

2026

2027

2028

2029

2030

Thereafter

$ 750

$ —

$ 1,000

$ —

$ 1,000

$ 5,000

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. Any such issuance will mature within 364 days from

date of issue. The commercial paper program contains representations and warranties, covenants, and defaults that are customary for this

type of financing. The commercial paper notes issued under the commercial paper program are unsecured notes ranking at least pari passu

with all of the Company’s other senior unsecured indebtedness.

Prior to the Kenvue IPO, the Company issued $1.25 billion under its

commercial paper program which, collectively with the 2023 Senior Notes, are referred to as the “Debt Financing Transactions.”

As of December 28, 2025, the Company had $699 million of outstanding balances under its commercial paper program, net of a related

discount of $1 million. As of December 29, 2024, the Company had $797 million of outstanding balances under its commercial paper

program, net of a related discount of $3 million.

The weighted-average effective interest rate of the Company’s

commercial paper was 4.3% and 5.2% as of December 28, 2025 and December 29, 2024, respectively. The weighted-average maturities were less

than 90 days as of both December 28, 2025 and December 29, 2024.

Revolving Credit Facility

On March 6, 2023, the Company entered into a credit agreement

providing for a five-year senior unsecured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal

amount of $4.0 billion to be made available in U.S. 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. 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. The Revolving Credit Facility fees

and letter of credit fees are determined based upon the same grid. 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. 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.

The Revolving Credit Facility contains representations and warranties,

covenants, and events of default that are customary for this type of financing, including covenants restricting the incurrence of liens

and the entry into certain merger transactions.

J&J initially unconditionally guaranteed all of the obligations

of the borrowers under the Revolving Credit Facility on an unsecured basis. Such guarantees of the Revolving Credit Facility were automatically

terminated upon the completion of the Consumer Health Business Transfer and the Kenvue IPO. Kenvue unconditionally guarantees all of the

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

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

On April 5, 2023, the Company and J&J entered into the Facility

Agreement, allowing the Company to lend the proceeds from the issuance of debt (including commercial paper) in an aggregate amount of

$8.9 billion to J&J. Interest on loans made from the Facility Agreement was charged at an interest rate equal to the Secured Overnight

Financing Rate less an adjusted margin of 15 basis points, with a floor of 0% (a weighted-average interest rate of 4.7%) to be paid monthly

in arrears.

Upon 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 earned interest income of $33 million for the fiscal twelve months ended December 31, 2023 in relation to the Facility Agreement.

The Company remitted this cash back to J&J as a distribution in connection with the Separation. 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 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 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 28, 2025

December 29, 2024

December 31, 2023

Interest expense

$ 430

$ 431

$ 358

Interest income(1)

(51 )

(53 )

(108 )

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.

Fair Value of Debt

The Company’s debt was recorded at the carrying amount. 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 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.

Compliance with Covenants

As of December 28, 2025, the Company was in compliance with all debt

covenants, and no default or event of default has occurred.

6. Employee-Related Obligations

As of December 28, 2025 and December 29, 2024, employee-related obligations

recorded on the Consolidated Balance Sheets were:

(Dollars in Millions)

December 28, 2025

December 29, 2024

Pension benefits

$ 340

$ 339

Postretirement benefits

Severance benefits

Total employee-related obligations

393

379

Less: current benefits in Accrued liabilities

(53 )

(37 )

Total employee-related obligations—non-current

$ 340

$ 342

7. Pensions

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.

Single-Employer Plans

The Company is the plan sponsor for certain defined benefit retirement

plans (collectively, “the Plans”), and the Consolidated Financial Statements reflect the periodic benefit costs and funded

status of such plans. The Company uses December 31 as the fiscal year-end measurement date for the Plans, which are located outside the

United States.

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 28, 2025

December 29, 2024

December 31, 2023

Service cost

$ 32

$ 30

$ 21

Interest cost

Amortization of loss (gain)

(2 )

Special events(1)

Expected return on plan assets

(35 )

(34 )

(25 )

Total net periodic benefit cost

$ 40

$ 33

$ 30

(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.

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 28, 2025

December 29, 2024

December 31, 2023

Net Periodic Benefit Cost

Service cost discount rate

2.5 %

2.6 %

3.4 %

Interest cost discount rate

3.7 %

3.6 %

4.6 %

Rate of increase in compensation levels

3.3 %

Expected long-term rate of return on plan assets

6.0 %

5.5 %

Benefit Obligation

Discount rate

4.1 %

3.8 %

3.6 %

Rate of increase in compensation tables

3.3 %

The Company’s discount rates are determined by considering current

yield curves representing high-quality, long-term fixed income instruments. The resulting discount rates are consistent with the duration

of plan liabilities. The Company’s methodology in determining service and interest cost uses duration-specific spot rates along

that yield curve to the Plans’ liability cash flows.

The expected rates of return on plan asset assumptions represent the

Company’s assessment of long-term returns on diversified investment portfolios globally. The assessment is determined using projections

from external financial sources, long-term historical averages, actual returns by asset class, and the various asset class allocations

by market.

The following table sets forth information related to the benefit obligation

and the fair value of plan assets for the fiscal twelve months ended December 28, 2025 and December 29, 2024 for the Plans sponsored by

the Company:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 28, 2025

December 29, 2024

Change in Benefit Obligation

Projected benefit obligation—beginning of fiscal year

$ 786

$ 829

Service cost

Interest cost

Actuarial gain(1)

(26 )

(39 )

Plan participants’ contributions

Curtailments, settlements, and restructuring

(41 )

(39 )

Benefits paid from plan assets

(18 )

(15 )

Effect of exchange rates

(42 )

Other

(16 )

Projected benefit obligation—end of fiscal year

$ 832

$ 786

Change in Plan Assets

Plan assets at fair value—beginning of fiscal year

$ 526

$ 535

Company contributions

Plan participants’ contributions

Benefits paid from plan assets

(18 )

(15 )

Actual return on plan assets

Curtailments, settlements, and restructuring

(41 )

(29 )

Effect of exchange rates

(23 )

Plan assets at fair value—end of fiscal year

$ 572

$ 526

Funded status—end of fiscal year

$ (260 )

Amounts recognized on the Consolidated Balance Sheets consist of the following:

Other assets

$ 86

$ 84

Accrued liabilities

(11 )

(9 )

Employee-related obligations

(335 )

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

$ (260 )

Amounts recognized in Accumulated other comprehensive loss consist of the following:

Net actuarial loss

$ 159

$ 170

Prior service cost

(1 )

(5 )

Total before tax effects

$ 158

$ 165

Accumulated benefit obligations—end of fiscal year

$ 746

$ 686

(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 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 )

Effect of exchange rates

(7 )

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. Additional

discretionary contributions are made when deemed appropriate to meet the long-term obligations of the Plans. 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 sponsored

by the Company for the ten succeeding fiscal years is as follows:

(Dollars in Millions)

2026

2027

2028

2029

2030

2031-2035

$ 40

$ 39

$ 41

$ 42

$ 45

$ 261

The Company currently has $15 million in projected benefit plan

contributions.

The Company’s investment objective is to generate investment

returns that provide adequate assets to meet current and future benefit obligations. The investment objectives are achieved through diversification

of the retirement plan assets and management of liquidity to meet benefit payments and an appropriate balance of long-term investment

return and risk. 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 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. The Company further invests in commingled

funds that are actively investing with a focus to meet the allocation and risk exposure by focusing on debt or equity securities. The

increased volatility associated with equity securities that generate higher expected returns are offset by long-duration fixed-income

securities that help reduce the volatility of the overall portfolio. 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 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

December 28, 2025

December 29, 2024

2026

Debt instruments

8 %

49 %

8 %

Equity securities

Buy-in annuity policies

—

Other assets

Total plan assets

100 %

Determination of Fair Value of Plan Assets

The Plans have established a process for determining fair values. Fair

value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon models

that primarily use, as inputs, market-based or independently sourced market parameters, including yield curves, interest rates, volatilities,

equity or debt prices, foreign exchange rates, and credit curves.

While the Plans believe the valuation methods are appropriate and consistent

with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments

could result in a different estimate of fair value at the reporting date.

Valuation Hierarchy

Fair value measurements are estimated based on valuations techniques

and inputs categorized as follows:

·Level 1—Quoted prices

in active markets for identical assets or liabilities

·Level 2—Significant other

observable inputs

·Level 3—Significant unobservable

inputs

The Net Asset Value (“NAV”) is based on the value of the

underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

Following is a description of the valuation methodologies used for

the investments measured at fair value.

·Debt instruments—A limited

number of these investments are valued at the closing price reported on the major market on which the individual securities are traded.

The debt instruments primarily relate to government bonds, money held by trusts, or bonds taken from funds. Where quoted prices are available

in an active market, the investments are classified as Level 1. If quoted market prices are not available for the specific security,

then fair values are estimated by using other observable inputs including pricing models, quoted prices of securities with similar characteristics,

or discounted cash flows and are classified as Level 2.

·Equity securities—Equity

securities are valued at the closing price reported on the active market on which the individual securities are traded. 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 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. These assets are categorized as Level 3.

·Commingled funds—The

fair value of non-publicly traded funds is determined using the NAV provided by the administrator of the fund when the Company has the

ability to redeem the asset at the measurement date. When the Company is using the NAV as a practical expedient, those investments are

not included in the valuation hierarchy. The investments are valued using the NAV provided by the fund administrator. Assets in the Level

2 category have a quoted market price.

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)

Assets Measured at

NAV

Total Assets

(Dollars in Millions)

December 28, 2025

Debt instruments

$ —

$ 11

$ —

$ 11

Equity securities

—

Buy-in annuity policies

—

256

—

256

Other assets

—

175

—

255

Commingled funds

—

Total investments at fair value

$ 81

$ 52

$ 431

$ 8

$ 572

Quoted Prices

Active Markets for

Identical Assets

(Level 1)

Significant

Other

Observable Inputs

(Level 2)

Significant

Unobservable Inputs (Level 3)(1)

Assets Measured

NAV

Total Assets

(Dollars in Millions)

December 29, 2024

Debt instruments

$ —

$ 223

$ —

$ 223

Equity securities

—

Other assets

—

151

—

195

Commingled funds

—

100

Total investments at fair value

$ 52

$ 315

$ 151

$ 8

$ 526

(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

Other Assets

Fiscal Twelve Months Ended

(Dollars in Millions)

December 28, 2025

Fair value of plan assets, beginning of fiscal year

$ —

$ 151

Net realized and unrealized gains

—

Net purchases, issuances, and settlements(1)

250

(7 )

Currency translation

Fair value of plan assets, end of fiscal year

$ 256

$ 175

(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

Prior to the Separation, the Company’s employees

participated in J&J’s defined benefit pension plans, which covered eligible employees in the United States and certain

foreign jurisdictions. J&J also provided medical benefits, principally to its U.S. 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. 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 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.

In connection with the Separation, J&J has provided participation

rights for a 15-year period for certain employees to continue receiving the pension benefits within the United States and Canada. As a

result of this benefit provided to Kenvue employees, an asset has been recorded on the Consolidated Balance Sheet during the fiscal twelve

months ended December 31, 2023 in the amount of $94 million that will be amortized straight-line over the 15-year period ended 2039.

Savings Plan

The Company has 401(k) savings plans designed to enhance the existing

retirement programs covering eligible employees. 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 $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

Prior to the Separation, J&J maintained a post-employment benefit

plan to provide limited benefits to its former employees, including former employees of the Company, if they were involuntarily terminated.

The duration of these benefits was generally based on the employee’s term of service with J&J, and included both severance compensation

and other benefits, including medical coverage. The post-employment plan was published and was considered a benefit to employees which

was earned over the employee’s term of service. 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 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.

8. Leases

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. The Company’s

lease agreements do not contain any significant residual value guarantees or restrictive covenants.

Global and North America Headquarters Lease

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”). 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 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. Each lease includes an initial term of 15

years as well as renewal options, which the Company is reasonably certain to exercise, that will extend the term of each lease through

2060. 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, also accounted for as a finance lease, commenced in October 2025.

ROU Assets and Lease Liabilities

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

(Dollars in Millions)

December

28, 2025(1)

December

29, 2024(2)

December 28, 2025

December 29, 2024

ROU assets included in:

Property, plant, and equipment, net

$ —

$ 114

$ 111

Other assets

151

111

—

Total ROU assets

$ 151

$ 111

$ 114

$ 111

Lease liabilities included in:

Accrued liabilities

$ 43

$ 36

$ —

Loans and notes payable

—

Long-term debt

—

133

119

Other liabilities

107

—

Total lease liabilities

$ 150

$ 112

$ 135

$ 121

(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.

Lease Cost

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 28, 2025

December 29, 2024

December 31, 2023

Operating lease costs

$ 50

$ 48

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

The schedule of payments required on the Company’s operating

leases and finance leases for the five succeeding fiscal years, and thereafter, is as follows:

Fiscal Twelve Months Ended

(Dollars in Millions)

Operating Leases

Finance Leases

Total

2026

$ 48

$ 1

$ 49

2027

2028

2029

2030

Thereafter

253

285

Total

169

279

448

Less: Imputed interest

144

163

Total current and non-current lease liabilities

$ 150

$ 135

$ 285

Other Information

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 28, 2025

December 29, 2024

December 31, 2023

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

Operating leases

$ 59

$ 50

$ 49

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 28, 2025

December 29, 2024

December 31, 2023

ROU assets obtained in exchange for new lease liabilities:

Operating leases

$ 80

$ 27

$ 120

Finance leases

$ 9

$ 109

* The Company did not have significant

finance leases during the fiscal twelve months ended December 31, 2023.

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, 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

6 years

5 years

Finance leases

34 years

35 years

Weighted-average discount rate:

Operating leases

4.8 %

3.9 %

3.6 %

Finance leases

4.9 %

5.0 %

* The Company did not have significant finance leases during the

fiscal twelve months ended December 31, 2023.

9. Accrued and Other Liabilities

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

Accrued expenses

$ 428

$ 368

Accrued compensation and benefits

343

325

Operating lease liabilities

Tax indemnification liability(1)

Other accrued liabilities

323

321

Total accrued liabilities

$ 1,159

$ 1,132

(Dollars in Millions)

December 28, 2025

December 29, 2024

Accrued income taxes

$ 219

$ 185

Operating lease liabilities

107

Tax indemnification liability(1)

135

143

Other accrued liabilities

140

132

Total other liabilities

$ 601

$ 536

(1) The balances primarily relate to the Tax Matters Agreement (as

defined in Note 12, “Relationship with J&J—Tax Indemnification”) entered into with J&J on May 3, 2023 that

governs the parties’ respective rights, responsibilities, and obligations with respect to tax liabilities and benefits, tax attributes,

the preparation and filing of tax returns, the control of audits and other tax proceedings, and other matters regarding taxes. See Note

12, “Relationship with J&J—Tax Indemnification,” for more information.

10. Accumulated Other Comprehensive Loss

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 income (loss) before reclassifications

219

(181 )

104

Amounts reclassified to the Consolidated Statement of Operations

—

(28 )

(26 )

Net current period Other comprehensive income (loss)

219

(179 )

December 31, 2023

(5,257 )

(167 )

(5,377 )

Other comprehensive (loss) income before reclassifications

(783 )

(6 )

(760 )

Amounts reclassified to the Consolidated Statement of Operations

—

(17 )

(9 )

Net current period Other comprehensive (loss) income

(783 )

(23 )

(769 )

December 29, 2024

(6,040 )

(130 )

(6,146 )

Other comprehensive income (loss) before reclassifications

1,178

(9 )

1,196

Amounts reclassified to the Consolidated Statement of Operations

—

(23 )

(9 )

Net current period Other comprehensive income

1,178

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 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. Foreign currency translation is not adjusted for income taxes where it relates to permanent investments in international

operations. 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 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 28, 2025

December 29, 2024

December 31, 2023

Foreign currency translation

$ (13 )

$ (6 )

$ (12 )

Employee benefit plans

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.

11. Stock-Based Compensation

J&J Plans and Conversion of J&J Awards

J&J’s 2012 Long-Term Incentive Plan (the “J&J 2012

Plan”) expired on April 26, 2022. Prior to that expiration, on March 7, 2022, J&J’s Board of Directors approved the 2022

Long-Term Incentive Plan (the “J&J 2022 Plan,” together with the J&J 2012 Plan, the “J&J Plans”).

The J&J 2022 Plan became effective subsequent to the expiration of the J&J 2012 Plan. The J&J Plans provide for the grant

of stock options, RSUs, PSUs, other stock-based awards, and cash awards to employees and directors, including the Company’s personnel.

Stock-based compensation granted pursuant to the J&J Plans was denominated in shares of J&J’s common stock. As such, all

awards granted subsequent to the effective date of the J&J 2022 Plan and prior to the completion of the Exchange Offer were issued

under the J&J 2022 Plan.

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 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 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. Upon the conversion, there were 69,438,910

shares of common stock underlying the converted awards that were eligible to be issued under the Kenvue 2023 Plan. The terms of the converted

Kenvue awards are as follows:

Conversion of RSUs

On the Conversion Date, the Company was deemed to have issued 12.5

million RSUs with an incremental cost of $283 million. These awards have vesting dates extending through August 2026. These RSUs provide

for accelerated vesting in certain change-in-control scenarios.

The incremental cost of each RSU replaced was estimated based on the

fair value of the Company’s common stock at the deemed Conversion Date, adjusted to reflect that the RSUs do not have dividend participation

rights through the vesting date (using a dividend rate assumption consistent with the assumption disclosed within the table below).

Conversion of Stock Options

On the Conversion Date, the Company was deemed to have issued 57 million

non-qualified stock options and incentive stock options with an incremental cost of $198 million. 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. These stock options provide for accelerated vesting in certain

change-in-control scenarios.

Each stock option has a weighted-average exercise price of approximately

$21.01 as of the Conversion Date. The fair value of each stock option was estimated using the Black-Scholes option valuation model. The

assumptions used in calculating the fair value of the converted stock options were as follows:

Assumption

August 2023 Converted Stock

Options

Expected volatility(1)

16.5% – 21.4%

Expected dividend yield(2)

3.2%

Risk-free rate(3)

4.2% – 5.4%

Expected term(4)

0.5 years – 6.5 years

(1) Expected volatility was based on the historical volatility of

a selected group of the Company’s peers and other factors.

(2) Expected dividend yield was calculated using the assumed dividend

payout per common share as a percentage of the average Kenvue common share price for the prior three-month period, which was then annualized.

(3) Risk-free rate was based on the U.S. Treasury yield curve in

effect as of the Conversion Date.

(4) Expected term was consistent with the historical experiences

of J&J for awards similar to those in the Kenvue population.

As noted above, the conversion of J&J awards to Kenvue awards was

accounted for as a modification. As a result, the J&J awards were deemed to be canceled and replaced by Kenvue awards, resulting in

incremental stock-based compensation expense of $25 million recognized in the fiscal twelve months ended December 31, 2023 in relation

to J&J denominated stock options which had vested. With respect to the deemed cancelation of J&J stock options, PSUs, and RSUs

that had not yet vested, the Company reversed $148 million of previously recognized stock-based compensation expense. From the Conversion

Date through the end of the fiscal twelve months ended December 31, 2023, the Company recognized $215 million of compensation costs attributable

to the RSUs and stock options described above. In total, the Company recognized incremental stock-based compensation expense of $240 million

in the fiscal twelve months ended December 31, 2023.

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,

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. The Kenvue 2023 Plan was approved by J&J, as sole shareholder of the Company, prior to the Kenvue

IPO and became effective in May 2023. The maximum aggregate number of shares of common stock that was approved for issuance under the

Kenvue 2023 Plan was 188,897,256. 69,438,910 shares underlying awards converted from J&J awards to Kenvue awards (as described in

“—J&J Plans and Conversion of J&J Awards” above) will not reduce the maximum aggregate number of shares of common

stock that may be issued under the Kenvue 2023 Plan. To meet share requirements resulting from the exercise of stock options and the vesting

of RSUs and PSUs, the Company may use either authorized and unissued shares or shares of treasury stock. Since the inception of the Kenvue

2023 Plan, all issuances resulting from the exercise of stock options and the vesting of RSUs and PSUs were issued from the authorized

and unissued Kenvue 2023 Plan share pool.

On August 25, 2023, the Company’s Compensation & Human Capital

Committee approved equity grants to individuals employed by Kenvue as of October 2, 2023 (the “Founder Shares”). 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. 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 28, 2025, December 29, 2024, and December 31, 2023, were as follows:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 28, 2025

December 29, 2024

December 31,

2023(4)

Stock options

$ 41

$ 84

$ 90

RSUs

152

PSUs(1)

(2 )

Total stock-based compensation expense(2)

$ 136

$ 254

$ 188

Cost of sales(3)

$ 26

$ 100

$ 67

Selling, general, and administrative

expenses(3)

110

154

121

Total stock-based compensation expense(2)

$ 136

$ 254

$ 188

(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.

The Company’s unrecognized stock-based compensation expense and

the related weighted-average remaining requisite service periods for stock options, RSUs, and PSUs outstanding as of December 28, 2025

were as follows:

(Dollars in Millions)

Stock Options

December 28, 2025

Unrecognized stock-based compensation expense

$ 38

Weighted-average remaining requisite service period

1.09 years

RSUs

Unrecognized stock-based compensation expense

$ 100

Weighted-average remaining requisite service period

1.45 years

PSUs(1)

Unrecognized stock-based compensation expense

$ 5

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

Under the Kenvue 2023 Plan, Kenvue grants stock options which expire

10 years from the grant date and vest over service periods that range from six months to four years. All stock options are granted using

the closing price of Kenvue common stock on the New York Stock Exchange on the grant date.

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

were as follows:

Fiscal Twelve Months Ended

December 28,

2025

December 29,

2024

December 31,

2023

Expected volatility(1)

22.7 %

21.3 %

20.8 %

Expected dividend yield(2)

3.7 %

3.9 %

3.5 %

Risk-free rate(3)

4.1 %

4.5 %

Expected term(4)

6 years

(1) For awards granted under the Kenvue 2023 Plan, expected volatility

is based on the six-year historical volatility of a selected group of the Company’s peers and other factors. For stock options

granted under the J&J Plans, expected volatility was based on a blended rate of 10-year weekly historical overall volatility rate

and a five-week average implied volatility rate based on at-the-money traded J&J stock options with a contractual term of two years.

(2) For stock options granted under the Kenvue 2023 Plan, expected

dividend yield is calculated using the assumed dividend payout per common share as a percentage of the average Kenvue common share price

for the prior three-month period, which is then annualized. For stock options granted under the J&J Plans, expected dividend yield

was calculated using the assumed dividend payout per common share as a percentage of the spot J&J common share price as of the grant

date.

(3) Risk-free rate is based on the U.S. 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 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. For stock options granted under the

J&J Plans, expected term was calculated based on J&J’s historical data.

A summary of stock option activity under the Kenvue 2023 Plan during

the fiscal twelve months ended December 28, 2025 is presented below:

Aggregate

Intrinsic Value

(Options in Thousands)

Options

Weighted-Average Exercise Price

Weighted-Average Remaining Contractual Term

(Dollars in Millions)

Options outstanding as of December 29, 2024

66,885

$ 20.42

6.9 years

$ 95

Options granted

9,826

23.29

Options exercised

(6,413 )

19.55

Options canceled/forfeited

(7,177 )

21.37

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 was $5 million in the fiscal twelve months ended December 28, 2025.

Restricted Stock Units and Performance Stock Units

Restricted Stock Units

Under the Kenvue 2023 Plan, Kenvue grants RSUs which vest over service

periods that range from one year to three years. All RSUs granted have forfeitable dividend participation rights during the vesting period.

Under the Kenvue 2023 Plan, Kenvue grants insignificant RSUs to non-employee directors which vest, but are not issued, immediately upon

grant. For awards granted under the J&J Plans, the grant date fair value of RSUs granted was equivalent to the fair market value on

the grant date, discounted by the expected dividend yield, as the RSUs did not have dividend participation rights during the vesting period.

Performance Stock Units

Beginning in the fiscal twelve months ended December 29, 2024, under

the Kenvue Plan, the Company grants PSUs with both performance vesting conditions and market-based vesting conditions. The Performance

PSUs are paid in shares of Kenvue’s common stock after the end of a three-year performance period. The Performance PSUs have forfeitable

dividend participation rights during the vesting period. The vesting of Performance PSUs is tied to the completion of a three-year service

period and the achievement, over a three-year period, of specified performance metrics as well as the relative total shareholder return

for Kenvue common stock. The number of shares earned at the end of the three-year performance period will vary, based on actual performance,

from 0% to 200% of the target number of Performance PSUs granted.

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 28, 2025 and December 29, 2024 were as follows:

Fiscal Twelve Months Ended

December 28,

2025

December 29,

2024

Expected

volatility(1)

22.5 %

21.3 %

Risk-free

rate(2)

3.8 %

4.3 %

(1) Expected volatility is based on the historical volatility of

a selected group of the Company’s peers and other factors over the prior three fiscal years.

(2) Risk-free rate is based on the U.S. Treasury yield curve in

effect as of the grant date for Performance PSUs granted.

Under the Kenvue 2023 Plan, the Company granted PSUs with only market-based

vesting conditions during the fiscal twelve months ended December 31, 2023 (the “Market PSUs”). The Market PSUs are paid in

shares of Kenvue’s common stock after the end of a three-year performance period. The vesting of Market PSUs is tied to the completion

of service periods that range from one year to three years and the achievement, over a three-year period, of relative total shareholder

return for Kenvue common stock. The number of shares earned at the end of the three-year period will vary, based on actual performance,

from 0% to 200% of the target number of Market PSUs granted. The grant date fair value of each Market PSU granted, inclusive of the fair

value associated with the relative total shareholder return goal, was estimated on the grant date using the Monte Carlo valuation model.

Under the J&J Plans, J&J granted PSUs, which were paid in shares

of J&J common stock after the end of a three-year performance period. The vesting of these PSUs was tied to the completion of service

periods that ranged from six months to three years and the achievement, over a three-year period, of two equally weighted goals that directly

aligned with or helped drive long-term J&J shareholder return: adjusted operational earnings per share and relative total shareholder

return. The number of shares earned at the end of the three-year period varied, based on actual performance, from 0% to 200% of the target

number of PSUs granted. 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 following

the Conversion Date.

Restricted Stock Unit and Performance Stock Unit Activity

A summary of unvested RSU and PSU activity under the Kenvue 2023 Plan

during the fiscal twelve months ended December 28, 2025 is presented below:

(Shares in Thousands)

Outstanding Restricted

Stock Units

Weighted-Average Grant

Date Fair Value

Outstanding

Performance Stock

Units

Weighted-Average Grant

Date Fair Value

Shares as of December 29, 2024

13,633

$ 20.77

2,675

$ 21.43

Granted

4,966

23.16

1,319

25.44

Issued

(7,121 )

21.46

(2 )

23.22

Canceled/forfeited

(1,537 )

21.32

(1,093 )

22.80

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

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.

12. Relationship with J&J

On August 23, 2023, Kenvue became a fully independent company

upon the completion of the Exchange Offer (see Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description

of the Company and Business Segments”), and J&J ceased to be a related party on that date. The Company continues to have material

agreements with J&J—see “—Transactions with J&J, Including the Separation Agreement” section within this

footnote for additional details of these material agreements that govern the Company’s relationship with J&J.

Cost Allocations from J&J Prior to Kenvue IPO

Prior to the Kenvue IPO, J&J provided significant support functions

to the Company. The Consolidated Financial Statements reflect an allocation of these costs. 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 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 Statement

of Operations for the fiscal twelve months ended December 31, 2023 were:

Fiscal Twelve

Months Ended

(Dollars in Millions)

December 31, 2023

Cost of sales

$ 25

Selling, general, and administrative expenses

120

Total costs allocated

$ 145

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. 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 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 were:

Fiscal Twelve

Months Ended

(Dollars in Millions)

December 31, 2023

Cash pooling and general financing activities

$ (446 )

Corporate cost allocations

145

Taxes deemed settled with J&J

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

$ (274 )

Other(1)

(34 )

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

$ (308 )

(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, 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. Separation-related adjustments have been recognized in Net Investment from J&J, the net impact of

which resulted in an increase in net assets and total equity by $91 million for the fiscal twelve months ended December 31, 2023. 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 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);

·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; and

·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.

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:

(Dollars in Millions)

December 28, 2025

December 29, 2024

Prepaid expenses and other receivables

$ 21

$ 109

Accounts payable and Accrued liabilities

$ 136

$ 270

Other assets

$ 91

$ 78

Other liabilities

$ 139

$ 143

Fiscal Twelve Months Ended

(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

The Company entered into the Tax Matters Agreement with J&J on

May 3, 2023 that governs the parties’ respective rights, responsibilities, and obligations with respect to tax liabilities and benefits,

tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and other matters regarding

taxes.

Allocation of Taxes

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. Furthermore, subject to certain exceptions,

the Company is required to reimburse J&J for certain tax refunds it receives with respect to taxes paid prior to the effective date

of the Tax Matters Agreement.

Preservation of the Intended Tax Treatment of Certain Steps of the

Separation and the Distribution

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 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

During the fiscal six months ended July 2, 2023, the Company

received debt proceeds of approximately $7.7 billion from the issuance of the 2023 Senior Notes and received initial proceeds

from its commercial paper program of $1.2 billion. 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. The Company remitted this cash back

to J&J as a distribution in connection with the Separation.

13. 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 28, 2025

December 29, 2024

December 31, 2023

Litigation expense

$ 5

$ 4

$ 26

Royalty income

(37 )

(34 )

(35 )

Impact of Deferred Markets(1)

Contingent liability reversal(2)

—

(45 )

Gain on Skillman held for sale asset(3)

(17 )

—

Other(4)

(12 )

(3 )

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. See Note 1, “Description of the Company and

Summary of Significant Accounting Policies—Variable Interest Entities and Net Economic Benefit Arrangements,” for more information

regarding Deferred Markets.

(2) Includes the reversal of a contingent liability that was no

longer considered to be probable.

(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 28, 2025

December 29, 2024

December 31, 2023

Currency losses on transactions

$ 46

$ 1

$ 58

Losses on investments

—

Tax indemnification release(1)

—

(21 )

—

Other(2)

(10 )

(4 )

Total other expense, net

$ 36

$ 48

$ 72

(1) Includes the release of tax indemnification reserves that were

no longer considered to be probable.

(2) Other consists primarily of net periodic benefit costs other

than service cost components and miscellaneous non-operating (income) expenses. Other also includes the receipt of a government subsidy

for the fiscal twelve months ended December 28, 2025 and December 29, 2024.

14. Income Taxes

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.

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. 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. 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 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.

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 28, 2025

December 29, 2024

December 31, 2023

U.S.

$ 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

Current:

U.S. taxes(1)

$ 201

$ 287

$ 266

International taxes

436

383

374

Total current taxes

637

670

640

Deferred:

U.S. taxes(2)

(90 )

(178 )

(39 )

International taxes

(18 )

(107 )

(75 )

Total deferred taxes

(108 )

(285 )

(114 )

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

U.S. federal

$ 153

U.S. state and local

International

354

Total cash paid for income taxes, net of refunds(1)(2)

$ 595

(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. 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

December 28, 2025

(Dollars in Millions)

Amount

Percent

U.S. federal statutory tax rate

$ 420

21.0 %

Effect of cross-border tax laws(1)

0.4

Tax credits

(32 )

(1.6 )

Nontaxable or nondeductible items

0.1

Changes in valuation allowances

0.1

Other adjustments

(4 )

(0.2 )

State and local income taxes, net of federal income tax effect(2)

0.5

Foreign tax effects(3)

Switzerland

Rate differential

(38 )

(1.9 )

Other

1.4

Other foreign jurisdictions

4.4

Worldwide changes in unrecognized tax benefits(4)

2.3

Effective tax rate

$ 529

26.5 %

(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

Tax rates:

U.S. federal statutory tax rate

21.0 %

U.S. taxes on international income(1)

2.8

(1.5 )

International operations(2)

2.8

0.8

State

(0.4 )

2.0

Change in valuation allowance

1.0

2.5

Tax shortfall (windfall) on stock-based compensation

0.5

(0.5 )

All other

(0.5 )

(0.3 )

Effective tax rate

27.2 %

24.0 %

(1) Includes the impact of the tax on GILTI and other foreign income

that is taxable under the U.S. 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 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 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:

·U.S. 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 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. foreign source income. This resulted in an increase in the valuation allowance for foreign tax

credits related to earnings that are not indefinitely reinvested, as well as state and local income taxes. These items are partially offset

by reductions in unrecognized tax benefits in certain foreign jurisdictions reflected in international operations within the rate reconciliation,

as well as 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. The additional U.S. foreign tax credit benefit is reflected in U.S. taxes on international

income within the rate reconciliation.

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.

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)

Asset

Liability

Asset

Liability

Employee-related obligations

$ 34

$ —

$ 18

$ —

Stock-based compensation

—

Depreciation of property, plant, and equipment

—

Goodwill and intangibles

—

(2,597 )

—

(2,434 )

Reserves and liabilities

120

—

110

—

Net operating loss (“NOL”) and tax credit carryforward

178

—

122

—

Undistributed foreign earnings

—

(37 )

(103 )

Miscellaneous international

—

Research and development capitalized for tax

—

Miscellaneous U.S.

—

(11 )

Subtotal

590

(2,634 )

560

(2,548 )

Valuation allowance

(73 )

—

(89 )

—

Total deferred income taxes

$ 517

$ (2,634 )

$ 471

$ (2,548 )

The Company has wholly owned international subsidiaries that have cumulative

net losses. The Company believes that it is more likely than not that these subsidiaries will generate future taxable income sufficient

to utilize these deferred tax assets. However, in certain jurisdictions, valuation allowances have been recorded against deferred tax

assets for loss carryforwards that are not more likely than not to be realized.

The Company has recognized $77 million and $64 million of deferred

tax assets related to U.S. state and foreign NOL carryforwards and $101 million and $58 million of deferred tax assets related to

U.S. federal and state and foreign tax credit carryforwards as of December 28, 2025 and December 29, 2024, respectively. Foreign NOLs

expire over various years based on local laws; however, if unused, the majority of foreign NOL carryforwards will expire between 2026

through 2034. Existing federal tax credit carryforwards will expire between 2035 and 2045. U.S. state NOLs generally expire between 2035

and 2045. 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. For all other undistributed earnings from the Company’s subsidiaries

organized outside the United States, the Company has not recorded deferred taxes where the earnings are indefinitely reinvested. The

Company intends to continue to reinvest these earnings in those international operations. If the Company decides at a later date to repatriate

these earnings to the United States, the Company would be required to provide for the net tax effects on these amounts. 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 28, 2025, December 29, 2024, and December 31, 2023:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 28, 2025

December 29, 2024

December 31, 2023

Beginning of fiscal year

$ 176

$ 185

$ 437

Increases related to current year tax positions

Increases related to prior period tax positions

—

Decreases related to prior period tax positions

—

(11 )

(19 )

Settlements

(4 )

—

Lapse of statute of limitations

(5 )

(19 )

(42 )

Net decreases related to the Separation

—

(220 )

End of fiscal year

$ 194

$ 176

$ 185

As of December 28, 2025, the Company had unrecognized tax benefits

of $194 million. If recognized, $182 million would affect the Company’s annual effective tax rate. Pursuant to the Tax

Matters Agreement between J&J and the Company, certain liabilities for unrecognized tax benefits have been reduced during the fiscal

twelve months ended December 31, 2023 to reflect the fact that the liabilities are retained by J&J, including with respect to the

U.S. federal income tax, or have been reclassified as indemnification payables to J&J where the liabilities relate to the Company

for periods prior to the Kenvue IPO. The Company conducts business and files tax returns in numerous countries. 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 was part of J&J’s federal consolidated tax return. The

Company has therefore reduced its unrecognized tax benefits for U.S. federal uncertain tax positions as reflected in the table above under

Net decreases related to the Separation during the fiscal twelve months ended December 31, 2023. 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 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 $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.

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.

15. Net Income Per Share

The Company had 1,936,502,167 shares of common stock issued and 1,916,115,445

shares of common stock outstanding as of December 28, 2025. Prior to the completion of the Kenvue IPO, the Company had 1,716,160,000 shares

of common stock outstanding, of which 1,716,159,990 shares were issued to J&J through a subscription agreement in May 2023. On May 8,

2023, the Kenvue IPO was completed through the sale of 198,734,444 shares of common stock, including the underwriters’ full exercise

of their option to purchase 25,921,884 shares to cover over-allotments. 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 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 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

Dilutive effects of stock-based awards

Diluted weighted-average number of shares outstanding

1,924

1,923

1,850

Net income per share:

Basic

$ 0.77

$ 0.54

$ 0.90

Diluted

$ 0.76

$ 0.54

$ 0.90

Share Repurchase Program

During the fiscal three months ended October 1, 2023, the Company’s

Board authorized a share repurchase program, under which the Company is authorized to repurchase up to 27,000,000 shares of its outstanding

common stock in open market or privately negotiated transactions. The program has no expiration date and may be suspended or discontinued

at any time. The intent of this repurchase program is to offset dilution from the vesting or exercise of equity-based awards under the

Kenvue 2023 Plan. 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.

16. Fair Value Measurements

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

·Level 2—Significant other

observable inputs

·Level 3—Significant unobservable

inputs

If the inputs used to measure the financial assets and liabilities

fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair

value measurement of the instrument.

The following fair value hierarchy table presents the components and

classification of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 28,

2025 and December 29, 2024:

December 28, 2025

December 29, 2024

(Dollars in Millions)

Carrying

Value

Level 1

Level 2

Level 3

Carrying

Value

Level 1

Level 2

Level 3

Assets:

Forward foreign exchange contracts

$ 73

$ —

$ 73

$ —

$ 81

$ —

$ 81

$ —

Cross currency swap contracts

—

Total assets

$ 93

$ —

$ 93

$ —

$ 152

$ —

$ 152

$ —

Liabilities:

Forward foreign exchange contracts

$ (63 )

$ —

$ (63 )

$ —

$ (76 )

$ —

$ (76 )

$ —

Cross currency swap contracts

(111 )

—

(111 )

—

(1 )

—

(1 )

—

Total liabilities

$ (174 )

$ —

$ (174 )

$ —

$ (77 )

$ —

$ (77 )

$ —

Net amount presented in Prepaid expenses and other receivables:

$ 22

$ —

$ 22

$ —

$ 52

$ —

$ 52

$ —

Net amount presented in Accounts payable:

$ (59 )

$ —

$ (59 )

$ —

$ (13 )

$ —

$ (13 )

$ —

Net amount presented in Other assets:

$ —

$ 36

$ —

$ 36

$ —

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.

The fair value of forward foreign exchange contracts is the aggregation by currency of all future cash flows discounted to its present

value at the prevailing market interest rates and subsequently converted to the U.S. dollar at the current spot foreign exchange rate.

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.

The following table sets forth the notional amounts of the Company’s

outstanding derivative instruments as of December 28, 2025 and December 29, 2024:

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

Cash flow hedges

$ 3,422

$ —

$ 3,422

$ 3,570

$ —

$ 3,570

Fair value hedges

$ 296

$ —

$ 296

$ 30

$ —

$ 30

Net investment hedges

$ —

$ 2,000

$ —

$ 1,900

Undesignated hedging instruments

$ 502

$ —

$ 502

$ 574

$ —

$ 574

Cash Flow Hedges

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 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. These contracts are designated as cash flow hedging relationships at the date of contract inception, in accordance with the appropriate

accounting guidance. 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 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.

The Company expects that substantially all of the amounts related to

forward foreign exchange contracts will be reclassified into earnings over the next 12 months as a result of transactions

that are expected to occur over that period. The maximum length of time over which the Company is hedging transactional exposure is 18 months.

The amount ultimately realized in earnings may differ as foreign exchange rates change. Realized gains and losses are ultimately determined

by actual exchange rates at maturity of the derivative.

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 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

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

(Loss) gain reclassified from Other comprehensive income (loss) into earnings

$ (1 )

$ 15

$ (1 )

Fiscal Twelve Months Ended

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

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. 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 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

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. At inception,

all designated fair value hedging relationships are expected to be highly effective. The contracts are accounted for using the spot

method with changes in the fair value of the contract attributable to the changes in spot rates recorded within Other expense, net

in the Consolidated Statements of Operations. 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 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

Forward Foreign Exchange Contracts

Beginning in the fiscal three months ended July 2, 2023, the Company

entered into forward foreign exchange contracts to

mitigate foreign exchange exposure related to non-U.S. dollar net investments

in certain foreign subsidiaries against changes in foreign exchange rates. 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 income (loss). 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 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.

Cross Currency Swap Contracts

Beginning in the fiscal three months ended December 31, 2023, the Company

entered into cross currency swap contracts to hedge exposure in foreign subsidiaries with local functional currencies. 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 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 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 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 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

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. 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 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 28, 2025

December 29, 2024

December 31, 2023

(Loss) gain recognized in Other expense, net

$ (2 )

$ (7 )

$ 10

Effectiveness

On an ongoing basis, the Company assesses whether each derivative continues

to be highly effective in offsetting changes of hedged items. When a derivative is no longer expected to be highly effective, hedge accounting

is discontinued.

Statement of Cash Flows

Cash flows from derivatives designated in hedging relationships are

reflected in the Consolidated Statements of Cash Flows consistent with the presentation of the hedged item. Cash flows from derivatives

that were not accounted for as designated hedging relationships reflect the classification of the cash flows associated with the activities

being economically hedged.

Credit Risk

The Company is exposed to the risk of credit loss in the event of nonperformance

by counterparties to financial instrument contracts; however, nonperformance is considered unlikely and any nonperformance is unlikely

to be material as it is the Company’s policy to contract with diverse, creditworthy counterparties based upon both strong credit

ratings and other credit considerations. The Company has negotiated International Swaps and Derivatives Association, Inc. master agreements

with its counterparties, which contain master netting provisions providing the legal right and ability to offset exposures across trades

with each counterparty. Given the rights provided by these contracts, the Company presents derivative balances based on its “net”

counterparty exposure. These agreements do not require the posting of collateral.

17. 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, 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. As

of December 28, 2025, the Company has determined that the liabilities associated with certain litigation matters are probable and can

be reasonably estimated. The Company has accordingly accrued for those contingent liabilities and will continue to monitor each related

legal issue and adjust accruals as might be warranted based on new information and further developments. Accrued liabilities related to

litigation matters are included in Accrued liabilities and Other liabilities on the Consolidated Balance Sheets. For these and other litigation

and regulatory matters discussed below for which a loss is probable or reasonably possible, the Company is unable to estimate the possible

loss or range of loss beyond the amounts accrued. Amounts accrued for legal contingencies often result from a complex series of judgments

about future events and uncertainties that rely heavily on estimates and assumptions including timing of related payments. 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; proceedings are in early stages; matters

present legal uncertainties; significant facts are in dispute; procedural or jurisdictional issues exist; the number of potential claims

is certain or predictable; comprehensive multi-party settlements are achievable; there are complex related cross-claims and counterclaims;

and/or there are numerous parties involved.

In the Company’s opinion, based on its examination of these matters,

its experience to date and discussions with counsel, the ultimate outcome of legal proceedings, net of liabilities accrued on the Consolidated

Balance Sheets, is not expected to have a material adverse effect on the Company’s financial position. However, the resolution of,

or increase in accruals for, one or more of these matters in any reporting period may have a material adverse effect on the Company’s

results of operations and cash flows for that period.

Product Liability

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 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. From time to time, even if it has substantial defenses, the Company considers isolated settlements based

on a variety of circumstances. The Company may accrue an estimate of the legal defense costs needed to defend each matter when those costs

are probable and can be reasonably estimated. For certain of these matters, the Company may accrue additional amounts such as estimated

costs associated with settlements, damages, and other losses. Product liability accruals can represent projected product liability for

thousands of claims around the world, each in different litigation environments and with different fact patterns. Changes to the accruals

may be required in the future as additional information becomes available.

Claims for personal injury have been made against the Company’s

subsidiary Johnson & Johnson Consumer Inc., now known as Kenvue Brands LLC (“JJCI”), along with other third-party sellers

of acetaminophen-containing products, in federal court alleging that in utero exposure to acetaminophen (the active ingredient in Tylenol®,

an over-the-counter (“OTC”) pain medication) is associated with the development of autism spectrum disorder and/or attention-deficit/hyperactivity

disorder in children. In October 2022, lawsuits filed in federal courts in the United States were organized as a multi-district litigation

in the U.S. District Court for the Southern District of New York. In February 2024, the court entered final judgment in favor of JJCI

and the other sellers of acetaminophen-containing products and dismissed the majority of cases then pending in the multi-district litigation.

A Notice of Appeal was filed for those cases in March 2024. In August 2024, all remaining cases then pending in the multi-district litigation

were dismissed. As of December 2024, all cases were on appeal. 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. Lawsuits have also been filed in Canada against the Company’s subsidiary Johnson &

Johnson Inc. (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

In 2006, J&J acquired Pfizer’s OTC business including

the U.S. rights to OTC Zantac, which were on-sold to Boehringer Ingelheim (“BI”) as a condition to merger control

approval such that BI assumed product liability risk for U.S. 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.

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. In January 2020, J&J received a demand for indemnification from BI, pursuant to the 2006 Asset

Purchase Agreement among J&J, Pfizer, and BI. Pursuant to the agreements, Pfizer and BI have asserted indemnification claims

against J&J ostensibly related to Zantac sales by Pfizer. In November 2022, J&J received a demand for indemnification from

GlaxoSmithKline LLC, pursuant to the 2006 Stock and Asset Purchase Agreement between J&J and Pfizer, and certain 1993, 1998, and

2002 agreements between Glaxo Wellcome and Warner-Lambert entities. The notices seek indemnification for legal claims related to OTC

Zantac (ranitidine) products. Plaintiffs in the underlying actions allege that Zantac and other OTC medications that contain

ranitidine may degrade and result in unsafe levels of NDMA (N-nitrosodimethylamine) and can cause or have caused various cancers in

individuals using the products and seek declaratory and monetary relief. J&J has rejected all the demands for indemnification

relating to the underlying actions. No J&J entity sold Zantac in the United States.

In 2016, JJI sold the Canadian Zantac business to Sanofi Consumer Health,

Inc. (“Sanofi”). 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. The notice refers to indemnification

for legal claims in class actions and various individual personal injury actions with similar allegations to the U.S. litigation related

to OTC Zantac (ranitidine) products.

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. 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. JJI has provided

Sanofi notice reserving rights to claim indemnification pursuant to the 2016 Purchase Agreement related to the class actions and personal

injury actions. 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 September 2023, the Nonprescription Drugs Advisory Committee (the

“NDAC”) of the U.S. Food and Drug Administration (the “FDA”) met to discuss new data on the effectiveness of orally

administered phenylephrine (“PE”) and concluded that the current scientific data do not support that the recommended dosage

of orally administered PE is effective as a nasal decongestant. Neither the FDA nor the NDAC raised concerns about safety issues with

use of oral PE at the recommended dose. In November 2024, the FDA issued a proposed order to remove the ingredient from the OTC monograph.

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. The complaints seek damages and injunctive relief. In December 2023,

lawsuits filed in federal courts in the United States were organized as a multi-district litigation in the U.S. District Court for the

Eastern District of New York. In November 2024, the U.S. 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, 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.

Additionally, beginning in October 2023, two putative securities

class actions were filed in the U.S. District Court for the District of New Jersey against the Company and certain of its officers,

among other defendants. In December 2023, the two cases were consolidated as In re Kenvue Inc. Securities Litigation and a

lead plaintiff was appointed. In March 2024, a consolidated amended complaint was filed that named the Company’s directors as

defendants in addition to the defendants named in the initial complaints. The consolidated amended complaint brings claims under the

Securities Act of 1933, as amended. 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.

In January 2024, shareholder derivative complaints were filed in the

U.S. District Court for the District of New Jersey against the Company as the nominal defendant and the Company’s directors and

certain of its officers as defendants, among other defendants. The derivative complaints allege breaches of fiduciary duties based on

disclosures in the Company’s SEC filings regarding PE, and they seek damages and equitable relief. The derivative complaints have

been consolidated as In re Kenvue, Inc. Derivative Litigation and have been stayed. 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 March 2024, following the filing of a Citizen Petition with the

FDA by Valisure LLC that included testing results purporting to show that benzoyl peroxide (“BPO”) OTC acne products can degrade

into benzene at levels well above the alleged limit of two parts per million, putative class actions were filed against the Company and

its affiliates, along with other third-party sellers and manufacturers of BPO-containing acne products, asserting various causes of action

including violation of consumer protection statutes, negligence, breach of express and implied warranties, and unjust enrichment. The

complaints, pending in the U.S. 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.

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. District Court for the District of New Jersey,

related to the clean-up of a section of the Lower Passaic River in New Jersey. Certain defendants (not including JJCI) have executed a

settlement with the U.S. Environmental Protection Agency and U.S. Department of Justice, which was confirmed through a judicial Consent

Decree in December 2024. A Notice of Appeal was filed in January 2025. 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.

Other

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.

18. Segments of Business and Geographic Areas

The Company is organized into three reportable business segments: Self

Care, Skin Health and Beauty, and Essential Health.

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 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. In assessing segment performance and managing operations, the CODM does not review segment assets.

The Company operates

the business through the following three reportable business segments based on product categories:

Reportable Segments

Product Categories

Self Care

Cough, Cold, and Allergy

Pain Care

Other Self Care (Digestive Health, Smoking Cessation, Eye Care, and Other)

Skin Health and Beauty

Face and Body Care

Hair, Sun, and Other

Essential Health

Oral Care

Baby Care

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 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

Product Categories

December 28, 2025

December 29, 2024

December 31, 2023

Cough, Cold, and Allergy

13 %

14 %

13 %

Pain Care

Other Self Care

Face and Body Care

Hair, Sun, and Other

Oral Care

Baby Care

Other Essential Health

Total

100 %

Segment Net Sales and Segment Adjusted Operating Income

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

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

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)

2,285

1,671

2,056

6,012

2,287

1,738

2,102

6,127

2,249

1,952

2,228

6,429

Other

segment expense items(2)

1,984

1,966

1,400

5,350

2,067

1,895

1,424

5,386

1,903

1,747

1,376

5,026

Segment adjusted

operating income

$ 2,109

$ 477

$ 1,176

$ 3,762

$ 2,173

$ 607

$ 1,162

$ 3,942

$ 2,299

$ 679

$ 1,011

$ 3,989

Reconciliation

to Income before taxes

Less:

Depreciation(3)

300

329

305

Amortization of intangible

assets(4)

257

269

322

Separation-related costs(5)

296

468

Restructuring

expenses and operating model optimization initiatives(6)

335

221

Impairment charges(7)

578

—

Conversion of stock-based

awards(8)

Founder Shares(9)

Proposed

Transaction costs(10)

—

Other operating

(income) expense, net

(23 )

(10 )

General

corporate/unallocated expenses

329

314

296

Operating

income

$ 2,414

$ 1,841

$ 2,512

Other expense,

net

Interest

expense, net

379

378

250

Income

before taxes

$ 1,999

$ 1,415

$ 2,190

(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 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 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 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 28, 2025

December 29, 2024

December 31, 2023

Self Care

$ 204

$ 217

$ 202

Skin Health and Beauty

123

174

230

Essential Health

230

231

195

Total depreciation and amortization(1)

$ 557

$ 622

$ 627

(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 28, 2025, December 29, 2024, and December 31, 2023 were as follows:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 28, 2025

December 29, 2024

December 31, 2023

North America(1)

$ 7,259

$ 7,579

$ 7,610

Europe, Middle East, and Africa

3,721

3,559

3,388

Asia-Pacific

2,775

2,974

3,107

Latin America

1,369

1,343

1,339

Total Net sales

$ 15,124

$ 15,455

$ 15,444

(1) Includes U.S. 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:

(Dollars in Millions)

December 28, 2025

December 29, 2024

North America(1)

$ 1,156

$ 922

Europe, Middle East, and Africa

536

432

Asia-Pacific

308

297

Latin America

212

198

Total long-lived assets

$ 2,212

$ 1,849

(1) Includes U.S. long-lived assets as of December 28, 2025 and

December 29, 2024 of $1,078 million and $848 million, respectively.

Major Customers

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.

19. Restructuring Expenses and Operating Model Optimization Initiatives

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.

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.

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

28, 2025 and December 29, 2024:

Fiscal Twelve Months Ended

(Dollars in Millions)

December 28, 2025

December 29, 2024

Restructuring expenses

$ 290

$ 185

Cost of sales

Selling, general, and administrative expenses

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

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 28, 2025

December 29, 2024

Employee-related costs(1)

$ 109

$ 106

$ 215

Information technology and project-related costs(2)

216

315

Other implementation costs(3)

Total pre-tax restructuring expenses and other charges

$ 335

$ 221

$ 556

(1) Employee-related costs primarily include severance and other

termination benefits.

(2) Information technology and project-related costs primarily include

advisory costs to operationalize the initiative.

(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 28, 2025 and

December 29, 2024:

(Dollars in Millions)

Employee-Related Costs(1)

Information Technology

and Project-Related Costs(2)

Other Implementation

Costs(3)

Total Accrued Costs

December 31, 2023

$ —

Charges to earnings

106

221

Cash payments

(75 )

(34 )

(7 )

(116 )

Non-cash charges

(6 )

—

(6 )

(12 )

December 29, 2024

Charges to earnings

109

216

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.

(2) Information technology and project-related costs primarily include

advisory costs to operationalize the initiative.

(3) Other implementation costs primarily include costs to terminate

contracts, impairments of assets, and other associated costs to exit.

20. 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%).

EX-99.3 — EXHIBIT 99.3

EX-99.3

Filename: tm2625576d1_ex99-3.htm · Sequence: 5

Exhibit 99.3

KENVUE INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Dollars in Millions, Except Per Share

Data; Shares in Thousands)

June 28, 2026

December 28, 2025

Assets

Current assets

Cash and cash equivalents

$ 1,110

$ 1,062

Trade receivables, less allowances for credit losses ($18 and $26 as of June 28, 2026 and December 28, 2025, respectively)

2,476

2,382

Inventories

1,722

1,666

Prepaid expenses and other receivables

450

432

Other current assets

141

155

Total current assets

5,899

5,697

Property, plant, and equipment, net

2,226

2,212

Intangible assets, net

8,406

8,694

Goodwill

9,265

9,509

Deferred taxes on income

247

237

Other assets

692

727

Total Assets

$ 26,735

$ 27,076

Liabilities and Stockholders’ Equity

Current liabilities

Loans and notes payable

$ 1,406

$ 1,453

Accounts payable

2,577

2,473

Accrued liabilities

1,040

1,159

Accrued rebates, returns, and promotions

769

755

Accrued taxes on income

105

Total current liabilities

5,867

5,945

Long-term debt

7,074

7,071

Deferred taxes on income

2,328

2,354

Employee-related obligations

341

340

Other liabilities

572

601

Total liabilities

16,182

16,311

Commitments and contingencies (Note 13)

Stockholders’ Equity

Preferred stock, $0.01 par value, 750,000 shares authorized; no shares issued and outstanding as of June 28, 2026 and December 28, 2025

—

Common stock, $0.01 par value, 12,500,000 shares authorized; 1,940,628 and 1,920,241 shares issued and outstanding as of June 28, 2026, respectively; 1,936,502 and 1,916,115 shares issued and outstanding as of December 28, 2025, respectively

Additional paid-in capital

16,397

16,348

Treasury stock, 20,387 shares at cost as of June 28, 2026 and December 28, 2025

(439 )

Accumulated deficit

(70 )

(204 )

Accumulated other comprehensive loss

(5,354 )

(4,959 )

Total stockholders’ equity

10,553

10,765

Total Liabilities and Stockholders’ Equity

$ 26,735

$ 27,076

See accompanying Notes to Condensed Consolidated

Financial Statements.

KENVUE INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; Dollars in Millions, Except Per Share

Data; Shares in Millions)

Fiscal Three Months Ended

Fiscal Six Months Ended

June 28, 2026

June 29, 2025

June 28, 2026

June 29, 2025

Net sales

$ 3,955

$ 3,839

$ 7,864

$ 7,580

Cost of sales

1,654

1,578

3,261

3,151

Gross profit

2,301

2,261

4,603

4,429

Selling, general, and administrative expenses

1,537

1,504

2,990

3,041

Restructuring expenses

130

120

Other operating expense, net

Operating income

699

692

1,466

1,250

Other expense, net

Interest expense, net

185

188

Income before taxes

598

588

1,270

1,046

Provision for taxes

142

168

340

304

Net income

$ 456

$ 420

$ 930

$ 742

Net income per share

Basic

$ 0.24

$ 0.22

$ 0.48

$ 0.39

Diluted

$ 0.24

$ 0.22

$ 0.48

$ 0.39

Weighted-average number of shares outstanding

Basic

1,920

1,919

1,918

1,917

Diluted

1,923

1,928

1,922

1,927

See accompanying Notes to Condensed Consolidated

Financial Statements.

KENVUE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

INCOME

(Unaudited; Dollars in Millions)

Fiscal Three Months Ended

Fiscal Six Months Ended

June 28, 2026

June 29, 2025

June 28, 2026

June 29, 2025

Net income

$ 456

$ 420

$ 930

$ 742

Other comprehensive (loss) income, net of taxes

Foreign currency translation

(136 )

613

(368 )

1,065

Employee benefit plans

(5 )

(8 )

Derivatives and hedges

(15 )

(31 )

Other comprehensive (loss) income

(148 )

627

(395 )

1,074

Comprehensive income

$ 308

$ 1,047

$ 535

$ 1,816

See accompanying Notes to Condensed Consolidated

Financial Statements.

KENVUE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

EQUITY

(Unaudited; Dollars in Millions, Except Per Share

Data; Shares in Thousands)

Fiscal Three Months Ended June 28, 2026

Common Stock

Additional

Treasury Stock

Accumulated

Accumulated Other

Total Stockholders’

Amount

Paid-In Capital

Amount

Deficit

Comprehensive Loss

Equity

March 29, 2026

1,919,935

$ 19

$ 16,362

20,387

$ (439 )

$ (128 )

$ (5,206 )

$ 10,608

Net income

—

456

—

456

Other comprehensive loss

—

(148 )

Cash dividends on common stock ($0.2075 per share)

—

(398 )

—

(398 )

Stock-based compensation

—

Issuance of common stock under the Kenvue 2023 Plan, net

306

—

June 28, 2026

1,920,241

$ 19

$ 16,397

20,387

$ (439 )

$ (70 )

$ (5,354 )

$ 10,553

Fiscal Three Months Ended June 29, 2025

Common Stock

Additional

Treasury Stock

Accumulated

Accumulated Other

Total Stockholders’

Amount

Paid-In Capital

Amount

Deficit

Comprehensive Loss

Equity

March 30, 2025

1,918,859

$ 19

$ 16,201

14,208

$ (305 )

$ (163 )

$ (5,699 )

$ 10,053

Net income

—

420

—

420

Other comprehensive income

—

627

Cash dividends on common stock ($0.205 per share)

—

(393 )

—

(393 )

Stock-based compensation

—

Issuance of common stock under the Kenvue 2023 Plan, net

2,644

—

Purchase of treasury stock

(2,666 )

—

2,666

(64 )

—

(64 )

June 29, 2025

1,918,837

$ 19

$ 16,288

16,874

$ (369 )

$ (136 )

$ (5,072 )

$ 10,730

Fiscal Six Months Ended June 28, 2026

Common Stock

Additional

Treasury Stock

Accumulated

Accumulated Other

Total Stockholders’

Amount

Paid-In Capital

Amount

Deficit

Comprehensive Loss

Equity

December 28, 2025

1,916,115

$ 19

$ 16,348

20,387

$ (439

$ (204 )

$ (4,959 )

$ 10,765

Net income

—

930

—

930

Other comprehensive loss

—

(395 )

Cash dividends on common stock ($0.415 per share)

—

(796 )

—

(796 )

Stock-based compensation

—

Issuance of common stock under the Kenvue 2023 Plan, net

4,126

—

(12 )

—

(12 )

June 28, 2026

1,920,241

$ 19

$ 16,397

20,387

$ (439 )

$ (70 )

$ (5,354 )

$ 10,553

Fiscal Six Months Ended June 29, 2025

Common Stock

Additional

Treasury Stock

Accumulated

Accumulated Other

Total Stockholders’

Amount

Paid-In Capital

Amount

Deficit

Comprehensive Loss

Equity

December 29, 2024

1,913,768

$ 19

$ 16,130

11,208

$ (242 )

$ (93 )

$ (6,146 )

$ 9,668

Net income

—

742

—

742

Other comprehensive income

—

1,074

Cash dividends on common stock ($0.41 per share)

—

(785 )

—

(785 )

Stock-based compensation

—

Issuance of common stock under the Kenvue 2023 Plan, net

10,735

—

Purchase of treasury stock

(5,666 )

—

5,666

(127 )

—

(127 )

June 29, 2025

1,918,837

$ 19

$ 16,288

16,874

$ (369 )

$ (136 )

$ (5,072 )

$ 10,730

See accompanying Notes to Condensed Consolidated Financial Statements.

KENVUE INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; Dollars in Millions)

Fiscal Six Months Ended

June 28, 2026

June 29, 2025

Cash flows from operating activities

Net income

$ 930

$ 742

Adjustments to reconcile net income to cash flows from operating activities

Depreciation and amortization

288

278

Stock-based compensation

Deferred income taxes

(27 )

Other

Net changes in assets and liabilities

Trade receivables

(108 )

(51 )

Inventories

(69 )

(117 )

Other current and non-current assets

(85 )

112

Accounts payable and accrued liabilities

120

109

Employee-related obligations

(4 )

Accrued taxes on income

(15 )

(29 )

Other liabilities

(1 )

(78 )

Net cash flows from operating activities

1,177

1,049

Cash flows used in investing activities

Purchases of property, plant, and equipment

(203 )

(267 )

Other investing activities

(42 )

Net cash flows used in investing activities

(245 )

(257 )

Cash flows used in financing activities

Proceeds from (repayments of) commercial paper program, net of repayments (proceeds) and issuance costs

1,430

(25 )

Repayments of commercial paper program—original maturities more than three months

(750 )

—

Proceeds from issuance of Senior Notes, net of issuance costs

—

746

Repayment of Senior Notes

(750 )

Dividends paid

(796 )

(785 )

Purchase of treasury stock

—

(127 )

Other financing activities

(16 )

Net cash flows used in financing activities

(882 )

(858 )

Effect of exchange rate changes on cash and cash equivalents

(2 )

Cash and cash equivalents, beginning of period

1,062

1,070

Net increase in cash and cash equivalents

—

Cash and cash equivalents, end of period

$ 1,110

$ 1,070

See accompanying Notes to Condensed Consolidated

Financial Statements.

KENVUE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of the Company and Summary of Significant Accounting

Policies

Description of the Company and Business Segments

Kenvue Inc. (“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 cough, cold, and allergy;

pain care; digestive health; smoking cessation; eye care; and other products. The Skin Health and Beauty segment is focused on face and

body care, as well as hair, sun, and other products. The Essential Health segment includes oral care, baby care, women’s health,

wound care, and other products.

Kenvue was initially formed as a wholly owned subsidiary of Johnson

& Johnson (“J&J”). 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”). In August 2023, J&J completed

the Separation and Kenvue’s transition to being a fully independent company.

Pending 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, and Vesta Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of K-C, pursuant to which K-C

will acquire all of the outstanding shares of the Company in a series of transactions (the “Pending Transaction”). Pursuant

to the terms and subject to the conditions of the Merger Agreement, Company shareholders will receive 1) 0.14625 shares of K-C common

stock, par value $1.25 per share (the “K-C Common Stock”), plus 2) $3.50 in cash. Upon completion of the Pending 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.

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 Pending Transaction,

in each case at a special meeting of shareholders held for that purpose. Additionally, the waiting period applicable to the Pending Transaction

under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on February 4, 2026. The Pending 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

The accompanying unaudited Condensed Consolidated Financial Statements

have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)

pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information.

Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the

opinion of management, the Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal and recurring adjustments,

necessary for a fair statement of the financial condition, results of operations, and cash flows for the periods indicated. These financial

statements should be read in conjunction with the audited consolidated financial statements and related disclosures included in the Company’s

Annual Report on Form 10-K for the fiscal twelve months ended December 28, 2025, filed on February 20, 2026 with the SEC.

Intercompany balances and transactions have been eliminated. The Condensed

Consolidated Financial Statements include the accounts of the Company and its affiliates and entities consolidated under the variable

interest and voting models.

Reclassifications

Certain prior period amounts have been reclassified to conform to current

fiscal year presentation.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements

in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,

the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the periods

reported. Estimates are used when accounting for, among other things, sales discounts, trade promotions, rebates, allowances and incentives,

product liabilities, income taxes and related valuation allowances, withholding taxes, pensions, postretirement benefits, fair value of

financial instruments, stock-based compensation assumptions, depreciation, amortization, employee benefits, contingencies, and the valuation

of goodwill, intangible assets, and liabilities. Actual results may or may not differ from those estimates.

Global and North America Headquarters

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. 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 was substantially complete as of June 28, 2026.

Separation-Related Costs

The Company is incurring certain non-recurring separation-related costs

in connection with the establishment of Kenvue as a standalone public company (“Separation-related costs”), which are included

in Cost of sales and Selling, general, and administrative expenses in the Condensed Consolidated Statements 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. Costs related to legal entity name changes, as well as minimal

costs related to other activities, are expected to continue for a longer period than originally anticipated.

Separation-related costs for the fiscal three and six months ended

June 28, 2026 and June 29, 2025 consisted of:

Fiscal Three Months Ended

Fiscal Six Months Ended

(Dollars in Millions)

June 28, 2026

June 29, 2025

June 28, 2026

June 29, 2025

Information technology and other(1)

$ 2

$ 18

$ 2

$ 51

Legal entity name change

Total Separation-related costs

$ 7

$ 24

$ 10

$ 62

(1) Primarily related to the disentanglement of systems and the costs

associated with the discontinuation of certain information technology assets.

Research and Development

Research and development expenses are expensed as incurred and included

in Selling, general, and administrative expenses in the Condensed Consolidated Statements of Operations. Research and development expenses

were $94 million and $91 million for the fiscal three months ended June 28, 2026 and June 29, 2025, respectively, and $178 million

and $190 million for the fiscal six months ended June 28, 2026 and June 29, 2025, respectively.

Supplier Finance Program

As of June 28, 2026 and December 28, 2025, the Company’s Accounts

payable balances included $384 million and $314 million, respectively, related to invoices from suppliers participating in the supplier

finance program.

Net Economic Benefit Arrangements

In connection with the Separation, J&J and Kenvue entered into

a separation agreement (the “Separation Agreement”) on May 3, 2023. Under the Separation Agreement, transfer of certain

assets and liabilities of the Consumer Health Business in certain jurisdictions (each, a “Deferred Local Business”) was not

completed prior to the date on which Kenvue completed its initial public offering (the “Kenvue IPO”) on May 8, 2023 and was

deferred due to certain precedent conditions, which include ensuring compliance with applicable law and obtaining necessary governmental

approvals and other consents, and for other business reasons. At the Kenvue IPO and until the Deferred Local Business transfers to the

Company, J&J 1) holds and operates the Deferred Local Businesses on behalf of and for the benefit

of the Company and 2) will use reasonable best efforts to treat and operate, insofar as reasonably practicable and to the extent permitted

by applicable law, each such Deferred Local Business in the ordinary course of business in all material respects consistent with past

practice. The benefits and costs related to these Deferred Local Businesses will be assumed by the Company. In addition, the Company and

J&J will use reasonable best efforts to take all actions to transfer each Deferred Local Business as promptly as reasonably practicable.

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

With respect to certain Deferred Local Businesses that are 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 had a net liability to J&J of $45 million and

$44 million as of June 28, 2026 and December 28, 2025, respectively, in relation to the net economic benefit arrangements on the

Condensed Consolidated Balance Sheets. The Company recognized Net income of $13 million and $14 million for the fiscal three

months ended June 28, 2026 and June 29, 2025, respectively, and $18 million and $22 million for the fiscal six months ended

June 28, 2026 and June 29, 2025, respectively, in relation to the net economic benefit arrangements in the Condensed Consolidated Statements

of Operations.

Recent Accounting Standards Not Yet Adopted

Accounting Standards Update (“ASU”) 2024-03—Income

Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement

Expenses

In November 2024, the Financial Accounting Standards Board (the “FASB”)

issued ASU 2024-03—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

(Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). 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. Early adoption is permitted. The Company

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