Blackberry 2005 Annual Report Download - page 47

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(d) Foreign currency translation
The U.S. dollar is the functional and reporting currency of the Company. Foreign currency denominated
assets and liabilities of the Company and all of its subsidiaries are translated into U.S. dollars using the
temporal method. Accordingly, monetary assets and liabilities are translated using the exchange rates in
effect at the consolidated balance sheet date, non-monetary assets and liabilities at historical exchange
rates, and revenues and expenses at the rates of exchange prevailing when the transactions occurred.
Resulting exchange gains and losses are included in income.
(e) Cash and cash equivalents
Cash and cash equivalents consist of balances with banks and highly liquid short-term investments with
maturities of three months or less at the date of acquisition and are carried on the consolidated balance
sheets at fair value.
(f) Trade receivables
Trade receivables are presented net of an allowance for doubtful accounts. The allowance was $1,697 at
February 26, 2005 (February 28, 2004 – $2,379). Bad debt expense (recovery) was ($500) for the year ended
February 26, 2005 (February 28, 2004 – ($548); March 1, 2003 – $696).
The allowance for doubtful accounts reflects estimates of probable losses in trade receivables. The Company
has historically been dependent on a small number of significant customers and on large complex contracts
with respect to sales of the majority of its products, software and services. The Company expects this trend
of increasing trade receivables balances with its large customers to continue as it sells an increasing number
of its wireless handheld and software products and service relay access through network carriers and resellers
rather than selling directly to end consumers. The Company evaluates the collectibility of its trade receivables
balances based upon a combination of factors on a periodic basis.
When the Company becomes aware of a specific customer’s inability to meet its financial obligations to
the Company (such as in the case of bankruptcy filings or material deterioration in the customer’s operating
results or financial position, and payment experiences), RIM records a specific bad debt provision to reduce
the customer’s related trade receivable to its estimated net realizable value. If circumstances related to
specific customers continue to deteriorate, the Company’s estimates of the recoverability of trade receivables
balances could be further adjusted downward.
(g) Investments
The Company’s investments consist of money market and other debt securities, and are classified as
available-for-sale for accounting purposes. The Company does not exercise significant influence with respect
to any of these investments.
Investments with maturities of less than one year, as well as any investments that management intends to hold
for less than one year, are classified as Short-term investments, otherwise they are classified as Investments.
The Company has reviewed its intent to continue to hold certain investments previously classified as held-to-
maturity and has determined this intent is no longer present. These investments have been reclassified as
available-for-sale, and prior period carrying values have been adjusted to reflect these securities as available-
for-sale since acquisition. This change results in an increase of $5,399 in the carrying amount of investments
at February 28, 2004, and an increase in accumulated other comprehensive income of $5,399 for the year
ended February 28, 2004 (March 1, 2003 – increase of $4,158).
Investments classified as available-for-sale under Statement of Financial Accounting Standards (“SFAS”) 115
are carried at fair value. Unrealized gains and losses on available-for-sale investments are accounted for
through accumulated other comprehensive income, until such investments mature or are sold.
For the years ended February 26, 2005, February 28, 2004 and March 1, 2003