MKS INSTRUMENTS INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
MKSI$192.27+8.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000950170-24-123394
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000950170-25-066792
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 144 previous paragraphs and 142 current paragraphs.
57 unchanged; 55 reworded; 26 added; 31 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 17 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
Recent Developments
Current report
The new U.S. administration has imposed a series of tariffs on U.S. trading partners to address trade imbalances, cross-border issues, and other foreign policy disputes that have been met with both real and threatened retaliatory measures by impacted countries. We continue to closely monitor these developments, modifications and responsive actions and are actively implementing contingency plans, including alternative sourcing strategies and supplier diversification, to support supply chain continuity, maintain operational efficiency, and help mitigate potential future impacts.
Current report
For the three months ended March 31, 2025, net revenues in our electronics and packaging market decreased by $1 million, or less than 1%, compared to the prior quarter primarily due to a decrease in chemistry sales in the electronics market at MSD, mainly as a result of seasonal decline due to the Lunar New Year, partially offset by an increase in PCB via drilling systems sales at PSD.
Current report
For the three months ended March 31, 2025, net revenues in our electronics and packaging market increased by $45 million, or 22%, compared to the same period in the prior year. This increase was primarily due to higher industry demand for PCB via drilling systems at PSD and an increase in both chemistry and equipment sales in the electronics market at MSD.
Current report
Industrial
Current report
For the three months ended March 31, 2025, net revenues in our specialty industrial market decreased by $39 million, or 13%, compared to the same period in the prior year. This decrease was mainly due to lower chemistry sales in the automotive market at MSD as well as lower revenue across the material processing and spectroscopy markets at PSD and the general industrial market at VSD and MSD.
Current report
For the three months ended March 31, 2025, net product revenues decreased $5 million compared to the prior quarter primarily due to lower chemistry sales in the electronics and packaging and specialty industrial markets, mainly at MSD and driven by seasonality with the Lunar New Year, partially offset by increases in sales in the semiconductor market at VSD and in the electronics and packaging market related to PCB via drilling system sales at PSD.
Current report
For the three months ended March 31, 2025, net revenues from PSD remained flat compared to the prior quarter. For the three months ended March 31, 2025, net revenues from PSD increased $9 million compared to the same period in the prior year mainly due to an increase in sales of PCB via drilling systems in our electronics and packaging market offset by decreases in sales in material processing and spectroscopy in our specialty industrial market.
Current report
The following table sets forth gross profit as a percentage of net revenues by product and service:
Current report
Gross Profit Excluding Amortization
Current report
Gross profit as a percentage of net product revenues increased by 0.4 percentage points for the three months ended March 31, 2025 compared to the prior quarter, primarily due to favorable product mix and lower material costs, partially offset by higher excess and obsolete inventory charges.
Current report
Gross profit as a percentage of net product revenues decreased by 0.6 percentage points for the three months ended March 31, 2025 compared to the same period in the prior year, primarily due to higher excess and obsolete inventory charges and higher freight and duties costs, partially offset by higher revenue volumes.
Current report
Gross profit as a percentage of net services revenues decreased by 1.5 percentage points for the three months ended March 31, 2025 compared to the prior quarter, primarily due to unfavorable product mix and higher variable compensation, partially offset by lower excess and obsolete inventory charges.
Current report
Gross profit as a percentage of net revenues for PSD decreased for the three months ended March 31, 2025 compared to the prior quarter, primarily due to higher excess and obsolete inventory charges and unfavorable production variances. Gross profit as a percentage of net revenues for PSD decreased for the three months ended March 31, 2025 compared to the same period in the prior year, primarily due to unfavorable product mix, higher warranty costs and higher freight and duty costs, partially offset by operational efficiencies due in part to higher revenue volumes compared to the same period in the prior year.
Current report
Gross profit as a percentage of net revenues for MSD decreased for the three months ended March 31, 2025 compared to the prior quarter and compared to the same period in the prior year. The decrease for both periods was primarily due to higher excess and obsolete charges and unfavorable product mix.
Current report
The above gross profit percentages by division exclude an immaterial amount of unallocated corporate expense included in the total gross profit percentage.
Current report
Research and development expenses were flat for the three months ended March 31, 2025 compared to the same period in the prior year.
Current report
Amortization of intangible assets for the three months ended March 31, 2025 decreased $1 million compared to the prior quarter and decreased $2 million compared to the same period in the prior year.
Current report
Interest expense, net decreased by $31 million for the three months ended March 31, 2025 compared to the same period in the prior year, primarily as a result of the issuance of $1.4 billion of Convertible Notes (as defined and described further below under “Convertible Notes,”) in May 2024 at a coupon rate of 1.25%, of which $1.2 billion of the proceeds were used to pay down our loans under the Term Loan Facility with an interest rate of approximately 7.8%. In addition, in July 2024, we entered into the Fourth Amendment to Credit Agreement, dated as of July 23, 2024 by and among us as parent borrower, the other loan parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and each lender party thereto, and in January 2025 we entered into the Fifth Amendment, each of which decreased the applicable margin for both the USD Tranche B and EUR Tranche B by 0.25%. In addition, interest expense, net was lower for the three months ended March 31, 2025 as compared to the same period in the prior year as a result of the voluntary prepayments of $50 million in February
Current report
Other (Income) Expense, Net
Current report
Provision (Benefit) for Income Taxes
Current report
The Organisation for Economic Co-operation and Development (“OECD”) and participating OECD member countries continue to work toward the enactment of a 15% global minimum corporate tax rate for large multinational enterprise groups, also known as “Pillar Two.” Many of the participating countries have enacted legislation that became effective beginning in 2024, while other countries continue to work on defining the underlying rules and administrative procedures. Although the enacted and effective legislation in some countries was applicable to us as of January 1, 2024, and increased our effective income tax rate, the increase did not have a material impact on our overall results of operations or cash flows. We will continue to monitor and evaluate the impacts of the developing legislation.
Current report
Net cash used in financing activities was $180 million for the three months ended March 31, 2025, consisting of normal quarterly debt payments and a voluntary debt prepayment that together totaled $113 million, as well as the repurchase of our common stock of $45 million.
Current report
On July 25, 2011, our Board of Directors approved a share repurchase program for the repurchase of up to an aggregate of $200 million of our outstanding common stock from time to time in open market purchases, privately negotiated transactions or through other appropriate means. The timing and quantity of any shares repurchased depends upon a variety of factors, including business conditions, stock market conditions and business development activities, including, but not limited to, merger and acquisition opportunities. These repurchases may be commenced, suspended or discontinued at any time without prior notice. Any repurchased shares are held by us as authorized but unissued shares.
Current report
During the three months ended March 31, 2025, we repurchased approximately 546,000 shares of our common stock for total consideration of $45 million. During the three months ended March 31, 2024, we did not repurchase any shares of common stock. We have repurchased approximately 3.1 million shares of common stock for approximately $172 million pursuant to the program since its adoption.
Current report
Interest Rate Swap
Removed paragraphs (31)
Previous report
For the three months ended September 30, 2024, net revenues in our electronics and packaging market increased by $2 million, or 1%, compared to the prior quarter primarily due to an increase in chemistry sales within MSD.
Previous report
For the nine months ended September 30, 2024, net revenues in our electronics and packaging market decreased by $22 million, or 3%, compared to the same period in the prior year. This decrease was primarily due to lower revenue within MSD mainly as a result of lower palladium prices that are passed through to our customers, which were partially offset by volume growth in chemistry sales.
Previous report
Industrial Technologies
Previous report
For the three months ended September 30, 2024, net revenues in our specialty industrial market decreased by $2 million, or 1%, compared to the prior quarter mainly due to lower revenue in our material processing and defense markets within PSD.
Previous report
For the three months ended September 30, 2024, net product revenues increased $6 million compared to the prior quarter primarily due to higher volume of sales at VSD.
Previous report
For the three months ended September 30, 2024, net revenues from PSD decreased $3 million compared to the prior quarter. For the nine months ended September 30, 2024, net revenues from PSD increased $35 million compared to the same period in the prior year, primarily as a result of an increase in sales of our lithography, metrology and inspection products in our semiconductor market, and an increase in sales of our data communications and research and defense products in our specialty industrial market.
Previous report
Gross margin
Previous report
Gross margin for our products increased for the three months ended September 30, 2024 compared to the prior quarter, mainly as a result of lower warranty and scrap costs as well as better absorption on higher revenue volumes.
Previous report
Gross margin for our products increased for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to favorable product mix, higher factory utilization and lower excess and obsolete inventory charges, partially offset by higher warranty costs and lower revenue volumes.
Previous report
Gross margin for our services increased for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to favorable product mix, better absorption on higher revenue volumes and lower direct labor and overhead costs.
Previous report
Gross margin for VSD increased for the three months ended September 30, 2024 compared to the prior quarter primarily due to lower material costs, favorable product mix and higher revenue volumes, partially offset by higher variable compensation costs. Gross margin for VSD increased for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to higher factory utilization and lower material costs, partially offset by lower revenue volumes, unfavorable product mix and higher warranty costs.
Previous report
Gross margin for MSD increased for the three months ended September 30, 2024 compared to the prior quarter primarily due to favorable product mix and lower warranty costs, partially offset by higher excess and obsolete charges. Gross margin for MSD increased for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to lower palladium prices and favorable product mix, partially offset by higher warranty costs.
Previous report
For the three months ended September 30, 2024, amortization of intangible assets was flat compared to the prior quarter. For the nine months ended September 30, 2024, amortization of intangible assets decreased by $41 million compared to the same period in the prior year primarily due to the backlog intangible asset related to MSD being fully amortized in the three months ended December 31, 2023, and the write-off of completed technology at our equipment solutions business (“ESB”) reporting unit of PSD in the second quarter of 2023.
Previous report
Goodwill and intangible asset impairments
Previous report
During the nine months ended September 30, 2023, as a result of softer industry demand, particularly in the personal computer and smartphone markets, we concluded there was a triggering event in the three months ended June 30, 2023 at our electronics (“EL”) and general metal finishing (“GMF”) reporting units, which together constitute MSD, and the ESB reporting unit of PSD.
Previous report
For the EL, GMF and ESB reporting units, we performed a quantitative assessment of goodwill using a combination of market approach and the income approach. Fair value estimates are based on a complex set of judgments about future events and uncertainties and rely heavily on estimates and assumptions that have been deemed reasonable by our management. There are inherent uncertainties and management judgment required in these determinations.
Previous report
This quantitative assessment resulted in a non-cash goodwill impairment of $826 million for the EL reporting unit, $428 million for the GMF reporting unit and $372 million for the ESB reporting unit. In addition, we recorded a $49 million impairment of in-process research and development allocated to the EL reporting unit and a $152 million impairment related to completed technology allocated to the ESB reporting unit.
Previous report
We will continue to monitor and evaluate the carrying value of goodwill and intangible assets. If market and economic conditions or business performance deteriorate, the likelihood that we would record an impairment charge would increase, which could materially and adversely affect our financial condition and operating results.
Previous report
We have concluded there were no triggering events across our reporting units through the nine months ended September 30, 2024.
Previous report
For the nine months ended September 30, 2024, interest expense, net decreased by $43 million compared to the same period in the prior year. In addition to the impact of the Fourth Amendment and the July 2024 Prepayment, in May 2024, we issued $1.4 billion of Convertible Notes (as defined and described further below under “Convertible Notes,”) at a coupon rate of
Previous report
For the nine months ended September 30, 2024, in addition to the loss on extinguishment of debt related to the Fourth Amendment and the July 2024 Prepayment, and the issuance of the Convertible Notes in May 2024, we recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing costs associated with the extinguishment of our senior secured tranche A term loan using proceeds from borrowing additional USD Tranche B and additional Euro Tranche B loans pursuant to the Second Amendment.
Previous report
Other expense (income), net
Previous report
(Benefit) provision for income taxes
Previous report
On a quarterly basis, we evaluate both positive and negative evidence that affects the realizability of net deferred tax assets and assess the need for a valuation allowance. The future benefit to be derived from our deferred tax assets is dependent upon our ability to generate sufficient future taxable income in each jurisdiction of the right type to realize the assets.
Previous report
Many countries in which we operate have implemented or are implementing legislation and other tax changes to align their tax systems with the Organisation for Economic Co-operation and Development global minimum tax rate known as Pillar Two of the Global Anti-Base Erosion (“GloBE”) rules. The GloBE rules provide a framework for a coordinated multi-country system of taxation intended to ensure large multinational enterprise groups pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. Many jurisdictions, including many EU countries, have enacted certain provisions of the GloBE rules effective as of January 1, 2024. The Company does not expect the GloBE rules to have a material impact on its consolidated financial statements.
Previous report
Net cash used in financing activities was $303 million for the nine months ended September 30, 2024, primarily due to net proceeds from the issuance of Convertible Notes of $1.4 billion and incremental loans under the Term Loan Facility in an aggregate principal amount of $761 million. The proceeds of the incremental loans under the Term Loan Facility were used in part to prepay the USD Tranche A term loans outstanding under the Amended Credit Agreement (as defined and described further below under “Credit Facilities”) in full in an aggregate principal amount of $744 million and the proceeds of the Convertible Notes were used in part to prepay a portion of the USD Tranche B loans in an aggregate principal amount of $1.2 billion. In addition, there were normal quarterly debt payments and voluntary prepayments that totaled $248 million. We also made payments of $167 million to purchase a capped call option related to the Convertible Notes, $33 million for debt financing costs and $44 million for dividends.
Previous report
On October 23, 2024, we made a voluntary prepayment of €200 million principal amount, which equates to $216 million, to our Euro Tranche B loan under the Term Loan Facility.
Previous report
On May 16, 2024, we completed a private offering of Convertible Notes. A significant portion of the net proceeds from the offering was used to repay approximately $1.2 billion of the USD Tranche B. As a result of the repayment, we recorded a $38 million loss on extinguishment of debt.
Previous report
Interest Rate Agreements
Previous report
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
Previous report
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. We do not expect the additional disclosure requirements under ASU 2023-07 to have a material impact on our consolidated financial statements.
Reworded paragraphs (55)
Previous wording
Among the important factors that could cause actual events to differ materially from those in the forward-looking statements that we make are the level and terms of our substantial indebtedness and our ability to service such debt; our entry into the chemicals technology business through our acquisition of Atotech Limited (“Atotech”) in August 2022 (the “Atotech Acquisition”) which may expose us to significant additional liabilities; the risk that we are unable to integrate Atotech successfully or realize the anticipated synergies, cost savings and other benefits of the Atotech Acquisition; legal, reputational, financial and contractual risks resulting from the ransomware event we identified in February 2023, and other risks related to cybersecurity, data privacy and intellectual property; competition from larger, more advanced or more established companies in our markets; the ability to successfully grow our business, including through growth of the Atotech business and growth of the Electro Scientific Industries, Inc. business, which we acquired in February 2019, and financial risks associated with those and potential future acquisitions, including goodwill and intangible asset impairments; manufacturing and sourcing risks, including those associated with limited and sole source suppliers and the impact and duration of supply chain disruptions, component shortages, and price increases; changes in global demand; the impact of a pandemic or other widespread health crisis; risks associated with doing business internationally, including geopolitical conflicts, such as the conflict in the Middle East, trade compliance, regulatory restrictions on our products, components or markets, particularly the semiconductor market, and unfavorable currency exchange and tax rate fluctuations, which risks become more significant as we grow our business internationally and in China specifically; conditions affecting the markets in which we operate, including fluctuations in capital spending in the semiconductor, electronics manufacturing and automotive industries, and fluctuations in sales to our major customers; disruptions or delays from third-party service providers upon which our operations may rely; the ability to anticipate and meet customer demand; the challenges, risks and costs involved with integrating or transitioning global operations of the companies we have acquired; risks associated with the attraction and retention of key personnel; potential fluctuations in quarterly results; dependence on new product development; rapid technological and market change; acquisition strategy; volatility of stock price; risks associated with chemical manufacturing and environmental regulation compliance; risks related to defective products; financial and legal risk management; and the other important factors described under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securiti…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Among the important factors that could cause actual events to differ materially from those in the forward-looking statements that we make are the level and terms of our substantial indebtedness and our ability to service such debt; our entry into the chemicals technology business through our acquisition of Atotech Limited (“Atotech”) in August 2022 (the “Atotech Acquisition”) which has exposed us to significant additional liabilities; the risk that we are unable to realize the anticipated benefits of the Atotech Acquisition; risks related to cybersecurity, data privacy and intellectual property; competition from larger, more advanced or more established companies in our markets; the ability to successfully grow our business, including through growth of the Atotech business and financial risks associated with that acquisition and potential future acquisitions, including goodwill and intangible asset impairments; manufacturing and sourcing risks, including those associated with limited and sole source suppliers and the impact and duration of supply chain disruptions, component shortages, and price increases; changes in global demand; risks associated with doing business internationally, including geopolitical conflicts, such as the conflict in the Middle East, trade compliance, trade protection measures, such as import tariffs by the United States or retaliatory actions taken by other countries, regulatory restrictions on our products, components or markets, particularly the semiconductor market, and unfavorable currency exchange and tax rate fluctuations, which risks become more significant as we grow our business internationally and in China specifically; conditions affecting the markets in which we operate, including fluctuations in capital spending in the semiconductor, electronics manufacturing and automotive industries, and fluctuations in sales to our major customers; disruptions or delays from third-party service providers upon which our operations may rely; the ability to anticipate and meet customer demand; the challenges, risks and costs involved with integrating or transitioning global operations of the companies we have acquired; risks associated with the attraction and retention of key personnel; potential fluctuations in quarterly results; dependence on new product development; rapid technological and market change; acquisition strategy; volatility of stock price; risks associated with chemical manufacturing and environmental regulation compliance; risks related to defective products; financial and legal risk management; and the other important factors described under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the U.S. Securities and Exchange Commission on February 25, 2025 (“Annual Report”), Part II, Item 1A of this Quarterly Report on Form 10-Q and any subsequent Quarterly Reports on Form 10-Q. We are under no obligation to, and expressly disclaim …
Excerpt shortened here; the source contains the full paragraph.
Previous wording
The Management’s Discussion and Analysis of Financial Condition and Results of Operations describes principal factors affecting the results of operations, financial condition, cash flows and liquidity, as well as our critical accounting policies and estimates that require significant judgment and thus have the most significant potential impact on our condensed consolidated financial statements, and is intended to better allow investors to view the Company from management’s perspective. This section focuses on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of our future operating results or our future financial condition. This section provides an analysis of our financial results for the three months ended September 30, 2024 compared to the three months ended June 30, 2024, and the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. As a result of rounding, there may be immaterial differences in amounts presented and certain calculations may not sum to the total number expressed in each category or tie to a corresponding schedule.
Current wording
The Management’s Discussion and Analysis of Financial Condition and Results of Operations describes principal factors affecting the results of operations, financial condition, cash flows and liquidity, as well as our critical accounting policies and estimates that require significant judgment and thus have the most significant potential impact on our condensed consolidated financial statements, and is intended to better allow investors to view the Company from management’s perspective. This section focuses on material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be necessarily indicative of our future operating results or of our future financial condition. This section provides an analysis of our financial results for the three months ended March 31, 2025 compared to the three months ended December 31, 2024 and the three months ended March 31, 2024. As a result of rounding, there may be immaterial differences in amounts presented and certain calculations may not sum to the total number expressed in each category or tie to a corresponding schedule.
Previous wording
VSD delivers foundational technology solutions to leading edge semiconductor manufacturing, electronics and packaging and specialty industrial applications. VSD products are derived from our core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, temperature sensing and vacuum technology.
Current wording
VSD delivers foundational technology solutions to semiconductor manufacturing, electronics and packaging and specialty industrial applications. VSD products are derived from our core competencies in vacuum technologies, including pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, and fiber optic temperature and position sensing.
Previous wording
PSD provides a full range of solutions including lasers, beam measurement and profiling, precision motion control, vibration isolation systems, photonics instruments, opto-mechanical components, optical elements, laser-based systems for flexible printed circuit board (“PCB”) processing, and laser-based systems for high density interconnect PCB and package substrate manufacturing. During the quarter ended March 31, 2024, we moved our Optical Sensing Products (“OSP”) product line from the PSD segment to the VSD segment. The purpose of this realignment was to better align the OSP products with semiconductor related products within the VSD segment. Prior periods have been recast to reflect this change.
Current wording
PSD provides a broad range of solutions including lasers, beam measurement and profiling, precision motion control, vibration isolation systems, photonics instruments, opto-mechanical components, optical elements, laser-based systems for flexible printed circuit board (“PCB”) laser processing, laser-based systems for high density interconnect PCB and package substrate manufacturing.
Previous wording
MSD develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing. Applying a comprehensive systems-and-solutions approach, MSD’s portfolio includes chemistry, equipment and services for innovative and high-technology applications in a wide variety of end markets.
Current wording
MSD develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing. Applying a comprehensive systems-and-solutions approach, MSD’s portfolio includes chemistry, equipment and services for innovative and high-technology applications in our electronics and packaging and specialty industrial markets.
Previous wording
MKS is a critical solutions provider for semiconductor manufacturing. Our products are used in major semiconductor processing steps, such as deposition, etching, cleaning, lithography, metrology, and inspection. The semiconductor industry continually faces new challenges, as products become smaller, more powerful and highly mobile. Ultra-thin layers, smaller critical dimensions, new materials, 3D structures, and the ongoing need for higher yield and productivity drive the need for tighter process measurement and control, all of which MKS supports. We believe we are the broadest critical subsystem provider in the wafer fabrication equipment (“WFE”) ecosystem and address over 85% of the market. We characterize our broad and unique offering as Surround the Wafer® to reflect the technology enablement we provide across almost every major process in semiconductor manufacturing today.
Current wording
We are a critical solutions provider for semiconductor manufacturing. Our products are used in major semiconductor processing steps, such as deposition, etching, cleaning, lithography, metrology, and inspection. The semiconductor industry continually faces new challenges, as products become smaller, more powerful and highly mobile. Ultra-thin layers, smaller critical dimensions, new materials, 3D structures, and the ongoing need for higher yield and productivity drive the need for tighter process measurement and control, all of which we support. We believe we are the broadest critical subsystem provider in the wafer fabrication equipment ecosystem and address over 85% of the market. We characterize our broad and unique offering as Surround the Wafer® to reflect the technology enablement we provide across almost every major process in semiconductor manufacturing today.
Previous wording
The semiconductor market is subject to rapid demand shifts, which are difficult to predict, and we cannot be certain as to the timing or extent of future demand or any future softening in the semiconductor capital equipment industry. In addition to these rapid demand shifts, the semiconductor capital equipment industry is subject to significant trade restrictions, especially in China.
Current wording
The semiconductor market is subject to rapid demand shifts, which are difficult to predict, and we cannot be certain as to the timing or extent of future demand or any future softening in the semiconductor capital equipment industry. In addition to these rapid demand shifts, the semiconductor capital equipment industry has recently been subject to significant trade restrictions, especially in key markets, including China.
Previous wording
For the three months ended September 30, 2024, net revenues in our semiconductor market increased by $9 million, or 3%, compared to the prior quarter primarily due to strong in-quarter demand conversion within VSD.
Current wording
For the three months ended March 31, 2025, net revenues in our semiconductor market increased by $13 million, or 3%, compared to the prior quarter primarily due to strong in-quarter demand conversion at VSD for semiconductor capital equipment and services.
Previous wording
For the nine months ended September 30, 2024, net revenues in our semiconductor market decreased by $19 million, or 2%, compared to the same period in the prior year. This decrease was mainly due to continued softened demand for semiconductor capital equipment related to deposition and etching, partially offset by an increase in sales of our lithography, metrology and inspection products.
Current wording
For the three months ended March 31, 2025, net revenues in our semiconductor market increased by $62 million, or 18%, compared to the same period in the prior year. The increase was mainly due to an increase in sales of our semiconductor capital equipment related to strength in logic and foundry applications and planned upgrades to support existing NAND memory production, as well as increased services revenues.
Previous wording
MKS is a foundational solutions provider for the electronics and packaging market. Our portfolio includes photonics components, laser drilling systems, electronics chemistries and plating equipment that are critical for the manufacturing of PCBs and package substrates, and critical to wafer level packaging (“WLP”) applications. Similar to the semiconductor industry, the PCB, package substrate and WLP industries demand smaller features, greater density, and better performance. In addition, the electronics and packaging market also includes sales of our vacuum and photonics solutions for display manufacturing applications. We characterize our complementary offering of laser systems and chemistry solutions as Optimize the Interconnect®, to reflect the unique technology enablement we provide at the Interconnect level within PCBs, package substrates and WLPs.
Current wording
We are a foundational solutions provider for the electronics and packaging market. Our portfolio includes photonics components, laser drilling systems, electronics chemistries and plating equipment that are critical for the manufacturing of PCBs and package substrates, and critical to wafer level packaging (“WLP”) applications. Similar to the semiconductor industry, the PCB, package substrate and WLP industries demand smaller features, greater density, and better performance. In addition, the electronics and packaging market also includes sales of our vacuum and photonics solutions for display manufacturing applications. We characterize our complementary offering of laser systems and chemistry solutions as Optimize the Interconnect®, to reflect the unique technology enablement we provide at the Interconnect level within PCBs, package substrates and WLPs.
Previous wording
MKS’ strategy in the specialty industrial market is to leverage our domain expertise and proprietary technologies across a broad array of applications in industrial technologies, life and health sciences, and research and defense markets.
Current wording
Our strategy in the specialty industrial market is to leverage our domain expertise and proprietary technologies across a broad array of applications in industrial, life and health sciences, and research and defense markets.
Previous wording
Industrial technologies encompasses a wide range of diverse applications, including chemistries for functional coatings, surface finishing and wear resistance in the automobile industry, vacuum solutions for synthetic diamond manufacturing and photonics for solar manufacturing. Other applications include vacuum and photonics solutions for light emitting diode and laser diode manufacturing.
Current wording
Industrial encompasses a wide range of diverse applications, including chemistries for functional coatings, surface finishing and wear resistance in the automobile industry, vacuum solutions for synthetic diamond manufacturing and photonics for solar manufacturing. Other applications include vacuum and photonics solutions for light emitting diode and laser diode manufacturing.
Previous wording
For the nine months ended September 30, 2024, net revenues in our specialty industrial market decreased by $37 million, or 4%, compared to the same period in the prior year. This decrease was mainly due to lower revenue in general industrial and solar markets within VSD.
Current wording
For the three months ended March 31, 2025, net revenues in our specialty industrial market decreased by $11 million, or 4%, compared to the prior quarter mainly due to lower chemistry sales in the automotive market at MSD, mainly as a result of seasonal decline due to the Lunar New Year, as well as lower revenue in our general industrial market at VSD and MSD.
Previous wording
Starting in the second quarter of 2024, we changed our basis of reporting geographical net revenues from the location in which the sale originated to the shipped-to location of the end customer. Prior periods have been recast to reflect this change, which was made to better align with how management reviews geographic net revenues.
Current wording
Starting in the second quarter of 2024, we changed our basis of reporting geographical net revenues from the location in which the sale originated to the shipped-to location of the end customer. Prior periods have been recast to reflect this change, which was made to better align with how management reviews geographical net revenues.
Previous wording
A significant portion of our net revenues is from sales to customers in international markets. For the nine months ended September 30, 2024 and 2023, international net revenues accounted for approximately 77% and 75%, respectively, of our total net revenues. A significant portion of our international net revenues was generated from sales to customers in China, South Korea, Japan, Taiwan and Singapore. We expect international net revenues will continue to account for a significant percentage of total net revenues for the foreseeable future.
Current wording
A significant portion of our net revenues is from sales to customers in international markets. For the three months ended March 31, 2025 and 2024, international net revenues accounted for approximately 81% and 75%, respectively, of our total net revenues. A significant portion of our international net revenues was from customers in China, South Korea, Japan, Singapore and Taiwan. We expect international net revenues will continue to account for a significant percentage of total net revenues for the foreseeable future.
Previous wording
Long-lived assets located outside of the United States accounted for approximately 61% and 58% of our total long-lived assets as of September 30, 2024 and December 31, 2023. Long-lived assets include property, plant and equipment, net, right-of-use assets, net and certain other assets.
Current wording
Long-lived assets located outside of the United States accounted for approximately 60% and 59% of our total long-lived assets as of March 31, 2025 and December 31, 2024, respectively. Long-lived assets include property, plant and equipment, net, right-of-use assets, net and certain other assets.
Previous wording
For the nine months ended September 30, 2024, net product revenues decreased $115 million compared to the same period in the prior year as a result of decreases in sales in all three of our end markets. The decrease in product revenues in the semiconductor market was mainly due to volume decreases related to continued softened demand for semiconductor capital equipment related to deposition and etching products at VSD, partially offset by volume increases in sales of our lithography, metrology and inspection products at PSD. The decrease in product revenues in our electronics and packaging market was mainly due to lower equipment sales at MSD. The decrease in product revenues in our specialty industrial market was mainly due to lower solar and general industrial sales at VSD.
Current wording
For the three months ended March 31, 2025, net product revenues increased $65 million compared to the same period in the prior year as a result of increases in sales in the semiconductor and electronics and packaging markets, offset by decreases in sales in our specialty industrial market and the negative impact of foreign currency exchange. The increase in product revenues in the semiconductor market was mainly due to increases in sales in semiconductor capital equipment related to deposition and etching tools for memory applications at VSD. The increase in product revenues in our electronics and packaging market was mainly due to higher PCB via drilling systems sales at PSD. The decrease in product revenues in our specialty industrial market was mainly due to lower chemistry sales in the automotive market at MSD as well as lower revenues in the general industrial market at VSD and MSD and lower revenues across the material processing and spectroscopy markets at PSD.
Previous wording
Net service revenues consisted mainly of fees for services related to the maintenance and repair of our products, sales of spare parts, and installation and training. For the three months ended September 30, 2024, net service revenues increased $3 million compared to the prior quarter mainly in our semiconductor market.
Current wording
Net service revenues consisted mainly of fees for services related to the maintenance and repair of our products, sales of spare parts, and installation and training. For the three months ended March 31, 2025, net service revenues increased $6 million compared to the prior quarter mainly as a result of higher demand in our semiconductor market at VSD.
Previous wording
For the nine months ended September 30, 2024, net service revenues increased $37 million compared to the same period in the prior year primarily due to an increase in net service revenues in our semiconductor market, mainly at VSD, and an increase of net service revenues in our electronics and packaging market, mainly at MSD.
Current wording
For the three months ended March 31, 2025, net service revenues increased $3 million compared to the same period in the prior year primarily due to higher demand in our semiconductor market at VSD, partially offset by lower demand in our electronics and packaging market at PSD and MSD.
Previous wording
For the three months ended September 30, 2024, net revenues from VSD increased $10 million compared to the prior quarter mainly due to volume increases in the semiconductor market. For the nine months ended September 30, 2024, net revenues from VSD decreased $80 million compared to the same period in the prior year mainly due to a decrease in revenues from customers in the semiconductor market as a result of continued softened demand for semiconductor capital equipment in the deposition and etching tool markets.
Current wording
For the three months ended March 31, 2025, net revenues from VSD increased $14 million compared to the prior quarter mainly due to increased product revenues in the semiconductor market as a result of in quarter demand conversion, as well as increased service revenues. For the three months ended March 31, 2025, net revenues from VSD increased $54 million compared to the same period in the prior year mainly due to volume increases in capital equipment sales to the semiconductor market related to strength in logic and foundry applications and planned upgrades to support existing NAND memory production, as well as increased service revenues related to the semiconductor market. This was partially offset by decreases in sales in the specialty industrial market and the negative impact of foreign currency exchange.
Previous wording
For the three months ended September 30, 2024, net revenues from MSD increased $2 million compared to the prior quarter. For the nine months ended September 30, 2024, revenues from MSD decreased $33 million compared to the same period in the prior year primarily due to lower equipment revenue as customers postponed certain investment decisions, and a small decrease in chemistry sales, primarily due to lower palladium prices, which are passed on to our customers, offset by an increase in chemistry volumes.
Current wording
For the three months ended March 31, 2025, net revenues from MSD decreased $13 million compared to the prior quarter mainly due to a decrease in chemistry sales primarily from seasonality related to a slowdown in production as a result of the Lunar New Year. For the three months ended March 31, 2025, revenues from MSD increased $5 million compared to the same period in the prior year mainly due to higher equipment sales in the electronics and packaging market partially offset by lower automotive manufacturing sales and lower palladium prices, which are passed through to our customers, as well as the negative impact of foreign currency exchange.
Previous wording
Gross margin for our services increased for the three months ended September 30, 2024 compared to the prior quarter mainly as a result of favorable product mix partially offset by higher excess and obsolete inventory charges and warranty costs for service parts.
Current wording
Gross profit as a percentage of net services revenues increased by 0.8 percentage points for the three months ended March 31, 2025 compared to the same period in the prior year, primarily due to favorable product mix, partially offset by higher excess and obsolete inventory charges and higher variable compensation.
Previous wording
The following table sets forth gross margin as a percentage of net revenues by reportable segment:
Current wording
The following table sets forth gross profit as a percentage of net revenues by reportable segment:
Previous wording
Gross margin for PSD increased for the three months ended September 30, 2024 compared to the prior quarter primarily due to favorable product mix and lower material costs, partially offset by unfavorable factory utilization. Gross margin for PSD increased for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to higher revenue volumes, lower freight and duty costs and lower excess and obsolete inventory charges, partially offset by unfavorable product mix and lower factory utilization.
Current wording
Gross profit as a percentage of net revenues for VSD increased for the three months ended March 31, 2025 compared to the prior quarter, primarily due to operational efficiencies partially driven by higher revenue volumes, as well as lower material costs and favorable product mix. Gross profit as a percentage of net revenues for VSD increased for the three months ended March 31, 2025 compared to the same period in the prior year, primarily due to higher revenue volumes and favorable overhead absorption partially offset by higher freight and duty costs, and higher excess and obsolete charges.
Previous wording
For the three months ended September 30, 2024, research and development expenses increased $4 million compared to the prior quarter, primarily due to an increase of $4 million in compensation-related costs, including salaries, fringe and variable compensation expenses. Research and development expenses decreased $12 million for the nine months ended September 30, 2024 compared to the same period in the prior year, mainly due to decreases of $7 million in compensation-related costs, including salaries, fringe and variable compensation expenses, $3 million in test equipment and $1 million in project material costs.
Current wording
Research and development expenses increased $5 million for the three months ended March 31, 2025 compared to the prior quarter, mainly due to an increase of $4 million in compensation-related costs, including fringe and variable compensation.
Previous wording
Our research and development efforts are primarily focused on developing and improving our instruments, components, chemistry, subsystems, systems and process control solutions to improve process performance and productivity. We have thousands of products, and our research and development efforts primarily consist of a large number of projects related to these products, none of which is individually material to us. Projects typically have a duration of three to thirty-six months but may be extended for development of new products.
Current wording
Our research and development efforts are primarily focused on developing and improving our instruments, components, chemistry, subsystems, systems and process control solutions to improve process performance and productivity. We have thousands of products, and our research and development efforts primarily consist of a large number of projects related to these products, none of which is individually material. Projects typically have a duration of 3 to 36 months but may be extended for development of new products.
Previous wording
We believe that the continued investment in research and development and ongoing development of new products are essential to the expansion of our markets. We expect to continue to make significant investment in research and development activities. We are subject to risks from products not being developed in a timely manner, as well as from rapidly changing customer requirements and competitive threats from other companies and technologies. Our success primarily depends on our products being designed into new generations of equipment for the semiconductor, electronics and packaging, and specialty industrial markets. We seek to develop products that are technologically advanced so that they are positioned to be chosen for use in each successive generation of semiconductor capital equipment and advanced markets applications. If our products are not chosen to be designed into our customers’ products, our net revenues may be reduced during the lifespan of those products.
Current wording
We believe that the continued investment in research and development and ongoing development of new products are essential to the expansion of our markets. We expect to continue to make significant investment in research and development activities. We are subject to risks from products not being developed in a timely manner, as well as from rapidly changing customer requirements and competitive threats from other companies and technologies. Our success depends on many of our products being designed into new generations of equipment for the semiconductor, electronics and packaging, and specialty industrial markets. We seek to develop products that are technologically advanced so that they are positioned to be chosen for use in each successive generation of semiconductor capital equipment and advanced markets applications. If our products are not chosen to be designed into our customers’ products, our net revenues may be reduced during the lifespan of those products.
Previous wording
For the nine months ended September 30, 2024, selling, general and administrative expenses decreased $16 million compared to the same period in the prior year primarily as a result of decreases of $21 million in compensation-related costs, mainly related to salaries, fringe and variable compensation and $13 million in net costs incurred in the 2023 period as a result of the ransomware event in February 2023, partially offset by increases of $9 million in information technology investments, $6 million in software maintenance and $2 million in consulting and professional fees.
Current wording
Selling, general and administrative expenses increased $9 million for the three months ended March 31, 2025 compared to the prior quarter, primarily due to an increase of $19 million in compensation-related costs mainly related to stock and other variable incentive compensation offset primarily by decreases of $3 million in consulting and professional fees, $3 million in employee travel costs and $1 million in information technology costs.
Previous wording
For the three months ended September 30, 2024, selling, general and administrative expenses increased $6 million, compared to the prior quarter, primarily due to an increase of $6 million in compensation-related costs mainly related to variable compensation.
Current wording
Selling, general and administrative expenses increased $15 million for the three months ended March 31, 2025 compared to the same period in the prior year, primarily due to an increase of $13 million in compensation-related costs mainly related to stock and other variable incentive compensation.
Previous wording
Acquisition and integration costs incurred during the three and nine months ended September 30, 2024 and 2023 were related to consulting and professional fees related to the Atotech Acquisition.
Current wording
Acquisition and integration costs incurred during 2024 were related to consulting and professional fees related to the Atotech Acquisition.
Previous wording
Restructuring and other charges during the three and nine months ended September 30, 2024 and three months ended June 30, 2024, primarily related to severance costs as a result of a global cost-saving initiative implemented in the fourth quarter of 2023. Restructuring and other charges during the nine months ended September 30, 2023 primarily related to severance costs as a result of a global cost-saving initiative implemented in each of the first and second quarters of 2023.
Current wording
Restructuring and other charges during the three months ended March 31, 2025 related to severance costs incurred as a result of a cost saving initiative primarily in the general metals finishing business within MSD implemented in the first quarter of 2025. Restructuring and other charges during the three months ended December 31, 2024 and March 31, 2024, primarily related to severance costs incurred as a result of a global cost-saving initiative implemented in the fourth quarter of 2023.
Previous wording
During the three months ended September 30, 2024, we recorded fees and expenses related to the Fourth Amendment to Credit Agreement, dated as of July 23, 2024, by and among us as parent borrower, the other loan parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and each lender party thereto (the “Fourth Amendment”). During the nine months ended September 30, 2024, we recorded fees and expenses related to the Fourth Amendment and the Second Amendment to Credit Agreement, dated as of January 22, 2024, by and among us as parent borrower, the other loan parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and each lender party thereto (the “Second Amendment”).
Current wording
During the three months ended March 31, 2025, we recorded fees and expenses related to the Fifth Amendment to Credit Agreement, dated as of January 24, 2025, by and among us as parent borrower, the other loan parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and each lender party thereto (the “Fifth Amendment”). During the three months ended March 31, 2024, we recorded fees and expenses related to the incremental loans under the Term Loan Facility (as defined and described further below under “Credit Facilities”) incurred pursuant to the Second Amendment to Credit Agreement, dated as of January 22, 2024, by and among us as parent borrower, the other loan parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and each lender party thereto.
Previous wording
For the three months ended September 30, 2024, interest expense, net decreased $16 million compared to the prior quarter primarily as a result of our entering into the Fourth Amendment, which decreased the applicable margin for both the USD Tranche B loan and the EUR Tranche B loan (each as defined and described further below under “Credit Facilities”) by 0.25%. In addition, in July 2024, we made a voluntary prepayment of $110 million aggregate principal amount of the Term Loan Facility (as defined and described further below under “Credit Facilities”) consisting of $69 million principal amount of the USD Tranche B loan and €38 million principal amount of the Euro Tranche B loan (the “July 2024 Prepayment”).
Current wording
Interest expense, net increased by $1 million for the three months ended March 31, 2025 compared to the prior quarter, primarily as a result of the maturity of favorable interest rate swaps during the quarter, partially offset by the reduction of interest expense due to entering into the Fifth Amendment, which decreased the applicable margin for both the USD Tranche B loan and the EUR Tranche B loan (each as defined and described further below under “Credit Facilities”) by 0.25% and the voluntary prepayment of $100 million principal amount of USD Tranche B loans in January 2025 (“January 2025 Prepayment”).
Previous wording
1.25% and used $1.2 billion of the proceeds to pay down our loans under the Term Loan Facility, which had an interest rate of approximately 7.8%. In addition to the foregoing, interest expense, net for the nine months ended September 30, 2024, was lower as compared to the same period in the prior year as a result of the voluntary prepayments of $100 million in October 2023, $50 million in February 2024 and $50 million in April 2024 on loans under the Term Loan Facility.
Current wording
2024, $50 million in April 2024, $110 million in July 2024, $216 million in October 2024 and $100 million in January 2025 on loans under the Term Loan Facility.
Previous wording
For the three months ended September 30, 2024, in connection with the July 2024 Prepayment and the Fourth Amendment, we recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing and original issue discounts associated with our loans under the Term Loan Facility. For the three months ended June 30, 2024, in connection with the issuance of the Convertible Notes in May 2024, we recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing and original issue discount costs associated with our loans under the Term Loan Facility.
Current wording
For the three months ended March 31, 2025, in connection with the January 2025 Prepayment and the Fifth Amendment, we recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing and original issue discounts associated with our loans under the Term Loan Facility. For the three months ended December 31, 2024, in connection with voluntary prepayments under the Term Loan Facility made in October 2024, we recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing and original issue discount costs. For the three months ended March 31, 2024, in connection with the amendments to our Credit Facilities, (as defined and described further below under “Credit Facilities”) we recorded losses on extinguishment of debt as a result of the acceleration of deferred financing and original issue discount costs.
Previous wording
Other expense (income), net, for the three and nine months ended September 30, 2024, three months ended June 30, 2024 and nine months ended September 30, 2023, consisted primarily of net foreign exchange and fair value gains and losses.
Current wording
Other (income) expense, net for the three months ended March 31, 2025, three months ended December 31, 2024 and three months ended March 31, 2024, consisted primarily of net foreign exchange and fair value gains and losses.
Previous wording
Our effective tax rates for the nine months ended September 30, 2024 and 2023 were 1.2% and 4.1%, respectively. Our effective tax rate for the nine months ended September 30, 2024 was lower than the U.S. statutory tax rate primarily due to the tax benefit related to the earnings mix, increase in the U.S. deduction for FDII and a one-time increase in research and development credits due to filing of prior year amended returns for years 2020 and 2021, partially offset by an expected increase in foreign withholding taxes and a waiver of deductions related to U.S. base erosion payments. Our effective tax rate for the nine months ended September 30, 2023 was lower than the U.S. statutory tax rate primarily due to the tax benefit related to the impairment of intangible assets and various tax credits.
Current wording
Our effective tax rates for the three months ended March 31, 2025, December 31, 2024, and March 31, 2024 were 12.3%, (14.5%), and 23.1%, respectively. Our effective tax rate for the three months ended March 31, 2025 was lower than the U.S. statutory tax rate, mainly due to the U.S. deduction for foreign derived intangible income (“FDII”) and research and development credits, partially offset by an expected increase in foreign withholding taxes and a waiver of deductions related to U.S. base erosion payments. Our effective tax rate for the three months ended December 31, 2024 was lower than the U.S. statutory tax rate primarily due to the U.S. deduction for FDII and valuation allowance release partially offset by the increase in withholding taxes. Our effective tax rate for the three months ended March 31, 2024 was higher than the U.S. statutory tax rate mainly due to an expected increase in foreign withholding taxes and U.S. base erosion and anti-abuse tax, partially offset by the FDII and research and development credits.
Previous wording
Our future effective tax rate depends on various factors, including the impact of tax legislation, further interpretations and guidance from U.S. federal and state governments on the impact of proposed regulations issued by the Internal Revenue Service, further interpretations and guidance from foreign governments, the geographic composition of our pre-tax income, and changes in income tax reserves for unrecognized tax benefits. We monitor these factors and timely adjust our estimates of the effective tax rate accordingly. We expect the Atotech Acquisition will continue to have an unfavorable impact on our effective tax rate as MSD operates primarily in jurisdictions with tax rates higher than the U.S. statutory tax rate. However, the geographic mix of pre-tax income can change based on multiple factors, resulting in changes to the effective tax rate in future periods. While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from our accrued positions as a result of uncertain and complex application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits includes estimates and requires judgment by management. Accordingly, we may record additional provisions or benefits for U.S. federal, state, and foreign tax matters in future periods as new information becomes available.
Current wording
Our future effective tax rate depends on various factors, including the impact of tax legislation, further interpretations and guidance from U.S. federal and state governments on the impact of proposed regulations issued by the Internal Revenue Service, as well as the geographic composition of our pre-tax income and changes in income tax reserves for unrecognized tax benefits. We monitor these factors and timely adjust our estimates of the effective tax rate accordingly. While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from our accrued positions as a result of uncertain and complex application of tax laws and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, we could record additional provisions or benefits for U.S. federal, state, and foreign tax matters in future periods as new information becomes available.
Previous wording
Cash and cash equivalents at September 30, 2024 and December 31, 2023 totaled $861 million and $875 million, respectively. The primary driver in our current and anticipated future cash flows is, and we expect will continue to be, cash generated from operations, consisting primarily of our net income (loss), excluding non-cash charges and changes in operating assets and liabilities. In periods when our sales are growing, higher sales to customers will result in increased trade receivables, and inventories will generally increase as we build products for future sales. This may result in lower cash generated from operations. Conversely, in periods when our sales are declining, our accounts receivable and inventory balances will generally decrease, resulting in increased cash from operations. We believe that our current cash and investments position and available borrowing capacity, together with the cash anticipated to be generated from our future operations, will be sufficient to satisfy our estimated working capital, planned capital expenditure requirements, payments of debt, and any future cash dividends declared by our Board of Directors or share repurchases through at least the next 12 months and the foreseeable future.
Current wording
Cash and cash equivalents at March 31, 2025 and December 31, 2024 totaled $655 million and $714 million, respectively. The primary driver of our current and anticipated future cash flows is, and we expect will continue to be, cash generated from operations, consisting primarily of our net income, excluding non-cash charges and changes in operating assets and liabilities.
Previous wording
Net cash provided by operating activities was $352 million for the nine months ended September 30, 2024, resulting from net income of $99 million, which included non-cash charges of $254 million, mainly the result of $262 million of depreciation and amortization expense and $52 million of loss on extinguishment of debt, partially offset by $168 million in deferred income taxes and a net increase in working capital of $1 million. The net increase in working capital was primarily due to a decrease in accrued compensation of $26 million, a decrease in accounts payable of $21 million and a decrease in other current and non-current liabilities of $28 million. This net increase in working capital was partially offset by increases in income taxes payable of $53 million, other current and non-current assets of $17 million and inventory of $11 million.
Current wording
Net cash provided by operating activities was $141 million for the three months ended March 31, 2025 and resulted from net income of $52 million, which included non-cash charges of $99 million, mainly the result of $85 million in depreciation and amortization, offset by a net increase in working capital of $10 million. The net increase in working capital was primarily due to a decrease in accounts payable of $20 million and increases in trade accounts receivable of $19 million and inventories of $12 million. The net increase in working capital was partially offset by increases in accrued compensation of $17 million and income taxes payable of $12 million, and an increase in other current and non-current assets of $17 million.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
The following table sets forth our net revenues for products and services:
Current report — wording carried from elsewhere
Our total cash and cash equivalents at March 31, 2025 consisted of $106 million held in the United States and $549 million held by our foreign subsidiaries. We believe that our current cash and investments position and available borrowing capacity, together with the cash anticipated to be generated from our operations, will be sufficient to satisfy our estimated working capital, planned capital expenditure requirements, payments of debt, and any future cash dividends declared by our Board of Directors or share repurchases through at least the next 12 months and the foreseeable future.
Current report — wording carried from elsewhere
In periods when our sales are growing, higher sales to customers will result in increased trade receivables, and inventories will generally increase as we build products for future sales. This may result in lower cash generated from operations. Conversely, in periods when our sales are declining, our trade accounts receivable and inventory balances will generally decrease, resulting in increased cash from operations.
Current report — wording carried from elsewhere
As of March 31, 2025, borrowings under the Credit Facilities bore interest at a rate per annum equal to, at our option, any of the following, plus, in each case, an applicable margin: (a) with respect to the USD Tranche B and the Revolving Facility, (x)
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Our effective tax rates for the three months ended September 30, 2024 and June 30, 2024 were (4.0)% and (3.6%), respectively. Our effective tax rates for the three months ended September 30, 2024 and June 30, 2024 were lower than the U.S. statutory tax rate primarily due to the tax benefit related to the earnings mix, an increase in the U.S. deduction for foreign derived intangibles income (“FDII”) and a one-time increase in research and development credits due to the filing of prior year amended returns for 2020 and 2021, partially offset by an expected increase in foreign withholding taxes and a waiver of deductions related to U.S. base erosion payments.