MKS INC

Previous wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding the future financial performance, business prospects and growth of MKS Instruments, Inc. (“MKS,” the “Company,” “our,” or “we”). These statements are only predictions based on current assumptions and expectations. Any statements that are not statements of historical fact (including statements containing the words “will,” “projects,” “intends,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “forecasts,” “continues” and similar expressions) should be considered forward-looking statements. Actual events or results may differ materially from those in the forward-looking statements set forth herein.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding the future financial performance, business prospects and growth of MKS Inc., formerly known as MKS Instruments, Inc. (“MKS,” the “Company,” “our,” or “we”). These statements are only predictions based on current assumptions and expectations. Any statements that are not statements of historical fact (including statements containing the words “will,” “projects,” “intends,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “forecasts,” “continues” and similar expressions) should be considered forward-looking statements. Actual events or results may differ materially from those in the forward-looking statements set forth herein.

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 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.

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 our Quarterly Report on Form 10-Q for the three months ended March 31, 2025 and any subsequent Quarterly Reports on Form 10-Q. We are under …

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 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.

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 June 30, 2025 compared to the three months ended March 31, 2025, and the six months ended June 30, 2025 compared to the six months ended June 30, 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

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 wording

The 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 have implemented contingency plans, including alternative sourcing strategies and supplier diversification, to support supply chain continuity, maintain operational efficiency, and help mitigate potential future impacts.

Previous 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.

Current wording

For the six months ended June 30, 2025, net revenues in our semiconductor market increased by $126 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 at VSD related to strength in logic and foundry applications, upgrades to support existing NAND memory production and increased services revenues.

Previous wording

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 wording

For the three months ended June 30, 2025, net revenues in our electronics and packaging market increased by $13 million, or 5%, compared to the prior quarter primarily due to an increase in chemistry sales in the electronics market at MSD, mainly as a result of seasonally lower sales in the first quarter due to the Lunar New Year, partially offset by lower sales of PCB via drilling systems at PSD. Net revenues were also favorably impacted by foreign currency exchange rates.

Previous wording

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 wording

For the six months ended June 30, 2025, net revenues in our electronics and packaging market increased by $82 million, or 19%, compared to the same period in the prior year. This increase was primarily due to higher sales of PCB via drilling systems at PSD and an increase in both chemistry and equipment sales at MSD.

Previous 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.

Current wording

For the three months ended June 30, 2025, net revenues in our specialty industrial market increased by $5 million, or 2%, compared to the prior quarter mainly due to higher chemistry sales in the automotive market at MSD as a result of seasonally lower sales in the first quarter due to the Lunar New Year, as well as higher revenue in our general industrial market at MSD. Net revenues in the specialty industrial market were also favorably impacted by foreign currency exchange rates.

Previous wording

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 wording

For the six months ended June 30, 2025, net revenues in our specialty industrial market decreased by $53 million, or 9%, compared to the same period in the prior year. This decrease was mainly due to lower chemistry sales in the automotive market at MSD, lower revenues in the general industrial market at VSD and MSD as well as lower revenues across the material processing, metrology and spectroscopy markets at PSD. These decreases were partially offset by higher revenue in the general industrial market at PSD.

Previous 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.

Current wording

A significant portion of our net revenues is from sales to customers in international markets. For the six months ended June 30, 2025 and 2024, international net revenues accounted for approximately 81% and 76% respectively, of our total net revenues. A significant portion of our international net revenues was from customers in China, South Korea, Singapore, Taiwan and Japan. 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 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.

Current wording

Long-lived assets located outside of the United States accounted for approximately 63% and 59% of our total long-lived assets as of June 30, 2025 and December 31, 2024, respectively. Long-lived assets include property, plant and equipment, net, right-of-use assets and certain other assets.

Previous 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.

Current wording

For the six months ended June 30, 2025, net product revenues increased $144 million compared to the same period in the prior year, as a result of increases in sales in our semiconductor and electronics and packaging markets, offset by decreases in sales in our specialty industrial market. The increase in net product revenues in the semiconductor market was mainly due to increases in sales in semiconductor capital equipment at VSD related to strength in logic and foundry applications and upgrades to support existing NAND memory production. The increase in product revenues in our electronics and packaging market was mainly due to higher sales of PCB via drilling systems at PSD and higher equipment and chemistry sales at MSD. 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, metrology 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 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.

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 June 30, 2025, net service revenues increased $8 million compared to the prior quarter mainly as a result of higher demand in our semiconductor market at VSD and the favorable impact of foreign currency exchange rates.

Previous 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.

Current wording

For the six months ended June 30, 2025, net service revenues increased $11 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 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.

Current wording

For the three months ended June 30, 2025, net revenues from VSD increased $21 million compared to the prior quarter mainly due to increased product revenues of our semiconductor capital equipment related to strength in logic and foundry applications and upgrades to support existing NAND memory production, as well as increased service revenues and favorable impacts of foreign currency exchange rates. For the six months ended June 30, 2025, net revenues from VSD increased $125 million compared to the same period in the prior year, mainly due to increased product revenues of our semiconductor capital equipment related to strength in logic and foundry applications, upgrades to support existing NAND memory production and increased service revenues. This was partially offset by decreases in sales in the specialty industrial market.

Previous wording

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 wording

For the three months ended June 30, 2025, net revenues from PSD decreased $20 million compared to the prior quarter mainly due to lower sales of PCB via drilling systems in our electronics and packaging market partially offset by favorable impacts of foreign currency exchange rates. For the six months ended June 30, 2025, net revenues from PSD were flat compared to the same period in the prior year. Decreases in sales in material processing, metrology and spectroscopy within our specialty industrial market, as well as lower sales in the semiconductor market were offset by higher sales of PCB via drilling systems in our electronics and packaging market.

Previous 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.

Current wording

For the three months ended June 30, 2025, net revenues from MSD increased $36 million compared to the prior quarter mainly due to increased chemistry sales in our electronics and packaging market and automotive manufacturing sales in our specialty industrial market, mainly as a result of seasonally lower sales in the first quarter due to the Lunar New Year and favorable impacts of foreign currency exchange rates. For the six months ended June 30, 2025, revenues from MSD increased $30 million compared to the same period in the prior year, mainly due to higher chemistry and equipment sales in our electronics and packaging market partially offset by lower chemistry sales in our automotive manufacturing and general industrial markets as well as lower equipment service revenues in the electronics and packaging market.

Previous wording

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 wording

Gross profit as a percentage of net product revenues decreased by 0.9 percentage points for the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to higher duty and tariff costs and unfavorable product mix, partially offset by higher revenue volumes.

Previous 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.

Current wording

Gross profit as a percentage of net services revenues increased by 1.8 percentage points for the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to lower scrap and variances, favorable product mix, and higher revenue volumes, partially offset by higher duty and tariff costs.

Previous 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.

Current wording

Gross profit as a percentage of net revenues for VSD decreased for the three months ended June 30, 2025 compared to the prior quarter, primarily due to higher duty and tariff costs and unfavorable product mix, partially offset by lower excess and obsolete inventory charges. Gross profit as a percentage of net revenues for VSD increased for the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to higher revenue volumes and favorable factory utilization partially offset by higher duty and tariff costs.

Previous wording

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 wording

Gross profit as a percentage of net revenues for PSD decreased for the three months ended June 30, 2025 compared to the prior quarter, primarily due to higher duty and tariff costs and lower revenue volumes, partially offset by favorable product mix. Gross profit as a percentage of net revenues for PSD decreased for the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to higher duty and tariff costs.

Previous wording

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 wording

Gross profit as a percentage of net revenues for MSD decreased for the three months ended June 30, 2025 compared to the prior quarter, primarily due to unfavorable product mix, partially offset by lower excess and obsolete inventory charges. Gross profit as a percentage of net revenues for MSD decreased for the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to unfavorable product mix and higher excess and obsolete inventory charges.

Previous 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.

Current wording

Research and development expenses increased by $6 million for the three months ended June 30, 2025 compared to the prior quarter, mainly due to an increase of $2 million in compensation-related costs, including fringe and variable compensation, and a $2 million unfavorable impact of foreign currency exchange rates. Research and development expenses increased $9 million for the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to an increase of $10 million in compensation-related costs, including fringe and variable compensation.

Previous 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.

Current wording

Selling, general and administrative expenses decreased $10 million for the three months ended June 30, 2025 compared to the prior quarter, primarily due to a decrease of $10 million in compensation-related costs, mainly related to stock compensation, and $1 million of lower depreciation expense, partially offset by $4 million unfavorable impacts of foreign currency exchange rates.

Previous 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.

Current wording

Selling, general and administrative expenses increased $30 million for the six months ended June 30, 2025 compared to the same period in the prior year, primarily due to an increase of $35 million in compensation-related costs, mainly related to stock and other variable incentive compensation, and an increase of $3 million in information technology costs, partially offset by a decrease of $7 million in consulting and professional fees.

Previous 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.

Current wording

Restructuring and other charges during the three and six months ended June 30, 2025 and the three months ended March 31, 2025 related primarily to severance costs incurred as a result of a global cost saving initiative implemented during the first quarter of 2025, mainly in the general metals finishing business within MSD. Restructuring and other charges during the six months ended June 30, 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 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.

Current wording

During the three months ended March 31, 2025 and six months ended June 30, 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 six months ended June 30, 2024 we recorded fees and expenses related to borrowing additional USD Tranche B and additional Euro Tranche B (each as defined and described further below under “Credit Facilities”) 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 (the “Second Amendment”).

Previous wording

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 wording

Amortization of intangible assets for the three months ended June 30, 2025 increased $2 million compared to the prior quarter. Amortization of intangible assets for the six months ended June 30, 2025 decreased by $1 million compared to the same period in the prior year.

Previous 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”).

Current wording

Interest expense, net increased by $1 million for the three months ended June 30, 2025 compared to the prior quarter, primarily as a result of the maturity of favorable interest rate swaps during the first quarter, partially offset by higher interest income.

Previous wording

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 wording

Interest expense, net decreased by $54 million for the six months ended June 30, 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 six months ended June 30, 2025 as compared to the same period in the prior year, as a result of the voluntary prepayments of $50 million in February 2024, $50 million in April 2024, $110 million in July 2024, $216 million in October 2024, $100 million in January 2025, and

Previous 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.

Current wording

For the three and six months ended June 30, 2025, we recorded a loss on extinguishment of debt in connection with the voluntary prepayment in June 2025. For the three months ended March 31, 2025 and six months ended June 30, 2025, we recorded a loss on extinguishment of debt in connection with the voluntary prepayment in January 2025 and the Fifth Amendment. For the six months ended June 30, 2024, we recorded a loss on extinguishment of debt in connection with the extinguishment of our senior secured tranche A term loans using proceeds from borrowing additional USD Tranche B and additional Euro Tranche B pursuant to the Second Amendment and the issuance in May 2024 of the Convertible Notes, as defined and described further below under “Credit Facilities” as well as voluntary prepayments in February 2024 and April 2024. In each period, the loss resulted from the acceleration of deferred financing and original issue discount costs associated with our loans under the Term Loan Facility.

Previous 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.

Current wording

Other expense (income), net for the three and six months ended June 30, 2025, three months ended March 31, 2025 and six months ended June 30, 2024 consisted primarily of net foreign exchange and fair value gains and losses.

Previous 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.

Current wording

Our effective tax rates for the six months ended June 30, 2025 and 2024 were 13.0% and 8.9%, respectively. Our effective tax rate for the six months ended June 30, 2025 was lower than the U.S. statutory tax rate mainly due to the U.S. deduction for FDII and research and development credits, partially offset by foreign withholding taxes and a waiver of deductions related to U.S. base erosion payments. Our effective tax rate for the six months ended June 30, 2024 was lower than the U.S. statutory tax rate mainly due to the U.S. deduction for FDII and research and development credits, partially offset by an increase in foreign withholding taxes and U.S. base erosion and anti-abuse tax.

Previous wording

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 wording

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 impact of the developing legislation.

Previous 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.

Current wording

Cash and cash equivalents at June 30, 2025 and December 31, 2024 totaled $674 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

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 wording

Our total cash and cash equivalents at June 30, 2025 consisted of $97 million held in the United States and $577 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.

Previous 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.

Current wording

Net cash provided by operating activities was $306 million for the six months ended June 30, 2025 and resulted from net income of $114 million, which included non-cash charges of $175 million, mainly the result of $172 million in depreciation and amortization, partially offset by $80 million in deferred income taxes and a net decrease in working capital of $17 million. The net decrease in working capital was primarily due to increases in accrued compensation of $31 million and income taxes payable of $19 million as well as a decrease of other current and non-current assets of $11 million, partially offset by increases in trade accounts receivable of $10 million and inventories of $24 million as well as a decrease in other current and non-current liabilities of $14 million.

Previous wording

Net cash used in investing activities was $18 million for the three months ended March 31, 2025 related to capital expenditures.

Current wording

Net cash used in investing activities was $45 million for the six months ended June 30, 2025 primarily related to capital expenditures.

Previous wording

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 wording

Net cash used in financing activities was $309 million for the six months ended June 30, 2025, consisting primarily of normal quarterly debt payments and a voluntary debt prepayment that together totaled $225 million, as well as the repurchase of our common stock of $45 million and dividend payments of $30 million.

Previous wording

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 wording

During the six months ended June 30, 2025, we repurchased approximately 546,000 shares of our common stock for total consideration of $45 million. During the three months ended June 30, 2025 and six months ended June 30, 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.