FORM 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

(MARK ONE)


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

For the quarterly period ended September 30, 2025


☐	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 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, 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:

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 October 28, 2025, the registrant had 67,169,474 shares of common stock outstanding.

MKS INC.

FORM 10-Q

INDEX


PART I. FINANCIAL INFORMATION

	ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	3

		Condensed Consolidated Balance Sheets – September 30, 2025 and December 31, 2024	3

		Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) – Three and Nine Months Ended September 30, 2025 and 2024	4

		Condensed Consolidated Statements of Stockholders’ Equity – Three and Nine Months Ended September 30, 2025 and 2024	5

		Condensed Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2025 and 2024	6

		Notes to Unaudited Condensed Consolidated Financial Statements	7

	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42

	ITEM 4.	CONTROLS AND PROCEDURES	42

PART II. OTHER INFORMATION

	ITEM 1A.	RISK FACTORS	43

	ITEM 5.	OTHER INFORMATION	43

	ITEM 6.	EXHIBITS	44

SIGNATURES			45

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

MKS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

(Unaudited)


ASSETS	September 30, 2025			December 31, 2024
Current assets:
Cash and cash equivalents	$	697		$	714
Trade accounts receivable, net of allowance for doubtful accounts of $5 at both September 30, 2025 and December 31, 2024		611			615
Inventories		934			893
Other current assets		294			252
Total current assets		2,536			2,474

Property, plant and equipment, net		769			771
Right-of-use assets		275			238
Goodwill		2,563			2,479
Intangible assets, net		2,196			2,272
Other assets		438			356
Total assets	$	8,777		$	8,590

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	51		$	50
Accounts payable		382			341
Other current liabilities		453			384
Total current liabilities		886			775

Long-term debt, net		4,253			4,488
Non-current deferred taxes		483			504
Non-current accrued compensation		154			141
Non-current lease liabilities		250			211
Other non-current liabilities		151			149
Total liabilities		6,177			6,268
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.01 par value, 2 shares authorized; no shares issued and outstanding		—			—
Common stock, no par value, 200 shares authorized; 67.2 and 67.4 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		—			—
Additional paid-in capital		2,090			2,067
Retained earnings		618			503
Accumulated other comprehensive loss		(108	)		(248	)
Total stockholders’ equity		2,600			2,322
Total liabilities and stockholders’ equity	$	8,777		$	8,590

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

MKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net revenues:
Products	$	860		$	776		$	2,528		$	2,301
Services		128			120			370			351
Total net revenues		988			896			2,898			2,652
Cost of revenues:
Products		466			410			1,367			1,220
Services		61			54			173			165
Total cost of revenues (exclusive of amortization shown separately below)		527			464			1,540			1,385
Gross profit		461			432			1,358			1,267
Research and development		76			70			222			206
Selling, general and administrative		180			167			539			498
Acquisition and integration costs		—			3			—			6
Restructuring and other		4			1			26			6
Fees and expenses related to amendments to the Term Loan Facility		—			2			2			5
Amortization of intangible assets		63			61			184			184
Income from operations		138			128			385			362
Interest income		(3	)		(6	)		(11	)		(17	)
Interest expense		53			64			162			230
Loss on extinguishment of debt		2			5			8			52
Other expense (income), net		2			5			11			(3	)
Income before income taxes		84			60			215			100
Provision (benefit) for income taxes		10			(2	)		27			1
Net income	$	74		$	62		$	188		$	99
Other comprehensive income (loss), net of tax:
Changes in value of financial instruments designated as cash flow hedges	$	(2	)	$	(59	)	$	(28	)	$	(27	)
Foreign currency translation adjustments		(23	)		184			223			18
Change in net investment hedge		—			(28	)		(60	)		—
Unrecognized pension gain (loss)		—			(3	)		4			—
Unrealized gain on investments		—			13			—			22
Total comprehensive income (loss)	$	49		$	169		$	327		$	112
Net income per share:
Basic	$	1.10		$	0.92		$	2.79		$	1.48
Diluted	$	1.10		$	0.92		$	2.78		$	1.47
Weighted average common shares outstanding:
Basic		67.3			67.4			67.3			67.2
Diluted		67.6			67.6			67.6			67.5

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

MKS 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) Income			Equity
Balance at December 31, 2024		67.4		$	0.1	$	2,067		$	503		$	(248	)	$	2,322
Net issuance under stock-based plans		—					(5	)								(5	)
Stock-based compensation							22									22
Stock repurchase		(0.5	)				(17	)		(28	)					(45	)
Cash dividend ($0.22 per common share)										(15	)					(15	)
Comprehensive income (loss) (net of tax):
Net income										52						52
Other comprehensive income (loss)													23			23
Balance at March 31, 2025		66.9			0.1		2,067			512			(225	)		2,354
Net issuance under stock-based plans		0.3					—									—
Stock-based compensation							12									12
Cash dividend ($0.22 per common share)										(15	)					(15	)
Comprehensive income (loss) (net of tax):
Net income										62						62
Other comprehensive income (loss)													141			141
Balance at June 30, 2025		67.2			0.1		2,078			559			(84	)		2,553
Stock-based compensation							12									12
Cash dividend ($0.22 per common share)										(15	)					(15	)
Comprehensive income (loss) (net of tax):
Net income										74						74
Other comprehensive (loss) income													(25	)		(25	)
Balance at September 30, 2025		67.2		$	0.1	$	2,090		$	618		$	(108	)	$	2,600


	Common Stock				Additional Paid-In			Retained			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Capital			Earnings			(Loss) Income			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) income												(54	)		(54	)
Balance at March 31, 2024		67.1		0.1		2,201			373			(150	)		2,424
Net issuance under stock-based plans		0.2				(2	)							$	(2	)
Stock-based compensation						11									11
Purchase of capped calls related to Convertible Notes						(167	)								(167	)
Cash dividend ($0.22 per common share)									(15	)					(15	)
Comprehensive income (loss) (net of tax):
Net income									23						23
Other comprehensive (loss) income												(40	)		(40	)
Balance at June 30, 2024		67.3		0.1		2,042			381			(190	)		2,233
Net issuance under stock-based plans		—				(1	)								(1	)
Stock-based compensation						11									11
Cash dividend ($0.22 per common share)									(15	)					(15	)
Comprehensive income (loss) (net of tax):
Net income									62						62
Other comprehensive income (loss)												107			107
Balance at September 30, 2024		67.3	$	0.1	$	2,053		$	428		$	(83	)	$	2,398

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

MKS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net income	$	188		$	99
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		258			262
Unrealized (gain) loss on foreign currency and derivative instruments		(4	)		2
Amortization of debt issuance costs and original issue discount		20			23
Loss on extinguishment of debt		8			52
Stock-based compensation		46			37
Provision for excess and obsolete inventory		37			41
Deferred income taxes		(125	)		(168	)
Other		—			5
Changes in operating assets and liabilities:
Trade accounts receivable		24			(7	)
Inventories		(54	)		11
Other current and non-current assets		12			17
Accounts payable		31			(21	)
Current and non-current accrued compensation		55			(26	)
Income taxes payable		21			53
Other current and non-current liabilities		(14	)		(28	)
Net cash provided by operating activities		503			352
Cash flows from investing activities:
Purchases of investments		(1	)		—
Proceeds from sale of long-lived assets		3			1
Purchases of property, plant and equipment		(98	)		(67	)
Net cash used in investing activities		(96	)		(66	)
Cash flows from financing activities:
Repurchase of common stock		(45	)		—
Proceeds from borrowing		—			2,161
Payments of borrowings		(338	)		(2,198	)
Purchase of capped calls related to Convertible Notes		—			(167	)
Payments of deferred financing fees		—			(33	)
Dividend payments		(44	)		(44	)
Net payments related to employee stock awards		(6	)		(12	)
Other financing activities		(4	)		(10	)
Net cash used in financing activities		(437	)		(303	)
Effect of exchange rate changes on cash and cash equivalents		13			3
Decrease in cash and cash equivalents		(17	)		(14	)
Cash and cash equivalents at beginning of period		714			875
Cash and cash equivalents at end of period	$	697		$	861

Supplemental noncash financing activities
Right of use assets obtained in exchange for new finance lease liabilities	$	46		$	12

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

MKS 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 Inc., formerly known as MKS Instruments, Inc., and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The interim financial data as of September 30, 2025, and for the three and nine months ended September 30, 2025, 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, 2024 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 pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. 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, 2024, filed with the SEC on February 25, 2025.

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 ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, inventory valuation, warranty costs, pension plan valuations, stock-based compensation expense, intangible assets, goodwill, long-lived assets, income taxes and derivatives. 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.

(2)

Accounting Policies and Recent Accounting Pronouncements

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 September 30, 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. During the three and nine months ended September 30, 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, 2024 and for the three and nine months ended September 30, 2024 was immaterial.

Other government grants were not material for the three and nine months ended September 30, 2025 and 2024.

MKS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

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

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which focuses on the rate reconciliation and income taxes paid. ASU 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 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 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 planning to apply ASU 2023-09 prospectively beginning with the period ending December 31, 2025. 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.

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

In November 2024, the FASB issued ASU No. 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 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. 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.

(3)

Revenue from Contracts with Customers

Contract assets as of September 30, 2025 and December 31, 2024 were $41 and $30, respectively. 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:


	Nine Months Ended
	September 30, 2025			September 30, 2024
Beginning of period(1)	$	73		$	79
Additions to deferred revenue and customer advances		162			103
Amount of deferred revenue and customer advances recognized in income		(155	)		(110	)
End of period(2)	$	80		$	72

(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.

(2)

Ending deferred revenue and customer advances balances as of September 30, 2025 included $77 of current deferred revenue and customer advances and $3 of long-term deferred revenue. Ending deferred revenue and customer advances balances as of September 30, 2024 included $70 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. Remaining product and services revenues are recorded at a point in time.

MKS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Disaggregation of Revenue

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 September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Semiconductor	$	415	$	378	$	1,261	$	1,098
Electronics and Packaging		289		231		809		669
Specialty Industrial		284		287		828		885
Total net revenues	$	988	$	896	$	2,898	$	2,652

Refer to Note 15 for revenue by reportable segment, geography and groupings of similar products.

(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.

MKS 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 September 30, 2025, and are summarized as follows:


			Fair Value Measurements at Reporting Date Using
Description	September 30, 2025		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	$	275	$	275	$	—	$	—
Time deposits		9		—		9		—
Equity securities		3		3		—		—
Available-for-sale securities:
Group insurance contracts		6		—		6		—
Derivatives
Foreign exchange forward contracts		1		—		1		—
Interest rate swaps - current		3		—		3		—
Interest rate swaps - non-current		6		—		6		—
Pension and deferred compensation plan assets		23		—		23		—
Total assets	$	326	$	278	$	48	$	—
Liabilities:
Derivatives
Foreign exchange forward contracts-current	$	1	$	—	$	1	$	—
Interest rate swaps - current		6		—		6		—
Total liabilities	$	7	$	—	$	7	$	—
Reported as follows:
Assets:
Cash and cash equivalents(1)	$	284	$	275	$	9	$	—
Other current assets		4		—		4		—
Total current assets	$	288	$	275	$	13	$	—
Other assets	$	38	$	3	$	35	$	—
Liabilities:
Other current liabilities	$	7	$	—	$	7	$	—

(1)

The cash and cash equivalents amount presented in the table above does not include cash of $413 as of September 30, 2025.

MKS 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, 2024, and are summarized as follows:


			Fair Value Measurements at Reporting Date Using
Description	December 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	$	289	$	289	$	—	$	—
Time deposits		5		—		5		—
Equity securities		1		1		—		—
Available-for-sale securities:
Group insurance contracts		6		—		6		—
Derivatives
Foreign exchange forward contracts		9		—		9		—
Interest rate swaps - current		3		—		3		—
Interest rate swaps - non-current		35		—		35		—
Pension and deferred compensation plan assets		22		—		22		—
Total assets	$	370	$	290	$	80	$	—
Liabilities:
Derivatives
Foreign exchange forward contracts-current	$	3	$	—	$	3	$	—
Interest rate swaps - current		4		—		4		—
Total liabilities	$	7	$	—	$	7	$	—
Reported as follows:
Assets:
Cash and cash equivalents (1)	$	294	$	289	$	5	$	—
Other current assets		12		—		12		—
Total current assets	$	306	$	289	$	17	$	—
Other assets	$	64	$	1	$	63	$	—
Liabilities:
Other current liabilities	$	7	$	—	$	7	$	—

(1)

The cash and cash equivalents amount presented in the table above does not include cash of $420 as of December 31, 2024.

Other Fair Value Disclosures

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


	September 30, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
Term Loan Facility	$	2,989	$	2,999	$	3,249	$	3,262
Convertible Notes		1,400		1,538		1,400		1,357
Total	$	4,389	$	4,537	$	4,649	$	4,619

The estimated fair value of the Company’s Term Loan Facility, as defined and further described in Note 8, 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 8, was determined based on the last traded price of the Convertible Notes for the period ended September 30, 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 INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

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 for employees of certain of the Company’s subsidiaries.

Derivatives

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 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. The market participants are typically large commercial banks. The contracts are valued using broker quotations or market transactions.

(5)

Derivatives and Net Investment Hedge

Foreign Exchange Forward Contracts

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 other comprehensive income (“OCI”) in stockholders’ equity. These changes in fair value will subsequently be reclassified into earnings as applicable, when the forecasted transaction occurs. 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 condensed 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 condensed 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 expense (income), net.

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


	September 30, 2025		December 31, 2024
Designated as cash flow hedging instruments:
Foreign exchange forward contracts - cash flow hedges	$	21	$	74
Not designated as cash flow hedging instruments:
Foreign exchange forward contracts - balance sheet hedges	$	216	$	154

As of September 30, 2025, the Canadian dollar and South Korean won were the largest notional contracts designated as cash flow hedging instruments. As of December 31, 2024, the Japanese yen and South Korean won were the largest notional contracts designated as cash flow hedging instruments.

As of September 30, 2025, the 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 Chinese yuan and British pound were the largest notional contracts for balance sheet hedges not designated as cash flow hedging instruments.

Net Investment Hedge

On January 1, 2023, the Company designated certain Euro-denominated debt as a net investment hedge to hedge a portion of its net investments in certain of its entities with functional currencies denominated in the Euro. On January 22, 2024, the Company prepaid its USD Tranche A in full using, in part, a €250 incremental borrowing under its Euro Tranche B, each as defined and further described in Note 8. On January 22, 2024, the Company designated the additional €250 of its Euro Tranche B as a net investment hedge. As of September 30, 2025, the total principal amount outstanding under its Euro

MKS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per share data)

Tranche B was €589 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. Recognition in earnings of amounts previously recorded in accumulated OCI is limited to circumstances such as complete or substantially complete liquidation or sale of the net investment in the hedged foreign operations.

Interest Rate Agreements

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 8, to a fixed rate. The notional value of the agreements was $1,900 and $2,600 as of September 30, 2025 and December 31, 2024, respectively. The Company acquired USD London Interbank Offered Rate interest rate cap agreements as a result of its acquisition of Atotech Limited (“Atotech”) on August 17, 2022 (the “Atotech Acquisition”), and utilized these agreements to offset Term SOFR on its Term Loan Facility. 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. To the extent these arrangements are no longer effective hedges, the hedging relationship will be discontinued and changes in the fair value of the hedging instruments from the last assessment period that were effective up to the current period will be recorded immediately in earnings. Amounts previously recorded in OCI will remain in OCI and will be reclassified to earnings when the interest payments impact consolidated earnings. If the Company determines that the interest payments are unlikely to occur, amounts previously recorded in OCI will be reclassified to earnings immediately. 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 were classified in cash flows from operating activities in the condensed consolidated statements of cash flows.

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Foreign exchange forward contracts-cash flow hedges:
Net (losses) gains recognized in OCI, net of tax	$	—		$	(7	)	$	(4	)	$	1
Net gains (losses) reclassified from accumulated OCI into cost of revenues	$	—		$	3		$	4		$	5
Interest rate hedges:
Net (losses) gains recognized in OCI, net of tax	$	(2	)	$	(52	)	$	(24	)	$	(28	)
Net gains (losses) reclassified from accumulated OCI into interest expense	$	5		$	16		$	17		$	49

The Company expects an immaterial amount to be reclassified from accumulated OCI into cost of revenues during the next 12 months related to foreign exchange forward contracts. The Company expects a net gain of approximately $4 to be reclassified from accumulated OCI into interest expense during the next 12 months related to interest rate hedges.

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

MKS INC 10-Q