Contents - MiTAC

6. Risk Management
6.1 Influence of Interest Rates in the Most Recent Year, Exchange Rate Fluctuations, Inflation
on the Company's Profits or Losses, and Future Responses
6.1.1 Influence Of Interest Rates, Exchange Rate Fluctuations, And Inflation On The
Company's Profits Or Losses In 2003
Item
Amount for 2003
(Thousands of NT Dollars)
As Percentage of Operating
Revenues
(%)
Interest Expenses 259,551 0.66
Foreign Exchange Gains 59,759 0.15
There was no significant inflation in 2003.
6.1.2 Future Responses
In order to reduce the impact of exchange rate fluctuations on the Company's
profit/loss performance, the Company has agreed with vendors and customers to as
far as possible use US dollars for sales and purchases. Moreover, the Company
pursues foreign exchange derivatives to hedge risks from foreign currency fluctations,
in accordance with "Procedures of Trading in the Derivatives Products". In addition,
the Company regularly evaluates interest rates on bank loans, working closely with
banks in order to obtain favorable terms of loan interest, lessening the potential
impact of interest rate fluctuations on the Company's profit/loss performance.
6.2 For the most recent year, policies regarding participation in high-risk, highly leveraged
investments, loans to other parties; endorsements, guarantees, and derivatives; major
reasons for gains or losses, and future responsive measures:
6.2.1 In 2003, the Company did not pursue high-risk, highly leveraged investments, nor
provide loans to other parties. In compliance with regulations, the Company has
already established policies delineated in "Procedure for Lending Money to Other
Parties".
6.2.2 Endorsements and guarantees provided by the Company in 2003 were in conformance
with polices delineated in "Procedures of Guaranty for Other Persons". The upper
limit for endorsements and guaranties by the Company is NT$16,443,699. As of
December 31, 2003, the Company's balance of endorsements or guaranties amounted
to NT$4,022,306.
6.2.3 Derivatives transactions during 2003 were conducted according to policies delineated
in "Procedure of Trading in the Derivatives Products".
6.3 R&D Projects in the Last Year, Current Status of R&D Projects in Progress, Additional
R&D Expenditures Required, Projected Time to Mass Production, Key Factors Affecting
Success of R&D Efforts
6.3.1 Desktop PCs
Future products slated for development will integrate digital audiovisual
applications and the Internet—for example, high-resolution digital televisions,
personal digital camcorders, optical storage devices, home servers, wireless
networking products. It is projected that these products will enter mass production in
the third quarter of 2004. The key to the success of this R&D effort will be whether
relevant industry standards are unified.
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