VEECO INSTRUMENTS INC

Previous wording

The Semiconductor industry has historically been cyclical based on fluctuations in global chip demand and production capacity. Sales in the Semiconductor industry declined in 2023 to approximately $550 billion dollars after several years of growth following the pandemic. Looking ahead, industry analysts are forecasting long-term growth of the industry, driven by secular growth trends such as artificial intelligence, high-performance computing, mobile connectivity, and the electrification of the automotive industry. Additionally, government investments in the Semiconductor industry are expected to accelerate spending globally in next-generation technologies.

Current wording

The Semiconductor industry has historically been cyclical based on fluctuations in global chip demand and production capacity. Sales in the Semiconductor industry declined in 2023 to approximately $550 billion dollars after several years of growth following the pandemic. Looking ahead, industry analysts are forecasting long-term growth of the industry, driven by secular growth trends such as artificial intelligence, high-performance computing, mobile connectivity, and the electrification of the automotive industry. Additionally, government investments in the Semiconductor industry are projected to accelerate global spending in next-generation technologies.

Previous wording

Growth in the Semiconductor industry, coupled with increasing technological complexity of Semiconductor chips, are expected to drive long-term growth in Wafer Fab Equipment (“WFE”) spending. In an effort to improve chip performance and reduce costs, today’s most advanced Semiconductor manufacturers are shrinking device geometries, investing in more complex device designs such as Gate-All-Around and backside power delivery and exploring 3D architectures. As a result, growth of the WFE market is forecasted to keep pace with long-term growth of the Semiconductor industry, which we believe should benefit semiconductor capital equipment providers, including Veeco.

Current wording

Growth in the Semiconductor industry, coupled with increasing technological complexity of Semiconductor chips, are expected to drive long-term growth in Wafer Fab Equipment (“WFE”) spending. In an effort to improve chip performance, optimize power consumption, and reduce costs, today’s most advanced Semiconductor manufacturers are shrinking device geometries, investing in more complex transistor designs such as Gate-All-Around with backside power delivery and exploring 3D architectures. As a result, growth of the WFE market is forecasted to keep pace with long-term growth of the Semiconductor industry, which we believe should benefit semiconductor capital equipment providers, including Veeco.

Previous wording

Our strategy of investing in advanced logic and memory has enabled our Semiconductor business to outperform WFE growth for 3 consecutive years. Veeco technologies are at the forefront of enabling new technical innovations in the manufacture of high performance AI chips and High-Bandwidth Memory (“HBM”). We continue to invest in new technologies to expand our Served Available Market (“SAM”) to a broad range of new applications.

Current wording

Our strategy of investing in advanced logic and memory has enabled our Semiconductor business to outperform WFE growth for 3 consecutive years. Veeco’s technologies are at the forefront of enabling new technical innovations in the manufacture of high-performance AI chips and High-Bandwidth Memory (“HBM”). We continue to invest in new technologies to expand our Served Available Market (“SAM”) to a broad range of new applications.

Previous wording

Semiconductor revenue increased by 3% in the second quarter 2024 from the comparable prior year period, comprising 63% of total revenue. This increase was led by record Laser Annealing revenue. Our laser annealing solutions continue to gain share in advanced nodes in logic, highlighted by recent wins at both new and existing customers. In 2023, we won business with a new Tier 1 logic customer for advanced anneal applications and shipped multiple systems to this customer. In the first quarter of 2024, we received a multi-tool laser annealing order from a leading edge logic foundry for their 2nm gate-all-around process. In the second quarter of 2024, we shipped and received Laser Spike Annealing (“LSA”) orders for another leading logic customers’ gate-all-around process. In the memory market, a Tier 1 memory customer placed several LSA orders for high volume production of HBM and advanced DRAM devices following a successful evaluation program, and we’ve shipped multiple systems to this customer. While our growth strategy is predominately focused on advanced node logic and memory, we continue to see strong demand for mature node applications predominantly in China driven by new greenfield fabs and capacity additions.

Current wording

Semiconductor revenue increased by 26% in the third quarter 2024 from the comparable prior year period, comprising 67% of total revenue. This increase was driven by leading-edge foundry logic customers across several product lines. Our laser annealing solutions continue to gain acceptance at advanced logic nodes, highlighted by recent order activity involving both new and existing customers. In 2023, we received orders from a new Tier 1 logic customer for advanced anneal applications and have continued to ship systems to this customer in 2024. Also in 2024, we’ve shipped systems to, and received laser annealing orders from, several leading-edge logic customers, including shipments and orders for customers’ Gate-All-Around processes. In the memory market, we continue to ship systems to a Tier 1 customer for high volume production of HBM and advanced DRAM devices. While our growth strategy is predominately focused on advanced node logic and memory, LSA shipments to mature node customers have increased in 2023 and 2024 versus prior years, predominantly driven by new greenfield fabs and capacity additions in China.

Previous wording

We achieved a significant milestone in the fourth quarter of 2023 when we shipped two next generation laser annealing systems to tier 1 foundry and logic customers for evaluation. This next generation system, the NSA500, covers the nano-second annealing regime and complements our Laser Spike Annealing product. This new system is part of our continued effort to enable our customer’s product roadmap by providing innovative annealing solutions. Nanosecond annealing provides Veeco with an opportunity to expand our laser annealing SAM for new advanced node logic and memory applications, including Gate-All-Around, 3D devices, and backside power delivery.

Current wording

We achieved a significant milestone in the fourth quarter of 2023 by shipping two next generation laser annealing systems to Tier 1 foundry and logic customers for evaluation. This next generation system, the NSA500, covers the nano-second annealing regime and complements our LSA product. This new system is part of our continued effort to enable our customers’ product roadmap by providing innovative annealing solutions. Nanosecond annealing provides Veeco with an opportunity to expand our laser annealing SAM for new advanced node logic and memory applications, including low thermal budget anneals for: Gate-All-Around transistors, advanced 3D devices and for backside power delivery.

Previous wording

The ongoing adoption of EUV Lithography for advanced node semiconductor manufacturing continues to drive demand for our Ion Beam deposition system for mask blanks - the IBD-LDD. Our product roadmap is well positioned as the industry adopts next-generation High-NA EUV lithography. We are also working toward expanding our EUV related business to new mask blank applications.

Current wording

The ongoing adoption of EUV Lithography for advanced node semiconductor manufacturing continues to drive demand for our Ion Beam Deposition system for mask blanks, the IBD-EUV. Leading logic and memory customers expect EUV and High-NA lithography to be integral to their future roadmaps, which our Ion Beam Deposition technology is a key enabler of. Our product roadmap is well positioned as the industry adopts next-generation High-NA EUV lithography, and we’re expanding to our EUV related business to new mask blank applications.

Previous wording

We achieved another significant milestone in the fourth quarter of 2023 upon shipment of our new Ion Beam Deposition “IBD300” system to two leading memory customers for evaluation. Our IBD300 system provides Veeco with another opportunity to expand our SAM to advanced node applications where low resistance films are critical. These initial systems are being evaluated for advanced memory applications such as DRAM bitline.

Current wording

We achieved another significant milestone in the fourth quarter of 2023 by shipping our new Ion Beam Deposition “IBD300” system to two leading memory customers for evaluation. Our IBD300 system provides Veeco with another opportunity to expand our SAM to advanced node applications where low resistance films are critical. These initial systems are being evaluated for advanced memory applications, such as DRAM bitline.

Previous wording

Additionally, our Wet Processing systems are used for Advanced Packaging applications, including 3D packaging technologies, and we continue to see strong demand for HBM. Our Advanced Packaging lithography systems are used for packaging approaches such as fan out wafer level packaging and other advanced packaging applications. Given our revenue to date, current backlog and visibility, we expect Semiconductor revenue to grow in 2024.

Current wording

In Advanced Packaging, our Wet Processing systems are used for several applications, and we continue to see strong demand driven by Heterogenous Integration and 3D Packaging for AI. We recently announced over $50 million in orders for our Wet Processing systems from a leading foundry, a HBM manufacturer, and OSATs. Our Advanced Packaging lithography systems are used for packaging applications such as fan out wafer level packaging and other advanced packaging solutions. After two years of slow order activity driven by consumer markets, we’re beginning to see an increase in quoting and order activity from IDM’s, foundries, and OSAT’s driven by capacity expansions for AI and mobile markets.

Previous wording

We address the Compound Semiconductor market with a broad portfolio of technologies, including Wet Processing, MOCVD, MBE and Ion Beam, for Power Electronics, Photonics, and 5G RF applications. Sales in the Compound Semiconductor market declined in the second quarter 2024 from the comparable prior year period. Looking ahead, we’re focused on long-term growth opportunities within Power Electronics and Photonics, and expect revenue in the Compound Semiconductor market to be flat to down in 2024. We address the Data Storage market with sales of our Ion Beam Deposition technology. Demand for our Ion Beam products is driven by demand for cloud-based storage, and sales increased in the second quarter 2024 from the comparable prior year period. We expect revenue in the Data Storage market to be flat to up in 2024. Sales in the Scientific & Other market are largely driven by sales to governments, universities, and research institutions. We address the Scientific & Other market with several technologies, including MBE, ALD, MOCVD, Wet Processing, and IBD/IBE, which support scientific, optical coating and other applications, and sales in this market declined in the second quarter 2024 from the comparable prior year period. We expect revenue in the Scientific and Other market to remain flat in 2024.

Current wording

We address the Compound Semiconductor market with a broad portfolio of technologies, including Wet Processing, MOCVD, MBE and Ion Beam, for Power Electronics, Photonics, and 5G RF applications. Sales in the Compound Semiconductor market declined in the third quarter of 2024 from the comparable prior year period. We expect revenue in the Compound Semiconductor market to be down in 2024. Looking ahead, in the SiC market, the slowdown in EV adoption has weakened demand as some customers continue their transition to 200mm production. In GaN Power, emerging use cases have driven some traditional silicon power electronics manufacturers to consider adoption of GaN at 300mm, and we’re also seeing opportunities in photonics in areas such as solar and MicroLEDs. We address the Data Storage market with sales of our Ion Beam technology. Demand for our Ion Beam products is driven by demand for cloud-based storage. Compared to 2023, we expect revenue from our Data Storage products to be up in 2024 as we execute planned shipments in our backlog. Looking ahead, while customer utilizations are improving, they remain well below peak levels from a few years ago and customers are not investing to expand capacity in 2025. As a result, we expect an approximate $70 million reduction in revenue in our Data Storage business in 2025. Sales in the Scientific & Other market are largely driven by sales to governments, universities, and research institutions. We address the Scientific & Other market with several technologies, including MBE, ALD, MOCVD, Wet Processing, and IBD/IBE, which support scientific, optical coating and other applications, and sales in this market declined in the third quarter 2024 from the comparable prior year period. We expect revenue in the Scientific & Other market to be flat to down in 2024.

Previous wording

Sales increased for the three months ended June 30, 2024 against the comparable prior year period driven by sales in the Data Storage and Semiconductor markets, partially offset by decreases in sales in the Compound Semiconductor, and Scientific & Other markets. By geography, sales increased in the China, United States, and EMEA regions, partially offset by decreases in the Rest of APAC region. Sales in the Rest of APAC region for the three months ended June 30, 2024 included sales in Taiwan and Japan of $21.0 million, and $8.8 million respectively. Sales in the Rest of APAC region for the three months ended June 30, 2023 included sales in Singapore, Taiwan, and Japan of $22.9 million, $16.1 million, and $12.5 million respectively. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies. In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate.

Current wording

and Data Storage markets. By geography, sales increased in the China and the Rest of APAC region, partially offset by decreases in the EMEA region. Sales in the Rest of APAC region for the three months ended September 30, 2024 included sales in Taiwan and Japan of $49.9 million, and $4.0 million respectively. Sales in the Rest of APAC region for the three months ended September 30, 2023 included sales in Japan and Taiwan of $29.5 million, and $12.3 million respectively. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies. In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate.

Previous wording

For the six months ended June 30, 2024, gross profit increased against the comparable prior period primarily due to an increase in sales volume and increased gross margins. Gross margin increased principally due to higher volume and favorable product mix of sales partially offset by higher service costs. We expect our gross margins to fluctuate each period due to product mix and other factors.

Current wording

For the three months ended September 30, 2024, gross profit increased against the comparable prior period primarily due to an increase in sales volume, with gross margins remaining consistent. We expect our gross margins to fluctuate each period due to product mix and other factors.

Previous wording

Selling, general, and administrative expenses increased for the three months ended June 30, 2024 against the comparable prior period primarily due to higher variable expenses associated with the increase in revenue and profitability. However, expenses as a percentage of revenue are slightly down when compared to the comparable prior year period.

Current wording

Selling, general, and administrative expenses increased for the three months ended September 30, 2024 against the comparable prior period primarily due to higher variable expenses associated with the increase in revenue and profitability.

Previous wording

Amortization expense decreased compared to the comparable prior year period primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets.

Current wording

Amortization expense decreased compared to the comparable prior year period primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets, as well as certain other intangible assets becoming fully amortized.

Previous wording

We recorded net interest income of $0.3 million for the three months ended June 30, 2024, compared to net interest expense of $0.6 million for the comparable prior year period. The increase in net interest income was primarily due to higher interest rates for the three months ended June 30, 2024, against the comparable prior year period.

Current wording

We recorded net interest income of $0.3 million for the three months ended September 30, 2024, compared to net interest income of $0.2 million for the comparable prior year period. The increase in net interest income was primarily due to higher interest rates for the three months ended September 30, 2024, against the comparable prior year period.

Previous wording

At the end of each interim reporting period, we estimate the effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. Our tax expense for the six months ended June 30, 2024 was $3.0 million, compared to $1.5 million for the comparable prior period. For the six months ended June 30, 2024, the effective tax rate was favorably impacted by the tax benefits related to Foreign-Derived Intangible Income and research and development tax credits. Additionally, the effective tax rate was also lower than the U.S. statutory tax rate primarily relating to a discrete income tax benefit for share-based compensation windfall. For the six months ended June 30, 2023, we incurred income tax expense primarily related to pre-tax income from operations excluding the loss on extinguishment of the 2025 and 2027 Notes. Pursuant to Section 249 limitation on losses from extinguishment of convertible notes, we recognized a benefit of $0.9 million with this loss for the six months ended June 30, 2023.

Current wording

Our tax expense for the three months ended September 30, 2024, was $2.7 million, compared to $2.1 million of tax benefit for the comparable prior period. For the three months ended September 30, 2024, the effective tax rate was lower than the U.S. statutory tax rate primarily relating to tax benefits related to Foreign-Derived Intangible Income and research and development tax credits. For the three months ended September 30, 2023, the Company’s income tax benefit primarily consists of a $2.0 million tax benefit associated with the previously unrecognized research and development tax credits recognized upon completion of the Company’s study, as well as tax benefits related to Foreign-Derived Intangible Income and research and development tax credits, partially offset by tax expense related to pre-tax income from operations.

Previous wording

Sales increased for the six months ended June 30, 2024 against the comparable prior year period in the Semiconductor and Data Storage markets, partially offset by an decrease in the Compound Semiconductor, and Scientific & Other markets. By geography, sales increased in the Rest of APAC, China, and United States regions, partially offset by an decrease in the EMEA region. Sales in the Rest of APAC region for the six months ended June 30, 2024 included sales in Japan and Taiwan of $41.8 million and $40.3 million respectively. Sales in the Rest of APAC region for the six months ended June 30, 2023 included sales in Taiwan, Singapore, Japan, and Thailand of $34.1 million, $25.8 million, $16.9 million, and $10.4 million respectively. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies. In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate.

Current wording

Sales increased for the nine months ended September 30, 2024 against the comparable prior year period in the Semiconductor and Data Storage markets, partially offset by a decrease in the Compound Semiconductor, and Scientific & Other markets. By geography, sales increased in the Rest of APAC, China, and United States regions, partially offset by a decrease in the EMEA region. Sales in the Rest of APAC region for the nine months ended September 30, 2024 included sales in Taiwan and Japan of $90.2 million and $45.8 million respectively. Sales in the Rest of APAC region for the nine months ended September 30, 2023 included sales in Taiwan, Japan, Singapore, and Thailand of $46.4 million, $46.4 million, $30.0 million, and $11.4 million respectively. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies. In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate.

Previous wording

For the three months ended June 30, 2024, gross profit increased against the comparable prior period primarily due to an increase in sales volume and increased gross margins. Gross margin increased principally due to higher volume partially offset by higher service costs. We expect our gross margins to fluctuate each period due to product mix and other factors.

Current wording

For the nine months ended September 30, 2024, gross profit increased against the comparable prior period primarily due to an increase in sales volume and increased gross margins. Gross margin increased principally due to higher volume partially offset by higher service costs. We expect our gross margins to fluctuate each period due to product mix and other factors.

Previous wording

The markets we serve are characterized by continuous technological development and product innovation, and we invest in various research and development initiatives to maintain our competitive advantage and achieve our growth objectives. Research and development expenses increased for the six months ended June 30, 2024 against the comparable prior period primarily due to personnel-related expenses as we invest in new research and development and additional applications for our technology in order to be well-positioned to capitalize on emerging global megatrends and support longer term growth in Semiconductor and Compound Semiconductor markets.

Current wording

The markets we serve are characterized by continuous technological development and product innovation, and we invest in various research and development initiatives to maintain our competitive advantage and achieve our growth objectives. Research and development expenses increased for the nine months ended September 30, 2024 against the comparable prior period primarily due to personnel-related expenses as we invest in new research and development and additional applications for our technology in order to be well-positioned to capitalize on emerging global megatrends and support longer term growth in Semiconductor and Compound Semiconductor markets.

Previous wording

Selling, general, and administrative expenses increased for the six months ended June 30, 2024 against the comparable prior period primarily due to higher variable expenses associated with the increase in revenue and profitability. However, expenses as a percentage of revenue are slightly down when compared to the comparable prior year period.

Current wording

Selling, general, and administrative expenses increased for the nine months ended September 30, 2024 against the comparable prior period primarily due to higher variable expenses associated with the increase in revenue and

Previous wording

Amortization expense decreased compared to the comparable prior year period primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets.

Current wording

Amortization expense decreased compared to the comparable prior year period primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets, as well as certain other intangible assets becoming fully amortized.

Previous wording

We recorded net interest income of $1.1 million for the six months ended June 30, 2024, compared to net interest expense of $1.4 million for the comparable prior year period. The increase in net interest income was primarily related to an increase of interest income of approximately $1.9 million due to a higher interest rate environment for the six months ended June 30, 2024, against the comparable prior year period.

Current wording

We recorded net interest income of $1.3 million for the nine months ended September 30, 2024, compared to net interest expense of $1.2 million for the comparable prior year period. The increase in net interest income was primarily related to an increase of interest income of approximately $2.1 million due to a higher interest rate environment for the nine months ended September 30, 2024, against the comparable prior year period.

Previous wording

On May 19, 2023, in connection with the completion of a private offering of $230.0 million aggregate principal amount of 2.875% convertible senior notes, we repurchased and retired approximately $106.0 million in aggregate principal amount of our outstanding 2025 Notes; with a carrying amount of $105.4 million, for approximately $106.0 million of cash and 0.7 million shares of our common stock for the 2025 Notes. Also, we repurchased and retired approximately $100.0 million in aggregate principal amount of our outstanding 2027 Notes; with a carrying amount of $98.5 million, for approximately $92.8 million of cash and 3.8 million shares of our common stock for the 2027 Notes. We accounted for the partial settlement of the 2025 Notes and 2027 Notes as an extinguishment, and as such, recorded a loss on extinguishment of approximately $16.5 million and $80.6 million, respectively, for the six months ended June 30, 2023.* *

Current wording

On May 19, 2023, in connection with the completion of a private offering of $230.0 million aggregate principal amount of 2.875% convertible senior notes, we repurchased and retired approximately $106.0 million in aggregate principal amount of our outstanding 2025 Notes; with a carrying amount of $105.4 million, for approximately $106.0 million of cash and 0.7 million shares of our common stock for the 2025 Notes. Also, we repurchased and retired approximately $100.0 million in aggregate principal amount of our outstanding 2027 Notes; with a carrying amount of $98.5 million, for approximately $92.8 million of cash and 3.8 million shares of our common stock for the 2027 Notes. We accounted for the partial settlement of the 2025 Notes and 2027 Notes as an extinguishment, and as such, recorded a loss on extinguishment of approximately $16.5 million and $80.6 million, respectively, for the nine months ended September 30, 2023.* *

Previous wording

Our income tax expense for the three months ended June 30, 2024 was $2.1 million, compared to $1.3 million for the comparable prior period. For the three months ended June 30, 2024, the effective tax rate was favorably impacted by the tax benefits related to Foreign-Derived Intangible Income and research and development tax credits. Additionally, the effective tax rate was also lower than the U.S. statutory tax rate primarily relating to a discrete income tax benefit for share-based compensation windfall. For the three months ended June 30, 2023, we incurred income tax expense primarily related to pre-tax income from operations excluding the loss on extinguishment of the 2025 and 2027 Notes. Pursuant to Section 249 limitation on losses from extinguishment of convertible notes, we recognized a benefit of $0.9 million associated with this loss for the three months ended June 30, 2023. Additionally, the $1.3 million of income tax expense for the three months ended June 30, 2023 was favorably impacted by the tax benefits related to Foreign-Derived Intangible Income and research and development tax credits.

Current wording

Our tax expense for the nine months ended September 30, 2024, was $5.7 million, compared to $0.5 million of tax benefit for the comparable prior period. For the nine months ended September 30, 2024, the effective tax rate was lower than the U.S. statutory tax rate primarily relating to a discrete income tax benefit for share-based compensation windfall. Additionally, the effective tax rate was also favorably impacted by tax benefits related to Foreign-Derived Intangible Income and research and development tax credits. For the nine months ended September 30, 2023, our income tax benefit primarily consists of a $2.0 million associated with the previously unrecognized research and development tax credits recognized upon completion of our study, a $0.9 million tax benefit associated with the loss on extinguishment of the 2025 and 2027 Notes, as well as tax benefits related to Foreign-Derived Intangible Income, research and development tax credits, and a discrete benefit for share-based compensation windfall. These tax benefits were partially offset by tax expenses attributed to pre-tax income from operations excluding the loss on extinguishment of the 2025 and 2027 Notes.

Previous wording

At June 30, 2024 and December 31, 2023, cash and cash equivalents of $49.5 million and $46.8 million, respectively, were held outside the United States. As of June 30, 2024, we had $25.1 million of accumulated undistributed earnings generated by our non-U.S. subsidiaries for which the U.S. tax has previously been provided. Approximately $8.9 million of undistributed earnings will be subject to foreign withholding taxes if distributed back to the United States and we accrued $0.9 million for foreign withholding taxes for the undistributed earnings.

Current wording

At September 30, 2024 and December 31, 2023, cash and cash equivalents of $38.8 million and $46.8 million, respectively, were held outside the United States. As of September 30, 2024, we had $25.9 million of accumulated undistributed earnings generated by our non-U.S. subsidiaries for which the U.S. tax has previously been provided. Approximately $10.0 million of undistributed earnings will be subject to foreign withholding taxes if distributed back to the United States and we accrued $1.0 million for foreign withholding taxes for the undistributed earnings.

Previous wording

A summary of the cash flow activity for the six months ended June 30, 2024 and 2023 is as follows:

Current wording

A summary of the cash flow activity for the nine months ended September 30, 2024 and 2023 is as follows:

Previous wording

Net cash provided by operating activities was $17.8 million for the six months ended June 30, 2024 and was due to net income of $36.8 million and adjustments for non-cash items of $30.7 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $49.7 million. The changes in operating assets and liabilities were largely attributable to a decrease in contract liabilities and increases in inventories and contract assets, partially offset by a decrease in accounts receivables.

Current wording

Net cash provided by operating activities was $35.4 million for the nine months ended September 30, 2024 and was due to net income of $58.7 million and adjustments for non-cash items of $44.0 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $67.3 million. The changes in operating assets and liabilities were largely attributable to a decrease in contract liabilities and increases in accounts receivables, inventories, and contract assets, partially offset by a increase in accounts payable and accrued expenses.

Previous wording

The cash provided by investing activities during the six months ended June 30, 2024 was primarily attributable to net cash provided by net investment activity and proceeds from the sale of productive assets, partially offset by capital expenditures. The cash provided by investing activities during the six months ended June 30, 2023 was primarily attributable to net investment activity, partially offset by the net cash used in the acquisition of Epiluvac, and capital expenditures.

Current wording

The cash used in investing activities during the nine months ended September 30, 2024 was primarily attributable to net cash used for capital expenditures, and net investment activity, partially offset by proceeds from the sale of productive assets. The cash used in investing activities during the nine months ended September 30, 2023 was primarily attributable to net cash used in acquisition of Epiluvac, and capital expenditures, partially offset by net investment activity.

Previous wording

The cash used in financing activities for the six months ended June 30, 2024 was related to cash used to settle taxes related to employee equity programs and contingent consideration payment related to Epiluvac acquisition, partially offset by cash received under the Employee Stock Purchase Plan. The cash used in financing activities for the six months ended June 30, 2023 was related to the partial repurchase of the 2025 Notes and 2027 Notes, repayment of the 2023 Notes, as well as cash used to settle taxes related to employee equity programs, partially offset by proceeds from issuance of 2029 Notes.

Current wording

The cash used in financing activities for the nine months ended September 30, 2024 was related to cash used to settle taxes related to employee equity programs and contingent consideration payment related to Epiluvac acquisition, partially offset by cash received under the Employee Stock Purchase Plan. The cash used in financing activities for the nine months ended September 30, 2023 was related to the partial repurchase of the 2025 Notes and 2027 Notes, repayment of the 2023 Notes, as well as cash used to settle taxes related to employee equity programs, partially offset by proceeds from issuance of 2029 Notes.

Previous wording

We have $26.5 million outstanding principal balance of 3.50% convertible senior notes that bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, and mature on January 15, 2025, unless earlier purchased by the Company, redeemed, or converted. In addition, we have $25.0 million outstanding principal balance of 3.75% convertible senior notes that bear interest at a rate of 3.75% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2027, unless earlier purchased by the Company, redeemed, or converted. In addition, we have $230.0 million outstanding principal balance of 2.875% convertible senior notes that bear interest at a rate of 2.875% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2029, unless earlier purchased by the Company, redeemed, or converted. The 2025, 2027, and 2029 Notes are all currently convertible by noteholders until September 30, 2024.

Current wording

We have $26.5 million outstanding principal balance of 3.50% convertible senior notes that bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, and mature on January 15, 2025, unless earlier purchased by the Company, redeemed, or converted. In addition, we have $25.0 million outstanding principal balance of 3.75% convertible senior notes that bear interest at a rate of 3.75% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2027, unless earlier purchased by the Company, redeemed, or converted. In addition, we have $230.0 million outstanding principal balance of 2.875% convertible senior notes that bear interest at a rate of 2.875% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2029, unless earlier purchased by the Company, redeemed, or converted. The 2025 and 2027 Notes are currently convertible by noteholders until December 31, 2024. The Company has elected to settle the 2025 Notes using an all-share settlement method upon conversion.

Previous wording

We believe that we have sufficient capital resources and cash flows from operations to support scheduled interest payments on this debt and the scheduled January 2025 principal payment due on the 2025 Notes. In addition, on August 2, 2024, we increased the total funds available to us through our revolving credit facility from $150 million to $225 million. This provides the Company with the ability to meet any cash requirements that may arise as a result of potential conversions of the 2029 Notes, which are convertible by noteholders until September 30, 2024, the principal of which is required to be settled in cash. The Company has no immediate plans to draw down on the facility, which expires in December of 2026. Interest under the facility is variable based on the Company’s secured net leverage ratio and is expected to bear interest based on SOFR plus a range of 150 to 225 basis points, if drawn. There is a yearly commitment fee of 25 to 35 basis points, based on the Company’s secured net leverage ratio, charged on the unused portion of the Facility.

Current wording

We believe that we have sufficient capital resources and cash flows from operations to support scheduled interest payments on this debt. In addition, on August 2, 2024, we increased the total funds available to us through our revolving credit facility from $150 million to $225 million. The Company has no immediate plans to draw down on the facility, which expires in December of 2026. Interest under the facility is variable based on the Company’s secured net leverage ratio and is expected to bear interest based on SOFR plus a range of 150 to 225 basis points, if drawn. There is a yearly commitment fee of 25 to 35 basis points, based on the Company’s secured net leverage ratio, charged on the unused portion of the Facility.