Agenda• Introductions

• Corporate FX market trends

• Best practices corporate currency exposure management case

studies

– Dow Corning: End to End Automation Drives more Strategic Risk

Management

– Avnet: Managing FX Risk in Complex, M&A Driven Global Business

Operations

– FLIR Systems: Minimizing EPS Impacts through Holistic, Cost

Effective Currency Risk Management

• Q & A

• Resources

IntroductionsBruce Lynn, CTPThe FECGManaging Partner

Bruce has over 20 years of corporate and banking experience in all aspects of treasury and financial management by successfully tackling major assignments in such areas as treasury operations, cash management, strategic planning, credit, systems enhancements as well as operating and capital budgets. Bruce has an Industrial Engineering degree from Lehigh University, a MBA in Finance from the Stern School of Business and is a Certified Treasury Professional (CTP) by the Association for Financial Professionals (AFP).

Bruce Lynn

The FECG

Managing Partner

IntroductionsAndy GageFiREappsVP Strategic Market Development,Global Head of Research

Andy advises corporations, consulting firms and business partners on a wide range of foreign exchange exposure management topics and emerging industry best practices. Prior to his tenure at FiREapps, Andy has held management positions at Cyclone Commerce, Deloitte Consulting and Syntex Pharmaceuticals. Andy holds a B.S. in business administration from the University of Arizona and an MBA from the University of Texas, at Austin.

Andrew Gage

FiREapps

VP Strategic Market Development,

Global Head of Research

Euro Crisis

$0.02 $0.06 $0.09$0.94

$3.00

$20.27

$22.73

$4.19 $3.67 $4.10 $4.18

$5.83

$3.26

$1.21

$4.00

$18.66

$28.94

$19.03

$0

$8

$15

$23

$30

Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015

$16.95

(Bill

ion

s)

North American Negative Currency Impacts By

Quarter (Billions)

Source: FiREapps’ Quarterly Currency Impact Report: Available at fireapps.com

EUR (102)

BRL (40)CAD (37)

JPY (24) AUD (23)

€

¥$R$ A$

Source: FiREapps’ Quarterly Currency Impact Report: Available at fireapps.com

Top 5 Currencies Causing Negative

Impact in Q3 2015

31%

40% 39%

24% 23%

33%

14%19%

26% 26% 25%

47%

41%

23%

46%

63% 64%

50%

0%

20%

40%

60%

80%

2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1

Euro Crisis

Source: FiREapps’ Quarterly Currency Impact Report: Available at fireapps.com

North American Corporates Fielding Analyst

Questions After Reporting (-) ImpactThe last 3 quarters represent the 3 highest since we began research

Q2 2015 QUANTIFIED & REPORTED IMPACTS

213

233

205196

186

132

202215

279

170

0

60

120

180

240

300

Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015

97 95

7871

54

29

109

128

177

96

116138

127125

132

103

93

87

102

74

0

60

120

180

240

300

Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015

# Quantifying Size of Impact # Not quantifying, but reporting (-) Impact

Q2 Per Company Impact was Highest Ever The average negative impact was $177 million – by far the highest since we began tracking that data

point in 2012 Q4; and nearly 4X higher than Q2 2014

$38 $43

$54

$82

$60

$42 $37

$146

$164

$177

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

What Makes FX Exposure Management So Hard?

UnnecessaryTransactions

DataIntegrity

ERPLandscape

ComplexSpreadsheets

CurrencyVolatility

ComplexDerivatives

TaxImplications

CashManagement

IntercompanyPayments

PolicyCompliance

GlobalCoordination

InaccurateExposures

UnnecessaryTransactions

PoorResource

Utilization

EarningsVolatility

IncreasedAudits

MarketRisk

NonCompliance

UnnecessaryCosts

BusinessImpact

Challenges

ForeignExchangeManager

FiREapps Currency Analytics Engine

Case Study: Dow Corning

End to End Automation

Drives More Strategic

Risk Management

CS

Manufacturing

Case Study

With manual processes inside a complex SAP environment, we knew there were things that we didn’t

know, and that made us uncomfortable. That discomfort drove our decision to transform the

program.”

› Highly manual processes were time consuming, error prone, and heavily reliant

on human capital

› Individual currency VaR approach to hedging led to a number of trades and extra

cost with no opportunity to leverage cross-correlations

› 50% of its revenue is outside of the U.S.

› B/S Hedging $15 billion across 2,000 trades per year

› Lack of visibility caused Treasury to over- or under- hedge

› Complex SAP-based multicurrency accounting environment was decentralized

CHALLENGE

Annual Revenue:

$6.22 B (FY2014)

Headquarters:

Midland, MI

Business:

Dow Corning is a

multinational

corporation, equally

owned joint venture of

Dow Chemical and

Corning

SOLUTION: FiREapps Enterprise

Srikanth Dasari, Head of Treasury Front Office, Dow Corning Corporation

› Comprehensive overhaul of each step in the currency risk management process

› Automated straight-through processing gathers exposures from SAP through

FiREapps to IT2 and then ultimately 360T

› Dow Corning leveraged exposure definition as well as data integrity analytics for

a more comprehensive view of the data they needed

CSCase Study › Generated gross savings of $5 million per year from quantifiable

improvements

› Automated straight-through processing eliminated 600 hours of human

capital and yielded $750k in reduced market risk

› Value at Risk approach (VaR) delivers $2.75 million in savings by

enabling Treasury to hedge less and protect more

RESULTS

Executed Trade Data

G/L Data

Enhanced Capabilities:

› Comprehensive, on-

demand visibility tailored

specifically to the

Treasury reporting

process

› Portfolio risk approach,

with analytics that allows

Treasury to understand

currency risk taking into

account correlations

across its currency

portfolio

› Error free information

› Currency Action

Recommendations

› Reduced no. of trades

SOLUTION ARCHITECTURE

Manufacturing

External

Counterparties

Balance Sheet Actuals

Validated fullexposure set

TradeConfirmations

Case Study: Avnet

Managing FX Risk in

Complex, M&A Driven

Global Business

Operations

CS

Distribution

Case Study

We give finance [across the world] access to hedge recommendations and the underlying data in FiREapps.

They either check a box to tell us that they are okay with the data, or, if they spot an incorrect accounting

entry from their general ledge, they let us know so that we can make the necessary adjustments to hedge our

recommendations.”

› 300+ global locations and customers in 80+ countries with 10 different instances of

SAP and other ERP systems

› Since 1991, the company has completed 80+ acquisitions around the world

increasing exposure to volatility in foreign currencies as the percentage of income

generated outside of the U.S. increased to 60%

› Treasury couldn’t systematically identify or analyze exposures leaving risk

manifesting in the FX gain/loss line

› Different entity accounting groups had mixed FX interpretations manifesting itself in

daily excel submissions

CHALLENGE

Annual Revenue:

$27.5 B (FY2014)

Headquarters:

Phoenix, AZ

Business:

Avnet, Inc. is a

technology Business-to-

business B2B distributor

SOLUTION: FiREapps Enterprise

Joe Burke, Vice President & Treasurer, Avnet, Inc.

› Flexible and scalable cloud based platform for closed-loop FX exposure analytics

that helped with cross-functional collaboration and hedge program decision support

› Robust analytics bring balance sheet exposures into sharp focus giving Treasury

the visibility necessary to manage them

› FiREapps picks up the general ledger balances of all subsidiaries, and will

dynamically detect/include future additions to the system

› Manage exposure with closed-loop straight through processing – Finance has

access to hedge recommendations and the underlying data in FiREapps

CSCase Study

› Lowered hedging costs by $75k a month in Europe through organic

exposure elimination and reduced transaction volume

› Standardized global exposure definition across all regions and systems

› Gained real-time visibility towards exposure and VaR at the entity and

enterprise level

› Increased the frequency of exposure management based on VaR in some

cases to once a day

› Reduced FX Gain/Loss volatility on a corporate and regional basis

› Adaptable architecture that enables easy integration for new acquisitions

RESULTS

Regional

Exposure

Summary Hedge Data

TradesInternal & External

CurrencyActions

G/L Data

Enhanced Capabilities:

› Consolidated view of

Global Exposures

› Analytics platform

interoperates with the

company’s ERP, trade

execution and

accounting systems

› Treasury now has

automated exposure

identification, global

visibility and the

analytics required for

informed, effective risk

management at the

regional level

SOLUTION ARCHITECTURE

Distribution

Latin America

North America

EMEA / Asia

Template Captured

Exposure Data

Monetary Asset & Liability Balances

Exposure & Risk Analytics

Hedge Coverage Analytics

Exposure Trend Analysis

Case Study: FLIR Systems, Inc.

Minimizing EPS Impacts

through Holistic, Cost

Effective Currency

Risk Management

CS

Manufacturing

Case Study

FiREapps analytics and reports provide a single truth for understanding exposures at the

account and entity levels, enabling corporate treasury to work with regional controllers to

investigate the root causes of exposures, improve processes and mitigate risk across

geographies and divisions.”

› 48% of revenue generated internationally

› Labor-intensive manual process that wasn’t formalized

› Without a structured FX risk process, treasury couldn’t systematically

identify or analyze exposures leaving risk manifesting in the FX

gain/loss line

› Difficulty gathering exposure data from several operating units

› Unable to identify and utilize natural hedging opportunities

CHALLENGE

Annual Revenue:

$1.53 B (FY2014)

Headquarters:

Wilsonville, OR

Business:

FLIR Systems is the

world’s largest

commercial company

specializing in the

design and production

of thermal imaging

devices

SOLUTION: FiREapps FX Analytics Pro

Randahl Finnessy, VP, Corporate Treasury, FLIR Systems Inc.

› CoRE Analysis to benchmark hedging program from a cost / risk

perspective

› Analytics to identify and analyze exposure with a view to reduce

exposure organically with improved forecasting and cash management

› Decision Optimization

CSCase Study

› Volatility went down, predictability went up 90% confidence in exposure data

› Organically reduced B/S exposure by more than 50% in the first 6 months by using exposure

intelligence to restructure and settle outstanding intercompany transactions

› 90% visibility of worldwide exposure due to timely access to new exposure information when the

FX landscape changes:

› Mergers and acquisitions

› Integration of disparate accounting systems

› Minimized FX gain/loss, protected EPS and provided predictability in the income statement

› Analysis to potentially gain over $40K in quarterly interest income with a 70% risk reduction

› Reduced risk and cost of hedging

RESULTS

Enhanced Capabilities:

› CoRE analysis that

identified 36 currency

pairs representing $97M

in gross expenditure and

$16M VaR

› Identifying all sources of

exposure and reducing it

organically

› VaR analysis to help

finance improve

forecasting and make

informed cash

management decisions

› Robust formalized

program to manage FX

exposure, currency pair

volatility and risk

› Extract, aggregate,

harmonize and validate

data on demand from

multiple systems

Manufacturing

Constant Currency / Rate Impact Analysis

FiREapps CoRE Analysis™

Questions & Answers

Bruce Lynn

The FECG

Managing Partner

[o] 203-655-4806

[m] 203-722-3382

www.thefecg.com

Andy Gage

FiREapps

VP Strategic Market Development,

Global Head of Research

[o] 480-443-7333 Ext 155

[m] 480-213-4476

https://www.fireapps.com

To Learn More About FiREapps Solutions

Download free Case Studies

Download the free Currency Impact Report

Schedule a conference call, Executive Currency Risk

Briefing, or to receive a copy of today’s slides:

Contact Rob Richards:

480-443-7333 X510

rrichards@fireapps.com