Management’s Discussion and Analysis of Financial Condition and Results of Operations
−Removed: The Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes principal factors affecting the results of our 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 Consolidated Financial Statements, and is intended to better allow investors to view the Company from management’s perspective.
+Added: The Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) 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 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 year ended December 31, 2024 compared to the year ended December 31, 2023.
−Removed: For the discussion and analysis covering the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 14, 2023.
+Added: For the discussion and analysis covering the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 27, 2024.
+Added: 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.
We enable technologies that transform our world.
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Our solutions are also critical to addressing ever-increasing performance requirements across a wide array of specialty industrial applications.
−Removed: Ransomware Event
−Removed: On February 3, 2023, we identified that we had become subject to a ransomware event.
−Removed: We took immediate action to activate our incident response and business continuity protocols to contain the incident, including engaging appropriate incident response professionals and notifying law enforcement authorities.
−Removed: We then initiated the recovery phase, contained the incident, reopened our affected manufacturing and service operations and completed restoration of our information technology (“IT”) systems, including our enterprise resource planning systems.
−Removed: Based on our investigation, we concluded ransomware actors encrypted certain of our systems by deploying malware.
−Removed: This incident required us to temporarily suspend operations at certain of our facilities and had a material impact in the first quarter of 2023 on our ability to process orders, ship products and provide service to our Vacuum Solutions Division (“VSD”) and Photonics Solutions Division (“PSD”) customers.
−Removed: As a result of our inability to fulfill orders, we estimated the ransomware event negatively impacted our revenue in the first quarter of 2023 by approximately $160 million.
−Removed: We recovered substantially all of this revenue in the second and third quarters of 2023, as we shipped orders that were delayed during the first quarter.
−Removed: The incident did not impact the operations of our Materials Solutions Division (“MSD”).
−Removed: We engaged security specialists to assist in the review, assessment and remediation of our IT controls and strengthened access requirements and unauthorized access detection.
−Removed: We also implemented procedures to facilitate more timely restoration of our financial reporting systems.
−Removed: As a result of the ransomware event, we incurred approximately $15 million of net costs for the twelve months ended December 31, 2023.
−Removed: These costs were primarily comprised of various third-party consulting services, including forensic experts, restoration experts, legal counsel, and other IT and accounting professional expenses, enhancements to our cybersecurity measures, costs to restore our systems and access our data, and employee-related expenses, including with respect to increased overtime.
−Removed: We expect to continue to incur these and other costs related to this incident in the future.
−Removed: As a result of the incident, we were previously subject to two lawsuits, and we may be subject to future litigation, investigations, claims or actions, in addition to fines, penalties, or other obligations related to impacted data, whether or not such data is misused.
−Removed: For additional information on the risks we face related to this incident and other cybersecurity incidents, refer to “Risk Factors—Risks Related to Cybersecurity, Data Privacy and Intellectual Property Protection” and “Risk Factors—Legal, Tax, Regulatory and Compliance Risks” in Part I, Item 1A of this Annual Report on Form 10-K.
−Removed: Segments and Markets
−Removed: We have three divisions, which are our reportable segments, known as VSD, PSD and MSD.
−Removed: VSD delivers foundational technology solutions to leading edge semiconductor manufacturing, electronics and packaging and specialty industrial applications.
−Removed: VSD products are derived from our core competencies in pressure measurement and control, flow measurement and control, gas and vapor delivery, gas composition analysis, electronic control technology, reactive gas generation and delivery, power generation and delivery, and vacuum technology.
−Removed: PSD provides a broad range of instruments, components and subsystems to leading edge semiconductor manufacturing, electronics and packaging and specialty industrial applications.
−Removed: PSD products are derived from our core competencies in lasers, photonics, optics, temperature sensing, precision motion control and vibration control.
+Added: We have three divisions, which are our reportable segments:
+Added: Vacuum Solutions Division (“VSD”), Photonics Solutions Division (“PSD”) and Materials Solutions Division (“MSD”).
+Added: VSD delivers foundational technology solutions to semiconductor manufacturing, electronics and packaging and specialty industrial applications.
+Added: 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.
+Added: 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.
+Added: During the quarter ended March 31, 2024, we moved our Optical Sensing Products (“OSP”) product line from the PSD segment to the VSD segment.
+Added: The purpose of this realignment was to better align the OSP products with semiconductor related products within the VSD segment.
+Added: Prior periods have been recast to reflect this change.
MSD develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing.
−Removed: Applying a comprehensive systems-and-solutions approach, MSD's portfolio includes chemistry, equipment, software, and services for innovative and high-technology applications in our electronics and packaging and specialty industrial markets.
−Removed: Since our inception, we have focused on satisfying the needs of our customers by establishing long-term collaborative relationships.
−Removed: We have a diverse base of customers across our primary-served markets, which include semiconductor, electronics and packaging, and specialty industrial.
+Added: Applying a comprehensive systems-and-solutions approach, MSD’s portfolio includes chemistry, equipment and services for innovative and high-technology applications in our electronics and packaging and specialty industrial markets.
+Added: Net Revenues by End Market
Years Ended December 31,
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We believe we are the broadest critical subsystem provider in the wafer fabrication equipment (“WFE”) ecosystem and address over 85% of the market.
−Removed: We have characterized our broad and unique offering as Surround the Wafer to reflect the technology enablement we provide across almost every major process in semiconductor manufacturing today.
+Added: We characterize our broad and unique offering as Surround the Wafer® to reflect the technology enablement we provide across almost every major process in semiconductor manufacturing today.
+Added: The semiconductor market is subject to rapid demand shifts, which are difficult to predict, and we cannot be certain as to the timing or extent of future demand or any future softening in the semiconductor capital equipment industry.
+Added: In addition to these rapid demand shifts, the semiconductor capital equipment industry is subject to significant trade restrictions, especially in China.
Approximately 42% and 41% of our net revenues for 2024 and 2023, respectively, were from sales to customers in the semiconductor market.
−Removed: This decrease was primarily a result of the full-year impact of the Atotech Acquisition, as MSD only sells into our electronics and packaging and specialty industrial markets, as well as an overall decline in revenue from customers in our semiconductor market.
−Removed: Net revenues from customers in our semiconductor market decreased by $562 million, or 28%, in 2023, compared to 2022, due primarily to a decrease of $541 million in VSD given decreased industry spending on deposition and etch equipment for memory applications, particularly NAND, where MKS is a critical solutions provider.
−Removed: In general, the semiconductor capital equipment industry is subject to rapid demand shifts, which are difficult to predict, and we cannot be certain as to the timing or extent of future demand or any future softening in the semiconductor capital equipment industry.
−Removed: In addition to these rapid demand shifts, the semiconductor capital equipment industry is subject to significant trade restrictions.
−Removed: In October 2022, the U.S.
−Removed: Department of Commerce's Bureau of Industry and Security (“BIS”) implemented new and novel restrictions related to end-uses in semiconductor, semiconductor manufacturing, supercomputer, and advanced computing, along with certain equipment used to develop and produce them, as well as controls around the activities of U.S.
−Removed: persons in certain markets, including China.
−Removed: These rules, which BIS amended in October 2023 (as amended, the “BIS Rules”), restrict our direct and indirect sales to U.S.
−Removed: Arms Embargoed Countries, including China and primarily impact our semiconductor market.
−Removed: As a result of the BIS Rules, we estimate our net revenues were reduced by approximately $200 to $250 million in 2023.
+Added: Net revenues from customers in our semiconductor market increased by $19 million, or 1%, in 2024, compared to 2023, due primarily to an increase in sales of our lithography, metrology and inspection products, which we refer to as our World Class Optics portfolio, partially offset by decreased industry spending on deposition and etch equipment for memory applications, particularly NAND, where MKS is a critical solutions provider.
Electronics and Packaging Market
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Our portfolio includes photonics components, laser drilling systems, electronics chemistries and plating equipment that are critical for the manufacturing of PCBs and package substrates, and critical to wafer level packaging (“WLP”) applications.
−Removed: Similar to the semiconductor industry, the
−Removed: PCB, package substrate and WLP industries demand smaller features, greater density, and better performance.
+Added: Similar to the semiconductor industry, the PCB, package substrate and WLP industries demand smaller features, greater density, and better performance.
In addition, the electronics and packaging market also includes sales of our vacuum and photonics solutions for display manufacturing applications.
We characterize our complementary offering of laser systems and chemistry solutions as Optimize the Interconnect®, to reflect the unique technology enablement we provide at the Interconnect level within PCBs, package substrates and WLPs.
−Removed: Approximately 25% and 15% of our net revenues for 2023 and 2022, respectively, were from sales to customers in our electronic and packaging market.
−Removed: This increase was primarily a result of the full-year impact of the Atotech Acquisition, as MSD only sells into our electronics and packaging and specialty industrial markets.
+Added: Approximately 26% and 25% of our net revenues for 2024 and 2023, respectively, were from sales to customers in our electronics and packaging market.
Net revenues from customers in our electronics and packaging market increased by $6 million, or 1%, in 2024 compared to 2023.
−Removed: This increase was driven primarily by the full-year impact of the Atotech Acquisition, with MSD net revenues increasing by $403 million.
−Removed: This increase was primarily offset by a decrease of $26 million in PSD net revenues, in part due to decreased industry demand for flexible PCB via drilling systems as customers have temporarily slowed capacity expansion.
−Removed: In addition, demand for flexible PCB via drilling systems, which are a part of PSD, and demand for chemistry solutions, which are a part of MSD, have softened due to a decline in end market demand for consumer electronics, such as smartphones and personal computers.
+Added: This increase was primarily due to an increase in industry demand for PCB via drilling systems at PSD and an increase in the volume of chemistry materials at MSD, partially offset by a decline in palladium prices for chemistry products, which lower prices are passed through to our customers, and lower equipment revenue at MSD as customers postponed investment decisions.
Specialty Industrial Market
−Removed: MKS’ strategy in specialty industrial is to leverage our domain expertise and proprietary technologies across a broad array of applications in industrial technologies, life and health sciences, and research and defense markets.
−Removed: Industrial Technologies
−Removed: Industrial technologies encompasses a wide range of diverse applications, including chemistries for functional coatings, surface finishing and wear resistance in the automobile industry, vacuum solutions for synthetic diamond manufacturing and photonics for solar manufacturing.
+Added: MKS’ strategy in the specialty industrial market is to leverage our domain expertise and proprietary technologies across a broad array of applications in industrial, life and health sciences, and research and defense markets.
+Added: Industrial encompasses a wide range of diverse applications, including chemistries for functional coatings, surface finishing and wear resistance in the automobile industry, vacuum solutions for synthetic diamond manufacturing and photonics for solar manufacturing.
Other applications include vacuum and photonics solutions for light emitting diode and laser diode manufacturing.
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Approximately 32% and 34% of our net revenues for 2024 and 2023, respectively, were from customers in our specialty industrial market.
−Removed: This increase was primarily a result of the full-year impact of the Atotech Acquisition, as MSD only sells into our electronics and packaging and specialty industrial markets.
−Removed: Net revenues from customers in our specialty industrial market increased by $263 million, or 27%, in 2023, compared to 2022.
−Removed: This increase was driven primarily by the full-year impact of the Atotech Acquisition with MSD net revenues increasing by $286 million offset by decreases of $19 million and $4 million at VSD and PSD, respectively.
+Added: Net revenues from customers in our specialty industrial market decreased by $61 million, or 5%, in 2024, compared to 2023.
+Added: This decrease was driven primarily by lower revenue in the solar, general industrial and material processing markets, mainly within VSD and MSD.
International Markets
+Added: Starting in the second quarter of 2024, we changed our basis of reporting geographical net revenues from the location in which the sale originated to the shipped-to location of the end customer.
+Added: Prior periods have been recast to reflect this change, which was made to better align with how management reviews geographic net revenues.
A significant portion of our net revenues is from sales to customers in international markets.
International net revenues accounted for approximately 78% and 75% of our total net revenues in 2024 and 2023, respectively.
−Removed: A significant portion of our international net revenues was from customers in China, Germany, Japan and South Korea.
−Removed: We expect that international revenues will continue to account for a significant percentage of total net revenues for the foreseeable future.
+Added: A significant portion of our international net revenues was from customers in China, South Korea, Japan, Taiwan and Singapore.
+Added: We expect international net revenues will continue to account for a significant percentage of total net revenues for the foreseeable future.
Long-lived assets located outside of the United States accounted for approximately 59% and 58% of our total long-lived assets as of December 31, 2024 and 2023, respectively.
−Removed: Long-lived assets include property, plant and equipment, net, right-of-use assets, and certain other assets.
+Added: Long-lived assets include property, plant and equipment, net, right-of-use assets, net and certain other assets.
Critical Accounting Policies and Estimates
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The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
−Removed: On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventory, warranty costs, pension plan valuations, stock-based compensation expense, intangible assets, goodwill and other long-lived assets and income taxes.
+Added: On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, inventory valuation, warranty costs, pension plan valuations, stock-based compensation expense, intangible assets, goodwill and long-lived assets, income taxes and derivatives.
We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions.
+Added: For a complete description of our significant accounting policies, see Part II—Item 8 Financial Statements and Supplementary Data, Note 3, “Summary of Significant Accounting Policies”.
We believe the following critical accounting policies affect the most significant judgments, assumptions and estimates we use in preparing our Consolidated Financial Statements:
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For these sales, we use the cost-to-cost input method to measure progress.
−Removed: In cases, where cost-to-cost is not proportionate to our progress in satisfying the performance obligation because of uninstalled materials, we adjust the measure of progress and recognize revenue to the extent of cost incurred to satisfy the performance obligation under the contract.
+Added: In cases, where
+Added: cost-to-cost is not proportionate to our progress in satisfying the performance obligation because of uninstalled materials, we adjust the measure of progress and recognize revenue to the extent of cost incurred to satisfy the performance obligation under the contract.
Revenue from customized products with no alternative future use to us, and that have an enforceable right to payment for performance completed to date, is also recorded over time.
We consider this to be a faithful depiction of the transfer to the customer of revenue over time as the work is performed or service is delivered.
−Removed: Adjustments for custom products were not material for 2023, 2022 or 2021.
+Added: Adjustments for custom products were immaterial in each of the periods presented.
Installation services, other than those related to our plating equipment, are not significant, are usually completed in a short period of time and, therefore, are recorded at a point in time when the installation services are completed, rather than over time, as they are not material.
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These contracts include multiple deliverables that we evaluate to determine if the deliverables are separate performance obligations.
−Removed: Once we determine the performance obligations, we then determine the transaction price, which includes estimating the amount of variable consideration to be included in the
−Removed: transaction price, if any.
+Added: Once we determine the performance obligations, we then determine the transaction price, which includes estimating the amount of variable consideration to be included in the transaction price, if any.
To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method, depending on the method we expect to better predict the amount of consideration to which we will be entitled.
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A significant change in the liquidity or financial position of our customers could have a material adverse impact on the collectability of accounts receivable and our future operating results.
−Removed: Bad debt expense was immaterial in 2023, 2022 and 2021.
+Added: Bad debt expense was immaterial in each period presented.
+Added: Inventory Valuation .
We value our inventory at the lower of cost or net realizable value, cost being determined using a standard costing system that approximates actual costs, based on a first-in, first-out method.
−Removed: We regularly review inventory quantities on hand and record a provision to write-down excess and obsolete inventory to its estimated net realizable value, if less than cost, based primarily on our estimated forecast of product demand.
+Added: We regularly review inventory quantities on hand and record a provision to write-down excess and obsolete inventory to its estimated net realizable value, if less
+Added: than cost, based primarily on our estimated forecast of product demand.
Once our inventory value is written-down and a new cost basis has been established, the inventory value is not increased due to demand increases.
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Excess and obsolete expense was $56 million, $64 million and $21 million for 2024, 2023 and 2022, respectively.
−Removed: The higher excess and obsolete charge in 2023 was partially the result of an inventory write-off related to the discontinuation of a product line and partially the result of reduced forecasted usage.
+Added: The higher excess and obsolete charge in 2023 was partially the result of an inventory write-off related to the discontinuation of a product line in 2023 and partially the result of reduced forecasted usage.
+Added: The higher excess and obsolete charge in 2024 was the result of reduced forecasted usage.
Warranty Costs.
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Defective products will be either repaired or replaced, generally at our option, upon meeting certain criteria.
−Removed: Pension Plans.
+Added: Pension Plan Valuations.
Several of our non-U.S.
subsidiaries have defined benefit pension plans covering employees of those subsidiaries.
+Added: The majority of these defined benefit plans are frozen and do not allow new employees to join the plans.
Some of the plans are unfunded, as permitted under the plans and applicable laws.
For financial reporting purposes, we obtained actuarial reports supporting the calculation of net periodic pension costs that used a number of actuarial assumptions, including a discount rate for plan obligations, an assumed rate of return on pension plan assets, and an assumed rate of compensation increase for employees covered by the various plans.
−Removed: We reviewed these actuarial assumptions and concluded they
−Removed: were reasonable based upon our judgment, considering known trends and uncertainties.
+Added: We reviewed these actuarial assumptions and concluded they were reasonable based upon our judgment, considering known trends and uncertainties.
Actual results that differ from these assumptions would impact future expense recognition and the cash funding requirements of our pension plans.
Stock-Based Compensation Expense.
+Added: Stock-based awards include (i) time-based restricted stock units (“RSUs”), (ii) performance-based RSUs based on the achievement of adjusted EBITDA targets (the “Adjusted EBITDA RSUs”), (iii) performance-based RSUs based on the Company’s total shareholder return relative to a group of peers over a three-year performance period (the “rTSR RSUs”) and (iv) employee stock purchase plan rights.
We record compensation expense for all stock-based compensation awards to employees and directors based upon the estimated fair market value of the underlying instrument.
Accordingly, stock-based compensation cost is measured at the grant date, based upon the fair value of the award.
−Removed: We typically issue restricted stock units (“RSUs”) as stock-based compensation.
−Removed: We also provide certain employees the opportunity to purchase our shares through an Employee Stock Purchase Plan (“ESPP”).
−Removed: For RSUs, the fair value is the closing market price of the stock on the date of grant.
−Removed: We estimate the fair value of shares issued under our ESPP using the Black-Scholes pricing model, which incorporates a number of complex and subjective variables, including expected stock price volatility over the term of the awards, expected life, risk-free interest rate and expected dividends.
−Removed: Management determined that blended stock-based compensation, a combination of historical and implied volatility, is more reflective of market conditions and a better indicator of expected volatility than historical or implied volatility alone.
−Removed: Certain RSUs involve stock to be issued upon the achievement of performance conditions (“performance shares”) under our stock incentive plan.
−Removed: Such performance shares become available, subject to time-based vesting conditions if, and to the extent that, financial performance criteria for the applicable period are achieved.
+Added: We determine the fair value of time-based RSUs based on the closing market price of our common stock on the date of the award.
+Added: We determine the original fair value of Adjusted EBITDA RSUs based upon the closing market price of our stock on the date of the award and adjust the fair value quarterly during the first year based upon actual and forecasted results against Adjusted EBITDA targets.
Accordingly, the number of performance shares earned will vary based on the level of achievement of financial performance objectives for the applicable period.
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Accordingly, share-based compensation expense associated with performance shares may differ significantly from the amount recorded in the current period.
+Added: Such values are recognized as expense using the accelerated graded vesting method for Adjusted EBITDA RSUs, all over the requisite service periods.
+Added: We estimate the fair value of rTSR RSUs using the Monte Carlo simulation model, which requires the use of highly subjective and complex assumptions, including the price volatility of the underlying stock.
+Added: For the rTSR RSUs, the expense computed for the total shareholder return shares is fixed and recognized on a straight-line basis over the vesting period.
+Added: We provide certain employees the opportunity to purchase our shares through an Employee Stock Purchase Plan (“ESPP”).
+Added: We estimate the fair value of shares issued under our ESPP using the Black-Scholes model, which incorporates a number of complex and subjective variables, including expected stock price volatility over the term of the awards, expected life, risk-free interest rate and expected dividends.
+Added: Management determined that blended stock-based compensation, a combination of historical and implied volatility, is more reflective of market conditions and a better indicator of expected volatility than historical or implied volatility alone.
The assumptions used in calculating the fair value of share-based compensation awards represents management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment.
As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future.
−Removed: Intangible Assets, Goodwill and Other Long-Lived Assets .
+Added: Intangible Assets, Goodwill and Long-Lived Assets .
As a result of our acquisitions, we have identified intangible assets and generated significant goodwill.
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We make every effort to forecast these future cash flows as accurately as possible with the information available at the time the forecast is developed.
−Removed: During the quarter ended June 30, 2023, as a result of softer industry demand, particularly in the personal computer and smartphone markets, we concluded there was a triggering event at our Electronics (“EL”) and general metal finishing (“GMF”) reporting units, which together constitute MSD, and our Equipment Solutions Business (“ESB”) reporting unit of PSD.
−Removed: We concluded there was no triggering event at our other reporting units within VSD and PSD.
−Removed: For the EL, GMF and ESB reporting units, we performed a quantitative assessment of goodwill using a combination of a market approach and the income approach.
−Removed: This quantitative assessment resulted in a non-cash goodwill impairment of $826 million for the EL reporting unit, $428 million for the GMF reporting unit and $372 million for the ESB reporting unit.
−Removed: In addition, we recorded a $49 million impairment of in-process research and development (“IPR&D”) allocated to the EL reporting unit and a $152 million impairment related to completed technology allocated to the ESB reporting unit.
In performing our annual goodwill impairment test, we are permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying amount, including goodwill.
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If the fair value is less than the carrying amount, a goodwill impairment loss is measured and recorded.
+Added: As of October 31, 2024, we performed our annual impairment assessment of goodwill using a qualitative assessment for all of our reporting units.
+Added: We determined that it was more likely than not that the fair values were more than the carrying values for each of the reporting units.
+Added: During the quarter ended June 30, 2023, as a result of softer industry demand, particularly in the personal computer and smartphone markets, we concluded there was a triggering event at our Electronics (“EL”) and general metal finishing (“GMF”) reporting units, which together constitute MSD, and our Equipment Solutions Business (“ESB”) reporting unit of PSD.
+Added: We concluded there was no triggering event at our other reporting units within VSD and PSD.
+Added: For the EL, GMF and ESB reporting units, we performed a quantitative assessment of goodwill using a combination of a market approach and the income approach.
+Added: This quantitative assessment resulted in a non-cash goodwill impairment of $826 million for the EL reporting unit, $428 million for the GMF reporting unit and $372 million for the ESB reporting unit.
+Added: In addition, we recorded a $49 million impairment of in-process research and development (“IPR&D”) allocated to the EL reporting unit and a $152 million impairment related to completed technology allocated to the ESB reporting unit.
As of October 31, 2023, we performed our annual impairment assessment of goodwill by bypassing the qualitative assessment and using a quantitative assessment for all of our reporting units.
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We record a valuation allowance to reduce our net deferred tax assets to the amount that is expected to be realized.
−Removed: To the extent we establish a valuation allowance, an expense is recorded within the provision for income taxes line in the consolidated statements of operations and comprehensive (loss) income.
+Added: To the extent we establish a valuation allowance, or determine that a valuation allowance is no longer needed, an expense or benefit is recorded within the provision for income taxes line in the consolidated statements of operations and comprehensive (loss) income.
+Added: We are subject to the income tax laws and regulations of the many jurisdictions in which we operate.
+Added: These tax laws and regulations are complex and involve uncertainties in the application to our facts and circumstances that may be open to interpretation.
Accounting for income taxes requires a two-step approach to recognize and measure uncertain tax positions.
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The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
−Removed: We re-evaluate these uncertain tax positions on a quarterly basis.
−Removed: This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity.
+Added: This process is inherently subjective since it requires our assessment of the probability of future outcomes.
+Added: We re-evaluate these uncertain tax positions on a quarterly basis based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity.
Any change in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.
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We do not enter into derivative instruments for trading or speculative purposes.
−Removed: We have used derivative instruments, such as foreign exchange forward contracts and options, to manage certain foreign currency exposure, and interest rate swaps and interest rate caps to manage certain interest rate exposure.
+Added: We have used derivative instruments, such as foreign exchange forward contracts, options and net investment hedges, to manage certain foreign currency exposure, and interest rate swaps and interest rate caps to manage certain interest rate exposure.
Changes in fair value of derivative instruments are recognized in the consolidated statement of operations or, if hedge accounting is applied, in Other Comprehensive (Loss) Income (“OCI”) for the effective portion of the changes in fair value.
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All derivatives are stated at fair value in the consolidated balance sheets.
−Removed: Accounting principles for qualifying hedges require detailed documentation that describes the relationship between the hedging instrument and the hedged item, including, but not limited to, the risk management objectives and hedging strategy and
−Removed: the methods to assess the effectiveness of the hedging relationship.
+Added: Accounting principles for qualifying hedges require detailed documentation that describes the relationship between the hedging instrument and the hedged item, including, but not limited to, the risk management objectives and hedging strategy and the methods to assess the effectiveness of the hedging relationship.
We assess the hedging relationships, both at the inception of the hedge and on an ongoing basis, using either the critical terms matching approach or a regression analysis approach to determine whether the designated hedging instrument is highly effective in offsetting changes in the value of the hedged item.
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Results of Operations
−Removed: The following table sets forth, for the periods indicated, the percentage of total net revenues of certain line items included in our consolidated statements of operations and comprehensive (loss) income data:
+Added: The following table sets forth, for the periods indicated, the percentage of total net revenues of certain line items included in our consolidated statements of operations and comprehensive income (loss) data:
Years Ended December 31,
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Cost of revenues:
+Added: Cost of product revenues
+Added: Cost of service revenues
Total cost of revenues (exclusive of amortization shown separately below)
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Acquisition and integration costs
−Removed: Restructuring
−Removed: Fees and expenses related to repricing of Term Loan Facility
+Added: Restructuring and other
+Added: Fees and expenses related to amendments to the Term Loan Facility
Amortization of intangible assets
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Gain on sale of long-lived assets
−Removed: (Loss) income from operations
+Added: Income (loss) from operations
Interest income
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Loss on extinguishment of debt
−Removed: Other expense, net
−Removed: (Loss) income before income taxes
−Removed: (Benefit) provision for income taxes
−Removed: Net (loss) income
+Added: Other (income) expense, net
+Added: Income (loss) before income taxes
+Added: Provision (benefit) for income taxes
+Added: Net income (loss)
Year Ended December 31, 2024 compared to 2023
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Total net revenues
−Removed: Net product revenues increased $81 million in 2023, compared to 2022, primarily driven by the full-year impact of the Atotech Acquisition with MSD net product revenues increasing by $668 million compared to 2022, partially offset by decreases in VSD and PSD product revenues of $533 million and $52 million, respectively.
−Removed: VSD and PSD net product revenues were negatively impacted by volume decreases as a result of softening demand in our semiconductor and electronics and packaging markets.
+Added: Net product revenues decreased $76 million in 2024, compared to 2023, primarily driven by a decrease of $63 million in net product revenues from our specialty industrial market mainly due to lower solar, general industrial, and material processing sales and a decrease of $12 million in net product revenues from our electronics and packaging market, primarily due to lower equipment revenues at MSD as customers postponed investment decisions and also as a result of lower palladium prices for chemistry products which lower prices are passed through to our customers in our electronics component business at MSD, partially offset by volume increases in chemistry materials.
+Added: The decrease in our electronics and packaging market was partially offset by an increase in industry demand for PCB via drilling systems at PSD and an increase in the volume of chemistry materials at MSD.
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.
−Removed: Net service revenues decreased $6 million in 2023, compared to 2022, primarily due to a decrease in VSD net service revenues of $28 million partially offset by the full-year impact of the Atotech Acquisition with MSD net service revenues increasing by $22 million.
−Removed: The decrease in VSD net service revenues was a result of decreases in sales to customers in our semiconductor market.
+Added: Net service revenues increased $40 million in 2024, compared to 2023, primarily due to an increase in net service revenues in our semiconductor market, mainly at VSD, and an increase of net service revenues in our electronics and packaging market, mainly at PSD and MSD.
Total international net revenues, including product and service, were $2.8 billion in 2024, compared to $2.7 billion in 2023.
−Removed: The increase in 2023 was primarily driven by the full-year impact of the Atotech Acquisition.
−Removed: The increase in international net revenues was primarily from increases in sales to customers in China, India and Japan.
The following table sets forth our net revenues by reportable segment:
5 unchanged sentences
Total net revenues
−Removed: Net revenues for our VSD segment decreased $562 million in 2023, compared to 2022, which was largely reflective of volume decreases in the semiconductor market.
−Removed: Net revenues for our PSD segment decreased $52 million in 2023, compared to 2022, partially due to volume decreases in the semiconductor market and partially due to decreases in net revenues in the electronics and packaging market caused by decreased industry demand for flexible PCB via drilling equipment as a result of softened demand for electronics, such as personal computers, data center servers and smartphones.
−Removed: Net revenues for our MSD segment increased $689 million in 2023 compared to 2022, primarily due to the full-year impact of the Atotech Acquisition.
+Added: Net revenues for our VSD segment decreased $56 million in 2024, compared to 2023, mainly due to a decrease in revenues from customers in the specialty industrial market, as a result of lower solar and general industrial sales, as well as a decrease in net revenues in the semiconductor market as a result of continued softened demand for semiconductor capital equipment in the deposition and etching tool markets for memory applications, particularly NAND.
+Added: Net revenues for our PSD segment increased $45 million in 2024, compared to 2023, primarily as a result of an increase in sales of our lithography, metrology and inspection products, that are a part of our World Class Optics portfolio, in our semiconductor market and an increase in industry demand for PCB via drilling systems in our electronics and packaging market.
+Added: Net revenues for our MSD segment decreased $25 million in 2024, compared to 2023, primarily due to lower equipment revenue in the electronics and packaging market, as customers postponed certain investment decisions, and a decrease in chemistry sales in specialty industrial markets, primarily due to lower palladium prices, which lower prices are passed through to our customers, and the negative impact of foreign exchange, partially offset by volume increases in chemistry materials.
The following table sets forth gross profit as a percentage of net revenues by product and service:
3 unchanged sentences
Total gross profit percentage
−Removed: Gross profit as a percentage of net product revenues increased by 2.3 percentage points in 2023, compared to 2022, primarily due to the full-year impact of the Atotech Acquisition, as MSD had higher gross margins than VSD and PSD, as well as favorable product mix, including contributions from MSD and lower warranty costs.
−Removed: These increases in gross margin were partially offset by lower factory absorption at VSD and higher excess and obsolete inventory charges, mainly related to the discontinuation of a product line.
−Removed: Gross profit as a percentage of net service revenues decreased by 2.4 percentage points in 2023, compared to 2022, primarily due to unfavorable product mix and unfavorable overhead absorption partially offset by lower freight and duty costs.
+Added: Gross profit as a percentage of net product revenues increased by 1.4 percentage points in 2024, compared to 2023, primarily due to favorable product mix, higher factory utilization and lower excess and obsolete inventory charges, partially offset by higher warranty costs.
+Added: Gross profit as a percentage of net service revenues increased by 8.3 percentage points in 2024, compared to 2023, primarily due to favorable product mix and lower direct labor and overhead cost on repairs.
The following table sets forth gross profit as a percentage of net revenues by reportable segment:
6 unchanged sentences
Total gross profit percentage
−Removed: Gross profit as a percentage of net revenues for VSD decreased in 2023, primarily due to lower revenue volumes and unfavorable overhead absorption as a result of softening demand in our semiconductor market, and higher excess and obsolete inventory charges, partially offset by lower material costs.
−Removed: Gross profit as a percentage of net revenues for PSD decreased in 2023, primarily due to higher excess and obsolete inventory charges, mainly related to the discontinuation of a product line, lower revenue volumes and unfavorable product mix.
−Removed: Gross profit as a percentage of net revenues for MSD increased in 2023, primarily due to the full-year impact of the Atotech Acquisition which resulted in higher revenue volumes and favorable product mix.
−Removed: In addition, gross profit as a percentage was lower in 2022, due to $52 million of inventory step-up amortization related to the Atotech Acquisition.
+Added: Gross profit as a percentage of net revenues for VSD increased in 2024, compared to 2023, primarily due to higher factory utilization and lower material costs, partially offset by unfavorable product mix, higher excess and obsolete inventory charges and higher warranty costs.
+Added: Gross profit as a percentage of net revenues for PSD increased in 2024, compared to 2023, primarily due to higher revenue volumes, lower excess and obsolete inventory charges and lower freight and duty costs, partially offset by unfavorable product mix.
+Added: Gross profit as a percentage of net revenues for MSD increased in 2024, compared to 2023, primarily due to lower palladium prices and favorable product mix, partially offset by higher warranty costs.
+Added: The above gross profit percentages by division exclude an immaterial amount of unallocated corporate expense included in the total gross profit percentage.
Research and Development
2 unchanged sentences
Research and development
−Removed: Research and development expenses increased $47 million in 2023, compared to 2022, primarily due to an increase of $56 million resulting from the full-year impact of the Atotech Acquisition partially offset by decreases of $5 million in project material costs and $2 million in professional and consulting fees.
+Added: Research and development expenses decreased $17 million in 2024, compared to 2023, mainly due to decreases of $8 million in compensation-related costs, including salaries, fringe and variable compensation expenses, a decrease of $2 million in engineering consulting fees, and a decrease of $5 million of research and development credits and government assistance received in 2024.
Our research and development efforts are primarily focused on developing and improving our instruments, components, chemistry, subsystems, systems and process control solutions to improve process performance and productivity.
1 unchanged sentence
Projects typically have a duration of 3 to 36 months but may be extended for development of new products.
−Removed: We continue to make product advancements to meet our customers' evolving needs.
−Removed: We have developed, and continue to develop, new products to address industry trends, such as 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 industry transition to electric cars in the automotive market.
+Added: We continue to make product advancements designed to meet our customers’ evolving needs.
+Added: 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.
5 unchanged sentences
Our success depends on many of our products being designed into new generations of equipment for the semiconductor, electronics and packaging, and specialty industrial markets.
−Removed: We seek to develop products that are technologically advanced so that they are positioned to be chosen for use in each successive generation of semiconductor, electronics and packaging, and specialty industrial markets applications.
+Added: We seek to develop products that are technologically advanced so that they are positioned to be chosen for use in each successive generation of semiconductor capital equipment and advanced markets applications.
If our products are not chosen to be designed into our customers’ products, our net revenues may be reduced during the lifespan of those products.
3 unchanged sentences
Selling, general and administrative
−Removed: Selling, general and administrative expenses increased $187 million during 2023, compared to 2022, primarily due to an increase of $173 million resulting from the full-year impact of the Atotech Acquisition and $15 million in net costs incurred in 2023 as a result of the ransomware event.
+Added: Selling, general and administrative expenses decreased $1 million during 2024, compared to 2023, primarily due to a $20 million decrease in compensation-related costs, mainly related to salaries, fringe and variable compensation and a $14 million reduction in net costs mostly incurred in 2023 due to the ransomware event in February 2023.
+Added: These savings were partially offset by increases of $14 million in information technology investments, $7 million in consulting and professional fees, $5 million in non-income related taxes, $2 million in lease expenses and $2 million in travel expenses.
Acquisition and Integration Costs
2 unchanged sentences
Acquisition and integration costs
−Removed: Acquisition and integration costs incurred during 2023 and 2022 were primarily related to consulting and professional fees related to the Atotech Acquisition.
−Removed: Restructuring
+Added: Acquisition and integration costs incurred during 2024 and 2023 were related to consulting and professional fees related to the acquisition of Atotech Limited (“Atotech”) in August 2022 (the “Atotech Acquisition”).
+Added: Restructuring and other
Years Ended December 31,
(Dollars in millions)
−Removed: Restructuring
−Removed: Restructuring charges incurred in 2023 were related to severance costs as a result of various global cost savings initiatives implemented during the year.
−Removed: Restructuring charges in 2022 primarily related to executive payments related to the Atotech Acquisition, severance costs due to a global cost-saving initiative, the closure of two facilities in Europe and movement of certain products to low-cost regions.
−Removed: Fees and expenses related to repricing of Term Loan Facility
+Added: Restructuring and other
+Added: Restructuring and other charges incurred in 2024 and 2023 were primarily related to severance costs as a result of global cost-saving initiatives.
+Added: Fees and expenses related to amendments to the Term Loan Facility
Years Ended December 31,
(Dollars in millions)
−Removed: Fees and expenses related to repricing of Term Loan Facility
−Removed: In 2023, we recorded fees and expenses related to the First Amendment, as defined and described further below under “Credit Facilities.”
+Added: Fees and expenses related to amendments to the Term Loan Facility
+Added: In 2024, we recorded fees and expenses related to (i) 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”) and (ii) 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”).
+Added: In 2023, we recorded fees and expenses related to the First Amendment to Credit Agreement, dated as of October 3, 2023, 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 “First Amendment”).
Amortization of Intangible Assets
2 unchanged sentences
Amortization of intangible assets
−Removed: Amortization of intangible assets increased $149 million in 2023, compared to 2022, primarily due to amortization of intangible assets from the Atotech Acquisition.
+Added: Amortization of intangible assets decreased $50 million in 2024, compared to 2023, primarily due to the backlog-related intangible assets related to MSD being fully amortized in 2023, and the write-off of completed technology at our ESB reporting unit of PSD in the second quarter of 2023.
Goodwill and Intangible Asset Impairments
5 unchanged sentences
For the EL, GMF and ESB reporting units, we performed a quantitative assessment of goodwill using a combination of a market approach and income approach.
−Removed: Fair value estimates are based on complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions that have been deemed reasonable by our management.
−Removed: There are inherent uncertainties and management judgment required in these determinations.
+Added: Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions that have been deemed reasonable by our management.
This quantitative assessment resulted in a non-cash goodwill impairment of $826 million for the EL reporting unit, $428 million for the GMF reporting unit and $372 million for the ESB reporting unit.
−Removed: In addition, we recorded a $49 million impairment of IPR&D allocated to the EL reporting unit and a $152 million impairment related to completed technology allocated to the ESB reporting unit.
+Added: In addition, we recorded a $49 million impairment
+Added: of IPR&D allocated to the EL reporting unit and a $152 million impairment related to completed technology allocated to the ESB reporting unit.
On October 31, 2023, we performed our annual goodwill and intangible asset impairment assessment.
−Removed: As a result of higher WACC mainly caused by overall higher market interest rates, we recorded additional non-cash goodwill impairment charges of
−Removed: $48 million and $13 million at our EL and ESB reporting units, respectively.
+Added: As a result of higher WACC mainly caused by overall higher market interest rates, we recorded additional non-cash goodwill impairment charges of $48 million and $13 million at our EL and ESB reporting units, respectively.
In addition, we recorded a $14 million impairment of IPR&D allocated to the EL reporting unit.
There were no impairments at any of our other reporting units.
+Added: On October 31, 2024, we again performed our annual goodwill and intangible asset impairment assessment using a qualitative assessment for all of our reporting units.
+Added: We determined that it was more likely than not that the fair values were more than the carrying values for each of the reporting units.
We will continue to monitor and evaluate the carrying value of goodwill and intangible assets.
4 unchanged sentences
Gain on sale of long-lived assets
−Removed: In 2023 and 2022, we recorded gains as a result of receiving cash from the sale of a minority interest investment in a private company.
+Added: In 2023, we recorded a gain as a result of receiving cash from the sale of a minority interest investment in a private company.
Interest Expense, Net
2 unchanged sentences
Interest expense, net
−Removed: Interest expense, net, increased by $166 million in 2023, compared to 2022, primarily due to the full-year impact of borrowings under the Term Loan Facility, as described below.
+Added: Interest expense, net, decreased by $76 million in 2024, compared to 2023, 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%, $1.2 billion of the proceeds of which were used to pay down our loans under the Term Loan Facility, which had an interest rate of approximately 7.8%.
+Added: In addition in July 2024, we entered into the Fourth Amendment, which decreased the applicable margin for both the USD Tranche B and the EUR Tranche B (each as defined and described further below under “Credit Facilities”) by 0.25%.
+Added: In addition, interest expense, net was lower in 2024 than 2023 as a result of the voluntary prepayments of $100 million in October 2023, $50 million in February 2024, $50 million in April 2024, $110 million in July 2024 and $216 million in October 2024, on loans under the Term Loan Facility.
Loss on extinguishment of debt
2 unchanged sentences
Loss on extinguishment of debt
−Removed: In connection with the First Amendment, as defined and described further below under “Credit Facilities,” we recorded a loss on extinguishment of debt.
−Removed: Other Expense, Net
+Added: We recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing and original issue discount costs associated with the Second Amendment in January 2024, Convertible Notes in May 2024 and Fourth Amendment in July 2024.
+Added: In addition, we recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing and original issue discount costs as a result of voluntary prepayments under the Term Loan Facility made in 2024, as described above.
+Added: In October 2023, in connection with the First Amendment and the voluntary prepayment of $100 million, we recorded a loss on extinguishment of debt as a result of the acceleration of deferred financing and original issue discount costs.
+Added: Other (Income) Expense, Net
Years Ended December 31,
(Dollars in millions)
−Removed: Other expense, net
−Removed: Other expense, net, for 2023 and 2022 primarily related to changes in foreign exchange rates.
+Added: Other (income) expense, net
+Added: Other (income) expense, net, for 2024 and 2023 primarily relate to net foreign exchange and fair value gains and losses.
(Benefit) Provision for Income Taxes
4 unchanged sentences
Our effective tax rate for 2024 was lower than the U.S.
+Added: statutory tax rate, mainly due to the U.S.
+Added: deduction for foreign derived intangible income (“FDII”) and valuation allowance release partially offset by the increase in withholding taxes.
+Added: Our effective tax rate for 2023 was lower than the U.S.
statutory tax rate, mainly due to the impairment of goodwill and intangible assets.
−Removed: Our effective tax rate for 2022 was higher than the U.S.
−Removed: statutory tax rate, mainly due to additional withholding taxes related to the change of indefinite reinvestment assertion, the U.S.
−Removed: global intangible low-taxed income inclusion, offset by the U.S.
−Removed: deduction for foreign derived intangible income and the geographic mix of income earned by our international subsidiaries being taxed at rates lower than the U.S.
−Removed: statutory tax rate.
−Removed: As of December 31, 2023, total gross unrecognized tax benefits, which excludes interest and penalties, was $86 million.
−Removed: As of December 31, 2022, total gross unrecognized tax benefits, which excludes interest and penalties, was $83 million.
−Removed: The net increase was primarily attributable to the addition of unrecognized U.S.
−Removed: federal tax credits.
+Added: As of December 31, 2024 and 2023, total gross unrecognized tax benefits, which excludes interest and penalties, was $94 million and $86 million, respectively.
+Added: The net increase was primarily due to the addition of income tax reserves related to intercompany transactions.
We accrue interest and, if applicable, penalties for any uncertain tax positions.
7 unchanged sentences
The statute of limitations for our tax filings in other jurisdictions varies between fiscal years 2019 through the present.
−Removed: We also have certain federal credit carryforwards and state tax loss and credit carryforwards that are open to examination for tax years 2002 through the present.
−Removed: In addition, the 2017 transition tax remains open for examination.
−Removed: In 2023, we recorded a net charge to income tax expense of $7 million, due to additional reserves offset by the expiration of certain statutes of limitations.
−Removed: In 2022, we recorded a net charge to income tax expense of $5 million, due to additional reserves offset by the closure of a tax audit and expiration of certain statutes of limitations.
+Added: We also have certain prior year federal credit carryforwards and state tax loss and credit carryforwards that are subject to examination to the extent used in an open year.
Our future effective tax rate depends on various factors, including the impact of tax legislation, further interpretations and guidance from U.S.
federal and state governments on the impact of proposed regulations issued by the Internal Revenue Service, as well as the geographic composition of our pre-tax income and changes in income tax reserves for unrecognized tax benefits.
−Removed: A number of jurisdictions in which we operate are in the process of adopting Pillar Two Model Rules (“Pillar Two”) for a global 15% minimum tax as promulgated by the Organisation for Economic Co-operation and Development.
−Removed: Pillar Two could materially increase our future effective tax rate.
−Removed: We cannot be certain regarding the amount of the effective tax rate increase until all jurisdictions in which we operate adopt legislation and implement a version of Pillar Two.
−Removed: We monitor these factors and timely adjust our estimates of the effective tax rate accordingly.
−Removed: We expect the geographic mix of pre-tax income will continue to have a favorable impact on our effective tax rate.
−Removed: However, the geographic mix of pre-tax income can change based on multiple factors including the Atotech Acquisition, resulting in changes to the effective tax rate in future periods.
While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from our accrued positions as a result of uncertain and complex application of tax laws and regulations.
2 unchanged sentences
federal, state, and foreign tax matters in future periods as new information becomes available.
+Added: 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".
+Added: 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.
+Added: 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.
+Added: We will continue to monitor and evaluate the impacts of the developing legislation.
Liquidity and Capital Resources
−Removed: Cash, cash equivalents and short-term investments at December 31, 2023 and 2022 totaled $875 million and $910 million, respectively.
−Removed: 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 (loss) income, excluding non-cash charges and changes in operating assets and liabilities.
+Added: Cash and cash equivalents at December 31, 2024 and 2023 totaled $714 million and $875 million, respectively.
+Added: 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 (loss), excluding non-cash charges and changes in operating assets and liabilities.
Our total cash and cash equivalents at December 31, 2024 consisted of $268 million held in the United States and $446 million held by our foreign subsidiaries.
3 unchanged sentences
Conversely, in periods when our sales are declining, our trade accounts receivable and inventory balances will generally decrease, resulting in increased cash from operations.
+Added: Net cash provided by operating activities was $528 million for 2024 and resulted from net income of $190 million, which included non-cash charges of $334 million, offset by a net decrease in working capital of $4 million.
+Added: The net decrease in working capital was primarily due to an increase in income taxes payable of $49 million, an increase in accounts payable of $21 million, a decrease in other current and non-current assets of $25 million, primarily related to a decrease in right of use assets, and a decrease in inventory of $20 million.
+Added: This net decrease in working capital was partially offset by a decrease in other current and non-current liabilities of $43 million, a decrease in current and non-current accrued compensation of $32 million as a result of lower variable compensation and an increase in accounts receivable of $36 million.
Net cash provided by operating activities was $319 million for 2023 and resulted from a net loss of $1,841 million, which included non-cash charges of $2,259 million, mainly as a result of goodwill and intangible asset impairment charges of $1,902 million, offset by a net increase in working capital of $99 million.
1 unchanged sentence
This net increase in working capital was partially offset by a decrease in accounts receivable of $114 million, as a result of lower business levels, and a decrease in other current and non-current assets of $50 million, primarily as a result of a decrease in right of use assets of $31 million, and a decrease in other current and non-current assets of $19 million.
−Removed: Net cash provided by operating activities was $529 million for 2022 and resulted from net income of $333 million, which included non-cash net charges of $353 million, offset by a net increase in working capital of $157 million.
−Removed: The net increase in working capital was primarily due to increases in inventory of $236 million, as a result of increased business levels, and a decrease of $31 million in accrued compensation, resulting from the payment of variable compensation.
−Removed: These increases in working capital
−Removed: were partially offset by a decrease in other current and non-current assets of $28 million, an increase in accounts payable of $61 million and an increase in income taxes payable of $19 million.
+Added: Net cash used in investing activities was $117 million for 2024, consisting primarily of $118 million in capital expenditures.
Net cash used in investing activities was $84 million for 2023, consisting primarily of $87 million in capital expenditures, offset by $3 million in proceeds from the sale of long-lived assets.
−Removed: Net cash used in investing activities was $4.6 billion for 2022, primarily due to $4.5 billion used for the Atotech Acquisition, net of cash and cash equivalents acquired, and $164 million in capital expenditures, partially offset by $76 million in net maturities of investments.
+Added: Net cash used in financing activities was $549 million for 2024, primarily due to net proceeds from the issuance of Convertible Notes of $1.4 billion and incremental loans under the Term Loan Facility in an aggregate principal amount of $761 million.
+Added: The proceeds of the incremental loans under the Term Loan Facility were used in part to prepay the USD Tranche A term loans outstanding under the Amended Credit Agreement (as defined and described further below under “Credit Facilities”) in full in an aggregate principal amount of $744 million, and the proceeds of the Convertible Notes were used in part to prepay a portion of the USD Tranche B loans in an aggregate principal amount of $1.2 billion.
+Added: In addition, there were normal quarterly debt payments and voluntary prepayments that totaled $476 million.
+Added: We also made payments of $167 million to purchase a capped call option related to the Convertible Notes, $33 million for debt financing costs and $59 million for dividends.
Net cash used in financing activities was $259 million for 2023, primarily due to $403 million of payments on our Term Loan Facility and $59 million of dividend payments, partially offset by $216 million in proceeds from our Term Loan Facility.
−Removed: Net cash provided by financing activities was $4.0 billion for 2022, primarily due to $5.2 billion in net proceeds from our Term Loan Facility offset by $962 million of payments on borrowings, primarily related to payment of our prior term loan facility, a $100 million voluntary prepayment on the USD Tranche A (as defined below), a $22 million regularly scheduled payment on the Term Loan Facility, $52 million in dividend payments and $249 million in payments of deferred financing costs.
−Removed: For the year ended December 31, 2023, we paid cash dividends of $59 million in the aggregate or $0.88 per share.
−Removed: For the year ended December 31, 2022, we paid cash dividends of $52 million in the aggregate or $0.88 per share.
−Removed: Future dividend declarations, if any, as well as the record and payment dates for such dividends, are subject to the final determination of our Board of Directors.
Holders of our common stock are entitled to receive dividends when and if they are declared by our Board of Directors.
−Removed: Under the terms of our Term Loan Facility and Revolving Facility, each as defined and described further below, we may be restricted from paying dividends under certain circumstances.
+Added: For the years ended December 31, 2024 and 2023, we paid cash dividends of $59 million in the aggregate or $0.88 per share, respectively.
+Added: Future dividend declarations, if any, as well as the record and payment dates for such dividends, are subject to the final determination of our Board of Directors.
On February 10, 2025, our Board of Directors declared a quarterly cash dividend of $0.22 per share to be paid on March 7, 2025 to shareholders of record as of February 24, 2025.
−Removed: Atotech Acquisition
−Removed: On August 17, 2022 (the “Effective Date”), we completed the Atotech Acquisition.
−Removed: The total net purchase price, including cash consideration, net of cash acquired, value of MKS shares issued, repayment of Atotech debt and settlement of share-based awards totaled $5.7 billion.
−Removed: We funded the payment of the aggregate cash consideration with a combination of cash on hand and the proceeds from the Term Loan Facility, as defined below.
−Removed: As a result of the Atotech Acquisition, we issued an aggregate of 10.7 million shares of our common stock to the former Atotech shareholders.
Credit Facilities
−Removed: In connection with the completion of the Atotech Acquisition, we entered into the Credit Agreement, dated as of August 17, 2022, by and among us, the lenders and letter of credit issuers party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (as amended from time to time, the “Credit Agreement”).
−Removed: The Credit Agreement provided for (i) a senior secured term loan facility comprised of three tranches:
−Removed: a $1.0 billion loan (the “USD Tranche A”), a $3.6 billion loan (the “2022 USD Tranche B” and together with the 2023 USD Tranche B (as defined below), as the context may require, the “USD Tranche B”) and a €600 million loan (the “Euro Tranche B” and together with the USD Tranche A and the USD Tranche B, the “Term Loan Facility”), each of which were borrowed in full on the Effective Date, and (ii) a senior secured revolving credit facility of $500 million (the “Revolving Facility” and, together with the Term Loan Facility, the “Credit Facilities”), with the commitments under each of the foregoing facilities subject to increase from time to time subject to certain conditions.
−Removed: The USD Tranche A was repaid in January 2024, as described below.
−Removed: The Revolving Facility has a maturity date in August 2027 while the USD Tranche B and Euro Tranche B have a maturity date in August 2029.
−Removed: Borrowings under the Credit Facilities bear interest at a rate per annum equal to, at our option, any of the following, plus, in each case, an applicable margin:
−Removed: (a) with respect to the USD Tranche A, the Revolving Facility and, prior to the effectiveness of the First Amendment (as defined below), the USD Tranche B, (x) a base rate determined by reference to the highest of (1) the federal funds effective rate plus 0.50%, (2) the prime rate quoted in The Wall Street Journal , or (3) a forward-looking term rate based on the variable secured overnight financing rate (“Term SOFR”) (plus an applicable credit spread adjustment) for an interest period of one month, plus 1.00%;
−Removed: and (y) a Term SOFR rate (plus an applicable credit spread adjustment) for the interest period relevant to such borrowing, subject to a rate floor of (I) with respect to the USD Tranche B, 0.50% and (II) with respect to the USD Tranche A and the Revolving Facility, 0.0%;
+Added: In connection with the completion of the Atotech Acquisition, on August 17, 2022 (the “Effective Date”) we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, Barclays Bank PLC, and the lenders from time to time party thereto, which we have amended several times since (as amended, the “Amended Credit Agreement”).
+Added: As of December 31, 2024, the Amended Credit Agreement provided for (i) a senior secured term loan facility comprised of two tranches:
+Added: a $2.6 billion loan (the “USD Tranche B”) and a €596 million loan (the “Euro Tranche B” and together with the USD Tranche B, the “Term Loan Facility”) and (ii) a senior secured revolving credit facility of $675 million (the “Revolving Facility” and, together with the Term Loan Facility, the “Credit Facilities”), with the commitments under each of the foregoing facilities subject to increase from time to time subject to certain conditions.
+Added: As of December 31, 2024, borrowings under the Credit Facilities bore interest at a rate per annum equal to, at our option, any of the following, plus, in each case, an applicable margin:
+Added: (a) with respect to the USD Tranche B and the Revolving Facility, (x) a base rate determined by reference to the highest of (1) the federal funds effective rate plus 0.50%, (2) the prime rate quoted in The Wall Street Journal, or (3) a forward-looking term rate based on the variable secured overnight financing rate (“Term SOFR”) (plus an applicable credit spread adjustment) for an interest period of one month, plus 1.00%, and (y) a Term SOFR rate (plus an applicable credit spread adjustment) for the interest period relevant to such borrowing, subject to a rate floor of (I) with respect to the USD Tranche B, 0.50% and (II) with respect to the Revolving Facility, 0.0%;
and (b) with respect to the Euro Tranche B, a Euro Interbank Offered Rate (“EURIBOR”) rate determined by reference to the costs of funds for Euro deposits for the interest period relevant to such borrowing adjusted for certain additional costs, subject to a EURIBOR rate floor of 0.0%.
−Removed: The USD Tranche A was issued with original issue discount of 0.25% of the principal amount thereof.
−Removed: The 2022 USD Tranche B and the Euro Tranche B were issued with original issue discount of 2.00% of the principal amount thereof.
−Removed: The applicable margin for borrowings under the USD
−Removed: Tranche A is 1.50% with respect to base rate borrowings and 2.50% with respect to Term SOFR borrowings.
−Removed: Prior to the effectiveness of the First Amendment, the applicable margin for borrowings under the USD Tranche B was 1.75% with respect to base rate borrowings and 2.75% with respect to Term SOFR borrowings.
−Removed: The applicable margin for borrowings under the Euro Tranche B is 3.00%.
−Removed: The applicable margin for borrowings under the Revolving Facility is 1.50% with respect to base rate borrowings and 2.50% with respect to Term SOFR borrowings.
+Added: As of December 31, 2024, the applicable margins for borrowings under the Credit Facilities were (i) under the USD Tranche B and the Revolving
+Added: Facility, 1.25% with respect to base rate borrowings and 2.25% with respect to Term SOFR borrowings and (ii) under the Euro Tranche B, 2.75%.
In addition to paying interest on outstanding principal under the Credit Facilities, we are required to pay a commitment fee in respect of the unutilized commitments under the Revolving Facility.
−Removed: The initial commitment fee is 0.375% per annum.
−Removed: Commencing with the delivery of financial statements with respect to the first quarter ending after the closing of the Credit Agreement, the commitment fee is subject to downward adjustment based on our first lien net leverage ratio as of the end of the preceding quarter.
+Added: The commitment fee is subject to adjustment based on our first lien net leverage ratio as of the end of the preceding fiscal quarter.
We must also pay customary letter of credit fees and agency fees.
−Removed: On October 3, 2023 (the “First Amendment Effective Date”), we entered into the First Amendment to Credit Agreement (the “First Amendment”), which refinanced all of the $3.56 billion outstanding 2022 USD Tranche B (such refinanced loans, the “2023 USD Tranche B”) to (i) decrease the applicable margin for the USD Tranche B from 1.75% to 1.50% with respect to base rate borrowings and from 2.75% to 2.50% with respect to Term SOFR borrowings and (ii) remove the credit spread adjustments applicable to borrowings of the USD Tranche B based on Term SOFR.
−Removed: The 2023 USD Tranche B were issued with original issue discount of 0.25% of the principal amount thereof.
−Removed: On October 31, 2023, we made a voluntary prepayment of $100 million aggregate principal amount on the USD Tranche A.
−Removed: We incurred $242 million of deferred financing fees and original issue discount related to the term loans under the Term Loan Facility funded on the Effective Date, which are included in long-term debt, net in the accompanying consolidated balance sheets and are being amortized to interest expense over the estimated life of the term loans using the effective interest method.
−Removed: A portion of the deferred financing fees and original issue discount was accelerated in connection with the extinguishment of our previously existing term loan facility concurrently with our entry into the Term Loan Facility.
−Removed: We incurred $11 million of deferred financing fees and original issue discount related to the term loans under the 2023 USD Tranche B funded on the First Amendment Effective Date, of which $9 million is included in long-term debt, net in the accompanying consolidated balance sheets and is being amortized to interest expense over the estimated life of the term loans using the effective interest method.
−Removed: We recorded an $8 million loss on extinguishment of debt in connection with the First Amendment of the 2022 USD Tranche B.
−Removed: In connection with the various prepayments in 2022 and 2023, we wrote off a portion of the deferred financing costs related to the prepayments.
−Removed: Under the Credit Agreement, we are required to prepay outstanding term loans, subject to certain exceptions, with portions of our annual excess cash flow as well as with the net cash proceeds of certain of our asset sales, certain casualty and condemnation events and the incurrences or issuances of certain debt.
+Added: As of December 31, 2024, the commitment fee was 0.25% per annum, representing a downward adjustment from 0.375% as of June 30, 2024.
+Added: As of December 31, 2024, the principal outstanding on the Term Loan Facility was $3.2 billion, and the weighted average interest rate was 6.4%.
+Added: The Revolving Facility has a maturity date in August 2027 while the USD Tranche B and Euro Tranche B have a maturity date in August 2029.
+Added: As of December 31, 2024, there were no borrowings under the Revolving Facility.
+Added: We are required to make scheduled quarterly principal payments equal to approximately $10 million with respect to the USD Tranche B and approximately €2 million with respect to the Euro Tranche B, in each case with the balance due thereunder on the seventh anniversary of the Effective Date.
+Added: There is no scheduled amortization under the Revolving Facility.
+Added: Any principal amount outstanding under the Revolving Facility is due and payable in full on the fifth anniversary of the Effective Date.
+Added: Under the Amended Credit Agreement, we are required to prepay outstanding term loans, subject to certain exceptions, with portions of our annual excess cash flow as well as with the net cash proceeds of certain of its asset sales, certain casualty and condemnation events and the incurrence or issuances of certain debt.
If at any time the aggregate amount of outstanding loans, unreimbursed letter of credit drawings and undrawn letters of credit under the Revolving Facility exceeds the aggregate commitments under the Revolving Facility, we are required to repay outstanding loans and/or cash collateralize letters of credit, with no reduction of the commitment amount.
−Removed: We may voluntarily prepay outstanding loans under the Credit Facilities from time to time, subject to certain conditions, without premium or penalty other than customary “breakage” costs with respect to Term SOFR or EURIBOR loans;
−Removed: provided, however, that subject to certain exceptions, (i) if on or prior to the date that was twelve months after the Effective Date, we prepaid any loans under the 2022 USD Tranche B or the Euro Tranche B in connection with a repricing transaction, we would have been required to pay a prepayment premium of 1.00% of the aggregate principal amount of the loans so prepaid and (ii) if on or prior to the date that is six months after the First Amendment Effective Date, we prepaid any loans under the 2023 USD Tranche B in connection with a repricing transaction, we must pay a prepayment premium of 1.00% of the aggregate principal amount of the loans so prepaid.
+Added: We may voluntarily prepay, and have voluntarily repaid, outstanding loans under the Credit Facilities from time to time, subject to certain conditions, without premium or penalty other than customary “breakage” costs with respect to Term SOFR or EURIBOR loans and any prepayment premium that might be applicable to repayments we make prior to July 24, 2025.
Additionally, we may voluntarily reduce the unutilized portion of the commitment amount under the Revolving Facility.
−Removed: We are required to make scheduled quarterly payments each equal to 1.25% of the original principal amount of the USD Tranche A (increasing to 1.875% in years 3 and 4 and 2.50% in year 5), 0.25% of the original principal amount of the Euro Tranche B and 0.25% of the original principal amount of the 2023 USD Tranche B, with the balance due thereunder on the fifth anniversary of the closing date in the case of the USD Tranche A and the seventh anniversary of the closing date in the case of the USD Tranche B and the Euro Tranche B.
−Removed: There is no scheduled amortization under the Revolving Facility.
−Removed: Any principal amount outstanding under the Revolving Facility is due and payable in full on the fifth anniversary of the closing date.
−Removed: We incurred $7 million of costs in connection with the Revolving Facility, which were capitalized and included in other assets in the accompanying consolidated balance sheets and are being amortized to interest expense over the estimated life of four
−Removed: As a result of the termination of our previously existing revolving credit facility concurrently with our entry into the Revolving Facility, we wrote off an immaterial amount of previously capitalized debt issuance costs.
All obligations under the Credit Facilities are guaranteed by certain of our wholly-owned domestic subsidiaries and are required to be guaranteed by certain of our future wholly-owned domestic subsidiaries and are secured by substantially all of our assets and the assets of such subsidiaries, subject to certain exceptions and exclusions.
−Removed: Under the Credit Agreement, we have the ability to incur additional incremental debt facilities in an amount up to (x) the greater of (1) $1.01 billion and (2) 75% of consolidated EBITDA, plus (y) an amount equal to the sum of all voluntary prepayments of term loans under the Term Loan Facility, plus (z) an additional unlimited amount subject to pro forma compliance with certain leverage ratio tests (based on the security and priority of such incremental debt).
−Removed: Under the USD Tranche A and the Revolving Facility, so long as any USD Tranche A loans (or commitments in respect thereof) are outstanding as of the end of any fiscal quarter, we may not allow our total net leverage ratio as of the end of such fiscal quarter to be greater than 5.25 to 1.00 for the fiscal quarters ending December 31, 2023 through September 30, 2024, with an annual step-down of 0.25:1.00 and subject to a step-up of 0.50:1.00 for the four full fiscal quarter period following any material acquisition, not to exceed 5.50 to 1.00.
−Removed: In addition, in the event there are no loans outstanding under the USD Tranche A, as of the end of any fiscal quarter of ours when the aggregate amount of loans outstanding under the Revolving Facility (net of (a) all letters of credit (whether cash collateralized or not) and (b) unrestricted cash of ours and our restricted subsidiaries) exceeds 35% of the aggregate amount of all commitments under the Revolving Facility in effect as of such date, we may not allow its first lien net leverage ratio as of the end of each such fiscal quarter to be greater than 6.00 to 1.00.
+Added: Under the Amended Credit Agreement, we have the ability to incur additional incremental debt facilities in an amount up to (x) the greater of (1) $1,011 million and (2) 75% of consolidated last twelve months earnings before interest, taxes, depreciation, and amortization, plus (y) an amount equal to the sum of all voluntary prepayments of term loans under the Term Loan Facility, plus (z) an additional unlimited amount subject to pro forma compliance with certain leverage ratio tests (based on the security and priority of such incremental debt).
+Added: The Amended Credit Agreement contains customary representations and warranties, covenants and provisions relating to events of default.
+Added: As of December 31, 2024, we were in compliance with all covenants under the Amended Credit Agreement.
The USD Tranche B and the Euro Tranche B are not subject to financial maintenance covenants.
−Removed: The Credit Agreement contains a number of negative covenants that, among other things and subject to certain exceptions, restrict our ability and each of our subsidiaries to:
−Removed: incur additional indebtedness;
−Removed: pay dividends on its capital stock or redeem, repurchase or retire its capital stock or its subordinated indebtedness;
−Removed: make investments, loans and acquisitions;
−Removed: create restrictions on the payment of dividends or other amounts to ourselves from our restricted subsidiaries or restrictions on the ability of our restricted subsidiaries to incur liens;
−Removed: engage in transactions with its affiliates;
−Removed: sell assets, including capital stock of its subsidiaries;
−Removed: materially alter the business it conducts;
−Removed: consolidate or merge;
−Removed: and engage in sale-leaseback transactions.
−Removed: The Credit Agreement also contains customary representations and warranties, affirmative covenants and provisions relating to events of default.
−Removed: If an event of default occurs, the lenders under the Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under the Credit Facilities and all actions permitted to be taken by a secured creditor.
−Removed: As of December 31, 2023, we were in compliance with all covenants under the Credit Agreement.
−Removed: The proceeds of the Term Loan Facility were used on the Effective Date, among other things, to fund a portion of the consideration payable in connection with the Atotech Acquisition and to refinance the existing term loan and revolving credit facilities of ours and certain indebtedness of Atotech.
−Removed: We also paid certain customary fees to and expenses of JPMorgan Chase Bank, N.A., Barclays Bank PLC, BofA Securities, Inc., Citibank, N.A., HSBC Securities (USA) Inc.
−Removed: and Mizuho Bank, Ltd.
−Removed: in their respective capacities as lead arrangers and bookrunners in connection with the Credit Facilities.
−Removed: The proceeds of the 2023 USD Tranche B were used on the First Amendment Effective Date to refinance the 2022 USD Tranche B.
−Removed: We also paid certain customary fees to and expenses of JPMorgan Chase Bank, N.A.
−Removed: in its capacity as lead arranger in connection with the 2023 USD Tranche B.
−Removed: As of December 31, 2023, after total principal prepayments of $200 million and regularly scheduled principal payments of $109 million, the aggregate outstanding principal amount of the Term Loan Facility was $4.95 billion and the weighted average interest rate was 7.7%.
−Removed: As of December 31, 2023, there were no borrowings under the Revolving Facility.
2025 Amendments and Prepayment of Credit Facilities
−Removed: On January 22, 2024 (the “Second Amendment Effective Date”), we entered into the Second Amendment to Credit Agreement (the “Second Amendment”), which amended the Credit Agreement.
−Removed: Pursuant to the Second Amendment, we (i) borrowed additional USD Tranche B (as defined below) loans (the “Incremental USD Tranche B Loans”) in an aggregate principal amount of $490 million, (ii) borrowed additional Euro Tranche B (as defined below) loans (the “Incremental Euro Tranche B Loans” and together with the Incremental USD Tranche B Loans, the “Incremental Tranche B Loans”) in an aggregate principal amount of €250 million and (iii) used a portion of the proceeds of the Incremental Tranche B Loans to prepay our USD Tranche A (as defined below) in full in an aggregate principal amount of $744 million.
−Removed: Remaining proceeds of the Incremental Tranche B Loans were used to pay fees and expenses in connection with the Second Amendment and will be used for working capital and general corporate purposes.
−Removed: The Incremental USD Tranche B Loans and the Incremental Euro Tranche B Loans have identical terms to our existing USD Tranche B and Euro Tranche B loans (collectively, together with the Incremental Tranche B
−Removed: Loans, the “Tranche B Loans”), respectively, under the Credit Agreement.
−Removed: Additionally, pursuant to the Second Amendment, the 1.00% prepayment premium applicable to any Tranche B Loans prepaid in connection with certain repricing transactions was extended for a period of six months following the Second Amendment Effective Date.
−Removed: The Incremental Tranche B Loans were issued with original issue discount of 0.25%.
−Removed: In connection with the execution of the Second Amendment, we paid customary fees and expenses to JPMorgan Chase Bank, N.A.
−Removed: On February 5, 2024, we made a voluntary prepayment of $50 million aggregate principal amount on the USD Tranche B.
−Removed: On February 13, 2024, we entered into the Third Amendment to Credit Agreement (the “Third Amendment”).
−Removed: Pursuant to the Third Amendment, we increased the available borrowing capacity under our Revolving Facility by $175 million (the “Incremental Revolving Commitments”), from $500 million to $675 million.
−Removed: In connection with the execution of the Third Amendment, we paid customary fees and expenses to the lenders providing the Incremental Revolving Commitments and to JPMorgan Chase Bank, N.A.
+Added: On January 24, 2025 (the “Fifth Amendment Effective Date”), we entered into the Fifth Amendment to Credit Agreement (the “Fifth Amendment”).
+Added: Pursuant to the Fifth Amendment, we (i) refinanced our existing USD Tranche B loan and Euro Tranche B loan with a new $2.5 billion USD Tranche B loan and a new €596 million Euro Tranche B loan, (ii) decreased the applicable margin for the USD Tranche B from 2.25% to 2.00% with respect to Term SOFR borrowings and from 1.25% to 1.00% with respect to base rate borrowings, (iii) decreased the applicable margin for the Euro Tranche B from 2.75% to 2.50% and (iv) extended the period during which a 1.00% prepayment premium may be required if we prepay any loans under the USD Tranche B or the Euro Tranche B in connection with a repricing transaction until the date that is six months following the Fifth Amendment Effective Date.
+Added: The repriced USD Tranche B loan and Euro Tranche B loan were issued without original issue discount.
+Added: In connection with the execution of the Fifth Amendment, we paid customary fees and expenses to JPMorgan Chase Bank, N.A.
+Added: On January 24, 2025, concurrently with the effectiveness of the Fifth Amendment, we made a voluntary prepayment of $100 million principal amount to the USD Tranche B loan, reducing the principal from $2.6 billion to $2.5 billion.
+Added: Convertible Notes
+Added: On May 16, 2024, we completed a private offering of $1.4 billion aggregate principal amount of convertible senior notes due 2030 (the “Convertible Notes”).
+Added: The Convertible Notes were sold in a private placement under a purchase agreement, dated as of May 13, 2024, entered into by and among us and Morgan Stanley & Co.
+Added: Morgan Securities LLC, BofA Securities, Inc.
+Added: and Mizuho Securities USA LLC, as representatives of the several initial purchasers named therein, for resale to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended.
+Added: The net proceeds from the offering were approximately $1.4 billion after deducting the initial purchasers’ discounts and commissions and estimated offering expenses paid by us.
+Added: We used approximately $167 million of the net proceeds from the offering to pay the cost of the capped call transactions described below.
+Added: We used the remaining net proceeds from the offering to repay approximately $1.2 billion in borrowings outstanding under the USD Tranche B, together with accrued interest, as well as for general corporate purposes.
+Added: As a result of the repayment, we recorded a $38 million loss on extinguishment of debt.
+Added: Indenture and the Convertible Notes
+Added: On May 16, 2024, we entered into an indenture (the “Indenture”) with respect to the Convertible Notes with U.S.
+Added: Bank Trust Company, National Association, as trustee.
+Added: Under the Indenture, the Convertible Notes are senior unsecured obligations of ours and bear interest at a coupon rate of 1.25% per annum, with interest payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2024.
+Added: The Convertible Notes will mature on June 1, 2030, unless earlier converted, redeemed or repurchased in accordance with their terms.
+Added: Subject to certain conditions, on or after June 5, 2027, we may redeem for cash all or any portion of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the trading day immediately preceding the date the notice of redemption is sent.
+Added: The conversion rate for the Convertible Notes is initially 6.4799 shares of our common stock per one thousand dollars principal amount of Notes, which is equivalent to an initial conversion price of approximately $154.32 per share.
+Added: The conversion rate is subject to adjustment upon the occurrence of certain events.
+Added: Upon conversion, we will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.
+Added: Prior to March 1, 2030, noteholders may convert all or any portion of their Convertible Notes only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date.
+Added: If we undergo a fundamental change (as defined in the Indenture) prior to the maturity date of the Convertible Notes, holders may require us to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
+Added: The Indenture contains customary terms and covenants, including that upon certain events of default that are occurring and continuing, either the trustee or the holders of at least 25% in aggregate principal amount of the outstanding Convertible Notes may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the Convertible Notes to be due and payable.
+Added: As of December 31, 2024, the Convertible Notes are classified as a long-term liability, net of issuances costs, on the consolidated balance sheet.
+Added: The Convertible Notes were issued at par and costs associated with the issuance of the Convertible Notes are amortized to interest expense over the contractual term of the Convertible Notes.
+Added: As of December 31, 2024, the effective interest rate of the Convertible Notes was 1.56%.
+Added: Capped Call Transactions
+Added: On May 13, 2024, in connection with the pricing of the Convertible Notes, and on May 14, 2024, in connection with the exercise in full by the initial purchasers of their option to purchase additional Convertible Notes, we entered into privately negotiated capped call transactions with certain of the initial purchasers of the Convertible Notes or their respective affiliates and other financial institutions.
+Added: The capped call transactions are expected generally to reduce the potential dilution to our common stock upon conversion of any Convertible Notes and/or offset any cash payments that we are required to make in excess of the principal amount of any converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap initially equal to $237.42 per share (which represents a premium of 100% over the last reported sale price of $118.71 per share of our common stock on The Nasdaq Global Select Market on May 13, 2024), and is subject to customary adjustments under the terms of the capped call transactions.
Lines of Credit and Borrowing Arrangements
4 unchanged sentences
We operate internationally, and in the normal course of business, are exposed to fluctuations in interest rates and foreign exchange rates.
−Removed: These fluctuations can increase the costs of financing, investing and operating our business.
−Removed: We have used derivative instruments, such as foreign exchange forward contracts and options, to manage certain foreign currency exposure, and interest rate swaps and caps to manage certain interest rate exposure.
+Added: These fluctuations can increase the costs of financing, investing, and operating the business.
+Added: We have used derivative instruments, such as foreign exchange forward contracts, options, and net investment hedges, to manage certain foreign currency exposure, and interest rate swaps and caps to manage certain interest rate exposure.
+Added: We do not enter into derivative instruments for trading or speculative purposes.
By nature, all financial instruments involve market and credit risks.
−Removed: We enter into derivative instruments with a diversified group of major investment grade financial institutions and no collateral is required.
+Added: We enter into derivative instruments with major investment grade financial institutions and no collateral is required.
We have policies to monitor the credit risk of these counterparties.
1 unchanged sentence
Interest Rate Swap and Interest Rate Cap Agreements
−Removed: We have various interest rate swap agreements that exchange a forward-looking term rate based on Term SOFR paid on the outstanding balance of our Term Loan Facility, to a fixed rate.
+Added: We have various interest rate swap agreements maturing through January 31, 2029 that exchange a one-month forward-looking term rate based on Term SOFR paid on the outstanding balance of our USD Term Loan Facility, to a fixed rate.
+Added: The notional value of the agreements was $2,600 million and $2,300 million as of December 31, 2024 and December 31, 2023, respectively.
We acquired USD London Interbank Offered Rate (“USD LIBOR”) based interest rate cap agreements as a result of the Atotech Acquisition and had utilized these agreements to offset Term SOFR on our Term Loan Facility.
+Added: The notional value of the agreements was $700 million as of December 31, 2023 and expired on January 31, 2024.
Effective June 30, 2023, our USD LIBOR based interest rate caps were converted to Term SOFR.
1 unchanged sentence
The conversions from USD LIBOR to Term SOFR did not have a material impact on our results of operations.
−Removed: The table below summarizes interest rate swaps and interest rate caps outstanding at December 31, 2023 and December 31, 2022:
−Removed: (Dollars in millions)
−Removed: Years Ended December 31,
−Removed: Effective Date
−Removed: Notional Amount at December 31, 2023
−Removed: Interest Rate Swaps
−Removed: April 5, 2019
−Removed: March 31, 2023
−Removed: June 30, 2023
−Removed: February 28, 2025
−Removed: June 30, 2023
−Removed: February 28, 2025
−Removed: September 30, 2022
−Removed: September 30, 2026
−Removed: January 2, 2024
−Removed: January 31, 2028
−Removed: September 30, 2022
−Removed: September 30, 2027
−Removed: January 2, 2024
−Removed: January 31, 2029
−Removed: September 30, 2022
−Removed: September 30, 2026
−Removed: December 28, 2023
−Removed: December 31, 2027
−Removed: Interest Rate Caps
−Removed: June 30, 2023
−Removed: January 31, 2024
−Removed: June 30, 2023
−Removed: January 31, 2024
−Removed: The interest rate swaps are recorded at fair value on the consolidated balance sheets and changes in the fair value are recognized in accumulated OCI.
+Added: The interest rate swaps are recorded at fair value on the consolidated balance sheets and changes in the fair value are recognized in OCI.
To the extent these arrangements are no longer effective hedges, the hedging relationship will be discontinued and changes in the fair value of the hedging instruments from the last assessment period that were effective up to the current period will be recorded immediately in earnings.
1 unchanged sentence
If we determine that the interest payments are unlikely to occur, amounts previously recorded in OCI will be reclassified to earnings immediately.
−Removed: Changes in the fair value of interest rate caps are recorded immediately in earnings, as we have not designated these instruments as hedges and therefore these instruments do not qualify for hedge accounting.
−Removed: Foreign Exchange Contracts and Net Investment Hedge
−Removed: We hedge a portion of our forecasted foreign currency denominated intercompany sales of inventory, over a maximum period of eighteen months, using foreign exchange forward contracts accounted for as cash-flow hedges.
+Added: Changes in the fair value of interest rate caps were recorded immediately in earnings, as we did not designate these instruments as hedges and therefore these instruments did not qualify for hedge accounting.
+Added: There was a benefit on these derivatives of $3 million in 2023 and there was no net impact on these derivatives in 2024.
+Added: The cash flows resulting from interest rate agreements are classified in cash flows from operating activities.
+Added: We expect a gain of approximately $17 million to be reclassified from accumulated OCI into interest expense during the twelve months ending December 31, 2025 related to interest rate swaps.
+Added: Foreign Exchange Forward Contracts
+Added: We hedge a portion of our forecasted foreign currency denominated intercompany sales of inventory, over a maximum period of twenty-four months, using foreign exchange forward contracts accounted for as cash-flow hedges.
To the extent these derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise meet the hedge accounting criteria, changes in the derivatives’ fair value are not included in current earnings but are included in accumulated OCI in stockholders’ equity.
2 unchanged sentences
The cash flows resulting from foreign exchange forward contracts are classified in the consolidated statements of cash flows as part of cash flows from operating activities.
−Removed: We do not enter into derivative instruments for trading or speculative purposes.
−Removed: We also enter into foreign exchange forward contracts to hedge against changes in the consolidated balance sheets for certain subsidiaries to mitigate the risk associated with certain foreign currency transactions in the ordinary course of business.
−Removed: These derivatives are not designated as cash flow hedging instruments and gains or losses from these derivatives are recorded immediately in other expense, net.
−Removed: We had foreign exchange forward contracts with notional amounts totaling $266 million outstanding at December 31, 2023, which included $71 million outstanding to exchange U.S.
−Removed: dollars to Euro, $70 million outstanding to exchange South Korean won to U.S.
−Removed: dollars and $65 million outstanding to exchange Japanese yen to U.S.
−Removed: We had foreign exchange forward contracts with notional amounts totaling $702 million outstanding at December 31, 2022, which included $485 million outstanding to exchange U.S.
−Removed: dollars to Euro and $75 million outstanding to exchange South Korean won to U.S.
−Removed: As of December 31, 2023, the unrealized loss that will be reclassified from OCI to earnings over the next twelve months is immaterial.
+Added: We also enter into foreign exchange forward contracts to hedge against certain monetary asset and liability accounts on the consolidated balance sheet to mitigate the risk associated with certain foreign currency transactions in the ordinary course of business.
+Added: These derivatives are not designated as cash flow hedging instruments and gains or losses from these derivatives are recorded immediately in other (income) expense, net.
+Added: The net foreign exchange gain on these derivatives was $1 million in 2024, compared to a loss of $4 million in 2023.
+Added: The cash flows resulting from foreign exchange forward contracts are classified in our consolidated statements of cash flows as part of cash flows from operating activities.
+Added: We had foreign exchange forward contracts designated as cash flow hedges with notional amounts totaling $74 million and $178 million outstanding at December 31, 2024 and at December 31, 2023, respectively, with the Japanese yen and the South Korean won being the largest notional contracts in both periods.
+Added: We had foreign exchange forward contracts not designated as hedging instruments with notional amounts totaling $154 million and $155 million outstanding at December 31, 2024 and at December 31, 2023, respectively.
+Added: The British pound and Chinese yuan were the largest notional contracts for 2024, and the Euro and British pound were the largest notional contracts for 2023 for balance sheet hedges not designated as a hedging instrument.
+Added: As of December 31, 2024, the unrealized gain that will be reclassified from accumulated OCI to cost of revenues over the next twelve months is approximately $7 million.
Gains and losses on foreign exchange forward contracts that qualify for hedge accounting are classified in cost of products in 2024 and 2023 and totaled gains of $6 million and $7 million, respectively.
There were no ineffective portions of the derivatives recorded in 2024 and 2023.
−Removed: We hedge certain intercompany accounts receivable and intercompany loans with foreign exchange forward contracts.
−Removed: Typically, as these derivatives hedge existing amounts that are denominated in foreign currencies, the derivatives do not qualify for hedge accounting.
−Removed: Realized and unrealized gains and losses on foreign exchange forward contracts that do not qualify for
−Removed: hedge accounting are recognized immediately in earnings.
−Removed: The net foreign exchange losses on these derivatives were $31 million and $8 million in 2023 and 2022, respectively.
−Removed: Foreign currency gains or losses are classified in other expense, net.
−Removed: The cash flows resulting from foreign exchange forward contracts are classified in our consolidated statements of cash flows as part of cash flows from operating activities.
−Removed: We do not hold or issue derivative financial instruments for trading purposes.
−Removed: On January 1, 2023, we designated certain Euro-denominated debt as a net investment hedge to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Euro.
−Removed: As of December 31, 2023, we designated as a net investment hedge €593 million in aggregate principal amount of our Euro Tranche B issued in August 2022.
+Added: Net Investment Hedge
+Added: We have designated certain Euro-denominated debt as a net investment hedge to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Euro.
+Added: As of December 31, 2024, we designated as a net investment hedge €596 million in aggregate principal amount of our Euro Tranche B loan.
For these nonderivative instruments, we defer recognition of the foreign currency remeasurement gains and losses within the foreign currency translation adjustment component of OCI.
−Removed: There was no net investment hedge designated in 2022 and all remeasurement gains and losses went directly to the statement of operations.
Contractual Obligations
13 unchanged sentences
We have a number of defined benefit pension plans, which cover some of our employees outside the United States.
−Removed: In addition, we have certain pension assets and liabilities relating to our former employees in the United Kingdom.
As of December 31, 2024, our estimated benefit payments over the next 10 years amount to $80 million.
1 unchanged sentence
Recent Accounting Pronouncements
−Removed: Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures
−Removed: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.
−Removed: 2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.
−Removed: Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker.
−Removed: The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable
−Removed: The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.
−Removed: A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements.
−Removed: We are currently evaluating the impact of this ASU on our disclosures within the consolidated financial statements.
Income Taxes (Topic 740):
6 unchanged sentences
For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.
−Removed: An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented.
−Removed: We are currently evaluating the impact of this ASU on our consolidated financial statements and related disclosures.
+Added: An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods or may apply the amendments retrospectively by providing the revised disclosures for all periods presented.
+Added: We are currently evaluating the impact on the consolidated financial statement disclosures;
+Added: however, adoption will not impact our consolidated balance sheets, cash flows or income statements.
+Added: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):
+Added: Disaggregation of Income Statement Expenses
+Added: In November 2024, the FASB issued ASU No.
+Added: 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):
+Added: Disaggregation of Income Statement Expenses, which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements.
+Added: The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.
+Added: We are currently evaluating the impact on the consolidated financial statement disclosures;
+Added: however, adoption will not impact our consolidated balance sheets, cash flows or income statements.
Quantitative and Qualitat ive Disclosures about Market Risk
Market Risk and Sensitivity Analysis
−Removed: Our primary exposures to market risks include fluctuations in interest rates on our Term Loan Facility, as defined and as described further in Item 7 of this Annual Report on Form 10-K, and investment portfolio, as well as fluctuations in foreign currency exchange rates.
+Added: Our primary exposures to market risks include fluctuations in interest rates on our Term Loan Facility, as defined and as described further in Item 7 of this Annual Report on Form 10-K, as well as fluctuations in foreign currency exchange rates.
Foreign Exchange Rate Risk
3 unchanged sentences
We also enter into foreign exchange forward contracts to reduce foreign exchange risks arising from the change in fair value of certain foreign currency denominated assets and liabilities.
−Removed: We had foreign exchange forward contracts with notional amounts totaling $266 million outstanding and a net fair value liability of $3 million at December 31, 2023.
−Removed: We had foreign exchange forward contracts with notional amounts totaling $702 million outstanding and a net fair value liability of $1 million at December 31, 2022.
+Added: We had foreign exchange forward contracts designated as cash flow hedges with notional amounts totaling $74 million and $178 million outstanding at December 31, 2024 and December 31, 2023, respectively, with the Japanese yen and the South Korean won being the largest notional contracts in both periods.
+Added: We had foreign exchange forward contracts not designated as hedging instruments with notional amounts totaling $154 million and $155 million outstanding at December 31, 2024 and December 31, 2023, respectively.
+Added: For 2024, the British pound and Chinese yuan were the largest notional contracts and for 2023 the Euro and British pound were the largest notional contracts for balance sheet hedges not designated as a hedging instrument.
The potential fair value loss for a hypothetical 10% adverse change in the currency exchange rate on our foreign exchange forward contracts at December 31, 2024 and 2023 would be immaterial.
−Removed: On January 1, 2023, we designated certain Euro-denominated debt as a net investment hedge to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Euro.
−Removed: As of December 31, 2023, we designated as a net investment hedge €593 million in aggregate principal amount of our Euro Tranche B issued in August 2022.
+Added: We designated certain Euro-denominated debt as a net investment hedge to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the Euro.
+Added: As of December 31, 2024, we designated as a net investment hedge €596 million in aggregate principal amount of our Euro Tranche B loan.
For these nonderivative instruments, we defer recognition of the foreign currency remeasurement gains and losses within the foreign currency translation adjustment component of OCI.
−Removed: There was no net investment hedge designated in 2022 and all remeasurement gains and losses went directly to the statement of operations.
Interest Rate Risk
−Removed: We hold our cash, cash equivalents and short-term investments for working capital purposes.
−Removed: Some of the securities we invest in are subject to market risk.
−Removed: This means that a change in prevailing interest rates may cause the principal amount of such investments to fluctuate.
−Removed: To minimize this risk, we maintain our portfolio of cash, cash equivalents and short-term investments in a variety of securities, including money market funds and government debt securities.
−Removed: Due to the short-term nature of these instruments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates.
+Added: We hold our cash and cash equivalents for working capital purposes.
+Added: Some of the cash equivalents are subject to market risk.
+Added: This means that a change in prevailing interest rates may cause the principal amount of such cash equivalents to fluctuate.
+Added: To minimize this risk, we maintain a portion of our portfolio of cash and cash equivalents in money market funds.
+Added: Due to the short-term nature of these instruments, we believe that we do not have any material exposure to changes in the fair value of our cash equivalents as a result of changes in interest rates.
Declines in interest rates, however, would reduce future interest income.
The effect of a hypothetical 10% increase or decrease in overall interest rates would not have had a material impact on our operating results or the total fair value of our portfolio.
−Removed: We have various interest rate swap and cap agreements as described further in “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Derivatives” that exchange the variable Term SOFR interest rate to a fixed rate in order to manage the exposure to interest rate fluctuations associated with the variable Term SOFR interest rate paid on the outstanding balance of the Term Loan Facility.
−Removed: We acquired USD LIBOR interest rate cap agreements as a result of the Atotech Acquisition and had utilized these agreements to offset the variable Term SOFR rate on our Term Loan Facility.
−Removed: Effective June 30, 2023, our USD LIBOR based interest rate caps were converted to Term SOFR.
−Removed: We also had two USD LIBOR based swaps that were converted to Term SOFR, effective June 30, 2023.
−Removed: The conversions from USD LIBOR to Term SOFR did not have a material impact on our results of operations.
+Added: We have various interest rate swap agreements as described further in “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Derivatives” that exchange the one-month Term SOFR interest rate to a fixed rate in order to manage the exposure to interest rate fluctuations associated with the variable Term SOFR interest rate paid on the outstanding balance of the Term Loan Facility.
We are exposed to market risks related to fluctuations in interest rates related to our Term Loan Facility.
1 unchanged sentence
A 10% increase or decrease in the weighted average interest rate as of December 31, 2024 would increase or decrease annual interest expense by approximately $13 million, excluding the effect of our interest rate hedges.
−Removed: Because the notional amount of our interest rate hedges as of December 31, 2023 equals approximately 61% of the principal outstanding on our Term Loan Facility, the resulting net impact to interest expense would be approximately $13 million.
+Added: Because the notional amount of our interest rate hedges as of December 31, 2024 equaled approximately 91% of the principal outstanding on our Term Loan Facility, the resulting net impact to interest expense would be approximately $4 million.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.