Financial Instruments

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

22. FINANCIAL INSTRUMENTS

[a]	Foreign exchange contracts

At December 31, 2024, the Company had outstanding foreign exchange forward contracts representing commitments to buy and sell various foreign currencies. Significant commitments are as follows:


											For U.S dollars					For Canadian dollars								For euros
Buy (sell)	Peso amount			Weighted average rate		Canadian amount			Weighted average rate		euro amount			Weighted average rate		US dollar amount			Weighted average rate		US dollar amount			Weighted average rate
2025		12,117			0.050		1,237			0.747		197			1.083		180			1.364		160			0.911
2025		(60	)		18.703		(245	)		1.364		(146	)		0.911		(924	)		0.747		(214	)		1.083
2026		6,803			0.049		602			0.751		146			1.109		58			1.346		73			0.896
2026		—			—		(77	)		1.346		(66	)		0.896		(453	)		0.751		(162	)		1.109
2027		3,521			0.046		313			0.749		98			1.119		28			1.341		51			0.890
2027		(34	)		22.566		(37	)		1.341		(45	)		0.890		(234	)		0.749		(110	)		1.119
2028		—			—		114			0.756		10			1.145		10			1.323		31			0.887
2028		—			—		(13	)		1.323		(27	)		0.887		(86	)		0.756		(12	)		1.145
2029		—			—		—			—		(7	)		0.884		—			—		8			0.884
		22,347					1,894					160					(1,421	)				(175	)

Based on forward foreign exchange rates as at December 31, 2024 for contracts with similar remaining terms to maturity, the

pre-tax

gains and losses relating to the Company’s foreign exchange forward contracts recognized in other comprehensive income were $38 million and $116 million, respectively

[note 21]

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:


	2024			2023

Financial assets
Cash and cash equivalents	$	1,247		$	1,198
Accounts receivable		7,376			7,881
Warrants and public and private equity investments		220			264
Debt investments		31			22
Long-term receivables included in other assets [note 14]		260			321
	$	9,134		$	9,686

Financial liabilities
Short-term borrowing	$	271		$	511
Long-term debt (including portion due within one year)		4,842			4,994
Operating lease liability		1,955			1,718
Accounts payable		7,194			7,842
	$	14,262		$	15,065

Foreign currency contracts designated as effective hedges, measured at fair value
Prepaid expenses	$	33		$	78
Other assets		10			4
Other accrued liabilities		(107	)		(13	)
Other long-term liabilities		(83	)		(8	)
	$	(147	)	$	61

[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 summarizes 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, 2024
Assets		$ 43			$ 37		$	6
Liabilities		$ (190	)		$ (37	)	$	(153	)

December 31, 2023
Assets		$ 82			$ 7		$	75
Liabilities		$ (20	)		$ (7	)	$	(13	)

[d]	Supplier financing programs

The Company has supplier financing programs with third-party financial institutions that provide financing to suppliers that provide tooling related materials. These arrangements allow these suppliers to elect to be paid by a financial institution at a discount earlier than the maturity date of the receivable, which may extend from 6 to 18 months. The Company will pay the full amount owing to the financial institution on the maturity dates. Amounts outstanding under these programs as at December 31, 2024 were $86 million [2023 – $132 million] and are presented within

accounts payable

. The table below rolls forward the amounts outstanding under the Company’s supplier financing programs:


	2024			2023

Balance, beginning of year	$	132		$	135
Amounts settled		(172	)		(106	)
Amounts added to the program		126			103
Balance, end of year	$	86		$	132

[e]	Fair value

The Company determines 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, accounts receivable, accounts payable and short-term borrowings

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.

Publicly traded and private equity securities

The fair value of the Company’s investments in publicly traded equity securities is determined using the closing price on the measurement date, as reported on the stock exchange on which the securities are traded [Level 1 input based on the GAAP fair value hierarchy].

The Company estimates the value of its private equity securities based on valuation methods using the observable transaction price at the transaction date and other observable inputs including rights and obligations of the securities held by the Company [Level 3 input based on the GAAP fair value hierarchy].

Warrants

The Company estimates the value of its warrants based on the quoted prices in the active market for the common shares [Level 2 inputs based on the GAAP fair value hierarchy].

Term Loans

The Company’s Term Loans consist of advances in the form of 1, 3 or

6-month

loans that may be rolled over until the end of the 3 and

5-year

terms. Due to the short-term maturity of each loan, the carrying value as presented in the consolidated balance sheets is a reasonable estimate of its fair value.

Senior Notes

At December 31, 2024, the net book value of the Company’s Senior Notes was $4.3 billion and the estimated fair value was $4.3 billion. The fair value of our Senior Notes are classified as Level 1 when quoted prices in active markets are available and Level 2 when the quoted prices are from less active markets or when other observable inputs are used to determine fair value.

[f]	Credit risk

The Company’s financial assets that are exposed to credit risk consist primarily of cash and cash equivalents, accounts receivable, debt investments, and foreign exchange and commodity forward contracts with positive fair values. Cash and 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 major financial institutions.

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, 2024, sales to the Company’s six largest customers represented 73% [2023 - 76%] of the Company’s total sales; and substantially all of its sales are to customers with which the Company has ongoing contractual relationships. The Company conducts business with newer electric vehicle-focused customers, which poses incremental credit risk due to their relatively short operating histories; limited financial resources; less mature product development and validation processes; uncertain market acceptance of their products/services; and untested business models. These factors may elevate the Company’s risks in dealing with such customers, particularly with respect to recovery of:

pre-production

(including tooling, engineering, and launch) and production receivables; inventory; fixed assets and capitalized preproduction expenditures; as well as other third party obligations related to such items. As at December 31, 2024, the Company’s balance sheet exposure related to newer electric vehicle-focused customers was approximately $300 million [2023 – $600 million]. In determining the allowance for expected credit losses, the Company considers changes in customers’ credit ratings, liquidity, customers’ historical payments and loss experience, current economic conditions, and the Company’s expectations of future economic conditions. For the years ended December 31, 2024, and 2023, sales to these customers represented less than 5% of the Company’s total sales.

[g]	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 22[a]]

[h]	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.

The Company is exposed to interest rate risk on its Term Loans as the interest rate is variable; however, the Company is not exposed to interest rate risk on Senior Notes as the interest rates are fixed.

[i]	Equity price risk

Public equity securities and warrants

The Company’s public equity securities and warrants are subject to market price risk due to the risk of loss in value that would result from a decline in the market price of the common shares or underlying common shares.