Blackberry 2005 Annual Report Download - page 71

Download and view the complete annual report

Please find page 71 of the 2005 Blackberry annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

69
19. Financial Instruments
Values of financial instruments outstanding were as follows:
February 26, 2005
Notional Carrying Estimated
Amount Amount Fair Value
Assets (Liabilities)
Cash and cash equivalents $–$610,354 $ 610,354
Available-for-sale investments –1,069,363 1,069,363
Long-term debt –(6,727) (7,079)
Currency forward contracts 295,761 14,597 14,597
February 28, 2004
Notional Carrying Estimated
Amount Amount Fair Value
Assets (Liabilities)
Cash and cash equivalents $ – $ 1,156,419 $ 1,156,419
Available-for-sale investments – 339,285 339,285
Long-term debt – (6,433) (6,808)
Currency forward contracts 208,850 5,399 5,399
For the Company’s trade receivables, other receivables, accounts payable and accrued liabilities, the fair
values approximate their respective carrying amounts due to their short maturities.
The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its
functional currency, the U.S. dollar. The majority of the Company’s revenues in fiscal 2005 are transacted in
U.S. dollars. Portions of the revenues are denominated in Canadian dollars, Euros and British Pounds.
Purchases of raw materials are primarily transacted in U.S. dollars. Other expenses, consisting of the majority
of salaries, certain operating costs and all manufacturing overhead, are incurred primarily in Canadian dollars.
At February 26, 2005 approximately 2% of cash and cash equivalents, 42% of trade receivables and 22% of
accounts payable and accrued liabilities are denominated in foreign currencies (February 28, 2004 – 2%, 26%,
and 18%, respectively). These foreign currencies include the Canadian dollar, British Pound and Euro.
As part of its risk management strategy, the Company maintains net monetary asset and/or liability balances
in foreign currencies and engages in foreign currency hedging activities using derivative financial instruments,
including forward foreign currency contracts and options. The Company does not use derivative instruments
for speculative purposes.
To hedge exposures relating to foreign currency anticipated transactions, the Company has entered into forward
contracts to sell U.S. dollars and purchase Canadian dollars, to sell Euros and purchase U.S. dollars, and to
sell British Pounds and purchase U.S. dollars. These contracts have been designated as cash flow hedges,
with the resulting changes in fair value recorded in other comprehensive income, and subsequently reclassified
to earnings in the period in which the cash flows from the associated hedged transactions affect earnings.
The maturity dates of these instruments range from March 2005 through to January 2008. These cash flow
hedges were fully effective at February 26, 2005. As at February 26, 2005, the unrealized gain on these forward
contracts was approximately $14,644 (February 28, 2004 – $5,468; March 1, 2003 – $3,439). These amounts
were included in Other current assets and Accumulated other comprehensive income.
For the years ended February 26, 2005, February 28, 2004 and March 1, 2003