Company: CPS
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0001320461-25-000033
Chunk: 79

Company: Cooper-Standard Holdings Inc.
Filing Date: 2025-02-14
Form: 10-K
Item: Item 7A
Chunk 79
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Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

We are exposed to fluctuations in interest rates, currency exchange rates and commodity prices. We actively manage our exposure to risk from changes in foreign currency exchange rates through the use of derivative financial instruments in accordance with management’s guidelines. We do not enter into derivative instruments for trading or speculative purposes. See Item 8. “Financial Statements and Supplementary Data,” specifically Note 11. “Fair Value Measurements and Financial Instruments” to the consolidated financial statements.

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Foreign Currency Exchange Rate Risk. We use forward foreign exchange contracts to reduce the effect of fluctuations in foreign exchange rates on a portion of forecasted sales, material purchases, operating expenses and certain assets and liabilities. As of December 31, 2024, the notional amount of these contracts was $188.1 million. As of December 31, 2024, the fair value of the Company’s forward foreign exchange contracts was a liability of $3.8 million. The potential fair value of the forward foreign exchange contracts from a hypothetical 10% adverse or favorable movement in the foreign currency exchange rates in relation to the U.S. Dollar is as follows:December 31, 2024December 31, 202310% strengthening of U.S. Dollar- $17.3 million- $16.4 million10% weakening of U.S. Dollar + $12.9 million + $21.2 million

These estimates assume a parallel shift in all currency exchange rates and, as a result, may overstate the potential impact to earnings because currency exchange rates do not typically move all in the same direction. 

In addition to transactional exposures, our operating results are impacted by the translation of our foreign operating income into U.S. dollars. In 2024, net sales outside of the United States accounted for 78% of our consolidated net sales, although certain non-U.S. sales are U.S. dollar denominated. We do not enter into foreign exchange contracts to mitigate this exposure.

Interest Rates. The Company historically used interest rate swap contracts to create fixed interest payments on variable rate debt instruments in order to manage exposure to fluctuations in interest rates. As of December 31, 2024 and 2023, we did not have any outstanding debt at variable interest rates, and therefore did not enter into any interest rate swap contracts in 2024 or 2023.

Commodity Prices. We have commodity price risk with respect to purchases of certain raw materials, including