Blackberry 2003 Annual Report Download - page 32

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30
Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
31
For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
(h)฀Derivative฀nancial฀instruments฀–฀The฀Company฀utilizes฀derivative฀nancial฀instruments฀to฀reduce฀
exposure฀to฀uctuations฀in฀foreign฀currency฀exchange฀rates.฀The฀Company฀does฀not฀purchase฀or฀hold฀
derivative฀nancial฀instruments฀for฀speculative฀purposes.
The฀Company฀formally฀documents฀relationships฀between฀hedging฀instruments฀and฀associated฀
hedged฀items.฀This฀documentation฀includes:฀identication฀of฀the฀specic฀foreign฀currency฀asset,฀
liability฀or฀forecasted฀transaction฀being฀hedged;฀the฀nature฀of฀the฀risk฀being฀hedged;฀the฀hedge฀
objective;฀and,฀the฀method฀of฀assessing฀hedge฀effectiveness.฀Hedge฀effectiveness฀is฀formally฀
assessed,฀both฀at฀hedge฀inception฀and฀on฀an฀ongoing฀basis,฀to฀determine฀whether฀the฀derivatives฀
used฀in฀hedging฀transactions฀are฀highly฀effective฀in฀offsetting฀changes฀in฀foreign฀currency฀cash฀
ows฀of฀hedged฀items.
The฀Company฀utilizes฀derivative฀instruments฀designated฀as฀fair฀value฀hedges฀to฀manage฀its฀exchange฀
risk฀related฀to฀certain฀assets฀and฀liabilities฀denominated฀in฀foreign฀currencies.฀Foreign฀exchange฀transla-
tion฀gains฀and฀losses฀on฀foreign฀currency฀denominated฀derivative฀nancial฀instruments฀used฀as฀a฀fair฀
value฀hedge฀are฀accrued฀under฀prepaid฀expenses฀and฀other฀assets฀on฀the฀balance฀sheet฀and฀recognized฀
currently฀in฀selling,฀marketing฀and฀administration฀expense,฀net,฀offsetting฀the฀respective฀translation฀gains฀
and฀losses฀recognized฀on฀the฀underlying฀foreign฀currency฀asset฀or฀liability.
The฀Company฀utilizes฀derivative฀instruments฀designated฀as฀cash฀ow฀hedges฀to฀manage฀the฀risk฀
associated฀with฀certain฀anticipated฀transactions฀that฀will฀be฀denominated฀in฀foreign฀currencies.฀
Recognition฀of฀the฀changes฀in฀the฀fair฀value฀of฀these฀derivative฀instruments฀is฀deferred฀and฀recorded฀
in฀earnings฀in฀the฀period฀in฀which฀the฀hedged฀transaction฀occurs,฀offsetting฀the฀change฀in฀the฀
functional฀currency฀equivalent฀of฀the฀hedged฀cash฀ow.
Realized฀and฀unrealized฀gains฀or฀losses฀associated฀with฀derivative฀instruments,฀which฀have฀been฀
terminated฀or฀cease฀to฀be฀effective฀prior฀to฀maturity,฀are฀deferred฀under฀other฀current,฀or฀non-
current,฀assets฀or฀liabilities฀on฀the฀balance฀sheet฀and฀recognized฀in฀income฀in฀the฀period฀in฀which฀
the฀underlying฀hedged฀transaction฀is฀recognized.฀In฀the฀event฀a฀designated฀hedged฀item฀is฀sold,฀
extinguished฀or฀matures฀prior฀to฀the฀termination฀of฀the฀related฀derivative฀instrument,฀any฀realized฀
or฀unrealized฀gain฀or฀loss฀on฀such฀derivative฀instrument฀is฀recognized฀in฀income.
(i)฀Inventories฀–฀Raw฀materials฀are฀stated฀at฀the฀lower฀of฀cost฀and฀replacement฀cost.฀Work฀in฀process฀
and฀nished฀goods฀inventories฀are฀stated฀at฀the฀lower฀of฀cost฀and฀net฀realizable฀value.฀Cost฀includes฀
the฀cost฀of฀materials฀plus฀direct฀labour฀applied฀to฀the฀product฀and฀the฀applicable฀share฀of฀manufac-
turing฀overhead.฀Cost฀is฀determined฀on฀a฀rst-in-rst-out฀basis.
(j)฀Capital฀assets฀–฀Capital฀assets฀are฀stated฀at฀cost฀less฀accumulated฀amortization.฀Amortization฀
is฀provided฀using฀the฀following฀rates฀and฀methods:
Buildings฀and฀leaseholds฀ ฀ ฀ Straight-line฀over฀terms฀between฀5฀and฀40฀years
Information฀technology฀ ฀ ฀ Straight-line฀over฀5฀years
Furniture,฀xtures,฀tooling,฀and฀equipment฀฀ 20%฀per฀annum฀declining฀balance฀
(k)฀Intangible฀assets฀–฀Intangible฀assets฀are฀stated฀at฀cost฀less฀accumulated฀amortization.฀Intangible฀
assets฀are฀amortized฀as฀follows:฀
Acquired฀technology฀ ฀ ฀ Straight-line฀over฀2฀to฀5฀years
Licences฀ ฀ ฀ ฀ ฀ Lesser฀of฀5฀years฀or฀the฀actual฀number฀of฀units฀sold฀
฀ ฀ ฀ ฀ ฀ ฀ during฀the฀terms฀of฀the฀licence฀agreements
Patents฀ ฀ ฀ ฀ ฀ Straight-line฀over฀17฀years
Effective฀March฀3,฀2002,฀the฀Company฀adopted฀the฀new฀recommendations฀of฀Section฀3063฀of฀the฀
Canadian฀Institute฀of฀Chartered฀Accountants฀(“CICA”)฀Handbook฀(“CICA฀3063”)฀with฀regards฀to฀the฀
impairment฀of฀long-lived฀assets฀and฀accordingly,฀intangible฀assets฀are฀tested฀for฀recoverability฀when฀