Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward-looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are a leading global supplier of automated test equipment and robotics products. We design, develop, manufacture, and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency, and decrease manufacturing and logistics costs. Our automatic test equipment and robotics products and services include:

semiconductor test (“Semiconductor Test”) systems;

storage and system level test (“Integrated System Test”, formally "Storage Test") systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”);

wireless test (“Wireless Test”) systems; and

robotics (“Robotics”) products.

The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our test products both through direct sales and sales to the customers’ supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.

In the third quarter of 2024, we saw strength in Semiconductor Test performance driven in System-on-a-chip by compute and in memory by DRAM and high bandwidth memory. We expect compute and memory to continue to drive meaningful demand in the fourth quarter of 2024, helping to offset weakness in the mobility test market. We anticipate an eventual upturn in mobility at some point in 2025.

Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms, and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation. The market for our Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (“SMEs”) throughout the world. Robotics results in the third quarter of 2024 were in line with our revenue forecast, putting us in position for full year growth due to new product offerings and expansion of our Original Equipment Manufacturer (“OEM”) and large account channels, along with increasing recurring revenue through new service and software offerings.

On November 7, 2023, we and Technoprobe S.p.A, (“Technoprobe”), a leader in the design and production of probe cards, announced the establishment of a strategic partnership that will seek to accelerate growth for both companies and enable higher performance semiconductor test interfaces for customers worldwide. As part of the partnership, on May 27, 2024, we made an investment of $524.1 million in exchange for 10% of the issued and outstanding shares of Technoprobe, and we sold our Device Interface Solutions ("DIS") business to Technoprobe in exchange for $85.0 million, net of cash and cash equivalents sold, and a customary working capital adjustment.

Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in the fourth quarter of 2024.

Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses. We have strategically increased engineering and go-to-market spending, primarily in Semiconductor Test and Integrated System Test, in order to support market share gains. We plan to execute on our strategy while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for opportunistic accretive acquisitions.

Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the nine months ended September 29, 2024, to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as noted below.

Equity method investments

We account for investments using the equity method of accounting when we have significant influence over the financial and operating policies, but not control, of the investee. The equity method investments are initially recorded at cost and included in ‘Equity method investment’ in the consolidated balance sheet. We record our share of investee's net income or loss and the amortization of equity method basis difference, calculated as the difference between the investment and the amount of underlying equity in net assets acquired, on a 3-month lag, which is applied consistently from period to period. These results are reported in ‘Equity in net earnings of affiliate’ in the consolidated statement of operations. We record our share of investee's other comprehensive income and a cumulative translation adjustment in the consolidated statements of comprehensive income, also on a 3-month lag. We monitor on an ongoing basis our equity method investments for indicators of other-than-temporary declines in fair value below carrying value.

Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur, and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions.

SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

		For the Three Months Ended								For the Nine Months Ended
		September 29, 2024				October 1, 2023				September 29, 2024				October 1, 2023
Percentage of revenues:
Revenues:
Products			83	%			78	%			81	%			78	%
Services			17				22				19				22
Total revenues			100				100				100				100
Cost of revenues:
Cost of products			34				34				34				33
Cost of services			6				9				8				10
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)			41				43				42				42
Gross profit			59				57				58				58
Operating expenses:
Selling and administrative			21				20				22				22
Engineering and development			16				15				16				16
Acquired intangible assets amortization			1				1				1				1
Restructuring and other			1				1				1				1
Gain on sale of business			—				—				(3	)			—
Total operating expenses			39				36				37				39
Income from operations			21				20				21				19
Non-operating (income) expense:
Interest income			(1	)			(1	)			(1	)			(1	)
Interest expense			—				—				—				—
Other (income) expense, net			—				1				1				—
Income before income taxes and equity in net earnings of affiliate			22				21				22				19
Income tax provision			2				2				3				3
Income before equity in net earnings of affiliate			20				18				19				17
Equity in net earnings of affiliate			(0	)			—				(0	)			—
Net income			20	%			18	%			19	%			17	%

Results of Operations

Third Quarter 2024 Compared to Third Quarter 2023

Revenues

Revenues by our reportable segments were as follows:

		For the Three Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Semiconductor Test		$	542.7			$	497.9			$	44.8
System Test			73.3				83.2				(9.9	)
Robotics			88.7				85.7				3.0
Wireless Test			32.6				37.0				(4.4	)
		$	737.3			$	703.7			$	33.6

The increase in Semiconductor Test revenues of $44.8 million, or 9.0%, was driven primarily by higher tester sales for computing and memory applications, partially offset by lower tester sales for mobility and legacy automotive applications. The decrease in System Test revenues of $9.9 million, or 11.9%, was due principally to lower sales in Integrated System Test of system level and hard disk drive testers. The increase in Robotics revenues of $3.0 million, or 3.5%, was driven predominantly by higher demand for UR’s collaborative robotic arms and MiR’s autonomous mobile robots. The decrease in Wireless Test revenues of $4.4 million, or 11.9% was primarily due to a decrease in ultra-wide band test products.

Revenues by country as a percentage of total revenues were as follows (1):

		For the Three Months Ended
		September 29, 2024				October 1, 2023
Korea			26	%			15	%
Taiwan			26				14
China			13				12
United States			12				13
Europe			8				9
Japan			2				15
Singapore			2				4
Thailand			2				3
Malaysia			2				3
Philippines			2				8
Rest of World			5				4
			100	%			100	%

(1)

Revenues attributable to a country are based on location of customer site.

Gross Profit

Our gross profit was as follows:

		For the Three Months Ended
		September 29, 2024				October 1, 2023				Dollar/Point Change
		(in millions)
Gross profit		$	436.5			$	398.3			$	38.2
Percent of total revenues			59.2	%			56.6	%			2.6

Gross profit as a percent of revenue increased by 2.6 points, primarily due to volume and product mix, partially offset by a $3.6 million charge for a legal settlement following a judgment against us for infringement of expired patents in our Robotics business.

Selling and Administrative

Selling and administrative expenses were as follows:

		For the Three Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Selling and administrative		$	157.6			$	138.3			$	19.3
Percent of total revenues			21.4	%			19.7	%

The increase of $19.3 million in selling and administrative expenses was primarily due to higher spending in Semiconductor Test.

Engineering and Development

Engineering and development expenses were as follows:

		For the Three Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Engineering and development		$	117.5			$	104.4			$	13.1
Percent of total revenues			15.9	%			14.8	%

The increase of $13.1 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test.

Restructuring and Other

During the three months ended September 29, 2024, we recorded restructuring and other charges primarily related to $1.3 million of severance charges related to headcount reductions principally in Robotics.

During the three months ended October 1, 2023, we recorded restructuring and other charges primarily related to $4.7 million of severance charges related to headcount reductions of 94 people, principally in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, and a $1.5 million contract termination charge.

Interest and Other

		For the Three Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Interest income		$	(5.1	)		$	(6.9	)		$	1.8
Interest expense			0.8				1.0			$	(0.2	)
Other (income) expense, net			(2.7	)			5.6			$	(8.3	)

Other (income) expense reflects a net increase of $8.3 million primarily due to foreign exchange and actuarial gains.

Income (Loss) Before Income Taxes

		For the Three Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Semiconductor Test		$	163.8			$	136.5			$	27.3
System Test			12.5				23.8				(11.3	)
Wireless Test			4.3				9.5				(5.2	)
Robotics			(24.2	)			(21.8	)			(2.4	)
Corporate and Eliminations (1)			2.6				(3.6	)			6.2
		$	159.0			$	144.3			$	14.7

(1)

Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension, acquisition and divestiture related fees, and an expense for the modification of outstanding equity awards.

The change in income before income taxes in Semiconductor Test, System Test, and Wireless Test were driven primarily by fluctuations in revenue within each of the businesses. In Robotics, the change in income before income taxes was driven primarily by increases to operating expenses.

Income Taxes

The effective tax rate for the three months ended September 29, 2024, and October 1, 2023, was 7.8% and 11.2%, respectively. The decrease in the effective tax rate from the three months ended October 1, 2023, to the three months ended September 29, 2024, primarily resulted from the benefit of a projected shift in the geographic distribution of income and an increase in benefit related to reserves for uncertain tax positions. These benefits were partially offset by decreases in benefits related to tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017.

Nine Months 2024 Compared to Nine Months 2023

Revenues

Revenues by our reportable segments were as follows:

		For the Nine Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Semiconductor Test		$	1,497.6			$	1,387.6			$	110.0
System Test			209.4				252.1				(42.7	)
Robotics			266.6				246.5				20.1
Wireless Test			93.5				119.5				(26.0	)
		$	2,067.0			$	2,005.7			$	61.3

The increase in Semiconductor Test revenues of $110.0 million, or 7.9%, was driven primarily by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for mobility and legacy automotive applications. The decrease in System Test revenues of $42.7 million, or 16.9%, was due principally to lower sales in Integrated System Test of system level and hard disk drive testers. The increase in Robotics revenues of $20.1 million, or 8.2%, was predominantly from higher demand for UR’s collaborative robotic arms and MiR’s autonomous mobile robots. The decrease in Wireless Test revenues of $26.0 million, or 21.8%, was primarily due to a decrease in cellular and ultra-wide band test products.

Revenues by country as a percentage of total revenues were as follows (1):

		For the Nine Months Ended
		September 29, 2024				October 1, 2023
Korea			28	%			14	%
Taiwan			20				15
United States			13				16
China			11				12
Europe			9				10
Japan			7				12
Philippines			2				6
Singapore			2				5
Malaysia			2				4
Thailand			2				3
Rest of World			4				3
			100	%			100	%

(1)

Revenues attributable to a country are based on location of customer site.

Gross Profit

Our gross profit was as follows:

		For the Nine Months Ended
		September 29, 2024				October 1, 2023				Dollar/Point Change
		(in millions)
Gross profit		$	1,201.6			$	1,157.2			$	44.4
Percent of total revenues			58.1	%			57.7	%			0.4

Gross profit as a percent of revenue increased by 0.4 points, primarily due to product mix, partially offset by a $3.6 million charge for a legal settlement following a judgment against us for infringement of expired patents in our Robotics business.

Selling and Administrative

Selling and administrative expenses were as follows:

		For the Nine Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Selling and administrative		$	461.3			$	435.0			$	26.3
Percent of total revenues			22.3	%			21.7	%

The increase of $26.3 million in selling and administrative expenses was primarily due to higher spending in Semiconductor Test.

Engineering and Development

Engineering and development expenses were as follows:

		For the Nine Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Engineering and development		$	332.5			$	315.9			$	16.6
Percent of total revenues			16.1	%			15.7	%

The increase of $16.6 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test.

Restructuring and Other

During the nine months ended September 29, 2024, we recorded restructuring and other charges primarily related to $5.3 million of severance and other charges, related to headcount reductions of 87 people primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program for employees meeting certain conditions, and $2.2 million of acquisition and divestiture expenses related to the Technoprobe transactions.

During the nine months ended October 1, 2023, we recorded restructuring and other charges primarily related to $11.8 million of severance charges related to headcount reductions of 197 people, primarily in Semiconductor Test and Robotics, which included which included charges related to a voluntary early retirement program for employees meeting certain conditions, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental liability.

Gain on Sale of Business

During the nine months ended September 29, 2024, we recorded a gain of $57.5 million associated with the sale of DIS to Technoprobe.

Interest and Other

		For the Nine Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Interest income		$	(19.7	)		$	(18.5	)		$	(1.2	)
Interest expense			3.0				3.0				—
Other (income) expense, net			5.6				6.5				(0.9	)

Other (income) expense reflects a net decrease of $0.9 million primarily due to the settlement of our call option purchased in connection with the investment in 10% of Technoprobe partially offset by actuarial gains.

Income (Loss) Before Income Taxes

		For the Nine Months Ended
		September 29, 2024				October 1, 2023				Dollar Change
		(in millions)
Semiconductor Test		$	401.5			$	361.7			$	39.8
System Test			36.1				67.6				(31.5	)
Wireless Test			13.4				30.8				(17.4	)
Robotics			(56.1	)			(66.7	)			10.6
Corporate and Eliminations (1)			56.4				(7.7	)			64.1
		$	451.3			$	385.8			$	65.5

(1)

Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension, acquisition and divestiture related fees, and an expense for the modification of outstanding equity awards.

The change in income before income taxes in Semiconductor Test, System Test, Wireless Test, and Robotics were driven primarily by fluctuations in revenue within each of the businesses. The gain before income taxes in Corporate and Eliminations was primarily due to the sale of DIS to Technoprobe.

Income Taxes

The effective tax rate for the nine months ended September 29, 2024, and October 1, 2023, was 12.0% and 14.0%, respectively. The decrease in the effective tax rate from the nine months ended October 1, 2023, to the nine months ended September 29, 2024, primarily resulted from the benefit of a projected shift in the geographic distribution of income and an increase in benefit related to reserves for uncertain tax positions. These benefits were partially offset by decreases in benefits related to tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017.

Contractual Obligations

There have been no changes outside of the ordinary course of business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities balances decreased by $259.5 million in the nine months ended September 29, 2024, to $677.6 million.

Operating activities during the nine months ended September 29, 2024, provided cash of $389.6 million. Changes in operating assets and liabilities used cash of $75.8 million due to a $7.3 million decrease in operating assets and a $83.1 million decrease in operating liabilities.

The decrease in operating assets was primarily due to decreases in other assets and inventory of $61.4 million and $11.1 million, respectively, partially offset by a $65.3 million increase in accounts receivable, driven by higher sales in the third quarter.

The decrease in operating liabilities was due to a $32.3 million decrease in accrued employee compensation, $25.9 million decrease in accounts payable, $18.9 million decrease in income taxes, $4.2 million decrease in retirement plans, and $5.5 million decrease in accrued other, partially offset by a $3.6 million increase in deferred revenue and customer advances.

Investing activities during the nine months ended September 29, 2024, used cash of $554.9 million due to $527.1 million used for the purchases of investment, $140.7 million used for the purchase of property, plant and equipment, $35.1 million used for the purchase of marketable securities, partially offset by $90.3 million in proceeds from the sale of a business, $23.6 million and $33.2 million in proceeds from the sales and maturities and marketable securities, respectively, and $0.9 million in proceeds from life insurance.

Financing activities during the nine months ended September 29, 2024, used cash of $88.6 million due to $185.0 million used for proceeds from borrowings on revolving credit facility of which $185.0 million in payments were paid back in full during the quarter, $56.9 million used for dividend payment, $55.1 million used for the repurchase of 0.5 million shares of common stock at an average price of $111.32 per share and $13.8 million used for payment related to net settlements of employee stock compensation awards, partially offset by $37.3 million from the issuance of common stock under employee stock purchase and stock option plans.

Operating activities during the nine months ended October 1, 2023, provided cash of $336.5 million. Changes in operating assets and liabilities used cash of $119.3 million due to a $27.4 million increase in operating assets and $91.9 million decrease in operating liabilities.

The increase in operating assets was primarily due to a $64.0 million increase in prepayments and other assets due to prepayments to our contract manufacturers, partially offset by a $30.2 million decrease in accounts receivable and a $6.4 million decrease in inventories.

The decrease in operating liabilities was due to a $56.6 million decrease in accrued employee compensation, a $49.5 million decrease in deferred revenue and customer advance payments, a $42.7 million decrease in income taxes, and $3.7 million of retirement plan contributions, partially offset by $36.0 million increase in accounts payable and an $24.5 million increase in other accrued liabilities.

Investing activities during the nine months ended October 1, 2023, used cash of $149.2 million due to $137.8 million used for purchases of marketable securities and $115.3 million used for purchases of property, plant and equipment, and $5.0 million used for issuance of convertible loan, partially offset by $37.0 million and $71.4 million in proceeds from sales and maturities of marketable securities, respectively, and $0.5 million in proceeds from the cancellation of Teradyne owned life insurance policies related to the cash surrender value.

Financing activities during the nine months ended October 1, 2023, used cash of $410.8 million due to $346.5 million used for the repurchase of 3.4 million shares of common stock at an average price of $103.89 per share, $51.1 million used for dividend payments, and $26.7 million used for payments of convertible debt principal, and $20.6 million used for payment related to net settlements of employee stock compensation awards, partially offset by $34.1 million from the issuance of common stock under employee stock purchase and stock option plans.

In January 2024, May 2024, and August 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Dividend payments for the three and nine months ended September 29, 2024, were $19.6 million and $57.0 million, respectively.

In January 2023, May 2023, and August 2023, our Board of Directors declared a quarterly cash dividend of $0.11 per share. Dividend payments for the three and nine months ended October 1, 2023, were $16.9 million and $51.1 million, respectively.

In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock.

During the nine months ended September 29, 2024, we repurchased 0.5 million shares of common stock for $55.1 million, which excludes related excise tax, at an average price of $111.32 per share. In 2024, Teradyne intends, based on market conditions, to repurchase its common stock in an amount necessary to offset dilution from equity compensation and our employee share purchase program. The cumulative repurchases under the 2023 repurchase program as of September 29, 2024, were 4.4 million shares of common stock for $455.6 million, which excludes related excise tax, at an average price per share of $103.46. During the nine months ended October 1, 2023, we repurchased 3.4 million shares of common stock for $346.5 million, which excludes related excise tax, at an average price of $103.89 per share.

While we have previously declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.

On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400.0 million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving credit facility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. On November 7, 2023, the Credit Agreement was amended to allow for the purchase of the shares of Technoprobe. On May 16, 2024, we borrowed $185.0 million under the credit agreement to fund the acquisition of 10% of the issued and outstanding shares of Technoprobe. We fully repaid our borrowings on the revolving credit facility prior to September 29, 2024. As of November 1, 2024, there are no outstanding borrowings under the credit facility.

We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.

Equity Compensation Plans

In addition to our 1996 Employee Stock Purchase Program as discussed in Note Q: “Stock-Based Compensation” in our 2023 Annual Report on Form 10-K, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”).

The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers and directors. Both plans were approved by our shareholders.

Recently Issued Accounting Pronouncements

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 will require us to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, we will be required to disclose the title and position of the CODM. 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. This ASU will have no impact on our results of operations, cash flows or financial condition.

Upon adoption, we will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements.

In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. This ASU will have no impact on results of operations, cash flows or financial condition.