Kimberly-Clark KMB · USD

Segment ReportingThe Company's continuing operations are organized by operating segments aggregated into two reportable segments defined by geographic region: North America ("NA") and International Personal Care ("IPC"). These segments differ from those used in prior periods due to the following changes:IFP TransactionAs a result of the IFP Transaction discussed in Notes 1 and 3, the results of operations and applicable assets and liabilities of the IFP Business are reported as discontinued operations in the Company's financial statements and are excluded from segment results for all periods presented. This includes certain costs that were previously allocated to the IPC segment that relate to assets or activities that are part of the IFP Transaction. These costs have been removed from the results of the IPC segment and are reported as discontinued operations. Additionally, certain operations and commercial activities of the former IFP segment retained by K-C are now reported in the NA and IPC segments.Corporate and OtherCorporate and Other was updated for all periods presented to include the following:•Operations of the former IFP segment that were divested prior to the IFP Transaction and therefore not reported as discontinued operations.•Costs previously allocated to the former IFP segment that are not directly attributable to the operations included in the IFP Transaction and therefore are not reported as discontinued operations.The reportable segments were determined in accordance with how our Chief Executive Officer, who is our chief operating decision maker ("CODM"), develops and executes global strategies to drive growth and profitability. These strategies include global plans for branding and product positioning, technology, research and development programs, cost reductions including supply chain management, and capacity and capital investments for each of these businesses. The primary measure of segment profitability utilized by our CODM is segment operating profit. Our CODM uses this measure to assess the operating results and performance of our segments, perform analytical comparisons to budget and allocate resources to each segment.

Leases and CommitmentsWe have entered into leases for certain facilities, vehicles, material handling and other equipment. Our leases have remaining contractual terms up to 93 years, some of which include options to extend the leases for up to 99 years, and some of which include options to terminate the leases within 1 year. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Our lease costs are primarily related to facility leases for inventory warehousing and administration offices.Lease Expense Year Ended December 31202520242023Income Statement ClassificationOperating lease expense$141 $136 $131 Cost of products sold, Marketing, research and general expensesFinance lease expense:Amortization of lease assets15 14 12 Cost of products soldInterest on lease liabilities3 3 2 Interest expenseTotal finance lease expense18 17 14 Variable lease expense(a)136 132 214 Cost of products sold, Marketing, research and general expensesTotal lease expense$295 $285 $359 (a) Includes short-term leases, which are immaterial.Lease Assets and LiabilitiesDecember 3120252024Balance Sheet ClassificationAssetsOperating lease$369 $363 Other AssetsFinance lease49 46 Property, Plant and Equipment, NetTotal lease assets$418 $409 LiabilitiesCurrent:Operating lease$128 $116 Accrued expenses and other current liabilitiesFinance lease13 12 Debt payable within one yearNoncurrent:Operating lease258 265 Other LiabilitiesFinance lease30 32 Long-Term DebtTotal lease liabilities$429 $425 As of December 31, 2025 and 2024, accumulated amortization of finance lease assets was $36 and $28, respectively.Maturity of Lease LiabilitiesDecember 31, 2025Operating LeasesFinance LeasesTotal2026$146 $15 $161 2027116 13 129 202869 10 79 202942 5 47 203027 3 30 Thereafter38 5 43 Total lease payments438 51 489 Less imputed interest52 8 60 Present value of lease liabilities$386 $43 $429 Supplemental Information Related to LeasesThe Consolidated Statements of Cash Flows are presented on a consolidated basis for both continuing operations and discontinued operations. As a result, unless specifically stated, supplemental cash flow information shown below reflects Kimberly-Clark's consolidated results for all periods presented.

DebtLong-term debt is composed of the following:Weighted-Average Interest RateMaturitiesDecember 3120252024Notes and debentures3.6%2026 - 2050$6,784 $7,310 Industrial development revenue bonds3.7%2029 - 204559 59 Bank loans and other financings in various currencies5.9%2026 - 204643 46 Total long-term debt6,886 7,415 Less current portion412 561 Long-term portion$6,474 $6,854 Scheduled maturities of long-term debt for the next five years are $413 in 2026, $608 in 2027, $704 in 2028, $706 in 2029 and $745 in 2030.In February 2023, we issued $350 aggregate principal amount of 4.50% notes due February 16, 2033. Proceeds from the offering were used for general corporate purposes including the repayment of a portion of our commercial paper indebtedness.Committed Bridge FinancingIn November 2025, in connection with the Merger Agreement discussed in Note 4, the Company and JPMorgan Chase Bank, N.A. (the "Bank") executed a certain bridge loan facility commitment letter, pursuant to which the Bank has committed to provide bridge financing (the "Bridge Facility") in an amount of $7.7 billion to the Company to fund the Cash Consideration, the fees, costs and expenses incurred in connection with the transactions contemplated by the Merger Agreement and to repay certain existing indebtedness of Kenvue and/or its subsidiaries. In December 2025, $3.8 billion of the commitments in the Bridge Facility were terminated in connection with entry into the New Revolving Credit Facility and DDTL Credit Facility (as defined below). We incurred debt issuance costs of $15 in connection with the Bridge Facility, of which $8 was charged to earnings in connection with the termination of a portion of the commitments. The remaining unamortized amount is capitalized in Other current assets.Revolving Credit and Delayed Draw Term Loan AgreementsIn December 2025, we entered into (i) the Five-Year Revolving Credit Agreement by and among Kimberly-Clark, JPMorgan Chase Bank, N.A. (the "Bank") and the other lenders party thereto (the “New Revolving Credit Facility”) and (ii) the Delayed Draw Term Loan Credit Agreement by and among Kimberly-Clark, the Bank, and the other lenders party thereto (the “DDTL Credit Facility”). The New Revolving Credit Facility matures in December 2030 and provides for a revolving credit facility of up to $4.0 billion (which may be increased by up to $1.

Income TaxesThe Provision for income taxes consists of the following:Year Ended December 31202520242023Current income taxes United States$117 $236 $364 State42 56 53 Other countries226 195 252 Total385 487 669 Deferred income taxes United States241 (14)(120) State1 (18)(28) Other countries(28)(13)(178) Total214 (45)(326)Total Provision for income taxes$599 $442 $343 The components of Income from Continuing Operations Before Income Taxes and Equity Interests are as follows: Year Ended December 31202520242023United States$1,743 $2,194 $1,954 Other countries309 224 (348)Total Income from Continuing Operations Before Income Taxes and Equity Interests$2,052 $2,418 $1,606 Deferred income tax assets and liabilities are comprised of the following:December 3120252024Deferred tax assetsPension and other postretirement benefits$162 $169 Tax credits and loss carryforwards 712 623 Capitalized research costs204 272 Lease liabilities114 112 Other423 364 1,615 1,540 Valuation allowances(451)(295)Total deferred tax assets 1,164 1,245 Deferred tax liabilitiesProperty, plant and equipment851 854 Investments in subsidiaries133 113 Goodwill69 64 Lease assets109 105 Other186 203 Total deferred tax liabilities1,348 1,339 Net deferred tax assets (liabilities)$(184)$(94)Valuation allowances as of December 31, 2025 primarily relate to tax credits, capital loss carryforwards, and income tax loss carryforwards of $1.1 billion. If these items are not utilized against taxable income, $484 of the income tax loss carryforwards will expire from 2026 through 2045. The remaining $589 has no expiration date.Realization of income tax loss carryforwards is dependent on generating sufficient taxable income prior to expiration of these carryforwards. Although realization is not assured, we believe it is more likely than not that all of the deferred tax assets, net of applicable valuation allowances, will be realized. The amount of the deferred tax assets considered realizable could be reduced or increased due to changes in the tax environment or if estimates of future taxable income change during the carryforward period.Presented below is a reconciliation of the Provision for income taxes computed at the U.S. federal statutory tax rate to the actual effective tax rate:Year Ended December 31202520242023AmountPercentAmountPercentAmountPercentU.S. statutory rate applied to income from continuing operations before income taxes and equity interests$431 21.0 %$508 21.0 %$337 21.

Stock-Based CompensationWe have a stock-based Equity Participation Plan and an Outside Directors' Compensation Plan (the "Plans"), under which we can grant stock options, restricted share units ("RSUs") and other types of awards described further in the Plans to employees and outside directors. As of December 31, 2025, the number of shares of common stock available for grants under the Plans aggregated to 6.3 million shares. Unless specifically stated, the following reflects consolidated information for the Company inclusive of the IFP Business. Stock options are granted at an exercise price equal to the fair market value of our common stock on the date of grant, and they have a term of 10 years. Stock options are subject to graded vesting whereby options vest 30% at the end of each of the first two 12-month periods following the grant and 40% at the end of the third 12-month period.Time-vested RSUs are valued at the closing market price of our common stock on the grant date and are generally subject to graded vesting whereby shares vest 30% at the end of each of the first two 12-month periods following the grant and 40% at the end of the third 12-month period. Time-vested restricted share unit grants issued for special one-time awards and performance-based RSUs granted to employees are valued at the closing market price of our common stock on the grant date and vest generally at the end of three years. The number of performance-based RSUs that ultimately vest ranges from zero to 200% of the number granted based on the attainment of performance metrics. Performance metrics are tied to modified free cash flow and organic sales growth during the three-year performance period. Modified free cash flow and organic sales growth targets are set at the beginning of the performance period. RSUs granted to outside directors are valued at the closing market price of our common stock on the grant date and vest when they are granted. These shares are subject to a restricted period that begins on the date of grant and expires within ninety days following the date the outside director retires from or otherwise terminates service on our Board.At the time stock options are exercised or RSUs vest, common stock is issued from our accumulated treasury shares. Dividend equivalents are credited on RSUs on the same date and at the same rate as dividends are paid on Kimberly-Clark's common stock.

Acquisitions and DivestituresPending Acquisition of Kenvue, Inc.On November 2, 2025, we entered into an Agreement and Plan of Merger (the "Merger Agreement") to acquire the outstanding equity interests of Kenvue, Inc. ("Kenvue"), a global consumer health leader, for stock and cash consideration (the "Kenvue Acquisition"). Under the terms of the Merger Agreement, which was unanimously approved by the Boards of Directors of each of Kimberly-Clark and Kenvue, each share of Kenvue common stock, par value $0.01 per share, issued and outstanding at the close of the Kenvue Acquisition (subject to certain provisions within the Merger Agreement) will be converted into the right to receive (i) 0.14625 shares of Kimberly-Clark common stock, par value $1.25 per share (the "Stock Consideration"), plus (ii) $3.50 in cash (the "Cash Consideration" and, together with the Stock Consideration, the "Merger Consideration"). In total, we expect approximately 280 million shares of common stock to be issued and approximately $6.7 billion to be paid for the Merger Consideration. The Cash Consideration is expected to be funded through a combination of cash on hand, proceeds from new debt issuance, and proceeds from the IFP Transaction. The actual value of the transaction will fluctuate based upon changes in the price of Kimberly-Clark common stock and the number of shares of Kenvue common stock outstanding at the time of closing.On January 29, 2026, Kimberly-Clark and Kenvue each held a special meeting of their respective stockholders. During the respective meetings, Kimberly-Clark stockholders approved by requisite vote the issuance of Kimberly-Clark common stock as consideration to holders of Kenvue common stock, and Kenvue stockholders adopted by the requisite vote the Merger Agreement. Additionally, the waiting period applicable to the Kenvue Acquisition under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired on February 4, 2026. Completion of the Kenvue Acquisition, which is expected to take place in the second half of 2026, remains subject to the satisfaction of other customary closing conditions, as described in the Merger Agreement, including the receipt of foreign regulatory approvals. The Merger Agreement also provides for certain termination rights, and under certain specified circumstances, both Kimberly-Clark and Kenvue may be required to pay the other a termination fee of $1.1 billion.

Internal Cybersecurity TeamOur Chief Information Security Officer (“CISO”) oversees a team with extensive cybersecurity knowledge and experience. The team is responsible for:•leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes;•incident response and operational activities, including identifying and initiating updates to systems which require patching, vulnerability management strategy, red teaming, network security configurations and security architecture;•oversight of third parties engaged to assist in our cybersecurity risk management, along with third parties’ vendors; and•legal and regulatory compliance. Our CISO reports to our Chief Digital and Technology Officer (“CDTO”), who provides management of cybersecurity risks, reviews operational metrics and performs other relevant activities related to the cybersecurity function.Security Policy and RequirementsAs part of our overall risk management program, we have adopted our Information Security Policy which details the overall risk-based framework and governance for the management and security of our information technology assets and information. The policy applies to everyone who accesses our data or information resources and all of our information systems and resources, including third parties we engage. Our program aligns with the NIST cybersecurity framework.Material Cyber Risks, Threats and IncidentsWe actively monitor the evolving cybersecurity and geopolitical landscapes that could result in new or increased cybersecurity threat including geopolitical events such as the war in Ukraine.As a global company serving consumers in more than 175 countries and territories, we routinely experience a wide variety of cybersecurity incidents. However, we have not experienced a cybersecurity incident that has materially affected or is reasonably likely to materially affect our business strategy, results of operation or financial condition. For a more detailed discussion of the risks we face, see Item 1A, "Risk Factors."Incident ResponseWe have adopted a cybersecurity incident response plan that is designed to provide a framework across all functions for a coordinated identification and response to security incidents. The plan specifies the process for identifying, validating, classifying, documenting, and responding to cybersecurity events as well as determining whether reporting of an event is appropriate under regulatory standards.

Legal MattersWe routinely are involved in legal proceedings, claims, disputes, tax matters, regulatory matters and governmental inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below in this section. We record accruals in the Consolidated Financial Statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies, unless disclosed below. At present we believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows. However, legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position.As previously disclosed, we have been party to certain legal proceedings relating to our former health care business, Avanos Medical, Inc. (previously Halyard Health, Inc.), including a qui tam matter and certain subpoena and document requests from the federal government. The subpoena and document requests included subpoenas from the United States Department of Justice (“DOJ”) concerning allegations of potential criminal and civil violations of federal laws, including the Food, Drug, and Cosmetic Act, in connection with the manufacturing, marketing and sale of surgical gowns by our former health care business. During the second quarter of 2025, we entered into a settlement agreement to resolve the qui tam matter which provided for a payment by us in an amount that did not materially affect our financial position, results of operations or cash flows.