Acer 2010 Annual Report Download - page 69

ACER INCORPORATED 2010 ANNUAL REPORT
134
RISK MANAGEMENT
135
8.2.1 Impact of Interest Rate, Exchange Rate and Inflation on Company’s P&L and
Future Strategy
Interest Rate Fluctuation
The U.S. unemployment rate is still high, unless the economy significantly improve the Fed will not raise U.S. interest
rates. Due to the economic recovery and the government’s intention to suppress the real estate market, the central
bank is expected to raise interest rates 12.5bps every quarter.
Our funding cost of liability will not increase due to the low interest rate. We usually use the New Taiwan Dollar (NT$)
and short-term foreign currency deposits to optimize return at low risk level.
Exchange Rate
Because of RMB appreciation and the strong recovery of emerging markets, NTD is expected to continue to
appreciate steadily. The euro zone may stop easing monetary policy and start to raise interest rates due to the threat
of inflation. Also, the weak U.S. dollar with low interest rates and the interest rate differentials will help to stimulate the
euro. Consistent execution of a conservative hedging strategy will continue to be maintained in order to minimize the
impact of foreign exchange rate fluctuation on the company’s earnings.
Inflation
Due to the economic recovery and high oil price, each country is likely to face inflation problems this year. However, if
the rise in commodity prices causes an increase in production cost, appropriate measures will be taken accordingly to
avoid loss.
8.2.2 How Corporate Image Change 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 flexibility 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 Benefits and Potential Risk to Company with Factory/Office
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 firm, 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 final 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 2010 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 2010 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