Company: IPGP
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0001111928-25-000023
Chunk: 12

Company: IPG PHOTONICS CORP
Filing Date: 2025-02-20
Form: 10-K
Item: Item 16
Chunk 12
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 evaluates inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historic usage, estimated future usage and age. Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory. As of December 31, 2024, the Company has inventories of $284.8 million, net of excess quantities and obsolescence reserves. 

We identified the reserve for excess quantities and obsolete inventory as a critical audit matter because of the significant estimates and assumptions management makes to quantify the reserve, including the determination of expected demand, especially when considering the vertically integrated nature of the Company's operations, as well as parts subject to technological obsolescence. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the policy and the reasonableness of assumptions including expected demand.

F-2

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments underlying the calculation of excess or obsolete inventory reserve, included the following, among others:

•We tested the effectiveness of controls over inventory, including those over the estimation of reserves for excess quantities and obsolescence.

•We evaluated the reasonableness of the Company's excess and obsolete reserve policy, considering historical experience and the underlying assumptions.

•We tested the calculation of the excess and obsolete reserve pursuant to the Company’s policy, including the completeness and accuracy of the data used in the calculation.

•We evaluated management’s ability to estimate future demand by comparing actual inventory usage to estimates made in prior years.

•We considered the existence of contradictory evidence based on consideration of internal communication to management and the board of directors, Company press releases, and analysts’ reports, as well as any changes within the business.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

February 20, 2025 

We have served as the Company's auditor since 1999.

F-3

IPG PHOTONICS CORPORATION

CONSOLIDATED BALANCE SHEETSDecember 31, 20242023 (In thousands, except shareand per share data)ASSETSCurrent assets:Cash and cash equivalents$620,040 $514,674 Short-term investments310,152 662,807 Accounts receivable, net171,131 219,053 Inventories284,780 453,874 Prepaid income taxes17,592 26,038 Prepaid expenses and other current assets27,300 38,208 Total current assets