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Derivative Instruments and Hedging Activities
 12 Months Ended
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities
13.
Derivative Instruments and Hedging Activities
Interest Rate Risk
The Company’s exposure to interest rate risk relates primarily to outstanding variable rate debt and adverse movements in the related market rates. Typically, the most significant component of the Company’s interest rate risk relates to amounts outstanding under the 2019 Credit Agreement and the 2019 Term Loan.

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 generates a substantial portion of its revenues and expenses in international markets, principally Germany and other countries in the European Union and Switzerland, which subjects its operations to the exposure of exchange rate fluctuations. The impact of currency exchange rate movement can be positive or negative in any period. The Company periodically enters into foreign currency contracts in order to minimize the volatility that fluctuations in currency translation have on its monetary transactions. Under these arrangements, the Company typically agrees to purchase a fixed amount of a foreign currency in exchange for a fixed amount of U.S. Dollars or other currencies on specified dates with maturities of less than twelve months, with some agreements extending to longer periods. These transactions do not qualify for hedge accounting and, accordingly, the instrument is recorded at fair value with the corresponding gains and losses recorded in the consolidated statements of income and comprehensive income.

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 $8.5
 million and
$4.8
 million

 

for the purchase of products at December 31, 2021 and 2020, respectively. The contracts, denominated in currencies other than the functional currency of the transacting parties, amounted to $0.0 million and $7.5 million for the delivery of products at December 31, 2021 and 2020, respectively. The changes in the fair value of these embedded derivatives are recorded in interest and other income (expense), net in the consolidated statements of income and comprehensive income.
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 (in millions) and the respective fair value of the instruments recorded in the consolidated balance sheets as follows (in millions):

 
 
  
Notional
(in USD)
 
  
December 31,
2021
 
  
Notional
(in USD)
 
  
December 31,
2020
 
Derivatives designated as hedging instruments
  
      
  
      
  
      
  
      
Interest rate cross-currency swap agreements
  
      
  
      
  
      
  
      
Other current assets
  
      
  
$
6.4
 
  
      
  
$
7.6
 
Other current liabilities
  
      
  
 
(5.8
) 
  
      
  
 
(4.3
) 
Other long-term liabilities
  
      
  
 
(18.1
) 
  
      
  
 
(57.2
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
$
504.3
 
  
$
(17.5
) 
  
$
505.0
 
  
$
(53.9
) 
Long-term debt
  
      
  
      
  
      
Long-term Debt
  
 
825.8
 
  
 
(35.1
) 
  
 
335.5
 
  
 
(37.6
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total derivatives designated as hedging instruments
  
$
1,330.1
 
  
$
(52.6
) 
  
$
840.5
 
  
$
(91.5
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments
  
      
  
      
  
      
  
      
Forward currency contracts
  
      
  
      
  
      
  
      
Other current assets
  
$
157.7
 
  
$
0.7
 
  
$
175.8
 
  
$
2.1
 
Other current liabilities
  
 
23.0
 
  
 
(0.3
) 
  
 
102.5
 
  
 
(0.4
) 
Embedded derivatives in purchase and delivery
contracts
  
      
  
      
  
      
  
      
Other current assets
  
 
8.5
 
  
 
0.2
 
  
 
12.3
 
  
 
0.1
 
Fixed price commodity contracts
  
      
  
      
  
      
  
      
Other current assets
  
 
5.5
 
  
 
0.4
 
  
 
8.8
 
  
 
3.1
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total derivatives not designated as hedging instruments
  
$
194.7
 
  
$
1.0
 
  
$
299.4
 
  
$
4.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivatives
  
$
1,524.8
 
  
$
(51.6
) 
  
$
1,139.9
 
  
$
(86.6
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
The following is a summary of the gain (loss) included in th
e
 consolidated statements of income and comprehensive income related to
the
derivative instruments described above (in millions):
 
 
  
 
  
Years Ended December 31,
 
 
  
Financial Statement Classification
  
2021
 
  
2020
 
  
2019
 
Derivatives not designated as hedging instruments
  
  
  
      
  
      
  
      
Forward currency contracts
  
Interest and other income (expense), net

   $ (5.5 )    $ 2.1     $ 3.0  
Embedded derivatives in purchase and delivery contracts
  
 Interest and other income
 
(expense), net		  
 		   0.1       0.5       —    
       
 
 
    
 
 
    
 
 
  

        (5.4 )      2.6       3.0  
Derivatives designated as cash flow hedging
instruments
  
  
 
      
 
      
 
      
Interest rate cross-currency swap agreements
  
Interest and other income
 
(expense), net
 
 
(4.7
) 
 
 
(3.0
) 
 
 
—  
 
 
  
  
  
 
 
 
  
 
 
 
  
 
 
 
Derivatives designated as net investment hedging instruments
  
  
  
      
  
      
  
      
Interest rate cross-currency swap agreements
  
Interest and other income (expense), net
  
 
10.2
 
  
 
10.1
 
  
 
0.6
 
 
  
  
  
 
 
 
  
 
 
 
  
 
 
 
Total
  
  
  
$
0.1
 
  
$
9.7
 
  
$
3.6
 
 
  
  
  
 
 
 
  
 
 
 
  
 
 
 
 

 
  
 
  
Years Ended December 31,
 
 
  
Financial Statement Classification
  
2021
 
  
2020
 
  
2019
 
Derivatives designated as cash flow hedging instruments
  
  
  
      
  
      
  
      
Interest rate cross-currency swap agreements
  
Accumulated other
 
comprehensive income,
 
net of tax
 
$
15.0
 
  
$
(20.4
) 
 
$
2.0
 
Derivatives designated as net investment hedging
instruments
    
 
      
  
      
 
      
Interest rate cross-currency swap agreements
  
Accumulated other
 
comprehensive income,
 
net of tax
 
 
25.6
 
  
 
(26.7
) 
 
 
(8.8
) 
Long-term debt
  
Accumulated other
 
comprehensive income,
 
net of tax
     10.8       (28.7 )     (8.9 )
     
 
 
 
 
  
 
 
 
 
 
 
 
     
 
 
36.4
 
  
 
(55.4
) 
 
 
(17.7
) 
     
 
 
 
 
  
 
 
 
 
 
 
 
Total
    
 
$
51.4
 
  
$
(75.8
) 
 
$
(15.7
)