What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-24 compared with 2025-02-25 · 400 added, 524 removed, 983 unchanged (48% of the section changed)

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of MKS Instruments, Inc.

To the Board of Directors and Stockholders of MKS Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of MKS Instruments, Inc.

We have audited the accompanying consolidated balance sheets of MKS Inc.

and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2025 appearing after Item 16 (collectively referred to as the “consolidated financial statements”).

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We have served as the Company’s auditor since 1981.

MKS Instruments, Inc.

Consolidated B alance Sheets

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Trade accounts receivable, net of allowance for doubtful accounts of

$ 5 and $ 6 at December 31, 2024 and 2023, respectively

$ 5 at both December 31, 2025 and 2024

Other current assets

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The accompanying notes are an integral part of the Consolidated Financial Statements.

MKS Instruments, Inc.

Consolidated Statements of Opera tions and Comprehensive Income (Loss)

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Restructuring and other

Fees and expenses related to repricing of Term Loan Facility

Fees and expenses related to amendments to the Term Loan Facility

Amortization of intangible assets

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Loss on extinguishment of debt

Other (income) expense, net

Other expense (income), net

Income (loss) before income taxes

(Benefit) provision for income taxes

Provision (benefit) for income taxes

Net income (loss)

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Unrecognized pension gain (loss)

Unrealized loss on investments

Unrealized gain (loss) on investments

Total comprehensive income (loss)

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The accompanying notes are an integral part of the Consolidated Financial Statements.

MKS Instruments, Inc.

Consolidated Statements of Stockholders’ Equity

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Net issuance under stock-based plans

Shares issued for Atotech Acquisition

Stock-based compensation

Cash dividend ($ 0.88 per common share)

Comprehensive income (net of tax):

Other comprehensive income

Balance at December 31, 2022

Net issuance under stock-based plans

Stock-based compensation

Cash dividend ($ 0.88 per common share)

Comprehensive loss (net of tax):

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Balance at December 31, 2024

Net issuance under stock-based plans

Stock-based compensation

Stock repurchase

Cash dividend ($ 0.88 per common share)

Comprehensive income (net of tax):

Other comprehensive income

Balance at December 31, 2025

The accompanying notes are an integral part of the Consolidated Financial Statements.

MKS Instruments, Inc.

Consolidated Statem ents of Cash Flows

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Depreciation and amortization

Amortization of inventory step-up to fair value

Goodwill and intangible asset impairments

Unrealized loss (gain) on foreign currency and derivative instruments

Unrealized (gain) loss on foreign currency and derivative instruments

Amortization of debt issuance costs and original issue discount

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Deferred income taxes

Changes in operating assets and liabilities, net of acquired assets and liabilities:

Changes in operating assets and liabilities:

Trade accounts receivable

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Cash flows from investing activities:

Acquisitions of businesses, net of cash acquired

Purchases of investments

Maturities of investments

Proceeds from sale of long-lived assets

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Cash flows from financing activities:

Repurchase of common stock

Proceeds from borrowing

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Other financing activities

Net cash (used in) provided by financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

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Cash paid during the period for:

Supplemental noncash financing activities:

Right of use assets obtained in exchange for new finance lease liabilities

The accompanying notes are an integral part of the Consolidated Financial Statements.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(1) B usiness Description

MKS Instruments, Inc.

(“MKS” or the “Company”) was founded in 1961 and enables technologies that transform the world.

MKS Inc., formerly known as MKS Instruments, Inc.

(“MKS” or the “Company”), was founded in 1961 as a Massachusetts corporation and enables technologies that transform the world.

The Company delivers foundational technology solutions to leading edge semiconductor manufacturing, electronics and packaging, and specialty industrial applications.

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(2) Basis of Presentation

The terms “MKS” and the “Company” refer to MKS Instruments, Inc.

The terms “MKS” and the “Company” refer to MKS Inc.

and its subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

Certain prior period amounts have been reclassified to conform to current period presentation.

The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

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the Vacuum Solutions Division (“VSD”), the Photonics Solutions Division (“PSD”) and the Materials Solutions Division (“MSD”) as described in Note 20.

During the quarter ended March 31, 2024, the Company moved its Optical Sensing Products (“OSP”) product line from the PSD segment to the VSD segment.

The purpose of this realignment was to group the OSP products with related semiconductor products within the VSD segment.

Prior periods have been recast to reflect this change.

(3) Summary of Significant Accounting Policies

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Revenue is recognized when or as obligations under the terms of a contract with a customer have been satisfied and control has transferred to the customer.

The majority of the Company’s performance obligations, and associated revenue,

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

are transferred to customers at a point in time, generally upon shipment of a product to the customer or receipt of the product by the customer and without significant judgments.

The majority of the Company’s performance obligations, and associated revenue, are transferred to customers at a point in time, generally upon shipment of a product to the customer or receipt of the product by the customer and without significant judgments.

The Company recognizes revenue over time for contracts relating to the manufacturing, modifications and retrofits of its plating equipment, as the equipment is built to customer specification, and the Company has an enforceable right to payment for the performance completed to date.

For these sales, the Company uses the cost-to-cost input method to measure progress.

In cases, where cost-to-cost is not proportionate to its progress in satisfying the performance obligation because of uninstalled materials, the Company adjusts the measure of progress and recognizes revenue to the extent of cost incurred to satisfy the performance obligation under the contract.

In cases, where cost-to-cost is not proportionate to its progress in satisfying the performance obligation because of uninstalled materials, the Company

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

adjusts the measure of progress and recognizes 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 the Company, and that have an enforceable right to payment for performance completed to date, is also recorded over time.

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Adjustments for custom products were not material for 2025, 2024 or 2023.

Installation services, other than those related to the Company’s 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.

Extended warranty, service contracts, and repair services, which are transferred to the customer over time, are recorded as revenue as the services are performed.

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The Company has elected to use the practical expedient related to disclosing the remaining performance obligations as of December 31, 2025 and 2024 , as the majority have a duration of less than one year .

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Costs to Obtain and Fulfill a Contract

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The Company has elected to recognize the costs for freight and shipping when control over products has transferred to the customer as an expense in cost of sales.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Accounts Receivable Allowances

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Advertising costs are expensed as incurred and were immaterial in 2025, 2024 and 2023.

Government Incentives

The Company receives government incentives or grants for certain qualifying capital investments, research and development, and other activities as defined by the relevant government entities awarding the incentive.

Such incentives provided by government entities are recognized when the Company has reasonable assurance that it will comply with the conditions of the incentive and the incentive will be received.

The Company has elected to classify capital grants as a reduction to the carrying amount of the related asset and income grants as a reduction to the related expense.

The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (the “CHIPS Act”), signed into law on August 9, 2022, and the One Big Beautiful Bill Act (“OBBBA”), signed into law on July 4, 2025, offer various tax incentives and credits, including the Advanced Manufacturing Investment Credit (“AMIC”).

The AMIC equals 25 % of qualified investments made in an advanced manufacturing facility that is placed in service between January 1, 2023 and December 31, 2025.

For qualified investments placed in service after December 31, 2025 , the AMIC increases to 35 % provided that construction begins before January 1, 2027.

The Company expects to receive the AMIC in connection with ongoing expansion projects.

As of December 31, 2025 , the Company recorded $ 44 in other current assets related to the AMIC with a corresponding reduction to the carrying amounts of the qualifying manufacturing assets in property, plant and equipment.

The Company receives a benefit for the AMIC in the form of reduced depreciation expense, which is primarily recognized in cost of goods sold in the consolidated statement of operations, over the life of the manufacturing assets.

As of December 31, 2025, the benefit to depreciation expense from the AMIC was immaterial.

The impact of the AMIC on the consolidated financial statements as of December 31, 2025 and 2024 was immaterial.

Other government incentives and grants were not material for December 31, 2025 and 2024 .

The Company accounts for leases under ASC Topic 842, “Leases” (“ASC Topic 842”).

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The lease term used to calculate the lease liability includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company measures the lease liability as the present value of future lease payments, discounted using the discount rate for the lease at the commencement date.

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Stock-Based Compensation

The accounting for share-based compensation expense requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors based on estimated fair values.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

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.

For RSUs, the fair value is measured on the date of grant and expensed normally over a three-year period.

The accounting for share-based compensation expense requires the measurement and recognition of compensation expense for all stock-based awards for employees and directors based on estimated fair values.

Stock-based awards include (i) time-based restricted stock units (“time-based RSUs”), (ii) performance-based RSUs based on the achievement of Company adjusted EBITDA targets over a one-year performance period (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.

The Company determines the fair value of time-based RSUs based on the closing market price of the Company’s common stock on the date of grant reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting.

The Company does not include a forfeiture rate in the fair value measurement at the date of grant.

The Company determines the fair value of time-based RSUs based on the closing market price of the Company’s common stock on the date of the award.

The Company determines the original fair value of Adjusted EBITDA RSUs based upon the closing market price of the Company’s stock on the date of the award and adjusts the fair value quarterly during the first year based upon actual and forecasted results against Adjusted EBITDA targets.

The Company estimates 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.

Such values are recognized as expense on a straight-line basis for time-based awards and rTSR RSUs and using the accelerated graded vesting method for Adjusted EBITDA RSUs, all over the requisite service periods.

Time-based RSUs granted to employees generally vest 33 % per year over three years , beginning on the first anniversary of the grant date and are expensed on a straight-line basis over three years from the grant date.

Time-based RSUs granted to directors generally vest on the earliest of (1) one day prior to the next annual shareholder meeting or (2) 13 months from date of grant.

The Company determines the original fair value of Adjusted EBITDA RSUs, which are only granted to the Company’s executive officers and certain other officers, based upon the closing market price of the Company’s common stock on the date of grant reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting and adjusts the fair value quarterly during the one-year performance period based upon actual and forecasted results against Company Adjusted EBITDA targets.

The Company does not include a forfeiture rate in the fair value measurement at the date of grant.

Adjusted EBITDA RSUs vest 33 % per year over three years beginning on the first anniversary of the grant date, with compensation expense recognized according to the graded vesting method over three years.

These awards are based on the Company’s achievement of Adjusted EBITDA for a one-year performance period, defined as GAAP operating income for the relevant year excluding any charges or income not related to the operating performance of the Company plus depreciation, amortization and stock compensation expense.

The final number of Adjusted EBITDA RSUs earned is based on the actual level of performance achieved, which ranges from 0 % to 200 % of Adjusted EBITDA RSU target achievement.

The Company estimates the fair value of rTSR RSUs, which are only granted to the Company’s executive officers and certain other officers, using the Monte Carlo simulation model, which requires the use of highly subjective and complex assumptions, including the price volatility of the underlying common stock.

rTSR RSUs vest in full on the three-year anniversary of the grant date, subject to achievement of performance criteria and are expensed on a straight-line basis over three years from the grant date.

The final number of rTSR RSUs earned is based on the Company’s total shareholder return relative to a group of peers over the three-year performance period.

Employees who meet the retirement eligibility requirements under their RSU agreements may be eligible for full or partial acceleration of vesting of their time-based RSUs, Adjusted EBITDA RSUs and rTSR RSUs.

Expense is recognized between twelve and thirty-six months from the date of grant, depending on when the retirement eligibility requirements are met.

For certain grandfathered retirement eligibility provisions applicable to certain executive officers, time‑based RSUs are fully expensed on the grant date, while Adjusted EBITDA RSUs and rTSR RSUs may be expensed on a pro‑rated basis.

The Company also provides certain employees with the opportunity to purchase shares through its 2014 Employee Stock Purchase Plan (“2014 ESPP”).

The Company estimates the fair value of employee stock purchase plan rights 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

volatility over the term of the awards, expected life, risk-free interest rate and expected dividends.

Management determined that blended volatility, 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.

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Translation adjustments resulting from this process are recorded to Other Comprehensive Income (Loss) (“OCI”).

There were translation adjustment losses included in accumulated OCI, net of taxes, of $ 292 and $ 79 , as of December 31, 2024 and 2023, respectively.

Unrealized gains and losses on securities classified as available-for-sale and unrecognized pension gains and losses are included in accumulated OCI in consolidated stockholders’ equity.

For derivative instruments designated as cash-flow hedges and interest rate swap hedges, the effective portion of the derivative’s gain (loss) is initially reported as a component of OCI and is subsequently recognized in earnings, upon reclassification from accumulated OCI.

There were derivative gains included in accumulated OCI, net of taxes, of $ 30 and $ 31 , as of December 31, 2024 and 2023, respectively.

The related tax effects of these OCI items are recorded in income tax expense within the statement of income, upon reclassification from accumulated OCI.

Unrealized gains and losses on securities classified as available-for-sale and unrecognized pension gains and losses are recorded to OCI.

For derivative instruments and interest rate swap hedges designated as cash-flow hedges, the effective portion of the derivative’s gain (loss) is initially reported as a component of OCI and is subsequently recognized in earnings, upon reclassification from accumulated OCI.

The related tax effects of OCI items are recorded in income tax expense within the statement of operations, upon reclassification from accumulated OCI.

Net Income (Loss) Per Share

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The dilutive effect of equity awards is determined under the treasury stock method using the average market price for the period.

The dilutive effect of the Convertible Notes, as defined and further described in Note 14 to the Notes to Consolidated Financial Statements, is calculated under the if-converted method.

Common equivalent shares are included in the per share calculations when the effect of their inclusion would be dilutive.

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Debt securities that the Company does not have the intent and ability to hold to maturity are classified as “available-for-sale” and are carried at fair value.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company classifies investments with maturity dates greater than twelve months in short-term investments rather than long-term investments.

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The Company enters into foreign exchange forward contracts with high credit-quality financial institutions in order to minimize credit risk exposure.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company’s largest customers are primarily concentrated in the semiconductor industry, and a limited number of these customers account for a significant portion of the Company’s revenues.

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Key areas of estimation and judgment may include the selection of valuation approaches, cost of capital, market characteristics, cost structure, impacts of synergies, and estimates of terminal value, among other factors.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

While the Company uses estimates and assumptions as part of the purchase price allocation process to estimate the value of assets acquired and liabilities assumed, estimates are inherently uncertain and subject to refinement.

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Upon completion of a project, the Company expects the corresponding IPR&D intangible assets to be amortized over an estimated useful life of eight to nine years .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Indefinite-lived intangible assets, such as trade names, are not amortized;

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If the future undiscounted cash flows are less than their carrying value, impairment exists.

The impairment is

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

measured as the difference between the carrying value and the fair value of the underlying asset.

The impairment is measured as the difference between the carrying value and the fair value of the underlying asset.

Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.

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The resulting translation adjustments are included in OCI in consolidated stockholders’ equity.

Foreign exchange transaction gains and losses are classified in other (income) expense, net in the statement of operations and comprehensive income (loss).

Net foreign exchange losses resulting from re-measurement were $ 0 , $ 30 , and $ 5 for the years ended December 31, 2024, 2023, and 2022 , respectively, and are included in other (income) expense, net.

Foreign exchange transaction gains and losses are classified in other expense (income), net in the statement of operations and comprehensive income (loss).

Net foreign exchange losses resulting from re-measurement were $ 18 , $ 0 , and $ 30 for the years ended December 31, 2025, 2024, and 2023, respectively, and are included in other expense (income), net.

These amounts do not reflect the corresponding gain (loss) from foreign exchange forward contracts, which are included in cost of sales.

See Note 8 regarding foreign exchange forward contracts.

See Note 8 to the Notes to Consolidated Financial Statements regarding foreign exchange forward contracts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Employee Benefit Plans

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Income tax effects resulting from changes in tax law are accounted for by the Company in the period in which the law is enacted and the effects are recorded as a component of provision for income taxes from continuing operations.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

As a result of the Company's global operating activities and variable interest rate borrowings, the Company is exposed to market risks from changes in foreign currency exchange rates and interest rates, which may adversely affect its operating results and financial position.

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The Company does not enter into derivative instruments for trading or speculative purposes.

The Company uses 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.

The Company uses 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 OCI for the effective portion of the changes in fair value.

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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.

The Company assesses 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.

The Company assesses the hedging relationships, both at the inception of the hedge and on an ongoing basis, using either the critical terms matching approach

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

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.

By nature, all financial instruments involve market and credit risks.

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(4) Recent Accounting Pronouncements

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide certain interim periods disclosures that are currently only required annually.

Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”).

ASU 2023-07 does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

A public entity should apply the amendments in ASU 2023-07 retrospectively to all prior periods presented in the financial statements.

The Company adopted this standard during fiscal year 2024.

The adoption of this standard only impacts disclosures and did not have a material impact on the Company’s consolidated financial statements.

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-09, Income Taxes (Topic 740):

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An entity may apply the amendments 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.

The Company is currently evaluating the impact on its consolidated financial statement disclosures;

however, adoption will not impact its consolidated balance sheets, cash flows or income statements.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company adopted this standard during fiscal year 2025.

The adoption of this standard only impacts disclosures and did not have a material impact on the Company’s consolidated financial statements.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to financial statements.

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public companies to disclose, in interim and annual reporting periods, additional disaggregated information about certain income statement expense line items in the notes to financial statements.

The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

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however, adoption will not impact its consolidated balance sheets, cash flows or income statements.

Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements

In November 2025, the FASB issued ASU No, 2025-09, Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements (“ASU 2025-09”), which focuses on aligning hedge accounting with the economics of an entity’s risk management activities.

The amendments in ASU 2025-09 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact of adopting the new standard.

Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities

In December 2025, the FASB issued ASU No.

2025-10, Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), which establishes authoritative guidance on the recognition, measurement, presentation and disclosure of government grants received by business entities.

The amendments in ASU 2025-10 are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2025-10 but does not expect ASU 2025-10 adoption to have a material impact on its consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Interim Reporting (Topic 270):

Narrow-Scope Improvements

In December 2025, the FASB issued ASU No.

2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements (“ASU 2025-11”), which clarifies interim disclosure requirements and the applicability of Topic 270.

The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2025-11 but does not expect ASU 2025-11 adoption to have a material impact on its consolidated financial statements.

(5) Revenue from Contracts with Customers

Contract assets as of December 31, 2025 and 2024 were $ 45 and $ 30 , respectively.

A roll forward of the Company’s deferred revenue and customer advances is as follows:

Beginning balance, January 1 (1)

Contract assets reflect revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing.

The Company has elected to use the practical expedient and is not disclosing the remaining performance obligations related to deferred revenue and customer advances because these obligations generally have a duration of less than one year.

A roll forward of the Company’s deferred revenue and customer advances was as follows:

Beginning of period (1)

Additions to deferred revenue and customer advances

Amount of deferred revenue and customer advances recognized in income

Ending balance, December 31 (2)

(1) Beginning deferred revenue and customer advances as of January 1, 2024 included $ 77 of current deferred revenue and customer advances, and $ 2 of long-term deferred revenue.

Beginning deferred revenue and customer advances as of January 1, 2023 included $ 94 of current deferred revenue and customer advances, and $ 2 of long-term deferred revenue.

End of period (2)

(1) Beginning deferred revenue and customer advances balances as of January 1, 2025 included $ 71 of current deferred revenue and customer advances and $ 2 of long-term deferred revenue.

Beginning deferred revenue and customer advances balances as of January 1, 2024 included $ 77 of current deferred revenue and customer advances and $ 2 of long-term deferred revenue.

The majority of the beginning balance in 2025 and 2024 was recognized in each year.

(2) Ending deferred revenue and customer advances as of December 31, 2024 included $ 71 of current deferred revenue and customer advances, and $ 2 of long-term deferred revenue.

Ending deferred revenue and customer advances as of December 31, 2023 included $ 77 of current deferred revenue and customer advances, and $ 2 of long-term deferred revenue.

(2) Ending deferred revenue and customer advances balances as of December 31, 2025 included $ 79 of current deferred revenue and customer advances and $ 4 of long-term deferred revenue.

Ending deferred revenue and customer advances balances as of December 31, 2024 included $ 71 of current deferred revenue and customer advances and $ 2 of long-term deferred revenue.

Revenue from certain custom products, including MSD plating equipment, and revenue from certain service contracts are recorded over time.

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Refer to Note 20 for revenue by reportable segment, geography and groupings of similar products.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Net income (loss) per common share:

Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period.

Diluted net income (loss) per common share is computed by dividing the diluted net income (loss) available to common shareholders by the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.

Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period.

Diluted net income (loss) per common share is computed by dividing the diluted net income (loss) available to common stockholders by the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period.

The dilutive effect of equity awards is calculated based on the average stock price for the relevant period, using the treasury stock method.

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The dilutive effect of the Convertible Notes is calculated under the if-converted method.

Shares that would be issued if the Convertible Notes were converted are not included in the calculation of diluted net income (loss) per common share as the Company’s share price is below the initial conversion price and inclusion would be antidilutive.

In 2024 and 2022 , the Company had an immaterial quantity of RSUs that were antidilutive and were excluded from the computation of diluted weighted-average shares.

In 2025 and 2024 , the Company had an immaterial quantity of RSUs that were antidilutive and excluded from the computation of diluted weighted-average shares.

Shares of common stock that would have been issued if the Convertible Notes had been converted are not included in the calculation of diluted net income per common share as the Company’s average share price during these periods was below the initial conversion price and inclusion would be antidilutive.

(7) Fair Value Measurements

11 unchanged sentences

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, the Company categorizes such assets and liabilities based on the lowest level input that is significant to the fair

MKS INSTRUMENTS, INC.

In such cases, the Company categorizes such assets and liabilities based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Assets and liabilities of the Company are measured at fair value on a recurring basis as of December 31, 2025, and are summarized as follows:

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Identical Assets

Significant Other

Cash equivalents

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(1) The cash and cash equivalents amount presented in the table above does not include cash of $ 418 as of December 31, 2025.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Identical Assets

Significant Other

Cash equivalents

1 unchanged sentence

Time deposits

Equity securities

Available-for-sale securities:

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Foreign exchange forward contracts

Interest rate caps - current

Interest rate swaps - current

Interest rate swaps - non-current

Pension and deferred compensation plan assets

Foreign exchange forward contracts

Foreign exchange forward contracts-current

Interest rate swaps - current

Total liabilities

6 unchanged sentences

Other Fair Value Disclosures

The estimated carrying value and fair value of the Company’s debt as of December 31, 2024 and 2023 is as follows:

The estimated carrying value and fair value of the Company’s debt were as follows:

Years Ended December 31,

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Convertible Notes

The estimated carrying value of the Company’s Term Loan Facility, as defined and further described in Note 15, was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks, terms and maturities, which fall within Level 2 under the fair value hierarchy.

The estimated fair value of the Company’s Term Loan Facility, as defined and further described in Note 14, was determined using available market information based on recent trades or activity of debt instruments with substantially similar risks, terms and maturities, which fall within Level 2 under the fair value hierarchy.

The estimated fair value of the Company’s Convertible Notes, as defined and further described in Note 14, was determined based on the last traded price of the Convertible Notes for the period ended December 31, 2025, and falls under Level 2 of the fair value hierarchy.

Money Market Funds

Money market funds are cash and cash equivalents and are classified within Level 1 of the fair value hierarchy.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Money Market Funds

Money market funds are cash and cash equivalents and are classified within Level 1 of the fair value hierarchy.

Pension and Deferred Compensation Plan Assets

The pension and deferred compensation plan assets represent investments in mutual funds, exchange traded funds, government securities and other time deposits.

These investments are set aside for retirement benefits of certain of the Company's subsidiaries.

These investments are set aside for retirement benefits for employees of certain of the Company’s subsidiaries.

As a result of the Company’s global operating activities and variable interest rate borrowings, the Company is exposed to market risks from changes in foreign currency exchange rates and interest rates, which may adversely affect its operating results and financial position.

When deemed appropriate, the Company minimizes its risks from foreign currency exchange rate and interest rate fluctuations through the use of derivative financial instruments.

When appropriate, the Company uses derivative financial instruments to minimize its exposure to risks from foreign currency exchange rate and interest rate fluctuations.

The principal market in which the Company executes its foreign currency and interest rate contracts is the institutional market in an over-the-counter environment with a relatively high level of price transparency.

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Foreign Exchange Forward Contracts

The Company hedges a portion of its 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.

The Company hedges a portion of its forecasted foreign currency-denominated intercompany sales of inventory and certain of its foreign subsidiaries’ operating expenses, 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 OCI in stockholders’ equity.

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To the extent that a previously designated hedging transaction is no longer an effective hedge, any ineffectiveness measured in the hedging relationship is recorded in earnings in the period it occurs.

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.

The Company also enters 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.

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.

The following table summarizes the net notional values of foreign exchange forward contracts outstanding as of December 31, 2024 and December 31, 2023:

These derivatives are not designated as cash flow hedging instruments and gains or losses from these derivatives are recorded immediately in other expense (income), net.

The following table summarizes the net notional values of foreign exchange forward contracts outstanding:

Years Ended December 31,

Derivatives designated as hedging instruments:

Designated as cash flow hedging instruments:

Foreign exchange forward contracts - cash flow hedges

Derivatives not designated as hedging instruments:

Not designated as cash flow hedging instruments:

Foreign exchange forward contracts - balance sheet hedges

For both periods presented in the table, the Japanese yen and the South Korean won were the largest notional contracts for designated cash flow hedges.

For 2024, the British pound and Chinese yuan were the largest notional contracts for balance sheet hedges not designated as a hedging instrument.

For 2023, the Euro and British pound were the largest notional contracts for balance sheet hedges not designated as a hedging instrument.

As of December 31, 2025 , the Canadian dollar was the only notional contract for designated cash flow hedging instruments.

As of December 31, 2024, the Japanese yen and the South Korean won were the largest notional contracts designated as cash flow hedging instruments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

As of December 31, 2025, the Euro, Chinese yuan, British pound and New Taiwan dollar were the largest notional contracts for balance sheet hedges not designated as cash flow hedging instruments.

As of December 31, 2024, the British pound and Chinese yuan were the largest notional contracts for balance sheet hedges not designated as a hedging instrument.

Net Investment Hedge

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As of December 31, 2025, the total principal amount outstanding under its Euro Tranche B was € 587 and the entire balance was designated as a net investment hedge.

As of December 31, 2023, the

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

total principal amount outstanding under its Euro Tranche B was € 593 and the entire balance was designated as a net investment hedge.

As of December 31, 2024, the total principal amount outstanding under its Euro Tranche B was € 596 and the entire balance was designated as a net investment hedge.

For these net investment hedges, the Company records foreign currency remeasurement gains and losses within a component of OCI.

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Interest Rate Agreements

The Company has various interest rate swap agreements maturing through January 31, 2029, that exchange a one-month forward-looking term rate based on the variable secured overnight financing rate (“Term SOFR”) paid on the outstanding balance of its USD Term Loan Facility, as defined and further described in Note 15, to a fixed rate.

The Company has various interest rate swap agreements, which are cash-flow hedges, maturing through January 31, 2029, that exchange a one-month forward-looking term rate based on the variable secured overnight financing rate (“Term SOFR”) paid on the outstanding balance of its USD Term Loan Facility, as defined and further described in Note 14, to a fixed rate.

The notional value of the agreements was $ 1,900 and $ 2,600 as of December 31, 2025 and December 31, 2024 , respectively.

The Company acquired USD London Interbank Offered Rate (“LIBOR”) interest rate cap agreements as a result of its acquisition of Atotech Limited (“Atotech”) on August 17, 2022 (the “Atotech Acquisition”) and had utilized these agreements to offset Term SOFR on its Term Loan Facility.

The notional value of the agreements was $ 700 as of December 31, 2023 and expired on January 31, 2024 .

Effective June 30, 2023, the Company’s USD LIBOR based interest rate caps were converted to Term SOFR.

The Company also had two USD LIBOR based swaps that were converted to Term SOFR, effective June 30, 2023.

The conversions from USD LIBOR to Term SOFR did not have a material impact on the Company’s results of operations.

The interest rate cap agreements expired on January 31, 2024 .

The interest rate swaps are recorded at fair value on the balance sheet and changes in the fair value are recognized in OCI.

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Changes in the fair value of interest rate caps were recorded immediately in earnings, as the Company did not designate these instruments as hedges and therefore these instruments did not qualify for hedge accounting.

The cash flows resulting from interest rate agreements are classified in cash flows from operating activities.

The cash flows resulting from interest rate agreements were classified in cash flows from operating activities in the consolidated statements of cash flows.

The following table summarizes the net gains (losses) on derivatives designated as cash flow hedging instruments:

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Net gains (losses) reclassified from accumulated OCI into interest expense

The Compan y expects a gain of approximately $ 7 to be reclassified from OCI into cost of revenues during the next twelve months related to foreign exchange forward contracts.

The Company expects a gain of approximately $ 17 to be reclassified from OCI into interest expense during the next twelve months related to interest rate swaps.

The following table summarizes the net gains (losses) on derivatives not designated as hedging instruments:

Years Ended December 31,

Net (losses) gains recognized in other (income) expense, net

The interest rate caps resulted in a reduction of $ 3 , $ 30 and $ 5 to interest expense in 2024, 2023 and 2022, respectively.

Currency Option Agreements

In connection with financing the Atotech Acquisition, the Company issued euro denominated term loan debt.

In anticipation of issuing this debt, the Company purchased foreign currency option contracts in 2021 to fix the conversion

MKS INSTRUMENTS, INC.

For derivatives designated as cash flow hedging instruments as of December 31, 2025 , t he Compan y expects an immaterial amount of gains or losses to be reclassified from accumulated OCI into cost of revenues related to foreign exchange forward contracts and into interest expense related to interest rate hedges during the next 12 months.

The following table summarizes the net (losses) gains on derivatives not designated as hedging instruments:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

of EUR 300 into U.S.

The options settled on January 31, 2022, and the Company recorded a gain of $ 5 , net of premiums, in 2022 which is included in other (income) expense, net in the table above.

Years Ended December 31,

Net (losses) gains recognized in other expense (income), net

The interest rate caps resulted in a reduction of $ 3 and $ 30 to interest expense in 2024 and 2023, respectively.

Derivative instruments are subject to master netting arrangements.

4 unchanged sentences

Years Ended December 31,

Raw materials

Work-in-process

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The non-real estate leases are mainly comprised of automobiles but also include office equipment and other lower-valued items.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Finance leases

(1) Operating cash flows used for operating leases for the year ended December 31, 2023 and 2022 include an immaterial amount of tenant improvement allowance receipts.

(1) Operating cash flows used for operating leases for the year ended December 31, 2023 include an immaterial amount of tenant improvement allowance receipts.

The weighted average remaining terms for all leases were as follows:

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Amounts presented above do not include payments relating to immaterial leases excluded from the consolidated balance sheets as well as leases with terms of less than twelve months.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

(12) Acquisitions

On August 17, 2022 (the “Effective Date”), the Company completed the Atotech Acquisition, through the acquisition of the entire issued share capital of Atotech by Atotech Manufacturing, Inc.

(“Bidco”), a Delaware corporation and indirect wholly owned subsidiary of the Company.

The Atotech Acquisition was implemented by means of a scheme of arrangement under the laws of Jersey (the “Scheme”) pursuant to the definitive agreement entered into by the Company and Atotech on July 1, 2021 (as amended, the “Implementation Agreement”).

Atotech, which the Company operates as MSD, develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing.

Applying a comprehensive systems-and-solutions approach, Atotech's portfolio includes chemistry, equipment and services for innovative and high-technology applications in a wide variety of end markets.

Atotech further broadens the Company’s capabilities by bringing leadership in critical chemistry solutions for electronics and packaging and specialty industrial applications.

On the Effective Date, pursuant to the Scheme and in accordance with the terms and conditions of the Implementation Agreement, Bidco acquired each issued and outstanding ordinary share of Atotech in exchange for per share consideration of $ 16.20 in cash and 0.0552 of a share of Company common stock.

The Company 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 in Note 15.

As a result of the Atotech Acquisition, the Company issued an aggregate of 10.7 shares of Company common stock to the former Atotech shareholders.

The purchase price of Atotech consisted of the following:

Cash consideration to Atotech stockholders, net

Value of MKS shares issued

Repayment of Atotech senior secured term loans

Settlement of accelerated Atotech share-based awards

Total purchase price, net of cash and cash equivalents acquired

Under the acquisition method of accounting, the total purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of Atotech based on their fair values as of the Effective Date, except for contract assets and liabilities, which remain at book value in accordance with ASC Topic 606, Revenue from Contracts with Customers.

Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed was allocated to goodwill and none of this goodwill or intangible assets will be deductible for tax purposes.

The Company believes the amount of goodwill relative to identifiable intangible assets relates to several factors, including (1) broadening its position in key electronics and industrial markets to offer complementary solutions, and (2) leveraging component and systems expertise to provide robust solutions to meet its customers’ evolving technology needs.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The following table summarizes the allocation of the purchase price to the fair values assigned to assets acquired and liabilities assumed at the Effective Date inclusive of immaterial measurement period adjustments:

Cash and cash equivalents

Accounts receivable

Other current assets

Property, plant and equipment

Intangible assets

Total assets acquired

Accounts payable

Other current liabilities

Non-current deferred taxes

Non-current accrued compensation

Other non-current liabilities

Total liabilities assumed

Fair value of assets acquired and liabilities assumed

Cash and cash equivalents acquired

Total purchase price, net of cash and cash equivalents acquired

The fair value of the acquired intangible assets was determined using the income approach.

In performing these valuations, the key underlying assumptions used included the appropriate discount rates as well as forecasted revenue growth rates, gross profit and operating expenses.

Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.

The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations.

The valuations were based on the information that was available during the one-year measurement period that existed as of the Effective Date and the expectations and assumptions that have been deemed reasonable by the Company's management.

The size and breadth of the Atotech Acquisition necessitated the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the fair value of certain tangible and intangible assets acquired and liabilities assumed as of the Effective Date and the related tax impacts of any changes made.

The measurement period is now complete.

The following table reflects the allocation of the acquired intangible assets and related estimate of useful lives at the Effective Date:

Customer relationships

11 - 14 years

Completed technology

In-process research and development

The acquired intangible assets are being amortized on a straight-line basis, which approximates the economic use of the assets over their estimated useful liv es.

Upon completion of the related projects, the Company expects the IPR&D intangible asset to be amortized over its estimated useful life of eight to nine years .

During the fourth quarter of 2022, the Company recorded adjustments to balances reported as of, and for the period ended, September 30, 2022, resulting from foreign currency translation of the preliminary allocation of intangible assets and goodwill from the Atotech Acquisition in August 2022 and the related effect on cumulative translation adjustment and deferred tax liabilities.

The adjustments recorded were to correct an overstatement of goodwill of $ 43 , intangible assets, net of $ 56 , and non-current deferred tax liabilities of $ 38 , and an understatement of both accumulated OCI and OCI of $ 61 .

These adjustments that the Company recorded did not affect net income, earnings per share or the consolidated statements of cash flows.

The Company assessed these adjustments in accordance with SEC Staff

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Accounting Bulletin (“SAB”) No.

99 and SAB No.

108 and determined they were not material to the interim financial statements taken as a whole.

Pro Forma Results

The following unaudited pro forma financial information presents the combined results of operations of the Company as if the Atotech Acquisition had occurred on January 1, 2022.

The unaudited pro forma financial information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had the acquisition occurred on the assumed date.

In addition, the unaudited pro forma financial information does not attempt to project the future results of operations of the combined Company.

December 31, 2022

Total net revenues

The unaudited pro forma information for the year ended December 31, 2022 give effect primarily to the following:

• Applying the Company’s accounting policies;

• Incremental interest expense related to the Term Loan Facility;

• Incremental amortization of acquired intangible assets related to the estimated fair value from the purchase price allocation;

• The exclusion of inventory step-up amortization in 2022;

• Incremental depreciation of acquired property, plant and equipment related to the estimated fair value from the purchase price allocation;

• Incremental compensation expense for share-based compensation arrangements;

• The estimated tax impact of the above adjustments.

(12) Goodwill and Intangible Assets

The Company’s methodology for allocating the purchase price of an acquisition is determined through established and generally accepted valuation techniques.

Goodwill is measured as the excess of the cost of the acquisition over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed.

Goodwill is measured as the excess of the cost of the acquisition over the sum of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed.

The Company assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition.

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The Company regularly monitors current business conditions and other factors, including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results.

The Company’s stock price and any estimated control premium are factors affecting the

MKS INSTRUMENTS, INC.

The Company’s stock price and any estimated control premium are factors affecting the assessment of the fair value of the Company’s underlying reporting units for purposes of performing any goodwill impairment assessment.

Effective January 1, 2025, the Company reassigned goodwill to certain reporting units within PSD resulting from a reorganization of the business.

The goodwill was reassigned to the new reporting units using the relative fair value approach.

The Company also concluded that the fair value of each reporting unit immediately before and after the reorganization exceeded its respective carrying value.

Goodwill associated with each of the Company’s reportable segments was as follows:

Reportable segment:

Gross goodwill at December 31, 2024

Foreign currency translation adjustments

Gross goodwill at December 31, 2025

Accumulated goodwill impairment at December 31, 2024

Impairment charge

Accumulated goodwill impairment at December 31, 2025

Goodwill, net of accumulated impairment and foreign currency translation adjustments at December 31, 2025

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

assessment of the fair value of the Company’s underlying reporting units for purposes of performing any goodwill impairment assessment.

The changes in the carrying amount of goodwill and accumulated impairment losses were as follows:

Gross Carrying Amount

Accumulated Impairment Loss

Gross Carrying Amount

Accumulated Impairment Loss

Beginning balance at January 1

Impairment of goodwill

Acquired goodwill

Foreign currency translation and measurement period adjustments

Ending balance at December 31

As of October 31, 2024, the Company performed its annual impairment assessment of goodwill using a qualitative assessment for all of its reporting units.

Reportable segment:

Gross goodwill at December 31, 2023

Movement of OSP product line

Foreign currency translation adjustments

Gross goodwill at December 31, 2024

Accumulated goodwill impairment at December 31, 2023

Impairment charge

Accumulated goodwill impairment at December 31, 2024

Goodwill, net of accumulated impairment and foreign currency translation adjustments at December 31, 2024

As of October 31, 2025 and 2024, the Company performed its annual impairment assessment of goodwill using a qualitative assessment for all of its reporting units.

The Company determined that it was more likely than not that the fair values were more than the carrying values for each of the reporting units.

During the quarter ended June 30, 2023, the Company identified softer industry demand, particularly in the personal computer and smartphone markets, and concluded there was a triggering event at each of its electronics (“EL”) and general metal finishing reporting (“GMF”) units, which together constitute MSD, and the equipment solutions business (“ESB”) reporting unit of PSD.

For each of the three reporting units, the Company performed a quantitative assessment of goodwill using a weighting of an income approach and market approach.

The income approach was based upon projected future cash flows that were discounted to present value and an assumed terminal growth rate.

The key underlying assumptions included forecasted revenues, which incorporated external market data, terminal growth rate, gross profit and operating expenses, as well as an applicable discount rate for each reporting unit.

The market approach for each of the three reporting units incorporated observed multiples of guideline public companies.

The market approach for the EL and GMF reporting units also incorporated multiples from guideline transactions.

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 the Company’s management.

There are inherent uncertainties and management judgment required in these determinations.

This quantitative assessment during the quarter ended June 30, 2023 resulted in the following:

Reporting Unit

Goodwill Impairment

Remaining Goodwill

General Metal Finishing

Equipment Solutions Business

In addition, the Company used an income approach to determine the fair value of the long-lived and indefinite-lived intangible assets within these reporting units (Level 3 within the fair value hierarchy).

These valuations resulted in a $ 20 fair value and $ 152 impairment of completed technology within the ESB reporting unit and a $ 72 fair value and $ 49 impairment of IPR&D within the EL reporting unit.

After evaluating forecast updates and carrying values, the Company did not identify impairments at any other of its reporting units.

For the completed technology valuation within the ESB reporting unit, the forecasted future undiscounted cash flows were consistent with the Company’s goodwill analysis, using an approximate 7 year useful life, an 8 % weighted-average forecasted revenue growth rate, and a discount rate of 13.5 %.

For the IPR&D intangible asset within the EL reporting unit, the forecasted undiscounted future cash flows utilized were consistent with the Company’s goodwill analysis, with estimated time to complete in-process projects of up to 2 years, and a discount rate of 12.5 %.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

As of October 31, 2023, the Company performed its annual goodwill and intangible asset impairment assessment using a quantitative assessment for all its reporting units.

For the EL, GMF and ESB reporting units, the Company performed a quantitative assessment of goodwill using an equal weighting of the income approach and market approach and for the VSD and PSD reporting units only used an income approach.

The income approach was based upon projected future cash flows that were discounted to present value and an assumed terminal growth rate.

The key underlying assumptions included forecasted revenues, which incorporated external market data, the terminal growth rate, gross profit and operating expenses, as well as an applicable discount rate for each reporting unit.

The market approach incorporated observed multiples of guideline public companies.

The market approach for the electronics and general metal finishing reporting units also incorporated multiples from guideline transactions.

This quantitative assessment during the quarter ended December 31, 2023 resulted in the following:

Reporting Unit

Goodwill Impairment

Remaining Goodwill

Equipment Solutions

There was no goodwill impairment at any of the Company’s other reporting units.

The Company will continue to monitor for future triggering events which could result in an impairment charge.

In addition, the Company used an income approach to determine the fair value of the long-lived and indefinite lived intangible assets within these reporting units (Level 3 within the fair value hierarchy).

These valuations resulted in a $ 14 impairment of IPR&D within the EL reporting unit as it was determined that there was no remaining fair value in its remaining projects.

After evaluating forecast updates and carrying values, the Company did not identify impairments at any other of its reporting units.

Intangible Assets

The Company’s intangible assets are comprised of the following:

The Company’s intangible assets were comprised of the following:

As of December 31, 2025

Impairment Charges

Accumulated Impairment Charges

Accumulated Amortization

Foreign Currency

Foreign Currency Translation

Completed technology

2 unchanged sentences

As of December 31, 2024

Accumulated Impairment

Translation and Measurement Period Adjustments

Accumulated Impairment Charges

Accumulated Amortization

Foreign Currency Translation

Completed technology

1 unchanged sentence

Patents, trademarks, trade names and other

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

During the twelve months ended December 31, 2023, $ 117 of IPR&D included with patents, trademarks, trade names and other was reclassified into completed technology.

Aggregate amortization expense related to acquired intangible assets for 2025, 2024 and 2023 was $ 247 , $ 245 and $ 295 , respectively.

Aggregate amortization expense related to acquired intangible assets for future years is:

Aggregate amortization expense related to acquired intangible assets for future years is as follows:

The Company excluded from the above table intangible assets of $ 56 of indefinite-lived trademarks and trade names, which were not subject to amortization.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

(13) Product Warranties

22 unchanged sentences

Total long-term debt, net

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

In connection with the completion of the Atotech Acquisition, on August 17, 2022 (the “Effective Date”) the Company 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 (the “Credit Agreement”).

The Credit Agreement provided for (i) a senior secured term loan facility comprised of three tranches:

a $ 1,000 loan (the “USD Tranche A”), a $ 3,600 loan (as further increased, refinanced and otherwise modified as described herein, the “USD Tranche B”) and a € 600 loan (as further increased and otherwise modified as described herein, 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 (as further increased and otherwise modified as described herein, 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.

The Credit Agreement initially provided for (i) a senior secured term loan facility comprised of three tranches:

a $ 1,000 loan (as further refinanced and otherwise modified as described herein, the “USD Tranche A”), a $ 3,600 loan (as further refinanced and otherwise modified as described herein, the “USD Tranche B”) and a € 600 loan (as further refinanced and otherwise modified as described herein, 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 (as further increased and otherwise modified as described herein, 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.

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 the Company and certain indebtedness of Atotech.

Initially, borrowings under the Credit Facilities bore interest at a rate per annum equal to, at the Company’s option, any of the following, plus, in each case, an applicable margin:

(a) with respect to the USD Tranche A, the Revolving Facility and 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 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 USD Tranche A and the Revolving Facility, 0.0 %;

The Company has entered into six amendments to the Credit Agreement since the Effective Date (as amended, the “Amended Credit Agreement”), including most recently the Sixth Amendment (as defined below).

For more information, see Note 23 to the Notes to Consolidated Financial Statements.

As of December 31, 2025 , after giving effect to all amendments and repayments prior to such date, the Amended Credit Agreement provided for (i) the Term Loan Facility comprised of two tranches:

the USD Tranche B in an outstanding principal amount of $ 2,188 and the Euro Tranche B in an outstanding principal amount of € 587 and (ii) the Revolving Facility with aggregate commitments of $ 675 .

As of December 31, 2025 , borrowings under the Credit Facilities bore interest at a rate per annum equal to, at the Company’s option, any of the following, plus, in each case, an applicable margin:

(a) with respect to the Revolving Facility and 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 Term SOFR (plus, with respect to the Revolving Facility, an applicable credit spread adjustment) for an interest period of one month, plus 1.00 %;

and (y) a Term SOFR rate (plus, with respect to the Revolving Facility, 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 %.

Initially, the applicable margins for borrowings under the Credit Facilities were (i) under the USD Tranche A, 1.50 % with respect to base rate borrowings and 2.50 % with respect to Term SOFR borrowings, (ii) under the USD Tranche B, 1.75 % with respect to base rate borrowings and 2.75 % with respect to Term SOFR borrowings, (iii) under the Euro Tranche B, 3.00 % and (iv) under the Revolving Facility, 1.50 % with respect to base rate borrowings and 2.50 % with respect to Term SOFR borrowings.

As of December 31, 2025 , the applicable margins for borrowings under the Credit Facilities were (i) under the USD Tranche B, 1.00 % with respect to base rate borrowings and 2.00 % with respect to Term SOFR borrowings, (ii) under the Euro Tranche B, 2.50 % and (iii) under the Revolving Facility, 1.50 % with respect to base rate borrowings and 2.50 % with respect to Term SOFR borrowings.

In addition to paying interest on outstanding principal under the Credit Facilities, the Company is required to pay a commitment fee in respect of the unutilized commitments under the Revolving Facility.

1 unchanged sentence

The Company must also pay customary letter of credit fees and agency fees.

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.

On October 3, 2023 (the “First Amendment Effective Date”), the Company entered into the First Amendment to Credit Agreement (the “First Amendment”), which refinanced all of the $ 3,564 outstanding 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 adjustment applicable to Term SOFR borrowings of the USD Tranche B.

On January 22, 2024 (the “Second Amendment Effective Date”), the Company entered into the Second Amendment to Credit Agreement (the “Second Amendment”), pursuant to which the Company (i) borrowed additional USD Tranche B loans in an aggregate principal amount of $ 490 and additional Euro Tranche B loans in an aggregate principal amount of € 250 (collectively, the “Incremental Tranche B Loans”) and (ii) used a portion of the proceeds of the Incremental Tranche B Loans to prepay the USD Tranche A in full in an aggregate principal amount of $ 744 .

On February 13, 2024, the Company entered into the Third Amendment to Credit Agreement (the “Third Amendment”), pursuant to which the Company increased the available borrowing capacity under the Revolving Facility by $ 175 (the “Incremental Revolving Commitments”).

As of December 31, 2024, the available borrowing capacity under the Revolving Facility was $ 675 .

MKS INSTRUMENTS, INC.

As of December 31, 2025 , the commitment fee was 0.25 % per annum.

On January 24, 2025, the Company entered into the Fifth Amendment to Credit Agreement (the “Fifth Amendment”), pursuant to which the Company (i) refinanced its existing USD Tranche B loan and Euro Tranche B loan with a new $ 2,529 USD Tranche B loan and a new € 596 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 and (iii) decreased the applicable margin for the Euro Tranche B from 2.75 % to 2.50 %.

The repriced USD Tranche B loan and Euro Tranche B loan were issued without original issue discount.

In connection with the execution of the Fifth Amendment, the Company paid customary fees and expenses to JPMorgan Chase Bank, N.A.

On January 24, 2025, concurrently with the effectiveness of the Fifth Amendment, the Company made a voluntary prepayment of $ 100 principal amount to the USD Tranche B loan.

On each of June 27, 2025, August 1, 2025 and October 29, 2025, the Company made an additional voluntary prepayment of $ 100 principal amount to the USD Tranche B loan.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

On July 23, 2024 (the “Fourth Amendment Effective Date”), the Company entered into the Fourth Amendment to Credit Agreement (the “Fourth Amendment”), pursuant to which the Company (i) refinanced its existing USD Tranche B loan and Euro Tranche B loan with a new $ 2,650 USD Tranche B loan and a new € 800 Euro Tranche B loan, (ii) decreased the applicable margin for the USD Tranche B from 2.50 % to 2.25 % with respect to Term SOFR borrowings and from 1.50 % to 1.25 % with respect to base rate borrowings and (iii) decreased the applicable margin for the Euro Tranche B from 3.00 % to 2.75 %.

On July 23, 2024, immediately prior to the effectiveness of the Fourth Amendment, the Company made a voluntary prepayment of $ 110 aggregate principal amount under the Term Loan Facility, consisting of $ 69 principal amount of its USD Tranche B loan and € 38 principal amount of its Euro Tranche B loan.

The USD Tranche B and the Euro Tranche B were issued on the Effective Date with original issue discount of 2.00 % of the principal amounts thereof.

The USD Tranche B was issued on the First Amendment Effective Date with original issue discount of 0.25 % of the principal amount thereof.

The Incremental Tranche B Loans were issued with original issue discount of 0.25 % of the principal amount thereof.

The Company incurred $ 242 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.

The Company incurred $ 11 of deferred financing fees and original issue discount related to the USD Tranche B funded on the First Amendment Effective Date, of which $ 9 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.

The Company recorded an $ 8 loss on extinguishment of debt in connection with the First Amendment.

The Company incurred $ 5 of deferred financing fees and original issue discount related to the Incremental Tranche B Loans funded on the Second Amendment Effective Date, of which $ 2 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.

The Company recorded a $ 9 loss on extinguishment of debt in connection with the Second Amendment.

The Company recorded a $ 5 loss on extinguishment of debt in connection with the Fourth Amendment as a result of the acceleration of deferred financing and original issue discounts.

Under the Credit Agreement, the Company is required to prepay outstanding term loans, subject to certain exceptions, with portions of its 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.

Under the Amended Credit Agreement, the Company is required to prepay outstanding term loans, subject to certain exceptions, with portions of its 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, the Company is required to repay outstanding loans and/or cash collateralize letters of credit, with no reduction of the commitment amount.

The Company 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;

provided, however, that subject to certain exceptions, if on or prior to the date that is six months after the Fourth Amendment Effective Date, the Company prepays any loans under the USD Tranche B or the Euro Tranche B in connection with a repricing transaction, the Company must pay a prepayment premium of 1.00 % of the aggregate principal amount of the loans so prepaid.

provided, however, that subject to certain exceptions, if on or prior to the date that is six months after the Fifth Amendment Effective Date, the Company prepays any loans under the USD Tranche B or the Euro Tranche B in connection with a repricing transaction, the Company must pay a prepayment premium of 1.00 % of the aggregate principal amount of the loans so prepaid.

Additionally, the Company may voluntarily reduce the unutilized portion of the commitment amount under the Revolving Facility.

Prior to the repayment in full of the USD Tranche A, the Company was required to make scheduled quarterly payments each equal to 1.25 % of the original principal amount of the USD Tranche A.

The Company is required to make scheduled quarterly payments each equal to approximately $ 10 with respect to the USD Tranche B and approximately € 2 with respect to the Euro Tranche B, in each case with the balance due thereunder on the seventh anniversary of the Effective Date.

As of December 31, 2025, the Company was required to make scheduled quarterly payments each equal to approximately $ 10 with respect to the USD Tranche B and approximately € 2 with respect to the Euro Tranche B, in each case with the balance due thereunder on the maturity date of the Term Loan Facility.

There is no scheduled amortization under the Revolving Facility.

Any principal amount outstanding under the Revolving Facility is due and payable in full on the fifth anniversary of the Effective Date.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Any principal amount outstanding under the Revolving Facility is due and payable in full on the maturity date of the Revolving Facility.

All obligations under the Credit Facilities are guaranteed by certain of the Company’s wholly-owned domestic subsidiaries and are required to be guaranteed by certain of the Company’s future wholly-owned domestic subsidiaries, and are secured by substantially all of the Company’s assets and the assets of such subsidiaries, subject to certain exceptions and exclusions.

Under the Credit Agreement, the Company has the ability to incur additional incremental debt facilities in an amount up to (x) the greater of (1) $ 1,011 and (2) 75 % of consolidated last twelve months earnings before interest, taxes, depreciation, and amortization (“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) .

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, the Company may not allow its 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 .

In addition, in the event there are no loans outstanding under the USD Tranche A, as of the end of any fiscal quarter of the Company 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 the Company and its restricted subsidiaries) exceeds 35 % of the aggregate amount of all commitments under the Revolving Facility in effect as of such date, the Company 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 .

The USD Tranche B and the Euro Tranche B are not subject to financial maintenance covenants.

The Credit Agreement contains a number of negative covenants that, among other things and subject to certain exceptions, restrict the ability of the Company and each of its subsidiaries to:

incur additional indebtedness;

pay dividends on its capital stock or redeem, repurchase or retire its capital stock or its subordinated indebtedness;

make investments, loans and acquisitions;

create restrictions on the payment of dividends or other amounts to the Company from the Company’s restricted subsidiaries or restrictions on the ability of the Company’s restricted subsidiaries to incur liens;

engage in transactions with its affiliates;

sell assets, including capital stock of its subsidiaries;

materially alter the business it conducts;

consolidate or merge;

and engage in sale-leaseback transactions.

The Credit Agreement also contains customary representations and warranties, affirmative covenants and provisions relating to events of default.

The Amended Credit Agreement contains customary representations and warranties, covenants and provisions relating to events of default.

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.

As of December 31, 2024, the Company was in compliance with all covenants under the Credit Agreement.

The Company paid certain customary fees to and expenses of (i) JPMorgan Chase Bank, N.A., Barclays Bank PLC, BofA Securities, Inc., Citibank, N.A., HSBC Securities (USA) Inc.

and Mizuho Bank, Ltd.

in their respective capacities as lead arrangers and bookrunners in connection with the Credit Facilities on the Effective Date, (ii) JPMorgan Chase Bank, N.A.

in its capacity as lead arranger in connection with each of the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and (iii) the lenders providing the Incremental Revolving Commitments pursuant to the Third Amendment.

As described further below under “Convertible Notes,” on May 16, 2024, the Company completed a private offering of convertible senior notes.

A significant portion of the net proceeds from the offering was used to repay approximately $ 1,206 of the USD Tranche B.

As a result of the repayment, the Company recorded a $ 38 loss on extinguishment of debt.

As of December 31, 2025, the Company was in compliance with all covenants under the Amended Credit Agreement.

As of December 31, 2025 , the weighted average interest rate of the Term Loan Facility was 5.4 %.

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.

As of December 31, 2025, the Revolving Facility had a maturity date in August 2027 while the Term Loan Facility had a maturity date in August 2029.

As of December 31, 2025 , there were no borrowings under the Revolving Facility.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Convertible Notes

On May 16, 2024, the Company completed a private offering of $ 1,400 aggregate principal amount of its convertible senior notes due 2030 (the “Convertible Notes”).

The Convertible Notes were sold in a private placement under a purchase agreement, dated as of May 13, 2024 (the “Purchase Agreement”), entered into by and between the Company and each of Morgan Stanley & Co.

Morgan Securities LLC, BofA Securities, Inc.

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 .

The aggregate principal amount of the Convertible Notes sold in the offering was $ 1,400 , which included $ 200 aggregate principal amount of the Convertible Notes issued pursuant to an option to purchase, within a 13-day period beginning on, and including, the date on which the Convertible Notes were first issued, which the initial purchasers exercised in full on May 14, 2024 and which additional purchase was also completed on May 16, 2024 .

The net proceeds from the offering were approximately $ 1,374 after deducting the initial purchasers’ discounts and commissions and estimated offering expenses paid by the Company.

1 unchanged sentence

The Company used the remaining net proceeds from the offering to repay approximately $ 1,206 in borrowings outstanding under the USD Tranche B, together with accrued interest, as well as for general corporate purposes.

As a result of the repayment, the Company recorded a $ 38 loss on extinguishment of debt in the three months ended June 30, 2024.

Indenture and the Convertible Notes

3 unchanged sentences

The Convertible Notes will mature on June 1, 2030 , unless earlier converted, redeemed or repurchased in accordance with their terms.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Subject to certain conditions, on or after June 5, 2027, the Company 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 the Company’s 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.

2 unchanged sentences

Upon conversion, the Company 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 the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.

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.

Prior to the close of business on the business day immediately preceding March 1, 2030, noteholders may convert all or any portion of their Convertible Notes under the following circumstances:

• during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ended September 30, 2024, if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the applicable conversion price of the Convertible Notes on each applicable trading day (approximately $ 200.62 per share based on an initial conversion price of approximately $ 154.32 per share, which is subject to adjustment upon the occurrence of certain events);

• during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $ 1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on each such trading day;

• if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date;

• upon the occurrence of specified corporate events as specified in the Indenture.

On or after March 1, 2030, until the close of business on the second scheduled trading day immediately preceding the maturity date, noteholders may convert all or any portion of their Convertible Notes at any time.

If the Company undergoes a fundamental change (as defined in the Indenture) prior to the maturity date of the Convertible Notes, holders may require the Company 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.

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.

As of December 31, 2024, the Convertible Notes are classified as a long-term liability, net of issuances costs, on the consolidated balance sheet.

As of December 31, 2025, the Convertible Notes were classified as a long-term liability, net of issuances costs, on the consolidated balance sheet.

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.

There were no conversions of the Convertible Notes in 2025 and 2024.

As of December 31, 2025 , the effective interest rate of the Convertible Notes was 1.56 %.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9 unchanged sentences

Contractual interest expense

Amortization of debt issuance costs as interest expense

Amortization of debt issuance costs as interest

Total interest expense on Term Loan Facility

4 unchanged sentences

Total interest expense on Convertible Notes

Other interest expense, net (1)

Other interest (income) expense, net (1)

Total interest expense

(1) Other interest expense, net primarily consists of interest (income) expense related to the Company’s interest rate swap and interest rate cap agreements.

(1) Other interest (income) expense, net primarily consists of interest (income) expense related to the Company’s interest rate swap and interest rate cap agreements.

Lines of Credit and Borrowing Arrangements

3 unchanged sentences

Contractual maturities of the Company’s debt obligations as of December 31, 2025 are as follows:

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7 unchanged sentences

Income taxes payable

Lease liabilities

Accrued expenses

Total other current liabilities

(16) Income Taxes

A reconciliation of the Company’s effective tax rate to the U.S.

federal income tax statutory rate is as follows:

The components of income (loss) before income taxes and the related provision (benefit) for income taxes consist of the following:

Years Ended December 31,

federal income tax statutory rate

Foreign derived intangible income deduction

Change in valuation allowance

Income (loss) before income taxes:

United States

Current provision (benefit) for income taxes:

Deferred provision (benefit) for income taxes:

Provision (benefit) for income taxes

The following table is a reconciliation of the Company’s effective tax rate to the U.S.

federal statutory income tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09:

federal statutory income tax rate

State and local income taxes, net of federal income tax effect (1)

Foreign tax effects

Intercompany royalty

Withholding taxes

Audit settlement related to intercompany transactions

Effect of changes in tax laws or rates enacted in the current period

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Statutory tax rate difference between Israel and United States

Withholding taxes

Changes in valuation allowances

Realized foreign exchange gain (loss)

Withholding taxes

Other foreign jurisdictions

Effect of cross-border tax laws

Base erosion and anti-abuse tax related waiver of deductions

Foreign-derived intangible income

Subpart F, net of foreign tax credits

Research and development tax credits

Foreign tax credit related to withholding taxes

Nontaxable or nondeductible items

Stock-based compensation

Changes in unrecognized tax benefits

Other adjustments

Effective tax rate

(1) State taxes in California, Oregon, and Massachusetts made up the majority (greater than 50 percent) of the tax effect in this category.

The Company adopted ASU 2023-09 on a prospective basis effective January 1, 2025.

Prior period information has not been restated and is presented under the disclosure requirements in effect during those periods.

The following table is a reconciliation of the Company’s effective tax rate to the U.S.

federal statutory income tax rate for the years ended December 31, 2024 and December 31, 2023 in accordance with the guidance prior to the adoption of ASU 2023-09:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Years Ended December 31,

federal statutory income tax rate

Foreign-derived intangible income

Changes in valuation allowances

Withholding taxes, net of foreign tax credits

8 unchanged sentences

Goodwill impairment

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The components of income (loss) before income taxes and the related (benefit) provision for income taxes consist of the following:

Years Ended December 31,

Income (loss) before income taxes:

United States

Current taxes:

Deferred taxes:

(Benefit) provision for income taxes

Effective tax rate

The significant components of the deferred tax assets and deferred tax liabilities are as follows:

5 unchanged sentences

Lease liability

Depreciation and amortization

Inventory and warranty reserves

12 unchanged sentences

The future benefit to be derived from its deferred tax assets is dependent upon its ability to generate sufficient future taxable income to realize the assets.

During 2024, the Company decreased its valuation allowance by $ 39 , primarily related to the valuation allowance recorded in connection with certain foreign interest and net operating loss carryforwards.

During 2023, the Company increased its valuation allowance by $ 9 , primarily related to the valuation allowance recorded in connection with certain foreign interest and net operating loss carryforwards.

MKS INSTRUMENTS, INC.

During 2025, the Company decreased its valuation allowance by $ 72 , primarily related to certain foreign interest and net operating loss carryforwards.

During 2024, the Company decreased its valuation allowance by $ 39 , primarily related to certain foreign interest and net operating loss carryforwards.

Deferred taxes have been recorded related to historical outside basis differences, primarily unremitted earnings, of certain of the Company’s foreign subsidiaries.

During 2025, the Company recorded a tax benefit of $ 4 related to such taxes.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Deferred taxes have been recorded related to historical outside basis differences, primarily unremitted earnings, of certain of the Company’s foreign subsidiaries.

During 2024, the Company recorded a tax benefit of $ 8 related to such taxes for prior periods.

As of December 31, 2025, the Company had U.S.

federal and state as well as foreign gross research and other tax credit carryforwards of $ 16 , $ 39 and $ 0 , respectively.

Included in the total carryforwards are $ 1 of federal and $ 20 of state credits that can be carried forward indefinitely while the remaining credits expire at various dates through 2038 .

The Company also had U.S.

federal and state as well as foreign gross net operating loss and capital loss carryforwards of $ 3 , $ 41 and $ 273 , respectively.

Included in the total carryforwards are $ 2 , $ 1 and $ 50 of losses from federal, state and foreign that can be carried forward indefinitely while the remaining losses expire at various dates through 2043 .

federal and state as well as foreign gross research and other tax credit carryforwards of $ 29 , $ 40 and $ 0 , respectively, which are presented gross of unrecognized tax benefits.

Included in the total tax credit carryforwards as of December 31, 2025 are $ 1 of federal and $ 16 of state tax credits that can be carried forward indefinitely while the remaining tax credits expire at various dates through 2040 .

As of December 31, 2025, the Company also had U.S.

federal and state as well as foreign net operating loss and capital loss carryforwards of $ 2 , $ 3 and $ 263 , respectively.

Included in the total loss carryforwards are $ 2 , $ 0 and $ 263 of losses from federal, state and foreign that can be carried forward indefinitely while the remaining losses expire at various dates through 2044 .

The Company had $ 280 and $ 377 of U.S.

9 unchanged sentences

Balance at end of year

The net increase in gross unrecognized tax benefits in 2024 was primarily due to the addition of income tax reserves related to intercompany transactions.

The Company also recorded an offsetting asset of $ 18 against these reserves.

The net increase in gross unrecognized tax benefits in 2025 was primarily due to the addition of income tax reserves related to intercompany transactions offset by a decrease related to audit settlements.

The Company accrues interest and, if applicable, penalties for any uncertain tax positions.

Interest and penalties are classified as a component of income tax (benefit) expense.

Interest and penalties are classified as a component of income tax provision (benefit).

As of December 31, 2025, 2024 and 2023, the Company accrued interest on unrecognized tax benefits of approximately $ 10 , $ 8 and $ 7 , respectively.

Over the next 12 months, it is reasonably possible that the Company may recognize approximately $ 3 of previously net unrecognized tax benefits, excluding interest and penalties, related to various U.S.

federal and state as well as foreign tax positions, primarily due to the expiration of statutes of limitations.

The Company is subject to examination by U.S.

1 unchanged sentence

federal statute of limitations remains open for tax years 2020 through the present.

The Company is under U.S.

federal audit by the Internal Revenue Service for the years ended December 31, 2020, 2021 and 2022, and does not expect and is not aware of any unrecorded material adjustments.

The statute of limitations for the Company’s tax filings in other jurisdictions varies between fiscal years 2020 through present.

The Company also has 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The components of cash paid (net of refunds received) for income taxes as of December 31, 2025 are as follows:

Federal taxes

United States

Other state jurisdictions

Foreign taxes

Other foreign jurisdictions

Total cash taxes paid

Cash paid (net of refunds received) for income taxes as of December 31, 2024 and 2023 were $ 145 and $ 180 , respectively.

(17) Stock-Based Compensation

5 unchanged sentences

The price at which an employee’s purchase option is exercised for each offering period is the lower of (1) 90 % of the closing price of the common stock on the Nasdaq Global Select Market on the day that the offering commences, or (2) 90 % of the closing price of the common stock on the day that the offering terminates.

The Company issued 0.1 shares of common stock

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

during each of 2024, 2023 and 2022 to employees who participated in the 2014 ESPP at exercise prices of $ 102.28 and $ 75.77 per share in 2024, $ 74.95 and $ 74.30 per share in 2023, and $ 111.15 and $ 75.47 per share in 2022.

The Company issued 0.1 shares of common stock during each of 2025, 2024 and 2023 to employees who participated in the 2014 ESPP at exercise prices of $ 74.24 and $ 73.97 per share in 2025, $ 102.28 and $ 75.77 per share in 2024, and $ 74.95 and $ 74.30 per share in 2023.

The Company recorded an immaterial amount of compensation expense related to the 2014 ESPP in 2025, 2024 and 2023.

1 unchanged sentence

Equity Incentive Plans

Prior to May 10, 2022, the Company granted RSUs to employees and directors under the 2014 Stock Incentive Plan (the “2014 Plan”).

Following shareholder approval of the 2022 Stock Incentive Plan (the “2022 Plan,” and together with the 2014 Plan, the “Plans”) on May 10, 2022, the Company discontinued granting RSUs to employees and directors under the 2014 Plan and began granting them under the 2022 Plan.

The Plans are administered by the Compensation Committee of the Company's Board of Directors.

The Plans are intended to attract and retain employees and directors, and to provide an incentive for these individuals to assist the Company to achieve long-range performance goals and enable these individuals to participate in the long-term growth of the Company.

The Company grants RSUs to employees and directors under the 2022 Stock Incentive Plan (the “Plan”).

The Plan is administered by the Compensation Committee of the Company's Board of Directors.

The Plan is intended to attract and retain employees and directors, and to provide an incentive for these individuals to assist the Company to achieve long-range performance goals and enable these individuals to participate in the long-term growth of the Company.

Up to 6.6 shares of common stock (subject to adjustment in the event of stock splits and other similar events) may be issued pursuant to awards granted under the Plan.

6 unchanged sentences

As of December 31, 2025, there were 2.6 shares reserved for future issuance under the Plan.

Time-based RSUs granted to employees generally vest 33 % per year beginning on the first anniversary of the date of grant.

Adjusted EBITDA RSUs granted to the Company’s executive officers in 2024, 2023 and 2022 were based on the Company’s achievement of adjusted EBITDA for each respective year, defined as GAAP operating income excluding any charges or income not related to the operating performance of the Company plus depreciation and stock compensation expense, set at varying revenue levels.

The final number of Adjusted EBITDA RSUs that vest varies based on the level of performance achieved from 0 % to 200 % of the underlying target shares granted in 2024, 2023 and 2022.

The Adjusted EBITDA RSUs earned generally vest 33 % per year beginning on the first anniversary of the date of grant.

For rTSR RSUs, the vesting is dependent on the Company's total shareholder return relative to a group of peers over the performance period.

RSUs granted to certain employees who meet certain retirement eligibility requirements will vest in full upon each such employee’s retirement and are expensed immediately.

RSUs granted to directors generally vest at the earliest of (1) one day prior to the next annual meeting, (2) 13 months from date of grant, or (3) the effective date of a change in control of the Company.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company determines the fair value of time-based RSUs based on the closing market price of the Company’s common stock on the date of the award.

The Company recorded an immaterial amount of compensation expense related to the rTSR RSUs in 2024.

The following tables present the activity for the RSUs under the Plans:

The following tables present the activity for the RSUs:

Year Ended December 31, 2025

Weighted Average Grant Date Fair Value Per Share

RSUs — beginning of period

Beginning of period

Vested or forfeited

RSUs — end of period

End of period

Year Ended December 31, 2024

Weighted Average Grant Date Fair Value Per Share

RSUs — beginning of period

Beginning of period

Vested or forfeited

RSUs — end of period

End of period

Year Ended December 31, 2023

Weighted Average Grant Date Fair Value Per Share

RSUs — beginning of period

RSUs issued in Atotech Acquisition

RSUs — end of period

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Beginning of period

Vested or forfeited

End of period

The total fair value of RSUs vested during 2025, 2024 and 2023 was approximately $ 48 , $ 66 and $ 40 , respectively.

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Total stock-based compensation

(Excess tax benefit)/shortfall from stock-based compensation

Shortfall/(excess tax benefit) from stock-based compensation

Net effect on net income (loss)

Effect on net earnings (loss) per share:

The pre-tax effect within the consolidated statements of operations and comprehensive income (loss) of recording stock-based compensation was as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The pre-tax effect of stock-based compensation expense included in the Company’s consolidated statements of operations and comprehensive income (loss) was as follows:

Years Ended December 31,

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These repurchases may be commenced, suspended or discontinued at any time without prior notice.

The Company has repurchased approximately 2.6 shares of common stock for approximately $ 127 pursuant to the program since its adoption.

Any repurchased shares are held by the Company as authorized but unissued shares.

During 2025 , the Company repurchased approximately 0.5 shares of its common stock for total consideration of $ 45 .

During 2024 and 2023 , there were no repurchases of common stock.

The Company has repurchased approximately 3.1 shares of common stock for approximately $ 172 pursuant to the program since its adoption.

Cash Dividends

Holders of the Company’s common stock are entitled to receive dividends when they are declared by the Company’s Board of Directors.

Holders of the Company’s common stock are entitled to receive dividends when and if they are declared by the Company’s Board of Directors.

The Company’s Board of Directors declared a cash dividend of $ 0.22 per share during each quarter of 2025, which totaled $ 59 or $ 0.88 per share.

1 unchanged sentence

On February 9, 2026 , the Company’s Board of Directors declared a quarterly cash dividend of $ 0.25 per share to be paid on March 6, 2026 to stockholders of record as of February 23, 2026 .

MKS INSTRUMENTS, INC.

Future dividend declarations, if any, as well as the record and payment dates for such dividends, are subject to the final determination of the Company’s Board of Directors.

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component, net of tax in the aggregate of $ 7 , $( 7 ) and $( 32 ) as of December 31, 2025, 2024, and 2023, respectively, were as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Future dividend declarations, if any, as well as the record and payment dates for such dividends, are subject to the final determination of the Company’s Board of Directors.

Changes in value of financial instruments designated as cash flow hedges

Foreign currency translation adjustments

Change in net investment hedge

Unrecognized pension gain (loss)

Unrealized (loss) gain on investments

Balance at December 31, 2022

Other comprehensive income (loss) before reclassifications

Amounts reclassified out of AOCI

Net other comprehensive income (loss)

Balance at December 31, 2023

Other comprehensive income (loss) before reclassifications

Amounts reclassified out of AOCI

Net other comprehensive income (loss)

Balance at December 31, 2024

Other comprehensive income (loss) before reclassifications

Amounts reclassified out of AOCI

Net other comprehensive income (loss)

Balance at December 31, 2025

(19) Employee Benefit Plans

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The Company maintains a management incentive bonus plan (“MIP”) which provides cash awards to certain employees, at the discretion of the Compensation Committee of the Company’s Board of Directors, based upon certain metrics tied to the Company’s consolidated financial results.

In addition, certain of the Company’s foreign locations also have various bonus plans, which in 2024 were generally based upon the same consolidated financial results as the MIP.

In 2023 and 2022, these foreign bonus plans were based upon local operating results and employee performance.

The Company may also grant certain sign-on and spot bonuses when applicable.

In addition, certain of the Company’s foreign locations also have bonus programs, which in 2025 and 2024 were generally based upon the same consolidated financial results as the MIP.

In 2023, some of these foreign locations based certain bonus programs upon local operating results and employee performance.

The Company may also grant certain sign-on, retention, and spot bonuses when applicable.

The total bonus expense was $ 103 , $ 38 and $ 63 for 2025, 2024 and 2023, respectively.

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Actual results that differ from these assumptions would impact future expense recognition and the cash funding requirements of the Company’s pension plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The net periodic benefit costs for the defined benefit plans included the following components:

2 unchanged sentences

Expected return on plan assets

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The changes in projected benefit obligations and plan assets, as well as the ending balance sheet amounts for the Company’s defined benefit plans, were as follows:

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Estimated benefit

The Company expects to contribute less than $ 1 to the plans during 2025.

The Company expects to contribute $ 1 to the plans during 2026.

The weighted-average rates used to determine the net periodic benefit costs were as follows:

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Expected long-term rate of return on assets

In determining the expected long-term rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance.

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Plan assets were held in the following categories as a percentage of total plan assets:

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These assets are invested in group insurance contracts through the insurance companies administering these plans, in accordance with applicable pension laws.

These group insurance contracts have a guaranteed minimum rate of return ranging from 2.25 % to 4.00 % in 2024 and 2.00 % to 4.25 % in 2023, depending on the contract.

These group insurance contracts have a guaranteed minimum rate of return ranging from 2.25 % to 4.00 % in 2025 and 2024 , depending on the contract.

Because these assets were not separate legal assets of the pension plan, they were not included in the Company’s plan assets shown above.

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Reportable Segments and Products

The Company’s CODM, which is the Company’s Chief Executive Officer , utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company, which is used in the decision-making process to assess performance.

The Company’s Chief Operating Decision Maker (the “CODM”), which is the Company’s Chief Executive Officer , utilizes financial information to make decisions about allocating resources and assessing performance for the entire Company, which is used in the decision-making process to assess performance.

The Company has a diverse base of customers across its three end markets, semiconductor, electronics and packaging, and specialty industrial.

Segment gross margin is the primary measure used by the CODM to assess segment performance and to decide how to allocate resources.

The Company’s CODM assesses segment performance and decides how to allocate resources using segment gross margin among other measures.

Gross margin is utilized to drive decisions in the annual forecasting process when making decisions about allocating capital and personnel to the segments.

Segment gross margin is the primary measure used by the CODM to assess segment performance and allocate resources.

Gross margin, among other measures, is utilized when making decisions about capital and personnel allocations across segments.

The Company has three reporting segments, VSD, PSD and MSD as described below.

VSD delivers foundational technology solutions to semiconductor manufacturing, electronics and packaging and specialty industrial applications.

VSD delivers foundational technology solutions for semiconductor manufacturing, electronics and packaging, and specialty industrial applications.

VSD products are derived from the Company’s 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.

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 PCB laser processing, laser-based systems for high-density interconnect PCB and package substrate manufacturing.

PSD provides a broad range of instruments, components and subsystems to leading edge semiconductor manufacturing, electronics and packaging and specialty industrial applications.

PSD products are derived from our core competencies in lasers, photonics, optics, precision motion control and vibration control.

MSD develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing.

Applying a comprehensive systems-and-solutions approach, MSD’s portfolio includes chemistry, equipment and services for innovative and high-technology applications in the electronics and packaging and specialty industrial markets.

MKS INSTRUMENTS, INC.

Applying a comprehensive systems-and-solutions approach, MSD’s portfolio

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

includes chemistry, equipment and services for innovative and high-technology applications in the electronics and packaging and specialty industrial markets.

The Company derives its segment results directly from the manner in which results are reported in its management reporting system.

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Unallocated corporate expenses represent those costs not specifically related to the operations of each segment and are managed separately at the corporate level and primarily relate to labor costs of global functions such as supply chain, quality control and operations.

The following tables sets forth the details of gross profit by reportable segment and then reconciles to income (loss) before income taxes for each year presented:

The following tables set forth the details of gross profit by reportable segment and the reconciliation to income (loss) before income taxes:

Year Ended December 31, 2025

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Selling, general and administrative

Acquisition and integrated costs

Restructuring and other

Fees and expenses related to repricing of Term Loan Facility

Fees and expenses related to amendments to the Term Loan Facility

Amortization of intangible assets

4 unchanged sentences

Loss on extinguishment of debt

Other (income) expense, net

Other expense (income), net

Income before income taxes

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5 unchanged sentences

Segment gross profit percentage

Reconciliation to loss before income taxes

Reconciliation to income before income taxes

Operating expenses:

2 unchanged sentences

Acquisition and integrated costs

Restructuring

Fees and expenses related to repricing of Term Loan Facility

Restructuring and other

Fees and expenses related to amendments to the Term Loan Facility

Amortization of intangible assets

Goodwill and intangible asset impairment

Gain on sale of long-lived assets

Unallocated corporate expenses

Loss from operations

Income from operations

Interest income

2 unchanged sentences

Other (income) expense, net

Loss before income taxes

Income before income taxes

Year Ended December 31, 2023

3 unchanged sentences

Segment gross profit percentage

Reconciliation to income before income taxes

Reconciliation to loss before income taxes

Operating expenses:

2 unchanged sentences

Acquisition and integrated costs

Restructuring

Restructuring and other

Fees and expenses related to amendments to the Term Loan Facility

Amortization of intangible assets

Goodwill and intangible asset impairment

Gain on sale of long-lived assets

Unallocated corporate expenses

Income from operations

Loss from operations

Interest income

Interest expense

Other (income) expense, net

Income before income taxes

MKS INSTRUMENTS, INC.

Loss on extinguishment of debt

Other expense (income), net

Loss before income taxes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

(1) The significant expense category and amount aligns with the segment-level information that is regularly provided to the CODM.

The following table set forth capital expenditures by reportable segment:

The following table sets forth capital expenditures by reportable segment:

Years Ended December 31,

10 unchanged sentences

Total segment assets

receivable, net

December 31, 2022

Total segment assets

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The following tables reconciles total segment assets to total assets:

The following table reconciles total segment assets to total assets:

Total segment assets

2 unchanged sentences

Property, plant and equipment, net

Right-of-use assets, net

Right-of-use assets

Goodwill and intangible assets, net

Goodwill associated with each of the Company’s reportable segments is as follows:

Reportable segment:

Gross goodwill at December 31, 2023

Movement of OSP product line

Foreign currency translation and measurement period adjustments

Gross goodwill at December 31, 2024

Accumulated goodwill impairment at December 31, 2023

Impairment charge

Accumulated goodwill impairment at December 31, 2024

Goodwill, net of accumulated impairment and foreign currency translation at December 31, 2024

Reportable segment:

Gross goodwill at December 31, 2022

Foreign currency translation and measurement period adjustments

Gross goodwill at December 31, 2023

Accumulated goodwill impairment at December 31, 2022

Impairment charge

Accumulated goodwill impairment at December 31, 2023

Goodwill, net of accumulated impairment and foreign currency translation at December 31, 2023

Geographic Area

Information about the Company’s operations by geographic area is presented in the tables below.

Starting in the second quarter of 2024, the Company changed its basis of reporting geographical net revenues from the location in which the sale originated to the shipped-to location of the end customer.

Prior periods have been recast to reflect this change, which was

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

made to better align with how management reviews geographic net revenues.

Intercompany sales between geographic areas are at tax transfer prices and have been eliminated from consolidated revenues.

Geographic Area

Information about the Company’s operations by geographic area is presented in the tables below.

Net revenues from unaffiliated customers are based on the shipped-to location of the end customer.

I ntercompany sales between geographic areas are at tax transfer prices and have been eliminated from consolidated revenues.

Years Ended December 31,

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The Company sells products and services to thousands of customers worldwide, in a wide range of end markets.

Revenues from its top ten customers accounted for 32 % , 30 % and 42 % of net revenues for 2024, 2023, and 2022, respectively.

For the years ended December 31, 2024 and 2023, no customer represented 10% or more of the Company’s net revenues.

For the year ended December 31, 2022 , the Company had one customer that represented 14% and one customer that represented 10% of net revenues.

(22) Restructuring and Other

The Company’s top ten customers accounted for 35 % , 32 % and 30 % of net revenues for 2025, 2024, and 2023 , respectively.

(21) Restructuring

The Company recorded restructuring charges of $ 4 in 2024, primarily related to severance costs incurred as a result of a global cost-saving initiative implemented in the fourth quarter of 2023.

The Company recorded restructuring charges of $ 20 in 2023, primarily related to severance costs incurred as a result of various global cost-saving initiatives implemented in 2023.

The Company recorded $ 23 of restructuring charges in restructuring and other in 2025 primarily related to severance costs incurred as a result of a global cost saving initiative implemented during the first quarter of 2025, mainly in the general metal finishing business within MSD.

The Company recorded $ 4 of restructuring charges in restructuring and other in 2024 primarily related to severance costs incurred as a result of a global cost-saving initiative implemented in the fourth quarter of 2023.

The activity related to the Company’s restructuring accrual is shown below:

Years Ended December 31,

Restructuring accrual, beginning of period

Beginning of period

Charged to expense

Payments and adjustments

Restructuring accrual, end of period

MKS INSTRUMENTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

The Company recorded other charges of $ 2 in 2024 related to legal matters.

End of period

(22) Commitments and Contingencies

1 unchanged sentence

The majority of the purchase commitments covered by these arrangements are for periods of less than one year and aggregate to approximately $ 490 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Legal Proceedings

2 unchanged sentences

(23) Subsequent Events

On January 24, 2025, the Company entered into the Fifth Amendment to Credit Agreement, by and among us as parent borrower, the other loan parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and each lender party thereto (the “Fifth Amendment”).

Pursuant to the Fifth Amendment, the Company (i) refinanced its existing USD Tranche B loan and Euro Tranche B loan with a new $ 2,529 USD Tranche B loan and a new € 596 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 the Company prepays 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.

2026 Amendment and Prepayment of Credit Facilities

On February 4, 2026 (the “Sixth Amendment Effective Date”), the Company entered into the Sixth Amendment to Credit Agreement (the “Sixth Amendment”).

Pursuant to the Sixth Amendment, the Company (i) refinanced its existing USD Tranche B loan and Euro Tranche B loan with a new $ 914 USD Tranche B loan and a new € 587 Euro Tranche B loan, (ii) refinanced and increased the commitments under its existing Revolving Credit Facility with a new $ 1,000 Revolving Facility, (iii) decreased the applicable margin for the USD Tranche B from 2.00 % to 1.75 % with respect to Term SOFR borrowings and from 1.00 % to 0.75 % with respect to base rate borrowings, (iv) decreased the applicable margin for the Euro Tranche B from 2.50 % to 2.00 %, (v) decreased the applicable margin under the Revolving Facility from 2.50 % to 1.75 % with respect to SOFR borrowings and from 1.50 % to 0.75 % with respect to base rate borrowings, (vi) eliminated the credit spread adjustment applicable to SOFR borrowings of the Revolving Facility, (vii) extended the maturity of the Term Loan Facility to February 2033 and (viii) extended the maturity of the Revolving Facility to February 2031.

Additionally, pursuant to the Sixth Amendment, the Company (a) extended the period during which a 1.00 % prepayment premium may be required if the Company prepays 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 Sixth Amendment Effective Date, and (b) reduced the amount of scheduled quarterly principal payments the Company is required to make with respect to the USD Tranche B to approximately $ 2 .

The repriced USD Tranche B loan and Euro Tranche B loan were issued without original issue discount.

In connection with the execution of the Fifth Amendment, the Company paid customary fees and expenses to JPMorgan Chase Bank, N.A.

On January 24, 2025, concurrently with the effectiveness of the Fifth Amendment, the Company made a voluntary prepayment of $ 100 principal amount of USD Tranche B loans, reducing the principal amount of USD Tranche B loan from $ 2,629 to $ 2,529 .

On February 4, 2026, the Company completed a private offering (the “2034 Notes Offering”) of € 1,000 aggregate principal amount of 4.25 % senior notes due 2034 (the “2034 Notes”) with interest payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2026.

The 2034 Notes were sold in a private placement to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S.

persons outside the United States in reliance on Regulation S under the Securities Act.

The Company used the net proceeds from the 2034 Notes Offering, together with cash on hand, to prepay approximately $ 1,274 of the USD Tranche B.

The 2034 Notes are unconditionally guaranteed, on a senior unsecured basis, jointly and severally, by the Company’s existing and future subsidiaries that guarantee the Credit Agreement or are required to become guarantors under certain circumstances and subject to certain exceptions (the “Guarantors”).

The 2034 Notes and the guarantees are general senior unsecured obligations of the Company and the Guarantors.

Changes in and Disagreements with Acco untants on Accounting and Financial Disclosure

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.

What changed 10-K

Item 8. Financial Statements and Supplementary Data