Discontinued Operations and Disposal Groups

9 Months Ended

Sep. 30, 2025

Discontinued Operations and Disposal Groups [Abstract]

As disclosed in Note 1, on June 5, 2025, we announced the sale of a controlling equity interest in a newly formed Joint Venture comprised of our IFP Business. At the time of closing, Buyer will acquire a 51% interest in the Joint Venture for a purchase price of approximately $1.7 billion, subject to certain post-closing adjustments set forth in the Purchase Agreement. We will retain a 49% equity interest in the Joint Venture which we expect will initially be recorded at fair value and subsequently accounted for using the equity method of accounting. The transaction is expected to close in mid-2026, pending the satisfaction of consultation requirements and customary closing conditions, including obtaining required regulatory approvals, set forth in the Purchase Agreement.

Financial Information of Discontinued Operations

The following table presents the components of Income from Discontinued Operations, Net of Income Taxes:


	Three Months Ended September 30				Nine Months Ended September 30
	2025		2024		2025		2024
Net Sales	$	828	$	808	$	2,416	$	2,429
Cost of products sold	579		588		1,733		1,768
Gross Profit	249		220		683		661
Marketing, research and general expenses	103		91		297		278
Other (income) and expense, net	—		1		2		1
Operating Profit	146		128		384		382
Nonoperating expense	—		—		—		—
Income from discontinued operations before income taxes	146		128		384		382
Provision for income taxes	(36)		(36)		(103)		(99)
Income from Discontinued Operations, Net of Income Taxes	$	110	$	92	$	281	$	283

As a result of the IFP Transaction, we incurred separation costs of $17 and $50 for the three and nine months ended September 30, 2025, respectively, which are included in the reported amounts above. These costs were primarily related to external advisory, legal, accounting, contractor and other incremental costs directly related to the IFP Transaction.

The following table presents significant non-cash items and capital expenditures of discontinued operations:


	Three Months Ended September 30				Nine Months Ended September 30
	2025		2024		2025		2024
Depreciation and Amortization	$	—	$	32	$	68	$	96
Capital Spending	27		25		73		79

The following table presents the components of assets and liabilities classified as discontinued operations:


	September 30, 2025		December 31, 2024
Assets
Cash and cash equivalents	$	17	$	11
Accounts receivable, net	337		281
Inventories	405		370
Other current assets	15		34
Current Assets of Discontinued Operations	$	774	$	696

Property, Plant and Equipment, Net	$	1,317	$	1,229

Goodwill	180		168
Other Intangible Assets, Net	7		7
Other Assets	118		104
Non-current Assets of Discontinued Operations	$	1,622	$	1,508

Liabilities
Debt payable within one year	$	4	$	4
Trade accounts payable	471		451
Accrued expenses and other current liabilities	253		228

Current Liabilities of Discontinued Operations	$	728	$	683

Long-Term Debt	$	19	$	21
Non-current Employee Benefits	15		15
Deferred Income Taxes	32		26
Other Liabilities	88		77
Non-current Liabilities of Discontinued Operations	$	154	$	139

Joint Venture Agreement and Ancillary Agreements

Upon the closing, K-C, Buyer and the Joint Venture will enter into a joint venture agreement (the "JVA"), which will set forth provisions relating to, among other things, the governance of the Joint Venture following closing, transfer restrictions with respect to the parties’ interests in the Joint Venture, and the option of Buyer to purchase K-C's equity interests in the Joint Venture. We will also enter into certain ancillary agreements including intellectual property rights, transition services agreements (the "TSA") and transitional supply arrangements (the "Supply Agreements"). Pursuant to the TSA, K-C will provide certain services to the Joint Venture, on an interim, transitional basis from and after the closing for an initial duration of 18 months, with certain extension rights provided therein. Pursuant to the Supply Agreements, K-C will manufacture and supply certain products to the Joint Venture and, similarly, the Joint Venture will manufacture and supply certain products to K-C for a period of up to 36 months following the closing with certain extension rights provided therein.