Acer 2008 Annual Report Download - page 63

Acer Incorporated 2008 Annual Report122
Risk Management
Acer Incorporated 2008 Annual Report 123
8.2.1 Impact of Interest Rate, Exchange Rate and Ination on Company’s P&L and Future Strategy
Interest Rate Fluctuation
The current economic recession is not expected to end in the short term. The U.S. Federal Reserve Board will keep
the federal fund rate between zero and 0.25% throughout 2009, along with quantitative easing (QE) measures to
effectively stimulate economic growth.
Given the overall money-loosing situation and low risk of ination, the Central Bank of the R.O.C. is expected to
maintain the current benchmark policy rate of 1.25% till year end, supporting the Taiwan government efforts on
boosting sagging domestic demand.
Low interest rates will reduce the cost of our loans. Acer is making short-term deposits in New Taiwan Dollar (NTD)
or other foreign currencies to accrue yield and reduce risks.
Exchange Rate
At the Federal Open Market Committee (FOMC) on March 18, 2009, the Federal Reserve Board’s announcement of
a move to an aggressive QE policy has driven the U.S. dollar substantially lower. In the short-term, the currencies
of the QE countries, including the U.S., United Kingdom, and Japan, tend to weaken against the currencies of non-
QE countries. For the long-run, however, even if QE economies recover, it does not necessarily follow that their
currencies will. Acer will keep to a consistent strategy and aggressively hedge to reduce the impact on prot and
loss resulting from currency uctuation.
Ination
Inflation risk is substantially reduced due to falling prices of crude oil and raw materials worldwide. Should the
material price lead to an increase in cost, Acer shall act accordingly to avoid loss.
8.2.2 How Change Corporate Image Affects Company’s Risk Management Mechanism
The Company split off its manufacturing division at the end of year 2000 in order to focus on the design and
marketing of IT products and services. The potential crises within manufacturing and marketing companies are
very different, and the Company’s crisis management now focuses on our global supply-chain and logistics. By
outsourcing our manufacturing sector to multiple vendors and suppliers, the Company gained greater exibility in
inventory control and lowered risks compared to a single-vendor policy. With the ever-changing global economy, it
is essential to be prepared for risks and challenges at all times. The Company’s risk management team has a clear
sense of crisis management and has taken the precautions where necessary. We have set up a crisis mechanism
that will minimize potential damages to ensure the Company’s sustainable management.
8.2.3 Predicted Benets and Potential Risk to Company with Factory/Ofce Expansion
Not applicable.
8.2.4 Potential Risks to Company from Procurement and Sales
None
8.2.5 Affect on Company from Shares Transfers by Directors, Supervisors or Shareholders
Holding More Than 10% Shares
Not applicable.
8.2.6 Impact and Potential Risks to Company Management Team Change
Not applicable.
8.2.7 The major litigious, non-litigious or administrative disputes that: (1) involve Acer and/
or any Acer director, any Acer supervisor, the general manager, any person with actual
responsibility for the rm, any major shareholder holding a stake of greater than 10 percent,
and/or any company or companies controlled by Acer; and (2) have been concluded by
means of a nal and unappealable judgment, or are still under litigation. Where such a
dispute could materially affect shareholders’ equity or the prices of the company’s securities,
the facts of the dispute, amount of money at stake in the dispute, the date of litigation
commencement, the main parties to the dispute, and the status of the dispute as of the date
of printing of this annual report shall be disclosed as follows:
1. Similar to other IT companies, Acer receives notices from third parties asserting that Acer has infringed
certain patents or demands Acer obtain certain patents licenses. Acer takes these matters seriously and
may take appropriate counter actions.
2. In year 2008 and as of the date of printing of this annual report, any Acer director, supervisor, the general
manager, any person with actual responsibility for the firm, any major shareholder holding a stake of
greater than 10% were not involved in any material litigious, non-litigious or administrative disputes.
3. In year 2008 and as of the date of printing of this annual report, any company or companies controlled by
Acer were not involved in any material litigious, non-litigious or administrative disputes.
8.2.8 Other Risks:
None