Blackberry 2003 Annual Report Download - page 24

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22
Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
23
For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
uctuations,฀the฀Company฀maintains฀net฀monetary฀asset฀and/or฀liability฀balances฀in฀foreign฀currencies฀
and฀engages฀in฀foreign฀currency฀hedging฀activities฀through฀the฀utilization฀of฀derivative฀nancial฀instru-
ments.฀The฀Company฀does฀not฀purchase฀or฀hold฀any฀derivative฀instruments฀for฀speculative฀purposes.
To฀hedge฀exposures฀relating฀to฀foreign฀currency฀anticipated฀transactions,฀the฀Company฀has฀entered฀
into฀forward฀foreign฀exchange฀contracts฀to฀sell฀U.S.฀dollars฀and฀purchase฀Canadian฀dollars฀with฀an฀
aggregate฀notional฀value฀of฀U.S.฀$58.1฀million฀as฀at฀March฀1,฀2003฀(2002฀–฀$87.5฀million).฀These฀contracts฀
carry฀a฀weighted฀average฀rate฀of฀U.S.฀$1.00฀equals฀Canadian฀$1.5831,฀and฀mature฀at฀various฀dates,฀with฀
the฀latest฀being฀December฀1,฀2003.฀These฀contracts฀have฀been฀designated฀as฀cash฀ow฀hedges,฀with฀
gains฀and฀losses฀on฀the฀hedge฀instruments฀being฀recognized฀in฀the฀same฀period฀as,฀and฀as฀part฀of,฀the฀
hedged฀transaction.฀As฀at฀March฀1,฀2003,฀the฀notional฀gain฀on฀these฀forward฀contracts฀was฀approxi-
mately฀$3,439฀(2002฀–฀notional฀loss฀of฀$1,478).฀
To฀hedge฀exposure฀relating฀to฀foreign฀currency฀denominated฀long-term฀debt,฀the฀Company฀has฀
entered฀into฀forward฀foreign฀exchange฀contracts฀to฀sell฀U.S.฀dollars฀and฀purchase฀Canadian฀dollars฀with฀
an฀aggregate฀notional฀value฀of฀U.S.฀$10.0฀million฀(2002฀–฀$nil).฀These฀contracts฀carry฀a฀weighted฀average฀
exchange฀rate฀of฀U.S.฀$1.00฀equals฀Canadian฀$1.5706,฀and฀mature฀on฀December฀1,฀2003.฀These฀contracts฀
have฀been฀designated฀as฀fair฀value฀hedges,฀with฀gains฀and฀losses฀on฀the฀hedge฀instruments฀being฀
recognized฀in฀earnings฀each฀period,฀offsetting฀the฀change฀in฀the฀U.S.฀dollar฀value฀of฀the฀hedged฀liability.฀
As฀at฀March฀1,฀2003,฀the฀notional฀gain฀on฀these฀forward฀contracts฀was฀approximately฀$419฀(2002฀–฀n/a).
The฀majority฀of฀the฀Company’s฀cash,฀cash฀equivalents฀and฀marketable฀securities฀are฀denominated฀
in฀U.S.฀dollars฀as฀at฀March฀1,฀2003.฀
Interest฀Rate
Cash,฀cash฀equivalents฀and฀marketable฀securities฀are฀invested฀in฀certain฀instruments฀of฀varying฀short-
term฀maturities;฀consequently฀the฀Company฀is฀exposed฀to฀interest฀rate฀risk฀as฀a฀result฀of฀holding฀
investments฀of฀varying฀maturities฀up฀to฀one฀year.฀The฀fair฀value฀of฀marketable฀securities,฀as฀well฀as฀the฀
investment฀income฀derived฀from฀the฀investment฀portfolio,฀will฀uctuate฀with฀changes฀in฀prevailing฀
interest฀rates.฀The฀Company฀does฀not฀currently฀use฀interest฀rate฀derivative฀nancial฀instruments฀in฀its฀
investment฀portfolio.
Credit฀and฀Customer฀Concentration฀
The฀Company฀is฀undergoing฀signicant฀external฀sales฀growth฀internationally฀and฀the฀resulting฀growth฀
in฀its฀customer฀base฀in฀terms฀of฀both฀numbers฀and฀in฀some฀instances฀increased฀credit฀limits.฀The฀
Company,฀in฀the฀normal฀course฀of฀business,฀monitors฀the฀nancial฀condition฀of฀its฀customers฀and฀
reviews฀the฀credit฀history฀of฀each฀new฀customer.฀The฀Company฀establishes฀an฀allowance฀for฀doubtful฀
accounts฀that฀corresponds฀to฀the฀specic฀credit฀risk฀of฀its฀customers,฀historical฀trends฀and฀economic฀
circumstances.฀The฀Company฀also฀places฀insurance฀coverage฀for฀a฀portion฀of฀its฀foreign฀trade฀receiv-
ables฀with฀Export฀Development฀Corporation.
While฀the฀Company฀sells฀to฀a฀variety฀of฀customers,฀three฀customers฀comprised฀17%,฀16฀%,฀and฀14%฀of฀
trade฀receivables฀as฀at฀March฀1,฀2003฀(2002฀–฀two฀customers฀comprised฀16%฀and฀15%).฀Additionally,฀one฀
customer฀comprised฀12%฀of฀the฀Company’s฀sales฀(2002฀–฀two฀customers฀comprised฀17%฀and฀11%).฀
Forward-Looking฀Statements฀
Forward-looking฀statements฀in฀this฀Annual฀Report฀are฀made฀pursuant฀to฀the฀“safe฀harbor”฀provisions฀
of฀the฀United฀States฀Private฀Securities฀Litigation฀Reform฀Act฀of฀1995.฀When฀used฀herein,฀words฀such฀
as฀“intend,฀anticipate,฀estimate,฀expect,฀believe,฀will,฀predicts”฀and฀similar฀expressions฀are฀intended฀to฀
identify฀forward-looking฀statements.฀Forward-looking฀statements฀are฀based฀on฀assumptions฀made฀by฀
and฀information฀available฀to฀Research฀In฀Motion฀Limited.฀Investors฀are฀cautioned฀that฀such฀forward-
looking฀statements฀involve฀risks฀and฀uncertainties.฀