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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(MARK ONE)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number 0-23621

MKS INSTRUMENTS, INC.

(Exact name of registrant as specified in its charter)

 

Massachusetts

04-2277512

(State or other jurisdiction

(I.R.S. Employer

of incorporation or organization)

Identification No.)

 

 

2 Tech Drive, Suite 201, Andover, Massachusetts

01810

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code (978) 645-5500

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, no par value

 

MKSI

 

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

Accelerated filer

 

 

 

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of April 29, 2024, the registrant had 67,196,556 shares of common stock outstanding.

 

 


 

MKS INSTRUMENTS, INC.

FORM 10-Q

INDEX

 

PART I. FINANCIAL INFORMATION

 

 

ITEM 1.

FINANCIAL STATEMENTS (Unaudited)

3

 

 

 

 

 

 

Condensed Consolidated Balance Sheets – March 31, 2024 and December 31, 2023

3

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) – Three Months Ended March 31, 2024 and 2023

4

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2024 and 2023

5

 

 

 

Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2024 and 2023

6

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

25

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

38

 

 

ITEM 4.

CONTROLS AND PROCEDURES

38

 

PART II. OTHER INFORMATION

 

 

ITEM 1A.

RISK FACTORS

39

 

 

 

 

 

ITEM 5.

OTHER INFORMATION

39

 

 

 

 

 

ITEM 6.

EXHIBITS

40

 

 

 

 

SIGNATURES

41

 

2


 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

MKS INSTRUMENTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

(Unaudited)

 

ASSETS

 

March 31, 2024

 

 

December 31, 2023

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

845

 

 

$

875

 

Short-term investments

 

 

1

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts of $7 and $6 at March 31, 2024 and December 31, 2023, respectively

 

 

576

 

 

 

603

 

Inventories

 

 

971

 

 

 

991

 

Other current assets

 

 

268

 

 

 

227

 

Total current assets

 

 

2,661

 

 

 

2,696

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

766

 

 

 

784

 

Right-of-use assets, net

 

 

227

 

 

 

225

 

Goodwill

 

 

2,511

 

 

 

2,554

 

Intangible assets, net

 

 

2,501

 

 

 

2,619

 

Other assets

 

 

265

 

 

 

240

 

Total assets

 

$

8,931

 

 

$

9,118

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Short-term debt

 

$

50

 

 

$

93

 

Accounts payable

 

 

290

 

 

 

327

 

Other current liabilities

 

 

381

 

 

 

428

 

Total current liabilities

 

 

721

 

 

 

848

 

 

 

 

 

 

 

 

Long-term debt, net

 

 

4,692

 

 

 

4,696

 

Non-current deferred taxes

 

 

622

 

 

 

640

 

Non-current accrued compensation

 

 

148

 

 

 

151

 

Non-current lease liabilities

 

 

210

 

 

 

205

 

Other non-current liabilities

 

 

114

 

 

 

106

 

Total liabilities

 

 

6,507

 

 

 

6,646

 

Commitments and contingencies (Note 16)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value per share, 2 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock, no par value, 200 shares authorized; 67.1 and 66.9 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

2,201

 

 

 

2,195

 

Retained earnings

 

 

373

 

 

 

373

 

Accumulated other comprehensive loss

 

 

(150

)

 

 

(96

)

Total stockholders’ equity

 

 

2,424

 

 

 

2,472

 

Total liabilities and stockholders’ equity

 

$

8,931

 

 

$

9,118

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3


 

MKS INSTRUMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Net revenues:

 

 

 

 

 

 

Products

 

$

754

 

 

$

712

 

Services

 

 

114

 

 

 

82

 

Total net revenues

 

 

868

 

 

 

794

 

Cost of revenues:

 

 

 

 

 

 

Products

 

 

398

 

 

 

409

 

Services

 

 

55

 

 

 

50

 

Total cost of revenues (exclusive of amortization shown separately below)

 

 

453

 

 

 

459

 

Gross profit

 

 

415

 

 

 

335

 

Research and development

 

 

70

 

 

 

72

 

Selling, general and administrative

 

 

170

 

 

 

174

 

Acquisition and integration costs

 

 

1

 

 

 

6

 

Restructuring

 

 

3

 

 

 

1

 

Fees and expenses related to amendments to the Term Loan Facility

 

 

3

 

 

 

 

Amortization of intangible assets

 

 

62

 

 

 

81

 

Income from operations

 

 

106

 

 

 

1

 

Interest income

 

 

(6

)

 

 

(3

)

Interest expense

 

 

87

 

 

 

85

 

Loss on extinguishment of debt

 

 

9

 

 

 

 

Other (income) expense, net

 

 

(3

)

 

 

(2

)

Income (loss) before income taxes

 

 

19

 

 

 

(79

)

Provision (benefit) for income taxes

 

 

4

 

 

 

(37

)

Net income (loss)

 

$

15

 

 

$

(42

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

Changes in value of financial instruments designated as
cash flow hedges

 

$

32

 

 

$

(15

)

Foreign currency translation adjustments

 

 

(114

)

 

 

45

 

Change in net investment hedge

 

 

20

 

 

 

(15

)

Unrealized gain on investments

 

 

7

 

 

 

 

Net unrecognized pension gain (loss)

 

 

1

 

 

 

(2

)

Total comprehensive loss

 

$

(39

)

 

$

(29

)

Net income (loss) per share:

 

 

 

 

 

 

Basic

 

$

0.22

 

 

$

(0.64

)

Diluted

 

$

0.22

 

 

$

(0.64

)

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

67.0

 

 

 

66.7

 

Diluted

 

 

67.4

 

 

 

66.7

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

4


 

MKS INSTRUMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except per share data)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Equity

 

Balance at December 31, 2023

 

 

66.9

 

 

$

0.1

 

 

$

2,195

 

 

$

373

 

 

$

(96

)

 

$

2,472

 

Net issuance under stock-based plans

 

 

0.2

 

 

 

 

 

 

(9

)

 

 

 

 

 

 

 

 

(9

)

Stock-based compensation

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

 

15

 

Cash dividend ($0.22 per common share)

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Comprehensive income (loss) (net of tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54

)

 

 

(54

)

Balance at March 31, 2024

 

 

67.1

 

 

 

0.1

 

 

 

2,201

 

 

 

373

 

 

 

(150

)

 

 

2,424

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Retained

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Income

 

 

Equity

 

Balance at December 31, 2022

 

 

66.6

 

 

$

 

 

$

2,142

 

 

$

2,272

 

 

$

69

 

 

$

4,483

 

Net issuance under stock-based plans

 

 

0.1

 

 

 

 

 

 

(6

)

 

 

 

 

 

 

 

 

(6

)

Stock-based compensation

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Cash dividend ($0.22 per common share)

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

(15

)

Comprehensive (loss) income (net of tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

(42

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

13

 

Balance at March 31, 2023

 

 

66.7

 

 

 

 

 

 

2,154

 

 

 

2,215

 

 

 

82

 

 

 

4,451

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

5


 

MKS INSTRUMENTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

15

 

 

$

(42

)

Adjustments to reconcile (loss) net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

88

 

 

 

107

 

Unrealized loss on derivatives not designated as hedging instruments

 

 

3

 

 

 

13

 

Amortization of debt issuance costs and original issue discount

 

 

8

 

 

 

8

 

Loss on extinguishment of debt

 

 

9

 

 

 

 

Stock-based compensation

 

 

15

 

 

 

18

 

Provision for excess and obsolete inventory

 

 

11

 

 

 

18

 

Deferred income taxes

 

 

(36

)

 

 

(10

)

Other

 

 

2

 

 

 

 

Changes in operating assets and liabilities, net of effects of business acquired

 

 

 

 

 

Accounts receivable

 

 

16

 

 

 

150

 

Inventories

 

 

(1

)

 

 

(96

)

Other current and non-current assets

 

 

(5

)

 

 

(14

)

Accounts payable

 

 

(32

)

 

 

(55

)

Accrued compensation

 

 

(30

)

 

 

(34

)

Income taxes payable

 

 

16

 

 

 

(49

)

Other current and non-current liabilities

 

 

(12

)

 

 

23

 

Net cash provided by operating activities

 

 

67

 

 

 

37

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(18

)

 

 

(17

)

Net cash used in investing activities

 

 

(18

)

 

 

(17

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from borrowings

 

 

761

 

 

 

2

 

Payments of borrowings

 

 

(806

)

 

 

(23

)

Payments of deferred financing fees

 

 

(2

)

 

 

 

Dividend payments

 

 

(15

)

 

 

(15

)

Net payments related to employee stock awards

 

 

(9

)

 

 

(6

)

Other financing activities

 

 

(1

)

 

 

(1

)

Net cash used in financing activities

 

 

(72

)

 

 

(43

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(7

)

 

 

(6

)

Decrease in cash and cash equivalents

 

 

(30

)

 

 

(29

)

Cash and cash equivalents at beginning of period

 

 

875

 

 

 

909

 

Cash and cash equivalents at end of period

 

$

845

 

 

$

880

 

 

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

6


MKS INSTRUMENTS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

 

(1)
Basis of Presentation

The terms “MKS” and the “Company” refer to MKS Instruments, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The interim financial data as of March 31, 2024, and for the three months ended March 31, 2024, are unaudited; however, in the opinion of MKS, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The condensed consolidated balance sheet presented as of December 31, 2023 has been derived from the consolidated audited financial statements as of that date. The unaudited condensed consolidated financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by United States generally accepted accounting principles (“U.S. GAAP”). The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the MKS Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission on February 27, 2024.

The preparation of these unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, inventory valuation, warranty costs, stock-based compensation, intangible assets, goodwill, other long-lived assets and income taxes. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. As a result of rounding, there may be immaterial differences in amounts presented and certain calculations may not sum to the total number expressed in each category or tie to a corresponding schedule.

The Company has three reportable segments: the Vacuum Solutions Division (“VSD”), the Photonics Solutions Division (“PSD”) and the Materials Solutions Division (“MSD”) as described in Note 15. 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. The Company reserves the right to make reclassifications between segments.

(2)
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, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU 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, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this ASU on its disclosures within the consolidated financial statements.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (“PBE”) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax

7


MKS INSTRUMENTS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

 

payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

(3)
Revenue from Contracts with Customers

Contract assets as of March 31, 2024 and December 31, 2023 were $22 and $26, respectively. A roll-forward of the Company’s deferred revenue and customer advances is as follows:

 

 

Three Months Ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Beginning balance, January 1(1)

 

$

79

 

 

$

96

 

Additions to deferred revenue and customer advances

 

 

30

 

 

 

43

 

Amount of deferred revenue and customer advances recognized in income

 

 

(39

)

 

 

(41

)

Ending balance, March 31(2)

 

$

70

 

 

$

98

 

 

(1)
Beginning balance as of January 1, 2024 included $77 of current deferred revenue and customer advances and $2 of non-current deferred revenue. Beginning balance as of January 1, 2023 included $94 of current deferred revenue and customer advances and $2 of non-current deferred revenue.
(2)
Ending balance as of March 31, 2024 included $68 of current deferred revenue and customer advances and $2 of non-current deferred revenue. Ending balance as of March 31, 2023 included $96 of current deferred revenue and customer advances and $2 of non-current deferred revenue.

Revenue from certain custom products, including MSD plating equipment, and revenue from certain service contracts are recorded over time. Remaining product and services revenues are recorded at a point in time.

Disaggregation of Revenue

The following tables summarize product and service revenue from contracts with customers in MKS’ three reportable segments.

 

 

Three Months Ended March 31, 2024

 

 

 

VSD

 

 

PSD

 

 

MSD

 

 

Total

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

274

 

 

$

214

 

 

$

266

 

 

$

754

 

Services

 

 

58

 

 

 

40

 

 

 

16

 

 

 

114

 

Total net revenues

 

$

332

 

 

$

254

 

 

$

282

 

 

$

868

 

 

 

 

Three Months Ended March 31, 2023

 

 

 

VSD

 

 

PSD

 

 

MSD

 

 

Total

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

263

 

 

$

159

 

 

$

291

 

 

$

712

 

Services

 

 

41

 

 

 

27

 

 

 

14

 

 

 

82

 

Total net revenues

 

$

304

 

 

$

186

 

 

$

304

 

 

$

794

 

The following table summarizes revenue from contracts with customers in the Company’s three end markets: Semiconductor, Electronics and Packaging, and Specialty Industrial.

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Semiconductor

 

$

351

 

 

$

309

 

Electronics and Packaging

 

 

208

 

 

 

222

 

Specialty Industrial

 

 

309

 

 

 

263

 

 

$

868

 

 

$

794

 

 

8


MKS INSTRUMENTS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

 

(4)
Fair Value Measurements

In accordance with the provisions of fair value accounting, a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability and defines fair value based upon an exit price model.

The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments or securities or derivative contracts that are valued using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

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 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.

9


MKS INSTRUMENTS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

 

Assets and liabilities of the Company are measured at fair value on a recurring basis as of March 31, 2024 and are summarized as follows:

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

Description

 

March 31, 2024

 

 

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

370

 

 

$

370

 

$

 

 

$

 

Time deposits

 

 

13

 

 

 

 

 

13

 

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

Time deposits and certificates of deposit

 

 

1

 

 

 

 

 

1

 

 

 

 

Group insurance contracts

 

 

6

 

 

 

 

 

6

 

 

 

 

Derivatives

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

6

 

 

 

 

 

6

 

 

 

 

Interest rate hedges - current

 

 

21

 

 

 

 

 

21

 

 

 

 

Interest rate hedges - non-current

 

 

46

 

 

 

 

 

46

 

 

 

 

Pension and deferred compensation plan assets

 

 

19

 

 

 

 

 

19

 

 

 

 

Total assets

 

$

482

 

 

$

370

 

$

112

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

$

1

 

 

$

 

$

1

 

 

$

 

Total liabilities

 

$

1

 

 

$

 

$

1

 

 

$

 

Reported as follows:

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

383

 

 

$

370

 

$

13

 

 

$

 

Short-term investments

 

 

1

 

 

 

 

 

1

 

 

 

 

Other current assets

 

 

27

 

 

 

 

 

27

 

 

 

 

Total current assets

 

$

411

 

 

$

370

 

$

41

 

 

$

 

Other assets

 

$

71

 

 

$

 

$

71

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

1

 

 

$

 

$

1

 

 

$

 

(1) The cash and cash equivalents amount presented in the table above does not include cash of $462 as of March 31, 2024.

10


MKS INSTRUMENTS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

 

Assets and liabilities of the Company are measured at fair value on a recurring basis as of December 31, 2023 and are summarized as follows:

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

Description

 

December 31, 2023

 

 

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

356

 

 

$

356

 

 

$

 

 

$

 

Time deposits

 

 

12

 

 

 

 

 

 

12

 

 

 

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

Group insurance contracts

 

 

6

 

 

 

 

 

 

6

 

 

 

 

Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

 

2

 

 

 

 

 

 

2

 

 

 

 

Interest rate hedge - current

 

 

3

 

 

 

 

 

 

3

 

 

 

 

Interest rate hedge - non-current

 

 

41

 

 

 

 

 

 

41

 

 

 

 

Pension and deferred compensation plan assets

 

 

19

 

 

 

 

 

 

19

 

 

 

 

Total assets

 

$

439

 

 

$

356

 

 

$

83

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange forward contracts

 

$

5

 

 

$

 

 

$

5

 

 

$

 

Total liabilities

 

$

5

 

 

$

 

 

$

5

 

 

$

 

Reported as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents (1)

 

$

368

 

 

$

356

 

 

$

12

 

 

$

 

Other current assets

 

 

5

 

 

 

 

 

 

5

 

 

 

 

Total current assets

 

$

373

 

 

$

356

 

 

$