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    Foreign Exchange General Motors Suppl

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    Foreign Exchange General Motors Suppl

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    Theresa Brown
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    © All Rights Reserved
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    Download as xls, pdf, or txt
    41 views9 pages

    Foreign Exchange General Motors Suppl

    Uploaded by

    Theresa Brown

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 9

    Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures

    Harvard Business School Case 205-095


    Course Software 205-712

    This course software was prepared solely as the basis for class discussion. Cases are not intended to serve as
    endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright ©
    2005 President and Fellows of Harvard College. No part of this product may be reproduced, stored in a
    retrieval system, used in a spreadsheet or transmitted in any form or by any means—electronic, mechanical,
    photocopying, recording or otherwise—without the permission of Harvard Business School.
    Exhibit 1 GM Consolidated Income
    Statement

    December 31, 2000 1999 1998


    ($ millions)
    Total net sales and revenues 184,632 176,558 155,445
    Cost of sales and other expenses 145,664 140,708 127,957
    Selling, general, and administrative 22,252 19,053 15,915
    Interest expense 9,552 7,750 6,629
    Earnings before taxes and minority interests 7,164 9,047 4,944

    Income tax expense 2,393 3,118 1,636


    Equity income (loss) and minority interests (319) (353) (259)
    Income from discontinued operations - 426 (93)
    Net income 4,452 6,002 2,956

    Dividends on preference stocks (110) (80) (63)


    Earnings attributable to common stocks 4,342 5,922 2,893

    Source: General Motors, December 31, 2000 10-K (Detroit: General Motors, 2001).
    Exhibit 6 GM’s Largest Currency Exposures (Forecasted Receivables Less Payables)

    As of
    12/31/00 USD EUR JPY GBP SEK AUD CAD CHF

    ($millions)

    GMNA 800 (400) - - (200) - (1400) -

    GME 400 (2400) 200 1400 (800) 400 (200) 400

    GMAP 200 (200) 200 200 - 200 - -

    GMLAAM 600 (400) 500 - - - - -

    GM Total 2000 (3400) 900 1600 (1000) 600 (1600) 400

    Source: General Motors


    Figures have been disguised and do not reflect the actual operations of General Motors Corp.

    NOTES:

    GMNA: General Motors North America


    GME: General Motors Europe
    GMAP: General Motors Asian Pacific
    GMLAAM: General Motors Latin America, Africa, Middle East
    PLN MXP OTHER

    - 1200 -

    200 - 800

    - - 200

    - - -

    200 1200 1000


    Exhibit 9 GM Canada – Projected Cash Flow Exposure

    Cash Flows Amount as of September 30, 2001


    INFLOWS
    Canadian sales 10,564
    Tax refunds (GST) 1,049

    OUTFLOWS
    Material purchases (10,180)
    Capital expenditures (113)
    Other structural costs (1,737)
    Tax expenditures (1,258)
    Other expenditures (6)

    12 month C$ cash flow forecast (1,682)

    Source: Company documents.


    Figures have been disguised and do not reflect the actual operations of General Motors Corp.
    Exhibit 10 GM Canada – Net Monetary Asset/Liability Exposure

    Balance Sheet Account Amount as


    of
    September
    30, 2001

    ASSETS
    Cash & cash equivalents 683
    Accounts & notes receivable 271
    Deferred income taxes 118
    Pension asset 1525

    LIABILITIES
    Outside – all other (93)
    Other postretirement benefits (1949)
    Warranty (132)
    Accounts payable and other (2565)

    C$ Monetary asset / (liability) position (2143)

    Source: Company documents.


    Figures have been disguised and do not reflect the actual operations of General Motors Corp.
    Exhibit 11 GM Argentina Balance Sheet, Monetary Assets and Liabilities by Currency, as of September 30, 2001

    ARS Monetary Assets ARS Monetary Liabilities

    Scrap incentive owed by govt. 45.8 Payables to local suppliers 24.1


    Interest subsidy owed by govt. 3.2 Provisions to local suppliers 11.3
    VAT credit and other tax owed by govt. 130.6 ARS loan (VAT financing) 13.7
    Receivable (tax credit reimbursement) 2.7 Other provisions 9.8
    Other 7.8 Tax payable 2
    Total 190.0 Total 60.9

    USD Monetary Assets USD Monetary Liabilities

    Cash 2.5 Accounts payable 224.5

    Receivables 20.5 Loans 101.3


    Total 23.0 Total 325.7

    Source: Company documents.


    Figures have been disguised and do not reflect the actual operations of General Motors Corp.
    Exhibit 13 Cost of Hedging the ARS Exposure in Argentina

    Time Horizon / Hedging Period Cost


    One-month Forward $6.40
    Three-month Forward $18.20
    Six-month Forward $28.70
    Twelve-month Forward $40.30

    Source: Company documents.

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