What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-14 · 87 added, 96 removed, 157 unchanged (54% of the section changed)

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Discussions of 2024 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on February 14, 2025.

Merger with Axcelis Technologies, Inc.

On September 30, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Axcelis Technologies, Inc., a Delaware corporation (“Axcelis”), and Victory Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Axcelis (“Merger Sub”).

Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, Merger Sub shall be merged with and into Veeco (the “Merger”), with Veeco surviving as a wholly-owned subsidiary of Axcelis.

The Merger Agreement was approved by our board of directors (except for one (1) independent director who serves on the Axcelis’ board of directors as well who recused himself) and, on February 6, 2026, by the stockholders of each company, but is still pending regulatory approvals and other customary mutual closing conditions.

For more information regarding the previously announced merger with Axcelis, see Note 17 “Merger” to the accompanying Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Executive Summary

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To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

Veeco executed well during 2024, accomplishing a number of milestones, including:

● Solidly executing our multi-year growth strategy highlighted by several strategic wins.

We shipped and recognized revenue on our first Nanosecond Annealing (“NSA”) system at a leading-edge logic customer, shipped a 300mm GaN on Si evaluation system to a Tier 1 power device customer, and reached an agreement to ship an LSA evaluation system to another leading memory customer in 2025;

● Shipped multiple Laser Annealing systems to Tier 1 logic and memory customers for new architectures and technologies such as Gate-All-Around and High Bandwidth Memory;

● Won additional customer orders in Advanced Packaging with our strong position in wet processing as PTOR for a process step in Heterogenous Integration and 3D Packaging for AI;

● Maintained investments toward our largest Served Available Market (“SAM”) growth opportunities in the Semiconductor and Compound Semiconductor markets, including strategic investments in R&D and our evaluation program;

● Achieved year-on-year revenue growth for the Company, including record revenue in the Semiconductor market, which grew 13% and outperformed Wafer Fabrication Equipment (“WFE”) spending growth for the fourth consecutive year.

We believe these accomplishments position us well to capture our largest SAM growth opportunities in the coming years.

Veeco executed well during 2025, and accomplished a number of milestones, including:

● Accomplished year-on-year revenue semiconductor market growth, accounting for 72% of total Company revenue

● Shipped a Laser Spike Annealing (“LSA”) system to a second Tier 1 memory customer for evaluation in its advanced DRAM R&D group.

Penetrating the annealing market in the memory space, with our LSA system is an important growth opportunity.

● Achieved steady growth in our Advanced Packaging business year-over-year driven by AI-related demand.

Won multiple orders for advanced wet processing and lithography systems from leading foundries, supporting critical end markets through AI, automotive, aerospace, defense, and communications.

● Received multiple orders in the Compound Semiconductor market for our Propel 300mm GaN on Silicon and Lumina+ Arsenide Phosphide new platforms, supporting end markets for AI data centers and low earth orbit space grade solar cells;

these are revenue growth opportunities for 2026, principally in the second half.

● Received several orders in the Data Storage market for our ion beam and wet processing equipment from demand for cloud and AI data centers;

these are revenue growth opportunities for 2026, principally in the second half.

● Continued investments in next-generation technologies with our Nanosecond Annealing (“NSA”) system being evaluated at two Tier 1 logic customers and our Ion Beam Deposition 300 (“IBD300”) system being evaluated at two DRAM customers.

We believe these inflection points position us well to capture our largest SAM growth opportunities in 2026 and beyond.

Business Update

The Semiconductor industry has historically demonstrated cyclicality based on fluctuations in global chip demand and production capacity.

Sales in the Semiconductor industry are estimated to have increased year-over-year in 2024 to around $650 billion dollars.

Sales in the Semiconductor industry are estimated to have increased year-over-year in 2025 to approximately $770 billion dollars, according to Gartner.

Looking ahead, industry analysts are forecasting long-term growth of the industry, driven by secular growth trends such as artificial intelligence, high-performance computing, mobile connectivity, and the electrification of the automotive industry.

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As a result, growth of the WFE market is forecasted to keep pace with long-term growth of the Semiconductor industry, which we believe should benefit semiconductor capital equipment providers, including Veeco.

Our strategy of investing in advanced logic and memory has enabled our Semiconductor business to outperform WFE growth for four consecutive years.

Our strategy of investing in advanced logic and memory has enabled our Semiconductor business to continue to grow.

Veeco’s technologies are at the forefront of enabling new technical innovations in the manufacture of high-performance AI chips and High-Bandwidth Memory (“HBM”).

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Our laser annealing solutions continue to gain acceptance at advanced logic nodes, highlighted by recent order activity involving both new and existing customers.

In 2024, we received laser annealing orders from, and shipped systems to several leading-edge logic customers, including for customers’ Gate-All-Around processes.

We also shipped and recognized revenue on our first NSA system to a leading logic customer in the fourth quarter.

In the memory market, we continue to ship systems to a Tier 1 customer for high volume production of HBM and advanced DRAM devices.

While our growth strategy is predominately focused on advanced node logic and memory, LSA shipments to mature node customers have continued to increase in 2023 and 2024, predominantly driven by new greenfield fabs and capacity additions in China.

In 2025, we received laser annealing orders from, and shipped systems to several leading-edge logic customers and had multiple repeat orders from a DRAM customer.

In the memory market, we continue to ship systems to Tier 1 customers for high volume production of HBM and advanced DRAM devices.

We also shipped a LSA evaluation system to a second leading memory customer in the fourth quarter of 2025.

While we continue to ship LSA systems to mature node customers in China, as anticipated this business has moderated and we expect to continue to see a decline heading into 2026.

Our growth strategy remains predominately focused on advanced node logic and memory customers.

We have two next generation laser annealing systems under evaluation at Tier 1 foundry and logic customers.

We also shipped and recognized revenue on our NSA500 tool to a logic customer in 2025.

This next generation system, the NSA500, covers the nano-second annealing regime and complements our LSA product.

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Nanosecond annealing provides Veeco with an opportunity to expand our laser annealing SAM for new advanced node logic and memory applications, including low thermal budget anneals for Gate-All-Around transistors and advanced 3D devices.

The ongoing adoption of EUV Lithography for advanced node semiconductor manufacturing continues to drive demand for our Ion Beam Deposition LDD system for mask blanks.

Leading logic and memory customers expect EUV and High-Numerical Aperture (“High-NA”) lithography to be integral to their future roadmaps, which our Ion Beam Deposition technology is a key enabler of.

Our product roadmap is well positioned as the industry adopts next-generation High-NA EUV lithography, and we are expanding our EUV related business to new mask blank applications.

We also have two Ion Beam Deposition “IBD300” systems under evaluation at leading memory customers.

The ongoing adoption of EUV Lithography for advanced node semiconductor manufacturing continues to drive demand for our Ion Beam Deposition EUV system for mask blanks.

Leading logic and memory customers expect EUV and High Numerical Aperture (“High-NA”) lithography to be integral to their future roadmaps, with our Ion Beam Deposition technology serving as a key enabler.

Our product roadmap is well positioned as the industry adopts next-generation High-NA EUV lithography, and we are expanding our EUV related business to EUV pellicles which are increasingly

being used to improve the productivity of EUV steps.

Our IBD-EUV system is used to form the high transparency membrane used in pellicles.

We have two Ion Beam Deposition (“IBD300”) systems under evaluation at leading DRAM memory customers, which we have extended the evaluation into 2026.

Our IBD300 system provides Veeco with another opportunity to expand our SAM to advanced node applications where low resistance films are critical.

These initial systems are being evaluated for advanced memory applications, such as DRAM bitline.

In Advanced Packaging, our Wet Processing systems are used for several applications, and we continue to see strong demand driven by Heterogenous Integration and 3D Packaging for AI.

In the fourth quarter, we announced over $50 million in orders for our Wet Processing systems from a leading foundry, a HBM manufacturer, and OSATs.

Our Advanced Packaging lithography systems are used for packaging applications such as fan out wafer level packaging and other advanced packaging solutions.

After two years of slow order activity driven by consumer markets, we are beginning to see an increase in quoting and order activity from IDM’s, foundries, and OSAT’s driven by capacity expansions for AI and mobile markets.

Looking ahead, we anticipate seeing growth in leading-edge investment driven by new nodes and AI-related demand, including investment in Gate-All-Around nodes, High-Bandwidth Memory, and 3D packaging for AI.

At the same time, recent engagement with customers in China has moderated, and we expect a decline in China revenue heading into 2025.

Veeco also serves customers in the Compound Semiconductor, Data Storage, and Scientific & Other markets.

We address the Compound Semiconductor market with a broad portfolio of technologies, including Wet Processing, MOCVD, MBE and Ion Beam, for Power Electronics, Photonics, and 5G RF applications.

Sales in the Compound Semiconductor market declined in 2024 from the prior year.

Looking ahead, in the Silicon Carbide market, the slowdown in EV adoption has weakened demand as some customers continue their transition to 200mm production.

Additionally, market penetration of our previously acquired Silicon Carbide technology has not met our expectations.

In GaN Power, emerging use cases have driven some traditional silicon power electronics manufacturers to consider adoption of GaN at 300mm, and we have an evaluation system outstanding at a Tier 1 Power device customer.

We are also seeing photonics opportunities in areas such as solar and MicroLEDs.

We address the Data Storage market with sales of our Ion Beam technology.

Demand for our Ion Beam products is driven by demand for cloud-based storage.

Revenue from our Data Storage products increased in 2024 as compared to the prior year.

Looking ahead, while customer utilizations are improving, they remain well below peak levels from a few years ago and customers are not investing to expand new system capacity in 2025 as they bring idle capacity back on line.

As a result, we expect an approximate $60 to $70 million reduction in revenue in our Data Storage business in 2025.

In Advanced Packaging, we have seen significant growth in our business year-over-year.

Our Wet Processing systems are used for several applications, and we continue to see strong demand driven by Heterogenous Integration and 3D Packaging for AI and high-performance computing.

Our Advanced Packaging lithography systems are used for packaging steps such Cu pillar and microbumps used in fan out wafer level packaging and other 2.5 and 3D advanced packaging solutions.

We are seeing an uptick in the order activity from several OSAT customers driven by AI and consumer markets recovery.

Looking ahead, we anticipate seeing growth in the semiconductor market in leading-edge investment driven by new nodes and AI-related demand, including investment in Gate-All-Around nodes, High-Bandwidth Memory, and 3D packaging for AI.

Veeco also serves the Compound Semiconductor market with a broad portfolio of technologies, including Wet Processing, MOCVD, MBE and Ion Beam, for Power Electronics, Photonics, and 5G RF applications.

Sales in the Compound Semiconductor market for 2025 declined from the prior year.

However, we had significant order activity in the second half of 2025 for our new Propel 300 millimeter GaN on Silicon and Lumina+ arsenide phosphide platforms supporting GaN power, photonics and solar, which will drive revenue growth for 2026, principally in the second half.

Lastly, Veeco also addresses the Data Storage and Scientific & Other markets.

In the Data Storage market we experienced a decline in revenue from 2025 compared to the prior year.

However, we have seen new order activity and increased customer utilization rates driven by growth in end-market demand in data centers (AI and cloud) and as customers gain traction in new technologies like Heat Assisted-Magnetic-Recording (“HAMR”).

Orders received in the third and fourth quarter of 2025 for our ion beam and wet processing equipment from demand for cloud and AI Data Centers, will drive revenue growth in 2026, principally in the second half.

Sales in the Scientific & Other market are largely driven by sales to governments, universities, and research institutions.

We address the Scientific & Other market with several technologies, including MBE, ALD, MOCVD, Wet Processing, and IBD/IBE, which support scientific, optical coating and other applications, and sales in this market declined slightly in 2024 from the prior year.

Results of Operations

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Operating income

Interest income (expense), net

Interest income, net

Other income (expense), net

Income (loss) before income taxes

Income before income taxes

Income tax expense (benefit)

Net income (loss)

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Rest of World

Total sales increased for the year ended December 31, 2024 against the comparable prior year period in the Semiconductor and Data Storage markets, partially offset by a decrease in the Compound Semiconductor, and Scientific & Other markets.

By geography, sales increased in the China, and Rest of APAC regions, partially offset by a decrease in the EMEA region.

Included within the Rest of APAC region for the year ended December 31, 2024 were sales in Taiwan and Japan of $115.3 million and $67.4 million, respectively, while sales within Rest of APAC region for the year ended December 31, 2023 included sales in Japan, Taiwan, and Singapore of $74.7 million, $62.7 million, and $32.2 million, respectively.

Total sales decreased for the year ended December 31, 2025 against the comparable prior year period in the Data Storage and Compound Semiconductor markets, partially offset by increases in the Scientific & Other and Semiconductor markets.

By geography, sales decreased in the China, U.S., and EMEA regions, partially offset by an increase in the Rest of APAC Region.

Included within the Rest of APAC region for the year ended December 31, 2025 were sales in Taiwan and Japan of $178.8 million and $69.0 million, respectively, while sales within Rest of APAC region for the year ended December 31, 2024 included sales in Taiwan and Japan of $115.3 million and $67.4 million, respectively.

We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies.

In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate.

In 2024, gross profit increased compared to 2023 primarily due to an increase in sales volume, partially offset by decreased gross margins.

Gross margins decreased principally due to unfavorable product mix of sales and higher service costs.

In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate, including the recent tariff and trade dynamics.

In 2025, gross profit decreased compared to 2024 primarily due to a decrease in sales volume and gross margins.

Gross margins decreased principally due to unfavorable product mix of sales and higher production and tariff related costs.

We expect our gross margins to fluctuate each period due to product mix and other factors.

Additionally, other factors will cause our gross margins to fluctuate each period.

We expect higher costs in future periods as we incur tariffs on imported materials from overseas suppliers, as well as higher costs from domestic suppliers incurring tariffs on their imports.

Research and Development

The markets we serve are characterized by continuous technological development and product innovation, and we invest in various research and development initiatives to maintain our competitive advantage and achieve our growth objectives.

Research and development expenses increased in 2024 compared to 2023 primarily due to personnel-related expenses as we invest in new research and development and additional applications for our technology in order to be well-positioned to capitalize on emerging global megatrends and support longer term growth in Semiconductor and Compound Semiconductor markets.

However, expenses as a percentage of revenue have remained flat when compared to the prior period.

Research and development expenses decreased in 2025 compared to 2024 primarily due to personnel-related and operating-related expenses as part of our efforts to manage costs.

Selling, General, and Administrative

Selling, general, and administrative expenses increased in 2024 compared to 2023.

However, expenses as a percentage of revenue have remained flat when compared to the prior period.

Given the uncertainty regarding the impacts on our business resulting from the general macroeconomic environment, we are focused on the proactive management of expenses.

Selling, general, and administrative expenses remained consistent for the year ended December 31, 2025 against the comparable prior period.

Amortization Expense

Amortization expense decreased in 2024 compared to 2023 primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets, as well as certain other intangible assets becoming fully amortized in 2023.

Amortization expense decreased in 2025 compared to 2024 primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets, as well as certain other intangible assets becoming fully amortized and the full impairment of the Epiluvac related intangibles in 2024.

During the year ended December 31, 2025, we incurred approximately $8.9 million in legal, accounting, consulting fees and employee-related costs in connection with the proposed Merger.

Asset Impairment

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Other Operating Expense (Income), Net

Net other operating income in 2024 was primarily due to a $21.2 million reduction in the expected earn-out payments to be made to the previous shareholders of Epiluvac, as well as proceeds from the sale of productive assets .

Interest Income (Expense)

For the year ended December 31, 2024, we recorded net interest income of $1.9 million, compared to $1.2 million of net interest expense for the prior year.

The increase in net interest income was primarily related to an increase of interest income of approximately $2.3 million due to a higher interest rate environment for 2024 compared to 2023.

Additionally, the Company had a decrease of interest expense of approximately $0.7 million due to a reduction in convertible note and bank guarantee interest expenses.

Other Income (Expense)

For the year ended December 31, 2023, we recorded a loss on extinguishment of approximately $97.1 million related to the repurchase and retirement of approximately $206.0 million aggregate principal amount of our 2025 and 2027 Notes.

Our income tax benefit for the year ended December 31, 2024, was $4.9 million, compared to income tax expense of $2.0 million for the prior year.

Other operating income for the year ended December 31, 2025 was $0.9 million, primarily comprised of a reduction in the expected earn-out payment to the previous shareholders of Epiluvac.

Other operating income for the year ended December 31, 2024 was $22.3 million, primarily comprised of a reduction in the expected earn-out payments to the previous shareholders of Epiluvac, as well as proceeds from the sale of productive assets.

Interest Income, net

For the year ended December 31, 2025, we recorded net interest income of $4.3 million, compared to $1.9 million of net interest income for the prior year.

The increase in net interest income was primarily related to a decrease of interest expense of approximately $1.9 million due to a reduction in convertible note and bank guarantee interest expenses.

Additionally, the company had an increase of approximately $0.6 million of interest income due to a higher average cash balances for 2025 compared to 2024.

Our income tax expense for the year ended December 31, 2025, was $4.0 million, compared to income tax benefit of $4.9 million for the prior year.

The 2025 income tax expense was primarily attributed to 1) a $8.3 million income tax expense associated with pre-tax income from operations, 2) a $3.1 million income tax expense related to adjustments made for share-based compensation, and 3) a $1.4 million income tax expense related to non-deductible merger costs, partially offset by 4) a $5.7 million income tax benefit related to foreign-derived intangible income, and 5) a $3.6 million tax benefit associated with research and development tax credits.

The 2024 income tax benefit was primarily attributed to 1) $12.2 million of income tax benefits associated with asset impairments, 2) a $7.9 million income tax benefit related to research and development tax credits, and 3) a $5.1 million income tax benefit related to Foreign-Derived Intangible Income, partially offset by 4) a $20.3 million income tax expense related to pre-tax income from operations.

The 2023 income tax expense of $2.0 million was primarily comprised of 1) a $16.2 million income tax expense related to pre-tax income from operations, and 2) a $2.0 million income tax expense related to share-based compensation, partially offset by 3) a $7.5 million income tax benefit related to Foreign-Derived Intangible Income, 4) a $7.7 million income tax benefit associated with research and development tax credits, and 5) a $1.0 million income tax benefit associated with the loss on extinguishment of convertible notes under Section 249 of the Internal Revenue Code of 1986, as amended (Section 249).

Liquidity and Capital Resources

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Cash Flows from Operating Activities

Year Ended December 31,

For the year ended December 31,

(in thousands)

Net income (loss)

Non-cash items:

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Share-based compensation expense

Loss on extinguishment of debt

Asset impairment

Impairment of equity investment

Provision for bad debts

Change in contingent consideration

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Net cash provided by operating activities was $69.5 million for the year ended December 31, 2025 and was due to net income of $35.4 million and adjustments for non-cash items of $54.3 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $20.2 million.

The changes in operating assets and liabilities were largely attributable to an increase in inventories and accounts receivable, partially offset by an increase in contract liabilities.

Net cash provided by operating activities was $63.8 million for the year ended December 31, 2024 and was due to net income of $73.7 million and adjustments for non-cash items of $60.8 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $70.7 million.

The changes in operating assets and liabilities were largely attributable to an increase in inventories largely related to higher work-in-process and evaluation systems at customer facilities, an increase in contract assets, and a decrease in contract liabilities.

Net cash provided by operating activities was $61.7 million for the year ended December 31, 2023 and was due to net loss of $30.4 million and adjustments for non-cash items of $150.5 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $58.5 million.

The changes in operating assets and liabilities were largely attributable to increases in inventories largely related to evaluation systems at customer facilities, contract assets, prepaid expenses and other current assets, and decreases in accounts payable, and contract liabilities.

Cash Flows from Investing Activities

Year Ended December 31,

For the year ended December 31,

(in thousands)

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Changes in investments, net

Acquisitions of businesses, net of cash acquired

Proceeds from the sale of productive assets

Net cash provided by (used in) investing activities

The cash used in investing activities during the year ended December 31, 2025 was primarily attributable to net cash used for capital expenditures and net investment activity.

The cash used in investing activities during the year ended December 31, 2024 was primarily attributable to net cash used for capital expenditures, and net investment activity, partially offset by proceeds from the sale of productive assets.

The cash used in investing activities during the year ended December 31, 2023 was attributable to net cash used in the acquisition of Epiluvac, and capital expenditures, partially offset by changes in net investment activity.

Cash Flows from Financing Activities

Year Ended December 31,

For the year ended December 31,

(in thousands)

Settlement of equity awards, net of withholding taxes

Debt issuance costs

Repayment of convertible debt

Contingent consideration payment

Proceeds from issuance of 2029 Notes, net of issuance costs

Extinguishment of Convertible Notes

Net cash provided by (used in) financing activities

The cash used in financing activities for the year ended December 31, 2025 was related to cash used to settle taxes related to employee equity programs, settlement of the 2027 Notes, and debt issuance costs associated with the execution of the Fourth Amendment of the Loan and Security Agreement, partially offset by cash received under the Employee Stock Purchase Plan.

The cash used in financing activities for the year ended December 31, 2024 was related to cash used to settle taxes related to employee equity programs and a contingent consideration payment related to the Epiluvac acquisition, partially offset by cash received under the Employee Stock Purchase Plan.

The net cash used in financing activities for the year ended December 31, 2023 was related to the partial repurchase of the 2025 Notes and 2027 Notes, repayment of the 2023 Notes, a contingent consideration payment related to the Epiluvac acquisition, as well as cash used to settle taxes related to employee equity programs, partially offset by proceeds from issuance of the 2029 Notes.

Convertible Senior Notes and Revolving Credit Facility

We have $26.5 million outstanding principal balance of 3.50% convertible senior notes that bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, and mature on January 15, 2025, unless earlier purchased by the Company, redeemed, or converted.

These 2025 Notes subsequently matured in January 2025 and were settled through the issuance of Company shares to the noteholders.

In addition, we have $25.0 million outstanding principal balance of 3.75% convertible senior notes that bear interest at a rate of 3.75% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2027, unless earlier purchased by the Company, redeemed, or converted.

These 2027 Notes are currently convertible by shareholders and callable by the Company until March 31, 2025.

In addition, we have $230.0 million outstanding principal balance of 2.875% convertible senior notes that bear interest at a rate of 2.875% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2029, unless earlier purchased by the Company, redeemed, or converted.

Furthermore, we have access to a $225.0 million revolving credit facility to provide for our working capital needs and reimburse drawings under letters of credit and for other general corporate purposes.

The Company has no immediate plans to draw down on the facility, which expires in December of 2026.

We have $230.0 million outstanding principal balance of convertible senior notes that bear interest at a rate of 2.875% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2029, unless earlier purchased by the Company, redeemed, or converted.

We believe that we have sufficient capital resources and cash flows from operations to support scheduled interest payments on this debt.

In addition, in June 2025, we increased the total funds available to us through our revolving credit facility from $225 million to $250 million and extended the maturity until June 16, 2030, subject to a springing maturity date of March 2, 2029.

The Company has no immediate plans to draw down on the facility.

Interest under the facility is variable based on the Company’s secured net leverage ratio and is expected to bear interest based on SOFR plus a range of 125 to 200 basis points, if drawn.

There is a yearly commitment fee of 20 to 30 basis points, based on the Company’s secured net leverage ratio, charged on the unused portion of the Facility.

In connection with the Merger, the convertible senior notes will be assumed by Axcelis.

Contractual Obligations and Commitments

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Lease Obligations

As of December 31, 2024, our operating lease obligation was $53.1 million relating to various operating lease arrangements for certain facilities.

As of December 31, 2025, our future minimum lease payments was $48.9 million relating to various operating lease arrangements for certain facilities.

Refer to Note 10, “Commitments and Contingencies”, of the Notes to the Consolidated Financial Statements for further discussion related to our lease obligations.

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(1) identification of the contract(s) with customers, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract, and (5) recognition of revenue when, or as, a performance obligation is satisfied.

Management uses judgements in identifying performance obligations, determining stand-alone selling price (“SSP”) for each distinct performance obligation and allocating consideration from an arrangement to the individual performance obligations based on the SSP.

Management uses judgements in identifying performance obligations, determining stand-alone selling price (“SSP”) for each distinct performance obligation, allocating consideration from an arrangement to the individual performance obligations based on the SSP, determining when transfer of control occurs to the customer, and estimating potential variable consideration including the probability that a significant reversal in the amount of cumulative revenue recognized will not occur.

The SSPs are determined based on the prices at which we separately sell systems, upgrades, components, spare parts, installation, maintenance, and service plans.

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Unanticipated changes in demand for our products may require a write down of inventory that could materially affect our operating results.

Long-lived Assets

The carrying values of long-lived assets, including identifiable intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If circumstances require a long-lived asset or asset group be tested for possible impairment, a recoverability test is performed utilizing undiscounted cash flows expected to be generated by that asset or asset group compared to its carrying amount.

If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent the carrying amount exceeds its fair value.

Fair value is determined through various valuation techniques including discounted cash flow models or, when available, quoted market values and third-party appraisals.

It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude of any impairment.

Intangible assets with finite useful lives, including purchased technology, customer-related intangible assets, patents, trademarks, backlog, and software licenses, are subject to amortization over the expected period of economic benefit to us.

We evaluate whether events or circumstances have occurred that warrant a revision to the remaining useful lives of intangible assets.

In cases where a revision is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful life.

We estimate our income taxes in each of the jurisdictions in which we operate.

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These estimates consider future operational results including realizability of our deferred tax assets.

Deferred tax assets and liabilities are adjusted to reflect the effects of enacted changes in tax rates, laws and status, including changes in tax incentives.

Deferred tax assets and

liabilities are adjusted to reflect the effects of enacted changes in tax rates, laws and status, including changes in tax incentives.

Recent Accounting Pronouncements

We adopted ASU 2020-06 effective January 1, 2022 and ASU 2023-07 effective December 31, 2024.

We are also evaluating other pronouncements recently issued but not yet adopted, including ASU 2023-09 and ASU 2024-03.

We adopted ASU 2020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity effective January 1, 2022, ASU 2023-09 Improvements to Income Tax Disclosures (Topic 740) effective December 31, 2024, ASU 2024-04 Debt – Debt with Conversion and Other Options (Subtopic 470-20) effective June 30, 2025.

We are also evaluating other pronouncements recently issued but not yet adopted, including ASU 2024-03.

The adoption of these pronouncements is not expected to have a material impact on our consolidated financial statements.

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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 7. Management’s Discussion and Analysis