The case describes the foreign exchange problems faced by Mr. John Christopher, in the spring of 1995. Christopher's company, TCAS, had just been awarded the bid to deliver and install a new management information software system and local area network computer system for a customer in Canada. TCAS is a US-based company with no previous international experience. The company, as a result of the bid award, was confronted with a very large foreign exchange exposure. TCAS has additional problems, including an operating loss in the previous year, and the potential of continuing losses in the current year in the absence of the subject sale. TCAS needs to make a profit on this contract, manage its foreign exchange exposure, and restructure its balance sheet.

A U.S.-based manufacturer of imitation Navajo rugs is about to initiate manufacturing operations offshore for the first time-in this case-in the United Kingdom. In the financial planning stages, the firm's principals discuss tradeoffs in parent earnings and subsidiary earnings/expenses, focusing on the various intra-firm cash flows common between sub and parent (material transfers, royalties and license fees, intra-firm debt, etc.). The focus of the case is to determine the preferred combination and form of rates and charges between parent and subsidiary to achieve the firm's financial goals.