General Motors 2012 Annual Report Download - page 67

GENERAL MOTORS COMPANY AND SUBSIDIARIES
of correlations between foreign currency pairs or offsetting long-short positions in currency pairs which may significantly reduce the
potential loss in value.
Foreign Currency Exchange Rate Risk
We have foreign currency exposures related to buying, selling and financing in currencies other than the functional currencies of
the operations. At December 31, 2012 our three most significant foreign currency exposures were the Euro/British Pound, U.S. Dollar/
Korean Won and Euro/Korean Won. Derivative instruments such as foreign currency forwards, swaps and options are used primarily
to hedge exposures with respect to forecasted revenues, costs and commitments denominated in foreign currencies. At December 31,
2012 such contracts had remaining maturities of up to 12 months.
At December 31, 2012 and 2011 the net fair value liability of financial instruments with exposure to foreign currency risk was $4.0
billion and $4.2 billion. This presentation utilizes a population of foreign currency exchange derivatives, embedded derivatives and
foreign currency denominated debt and excludes the offsetting effect of foreign currency cash, cash equivalents and other assets. The
potential loss in fair value for such financial instruments from a 10% adverse change in all quoted foreign currency exchange rates
would be $671 million and $637 million at December 31, 2012 and 2011.
We are exposed to foreign currency risk due to the translation and remeasurement of the results of certain international operations
into U.S. Dollars as part of the consolidation process. Fluctuations in foreign currency exchange rates can therefore create volatility in
the results of operations and may adversely affect our financial condition.
The following table summarizes the amounts of automotive foreign currency translation and transaction and remeasurement losses
(dollars in millions):
Years Ended December 31,
2012 2011
Foreign currency translation losses recorded in Accumulated other comprehensive loss .............. $118 $167
Losses resulting from foreign currency transactions and remeasurements recorded in earnings ........ $117 $ 56
Interest Rate Risk
We are subject to market risk from exposure to changes in interest rates related to certain financial instruments, primarily debt,
capital lease obligations and certain marketable securities.
At December 31, 2012 we did not have any interest rate swap positions to manage interest rate exposures in our automotive
operations.
General Motors Company 2012 ANNUAL REPORT64