MKS INC

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 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.

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 September 30, 2025 compared to the three months ended June 30, 2025, and the nine months ended September 30, 2025 compared to the nine months ended September 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

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.

Current wording

VSD delivers foundational technology solutions for 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 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.

Current wording

PSD provides a broad range of solutions for semiconductor manufacturing, electronics and packaging, and specialty industrial applications. PSD products include 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

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.

Current wording

For the nine months ended September 30, 2025, net revenues in our semiconductor market increased by $163 million, or 15%, compared to the same period in the prior year. The increase was mainly due to higher sales of our semiconductor capital equipment in logic and foundry applications at VSD, higher NAND memory production upgrades at VSD and higher service revenues, partially offset by decreases in sales in our lithography, metrology and inspection products at PSD.

Previous 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.

Current wording

For the three months ended September 30, 2025, net revenues in our electronics and packaging market increased by $23 million, or 9%, compared to the prior quarter primarily due to higher chemistry and equipment sales in the electronics market at MSD as well as higher sales of PCB via drilling systems at PSD.

Previous 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.

Current wording

For the nine months ended September 30, 2025, net revenues in our electronics and packaging market increased by $140 million, or 21%, compared to the same period in the prior year. This increase was primarily due to higher chemistry and equipment sales in the electronics market at MSD as well as higher sales of PCB via drilling systems at PSD.

Previous 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.

Current wording

For the nine months ended September 30, 2025, net revenues in our specialty industrial market decreased by $57 million, or 6%, compared to the same period in the prior year. This decrease was mainly due to lower chemistry sales to industrial customers at MSD, lower sales to industrial and life and health science customers at PSD, and lower sales to industrial customers at VSD.

Previous 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.

Current wording

A significant portion of our net revenues is from sales to customers in international markets. For the nine months ended September 30, 2025 and 2024, international net revenues accounted for approximately 81% and 77% 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 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.

Current wording

Long-lived assets located outside of the United States accounted for approximately 68% and 59% of our total long-lived assets as of September 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

The following table sets forth our net revenues for products and services:

Current wording

The following table sets forth our net revenues for product and service:

Previous wording

For the three months ended June 30, 2025, net product revenues increased $29 million compared to the prior quarter primarily due to increases in sales in our semiconductor market at VSD, higher chemistry sales in the electronics and packaging and specialty industrial markets at MSD and the favorable impact of foreign currency exchange rates, partially offset by decreases in sales of PCB via drilling systems in the electronics and packaging market at PSD.

Current wording

For the three months ended September 30, 2025, net product revenues increased $12 million compared to the prior quarter primarily due to higher chemistry and equipment sales in the electronics and packaging and specialty industrial markets at MSD, partially offset by lower NAND upgrade sales in the semiconductor market at VSD.

Previous 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.

Current wording

For the nine months ended September 30, 2025, net product revenues increased $227 million compared to the same period in the prior year, primarily as a result of an increase in sales in our semiconductor market at VSD, mainly due to an increase in sales in capital equipment related to strength in logic and foundry applications and upgrades to support existing NAND memory production as well as an increase in sales in our electronics and packaging market, mainly due to higher sales of PCB via drilling systems at PSD and higher equipment and chemistry sales at MSD. The increase in product revenue was partially offset by decreases in sales in our specialty industrial market across all divisions and decreased sales in our lithography, metrology and inspection products 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 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.

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 September 30, 2025, net service revenues increased $3 million compared to the prior quarter mainly as a result of higher demand in our semiconductor market at PSD and electronics and packaging market at MSD.

Previous 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.

Current wording

For the nine months ended September 30, 2025, net service revenues increased $19 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 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.

Current wording

For the three months ended September 30, 2025, net revenues from VSD decreased $21 million compared to the prior quarter mainly due to decreased sales in semiconductor capital equipment driven by reduced demand due to the timing of NAND upgrades. For the nine months ended September 30, 2025, net revenues from VSD increased $167 million compared to the same period in the prior year, mainly due to higher sales of our semiconductor capital equipment in logic and foundry applications, higher NAND memory production upgrades and higher service revenues. This was partially offset by decreases in industrial applications in our specialty industrial market.

Previous 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.

Current wording

For the three months ended September 30, 2025, net revenues from PSD increased $6 million compared to the prior quarter mainly due to higher sales of PCB via drilling systems in our electronics and packaging market. For the nine months ended September 30, 2025, net revenues from PSD decreased $3 million compared to the same period in the prior year, mainly due to lower sales of our lithography, metrology and inspection products in our semiconductor market as well as decreases in sales in life and health sciences and industrial applications in our specialty industrial market, partially offset by higher sales of PCB via drilling systems in our electronics and packaging market.

Previous 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.

Current wording

For the three months ended September 30, 2025, net revenues from MSD increased $30 million compared to the prior quarter mainly due to increased chemistry and equipment sales in our electronics and packaging market. For the nine months ended September 30, 2025, revenues from MSD increased $82 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 sales in our industrial market.

Previous 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.

Current wording

Gross profit as a percentage of net product revenues decreased by 1.1 percentage points for the nine months ended September 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 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.

Current wording

Gross profit as a percentage of net services revenues increased by 0.2 percentage points for the nine months ended September 30, 2025 compared to the same period in the prior year, primarily due to favorable product mix and lower scrap and rework charges offset by higher variable compensation and freight and duty costs.

Previous 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.

Current wording

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

Previous 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.

Current wording

Gross profit as a percentage of net revenues for PSD increased for the three months ended September 30, 2025 compared to the prior quarter, primarily due to favorable product mix and factory utilization as well as lower material costs. Gross profit as a percentage of net revenues for PSD decreased for the nine months ended September 30, 2025 compared to the same period in the prior year, primarily due to higher duty and tariff costs and variable compensation, partially offset by lower excess and obsolete inventory charges.

Previous 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.

Current wording

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

Previous wording

We continue to make product advancements designed to meet our customers’ evolving needs. We have developed, and continue to develop, new products designed to address industry trends, such as the rising demand for more complex hardware architecture related to increasing investments in artificial intelligence, the shrinking of integrated circuit critical dimensions and technology inflections, and, in the flat panel display and solar markets, the transition to larger substrate sizes, which require more advanced processing and process control technology, the continuing drive toward more complex and accurate components and devices within the handset and tablet market, the transition to 5G for both devices and infrastructure, the growth in units and via counts in the high density interconnect PCB drilling market, and the transition from internal combustion to electric vehicles. In addition, we have developed, and continue to develop, products that support the migration to new classes of materials, ultra-thin layers, and 3D structures that are used in small geometry manufacturing. In our chemistry and equipment plating businesses, a majority of our research and development investment supports existing customers’ product improvement needs and their short-term research and development goals, which enables us to pioneer new high-value solutions while limiting commercial risk. Research and development expenses consist primarily of salaries and related expenses for personnel engaged in research and development, fees paid to consultants, material costs for prototypes and other expenses related to the design, development, testing and enhancement of our products.

Current wording

We continue to make product advancements designed to meet our customers’ evolving needs. We have developed, and continue to develop, new products designed to address industry trends, such as the rising demand for more complex hardware architecture related to increasing investments in artificial intelligence, the shrinking of integrated circuit critical dimensions and technology inflections, and, in the flat panel display and solar markets, the transition to larger substrate sizes, which require more advanced processing and process control technology, the continuing drive towards more complex and accurate components and devices within the handset and tablet market, the growth in units and via counts in the high density interconnect PCB drilling market, and the transition from internal combustion to electric vehicles. In addition, we have developed, and continue to develop, products that support the migration to new classes of materials, ultra-thin layers, and 3D structures that are used in small geometry manufacturing. In our chemistry and equipment plating businesses, a majority of our research and development investment supports existing customers’ product improvement needs and their short-term research and development goals, which enables us to pioneer new high-value solutions while limiting commercial risk. Research and development expenses consist primarily of salaries and related expenses for personnel engaged in research and development, fees paid to consultants, material costs for prototypes and other expenses related to the design, development, testing and enhancement of our products.

Previous 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.

Current wording

Selling, general and administrative expenses increased $41 million for the nine months ended September 30, 2025 compared to the same period in the prior year, primarily due to an increase of $46 million in compensation-related costs, mainly related to stock-based and other variable incentive compensation, partially offset by lower costs due to a decrease in headcount, resulting from the global cost saving initiative implemented during the first quarter of 2025.

Previous 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.

Current wording

Restructuring and other charges during the three and nine months ended September 30, 2025 and the three months ended June 30, 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 as well as third party costs supporting other strategic initiatives. Restructuring and other charges during the nine months ended September 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 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”).

Current wording

During the nine months ended September 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 nine 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”) 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”).

Previous 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.

Current wording

Amortization of intangible assets for the three months ended September 30, 2025 increased $1 million compared to the prior quarter. Amortization of intangible assets for the nine months ended September 30, 2025 remained flat compared to the same period in the prior year.

Previous 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.

Current wording

Interest expense, net decreased by $1 million for the three months ended September 30, 2025 compared to the prior quarter, primarily as a result of lower interest rates and outstanding debt balance.

Previous 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

Current wording

Interest expense, net decreased by $62 million for the nine months ended September 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, 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 nine months ended September 30, 2025 as compared to the same period in the prior year, as a result of various voluntary prepayments totaling $426 million in 2024 and $300 million for the nine months ended September 30, 2025, on loans under the Term Loan Facility. The decrease in interest expense, net was partially offset by the maturity of favorable interest rate swaps compared to the same period in the prior year.

Previous 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.

Current wording

For the nine months ended September 30, 2025, we recorded a loss on extinguishment of debt in connection with voluntary prepayments in January 2025, June 2025 and August 2025 as well as the Fifth Amendment. For the nine months ended September 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, the issuance in May 2024 of the Convertible Notes, as defined and described further below under “Credit Facilities”, and the Fourth Amendment as well as voluntary prepayments in February 2024, April 2024 and July 2024. In each period, the loss from voluntary prepayments resulted from the acceleration of deferred financing and original issue discount costs associated with our loans under the Term Loan Facility.

Previous 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.

Current wording

Other expense (income), net for the three and nine months ended September 30, 2025, three months ended June 30, 2025 and nine months ended September 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 June 30, 2025 and March 31, 2025 were 13.6% and 12.3%, respectively. Our effective tax rates for the three months ended June 30, 2025 and March 31, 2025 were 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 foreign withholding taxes and a waiver of deductions related to U.S. base erosion payments.

Current wording

Our effective tax rates for the three months ended September 30, 2025 and June 30, 2025 were 12.3% and 13.6%, respectively. Our effective tax rates for the three months ended September 30, 2025 and June 30, 2025 were 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 tax credits, partially offset by foreign withholding taxes and a waiver of deductions related to U.S. base erosion payments.

Previous 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.

Current wording

Our effective tax rates for the nine months ended September 30, 2025 and 2024 were 12.7% and 1.2%, respectively. Our effective tax rate for the nine months ended September 30, 2025 was lower than the U.S. statutory tax rate mainly due to the U.S. deduction for FDII and research and development tax 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 nine months ended September 30, 2024 was lower than the U.S. statutory tax rate primarily due to a tax benefit related to the earnings mix, an increase in the U.S. deduction for FDII and a one-time increase in research and development tax credits due to the 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.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law. The OBBBA includes significant changes to the U.S. tax code, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing the impact of the OBBBA on our consolidated financial statements.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law. The OBBBA includes changes to the U.S. tax code, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These changes to the U.S. tax code have not had a material impact on our results since the enactment of OBBBA and we do not anticipate these changes to the U.S. tax code will have a material impact on our results in future periods.

Previous 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.

Current wording

Cash and cash equivalents at September 30, 2025 and December 31, 2024 totaled $697 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 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.

Current wording

Our total cash and cash equivalents at September 30, 2025 consisted of $166 million held in the United States and $531 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 needs, 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 $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.

Current wording

Net cash provided by operating activities was $503 million for the nine months ended September 30, 2025 and resulted from net income of $188 million, which included non-cash charges of $240 million, mainly the result of $258 million in depreciation and amortization, partially offset by $125 million in deferred income taxes and a net decrease in working capital of $75 million. The net decrease in working capital was primarily due to increases in accrued compensation of $55 million, accounts payable of $31 million and income taxes payable of $21 million as well as a decrease in accounts receivable of $24 million and other current and non-current assets of $12 million, partially offset by an increase in inventories of $54 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 $45 million for the six months ended June 30, 2025 primarily related to capital expenditures.

Current wording

Net cash used in investing activities was $96 million for the nine months ended September 30, 2025 primarily related to capital expenditures of $98 million.

Previous 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.

Current wording

Net cash used in financing activities was $437 million for the nine months ended September 30, 2025, consisting primarily of normal quarterly debt payments and voluntary debt prepayments that together totaled $338 million, as well as the repurchase of our common stock of $45 million and dividend payments of $44 million.

Previous 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.

Current wording

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