Derivative and Designated Hedging Instruments

9 Months Ended

Sep. 30, 2024

Derivative and Designated Hedging Instruments Disclosure [Abstract]

Derivative and Designated Hedging Instruments

11.

Derivatives and Designated 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 translation 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 September 30, 2024, the Company had several cross-currency interest rate swap agreements to hedge the variability in the movement of foreign currency exchange rates on portions of our Euro and Swiss Franc denominated net asset investments. These agreements qualify for hedge accounting and accordingly the changes in fair value of the derivative are recorded in other comprehensive income and remain in accumulated comprehensive income (loss) attributable to Bruker Corporation in shareholders’ equity until the sale or substantial liquidation of the foreign operation.

In addition, the Company has foreign currency exposure at a transaction level and this is addressed by forward currency contracts for significant exposures.

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-float. The objective of this designated cash flow hedge is to offset the variability of cash flows in 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 income and comprehensive income. The Company presents the interest rate swap periodic settlements in operating activities in the statement of cash flows.

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 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 financial instruments recorded in the consolidated balance sheets as follows (in millions):


	September 30, 2024					December 31, 2023
	Notional (in USD)		Fair Value			Notional (in USD)		Fair Value
Financial instruments designated as hedging instruments:
Interest rate cross-currency swap agreements
Other current assets			$	9.0				$	12.0
Other assets				4.5					8.3
Other long-term liabilities				(26.8	)				(26.8	)
	$	267.0	$	(13.3	)	$	378.3	$	(6.5	)
Long-term debt
Long-term debt		1,562.4		(118.0	)		876.0		(85.3	)
Total financial instruments designated as hedging instruments	$	1,829.4	$	(131.3	)	$	1,254.3	$	(91.8	)
Financial instruments not designated as hedging instruments:
Forward currency contracts
Other current assets	$	677.9	$	1.0		$	177.8	$	1.3
Other current liabilities		240.7		(1.1	)		311.7		(0.6	)
Embedded derivatives in purchase and delivery contracts
Other current assets		18.9		0.5			25.6		1.2
Other current liabilities		1.3		—			0.1		—
Fixed price commodity contracts
Other current assets		3.2		0.2			8.4		0.3
Total financial instruments not designated as hedging instruments	$	942.0	$	0.6		$	523.6	$	2.2
Total financial instruments	$	2,771.4	$	(130.7	)	$	1,777.9	$	(89.6	)

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


		Three Months Ended September 30,						Nine Months Ended September 30,
	Financial Statement Classification	2024			2023			2024			2023
Financial instruments not designated as hedging instruments
Forward currency contracts	Interest and other income (expense), net	$	(9.0	)	$	(5.5	)	$	(14.1	)	$	(4.2	)
Embedded derivatives in purchase and delivery contracts	Interest and other income (expense), net		0.4			(0.6	)		(0.7	)		0.1
			(8.6	)		(6.1	)		(14.8	)		(4.1	)
Financial instruments designated as cash flow hedging instruments
Interest rate swap agreements	Interest and other income (expense), net	$	2.6		$	2.7		$	7.9		$	7.6
Financial instruments designated as net investment hedging instruments
Interest rate cross-currency swap agreements	Interest and other income (expense), net		1.3			2.0			4.2			6.0
			3.9			4.7			12.1			13.6
Total		$	(4.7	)	$	(1.4	)	$	(2.7	)	$	9.5

		Three Months Ended September 30,						Nine Months Ended September 30,
	Financial Statement Classification	2024			2023			2024			2023
Financial instruments designated as cash flow hedging instruments
Interest rate swap agreements	Accumulated other comprehensive income, net of tax	$	(5.2	)	$	0.5		$	(4.7	)	$	0.1
			(5.2	)		0.5			(4.7	)		0.1
Financial instruments designated as net investment hedging instruments
Interest rate cross-currency swap agreements	Accumulated other comprehensive income, net of tax	$	(9.3	)	$	5.5		$	0.6		$	(2.8	)
Long-term debt	Accumulated other comprehensive income, net of tax		(68.9	)		15.5			(24.7	)		(2.4	)
			(78.2	)		21.0			(24.1	)		(5.2	)
Total		$	(83.4	)	$	21.5		$	(28.8	)	$	(5.1	)

The Company or its subsidiaries periodically enter into purchase and sales contracts denominated in currencies other than the functional currency of the transacting parties and consequently the Company must separately account for the “embedded derivative” components of these contracts. 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.