Derivatives and Hedging

12 Months Ended

Dec. 31, 2024

Derivatives

The valuation of our derivative contracts used to manage their respective risks is described below:

•Foreign Currency – The fair value of any foreign currency option derivative is based upon valuation models applied to current market information such as strike price, spot rate, maturity date and volatility, and by reference to market values resulting from an over-the-counter market or obtaining market data for similar instruments with similar characteristics.

•Commodity – The fair value of copper derivatives is computed using a combination of intrinsic and time value valuation models, which are collectively a function of five primary variables: price of the underlying instrument, time to expiration, strike price, interest rate and volatility. The intrinsic valuation model reflects the difference between the strike price of the underlying copper derivative instrument and the current prevailing copper prices in an over-the-counter market at period end. The time value valuation model incorporates changes in the price of the underlying copper derivative instrument, the time value of money, the underlying copper derivative instrument’s strike price and the remaining time to the underlying copper derivative instrument’s expiration date from the period end date.

As of December 31, 2024, we did not have any derivative contracts that qualified for hedge accounting treatment.

Derivative instrument gains and losses are recorded as income or expense in the “Other income (expense), net” line item in the consolidated statements of operations. For the financial statement impacts, refer to Other Income (Expense), net table in “Note 14 – Supplemental Financial Information.”

Foreign Currency

In 2024, we entered into U.S. dollar, euro, South Korean won, Hungarian forint and Japanese yen forward contracts. We entered into these foreign currency forward contracts to mitigate certain global transactional exposures. These contracts do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in the “Other income (expense), net” line item in the consolidated statements of operations in the period in which the adjustment occurred.

As of December 31, 2024, the notional values of these foreign currency forward contracts were as follows:


Notional Values of Foreign Currency Derivatives
USD/CNH	$	38,324,088
KRW/USD	₩	4,412,250,000
JPY/EUR	¥	500,000,000
HUF/EUR	Ft	700,000,000
USD/EUR	$	1,500,000

Commodity

As of December 31, 2024, we had 12 outstanding contracts to hedge exposure related to the purchase of copper in our AES operating segment. These contracts are held with financial institutions and are intended to offset rising copper prices and do not qualify for hedge accounting treatment. As a result, any fair value adjustments required on these contracts are recorded in the “Other income (expense), net” line item in the consolidated statements of operations in the period in which the adjustment occurred.

As of December 31, 2024, the volumes of our copper contracts outstanding were as follows:


Volume of Copper Derivatives
January 2025 - March 2025			69 metric tons per month
April 2025 - June 2025			69 metric tons per month
July 2025 - September 2025			69 metric tons per month
October 2025 - December 2025			69 metric tons per month