Cooper-Standard Holdings Inc.CPS
Cooper-Standard Holdings Inc. Fair Value Disclosure
Fair Value Measurements and Financial Instruments
Fair Value Measurements
Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy is utilized, which prioritizes the inputs used in measuring fair value as follows:
| Level 1: | Observable inputs such as quoted prices in active markets; | ||||
| Level 2: | Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and | ||||
| Level 3: | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. | ||||
Items Measured at Fair Value on a Recurring Basis
Estimates of the fair value of foreign currency derivative instruments are determined using exchange traded prices and rates. The Company also considers the risk of non-performance in the estimation of fair value and includes an adjustment for non-performance risk in the measure of fair value of derivative instruments. In certain instances where market data is not available, the Company uses management judgment to develop assumptions that are used to determine fair value. Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured or disclosed at fair value on a recurring basis as of December 31, 2025 and 2024 were as follows:
| December 31, 2025 | December 31, 2024 | Input | |||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||
| Forward foreign exchange contracts - other current assets | $ | 7,211 | $ | 269 | Level 2 | ||||||||||||
| Forward foreign exchange contracts - accrued liabilities | $ | (68) | $ | (4,109) | Level 2 | ||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||
| Forward foreign exchange contracts - other current assets | $ | — | $ | 86 | Level 2 | ||||||||||||
Items Measured at Fair Value on a Nonrecurring Basis
In addition to items that are measured at fair value on a recurring basis, the Company measures certain assets and liabilities at fair value on a nonrecurring basis, which are not included in the table above. As these nonrecurring fair value
measurements are generally determined using unobservable inputs, these fair value measurements are classified within Level 3 of the fair value hierarchy. For additional information on assets and liabilities measured at fair value on a nonrecurring basis see Note 2. “Basis of Presentation and Summary of Significant Accounting Policies”, Note 4. “Divestitures”, Note 8. “Property, Plant and Equipment, Net”, and Note 9. “Goodwill and Intangible Assets”.
Items Not Carried at Fair Value
Fair values of the Company’s First Lien Notes, Third Lien Notes, and 2026 Senior Notes as of December 31, 2025 and 2024 were as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Aggregate fair value | $ | 1,062,833 | $ | 1,012,495 | |||||||
Aggregate carrying value (1) | $ | 1,051,175 | $ | 1,051,175 | |||||||
(1) Excludes unamortized debt issuance costs and unamortized original issue discount.
Fair values were based on quoted market prices and are classified within Level 1 of the fair value hierarchy.
Derivative Instruments and Hedging Activities
The Company is exposed to fluctuations in foreign currency exchange rates, interest rates and commodity prices. The Company enters into derivative instruments primarily to hedge portions of its forecasted foreign currency denominated cash flows and designates these derivative instruments as cash flow hedges in order to qualify for hedge accounting. The Company also enters into derivative instruments to manage exposure related to foreign currency denominated monetary assets and liabilities.
The Company formally documents its hedge relationships, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking various hedge transactions. The Company also formally assesses whether a cash flow hedge is highly effective in offsetting changes in cash flows of the hedged item. Derivatives are recorded at fair value in other current assets, other assets, accrued liabilities and other long-term liabilities.
For a cash flow hedge, the change in fair value of the derivative is recorded in AOCI in the consolidated balance sheets, to the extent that the hedges are effective, and reclassified into earnings when the underlying hedged transaction is realized. The realized gains and losses are recorded on the same line as the hedged transaction in the consolidated statements of operations. Derivatives not designated as hedging instruments are marked-to-market with changes in fair value recorded in earnings. Cash flows from derivatives used to manage foreign exchange risks are classified as operating activities within the consolidated statements of cash flows.
The Company is exposed to credit risk in the event of nonperformance by its counterparties on its derivative financial instruments. The Company mitigates this credit risk exposure by entering into agreements directly with major financial institutions with high credit standards that are expected to fully satisfy their obligations under the contracts.
Cash Flow Hedges
Forward Foreign Exchange Contracts. The Company uses forward contracts to mitigate the potential volatility to earnings and cash flow arising from changes in currency exchange rates that impact the Company’s foreign currency transactions. The principal currencies hedged by the Company include various European currencies, the Canadian Dollar, and the Mexican Peso. As of December 31, 2025 and 2024, the notional amount of these contracts was $222,988 and $188,140, respectively, and consisted of hedges of cash flow transactions extending out to December 2026.
Pretax amounts related to the Company’s cash flow hedges that were recognized in other comprehensive income (loss) (“OCI”) were as follows:
| Gain (Loss) Recognized in OCI | |||||||||||
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flow hedges | $ | 18,132 | $ | (8,045) | |||||||
Pretax amounts related to the Company’s cash flow hedges that were reclassified from AOCI and recognized in cost of products sold were as follows:
| Gain (Loss) Reclassified from AOCI to Income | |||||||||||
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flow hedges | $ | 7,140 | $ | (3,919) | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 17, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 20, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 23, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.