v3.25.2
Derivative Instruments and Hedging Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Instruments
17.
Derivative Instruments and Hedging Instruments

The Company's major exposures relate to foreign exchange rate, interest rate, and commodity price risks. Risk management activities related to these risks are as follows:

Foreign Exchange Rate Risk:

The Company’s exposure to foreign exchange rate risk includes exchange risk as a result of non-U.S. operations having functional currencies other than the U.S. Dollar, which is managed by cross-currency interest rate swap agreements and long-term debt designated as net investment hedges. As of June 30, 2025, the Company had several cross-currency interest rate swap agreements that qualify for hedge accounting with a notional value of $127.9 million of U.S. Dollar to Swiss Franc and a notional value of $127.9 million of U.S. Dollar to Euro to hedge the variability in the movement of foreign currency exchange rates on portions of its Euro and Swiss Franc denominated net asset investments.

In addition, the Company has foreign currency exposure at a transaction level, and this is addressed by forward currency contracts for significant exposures which have not been designated as accounting hedges.

 

Interest Rate Risk:

The Company’s exposure to interest rate risk relates primarily to outstanding variable rate debt under the U.S. Dollar denominated 2019 Term Loan and adverse movements in the related market rates. This exposure is managed as part of a cross-currency interest rate swap which involves the Company paying-fixed receiving-floating. The objective of this designated cash flow hedge is to offset the variability of cash flows on term loan debt interest payments attributable to changes in SOFR, a contractually specified rate. The difference between the interest rate received and paid under the interest rate and cross-currency swap agreements is recorded in Interest and other income (expense), net in the consolidated statements of operations and comprehensive income.

 

Commodity Price Risk:

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) related to changes in fair values are included within revenues.

The following table presents the Company’s notional amounts outstanding under foreign exchange contracts, cross-currency interest rate swap agreements, and long-term debt designated as net investment hedges, as well as the respective fair value of the instruments (in millions):

 

 

 

June 30,
2025

 

 

December 31,
2024

 

 

Notional
(in USD)

 

 

Fair Value

 

 

Notional
(in USD)

 

 

Fair Value

 

Derivatives designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cross-currency swap agreements

 

 

 

 

 

 

 

 

 

 

 

 

Other current assets

 

 

 

 

$

7.3

 

 

 

 

 

$

10.7

 

Other assets

 

 

 

 

 

1.9

 

 

 

 

 

 

11.1

 

Other long-term liabilities

 

 

 

 

 

(42.8

)

 

 

 

 

 

(17.2

)

 

$

255.8

 

 

$

(33.6

)

 

$

263.3

 

 

$

4.6

 

Long-term debt

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

1,660.7

 

 

 

(216.2

)

 

 

1,453.0

 

 

 

(8.5

)

Total derivatives designated as hedging instruments

 

$

1,916.5

 

 

$

(249.8

)

 

$

1,716.3

 

 

$

(3.9

)

Derivatives not designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Forward currency contracts

 

 

 

 

 

 

 

 

 

 

 

 

Other current assets

 

$

52.9

 

 

$

0.2

 

 

$

841.9

 

 

$

6.0

 

Other current liabilities

 

 

956.6

 

 

 

(3.3

)

 

 

78.6

 

 

 

(0.5

)

Total derivatives not designated as hedging instruments

 

$

1,009.5

 

 

$

(3.1

)

 

$

920.5

 

 

$

5.5

 

Total derivatives

 

$

2,926.0

 

 

$

(252.9

)

 

$

2,636.8

 

 

$

1.6

 

 

 

The following table is a summary of the gain (loss) included in Interest and other income (expense), net in the consolidated statements of operations and comprehensive income related to the derivative instruments described above (in millions):

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Derivatives not designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Forward currency contracts

 

$

(26.2

)

 

$

(7.1

)

 

$

(22.0

)

 

$

(5.1

)

Embedded derivatives in purchase and delivery contracts

 

 

0.9

 

 

 

0.2

 

 

 

1.1

 

 

 

(1.1

)

 

 

(25.3

)

 

 

(6.9

)

 

 

(20.9

)

 

 

(6.2

)

Derivatives designated as cash flow hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cross-currency swap agreements

 

$

1.8

 

 

$

2.6

 

 

$

3.7

 

 

$

5.3

 

Derivatives designated as net investment hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cross-currency swap agreements

 

 

1.2

 

 

 

1.4

 

 

 

2.5

 

 

 

2.9

 

 

 

3.0

 

 

 

4.0

 

 

 

6.2

 

 

 

8.2

 

Total

 

$

(22.3

)

 

$

(2.9

)

 

$

(14.7

)

 

$

2.0

 

 

The following table is a summary of the gain (loss) included in Accumulated other comprehensive income, net of tax in the consolidated statements of operations and comprehensive income related to the derivative instruments described above (in millions):

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Derivatives designated as cash flow hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cross-currency swap agreements

 

$

(1.4

)

 

$

(0.9

)

 

$

(3.5

)

 

$

0.5

 

 

 

(1.4

)

 

 

(0.9

)

 

 

(3.5

)

 

 

0.5

 

Derivatives designated as net investment hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cross-currency swap agreements

 

$

(20.6

)

 

$

(0.3

)

 

$

(26.0

)

 

$

9.9

 

Long-term debt

 

 

(126.9

)

 

 

(6.3

)

 

 

(158.0

)

 

 

44.2

 

 

 

(147.5

)

 

 

(6.6

)

 

 

(184.0

)

 

 

54.1

 

Total

 

$

(148.9

)

 

$

(7.5

)

 

$

(187.5

)

 

$

54.6