STONERIDGE INCSRI
STONERIDGE INC Fair Value Disclosure
Financial Instruments and Fair Value Measurements
Financial Instruments
A financial instrument is cash or a contract that imposes an obligation to deliver or conveys a right to receive cash or another financial instrument. The carrying values of cash and cash equivalents, accounts receivable and accounts payable are considered to be representative of fair value because of the short maturity of these instruments. The fair value of debt approximates the carrying value of debt, due to the variable interest rate on the Credit Facility and the maturity of outstanding debt.
Derivative Instruments and Hedging Activities
During 2025, the Company had Mexican peso-denominated foreign currency forward contracts. The Company used foreign currency forward contracts solely for hedging and not for speculative purposes during 2025 and 2024. Management believes that its use of these instruments to reduce risk was in the Company’s best interest. The counterparties to these financial instruments were financial institutions with investment grade credit ratings.
Foreign Currency Exchange Rate Risk
The Company conducts business internationally and, therefore, is exposed to foreign currency exchange rate risk. The Company uses derivative financial instruments as cash flow hedges to manage its exposure to fluctuations in foreign currency exchange rates by reducing the effect of such fluctuations on foreign currency denominated intercompany transactions, labor costs and other foreign currency exposures.
Cash Flow Hedges
The Company entered into foreign currency forward contracts to hedge the Mexican peso currency in 2025 and 2024. These forward contracts were executed to hedge forecasted transactions and have been designated and accounted for as cash flow hedges. As such, gains and losses on derivatives qualifying as cash flow hedges are recorded in accumulated other comprehensive loss, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated other comprehensive loss will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. The cash flow hedges were highly effective. The effectiveness of the transactions has been and will be measured on an ongoing basis using regression analysis and forecasted future purchases of the currency.
The Company’s foreign currency forward contracts offset a portion of the gains and losses on the underlying foreign currency denominated transactions as follows:
Mexican peso-denominated Foreign Currency Forward Contracts – Cash Flow Hedges
The Company held Mexican peso-denominated foreign currency forward contracts which expired ratably on a monthly basis from January 2025 to December 2025. The notional amounts at December 31, 2025 and 2024 related to Mexican peso-denominated foreign currency forward contracts were $0 and $32,339.
The Company evaluated the effectiveness of the Mexican peso-denominated foreign currency forward contracts held during the year ended December 31, 2025 and concluded that the hedges were highly effective.
Interest Rate Risk
Interest Rate Risk – Cash Flow Hedge
On February 18, 2020, the Company entered into a floating-to-fixed interest rate swap agreement (the “Swap”) with a notional amount of $50,000 to hedge its exposure to interest payment fluctuations on a portion of its Fourth Amended and Restated Credit Agreement borrowings. The Swap matured on March 10, 2023. The Swap was designated as a cash flow hedge of the variable interest rate obligation under the Company's Fourth Amended and Restated Credit Agreement. Accordingly, the change in fair value of the Swap was recognized in accumulated other comprehensive loss. The Swap agreement required monthly settlements on the same days that the Fourth Amended and Restated Credit Agreement interest payments were due and had a maturity date of March 10, 2023, which was prior to the Fourth Amended and Restated Credit Agreement maturity date of June 4, 2024. Under the Swap terms, the Company paid a fixed interest rate and received a floating interest rate based on the one-month London Inter-Bank Offered Rate ("LIBOR") with a floor. The critical terms of the Swap were aligned with the terms of the Fourth Amended and Restated Credit Agreement, resulting in no hedge ineffectiveness. The difference between amounts to be received and paid under the Swap were recognized as a component of interest expense, net on the consolidated statements of operations. The swap settlements reduced interest expense, net by $290 for the year ended December 31, 2023.
The notional amounts and fair values of derivative instruments in the consolidated balance sheets were as follows:
Notional amounts (A) | Prepaid expenses and other current assets | Accrued expenses and other current liabilities | ||||||||||||||||||||||||||||||||||||
| As of December 31, | 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||
| Cash flow hedges: | ||||||||||||||||||||||||||||||||||||||
| Forward currency contracts | $ | — | $ | 32,339 | $ | — | $ | — | $ | — | $ | 2,429 | ||||||||||||||||||||||||||
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(A)Notional amounts represent the gross contract of the derivatives outstanding in U.S. dollars.
Gross amounts recorded for the cash flow hedges in other comprehensive (loss) income and in net loss for the years ended December 31 were as follows:
| Gain (loss) recorded in other comprehensive (loss) income | Gain (loss) reclassified from other comprehensive (loss) income into net loss (A) | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Derivatives designated as cash flow hedges: | ||||||||||||||||||||||||||||||||||||||
| Forward currency contracts | $ | 3,709 | $ | (4,684) | $ | 2,304 | $ | 1,280 | $ | (397) | $ | 446 | ||||||||||||||||||||||||||
| Interest rate swap | $ | — | $ | — | $ | (4) | $ | — | $ | — | $ | 290 | ||||||||||||||||||||||||||
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(A)Gain (losses) reclassified from other comprehensive (loss) income into net loss recognized in COGS in the consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023 were $765, $(350) and $337, respectively. Gains (losses) reclassified from other comprehensive income (loss) into net loss recognized in SG&A in the consolidated statements of operations were $515, $(47) and $109 for the years ended December 31, 2025, 2024 and 2023, respectively. Gains reclassified from other comprehensive income (loss) into net loss recognized in interest expense, net in the consolidated statements of operations were $0, $0 and $290 for the years ended December 31, 2025, 2024 and 2023, respectively.
Cash flows from derivatives used to manage foreign exchange and interest rate risks are classified as operating activities within the consolidated statements of cash flows.
The Company has measured the ineffectiveness of the forward currency contracts and any amounts recognized in the consolidated financial statements were immaterial for the years ended December 31, 2025, 2024 and 2023.
Fair Value Measurements
Certain assets and liabilities held by the Company are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of the inputs used. Fair values estimated using Level 1 inputs consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Fair values estimated using Level 2 inputs, other than quoted prices, are observable for the asset or liability, either directly or indirectly and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward currency and cross-currency contracts, inputs include forward foreign currency exchange rates. For the interest rate swap, inputs included LIBOR. Fair values estimated using Level 3 inputs consist of significant unobservable inputs.
The following table presents our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of the fair value hierarchy based on the reliability of inputs used.
| December 31, | 2025 | 2024 | |||||||||||||||||||||||||||
| Fair values estimated using | |||||||||||||||||||||||||||||
| Fair value | Level 1 inputs | Level 2 inputs | Level 3 inputs | Fair value | |||||||||||||||||||||||||
| Financial liabilities carried at fair value: | |||||||||||||||||||||||||||||
| Forward currency contracts | $ | — | $ | — | $ | — | $ | — | $ | 2,429 | |||||||||||||||||||
| Total financial liabilities carried at fair value | $ | — | $ | — | $ | — | $ | — | $ | 2,429 | |||||||||||||||||||
There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the year ended December 31, 2025.
No non-recurring fair value adjustments, other than the Control Devices impairment which is disclosed in Note 2, were required for nonfinancial assets for the years ended December 31, 2025 and 2024.
Refer to Note 2 of the consolidated financial statements for details regarding our review of long-lived or finite-lived assets for impairment, including the Control Devices impairment.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Mar 2, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 7, 2018 | |
| 2016 | Mar 2, 2017 | |
| 2015 | Mar 14, 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.