Letter To Shareholders - Mitac

7.5.2 Influences of the interest rates, the exchange rate fluctuations and the inflation on the
company’s profits or losses in 2009 & 2010, and countermeasures for the future:
1. Influences from factors above during Jan 1, 2009 and Mar 31, 2010
Unit: NT$ Thousand
2009 2010/3/31
(Reviewed by CPA) (Note 1)
Amount Percentage Amount Percentage to
to the sales
the sales
Items (NT$ Thousand) revenue (%) (NT$ Thousand) revenue (%)
Interest expense 44,483 0.08 6,426 0.05
Exchange gain/loss 16,174 0.03 30,964 0.25
Losses (Gains) on
evaluation of
financial assets
97,289 0.17 (1,582) (0.01)
Note 1: To the end of the quarter prior to the publication date of this annual report.
Note 2: Inflation was negligible.
2. MiTAC’s substantial measures to respond to the variation of the interest, exchange
rate and inflation are:
(1) All accounts receivable and payable are received and paid in USD so minimize
the effects on overall profits from variable currency exchange.
(2) At present, the trading of derivative products is to avoid risks of the actual
foreign currency assets and the liabilities; also, to undertake financial instruments
through banks and periodically evaluate gains and losses per the “Procedure for
Derivative Trading”.
(3) The team of foreign currency specialists collects exchange rate, interest rate, and
market information on a daily basis, and conducts regular discussions on how
best to react to market movements. In the event of extraordinary market
movements, the top management is informed immediately to take actions
accordingly.
(4) We evaluate announced interest rates and work closely with banks in order to
obtain preferred interest on loans, so that we can minimize the impact of rate
fluctuations on the company.
(5) As oil and commodity prices continue to rise, protection against inflation is
becoming a critical issue. In anticipation to future market 於 movements, the
company undertakes long futures positions in advance to hedge against increases
to the prices of its purchases, in addition to its proactive procurement
management and searches for substitute materials. Since the time to delivery had
lengthened for every stage along the commodity supply chain, the management
of unpredictable threats such as long supply cycles, labor shortage. and the
control of inventory levels and the costs of non-production related materials has
become crucial. Commodity supply agents can respond to this threat by
increasing their inventory on hand, thereby minimizing adverse impacts to the
company’s earnings due to uncertain material supply or unstable costs.
7.5.3 Policies regarding participation in high-risk, highly leveraged investments, loans to
other parties, endorsements, guarantees, and derivatives; major reasons for gains or losses
in the recent year, and countermeasures for the future
1. MiTAC did not pursue high-risk, highly leveraged investments.
2. All loans to others follow the “Procedures Governing Lending Capital to others”. The
~165~