Blackberry 2004 Annual Report Download - page 29

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For the years ended February 28, 2004, March 1, 2003 and March 2, 2002
customers and reviews the credit history of each
new customer. The Company establishes an
allowance for doubtful accounts that corresponds to
the specific credit risk of its customers, historical
trends and economic circumstances. The Company
also places insurance coverage for a portion of its
foreign trade receivables. The allowance as at
February 28, 2004 is $ 2.4 million (March 1, 2003
- $2.3 million).
While the Company sells to a variety of customers,
two customers comprised 24% and 10% of trade
receivables as at February 28, 2004 (March 1,
2003 - three customers comprised 17%, 16% and
14%). Additionally, two customers comprised 15%
and 13% of the Company’s sales (fiscal 2003 - one
customer comprised 12%).
The Company is exposed to credit risk on derivative
financial instruments arising from the potential for
counterparties to default on their contractual
obligations to the Company. The Company
minimizes this risk by limiting counterparties to
major financial institutions and by continuously
monitoring their creditworthiness. As at February
28, 2004, the maximum exposure to a single
counter-party was 43% of outstanding derivative
instruments (March 1, 2003 - 37%).
The Company is exposed to market and credit risk
on its investment portfolio. The Company limits this
risk by investing only in liquid, investment grade
securities and by limiting exposure to any one entity
or group of related entities. As at February 28,
2004, no single issuer represented more than 4% of
the total cash, cash equivalents and investments
(March 1, 2003 - no single issuer represented more
than 5% of the total cash, cash equivalents and
short-term investments).
Impact of Accounting Pronouncements
Not Yet Implemented
In December 2003, the FASB amended
Interpretation No. 46 (“FIN 46”), Consolidation of
Variable Interest Entities (“FIN 46R”). FIN 46R
requires that a variable interest entity (“VIE”) be
consolidated by a company if that company is
subject to a majority of the risk of loss from the
VIE’s residual returns. For the Company, the
requirements of FIN 46R apply to VIE’s created
after January 31, 2003. For those VIE’s created
before January 31, 2003, the requirements of FIN
46R apply as at February 29, 2004. The adoption
of FIN 46R did not have an impact to the
Company’s financial statements as at and for the
year ended February 28, 2004.
Outlook and Strategy
RIM’s strategy is to continue to leverage the
technology and infrastructure investments made
over the past several years to drive BlackBerry
subscriber growth and financial performance. RIM
plans to extend its technical and market lead by
continuing to invest in core research and
development to enhance the BlackBerry product
portfolio, by fostering new international business
relationships, by licensing the BlackBerry platform
to key handset vendors and by strengthening our
infrastructure to support global subscriber growth.
RIM will continue to pursue growth opportunities
with global carriers to further expand BlackBerry’s
global footprint and to extend our enterprise market
leadership into the prosumer market. Through the
BlackBerry Connect program, RIM plans to increase
the addressable market for BlackBerry through the
strategic licensing of the BlackBerry platform.
RIM anticipates strong revenue and net earnings
growth for the balance of fiscal 2005 compared to
fiscal 2004 and is targeting substantial increases in
the BlackBerry subscriber base. RIM intends to
realize this growth while continuing to manage its
financial resources prudently and fostering a culture
of innovation and achievement for its employees.