Fair Value Measurements

9 Months Ended

Sep. 30, 2025

(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.

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.

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.

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.

MKS INC 10-Q