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Universal Circuits, Inc.
Foreign Exchange Exposure Management
Due to significant appreciation of the U.S dollar against the Irish punt in recent years, it
has come to our attention that the profit margins of our Irish operation are extremely
sensitive to fluctuations in the value of the U.S dollar. With already high interest rates,
steadying rates of inflation, and flat economic growth in the United States, it appears that
the time has come to worry about the possibility of a large devaluation of the dollar. Such
depreciation could have the effect of wiping out the existing benefit of lower Irish
operating costs relative to our American operations, which we have come to enjoy in
recent years due to the dollars large increase in value. One solution to this looming
problem is to allow the controller of our Irish subsidiary to buy the punt forward, thereby
eliminating the downside risk of any dollar depreciation. However, this option completely
negates the fact that there is currently a hedge already in
