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What changed in Kenvue's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Kenvue's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+719 added−820 removedSource: 10-K (2025-02-24) vs 10-K (2024-03-01)

Top changes in Kenvue's 2024 10-K

719 paragraphs added · 820 removed · 560 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+23 added−37 removed58 unchanged
Biggest changeProduct Development and Innovation Our R&D organization combines deep, multi-disciplinary scientific expertise and engagement with healthcare professionals and places human empathy at the heart of our product development process. We leverage our extensive capabilities and consumer 6 insights to drive innovative new products and solutions that meet the specific needs of our consumers while enhancing their overall standard of care.
Biggest changeSimilarly, our research and development organization combines these consumer insights with deep, multi-disciplinary scientific expertise, and engagement with healthcare professionals, to drive innovative new products, solutions, and experiences centered around consumer health.
Our Self Care product categories include: Pain Care; Cough, Cold, and Allergy; and Other Self Care (Digestive Health; Smoking Cessation; Eye Care; and Other). Major brands in the segment include Tylenol ® , Motrin ® , Benadryl ® , Nicorette ® , Zyrtec ® , Zarbee’s ® , ORSL TM , Rhinocort ® , and Calpol ® .
Our Self Care product categories include: Pain Care; Cough, Cold, and Allergy; and Other Self Care (Digestive Health, Smoking Cessation, Eye Care, and Other). Major brands in the segment include Tylenol ® , Motrin ® , Nicorette ® , Benadryl ® , Zyrtec ® , Zarbee’s ® , ORSL TM , Rhinocort ® , and Calpol ® .
Our supply chain is also subject to external audits by national regulatory bodies, including the U.S. Food and Drug Administration (“FDA”), which conduct multiple regulatory inspections every year.
Our supply chain is also subject to external audits by national regulatory bodies, including the U.S. Food and Drug Administration (the “FDA”), which conduct multiple regulatory inspections every year.
In addition, among other policies, our Board has adopted a Kenvue Code of Conduct designed to provide employees with guidance on our compliance policies and a Code of Business Conduct & Ethics for Members of our Board of Directors and Executive Officers that sets forth additional guidelines applicable to members of our Board and Kenvue’s executive officers, both of which can be found on our website at https://investors.kenvue.com/governance/governance-documents/.
In addition, among other policies, our Board has adopted a Kenvue Code of Conduct designed to provide employees with guidance on our compliance policies and a Code of Business Conduct & Ethics for Members of our Board of Directors and Executive Officers that sets forth additional guidelines applicable to members of our Board and Kenvue’s executive officers, both of which can be found on our website at investors.kenvue.com/governance/governance-documents/ .
The following description discusses the material effects of the regulatory landscape applicable to our business, with particular focus on the United States, the European Union, and China, which are some of our key geographic markets for our business from a regulatory perspective and markets that we believe are representative of the material differences in the regulation of our business across the various geographic markets in which we operate.
The following description discusses the material effects of the regulatory landscape applicable to our business, with particular focus on the United States, the European Union (“EU”), and China, which are some of our key geographic markets for our business from a regulatory perspective and markets that we believe are representative of the material differences in the regulation of our business across the various geographic markets in which we operate.
Learning and Development We invest in the learning and development of all Kenvuers to ensure their skills remain relevant and keep pace with the rapid evolution in the marketplace. Learning can happen in different ways, including on-the-job, on special assignment, and in classroom training, to develop functional and/or leadership skills.
Learning and Development We invest in the learning and development of all Kenvuers to ensure their skills remain relevant and keep pace with the rapid evolution in the marketplace. Learning can happen in different ways, including on-the-job, on special assignment, and e-learning or in-classroom training, to develop functional and/or leadership skills.
Supply Chain and Manufacturing Our global and balanced manufacturing footprint provides us with the flexibility and agility to benefit from economies of scale and global supply chain agreements, enabling us to grow our business and expand margins. We are continuously modernizing our supply chain operations while better connecting with and serving customers.
Supply Chain and Manufacturing Our global and balanced manufacturing footprint provides us with the flexibility and agility to benefit from economies of scale and global supply chain agreements, enabling us to grow our business and expand margins. We are continuously modernizing and optimizing our supply chain operations while better connecting with and serving our customers.
For example, in our Self Care segment, certain of our OTC products, such as Tylenol ® and Motrin ® , are typically purchased more frequently during the cold and flu season in the winter or, in the case of Zyrtec ® and Benadryl ® , during high allergy seasons in the spring and the fall.
For example, in our Self Care segment, certain of our OTC products, such as Tylenol ® and Motrin ® , are typically purchased more frequently in preparation for the cold and flu season in the winter or, in the case of Zyrtec ® and Benadryl ® , during high allergy seasons in the spring and the fall.
For example, pursuant to Directive 2001/83/EC, advertisements of Kenvue’s OTC products must, among other requirements, 1) be set out in such a way that it is clear that the message is an advertisement and that the product is clearly identified as a medicinal product, 2) not refer to claims of recovery in improper, alarming or misleading terms and 3) not suggest that the effects of taking the medicine are guaranteed, are unaccompanied by adverse reactions or are better than, or equivalent to, those of another treatment or medicinal product.
For example, pursuant to Directive 2001/83/EC, advertisements of our OTC products must, among other requirements, 1) be set out in such a way that it is clear that the message is an advertisement and that the product is clearly identified as a medicinal product, 2) not refer to claims of recovery in improper, alarming, or misleading terms, and 3) not suggest that the effects of taking the medicine are guaranteed, are unaccompanied by adverse reactions or are better than, or equivalent to, those of another treatment or medicinal product.
While similar to the GDPR, the PIPL contains unique requirements not found in the GDPR. In addition, we are subject to China’s Cybersecurity Law, which establishes its overall security framework and China’s Data Security Law, which aims to protect the security of processed data.
While similar to the EU GDPR, the PIPL contains unique requirements not found in the EU GDPR. In addition, we are subject to China’s Cybersecurity Law, which establishes its overall security framework, and China’s Data Security Law, which aims to protect the security of processed data.
In addition, the DEA regulates certain of our OTC products containing pseudoephedrine, such as Sudafed ® and Zyrtec-D ® , pursuant to the Combat Methamphetamine Epidemic Act (“CMEA”). Among other requirements, the CMEA sets daily and 30-day sales limits for pseudoephedrine products purchased by consumers. We are also subject to similar regulations at the state level.
In addition, the DEA regulates certain of our OTC products containing pseudoephedrine (“PSE”), such as Sudafed ® and Zyrtec-D ® , pursuant to the Combat Methamphetamine Epidemic Act (“CMEA”). Among other requirements, the CMEA sets daily and 30-day sales limits for PSE products purchased by consumers. We are also subject to similar regulations at the state level.
Although there is variation among jurisdictions in how our products are classified, medical devices are broadly defined as products which a manufacturer intends 13 to be used to treat, cure, prevent, mitigate or diagnose disease. Medical devices generally achieve their purpose by physical modes of action; the principal intended action may not be pharmacological, immunological or metabolic.
Although there is variation among jurisdictions in how our products are classified, medical devices are broadly defined as products which a manufacturer intends 12 to be used to treat, cure, prevent, mitigate, or diagnose disease. Medical devices generally achieve their purpose by physical modes of action; the principal intended action may not be pharmacological, immunological, or metabolic.
Kenvue may also be subject to various state consumer protection laws, including California’s Proposition 65, which requires a specific warning on any product that contains a substance listed by California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level.
We may also be subject to various state consumer protection laws, including California’s Proposition 65, which requires a specific warning on any product that contains a substance listed by California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level.
A comparable regulatory regime operates in the European Union, where dietary supplements, including some of our products under the Zarbee’s ® brand, are regulated as food products pursuant to the Food Supplements Directive 2002/46/EC. Most EU Member States have implemented notification procedures that require reporting prior to or immediately after the commencement of sales of a dietary supplement.
A comparable regulatory regime operates in the EU, where dietary supplements, including some of our products under the Zarbee’s ® brand, are regulated as food products pursuant to the Food Supplements Directive 2002/46/EC. Most EU Member States have implemented notification procedures that require reporting prior to or immediately after the commencement of sales of a dietary supplement.
In May 2023, we completed an initial public offering (the “IPO” or “Kenvue IPO”) of approximately 10.4% of our outstanding common stock and began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “KVUE.” Following the Kenvue IPO, J&J owned approximately 89.6% of our outstanding common stock.
In May 2023, we completed an initial public offering (the “Kenvue IPO”) of approximately 10.4% of our outstanding common stock and began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “KVUE.” Following the Kenvue IPO, J&J owned approximately 89.6% of our outstanding common stock.
Compliance with these new and changing laws has impacted, and may in the future impact, Kenvue’s business strategies, and unforeseen changes to privacy laws may affect Kenvue’s ability to tailor and personalize Kenvue’s products and services to meet Kenvue’s strategic goals or consumer expectations, which could adversely affect Kenvue’s business, results of operations or financial condition.
Compliance with these new and changing laws has impacted, and may in the future impact, our business strategies, and unforeseen changes to privacy laws may affect our ability to tailor and personalize our products and services to meet our strategic goals or consumer expectations, which could adversely affect our business, results of operations, or financial condition.
The majority of our distribution centers are operated in partnership with expert third-party operators in order to leverage their scale, expertise and 7 technology platforms. In all cases, whether in-house or external, our distribution centers must comply with its rigorous quality compliance standards and are subject to our audit process.
The majority of our distribution centers are operated in partnership with expert third-party operators in order to leverage their scale, expertise, and technology platforms. In all cases, whether in-house or external, our distribution centers must comply with our rigorous quality compliance standards and are subject to our audit process.
Ultimately, our goal is to ensure this ongoing commitment to development and growth yields superior performance and higher levels of engagement that differentiates us from our competitors. 10 Engagement We believe that an engaged workforce is more likely to deliver higher levels of performance and further differentiates us in the marketplace.
Ultimately, our goal is to ensure this ongoing commitment to development and growth yields superior performance and higher levels of engagement that differentiates us from our competitors. 9 Engagement We believe that an engaged workforce is more likely to deliver higher levels of performance and further differentiates us in the marketplace.
Environment, Health and Safety The EPA and parallel state and local authorities in the United States, as well as comparable authorities around the world, enforce a broad range of environmental laws and regulations in the jurisdictions in which we manufacture and sell our products or otherwise operates our business.
Environment, Health, and Safety The EPA and parallel state and local authorities in the United States, as well as comparable authorities around the world, enforce a broad range of environmental laws and regulations in the jurisdictions in which we manufacture and sell our products or otherwise operate our business.
In certain circumstances, Kenvue may also be subject to additional regulations depending on the nature of the labeling and product claims. For example, the U.S. Department of Agriculture enforces federal standards for organic production and use of the term “organic” on product labeling.
In certain circumstances, we may also be subject to additional regulations depending on the nature of the labeling and product claims. For example, the U.S. Department of Agriculture enforces federal standards for organic production and use of the term “organic” on product labeling.
In the European Union, manufacturers may self-certify compliance of certain medical devices by submitting notifications to the competent authority, with files open to inspection by a competent authority. In May 2021, the Medical Device Regulation (Regulation (EU) 2017/745) (“MDR”) came into effect in the European Union.
In the EU, manufacturers may self-certify compliance of certain medical devices by submitting notifications to the competent authority, with files open to inspection by a competent authority. In May 2021, the Medical Device Regulation (Regulation (EU) 2017/745) (“MDR”) came into effect in the EU.
In the European Union, the Registration, Evaluation, Authorisation and Restriction of Chemicals (“REACH”) regulations came into effect in 2007, with implementation rolling out over time. Registered chemicals then can be subject to further evaluation and potential restrictions. Since the promulgation of REACH, other countries have enacted or are in the process of implementing similar comprehensive chemical regulations.
In the EU, the Registration, Evaluation, Authorisation, and Restriction of Chemicals (“REACH”) regulations came into effect in 2007, with implementation rolling out over time. Registered chemicals then can be subject to further evaluation and potential restrictions. Since the promulgation of REACH, other countries have enacted or are in the process of implementing similar comprehensive chemical regulations.
For additional information about risks associated with government regulations, see “Risk Factors—Risks Related to Government Regulation and Legal Proceedings.” New or more stringent laws or regulations, more restrictive interpretations of existing laws or regulations or increased enforcement actions by governmental and regulatory agencies around the world could increase our ongoing costs of compliance, alter the environment in which we do business or otherwise adversely affect our business, results of operations or financial condition.
For additional information about risks associated with government regulations, see Part I, Item 1A, “Risk Factors—Risks Related to Government Regulation and Legal Proceedings.” New or more stringent laws or regulations, more restrictive interpretations of existing laws or regulations, or increased enforcement actions by governmental and regulatory agencies around the world could increase our ongoing costs of compliance, alter the environment in which we do business, or otherwise adversely affect our business, results of operations, or financial condition.
The FTC regulates the use of endorsements and testimonials in advertising as well as relationships between Kenvue, on the one hand, and advertisers and influencers, on the other hand, pursuant to principles described in the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”).
The FTC regulates the use of endorsements and testimonials in advertising as well as relationships between us, on the one hand, and advertisers and influencers, on the other hand, pursuant to principles described in the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”).
Treasury Department’s Office of Foreign Assets Control (“OFAC”) and other authorities that may prohibit us or our affiliates from doing business in certain 16 countries or restrict the type of business that may be conducted by us or our affiliates.
Treasury Department’s Office of Foreign Assets Control and other authorities that may prohibit us or our affiliates from doing business in certain countries or restrict the type of business that may be conducted by us or our affiliates.
For example, we must comply with an increasing number of laws designed to combat abuses of human rights in supply chain operations. In addition, our selling practices are regulated by competition law authorities in the United States and around the world. We are also subject to laws and sanctions imposed by the United States (including those imposed by the U.S.
For example, we must comply with an increasing number of laws designed to combat abuses of human rights in our value chain. In addition, our selling practices are regulated by competition law authorities in the United States and around the world. We are also subject to laws and sanctions imposed by the United States (including those imposed by the U.S.
Our Self Care brands offer accessibility to health care solutions with over-the-counter medicines and other naturally inspired products. These brands deliver connected health offerings, including digital diagnostics and telemedicine, to expand its personalized solutions to consumers. • Skin Health and Beauty. Our Skin Health and Beauty product categories include: Face and Body Care; and Hair, Sun, and Other.
Our Self Care brands offer accessibility to healthcare solutions with over-the-counter (“OTC”) medicines and other naturally inspired products. These brands deliver connected health offerings, including digital diagnostics and telemedicine, to expand personalized solutions to consumers. • Skin Health and Beauty. Our Skin Health and Beauty product categories include: Face and Body Care; and Hair, Sun, and Other.
For trademarks registered in the United States, a Declaration 11 of Use must be filed between the fifth and sixth years after initial registration, then may be renewed in the tenth year, and renewed every 10 years after that, so long as the mark is still being used in commerce.
For trademarks registered in the United States, a Declaration of Use must be filed between the fifth and sixth years after initial registration, then may be renewed in the 10th year, and 10 renewed every 10 years after that, so long as the mark is still being used in commerce.
In addition, certain of our cosmetic products, including those containing low-viscosity hydrocarbons such as baby oil, are regulated by the CPSC under the PPPA. See “—Quality and Safety.” Medical Devices Medical devices are subject to regulation in the various jurisdictions in which we operate.
In addition, certain of our cosmetic products, including those containing low-viscosity hydrocarbons such as baby oil, are regulated by the CPSC under the PPPA. See “—Quality and Safety” above. Medical Devices Medical devices are subject to regulation in the various jurisdictions in which we operate.
In the European Union, advertising of products is subject both to general consumer advertising requirements pursuant to the Unfair Commercial Practices Directive (Directive 2005/29/EC), which imposes a general prohibition on misleading and aggressive advertising, as well as more specific regulations in respect of various product classifications.
In the EU, advertising of products is subject both to general consumer advertising requirements pursuant to the Unfair Commercial Practices Directive (Directive 2005/29/EC), which imposes a general prohibition on misleading and aggressive advertising, as well as more specific regulations in respect of various product classifications.
We believe that open and honest communication among all team members creates a collaborative and inclusive work environment. We regularly conduct surveys that gauge Kenvuer sentiment in areas like strategic alignment, execution, inclusion, effectiveness of our people leaders, and career development.
We believe that open and honest communication among all team members creates a collaborative and inclusive work environment. We regularly conduct surveys that gauge Kenvuer sentiment in areas such as strategic alignment, execution, inclusion, effectiveness of our people leaders, and career development.
The process of obtaining regulatory approvals and complying with applicable federal, state and local regulations in the United States and around the world is complex, time-consuming and costly and may impact our business strategies.
The process of obtaining regulatory approvals and complying with applicable national and local regulations in the United States and around the world is complex, time-consuming, and costly and may impact our business strategies.
Quality Control and Compliance With a rigorous approach to product safety and quality control, we have a strong culture of quality across our end-to-end organization enhanced by rigorous compliance procedures. We invested in quality systems and data analytics platform to further drive proactive quality management and improve the effectiveness of our quality control system.
Quality Control and Compliance With a rigorous approach to product safety and quality control, we have a strong culture of quality across our end-to-end organization enhanced by rigorous compliance procedures. We invest in quality systems and data analytics platforms to further drive proactive quality management and improve the effectiveness of our quality control system.
Certain of our products marketed in the United States, such as BAND-AID ® Brand Adhesive Bandages (including Ourtone Adhesive Bandages), Listerine ® Sensitivity Defense Mouthrinse and Tylenol ® SmartCheck Digital Ear Scope, are medical devices regulated by the FDA through a system that, unless exempt, requires us to receive premarket clearance for commercial distribution known as a 510(k) clearance.
Certain of our products marketed in the United States, such as BAND-AID ® Brand Adhesive Bandages (including Ourtone TM Adhesive Bandages), and Listerine ® Sensitivity Defense Mouthrinse are medical devices regulated by the FDA through a system that, unless exempt, requires us to receive premarket clearance for commercial distribution known as a 510(k) clearance.
In addition, while Kenvue’s labeling and advertising claims for its monograph drug products, such as certain 14 Benadryl ® , Tylenol ® and Neutrogena ® products, and advertising claims for NDA products are not subject to approval by the FDA, labeling claims for Kenvue’s NDA products, such as certain Zyrtec ® , Pepcid ® , Imodium ® and Motrin ® products, are approved by the FDA.
In addition, while our labeling and advertising claims for our monograph drug products, such as certain Benadryl ® , Tylenol ®, and Neutrogena ® products, and advertising claims for NDA products are not subject to approval by the FDA, labeling claims for our NDA products, such as certain Zyrtec ® , Pepcid ® , Imodium ® , and Motrin ® products, are approved by the FDA.
In addition, in our Skin Health and Beauty segment, sales of our products that contain SPF are typically higher in the summer and sales of our products that contain moisturizers are typically higher in the fall and the winter.
In addition, in our Skin Health and Beauty 15 segment, sales of our products that contain SPF are typically higher in preparation for the summer, and sales of our products that contain moisturizers are typically higher in the fall and the winter.
Dietary Supplements Some of our products under the Zarbee’s ® brand and the Lactaid ® brand that are marketed in the United States are considered dietary supplement products and are governed by the Dietary Supplement Health and Education Act of 1994, which defines and regulates dietary supplements.
Dietary Supplements Some of our products, including those under the Lactaid ® and Zarbee’s ® brands, that are marketed in the United States are considered dietary supplement products and are governed by the Dietary Supplement Health and Education Act of 1994, which defines and regulates dietary supplements.
The European Union has also established a legal framework for cosmetic labeling claims based on the Cosmetics Products Regulation (Regulation (EC) No 1223/2009).
The EU has also established a legal framework for cosmetic labeling claims based on the Cosmetics Products Regulation (Regulation (EC) No. 1223/2009).
We also strive to actively support the communities we serve worldwide as well as those in which our Kenvuers live and work through strategic investments. Our global community engagement program is just one way in which we connect our passionate purpose-driven workforce to fulfill our potential and create possibilities.
We also strive to actively support the communities we serve worldwide as well as those in which Kenvuers live and work through strategic investments. Kenvue Cares, our global employee volunteer program, is just one way in which we connect our passionate purpose-driven workforce to fulfill our potential and create possibilities.
Given the breadth of our portfolio and global footprint, we compete with a broad set of competitors that include: 1) consumer healthcare businesses that are either independent or part of larger pharmaceutical groups; 2) global CPG companies that operate in similar or adjacent categories; 3) regional companies that operate in our categories within the markets in which we compete; 4) generic over-the-counter (“OTC”) manufacturers and private-label brands together with their customers in both traditional retail and online; and (5) emerging niche-oriented brands in our categories with distribution either through traditional retail or online and direct-to-consumer (“DTC”) channels.
Given the breadth of our portfolio and global footprint, we compete with a broad set of competitors that include 1) consumer healthcare businesses that are either independent or part of larger pharmaceutical groups, 2) global CPG companies that operate in similar or adjacent categories, 3) regional companies that operate in our categories within the markets in which we compete, 4) generic OTC manufacturers and retailers’, including our customers’, private-label brands in both traditional retail and online, and 5) emerging niche-oriented brands in our categories with distribution either through traditional retail, online, or direct-to-consumer (“DTC”) channels.
Across our three core segments, we experience significant degrees of competition. Our key competitors for each segment globally include: • Self Care. Haleon, Procter & Gamble, Reckitt Benckiser Group, and private-label brands • Skin Health and Beauty . Beiersdorf, L’Oréal, Procter & Gamble, Unilever, and private-label brands • Essential Health .
Across our three reportable business segments, we experience significant degrees of competition. Our key competitors for each segment globally include: • Self Care. Haleon, Procter & Gamble, Reckitt Benckiser Group, and private-label brands • Skin Health and Beauty . Beiersdorf, Estée Lauder, L’Oréal, Procter & Gamble, Unilever, and private-label brands • Essential Health .
See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein for additional information. We entered into a separation agreement (the “Separation Agreement”) and various agreements with J&J for the purpose of effecting the Separation.
See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description of the Company and Business Segments,” to the Consolidated Financial Statements included herein for additional information. 5 Relationship with J&J We entered into a separation agreement (the “Separation Agreement”) and various other agreements with J&J for the purpose of effecting the Separation.
Kenvue typically is required to have a reasonable basis to support any factual marketing claims, and what constitutes a reasonable basis for substantiation can vary widely from market to market and from product to product.
We typically are required to have a reasonable basis to support any factual marketing claims, and what constitutes a reasonable basis for substantiation can vary widely from market to market and from product to product.
We make financial contributions, provide in-kind charitable product donations and volunteer the time of team members to help non-profit organizations achieve their goals and generate societal impact. Compensation, Benefits, and Well-being We offer compensation and benefit programs designed to attract, develop, and retain top talent.
We make financial contributions, provide in-kind charitable product donations, and volunteer the time of team members to help non-profit organizations achieve their goals and generate societal impact. Total Rewards We offer compensation, benefits, and well-being programs designed to attract, develop, and retain top talent in a highly competitive environment.
The principal raw materials used in our products include resin, pulp and corn derivatives, vegetable oils and oleochemicals. The majority of raw and packaging materials used are purchased from third parties and available from several sources.
The principal raw materials used in our products include resins, silicon, pulp and corn derivatives, paper, agrochemicals, vegetable oils, and oleochemicals. The majority of raw and packaging materials used are purchased from third parties and available from several sources.
Additional privacy and data protection laws and regulations are being developed around the world, including in other jurisdictions in which Kenvue operates, and privacy enforcement by governmental authorities globally, particularly on data localization requirements and international data flows, has increased in recent years.
Additional privacy and data protection laws and regulations are being adopted around the world, including in other jurisdictions in which we operate, and privacy enforcement by governmental authorities globally, particularly on data localization requirements and international data flows, has increased in recent years.
Recognizing the importance of innovation in our industry to meet the evolving needs of our consumers, we remain focused on having the right capabilities and a workforce that is reflective of the customers and consumers we serve.
We recognize the importance of innovation in our industry to meet the evolving needs of our consumers globally, and we remain focused on having the right capabilities and a workforce that is reflective of the global consumers we serve.
We work hard to create an environment where Kenvuers feel a strong sense of belonging, feel empowered to care for their health and well-being and that of their families, feel like they can grow and have fulfilling careers, and feel recognized and valued for their contributions.
We strive to create an environment where Kenvuers feel a strong sense of belonging, are empowered to care for their health and well-being and that of their families, can grow and have fulfilling careers, and are recognized and valued for their contributions.
Each of our reportable segments are focused on driving financial performance by leveraging specific category expertise and capabilities while also benefiting from our scale to collaborate across the organization, including in brand management and marketing, R&D and innovation, insights and analytics and digital commerce. The reportable global segments are as follows: • Self Care.
Each of our reportable business segments are focused on driving financial performance by leveraging specific category expertise and capabilities while also benefiting from our scale to collaborate across the organization, including in brand management and marketing, research and development and innovation, insights and analytics, and omnichannel commerce. The reportable business segments are as follows: • Self Care.
Across our end-to-end organization, we have continuous touchpoints with our consumers and healthcare professionals, utilizing a suite of digital tools to ensure we hear from our consumers regardless of where they are located. Our insights, design, marketing and research teams then leverage these consumer insights to identify key unmet needs and potential product opportunities.
Throughout our end-to-end organization, we have continuous touchpoints with our consumers and healthcare professionals, utilizing a suite of digital tools to ensure we hear from them regardless of their location. Our insights, design, marketing, and research teams then leverage these consumer insights to identify key unmet needs and potential product opportunities.
While we consider these patents, and the protection thereof, to be important, we do not consider any single patent to be material to any material product or product family, and we do not expect the expiration of any single patent to have a material impact on any material product or product family.
While we consider these patents, and the protection thereof, to be important, we do not consider any single patent to be material to the success of our business, and we do not expect the expiration of any single patent to have a material impact on the success of our business.
In August 2023, J&J completed the Exchange Offer and exchanged shares representing 80.1% of our common stock, completing the Separation from J&J and transition to being a fully independent public company. Following the Separation, J&J continues to own approximately 9.5% of our outstanding common stock.
In August 2023, J&J completed the Exchange Offer and exchanged shares representing 80.1% of our common stock, completing the Separation from J&J and transition to being a fully independent public company.
We have built extensive capabilities, through our translational science and consumer insights teams, to understand our consumers’ and healthcare professionals’ key needs and current challenges, ensuring that our products are centered around human empathy.
We have built extensive capabilities through our translational science and consumer insights teams to understand the key needs and current challenges of our consumers and healthcare professionals, ensuring our products are centered around human empathy.
If Kenvue’s advertising claims or claims made by its social media influencers or by other endorsers with whom Kenvue has a material connection do not comply with the Endorsement Guides or any requirements of the FTC Act or similar state requirements, then the FTC and state authorities could subject Kenvue to investigations and enforcement actions, impose penalties, require Kenvue to pay monetary consumer redress, require Kenvue to revise its marketing materials or require Kenvue to accept burdensome injunctions, any of which could adversely affect Kenvue’s business, results of operations or financial condition.
If our advertising claims or claims made by our social media influencers 13 or by other endorsers with whom we have a material connection do not comply with the Endorsement Guides or any requirements of the FTC Act or similar state requirements, then the FTC and state authorities could subject us to investigations and enforcement actions, impose penalties, require us to pay monetary consumer redress, require us to revise our marketing materials, or require us to accept burdensome injunctions, any of which could adversely affect us.
For example, actions taken in response to the Russia-Ukraine War have included the imposition of export controls and broad financial and economic sanctions against Russia, Belarus and specific areas of Ukraine.
For example, actions taken in response to the ongoing military conflict between Russia and Ukraine (the “Russia-Ukraine War”) have included the imposition of export controls and broad financial and economic sanctions against Russia, Belarus, and specific areas of Ukraine.
We have a passionate, global team of approximately 1,500 scientists, doctors, pharmacists and engineers with expertise across a range of core disciplines, including formulation science, regulatory affairs, quality, medical affairs, medical safety, clinical operations, microbiology and packaging. Our R&D organization operates a global footprint of innovation hubs located close to consumers in key geographic markets.
Our global team of approximately 1,600 scientists, doctors, pharmacists, and engineers with expertise across a range of core disciplines, including formulation science, regulatory affairs, quality, medical affairs, medical safety, clinical operations, microbiology, translational science, and packaging. Our research and development organization operates a global network of innovation hubs located close to consumers in key geographic markets.
These trademarks and trade names convey that the products we sell are “brand name” products. We seek to obtain protection for these trademarks and trade names by all appropriate means, and we consider them, in the aggregate, to be material to our business.
The vast majority of our Net sales are derived from products bearing proprietary trademarks and trade names. These trademarks and trade names convey that the products we sell are “brand name” products. We seek to obtain protection for these trademarks and trade names by all appropriate means, and we consider them, in the aggregate, to be material to our business.
Labeling and Product Claims Kenvue is subject to various laws on labeling and product claims, including with respect to the characteristics, quality, safety, performance and benefits of Kenvue’s products.
Labeling and Product Claims We are subject to various laws on labeling and product claims, including with respect to the characteristics, quality, safety, performance, and benefits of our products.
For further information regarding the impact of changes in commodity prices, see Item 1A, “Risk Factors — Volatility in the cost or availability of raw materials and other inputs for our products, including due to military conflicts, has adversely affected, and could in the future continue to adversely affect, our business, results of operations or financial condition.” Manufacturing Footprint Our in-house manufacturing footprint delivered over half of our production volume in 2023, with the remaining production volume being supplied by an extensive network of external manufacturing facilities operated by trusted third-party suppliers.
For further information regarding the impact of changes in commodity prices, see Part I, Item 1A, “Risk Factors — Risks Related to Our Operations — Volatility in the cost or availability of raw materials and other inputs for our products, including due to military conflicts, has adversely affected, and could in the future continue to adversely affect us.” Manufacturing Footprint Our in-house manufacturing footprint delivered over 60% of our sales volume during the fiscal year 2024, with the remaining sales volume being supplied by an extensive network of external manufacturing facilities operated by trusted third-party 7 suppliers.
Demographics As of December 31, 2023, we had approximately 22,000 employees, with approximately 25% located in North America, 28% in EMEA, 29% in APAC, and 18% in Latin America. Approximately 99% of our global employees were full time and 1% were part-time employees.
Our People As of December 29, 2024, we had approximately 22,000 employees, with approximately 25% located in North America, 28% in EMEA, 28% in APAC, and 19% in LATAM. Approximately 99% of our global employees were full time and 1% were part-time employees.
Our global R&D teams coordinate across the product development lifecycle in partnership with consumers and our long-standing relationships with healthcare professionals and academic institutions to co-create a continuous pipeline of meaningful innovation.
Our global research and development teams collaborate across the product development lifecycle, partnering with consumers and leveraging our long-standing relationships with healthcare professionals and academic institutions to co-create a continuous pipeline of meaningful innovation.
See “Risk Factor s— Risks Related to Government Regulation and Legal Proceedings — We are subject to a broad range of environmental, health and safety laws and regulations, and the 15 impact of any obligations under these laws and regulations could adversely affect our business, results of operations or financial condition.” We are also subject to extensive and evolving regulations regarding the manufacturing, processing, distribution, importing, exporting and labeling of our products and their raw materials.
See Part I, Item 1A, “Risk Factors — Risks Related to Government Regulation and Legal Proceedings — We are subject to a broad range of environmental, health, and safety laws and regulations, and the impact of any obligations under these laws and regulations could adversely affect us.” We are also subject to extensive and evolving regulations regarding the manufacturing, processing, distribution, importing, exporting, registration, and labeling of our products and their raw materials.
We are united by a common Purpose to realize the extraordinary power of everyday care and anchored in our core values: 1) we put people first, 2) we care fiercely, 3) we earn trust with science, and 4) we solve with courage.
Human Capital Company Culture At Kenvue, we strive to build a culture of performance that rewards impact. We are united by a common Purpose to realize the extraordinary power of everyday care and anchored in our core values: 1) we put people first, 2) we care fiercely, 3) we earn trust with science, and 4) we solve with courage.
In recent years, we have also introduced certain connected health offerings as non-medical device apps, including certain products that are not offered in the United States, such as the Nicorette ® QuickMist SmartTrack, which is deemed a wellness app and, as such, is not regulated as a medical device by the health authorities in the countries in which it is offered.
In recent years, we have also introduced certain connected health offerings as non-medical device apps, including certain products that are not offered in the United States and, as such, are not regulated as medical devices by the health authorities in the countries in which they are offered.
Our marketing organization places the consumer at the center of all decisions related to our product delivery, services offering and the experiences we create. Our marketing footprint spans four regions, and our global presence allows us to tailor our marketing strategy and campaigns to the distinctive needs of our consumers in local markets throughout the world.
Brand Marketing Our digital approach to marketing places the consumer at the center of all decisions related to our product delivery, service offerings, and the experiences we create. Our global presence allows us to tailor our marketing strategy and campaigns to the distinctive needs of our consumers in local markets throughout the world.
In the European Union (“EU”), our OTC products, including certain Nicorette ® products that are not marketed by us in the United States, are subject to extensive pre- and post-marketing regulation by regulatory authorities at both the EU and EU Member State level.
Our OTC products containing PSE are also subject to heightened regulatory regimes in other jurisdictions around the world. In the EU, our OTC products, including certain Nicorette ® products that are not marketed by us in the United States, are subject to extensive pre- and post-marketing regulation by regulatory authorities at both the EU and EU Member State level.
The monographs establish the conditions, such as active ingredients, uses (indications), doses, labeling and testing, under which an OTC drug is generally recognized as safe and effective and can be marketed without an NDA and FDA premarket approval. 12 Products marketed under the OTC monograph system are required to conform to specific quality, formula and labeling requirements.
Most of our OTC products marketed in the United States are regulated pursuant to the FDA’s monograph system. The monographs establish the conditions, such as active ingredients, uses (indications), doses, labeling, and testing, under which an OTC drug is generally recognized as safe and effective and can be marketed without an NDA and FDA premarket approval.
Our consumer-first approach and rigorous clinical testing allows us to articulate science in ways that meet the needs of our consumers and healthcare professionals as we win their trust, endorsement and loyalty. We are a digital-first modern marketing company.
Our marketing expertise is built on a combination of human empathy and science that improves health outcomes. Our consumer-first approach and rigorous clinical testing allows us to articulate science in ways that meet the needs of our consumers and healthcare professionals as we win their trust, endorsement, and loyalty.
Under the OTC Monograph Reform Act, the FDA can also require manufacturers to conduct additional testing to ensure the safety and efficacy of monograph drug products. For example, in September 2021 the FDA issued a Proposed Order Amending the OTC Monograph for Sunscreen Drug Products requiring additional data for certain ingredients to ensure their safety.
For example, in September 2021, the FDA issued a Proposed Order Amending the OTC Monograph for Sunscreen Drug Products requiring additional data for certain ingredients to ensure their safety.
In addition, the global regulatory landscape is subject to rapid and unexpected changes, including as a result of the Russia-Ukraine War, the recent military conflict in the Middle East, and the general trend toward increasingly stringent regulation and enforcement around the world in recent years.
In addition, the global regulatory landscape is subject to rapid and unexpected changes and the general trend toward increasingly stringent regulation and enforcement around the world in recent years.
In the United States, we are subject to a range of privacy and data protection laws and regulations, the specific requirements of which vary from state to state. We are also subject to federal health information privacy laws. Outside the United States, the European Union’s General Data Protection Regulation (“EU GDPR”) and the United Kingdom’s General Data Protection Regulation (“U.K.
In the United States, we are subject to a growing number of privacy and data protection laws and regulations, the specific requirements of which vary from state to state. We are also subject to federal health information privacy laws.
In October 2023, we launched an update of our Healthy Lives Mission, which includes public ESG goals and commitments intended to position our brands as healthy choices for both people and the planet and to better manage ESG-related impacts, risks, and opportunities.
Our Healthy Lives Mission, which is our ESG strategy, includes public goals and commitments intended to position our brands as more positive choices for both people and the planet and to help manage ESG-related impacts, risks, and opportunities.
Monograph drug products that do not comply with these standards can be deemed unapproved new drugs and can be required to be withdrawn from the market.
Products marketed under the OTC monograph system are required to conform to specific quality, formula, and labeling 11 requirements. Monograph drug products that do not comply with these standards can be deemed unapproved new drugs and can be required to be withdrawn from the market.
These agreements provide a framework for our relationship with J&J and govern various interim and ongoing relationships between us and J&J that follow the completion of the Kenvue IPO.
These agreements provide a framework for our relationship with J&J and govern various interim and ongoing relationships between us and J&J that follow the completion of the Kenvue IPO. See Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein for additional information on these agreements.
References to our 2024 Healthy Lives Mission Report are for informational purposes only and 9 neither the 2024 Healthy Lives Mission Report nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K. Human Capital Company Culture At Kenvue, we strive to build a culture of performance that rewards for impact.
References to our Healthy Lives Mission Report or TCFD Report are for informational purposes only, and neither the Healthy Lives Mission Report, TCFD Report, nor the other information on our website is incorporated by reference into this Annual Report on Form 10-K.
Enforcement activities under these laws and regulations could subject us to additional administrative and legal proceedings and actions, which could include claims for civil penalties, criminal sanctions and administrative remedies. Seasonality Our business is generally not seasonal. However, certain products within our Self Care and Skin Health and Beauty segments are subject to degrees of seasonal sales fluctuations.
Enforcement activities under these laws and regulations could subject us to additional administrative and legal proceedings and actions, which could include claims for civil penalties, criminal sanctions, and administrative remedies. Seasonality While seasonality has a limited impact on the consolidated Net sales within all three of our reportable segments, we are subject to certain degrees of seasonal sales fluctuations.
All of the Company’s SEC filings are available free of charge on the Company’s investor relations website at https://investors.kenvue.com, as soon as reasonably practicable after having been electronically filed or furnished to the SEC. We file annual reports, quarterly reports, current reports, proxy statements and other documents with the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”).
All of the Company’s SEC filings are available free of charge on the Company’s investor relations website at investors.kenvue.com , as soon as reasonably practicable after having been electronically filed or furnished to the SEC.
Privacy and Data Protection We are subject to increasingly complex and changing privacy and data protection laws and regulations in the United States and around the world that impose broad compliance obligations on the collection, transmission, dissemination, use, privacy, confidentiality, security, retention, availability, integrity and other processing of health-related and other sensitive and personal information.
These standards establish certain employer responsibilities, including requirements to maintain a workplace free of recognized hazards likely to cause serious injury or death, certain medical and hygiene standards, licensing, and permitting obligations and various recordkeeping, disclosure, and procedural requirements. 14 Privacy and Data Protection We are subject to increasingly complex and changing privacy and data protection laws and regulations in the United States and around the world that impose broad compliance obligations on the collection, transmission, dissemination, use, privacy, confidentiality, security, retention, availability, integrity, and other processing of health-related and other sensitive and personal information.
Separation from Johnson & Johnson In November 2021, Johnson & Johnson (“J&J”), our former parent company, announced its intention to separate its Consumer Health segment (the “Consumer Health Business”) into an independent publicly traded company (the “Separation”).
Separation from J&J In November 2021, J&J, our former parent company, announced its intention to separate its Consumer Health segment (the “Consumer Health Business”) into an independent publicly traded company (the “Separation”). Kenvue was incorporated in Delaware in February 2022, as a wholly owned subsidiary of J&J, to serve as the ultimate parent company of J&J’s Consumer Health Business.
We offer team members access to ongoing inclusion and diversity education and support throughout their career journey through employee resource groups known as Kenvuer Impact Networks and mentorship. In addition, we offer flexible work arrangements that enable agile ways of working and promote inclusion, health, well-being, empowerment, and accountability.
Additionally, we nurture a sense of belonging for Kenvuers through numerous employee resource groups known as Kenvuer Impact Networks, mentorship programs, and other initiatives that are open to all Kenvuers. In addition, we offer flexible work arrangements that enable agile ways of working and promote inclusion, health, well-being, empowerment, and accountability.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePursuing acquisition targets, signing and closing acquisition transactions and integrating acquired businesses, brands, assets and technologies into our ongoing operations involve numerous potential risks that could adversely affect our business, results of operations or financial condition, including: • diverting management’s attention from other business priorities; • receiving necessary consents, clearances and approvals in connection with a transaction, including under antitrust and competition laws, which could delay or prevent the completion of a transaction or otherwise restrict our ability to realize the expected financial or strategic goals of a transaction; • successfully integrating the operations, technologies, services, products and systems of the acquired businesses, brands or assets in an effective, timely and cost-efficient manner; • to the extent applicable, integrating operations across different cultures and languages and addressing the particular economic, currency, political and regulatory risks associated with specific countries; • realizing the full extent of the expected benefits or synergies as a result of a transaction, within the anticipated time frame, or at all; • successfully operating in new lines of business, categories, channels of distribution or geographic markets; • achieving distribution expansion related to products, categories and geographic markets; • retaining key employees, partners, suppliers and customers of the acquired business; • conforming standards, controls, procedures and policies of the acquired business with our own; • developing and launching products with acquired technologies; and • encountering other unanticipated problems or liabilities.
Biggest changePursuing acquisition targets, signing and closing acquisition transactions, and integrating acquired businesses, brands, assets, and technologies into our ongoing operations involve numerous potential risks that could adversely affect our business, results of operations, or financial condition, including diverting management’s attention; receiving necessary consents, clearances, and approvals in connection with a transaction; successfully integrating operations; operating in new lines of business or markets; retaining key employees, partners, suppliers, and customers of the acquired business; and encountering other unanticipated problems or liabilities.
Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, the rapid growth of e-commerce and the integration of traditional and digital operations at key retail trade customers.
Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, the rapid growth of e-commerce, and the integration of traditional and digital operations at key customers.
Retail trade customers have used, and may continue to use, their bargaining strength as leverage to demand increased investments across a diverse platform, inclusive of data, retail media, search, higher trade discounts, logistical services or fines and promotion, which could lead to reduced sales or profitability.
Customers have used, and may continue to use, their bargaining strength as leverage to demand increased investments across a diverse platform, inclusive of data, retail media, search, higher trade discounts, logistical services, or fines and promotion, which could lead to reduced sales or profitability.
If we are unable to procure key raw materials or packaging components for our products at a reasonable cost, or at all, our business, results of operations or financial condition could be adversely affected. If we are unable to accurately forecast demand for our products, our business, results of operations or financial condition could be adversely affected.
If we are unable to procure key raw materials or packaging components for our products at a reasonable cost, or at all, our business, results of operations, or financial condition could be adversely affected. If we are unable to accurately forecast demand for our products, we could be adversely affected.
See “—We rely on third parties in many aspects of our business, including to manufacture certain of our products, which exposes us to additional risks that could adversely affect our business, results of operations or financial condition.” Climate change, or legal, regulatory or market measures to address climate change, could adversely affect our business, results of operations or financial condition.
See “—We rely on third parties in many aspects of our business, including to manufacture certain of our products, which exposes us to additional risks that could adversely affect us.” Climate change, or legal, regulatory or market measures to address climate change, could adversely affect us. Climate change could adversely affect our business, results of operations, or financial condition.
A change in statutory tax rate or certain international tax provisions in any jurisdiction would result in the revaluation of our deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. Any such change would result in an expense or benefit recorded in our Consolidated Statements of Operations.
A change in statutory tax rate or certain international tax provisions in any jurisdiction would result in the revaluation of our deferred tax assets and liabilities related to that particular jurisdiction in the period in which the new tax law is enacted. Any such change would result in an expense or benefit recorded in the Consolidated Statements of Operations.
At the end of the transitional periods specified in these agreements, we will need to perform these functions ourselves or hire third parties to perform these functions on our behalf, and these costs may significantly exceed the comparable expenses we have incurred in the past. 46 • Our working capital requirements and capital expenditures were satisfied as part of J&J’s corporate-wide cash management and centralized funding programs prior to the Consumer Health Business Transfer, and our cost of debt and other capital may differ significantly from the historical amounts reflected in our historical financial statements. • Prior to the Kenvue IPO, our business was integrated with the other businesses of J&J, and we benefited from J&J’s size and scale, including with respect to costs, employees and relationships with customers and third-party partners.
At the end of the transitional periods specified in these agreements, we will need to perform these functions ourselves or hire third parties to perform these functions on our behalf, and these costs may significantly exceed the comparable expenses we have incurred in the past. • Our working capital requirements and capital expenditures were satisfied as part of J&J’s corporate-wide cash management and centralized funding programs prior to the Consumer Health Business Transfer, and our cost of debt and other capital may differ significantly from the historical amounts reflected in our historical financial statements. • Prior to the Kenvue IPO, our business was integrated with the other businesses of J&J, and we benefited from J&J’s size and scale, including with respect to costs, employees, and relationships with customers and third-party partners.
If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports and the market price of shares of our common stock could be adversely affected.
If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports and the market 44 price of shares of our common stock could be adversely affected.
See “—Risks Related to Financial and Economic Market Conditions—Acts of war, military actions, terrorist attacks, or civil unrest could adversely affect our business, results of operations or financial condition.” Any violation or alleged violation of these laws and regulations, even if prohibited by our policies, could result in criminal or civil sanctions, reputational damage or other substantial costs and penalties, any of which could adversely affect our business, results of operations or financial condition.
See “—Risks Related to Financial and Economic Market Conditions—Acts of war, military actions, terrorist attacks, or civil unrest could adversely affect us.” Any violation or alleged violation of these laws and regulations, even if prohibited by our policies, could result in criminal or civil sanctions, reputational damage, or other substantial costs and penalties, any of which could adversely affect our business, results of operations, or financial condition.
We have extensive operations and business activity outside the United States, which exposes us to a variety of complex laws and regulations in the United States and around the world. These include anti-corruption laws and regulations, such as the 41 FCPA, the U.K. Bribery Act 2010 and Chinese anti-corruption laws, that are aimed at preventing and penalizing corrupt behavior.
We have extensive operations and business activity outside the United States, which exposes us to a variety of complex laws and regulations in the United States and around the world. These include anti-corruption laws and regulations, such as the FCPA, the U.K. Bribery Act 2010 and Chinese anti-corruption laws, that are aimed at preventing and penalizing corrupt behavior.
Furthermore, our ability to attract and retain talent has been, and may continue to be, impacted to varying degrees by challenges in the labor market that emerge from time to time, such as wage inflation, 31 labor shortages, changes in immigration laws and government policies and a shift toward remote work and other flexible work arrangements.
Furthermore, our ability to attract and retain talent has been, and may continue to be, impacted to varying degrees by challenges in the labor market that emerge from time to time, such as wage inflation, labor shortages, changes in immigration laws and government policies, and a shift toward remote work and other flexible work arrangements.
We are subject to increasingly complex and changing privacy and data protection laws and regulations in the United States and around the world that impose broad compliance obligations on the collection, transmission, dissemination, use, privacy, confidentiality, security, retention, availability, integrity and other processing of health-related and other sensitive and personal information.
We are subject to increasingly complex and changing privacy and data protection laws and regulations in the United States and around the world that impose broad compliance obligations on the collection, transmission, dissemination, use, privacy, 34 confidentiality, security, retention, availability, integrity, and other processing of health-related and other sensitive and personal information.
We cannot assure you that any transfer that is not yet completed will occur promptly, or at all, including if we are not able to obtain necessary governmental approvals or other consents or if there are any unanticipated developments or changes, including changes in laws or regulations, or that J&J will operate such businesses as we would have.
We cannot assure you that any transfer that is not yet completed will occur 41 promptly, or at all, including if we are not able to obtain necessary governmental approvals or other consents or if there are any unanticipated developments or changes, including changes in laws or regulations, or that J&J will operate such businesses as we would have.
If an upgrade to an IT System or a newly adopted technology that is used in our business does not function as designed or for its intended purpose, or increases our exposure to a cyberattack or cybersecurity incident, our business, results of operations or financial condition could be adversely affected.
If an upgrade to a Technology System or a newly adopted technology that is used in our business does not function as designed or for its intended purpose, or increases our exposure to a cyberattack or cybersecurity incident, our business, results of operations, or financial condition could be adversely affected.
We closely monitor these proposals as they arise in the jurisdictions where we operate. Changes to tax laws or regulations may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in which the law change is enacted.
We closely monitor these proposals as they arise in the jurisdictions where we operate. Changes to tax laws or regulations may occur at any time, and any related expense or benefit recorded may be material to the fiscal quarter and year in 36 which the law change is enacted.
These and other laws and regulations, as well as responding to related consumer expectations, may require us to redesign or change certain aspects of our products and could adversely affect our business, results of operations or financial condition. Changes in tax laws or exposures to additional tax liabilities could adversely affect our business, results of operations or financial condition.
These and other laws and regulations, as well as responding to related consumer and customer expectations, may require us to redesign or change certain aspects of our products and could adversely affect our business, results of operations, or financial condition. Changes in tax laws or exposures to additional tax liabilities could adversely affect us.
There is also a risk of data loss in the process of transferring IT Systems. As a result of our reliance on IT Systems, the cost of the information technology integration and transfer and any loss of key data could have an adverse effect on our business, results of operations or financial condition.
There is also a risk of data loss in the process of transferring Technology Systems. As a result of our reliance on Technology Systems, the cost of the information technology integration and transfer and any loss of key data could have an adverse effect on our business, results of operations, or financial condition.
Any unsuccessful implementation of our succession plans or failure to ensure effective transfer of knowledge and smooth transitions involving key employees could adversely affect our business, results of operations or financial condition. Labor disputes, strikes, work stoppages or other labor relations matters could adversely affect our business, results of operations or financial condition.
Any unsuccessful implementation of our succession plans or failure to ensure effective transfer of knowledge and smooth transitions involving key employees could adversely affect our business, results of operations, or financial condition. Labor disputes, strikes, work stoppages, or other labor relations matters could adversely affect us.
The patenting process is expensive and time-consuming, and we may not be able to file or 39 prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, we may not pursue or obtain patent protection in all relevant geographic markets.
The patenting process is expensive and time-consuming, and we may not be able to file or prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, we may not pursue or obtain patent protection in all relevant geographic markets.
Our cash flow from operations may not be sufficient to service our outstanding debt or to repay the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to service or refinance our debt.
Our cash flow from operations may not be sufficient to service our outstanding debt or to repay the outstanding debt as it becomes due, 45 and we may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at all, to service or refinance our debt.
If our assumptions change or if 55 actual circumstances differ from our assumptions, our results of operations could be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of shares of our common stock.
If our assumptions change or if actual circumstances differ from our assumptions, our results of operations could be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of shares of our common stock.
In addition, our current estimates of the potential impact of legal proceedings on our business, results of operations or financial condition could change from time to time in the future. The resolution of, or increase in accruals for, a legal proceeding in a particular reporting period could adversely affect our business, results of operations or financial condition for that period.
In addition, our current estimates of the potential impact of legal proceedings on our business, results of operations, or financial condition could change from time to time. The resolution of, or increase in accruals for, a legal proceeding in a particular reporting period could adversely affect our business, results of operations, or financial condition for that period.
In the event that any inbound license pursuant to 38 which we use intellectual property rights of a third party expires or is otherwise terminated, we would lose the right to use the intellectual property covered by the license, which could require us to develop or license in alternative intellectual property.
In the event that any inbound license pursuant to which we use intellectual property rights of a third party expires or is otherwise terminated, we would lose the right to use the intellectual property covered by the license, which could require us to develop or license alternative intellectual property.
Our ability to achieve a successful launch of a new product could also be adversely affected by preemptive actions taken by competitors in response to the launch, such as increased advertising and promotional activities with respect to competing products.
Our ability to achieve a successful launch of a new product could also be adversely affected by actions taken by competitors in response to the launch, such as increased advertising and promotional activities with respect to competing products.
For more information on the Tax Matters Agreement, see Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein and in our Proxy Statement. In connection with the Separation, J&J agreed to indemnify us for certain liabilities.
For more information on the Tax Matters Agreement, see Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein and our 2024 Proxy Statement. In connection with the Separation, J&J agreed to indemnify us for certain liabilities.
We could also become subject to investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources. 53 The obligations associated with being an independent, publicly traded company require significant resources and management attention.
We could also become subject to investigations by the NYSE, the SEC, or other regulatory authorities, which could require additional financial and management resources. The obligations associated with being an independent, publicly traded company require significant resources and management attention.
Compliance with existing or future requirements could require us to incur significant operating or capital expenditures or result in significant restrictions on our operations, including installing pollution control equipment or reformulating or ceasing the marketing of our products.
Compliance with existing or future requirements could require us to incur significant operating or capital expenditures or result in significant restrictions on our operations, including installing pollution control equipment or reformulating or ceasing the marketing of certain products.
These services include those categorized as direct and indirect costs in the 48 preceding paragraph and as such, cost allocations for these functions are no longer included in the Consolidated Financial Statements for dates following the completion of the Kenvue IPO.
These services include those categorized as direct and indirect costs in the preceding paragraph and as such, cost allocations for these functions are no longer included in the Consolidated Financial Statements for dates following the completion of the Kenvue IPO.
See “—Risks Related to Our Business and Industry—An inability to successfully expand our global operations could adversely affect our business, results of operations or financial condition.” Acts of war, military actions, terrorist attacks, or civil unrest could adversely affect our business, results of operations or financial condition.
See “—Risks Related to Our Business and Industry—An inability to successfully expand our global operations could adversely affect our business, results of operations, or financial condition.” Acts of war, military actions, terrorist attacks, or civil unrest could adversely affect us.
Upon the expiration of the term for each product subject to the Transition Manufacturing Agreement, we will be required to transition the manufacturing services for such product to our own internal organization or to obtain alternative third-party sources to provide these services.
Upon the expiration of the term for each product subject to the Transition Manufacturing Agreement, we will be required to transition the manufacturing operations for such product to our own internal organization or to obtain alternative third-party sources to provide these services.
However, we may not be able to successfully replicate or replace these services or obtain the services at the same or better quality, at the same or lower costs or otherwise on the same or more favorable terms and conditions from third parties.
However, we may not be able to successfully replicate or replace these services or obtain the services at the same or 42 better quality, at the same or lower costs or otherwise on the same or more favorable terms and conditions from third parties.
Current or prospective employees could also experience uncertainty about their future roles at our company as a result of the Separation or other strategic, organizational or operational changes in the future.
Current or prospective employees could experience uncertainty about their future roles at our company as a result of the Separation or other strategic, organizational, or operational changes in the future.
Information presented in our Consolidated Financial Statements for dates subsequent to the Kenvue IPO includes the cost incurred by Kenvue in association with services provided by J&J under the Transition Services Agreement.
Information presented in the Consolidated Financial Statements for dates subsequent to the Kenvue IPO includes the cost incurred by Kenvue in association with services provided by J&J under the Transition Services Agreement.
Although we devote significant resources to support our brands and market our products at multiple price points, during periods of economic uncertainty or unfavorable economic or market conditions consumers may reduce consumption or discretionary spending or change their purchasing patterns by forgoing purchasing certain of our products or by instead purchasing private-label or generic non-branded products, which are typically sold at lower prices than our products.
Although we devote significant resources to support our brands and market our products at multiple price points, during periods of economic uncertainty, consumers may reduce consumption or discretionary spending or change their purchasing patterns by forgoing purchasing certain of our products or by instead purchasing private-label or generic non-branded products, which are typically sold at lower prices than our products.
New or increased tariffs as well as import/export licensing requirements have subjected, and may continue to subject, us to additional costs and expenditure of resources.
New or increased tariffs as well as import/export licensing requirements and restrictions have subjected, and may continue to subject, us to additional costs and expenditure of resources.
Moreover, the standards or initiatives established by our retail trade customers may conflict with one another, as has been the case with various “clean beauty” sustainability standards, which could impose additional costs on us and otherwise present challenges, particularly for our brands that have global or large distribution footprints.
Moreover, the standards or initiatives established by our customers may conflict with one another, as has been the case with various “clean beauty” sustainability standards, which could impose additional costs on us and otherwise present challenges, particularly for our brands that have global or large distribution footprints.
We strive to maintain our usual profit margins in economies experiencing high inflation rates, which has in the past caused us (including in response to recent periods of high inflation in the United States), and may in the future cause us, to increase our prices and to implement supply chain optimization initiatives to partially offset the adverse effects of the high inflation.
We strive to maintain our usual profit margins in economies experiencing high inflation rates, which has in the past caused us (including in response to recent periods of high inflation in the United States), and may in the future cause us, to increase our prices where possible and to implement supply chain optimization initiatives to partially offset the adverse effects of the high inflation.
Return rates and related costs may be higher for products with degrees of unpredictable seasonable demand, such as products used for sun protection or to treat coughs and colds. If product returns or refunds are significant or higher than anticipated, our business, results of operations or financial condition could be adversely affected.
Return rates and related costs may be higher for products with degrees of unpredictable seasonal demand, such as products used for sun protection or to treat coughs and colds. If product returns or refunds are significant or higher than anticipated, our business, results of operations, or financial condition could be adversely affected.
As a result, our operational flexibility to implement changes with respect to these services or the amounts we pay for them is limited, and we may not be able to implement changes in a manner desirable to us. In addition, we have historically received informal support from J&J, which may not be addressed in the Transition Services Agreement.
As a result, our operational flexibility to implement changes with respect to these services or the amounts we pay for them is limited, and we may not be able to implement changes in a manner desirable to us. In addition, we have historically received informal support from J&J, which may not be addressed in the Transition Agreements.
Moreover, even if we ultimately succeed in recovering from J&J or its insurance providers any amounts for which we are held liable, we may be temporarily 51 required to bear these losses. The occurrence of any of these events could adversely affect our business, results of operations or financial condition.
Moreover, even if we ultimately succeed in recovering from J&J or its insurance providers any amounts for which we are held liable, we may be temporarily 43 required to bear these losses. The occurrence of any of these events could adversely affect our business, results of operations, or financial condition.
Your percentage ownership in us may be diluted in the future. In the future, your percentage ownership in us may be diluted if we issue additional shares of our common stock or convertible debt securities in connection with acquisitions, capital market transactions or other corporate purposes, including equity awards that we may grant to our directors, officers and employees.
In the future, your percentage ownership in us may be diluted if we issue additional shares of our common stock or convertible securities in connection with acquisitions, capital market transactions, or other corporate purposes, including equity-based awards that we may grant to our directors, officers, and employees.
If the market for third parties that provide the IT Systems we use in our business were to contract or converge in the future, this may increase both the challenge in identifying capable service providers and the potential impact of a breach incident with any single service provider.
If the market for third parties that provide the Technology Systems we use in our business were to contract or converge in the future, this may increase both the challenge in identifying capable service providers and the potential impact of a breach incident with any single service provider.
Furthermore, we and our third-party partners, including retail trade customers and third-party e-commerce partners, modify policies relating to returns or refunds from time to time, and may do so in the future, which may result in consumer dissatisfaction, damage to our reputation or our brands or an increase in the number of product returns or the amount of refunds we make.
Furthermore, we and our third-party partners, including customers and third-party e-commerce partners, modify policies relating to returns or refunds from time to time, and may do so in the future, which may result in consumer dissatisfaction, damage to our reputation or our brands or an increase in the number of product returns or the amount of refunds we make.
We are currently subject to a few such claims outside of the United States and Canada which are in early stages, and as such, we cannot reasonably estimate any probable loss relating to such claims. While we believe we have substantial defenses to these claims, it is not feasible to predict the ultimate outcome of these litigations.
We are currently subject to such claims outside of the United States and Canada which are in early stages, and as such, we cannot reasonably estimate any probable loss relating to such claims. While we believe we have substantial defenses to these claims, it is not feasible to predict the ultimate outcome of these litigations.
Uncertain or unfavorable global economic or market conditions, such as a recession, an economic slowdown, inflation or reduced category growth rates, could impact our operating results or lead to significant reductions in demand or significant volatility in demand for our products, which could adversely affect our business, results of operations or financial condition.
Uncertain or unfavorable local, regional, or global economic or market conditions, such as a recession, an economic slowdown, inflation or reduced category growth rates, could impact our operating results or lead to significant reductions or volatility in demand for our products, which could adversely affect our business, results of operations, or financial condition.
In particular, our day-to-day business operations, including a significant portion of the communications among our customers, manufacturers, suppliers and other third-party partners, rely on IT Systems. J&J’s IT Systems are complex, and we expect the transfer of IT Systems from J&J to us to continue to be complex, time-consuming and costly.
In particular, our day-to-day business operations, including a significant portion of the communications among our customers, manufacturers, suppliers and other third-party partners, rely on Technology Systems. J&J’s Technology Systems are complex, and we expect the transfer of Technology Systems from J&J to us to continue to be complex, time-consuming, and costly.
These divestitures may adversely affect our business, results of operations or financial condition if we are unable to offset the dilutive impacts from the loss of net sales associated with the divested businesses, brands or assets or otherwise achieve the anticipated benefits or cost savings from the divestitures.
These divestitures may adversely affect our business, results of operations, or financial condition if we are unable to offset the dilutive impacts from the loss of Net sales and profits associated with the divested businesses, brands, or assets or otherwise achieve the anticipated benefits or cost savings from the divestitures.
Despite our goal of having two or more activity sources of supply for all critical materials or to build appropriate safety stock, we purchase certain key components and materials for our products, including APIs required to manufacture Tylenol ® , from single-source suppliers or a limited number of suppliers.
Despite our goal of having two or more active sources of supply for all critical materials or to build appropriate safety stock, we purchase certain key components and materials for our products, including APIs required to manufacture Tylenol ® , from single-source suppliers or a limited number of suppliers.
See “—Risks Related to Our Operations—We rely on third parties in many aspects of our business, including to manufacture certain of our products, which exposes us to additional risks that could adversely affect our business, results of operations or financial condition.” In addition, in the ordinary course of business, we may be subject to claims, lawsuits or regulatory or governmental investigations or inquiries relating to our data privacy practices, including claims or lawsuits from third parties alleging that we have breached applicable data privacy laws or otherwise violated their privacy rights.
See “—Risks Related to Our Operations—We rely on third parties in many aspects of our business, including to manufacture certain of our products, which exposes us to additional risks that could adversely affect us.” In addition, in the ordinary course of business, we may be subject to claims, lawsuits, or regulatory or governmental investigations or inquiries relating to our data privacy practices, including claims or lawsuits from third parties alleging that we have breached applicable data privacy laws or otherwise violated their privacy rights.
In particular, the publication of our privacy policies and other statements that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices.
In particular, the publication of our privacy policies and other statements that provide promises and assurances about data privacy and cybersecurity can subject us to potential government or legal action if they are found to be deceptive, unfair, or misrepresentative of our actual practices.
For additional information about these licenses, see our Proxy Statement. As a result of this continued use of the legacy J&J branding, there is a risk that conduct or events adversely affecting J&J’s reputation could also adversely affect our reputation or the reputation of our brands.
For additional information about these licenses, see our 2024 Proxy Statement. 40 As a result of this continued use of the legacy J&J branding, there is a risk that conduct or events adversely affecting J&J’s reputation could also adversely affect our reputation or the reputation of our brands.
Our manufacturers, suppliers or other third-party partners may also be affected by labor-related issues, which could disrupt our operations, potentially for an extended period of time, and otherwise adversely affect our business, results of operations or financial condition.
Our manufacturers, suppliers or other third-party partners may also be affected by labor-related issues, which could increase our costs or disrupt our operations, potentially for an extended period of time, and otherwise adversely affect our business, results of operations, or financial condition.
LTL remains a subsidiary of J&J (and not Kenvue) following the Separation. 37 We cannot predict with certainty the amount or timing of Talc-Related Liabilities that LTL or J&J will be required to pay, whether in connection with the bankruptcy proceedings or otherwise.
LTL remains a subsidiary of J&J (and not Kenvue) following the Separation. 32 We cannot predict with certainty the amount or timing of Talc-Related Liabilities that LTL or J&J will be required to pay, whether in connection with the bankruptcy proceedings or otherwise.
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could divert our management’s attention and otherwise adversely affect our business, results of operations or financial condition. 56 Item 1B.
It is possible that a court could find these exclusive forum provisions inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, and we may incur additional costs associated with resolving such matters in other jurisdictions, which could divert our management’s attention and otherwise adversely affect our business, results of operations, or financial condition.
In connection with the Separation, we continue to work to separate our IT Systems from J&J’s IT Systems. Any of the foregoing risks may be exacerbated by the Separation as a result of the required transition of our IT Systems and related transfer of data.
In connection with the Separation, we continue to work to separate our Technology Systems from J&J’s Technology Systems. Any of the foregoing risks may be exacerbated by the Separation as a result of the required transition of our Technology Systems and related transfer of data.
Our business is increasingly dependent on information technology systems, networks and services, including internal and public internet and intranet sites, data hosting and processing facilities and technologies, cloud-based services and hardware, physical security systems, digital, social media and mobile technology platforms and other hardware, software-enabled shop-floor manufacturing and distribution automation systems or operational technology, software and technical applications and platforms (collectively, “IT Systems”), some of which are managed, hosted, provided or used by third parties, including cloud-based service providers, and their vendors.
Our business is increasingly dependent on informational technology systems; operational technology systems; networks and services, including internal and public internet and intranet sites; data hosting and processing facilities and technologies; cloud-based services and hardware; physical security systems; digital, social media, and mobile technology platforms and other hardware; software-enabled shop-floor manufacturing and distribution automation systems or operational technology; software and technical applications and platforms (collectively, “Technology Systems”), some of which are managed, hosted, provided or used by third parties, including cloud-based service providers and their vendors.
Furthermore, any cybersecurity incident impacting our third-party partners or their vendors may adversely affect our business, results of operations or financial condition even if the breach does not directly impact our IT Systems.
Furthermore, any cybersecurity incident impacting our third-party partners or their vendors may adversely affect our business, results of operations, or financial condition even if the breach does not directly impact our Technology Systems.
We also are subject to extensive and evolving regulations regarding the manufacturing, processing, distribution, importing, exporting, registration and labeling of our products and their raw materials. This includes the REACH regulations, which came into effect in the European Union in 2007, with implementation rolling out over time, and includes certain chemical evaluation and registration requirements and potential restrictions.
We also are subject to extensive and evolving regulations regarding the manufacturing, processing, distribution, importing, exporting, registration and labeling of our products and their raw materials. This includes the REACH regulations, which came into effect in the EU in 2007, with implementation rolling out over time, and includes certain chemical evaluation and registration requirements and potential restrictions.
Changes in tax laws or regulations in jurisdictions in which we operate, including changing laws in the United States and changes led by the Organization for Economic Cooperation and Development, such as the continuing enactment by additional countries of a global minimum tax, could negatively impact our effective tax rate and adversely affect our business, results of operations or financial condition.
Changes in tax laws or regulations in jurisdictions in which we operate, including changing laws in the United States and changes led by the Organization for Economic Co-operation and Development, such as the continuing enactment by additional countries of a global minimum tax, could negatively impact our effective tax rate and adversely affect our business, results of operations, or financial condition.
Transitioning these services from J&J to us or one or more third parties will be a complex, time-consuming and costly process, and could increase the risk of manufacturing defects or quality control issues.
Transitioning these manufacturing operations from J&J to us or one or more third parties will be a complex, time-consuming, and costly process, and could increase the risk of manufacturing defects or quality control issues.
The level of this informal support will continue to diminish or be eliminated since the Kenvue IPO was completed. The services that J&J is providing to us pursuant to the Transition Services Agreement are transitional in nature.
The level of this informal support will continue to diminish or be eliminated since the Kenvue IPO was completed. The services that J&J is providing to us pursuant to the Transition Agreements are transitional in nature.
Scrutiny of ingredients we use in our products, including scrutiny that originates on digital or social media platforms, may result in an inability to use, or restrictions on the use of, the ingredients or a requirement for remedial action, which could cause us to incur significant additional costs, particularly if we need or otherwise decide to reformulate the affected products, or result in litigation.
Scrutiny of such ingredients, including scrutiny that originates on digital or social media platforms, may result in an inability to use, or restrictions on the use of, the ingredients or a requirement for remedial action, which could cause us to incur significant additional costs, particularly if we need or otherwise decide to reformulate or withdraw the affected products, or could result in litigation.
These laws and regulations could expose us to significant risks due to our digital-first strategy.
These laws and regulations could expose us to significant risks due to our digital strategy.
Our rebranding strategy in connection with the Separation involves substantial costs and may not produce the intended benefits if it is not favorably received by our consumers, customers or third-party partners. In addition, our continued use of legacy J&J branding, including the “Johnson’s” brand, could adversely affect our reputation.
Our rebranding strategy in connection with the Separation involves substantial costs and may not produce the intended benefits if it is not favorably received by our consumers, customers, or third-party partners. In addition, our continued use of legacy J&J branding, including the “Johnson’s ® ” brand, could adversely affect our reputation.
A disruption to one or more of these top-tier partners could impact our ability to draw on existing credit facilities or otherwise adversely affect our cash flows or the cash flows of our customers and vendors.
A disruption to one or more of these partners could impact our ability to draw on existing credit facilities or otherwise adversely affect our cash flows or the cash flows of our customers and vendors.
This indebtedness could have important, adverse consequences to us and our investors, including: • requiring a substantial portion of our cash flow from operations to make interest payments; • making it more difficult to satisfy other obligations; • increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing; • increasing our vulnerability to general adverse economic and industry conditions; 54 • reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business; • limiting our ability to pay dividends; • limiting our flexibility in planning for, or reacting to, changes in our business and industry; and • limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase shares of our common stock.
This indebtedness could have important, adverse consequences to us and our investors, including: • requiring a substantial portion of our cash flow from operations to make interest payments; • making it more difficult to satisfy other obligations; • increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing; • increasing our vulnerability to general adverse economic and industry conditions; • reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business; • limiting our ability to pay dividends or repurchase shares of our common stock; • limiting our flexibility in planning for, or reacting to, changes in our business and industry; and • limiting our ability to borrow additional funds as needed.
The risks described above will increase with the amount of indebtedness we incur in the future. Furthermore, our ability to borrow additional funds may be reduced and the risks described above would intensify if these rates were to increase significantly, whether because of an increase in market interest rates or a decrease in our creditworthiness.
The risks described above will increase with the amount of indebtedness we incur in the future. Furthermore, our ability to borrow additional funds may be reduced and the risks described above would intensify if the cost of additional borrowings were to increase significantly, whether because of an increase in market interest rates or a decrease in our creditworthiness.
Certain of our third-party partners and their vendors have access to portions of our IT Systems, and any attack on the IT Systems of these third-party partners or their vendors could then be used to attempt to infiltrate our IT Systems.
Certain of our third-party partners and their vendors have access to portions of our Technology Systems, and any attack on the Technology Systems of these third-party partners or their vendors could then be used to attempt to infiltrate our Technology Systems.
Indirect costs were allocated to us for the purposes of preparing our Consolidated Financial Statements 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 the benefit received by us during the periods presented, depending on the nature of the services received.
Indirect costs were allocated to us 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 the benefit received by us during the periods presented, depending on the nature of the services received.
Our reputation or our brands could be adversely affected if our customers, manufacturers, suppliers, distributors and other third-party partners fail to maintain high ethical, social, environmental, health and safety standards, fail to comply with local laws and regulations or become subject to other negative events or adverse publicity.
Our reputation or our brands could be adversely affected if our customers or third-party partners fail to maintain high ethical, social, environmental, health and safety standards; fail to comply with local laws and regulations; or become subject to other negative events or adverse publicity.
For more information on the Separation Agreement, see Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein and in our Proxy Statement.
For more information on the Separation Agreement, see Note 12, “Relationship with J&J,” to the Consolidated Financial Statements included herein and our 2024 Proxy Statement.
For additional information about risks related to the regulatory landscape applicable to our business, see “—A breach of privacy laws or unauthorized access, loss or misuse of personal data could adversely affect our business, results of operations or financial condition.”, “—Our extensive operations and business activity throughout the world expose us to a variety of laws and regulations related to anti-corruption and human rights matters, and enforcement actions related to these laws and regulations could adversely affect our business, results of operations or financial condition.” and “—We are subject to a broad range of environmental, health and safety laws and regulations, and the impact of any obligations under these laws and regulations could adversely affect our business, results of operations or financial condition.” We are, and could become, subject to significant legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage.
For additional information about risks related to the regulatory landscape applicable to our business, see “—A breach of privacy laws or unauthorized access, loss or misuse of personal data could adversely affect us.”, “—Our extensive operations and business activity throughout the world expose us to a variety of laws and regulations related to anti-corruption and human rights, and the impact of any obligations related to these laws and regulations could adversely affect us.” and “—We are subject to a broad range of environmental, health, and safety laws and regulations, and the impact of any obligations under these laws and regulations could adversely affect us.” We are, and could become, subject to significant legal proceedings and regulatory investigations that may result in significant expenses, fines, and reputational damage.
To maintain our success and increase our consumer and customer base, we must continually work to maintain and enhance the reputation of our brands, develop, manufacture and market new products with differentiated benefits, maintain and adapt to existing and emerging distribution channels, anticipate and adapt to evolving scientific knowledge and advances, successfully manage our inventories and modernize and refine our approach as to how and where we manufacture, market and sell our products.
To maintain our success and increase our consumer and customer base, we must continually work to maintain and enhance the reputation of our brands; develop, manufacture and market new products with differentiated benefits; maintain or expand our presence in existing and emerging distribution channels; anticipate and adapt to evolving scientific knowledge and advances; successfully manage our inventories; and modernize and refine our approach as to how and where we manufacture, market, and sell our products.
Even if it is ultimately determined that we did not infringe, misappropriate or otherwise violate the intellectual property rights of others, we could incur material legal costs and related expenses to defend against such claims, and we could incur significant costs associated with suspending our use of the challenged intellectual property rights, which could adversely affect our business, results of operations or financial condition.
Even if it is ultimately determined that we did not infringe on the intellectual property rights of others, we could incur material legal costs and related expenses to defend against such claims, and we could incur significant costs associated with suspending our use of the challenged intellectual property rights, which could adversely affect our business, results of operations, or financial condition.
Any concerns about our data privacy and security practices, even if unfounded, could damage the reputation of our businesses and discourage potential users from our products and services.
Any concerns about our data privacy and cybersecurity practices, even if unfounded, could damage the reputation of our businesses and discourage potential users from our products and services.
Inventory levels in excess of consumer or customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices or in less preferred distribution channels, which could damage our reputation and otherwise adversely affect our business, results of operations or financial condition.
Excess inventory levels may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices or in less preferred distribution channels, which could damage our reputation and otherwise adversely affect our business, results of operations, or financial condition.
Pursuant to the Separation Agreement, in order to ensure compliance with applicable law, to obtain necessary governmental approvals and other consents and for other business reasons, we and J&J have deferred certain transfers of assets and assumptions of liabilities of businesses in certain jurisdictions.
Pursuant to the Separation Agreement, in order to ensure compliance with applicable law, to obtain necessary governmental approvals and other consents, and for other business reasons, we and J&J have deferred certain transfers of assets and assumptions of liabilities of businesses in certain non-U.S. jurisdictions.
See “—We rely on third parties in many aspects of our business, including to manufacture certain of our products, which exposes us to additional risks that could adversely affect our business, results of operations or financial condition.” Volatility in the cost or availability of raw materials and other inputs for our products, including due to military conflicts, has adversely affected, and could in the future continue to adversely affect, our business, results of operations or financial condition.
See “—We rely on third parties in many aspects of our business, including to manufacture certain of our products, which exposes us to additional risks that could adversely affect us.” Volatility in the cost or availability of raw materials and other inputs for our products, including due to military conflicts, has adversely affected, and could in the future continue to adversely affect us.
However, our security efforts may not prevent or timely detect interruptions, breakdowns, invasions, corruptions, destructions, breaches, cyberattacks or other compromises of or interruptions to our IT Systems or those of third parties with which we partner or their vendors, and we may not be able to timely remediate any interruptions, breakdowns, invasions, corruptions, destructions, breaches, cyberattacks or other compromises or interruptions that we detect, which could adversely affect our business, results of operations or financial condition.
However, our security efforts may not prevent or timely detect interruptions, breakdowns, invasions, corruptions, destructions, breaches, cyberattacks, or other compromises of or interruptions to our Technology Systems or those of third parties with which we partner or their vendors (collectively, “Interruptions”), and we may not be able to timely remediate any Interruptions that we detect, which could adversely affect our business, results of operations, or financial condition.
For example, certain of the assets and liabilities of our operations in China and the assets and liabilities of our operations in Russia were not transferred to us prior to the end of fiscal year 2023.
For example, certain of the assets and liabilities of our operations in China and the assets and liabilities of our operations in Russia were not transferred to us prior to the end of fiscal year 2024.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePrior to his role at Kenvue, our CISO spent over ten years at J&J in cybersecurity, and he retired from the United States Air Force Reserves in 2018 as a Lieutenant Colonel, where he had responsibility for cybersecurity. He is a Certified Information Systems Security Professional and holds a Masters in Telecommunications Management from the University of Maryland, University College.
Biggest changeOur CISO has over 25 years of cybersecurity experience in the healthcare, finance, and telecommunications industries and in government. Prior to his role at Kenvue, our CISO spent over 10 years at J&J in cybersecurity, and he retired from the United States Air Force Reserves in 2018 as a Lieutenant Colonel, where he had responsibility for cybersecurity.
Our cybersecurity organization assesses and manages cybersecurity risk through technical, physical and administrative controls, including implementing cybersecurity policies, procedures and strategies, with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while increasing our system resilience in an effort to minimize business impact should an incident occur.
Our cybersecurity organization assesses, monitors, and manages cybersecurity risk through technical, physical, and administrative controls, including implementing cybersecurity policies, procedures, and strategies, with the ultimate goal of preventing cybersecurity incidents to the extent feasible, while increasing our system resilience in an effort to minimize business impact should an incident occur.
The members of the cybersecurity organization have decades of experience selecting, deploying, and operating cybersecurity technologies, initiatives, and processes around the world, and rely on threat intelligence as well as other information obtained from governmental, public or private sources, including external consultants.
The other members of the cybersecurity organization have decades of experience 48 selecting, deploying, and operating cybersecurity technologies, initiatives, and processes around the world, and rely on threat intelligence as well as other information obtained from governmental, public, or private sources, including external consultants.
The underlying controls of the cybersecurity risk management program are based on recognized best practices and standards for cybersecurity and information technology, including the National Institute of Standards and Technology Cybersecurity Framework.
The underlying controls of the cybersecurity risk management program are based on 47 recognized best practices and standards for cybersecurity and information technology, including the National Institute of Standards and Technology Cybersecurity Framework.
Our Integrated Risk Management Council, which includes our Chief Information Security Officer (“CISO”) proactively identifies, assesses and prioritizes key or emerging risks, which are then escalated to senior management as needed and, in the case of cybersecurity risk, reported to the Nominating Governance & Sustainability Committee or our full Board.
Our Integrated Risk Management Council, which includes our Chief Information Security Officer (“CISO”), proactively identifies, assesses, and prioritizes key or emerging risks, which are then escalated to senior management as needed and, in the case of cybersecurity risk, reported to our Board’s Nominating, Governance & Sustainability Committee (the “NG&S Committee”) or our full Board.
The CISO and the Chief Privacy Officer inform the NG&S Committee, which in turn informs our Board, of risks from cybersecurity 57 threats during such meetings. The NG&S Committee reports to our full Board following each of its regularly scheduled meetings at a minimum and reviews with our Board significant issues or concerns that arise at NG&S Committee meetings.
The CISO and the CPDO inform the NG&S Committee, which in turn informs our Board, of risks from cybersecurity threats during such meetings. The NG&S Committee reports to our full Board following each of its regularly scheduled meetings at a minimum and reviews with our Board significant issues or concerns that arise at NG&S Committee meetings.
The Nominating, Governance and Sustainability Committee of our Board (the “NG&S Committee”) is responsible for assisting the Board with respect to designated risk oversight matters, including privacy and cybersecurity. The NG&S Committee receives reports from, and meets at least twice a year and as needed with, the CISO and the Chief Privacy Officer.
The NG&S Committee is responsible for assisting our Board with respect to designated risk oversight matters, including privacy and cybersecurity. The NG&S Committee receives reports from, and meets at least twice a year and as needed with, the CISO and the Chief Privacy and Digital Officer (“CPDO”).
Item 1C. CYBERSECURITY Risk Management and Strategy Our process for assessing, identifying and managing material risks from cybersecurity threats is integrated into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. Our cybersecurity organization continually evaluates and addresses cybersecurity risk in alignment with our business objectives.
Item 1C. CYBERSECURITY Risk Management and Strategy Our process for assessing, identifying, and managing material risks from cybersecurity threats is integrated into our broader risk management framework to promote a company-wide culture of cybersecurity risk management.
For a discussion of cybersecurity risks, see Item 1A, “Risk Factors —Risks Related to Our Operations—An information security incident, including a cybersecurity breach, or the failure, interruption, breakdown, invasion, corruption, destruction, or breach of an information technology system owned or operated by us or a third party, could adversely affect our business, results of operations or financial condition.”
For a discussion of cybersecurity risks, see Part I, Item 1A, “Risk Factors—Risks Related to Our Operations—An information security incident, including a cybersecurity breach, or the failure of an information technology or operational technology system owned or operated by us or a third party, could adversely affect us.”
Risks from cybersecurity threats did not materially affect our results of operations or financial condition during the period covered by this filing. Governance Cybersecurity related risks are one of the key risks contemplated by our Enterprise Risk Management (“ERM”) Framework.
Risks from cybersecurity threats did not materially affect our results of operations or financial condition during the fiscal twelve months ended December 29, 2024. Governance Cybersecurity-related risks are one of the key risks contemplated by our Enterprise Risk Management (“ERM”) Framework.
The disclosure committee or a sub-committee thereof will consider the materiality of an incident elevated by the Data Incident Response Program, inform the Board and other key stakeholders as appropriate, and determine the Company’s reporting obligation on a timely basis.
The Disclosure Committee or a sub-committee thereof will consider the materiality of an incident elevated by the Data Incident Response Program, inform our Board and other key stakeholders as appropriate, and determine the Company’s reporting obligation on a timely basis. Our organization tests and monitors these processes, including through table-top exercise testing with senior leaders.
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Our cybersecurity organization is led by our CISO. Our CISO leads a global team to develop our strategic cybersecurity priorities and execute operational plans. He has over 25 years of cybersecurity experience in the healthcare, finance and telecommunications industries and in government.
Added
Our cybersecurity organization continually evaluates and addresses cybersecurity risk in alignment with our business objectives to address the evolving regulatory landscape and emerging risks, including those resulting from geopolitical shifts and technological innovations such as the growth of cloud technologies and artificial intelligence.
Added
We maintain a formal cybersecurity training program, including annual trainings for all Kenvuers, covering, among other topics, phishing, email security, and data privacy.
Added
In the event of a cybersecurity incident, our cybersecurity team assesses, among other factors, safety impact, supply chain and manufacturing disruption, data and personal information loss, business operations disruption, projected cost, and potential for reputational harm, with support from external technical and legal advisors and law enforcement, as appropriate.
Added
In addition, in February 2025, the CISO and the CPDO reviewed with our Board the cybersecurity and privacy programs, the Data Incident Response Program, and the role of our Board related thereto. Our CISO leads a global cybersecurity organization, which develops our strategic cybersecurity priorities and executes operational plans.
Added
He is a Certified Information Systems Security Professional and holds a Masters in Telecommunications Management from the University of Maryland, University College and a Directorship Certification from the National Association of Corporate Directors. Our CPDO has over 10 years of privacy and digital legal experience.
Added
Prior to his role at Kenvue, our CPDO worked for over 15 years in J&J’s Law Department.
Added
He also worked as a lawyer in private practice at the law firm Linklaters LLP, in industry associations, and in government, and he acted as Vice Chair of the Consumer Goods Privacy+ Consortium, an association developing compliance strategies and best practices to meet requirements of global privacy laws.
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He holds a Juris Doctor from Luiss Guido Carli University (Rome, Italy) and a Master of Laws in European Law and Economic Analysis from the College of Europe (Bruges, Belgium).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe consider the facilities that we use in our business to be suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities. We are committed to maintaining all of these properties in good operating condition.
Biggest changeOn February 21, 2024, we listed our interim corporate headquarters in Skillman, New Jersey for sale. We consider the sites that we use in our business to be suitable and adequate for the purposes for which they are used and do not anticipate difficulty in renewing existing leases as they expire or in finding alternative sites.
We are also party to various agreements with J&J relating to real estate matters, which include leasing, subleasing and licensing arrangements between us and J&J with respect to our facilities and J&J’s facilities.
We are also party to various agreements with J&J relating to real estate matters, which include leasing and subleasing arrangements between us and J&J with respect to our properties and J&J’s properties.
In addition, we have approximately 193 facilities located in 57 other countries and territories around the world, including in EMEA, APAC, LATAM, and other areas of North America. Many of these facilities serve more than one of our business segments and multiple functions across our business.
In addition, we have approximately 121 sites located in 58 other countries and territories around the world, including in EMEA, APAC, LATAM, and other areas of North America. Many of these sites serve more than one of our reportable business segments and multiple functions across our business.
As of December 31, 2023, we own, lease or otherwise have rights to use approximately 214 facilities, consisting of approximately 44 facilities that we own and approximately 170 facilities that we lease or otherwise have rights to use. We have approximately 21 facilities located in 12 different states of the United States.
As of December 29, 2024, we own, lease, or otherwise have rights to use approximately 133 sites, consisting of approximately 35 sites that we own and approximately 98 sites that we lease or otherwise have rights to use. We have approximately 12 sites located in 10 different states of the United States.
Item 2. PROPERTIES We own, lease or otherwise have rights to use a number of facilities, which include administration, research and development, manufacturing, warehousing, distribution and other facilities.
Item 2. PROPERTIES We own, lease, or otherwise have rights to use sites that are comprised of administration, research and development, manufacturing, warehousing, distribution, and other properties, as well as the global and North America corporate headquarters campus (discussed below).
On April 20, 2023, we entered into a long-term lease for a newly renovated office building and a newly constructed R&D building in Summit, New Jersey that, when completed, will encompass a total of approximately 290,000 square feet and serve as the Company’s new global corporate headquarters and R&D center.
On April 20, 2023, we 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”). We expect to officially open our new global and North America corporate headquarters in March 2025.
Removed
The relocation to this campus is expected to commence in 2025 for the office building and continue through 2026 for the new R&D building. We will continue to operate from our interim corporate headquarters in Skillman, New Jersey until that time. On February 21, 2024, we listed our headquarters in Skillman for sale.
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The relocation to our 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.
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The Global and North America Headquarters Lease collectively includes the lease associated with the global and North America corporate headquarters building (the “Corporate Office Lease”), the lease associated with the land where the research and development building is under construction (the “State-of-the-Art Lab Facility Lease”), and the lease associated with land to be used for amenities (the “Amenities Lease”).
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We are committed to maintaining all of these sites in good operating condition.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table represents our purchases of common stock during the fiscal twelve months ended December 31, 2023: (Shares in Thousands) Period Total Number of Shares Purchased Average Price Paid Per Common Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Program Approximate Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - October 31 — $ — — 27,000 November 1 - November 30 — $ — — 27,000 December 1 - December 31 350 $ 20.47 350 26,650 Total 350 Item 6. [Reserved] 60
Biggest changeThe intent of this repurchase program is to offset dilution from the vesting or exercise of equity-based awards under the Kenvue 2023 Plan (as defined in Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included herein). 51 The following table represents our purchases of common stock during the fiscal three months ended December 29, 2024: (Shares in Thousands) Period Total Number of Shares Purchased Average Price Paid Per Common Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Program Approximate Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs September 30, 2024 – October 27, 2024 — $ — — 20,950 October 28, 2024 – November 24, 2024 2,158 $ 23.68 2,158 18,792 November 25, 2024 – December 29, 2024 3,000 $ 23.04 3,000 15,792 Total number of shares purchased 5,158 Item 6. [Reserved]
Securities Authorized for Issuance under Equity Compensation Plans For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12 of this Form 10-K. 59 Share Performance Graph The following graph compares cumulative total shareholder return on the Company’s common stock against the Standard & Poor’s (“S&P”) 500 Stock Index and the S&P’s Consumer Staples Stock Index from May 4, 2023 (the first day our common stock began trading on the NYSE) through December 31, 2023.
Securities Authorized for Issuance Under Equity Compensation Plans For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Annual Report on Form 10-K. 50 Stock Performance Graph The following graph compares cumulative total shareholder return on our common stock against the Standard & Poor’s (“S&P”) 500 Stock Index and the S&P’s Consumer Staples Stock Index from May 4, 2023 (the first day our common stock began trading on the NYSE) through December 29, 2024.
Company/Stock Index May 4, 2023 July 2, 2023 October 1, 2023 December 31, 2023 Kenvue Inc. $ 100.00 $ 98.22 $ 75.36 $ 81.61 S&P 500 Stock Index $ 100.00 $ 109.58 $ 105.59 $ 117.45 S&P 500 Consumer Staples Stock Index $ 100.00 $ 97.76 $ 91.30 $ 95.69 Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the third quarter of fiscal year 2023, our Board authorized a share repurchase program, under which we are authorized to repurchase up to 27 million shares of our outstanding common stock in open market or privately negotiated transactions.
Company/Stock Index May 4, 2023 July 2, 2023 October 1, 2023 December 31, 2023 Kenvue Inc. $ 100.00 $ 98.22 $ 75.36 $ 81.61 S&P 500 Stock Index $ 100.00 $ 109.58 $ 105.59 $ 117.45 S&P 500 Consumer Staples Stock Index $ 100.00 $ 97.76 $ 91.30 $ 95.69 Company/Stock Index March 31, 2024 June 30, 2024 September 29, 2024 December 29, 2024 Kenvue Inc. $ 82.19 $ 70.33 $ 90.83 $ 84.79 S&P 500 Stock Index $ 129.38 $ 134.45 $ 141.29 $ 147.02 S&P 500 Consumer Staples Stock Index $ 102.21 $ 102.92 $ 111.34 $ 108.32 Purchases of Equity Securities by the Issuer and Affiliated Purchasers During the fiscal three months ended October 1, 2023, our Board authorized a share repurchase program, under which we are authorized to repurchase up to 27,000,000 shares of our outstanding common stock in open market or privately negotiated transactions.
A summary of cash dividends per share on the outstanding Kenvue common stock declared to shareholders by our Board and paid during the fiscal twelve months ended December 31, 2023 is presented below: Declaration Date Record Date Payment Date Per Share Amount July 20, 2023 August 28, 2023 September 7, 2023 $0.20 October 26, 2023 November 8, 2023 November 22, 2023 $0.20 On January 25, 2024, the Company announced that our Board declared a dividend payable in the first quarter of fiscal year 2024 of $0.20 per share on the Company’s common stock.
A summary of cash dividends per share on the outstanding Kenvue common stock declared to shareholders by our Board and paid during the fiscal twelve months ended December 29, 2024 is presented below: Declaration Date Record Date Payment Date Per Share Amount January 25, 2024 February 14, 2024 February 28, 2024 $0.20 April 25, 2024 May 8, 2024 May 22, 2024 $0.20 July 25, 2024 August 14, 2024 August 28, 2024 $0.205 October 17, 2024 November 13, 2024 November 27, 2024 $0.205 On January 16, 2025, we announced that our Board declared a cash dividend of $0.205 per share on our common stock.
The first quarter dividend was payable on February 28, 2024 to shareholders of record as of the close of business on February 14, 2024. Kenvue expects to continue to pay cash dividends on a quarterly basis. However, the declaration of dividends is subject to the discretion of our Board.
The dividend is payable on February 26, 2025 to shareholders of record as of the close of business on February 12, 2025. We expect to continue to pay cash dividends on a quarterly basis. However, the declaration of dividends is subject to the discretion of our Board.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders The Company’s common stock trades on the NYSE under the symbol “KVUE”. As of February 23, 2024, there were 1,914,581,851 shares of common stock outstanding, with 3,149 shareholders of record. Dividends Quarterly dividends have been paid since the Kenvue IPO.
Market Information and Holders Our common stock trades on the NYSE under the symbol “KVUE.” As of February 14, 2025, there were 1,911,240,720 shares of common stock outstanding, with 2,993 shareholders of record. Dividends Quarterly dividends have been paid to our shareholders since the Kenvue IPO.
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 awards under our equity incentive plan.
The program has no expiration date and may be suspended or discontinued at any time.
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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities There were no sales of equity securities by the Company during the fiscal twelve months ended December 29, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFiscal Twelve Months Ended Change In Fiscal Year December 31, 2023 January 1, 2023 2022 to 2023 2022 to 2023 (Dollars in Millions) Amount Percent Amount Percent Amount Percent Segment Net Sales Self Care $ 6,451 41.8 % $ 6,030 40.3 % $ 421 7.0 % Skin Health and Beauty 4,378 28.3 4,350 29.1 28 0.6 Essential Health 4,615 29.9 4,570 30.6 45 1.0 Segment net sales $ 15,444 100.0 % $ 14,950 100.0 % $ 494 3.3 % Self Care $ 2,299 $ 2,088 $ 211 10.1 % Skin Health and Beauty 679 708 (29) (4.1) Essential Health 1,011 1,111 (100) (9.0) Segment adjusted operating income (1) $ 3,989 $ 3,907 $ 82 2.1 % Reconciliation to Income before taxes: Depreciation 305 296 Amortization 322 348 Separation-related costs 468 213 Restructuring expenses and operating model optimization initiatives (2) 32 100 Conversion of stock-based awards (3) 55 — Founder Shares (4) 9 — Other operating income, net (10) (23) General corporate/unallocated expenses 296 298 Operating income $ 2,512 $ 2,675 Other expense, net 72 38 Interest expense 250 — Income before taxes $ 2,190 $ 2,637 (1) In the first quarter of fiscal year 2023, we adjusted the allocation for certain intangible asset amortization costs within Cost of Sales to align with segment financial results as measured by us, including the CODM.
Biggest changeFiscal Twelve Months Ended Change In Fiscal Year December 29, 2024 December 31, 2023 Change 2023 to 2024 (Dollars in Millions) Self Care Skin Health and Beauty Essential Health Total Self Care Skin Health and Beauty Essential Health Total Amount Percent Net sales $ 6,527 $ 4,240 $ 4,688 $ 15,455 $ 6,451 $ 4,378 $ 4,615 $ 15,444 $ 11 0.1 % Segment adjusted Cost of sales (1) 2,287 1,738 2,102 6,127 2,249 1,952 2,228 6,429 (302) (4.7) % Other segment expense items (2) 2,067 1,895 1,424 5,386 1,903 1,747 1,376 5,026 360 7.2 % Segment adjusted operating income $ 2,173 $ 607 $ 1,162 $ 3,942 $ 2,299 $ 679 $ 1,011 $ 3,989 $ (47) (1.2) % Reconciliation to Income before taxes: Less: Depreciation (3) 329 305 Amortization of intangible assets 269 322 Separation-related costs (4) 296 468 Restructuring and operating model optimization initiatives 221 32 Impairment charges 578 — Conversion of stock-based awards (5) 39 55 Founder Shares (6) 29 9 Other operating expense (income), net 26 (10) General corporate/unallocated expenses 314 296 Operating income $ 1,841 $ 2,512 Other expense, net 48 72 Interest expense, net 378 250 Income before taxes $ 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.
Our Brands and Product Portfolio We have a world class, global portfolio of iconic and modern brands, and we have been making and investing in consumer products for over 135 years that are trusted by generations of consumers. Our business is balanced and resilient with leading brands across categories and geographic markets.
Our Brands and Product Portfolio We have a world-class, global portfolio of iconic and modern brands, and for over 135 years, we have been making and investing in consumer products that are trusted by generations of consumers. Our business is balanced and resilient with leading brands across categories and geographic markets.
Increased Competition Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, the rapid growth of e-commerce, and the integration of traditional and digital operations at key retail trade customers.
Increased Competition Our products are sold in a highly competitive global marketplace, which, in recent years, has experienced increased retail trade concentration, the emergence of retail buying alliances, the rapid growth of e-commerce, and the integration of traditional and digital operations at key customers.
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 the “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.
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.
See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” and Note 4, “Intangible Assets and Goodwill,” to the Consolidated Financial Statements included herein for further information regarding goodwill and intangible assets.
See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” and Note 4, “Intangible Assets and Goodwill,” to the Consolidated Financial Statements included herein for further information regarding intangible assets and goodwill.
The nature of our business gives rise to several types of variable consideration including 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, which are estimated at the time of the sale using the “expected value” method or the “most likely amount” method based on the form of variable consideration.
The nature of our business gives rise to several types of variable consideration including trade promotions, comprised of coupons, product listing allowances, cooperative advertising arrangements, volume-based incentive programs, as well as 63 discounts to customers, rebates, sales incentives, and product returns, which are estimated at the time of the sale using the “expected value” method or the “most likely amount” method based on the form of variable consideration.
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 our company, are not allocated to the segments. In assessing segment performance and managing operations, management does not review segment assets.
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 our Company, are not allocated to the segments. In assessing segment performance and managing operations, the CODM does not review segment assets.
The Consolidated Financial Statements included herein include businesses in all jurisdictions in which we will operate following the completion of the Separation, including any Deferred Local Business (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein).
The Consolidated Financial Statements included herein include businesses in all jurisdictions in which we operate following the completion of the Separation, including any Deferred Local Business (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein).
See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” and Note 14, “Income Taxes,” to the Consolidated Financial Statements included herein for further information regarding income taxes. 73 See Note 14, “Income Taxes,” for the Company’s analysis on material changes in tax law.
See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Income Taxes,” and Note 14, “Income Taxes,” to the Consolidated Financial Statements included herein for further information regarding income taxes. See Note 14, “Income Taxes,” to the Consolidated Financial Statements included herein for the Company’s analysis on material changes in tax law.
Our extensive distribution network and sales organization enable us to establish strategic partnerships with key suppliers and retailers across multiple markets and channels, where we further leverage our scale to drive flexible manufacturing capacity and supply chain optimization.
Our extensive distribution network and sales organization enable us to establish strategic partnerships with key suppliers and retailers across multiple markets and channels, where we further leverage our scale to drive flexible 54 manufacturing capacity and supply chain optimization.
Recently Issued Accounting Standards See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein for a description of recently issued accounting standards not yet adopted and their anticipated impact to the Consolidated Financial Statements.
Recent Accounting Standards See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Recent Accounting Standards Not Yet Adopted,” to the Consolidated Financial Statements included herein for a description of recently issued accounting standards not yet adopted and their anticipated impact to the Consolidated Financial Statements.
The potential of estimates to vary differs by product, 72 customer type, and geographic location. Historically, adjustments to these estimates to reflect updated expectations or actual results have not been material to our overall business.
The potential of estimates to vary differs by product, customer type, and geographic location. Historically, adjustments to these estimates to reflect updated expectations or actual results have not been material to our overall business.
Major brands in the segment include Neutrogena ® , Aveeno ® , Dr.Ci:Labo ® , OGX ® , Le Petit Marseillais ® , Lubriderm ® , and Rogaine ® . • Essential Health. Our Essential Health product categories include: Oral Care; Baby Care; and Other Essential Health (Women’s Health, Wound Care, and Other).
Major brands in the segment include Neutrogena ® , Aveeno ® , Dr.Ci:Labo ® , OGX ® , Le Petit Marseillais ® , Lubriderm ® , and Rogaine ® . 52 • Essential Health. Our Essential Health product categories include: Oral Care; Baby Care; and Other Essential Health (Women’s Health, Wound Care, and Other).
Future Cash Requirements We expect our future cash requirements will relate to working capital, capital expenditures, restructuring and integration, compensation and benefit related obligations, interest expense and debt service obligations, litigation costs, the return of capital to shareholders, including through the payment of any dividend and other contractual obligations that arise in the normal course of business.
Future Cash Requirements We expect our future cash requirements will relate to working capital, capital expenditures, restructuring and integration, compensation and benefit-related obligations, interest expense and debt service obligations, litigation costs, the return of capital to shareholders, including through the payment of any dividends, and other contractual obligations that arise in the normal course of business.
Our brands are widely recognized and represent a combination of global powerhouses and regional brands, many of which hold leading positions in their respective categories. Our brands are built for moments that uniquely matter; these moments of care create an emotional connection to our products that forms deep bonds between consumers and our brands.
Our brands are widely recognized and represent a combination of global powerhouses and regional brands, many of which hold leading positions in their respective categories. Our brands are built for moments that uniquely matter; these moments of care create an emotional connection to our products that creates deep bonds between consumers and our brands.
Our material cash requirements include the following contractual and other obligations: • Debt Obligations and Interest Payments —See Note 5, “Borrowings,” to the Consolidated Financial Statements included herein for additional information on our debt and the timing of expected future principal and interest payments. • Purchase Obligations— As of December 31, 2023, we had purchase obligations of approximately $0.5 billion in connection with suppliers for the purchases of raw materials, packaging, other materials, and finished goods in the normal course of business, which are payable within 12 months. • Pensions —It is our objective to contribute to the pension plans to ensure adequate funds are available to make benefit payments to plan participants and beneficiaries when required.
Our material cash requirements include the following contractual and other obligations: • Debt Obligations and Interest Payments —See Note 5, “Borrowings,” to the Consolidated Financial Statements included herein for additional information on our debt and the timing of expected future principal and interest payments. • Purchase Obligations— As of December 29, 2024, we had purchase obligations of approximately $0.5 billion in connection with suppliers for the purchases of raw materials, packaging, other materials, and finished goods in the normal course of business, which are payable within 12 months. • Pensions —It is our objective to contribute to the pension plans to ensure adequate funds are available to make benefit payments to plan participants and beneficiaries when required.
On September 11, 2023, J&J transferred the equity interests in the majority of the Deferred Legal Entities (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein) to the Company that previously had been consolidated as Variable Interest Entities (“VIEs”) in the Company’s Consolidated Financial Statements.
On September 11, 2023, J&J transferred the equity interests in the majority of the Deferred Legal Entities (as defined in Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein) to the Company that previously had been consolidated as Variable Interest Entities in the Consolidated Financial Statements.
See Note 19, “Segments of Business and Geographic Areas,” to the Consolidated Financial Statements included herein for further disaggregation of net sales and Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein for further information regarding revenue recognition.
See Note 18 “Segments of Business and Geographic Areas,” to the Consolidated Financial Statements included herein for disaggregation of Net sales and Note 1, “Description of the Company and Summary of Significant Accounting Policies—Revenue Recognition,” to the Consolidated Financial Statements included herein for further information regarding revenue recognition.
The program provides some of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the arrangements between the suppliers and the third-party financial institutions.
The program provides some of our suppliers with the opportunity to sell receivables due from us (our accounts payables) to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. We are not a party to the arrangements between the suppliers and the third-party financial institutions.
Our ability to fund our operating needs will depend on our ability to continue to generate positive cash flow from operations, and on our ability to obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities.
Our ability to fund our operating needs will depend on our ability to continue to generate positive cash flows from operations and on our ability to obtain debt financing on acceptable terms or to issue additional equity or equity-linked securities.
See Note 19, “Segments of Business and Geographic Areas,” to the Consolidated Financial Statements included herein for further details regarding Segment net sales and Segment adjusted operating income.
See Note 18, “Segments of Business and Geographic Areas,” to the Consolidated Financial Statements included herein for further details regarding Segment net sales and Segment adjusted operating income.
Kenvue’s Board has authorized a share repurchase program, under which we are authorized to repurchase up to 27 million shares of our 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.
Share Repurchase Program Our Board has authorized a share repurchase program, under which we are authorized to repurchase up to 27,000,000 shares of our 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.
Following the Exchange Offer, our operating footprint as well as tax return elections and assertions are expected to be different and therefore, our income taxes as presented in the Consolidated Financial Statements may differ in future periods. Income taxes are recorded based on amounts refundable or payable for the current year and include the results of any differences between U.S.
Following the Exchange Offer, our operating footprint, as well as tax return elections and assertions, are different, and therefore, our income taxes, as presented in the Consolidated Financial Statements, may differ in future periods. 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.
Our global scale and the breadth of our brand portfolio are complemented by our well-developed capabilities and accelerated through our digital-first approach, allowing us to dynamically capitalize on and respond to current trends impacting our categories and geographic markets.
Our global scale and the breadth of our brand portfolio are complemented by our well-developed capabilities and accelerated through our digital strategy, allowing us to dynamically capitalize on and respond to current trends impacting our categories and geographic markets.
Legal Proceedings We and/or certain of our subsidiaries are involved from time to time in various lawsuits and claims relating to intellectual property, commercial contracts, product liability, labeling, marketing, advertising, pricing, antitrust and trade regulation, labor and employment, indemnification, data privacy and security, environmental, health and safety, and tax matters, governmental investigations, and other legal proceedings that arise in the ordinary course of our business.
Legal Proceedings We and/or certain of our subsidiaries are involved from time to time in various lawsuits and claims relating to product liability, labeling, marketing, advertising, pricing, intellectual property, commercial contracts, foreign exchange controls, antitrust and trade regulation, labor and employment, indemnification, data privacy and cybersecurity, environmental, health and safety, and tax matters, governmental investigations, and other legal proceedings that arise in the ordinary course of our business.
Senior Notes On March 22, 2023, we issued eight series of senior unsecured notes (the “Senior Notes”) in an aggregate principal amount of $7.75 billion. The net proceeds to us from the Senior Notes offering was $7.7 billion after deductions of discounts and issuance costs of $77 million.
Senior Notes On March 22, 2023, we issued eight series of senior unsecured notes (the “Senior Notes”) in an aggregate principal amount of $7.75 billion. The net proceeds to us from the Senior Notes were approximately $7.7 billion after deductions of discounts and issuance costs of $77 million.
For more information regarding Deferred Local Businesses, see “Risk Factors—Risks Related to Our Relationship with J&J—The transfer of certain assets and liabilities from J&J to us contemplated by the Separation has not been completed and may be significantly delayed or not occur at all” and Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein.
For more information regarding Deferred Local Businesses, see Part I, Item 1A, “Risk Factors—Risks Related to Our Relationship with J&J—The transfer of certain assets and liabilities from J&J to us contemplated by the Separation has not been completed and may be significantly delayed or not occur at all,” and Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein.
Income Taxes 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.
Income Taxes Prior to the Kenvue IPO, our 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 us and were removed from the tax provision.
See Note 7, “Pensions,” to the Consolidated Financial Statements included herein for additional information on our pensions and the timing of expected future payments related to projected benefit plan contributions. • Operating Leases —See Note 8, “Leases,” to the Consolidated Financial Statements included herein for additional information on our operating leases and the timing of expected future payments.
See Note 7, “Pensions,” to the Consolidated Financial Statements included herein for additional information on our pension plans and the timing of expected future payments related to projected benefit plan contributions. • Leases —See Note 8, “Leases,” to the Consolidated Financial Statements included herein for additional information on our operating and finance leases and the timing of expected future payments.
These estimates may be revised in the future and such changes may result in a material additional expense or benefit to our financial results or our effective tax rate. In the United States, the Tax Cuts and Jobs Act of 2017 (“TCJA”) includes provisions for GILTI.
These estimates may be revised in the future and such changes may result in a material additional expense or benefit to our financial results or our effective tax rate. In the United States, the Tax Cuts and Jobs Act of 2017 (“TCJA”) includes provisions for Global Intangible Low-Tax Income (“GILTI”).
(4) 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”).
(6) On August 25, 2023, our Compensation & Human Capital Committee approved equity grants to individuals employed by Kenvue as of October 2, 2023 (the “Founder Shares”).
Deferred Markets In order to ensure compliance with applicable law, to obtain necessary governmental approvals and other consents and for other business reasons, we deferred the transfer of certain assets and liabilities of businesses in certain non-U.S. jurisdictions, including China, Malaysia, and Russia, until after the completion of the Kenvue IPO.
Deferred Markets Pursuant to the Separation Agreement, in order to ensure compliance with applicable law, to obtain necessary governmental approvals and other consents, and for other business reasons, we and J&J deferred certain transfers of assets and assumptions of liabilities of businesses in certain non-U.S. jurisdictions, including China, Malaysia, and Russia, until after the completion of the Kenvue IPO.
For additional information about our three reportable business segments, see “ —Key Factors Affecting Our Results—Our Brands and Product Portfolio ” and Note 19 , “ Segments of Business and Geographic Areas , ” to the Consolidated Financial Statements .
For additional information about our three reportable business segments, see “ —Key Factors Affecting Our Results—Our Brands and Product Portfolio ” and Note 18 , “Segments of Business and Geographic Areas , ” to the Consolidated Financial Statements included herein .
Sources of Liquidity Our primary sources of liquidity are cash on hand, which consisted of cash and cash equivalents of $1.4 billion as of December 31, 2023, cash flows from operations, borrowing capacity under our Revolving Credit Facility of $4.0 billion and authorized Commercial Paper Program issuance of $4.0 billion.
Sources of Liquidity Our primary sources of liquidity are cash on hand, which consisted of Cash and cash equivalents of $1.1 billion as of December 29, 2024, cash flows from operations, borrowing capacity under our Revolving Credit Facility (as defined below) of $4.0 billion, and authorized Commercial Paper Program issuance of $4.0 billion.
Shifting Consumer Preferences Everyday care has never been a more essential part of the consumer health journey. Globally, preferences and expectations for consumer health products continue to evolve, with a heightened focus on preventative care and science-backed solutions.
Shifting Consumer Preferences Everyday care has never been a more essential part of the consumer health journey. Globally, preferences and expectations for consumer health products continue to evolve, with a heightened focus on preventative care and science-backed solutions. Consumers are also shifting the paradigm of beauty towards health.
Prior to the Kenvue IPO, we issued $1.25 billion under the Commercial Paper Program which, collectively with the Senior Notes as further described above, are referred to as the “Debt Financing Transactions.” 70 Revolving Credit Facility On March 6, 2023, we 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.
For further details on the Commercial Paper Program, see Note 5, “Borrowings—Commercial Paper Program,” to the Consolidated Financial Statements included herein. 61 Prior to the Kenvue IPO, we issued $1.25 billion under the Commercial Paper Program which, collectively with the Senior Notes as further described above, are referred to as the “Debt Financing Transactions.” Revolving Credit Facility On March 6, 2023, we 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.
One of our customers accounted for approximately 12%, 13%, and 14% of our total Net sales for the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively.
One of our customers accounted for approximately 12%, 12%, and 13% of total Net sales for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.
Stock-Based Compensation The Company recognizes compensation costs related to equity awards granted ratably over the requisite service period, which is the vesting period of the award, based on the estimated fair value of the awards on the grant date. The estimated fair value of stock options is determined using the Black-Scholes option valuation model.
Stock-Based Compensation We recognize 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 grant date fair value of each stock option granted is estimated on the grant date using the Black-Scholes option valuation model.
We may also use cash to enter into business development transactions, such as licensing arrangements or strategic acquisitions. As of December 31, 2023, we expect our primary cash requirements for 2024 to include capital expenditures. We have made payments of $469 million for property, plant, and equipment for the fiscal twelve months ended December 31, 2023.
We may also use cash to enter into business development transactions, such as licensing arrangements or strategic acquisitions. As of December 29, 2024, we expect our primary cash requirements for fiscal year 2025 to include capital expenditures. We made payments of $434 million for property, plant, and equipment during the fiscal twelve months ended December 29, 2024.
Major brands in the segment include Listerine ® , Johnson’s ® , BAND-AID ® Brand Adhesive Bandages, Stayfree ® , o.b. ® tampons, Carefree ® , and Desitin ® Diaper Rash.
Major brands in the segment include Listerine ® , Johnson’s ® , BAND-AID ® Brand, Stayfree ® , o.b. ® tampons, Carefree ® , and Desitin ® .
A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 31, 2023 and the fiscal twelve months ended January 1, 2023 is presented below.
Results of Operations A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 29, 2024 and the fiscal twelve months ended December 31, 2023 is presented below.
Our Senior Notes are governed by an indenture and supplemental indenture between us and a trustee (collectively, the “indenture”). The indenture contains certain covenants, including limitations on us and certain of our subsidiaries’ ability to incur liens or engage in sale-leaseback transactions. The indenture also contains restrictions on our ability to consolidate, merge or sell substantially all of our assets.
Our Senior Notes are governed by an indenture and supplemental indenture between us and a trustee (collectively, the “Indenture”). The Indenture contains certain covenants, including limitations on us and certain of our subsidiaries’ ability to incur liens or engage in certain sale-leaseback transactions.
Our top 10 customers represented approximately 41%, 42%, and 43% of our total Net sales for the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively . A s a result of these trends, certain large-format retail trade customers have significant bargaining strength and represent a significant proportion of our total Net sales.
Our top 10 customers represented approximately 41%, 41%, and 42% of total Net sales for the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively . A s a result of these trends, certain large-format customers have significant bargaining strength and represent a significant portion of our total Net sales.
Cash flows used in financing activities for the fiscal twelve months ended December 31, 2023 primarily reflect $13.8 billion in distribution to J&J in connection with the Separation and $0.8 billion in dividends paid, partially offset by $7.7 billion of net proceeds from Senior Notes (as defined below), $4.2 billion of proceeds from the sale of common stock in connection with the Kenvue IPO, and $0.6 billion of net proceeds from the issuance of commercial paper under the Commercial Paper Program (as defined below).
Net cash flows used in financing activities for the fiscal twelve months ended December 31, 2023 were primarily driven by $13.8 billion in distributions to J&J in connection with the Separation, $766 million of dividends paid, and Net transfers to J&J of $274 million, partially offset by approximately $7.7 billion of net proceeds from Senior Notes (as defined below), $4.2 billion of proceeds from the sale of common stock in connection with the Kenvue IPO, and $574 million of net proceeds from the issuance of commercial paper under the Commercial Paper Program.
Our obligations to the suppliers, including amounts due, and scheduled payment dates, are not affected by a participating supplier’s decision to participate in the program. See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included herein.
Our obligations to the suppliers, including amounts due, and scheduled payment dates (which have general payment terms between 30 and 120 days), are not affected by a participating supplier’s decision to participate in the program. See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Supplier Finance Program,” to the Consolidated Financial Statements included herein.
Segment Results Segment profit is based on Operating income, excluding depreciation and amortization, non-recurring Separation-related costs, restructuring expenses and operating model optimization initiatives, the impact of the conversion of stock-based awards, issuance of Founder Shares, Other operating (income) expense, net, and unallocated general corporate administrative expenses (referred to herein as “Segment adjusted operating income”), as management excludes these items in assessing segment financial performance.
Segment Results Segment profit is based on Operating income, excluding depreciation, amortization of intangible assets, Separation-related costs, restructuring and operating model optimization initiatives, impairment charges, the impact of the conversion of stock-based awards, issuance of Founder Shares (as defined below), Other operating expense (income), net, and unallocated general corporate administrative expenses (referred to herein as “Segment adjusted operating income”), as the Chief Operating Decision Maker (the “CODM) excludes these items in assessing segment financial performance.
Management believes Organic growth provides investors with additional, supplemental information that they may find useful in assessing our results of operations by excluding the impact of certain items that we believe do not directly reflect our underlying operations. The following tables present a reconciliation of the change in U.S.
Management believes reporting period-over-period changes in Organic sales provides investors with additional, supplemental information that is useful in assessing our results of operations by excluding the impact of certain items that we believe do not directly reflect our underlying operations. The following tables present a reconciliation of the change in U.S.
In May 2023, we completed an initial public offering (the “IPO” or “Kenvue IPO”) of approximately 10.4% of our outstanding common stock and began trading on the New York Stock Exchange (“NYSE”) under the ticker symbol “KVUE.” Following the Kenvue IPO, J&J owned approximately 89.6% of our outstanding common stock.
In May 2023, we completed an initial public offering of approximately 10.4% of our outstanding common stock and began trading on the NYSE under the ticker symbol “KVUE.” Following the Kenvue IPO, J&J owned approximately 89.6% of our outstanding common stock.
Distribution to J&J On May 8, 2023, in conjunction with the Consumer Health Business Transfer, we distributed $13.8 billion to J&J from the 1) net proceeds received from the sale of the common stock in the Kenvue IPO, 2) net proceeds received from the Debt Financing Transactions as defined in Note 5, “Borrowings,” of the Consolidated Financial Statements included herein, and 3) any cash and cash equivalents in excess of the $1.17 billion in cash and cash equivalents retained by Kenvue immediately following the Kenvue IPO.
Distribution to J&J On May 8, 2023, in conjunction with the Consumer Health Business Transfer, we distributed $13.8 billion to J&J from 1) the net proceeds received from the sale of the common stock in the Kenvue IPO, 2) the net proceeds received from the Debt Financing Transactions, and 3) any cash and cash equivalents in excess of the $1.17 billion retained by us immediately following the Kenvue IPO.
Essential Health Segment Essential Health Segment Net Sales The Essential Health Segment net sales were $4.6 billion and $4.6 billion for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively, an increase of $45 million, or 1.0%.
Essential Health Segment Essential Health Segment Net Sales The Essential Health Segment Net sales were $4.7 billion and $4.6 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, an increase of $73 million, or 1.6%.
Trusted by generations, our differentiated portfolio of iconic brands—including Tylenol ® , Neutrogena ® , Listerine ® , Johnson’s ® , BAND-AID ® Brand Adhesive Bandages, Aveeno ® , Zyrtec ® , and Nicorette ® —is backed by science and recommended by healthcare professionals, which further reinforces our consumers’ connections to our brands.
Built on more than a century of heritage and trusted by generations, our differentiated portfolio of iconic brands—including Tylenol ® , Neutrogena ® , Listerine ® , Johnson’s ® , BAND-AID ® Brand, Aveeno ® , Zyrtec ® , and Nicorette ® —is backed by science and recommended by healthcare professionals, which further reinforces our consumers’ connections to our brands.
Cash used in investing activities in both the fiscal twelve months ended December 31, 2023 and January 1, 2023 was primarily driven by purchases of property, plant, and equipment, partially offset by the proceeds from the sale of assets.
Net cash flows used in investing activities were primarily driven by purchases of property, plant, and equipment in both the fiscal twelve months ended December 29, 2024 and December 31, 2023, partially offset by proceeds from the sale of assets in the fiscal twelve months ended December 31, 2023.
Russia-Ukraine War Although the long-term implications of the ongoing military conflict between Russia and Ukraine (the “Russia-Ukraine War”) are difficult to predict at this time, the financial impact of the conflict to us during the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022 was not significant to our results of operations.
Russia-Ukraine War Although the long-term implications of the Russia-Ukraine War are difficult to predict at this time, the financial impact of the conflict during the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023 was not significant to our results of operations.
Certain current income tax liabilities related to our activities included in J&J’s income tax returns were assumed to be immediately settled with J&J through the Net Parent investment or Additional Paid-In Capital accounts on the Consolidated Balance Sheets and reflected in the Consolidated Statements of Cash Flows as a financing activity.
Certain current income tax liabilities related to our activities included in J&J’s income tax returns were assumed to be immediately settled with J&J through the Net Investment from J&J or Additional Paid-In Capital accounts on the Consolidated Balance Sheets and reflected in the Consolidated Statements of Cash Flows as a financing activity for the fiscal twelve months ended December 31, 2023 and January 1, 2023.
Global economic challenges, including the impact from acts of war, military actions, terrorist attacks, or civil unrest, such as the ongoing Russia-Ukraine War or the ongoing conflict in the Middle East, may continue to cause economic uncertainty and volatility. The impact of these issues may adversely affect prevailing economic conditions and our business, results of operations or financial condition.
Economic challenges, including the impact from acts of war, military actions, terrorist attacks, or civil unrest, may continue to cause economic uncertainty and volatility. The impact of these issues may adversely affect prevailing economic conditions and our business, results of operations, or financial condition.
Net Sales Net sales were $15.4 billion and $15.0 billion for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively, an increase of $494 million, or 3.3%.
Net Sales Net sales were $15.5 billion and $15.4 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, an increase of $11 million, or 0.1%.
See Note 1, “Description of the Company and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for additional information. We are incurring certain costs in connection with our establishment as a standalone public company (the “Separation-related costs”). We expect the non-recurring Separation-related costs will continue through at least fiscal year 2024.
See Note 1, “Description of the Company and Summary of Significant Accounting Policies—Description of the Company and Business Segments,” to the Consolidated Financial Statements for additional information. We are incurring certain non-recurring separation-related costs in connection with our establishment as a standalone public company (the “Separation-related costs”).
In addition, as we continue to expand our global operations, our exposure to foreign currency risk could become more significant, particularly if the U.S. dollar strengthens in the future. Where possible, we manage foreign currency exposure through a variety of methods.
In addition, as we continue to expand our global operations, our exposure to foreign currency risk could become more significant, particularly if the U.S. dollar strengthens in the future.
This adjustment primarily represents the add-back of the net impact of the gain on reversal of previously recognized stock-based compensation expense of $148 million, offset by stock-based compensation expense recognized in the fiscal twelve months ended December 31, 2023 relating to employee services provided prior to the Separation of $203 million.
The adjustment represents the net impact of the gain on reversal of previously recognized stock-based compensation expense, offset by stock-based compensation expense recognized in the fiscal twelve months ended December 29, 2024 and December 31, 2023 relating to employee services provided prior to the Separation.
In the first quarter of fiscal year 2022, we announced our decision to suspend supply of all of our products into Russia other than our over-the-counter medicines within our Self Care segment, which we continued to supply as patients rely on many of these products for healthcare purposes.
In the fiscal three months ended April 3, 2022, we announced our decision to suspend supply of all of our products into Russia other than our OTC medicines within our Self Care segment, which we continued to supply as patients rely on many of these products for healthcare purposes.
Fiscal Twelve Months Ended December 31, 2023 Compared with Fiscal Twelve Months Ended January 1, 2023 The following table presents Segment net sales and Segment adjusted operating income and the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022.
Fiscal Twelve Months Ended December 29, 2024 Compared with Fiscal Twelve Months Ended December 31, 2023 The following tables presents Segment net sales and Segment adjusted operating income and the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 29, 2024 and December 31, 2023.
Organic Growth We assess our Net sales performance by measuring Organic growth, a non-GAAP financial measure, which measures the period-over-period change in Net sales excluding the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures.
Organic Sales Change We define Organic sales, a non-GAAP financial measure, as Net sales excluding the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures. We assess our Net sales performance by measuring the period-over-period change in Organic sales (previously referred to as “Organic growth”).
Financing Activities Net cash flows used in financing activities were $2.5 billion and $1.6 billion for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively.
Financing Activities Net cash flows used in financing activities were $1.6 billion and $2.5 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $962 million.
However, we cannot assure you that we will be able to obtain additional debt or equity financing on acceptable terms in the future. Cash and cash equivalents increased by $151 million during the fiscal twelve months ended December 31, 2023 to $1.4 billion as of December 31, 2023, as compared to $1.2 billion as of January 1, 2023, respectively.
However, we cannot assure you that we will be able to obtain additional debt or equity financing on acceptable terms in the future. Cash and cash equivalents decreased by $312 million during the fiscal twelve months ended December 29, 2024 to $1,070 million as of December 29, 2024, as compared to $1,382 million as of December 31, 2023.
On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and PSUs to executive officers and either stock options and PSUs or RSUs to non-executive individuals (see Note 11, “Stock-Based Compensation”).
On October 2, 2023, the Founder Shares were granted to all Kenvue employees in the form of stock options and PSUs to executive officers and either stock options and PSUs or RSUs to non-executive individuals (see Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included herein for additional information).
Furthermore, the Company operated as part of J&J until the completion of the Exchange Offer on August 23, 2023, and therefore the Company will be included in J&J’s U.S. Federal consolidated income tax return until that date. The Company will then file a standalone U.S. Federal consolidated income tax return for the remainder of the fiscal year 2023.
Furthermore, we 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. We filed a standalone U.S.
Supply of the suspended products terminated during the second quarter of fiscal year 2022. We also suspended all advertising in Russia, all clinical trials in Russia, and any additional investment in Russia. We will continue to monitor the geopolitical situation in Russia and to evaluate our activities and future operations in Russia.
Supply of the suspended products terminated during the fiscal three months ended July 3, 2022. We also suspended branded advertising, clinical trials, and additional investment in Russia. We will continue to monitor the geopolitical situation in Russia and evaluate our activities and future operations in Russia.
See Note 5, “Borrowings,” to the Consolidated Financial Statements included herein for additional information. Provision For Taxes Provision for taxes was $526 million and $573 million for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively, a decrease in income tax expense of $47 million.
See Note 5, “Borrowings,” to the Consolidated Financial Statements included herein for additional information. Provision For Taxes Provision for taxes was $385 million and $526 million for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $141 million.
We do not expect the impact of this change to have a significant impact on our results of operations.
The impact of this change did not have a significant impact on our results of operations.
A detailed discussion of the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended January 1, 2023 and the fiscal twelve months ended January 2, 2022 can be found under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our IPO Prospectus.
A detailed discussion of the period-over-period changes in Segment net sales and Segment adjusted operating income for the fiscal twelve months ended December 31, 2023 and the fiscal twelve months ended January 1, 2023 can be found under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II., Item 7 of our 2023 Annual Report.
Critical Accounting Policies and Estimates Critical accounting policies and estimates are those policies and estimates made in accordance with generally accepted accounting principles that are most important and material to the preparation of the consolidated financial statements and which require management’s most subjective and complex judgments due to the need to select policies from among alternatives available and to make estimates about matters that are inherently uncertain.
GAAP that are most important and material to the preparation of the Consolidated Financial Statements and which require management’s most subjective and complex judgments due to the need to select policies from various alternatives available and to make estimates about matters that are inherently uncertain.
As of December 31, 2023, we had no amounts outstanding under the 69 Revolving Credit Facility and $599 million of outstanding balances under our Commercial Paper Program, net of related discount of $1 million.
As of December 29, 2024, we had no amounts outstanding under the Revolving Credit Facility and $797 million of outstanding balances under our Commercial Paper Program, net of a related discount of $3 million.
The net proceeds were reflected as Restricted cash on the Consolidated Balance Sheets prior to their release from escrow on April 5, 2023. Upon release from escrow, these funds were loaned to J&J through the Facility Agreement dated April 5, 2023. For further details on the Senior Notes and Facility Agreement, see Note 5.
The net proceeds were reflected as Restricted cash on the Consolidated Balance Sheet prior to their release from escrow on April 5, 2023. Upon release from escrow, these funds were loaned to J&J through a facility agreement (the “Facility Agreement”) dated April 5, 2023.
For the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022, our Ukrainian business represented 0.2%, 0.1%, and 0.3% of our Net sales, respectively. For the fiscal twelve months ended December 31, 2023, January 1, 2023, and January 2, 2022, our Russian business represented 1.0%, 1.4%, and 1.8% of our Net sales, respectively.
For the fiscal twelve months ended December 29, 2024, December 31, 2023, and January 1, 2023, our Ukrainian business represented 0.2%, 0.2%, and 0.1% of our Net sales, respectively. As of both December 29, 2024 and December 31, 2023, our Ukrainian business represented 0.1% of our assets.
Operating Activities Net cash flows from operating activities were $3.2 billion and $2.5 billion for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively, an increase of $643 million.
Operating Activities Net cash flows from operating activities were $1.8 billion and $3.2 billion for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $1,399 million.
A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended January 1, 2023 and the fiscal twelve months ended January 2, 2022 can be found under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our IPO Prospectus.
A detailed discussion of the period-over-period changes in the results for the fiscal twelve months ended December 31, 2023 and the fiscal twelve months ended January 1, 2023 can be found under the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II., Item 7 of our 2023 Annual Report.
Facility Agreement On April 5, 2023, we entered into the Facility Agreement, allowing us to lend the proceeds from the issuance of debt (including commercial paper) in an aggregate amount of $8.9 billion to J&J.
For further details on the Revolving Credit Facility, see Note 5, “Borrowings—Revolving Credit Facility,” to the Consolidated Financial Statements included herein. Facility Agreement On April 5, 2023, we entered into the Facility Agreement, allowing us to lend the proceeds from the issuance of debt (including commercial paper) in an aggregate amount of $8.9 billion to J&J.
The Company accounts for forfeitures during the period in which they occur. See Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included herein for more information on equity awards granted by Kenvue.
For all equity-based awards, the original estimate of the grant date fair value is not subsequently revised unless the awards are modified. The Company accounts for forfeitures during the period in which they occur. See Note 11, “Stock-Based Compensation,” to the Consolidated Financial Statements included herein for more information on equity-based awards granted by Kenvue.
Our evaluation is based on an assessment of potential indicators of impairment, such as: • an adverse change in legal factors or in the business climate that could affect the value of an asset; • an adverse change in the extent or manner in which an asset is used or is expected to be used; or • current or forecasted reductions in net sales, operating income, or cash flows associated with the use of an asset.
When assessing for potential indicators of impairment, we consider several factors including any adverse changes in legal factors or in the business climate that could affect the value of an asset, any adverse changes in the extent or manner in which an asset is used or is expected to be used, and current or forecasted reductions in net sales, operating income, or cash flows associated with the use of an asset.
Investing Activities Net cash flows used in investing activities were $488 million and $390 million for the fiscal twelve months ended December 31, 2023 and January 1, 2023, respectively.
Investing Activities Net cash flows used in investing activities were $425 million and $488 million for the fiscal twelve months ended December 29, 2024 and December 31, 2023, respectively, a decrease of $63 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe financial instruments utilized are viewed as risk management tools and are not used for trading or speculative purposes. Forward and swap foreign exchange contracts are sensitive to changes in foreign currency rates. As of December 31, 2023, a hypothetical 10% unfavorable change in exchange rate would result in an unrealized loss of approximately $69 million.
Biggest changeAs of December 29, 2024, a hypothetical 10% unfavorable change in exchange rates would result in an unrealized loss of approximately $187 million associated with the change in the fair value of the forward foreign exchange contracts and the cross currency swap contracts.
We are also 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 our policy to contract with diverse, credit-worthy counterparties based upon both strong credit ratings and other credit considerations. 76
We are also 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 our policy to contract with diverse, credit-worthy counterparties based upon both strong credit ratings and other credit considerations. 69
As of December 31, 2023, our outstanding long-term debt portfolio was comprised of primarily fixed-rate debt, and therefore, any fluctuation in market interest rate is not expected to have a material impact on our results of operations. In connection with the Separation, we incurred approximately $9.0 billion of new debt pursuant to the Debt Financing Transactions.
As of December 29, 2024, our outstanding long-term debt portfolio was comprised of primarily fixed-rate debt, and therefore, any fluctuation in market interest rate is not expected to have a material impact on our results of operations. In connection with the Separation, we incurred approximately $9.0 billion of new debt pursuant to the Debt Financing Transactions.
Gains or losses on these contracts are generally offset by the gains or losses on the underlying transactions, and therefore, would have no impact on future anticipated earnings and cash flows. 75 Inflation Risk Inflationary pressures have recently increased, and may continue to increase, the costs of raw materials, packaging components, and other inputs for our products.
Gains or losses on these contracts are generally offset by the gains or losses on the underlying transactions, and therefore, would have no impact on future anticipated earnings and cash flows. Inflation Risk Inflationary pressures have increased in recent years, and may increase in the future the costs of raw materials, packaging components, and other inputs for our products.
A hypothetical 10% unfavorable change in the average exchange rate used to translate Net income for the fiscal twelve months ended December 31, 2023 from local currencies to U.S. dollars would result in a decline of approximately $98 million.
A hypothetical 10% unfavorable change in the average exchange rate used to translate Net income for the fiscal twelve months ended December 29, 2024 from local currencies to U.S. dollars would result in a decline in Net income of approximately $83 million.
As of December 31, 2023, we have $7.7 billion of Senior Notes and $599 million of commercial paper issued under the Commercial Paper Program outstanding, net of related amortization of debt issuance costs and discounts.
As of December 29, 2024, we have $7.7 billion of Senior Notes and $797 million of commercial paper issued under the Commercial Paper Program outstanding, net of related amortization of discounts and debt issuance costs.
The objective is to maintain a cost-effective mix that management deems appropriate. From time to time, we also hedge the anticipated issuance of fixed-rate debt, and those contracts are designated as cash flow hedges.
Interest rate risk is managed through the maintenance of a portfolio of variable and fixed-rate debt composed of short-term and long-term instruments. The objective is to maintain a cost-effective mix that management deems appropriate. From time to time, we also hedge the anticipated issuance of fixed-rate debt, and those contracts are designated as cash flow hedges.
See Note 16, “Fair Value Measurements,” to the Consolidated Financial Statements included herein. Commodity Price Risk We are exposed to commodity and other price risk, including from resins, pulp and corn derivatives, vegetable oils and oleochemicals; and other inputs, including energy, labor, transportation (such as trucks, containers and ocean freight), and logistics services.
Commodity Price Risk We are exposed to commodity and other price risks, including from resins, silicon, pulp and corn derivatives, paper, agrochemicals, vegetable oils and oleochemicals; and other inputs, including energy, labor, transportation (such as trucks, containers, and ocean freight), and logistics services.
In recent years, we have experienced, and we continue to experience, higher than expected inflation, including escalating transportation, commodity, and other supply chain costs and disruptions that have affected, and continue to affect, our results of operations. We have partially offset the impact of inflation largely through price increases, in addition to continued supply chain optimization initiatives.
Since 2021, we have experienced, and we may in the future experience, higher than expected inflation, including escalating transportation, commodity, and other supply chain costs and disruptions that have adversely affected, and could in the future adversely affect, our results of operations.
Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Interest rate risk is managed through the maintenance of a portfolio of variable and fixed-rate debt composed of short and long-term instruments.
Interest Rate Risk We are subject to interest rate risk related to our cash equivalents and marketable securities. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.
Beginning in October 2022, we entered into forward starting interest rate swap agreements in contemplation of securing long-term financing for the Separation or for other long-term financing purposes in the event the Separation did not occur. In connection with the Senior Notes offering, the interest rate swap contracts were early terminated on a negotiated basis.
Beginning in the fiscal three months ended January 1, 2023, we entered into forward starting interest rate swap agreements in contemplation of securing long-term financing for the Separation or for other long-term financing purposes in the event the 68 Separation did not occur.
However, if our costs continue to be subject to significant inflationary pressures, we may not be able to offset such higher costs through price increases, which could adversely affect our business, results of operations, or financial condition. Interest Rate Risk Our cash equivalents and marketable securities are subject to market risk due to changes in interest rates.
However, if our costs continue to be subject to inflationary pressures, we may not be able to offset the higher costs through price increases, achieve cost efficiencies, or otherwise manage the exposure through sourcing strategies, ongoing productivity initiatives, and the use of commodity hedging contracts, which could adversely affect our business, results of operations, or financial condition.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Risk Because we manufacture and sell products and finance operations in a number of countries throughout the world, we are exposed to the impact on revenue and expenses of movements in currency exchange rates, including as a result of the strengthening of the U.S. dollar or fluctuations in foreign currency rates in numerous jurisdictions, particularly the European Union, the United Kingdom, Japan, China, Canada, Brazil, and India.
Because we manufacture and sell products and finance operations in a number of countries throughout the world, we are exposed to the impact of movements in currency exchange rates on revenue and expenses.
We manage the impact of foreign exchange rate movements on our earnings, cash flows and fair values of assets and liabilities through operational means and through the use of various financial instruments, including derivative instruments such as forward and swap foreign exchange contracts.
We manage the impact of foreign exchange rate translation and transaction exposures through operational means and the use of derivative financial instruments such as forward foreign exchange contracts and cross currency swap contracts. The derivative financial instruments are utilized as risk management tools and are not used for trading or speculative purposes.
Added
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Risk The global nature of our operations (particularly, the EU, China, Canada, the United Kingdom, Brazil, and India), both in the manufacture and sale of our products, results in foreign currency exposure to our financial statements.
Added
The fair value of forward foreign exchange contracts and cross currency swap contracts is sensitive to changes in foreign currency rates.
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During 2023 and 2024, we partially offset the impact of prior inflationary increases through price increases, in addition to continued supply chain optimization initiatives.
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In connection with the Senior Notes offering, the interest rate swap contracts were early terminated on a negotiated basis. See Note 16, “Fair Value Measurements,” to the Consolidated Financial Statements included herein.

Other KVUE 10-K year-over-year comparisons