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Financial Instruments | 12 Months Ended
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Dec. 31, 2017
Investments, All Other Investments [Abstract] |
Financial Instruments |
21. | FINANCIAL INSTRUMENTS
[a] | Foreign exchange contracts
At December 31, 2017, the Company had outstanding foreign exchange forward contracts representing commitments to buy and sell various foreign currencies. Significant commitments are as follows:
|  | For Canadian dollars |  |  | For U.S. dollars |
Buy (Sell) |  | U.S. dollar amount |  |  | Weighted average rate |  |  | Euro amount |  |  | Weighted average rate |  |  | Peso amount |  |  | Weighted average rate |
2018 |  |  | 208 |  |  |  | 1.27249 |  |  |  | 22 |  |  |  | 1.48899 |  |  |  | 3,778 |  |  |  | 0.05170 |
2018 |  |  | (980 | ) |  |  | 0.78027 |  |  |  | (16 | ) |  |  | 0.66174 |  |  |  | — |  |  |  | — |
2019 |  |  | 41 |  |  |  | 1.29098 |  |  |  | 9 |  |  |  | 1.56845 |  |  |  | 1,755 |  |  |  | 0.04678 |
2019 |  |  | (596 | ) |  |  | 0.77989 |  |  |  | (5 | ) |  |  | 0.64926 |  |  |  | — |  |  |  | — |
2020 |  |  | 9 |  |  |  | 1.29947 |  |  |  | — |  |  |  | — |  |  |  | 576 |  |  |  | 0.04684 |
2020 |  |  | (291 | ) |  |  | 0.77338 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2021 |  |  | (97 | ) |  |  | 0.78321 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2022 |  |  | (26 | ) |  |  | 0.78978 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | (1,732 | ) |  |  |  |  |  |  | 10 |  |  |  |  |  |  |  | 6,109 |  |  |  |  |
|  |  |  |  | For euros |
Buy (Sell) |  | U.S. dollar amount |  |  | Weighted average rate |  |  | GBP amount |  |  | Weighted average rate |  |  | Czech koruna amount |  |  | Weighted average rate |
2018 |  |  | 104 |  |  |  | 0.86349 |  |  |  | 7 |  |  |  | 1.11963 |  |  |  | 4,128 |  |  |  | 0.03791 |
2018 |  |  | (130 | ) |  |  | 1.17146 |  |  |  | (28 | ) |  |  | 0.83230 |  |  |  | (14 | ) |  |  | 25.4660 |
2019 |  |  | 37 |  |  |  | 0.86276 |  |  |  | 1 |  |  |  | 1.11072 |  |  |  | 2,885 |  |  |  | 0.03799 |
2019 |  |  | (68 | ) |  |  | 1.18414 |  |  |  | (14 | ) |  |  | 0.83346 |  |  |  | — |  |  |  | — |
2020 |  |  | 14 |  |  |  | 0.85860 |  |  |  | — |  |  |  | — |  |  |  | 1,101 |  |  |  | 0.03851 |
2020 |  |  | (16 | ) |  |  | 1.22742 |  |  |  | (9 | ) |  |  | 0.88220 |  |  |  | — |  |  |  | — |
2021 |  |  | 7 |  |  |  | 0.82532 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2021 |  |  | (11 | ) |  |  | 1.29394 |  |  |  | (6 | ) |  |  | 0.92098 |  |  |  | — |  |  |  | — |
2022 |  |  | 1 |  |  |  | 0.75974 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2022 |  |  | (1 | ) |  |  | 1.31155 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  |  | (63 | ) |  |  |  |  |  |  | (49 | ) |  |  |  |  |  |  | 8,100 |  |  |  |  |
Based on forward foreign exchange rates as at December 31, 2017 for contracts with similar remaining terms to maturity, the gains and losses relating to the Company’s foreign exchange forward contracts recognized in other comprehensive income are approximately $101 million and $49 million, respectively [note 20]. The Company does not enter into foreign exchange forward contracts for speculative purposes.
[b] | Financial assets and liabilities
The Company’s financial assets and liabilities consist of the following:
|  | 2017 |  |  | 2016 |
Financial assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 726 |  |  | $ | 974 |
Restricted cash equivalents |  |  | 113 |  |  |  | 194 |
Investment in ABCP |  |  | — |  |  |  | 60 |
Accounts receivable |  |  | 6,878 |  |  |  | 6,165 |
Severance investments |  |  | 4 |  |  |  | 3 |
Long-term receivables included in other assets [note 13] |  |  | 180 |  |  |  | 229 |
|  | $ | 7,901 |  |  | $ | 7,625 |
Financial liabilities |  |  |  |  |  |  |  |
Bank indebtedness [note 16] |  | $ | 9 |  |  | $ | 8 |
Commercial paper [note 16] |  |  | 250 |  |  |  | 615 |
Long-term debt (including portion due within one year) |  |  | 3,303 |  |  |  | 2,533 |
Accounts payable |  |  | 6,299 |  |  |  | 5,430 |
|  | $ | 9,861 |  |  | $ | 8,586 |
Derivatives designated as effective hedges, measured at fair value |  |  |  |  |  |  |  |
Foreign currency contracts |  |  |  |  |  |  |  |
Prepaid expenses and other |  | $ | 55 |  |  | $ | 12 |
Other assets |  |  | 46 |  |  |  | 6 |
Other accrued liabilities |  |  | (32 | ) |  |  | (134 | )
Other long-term liabilities |  |  | (17 | ) |  |  | (61 | )
|  | $ | 52 |  |  | $ | (177 | )
[c] | Derivatives designated as effective hedges, measured at fair value
The Company presents derivatives that are designated as effective hedges at gross fair values in the consolidated balance sheets. However, master netting and other similar arrangements allow net settlements under certain conditions. The following table shows the Company’s derivative foreign currency contracts at gross fair value as reflected in the consolidated balance sheets and the unrecognized impacts of master netting arrangements:
|  | Gross amounts presented in consolidated balance sheets |  |  | Gross amounts not offset in consolidated balance sheets |  |  | Net amounts |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |
Assets |  | $ | 101 |  |  | $ | 47 |  |  | $ | 54 |
Liabilities |  | $ | (49 | ) |  | $ | (47 | ) |  | $ | (2 | )
December 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |
Assets |  | $ | 18 |  |  | $ | 17 |  |  | $ | 1 |
Liabilities |  | $ | (195 | ) |  | $ | (17 | ) |  | $ | (178 | )
[d] | Fair value
The Company determined the estimated fair values of its financial instruments based on valuation methodologies it believes are appropriate; however, considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair value amounts can be materially affected by the use of different assumptions or methodologies. The methods and assumptions used to estimate the fair value of financial instruments are described below: Cash and cash equivalents, restricted cash equivalents, accounts receivable, short-term borrowings and accounts payable. Due to the short period to maturity of the instruments, the carrying values as presented in the consolidated balance sheets are reasonable estimates of fair values. Commercial Paper Due to the short period to maturity of the commercial paper, the carrying value as presented in the consolidated balance sheet is a reasonable estimate of its fair value. Term debt The Company’s term debt includes $108 million due within one year. Due to the short period to maturity of this debt, the carrying value as presented in the consolidated balance sheet is a reasonable estimate of its fair value. Senior Notes The fair value of our Senior Notes are classified as Level 1 when we use quoted prices in active markets and Level 2 when the quoted prices are from less active markets or when other observable inputs are used to determine fair value. At December 31, 2017, the net book value of the Company’s Senior Notes was $3.12 billion and the estimated fair value was $3.27 billion, determined using active market prices.
[e] | Credit risk
The Company’s financial assets that are exposed to credit risk consist primarily of cash and cash equivalents, restricted cash equivalents, accounts receivable, held-to-maturity investments and foreign exchange and commodity forward contracts with positive fair values. Cash and cash equivalents and restricted cash equivalents, which consist of short-term investments, are only invested in bank term deposits and bank commercial paper with an investment grade credit rating. Credit risk is further reduced by limiting the amount which is invested in certain governments or any major financial institution. The Company is also exposed to credit risk from the potential default by any of its counterparties on its foreign exchange forward contracts. The Company mitigates this credit risk by dealing with counterparties who are major financial institutions that the Company anticipates will satisfy their obligations under the contracts. In the normal course of business, the Company is exposed to credit risk from its customers, substantially all of which are in the automotive industry and are subject to credit risks associated with the automotive industry. For the year ended December 31, 2017, sales to the Company’s six largest customers represented 81% [2016 - 82%] of the Company’s total sales; and substantially all of its sales are to customers in which the Company has ongoing contractual relationships.
[f] | Currency risk
The Company is exposed to fluctuations in foreign exchange rates when manufacturing facilities have committed to the delivery of products for which the selling price has been quoted in currencies other than the facilities’ functional currency, and when materials and equipment are purchased in currencies other than the facilities’ functional currency. In an effort to manage this net foreign exchange exposure, the Company employs hedging programs, primarily through the use of foreign exchange forward contracts [note 21[a]].
[g] | Interest rate risk
The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and current liabilities. In particular, the amount of interest income earned on cash and cash equivalents is impacted more by investment decisions made and the demands to have available cash on hand, than by movements in interest rates over a given period. In addition, the Company is not exposed to interest rate risk on its term debt and Senior Notes as the interest rates on these instruments are fixed.

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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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