Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

9.Derivative Instruments and Hedging Activities

Commodity Price Risk Management

The Company has arrangements with certain customers under which it has a firm commitment to deliver copper-based superconductors at a fixed price. In order to minimize the volatility that fluctuations in the price of copper have on the Company’s sales of these commodities, the Company enters into commodity hedge contracts. As commodity contracts settle, gains (losses) as a result of changes in fair values are adjusted to the contracts with the customers through revenues.

Foreign Exchange Rate Risk Management

The Company had the following notional amounts outstanding under foreign exchange contracts, cross-currency interest rate swap agreements and long-term debt designated as net investment hedges and the respective fair value of the instruments recorded in the consolidated balance sheets as follows (in millions):

	March 31, 2023					December 31, 2022
	Notional (in USD)		Fair Value			Notional (in USD)		Fair Value
Derivatives designated as hedging instruments:
Interest rate cross-currency swap agreements
Other current assets			$	15.5				$	14.8
Other assets				15.6					23.0
Other long-term liabilities				(11.5	)				(12.2	)
	$	389.5	$	19.6		$	393.3	$	25.6
Long-term debt
Long-term debt		815.7		(25.0	)		807.6		(17.0	)
Total derivatives designated as hedging instruments	$	1,205.2	$	(5.4	)	$	1,200.9	$	8.6
Derivatives not designated as hedging instruments:
Forward currency contracts
Other current assets	$	139.1	$	1.3		$	89.8	$	0.6
Other current liabilities		126.8		(0.3	)		97.4		(0.3	)
Embedded derivatives in purchase and delivery contracts
Other current assets		1.4		0.6			15.3		0.1
Other current liabilities		27.9		(0.2	)		—		—
Fixed price commodity contracts
Other current assets		5.3		0.9			8.9		0.6
Total derivatives not designated as hedging instruments	$	300.5	$	2.3		$	211.4	$	1.0
Total derivatives	$	1,505.7	$	(3.1	)	$	1,412.3	$	9.6

In addition, the Company periodically enters into purchase and sales contracts denominated in currencies other than the functional currency of the parties to the transaction. The Company accounts for these transactions separately valuing the “embedded derivative” component of these contracts. The contracts, denominated in currencies other than the functional currency of the transacting parties, amounted to $1.4 million for the delivery of products and $27.9 million for the purchase of products at March 31, 2023 and $15.3 million for the purchase of products at December 31, 2022. The Company records the changes in the fair value of these embedded derivatives in interest and other income (expense), net in the consolidated statements of income and comprehensive income.

The following is a summary of the gain (loss) included in the consolidated statements of income and comprehensive income related to the derivative instruments described above (in millions):

		Three Months Ended March 31,
	Financial Statement Classification	2023			2022
Derivatives not designated as hedging instruments
Forward currency contracts	Interest and other income (expense), net	$	(0.1	)	$	(1.5	)
Embedded derivatives in purchase and delivery contracts	Interest and other income (expense), net		(0.3	)		(0.1	)
			(0.4	)		(1.6	)
Derivatives designated as cash flow hedging instruments
Interest rate cross-currency swap agreements	Interest and other income (expense), net	$	2.3		$	(1.0	)
Derivatives designated as net investment hedging instruments
Interest rate cross-currency swap agreements	Interest and other income (expense), net		2.0			2.1
			4.3			1.1
Total		$	3.9		$	(0.5	)
		Three Months Ended March 31,
	Financial Statement Classification	2023			2022
Derivatives designated as cash flow hedging instruments
Interest rate cross-currency swap agreements	Accumulated other comprehensive income, net of tax	$	(3.4	)	$	11.4
			(3.4	)		11.4
Derivatives designated as net investment hedging instruments
Interest rate cross-currency swap agreements	Accumulated other comprehensive income, net of tax	$	(1.2	)	$	0.7
Long-term debt	Accumulated other comprehensive income, net of tax		(6.1	)		9.0
			(7.3	)		9.7
Total		$	(10.7	)	$	21.1