Blackberry 2007 Annual Report Download - page 54

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RESEARCH IN MOTION LIMITED
management’s discussion and analysis of financial
condition and results of operations continued
FOR THE THREE MONTHS AND FISCAL YEAR ENDED MARCH 3, 2007
Aggregate Contractual Obligations
The following table sets out aggregate information about the
Company’s contractual obligations and the periods in which
payments are due as at March 3, 2007:
Total Less than
One Year One to Three Years Four to Five Years Greater than Five Years
Long-term debt $ 6,613 $ 271 $ 6,342 $ - $ -
Operating lease obligations 88,372 11,201 30,383 15,258 31,530
Purchase obligations and commitments 1,374,721 1,282,921 91,800 - -
Total $ 1,469,706 $ 1,294,393 $ 128,525 $ 15,258 $ 31,530
Purchase obligations and commitments of $1.37 billion as of
March 3, 2007, in the form of purchase orders or contracts,
are primarily for the purchase of raw materials, as well as for
capital assets and other goods and services. The expected
timing of payment of these purchase obligations and
commitments is estimated based upon current information.
Timing of payment and actual amounts paid may be different
depending upon the time of receipt of goods and services or
changes to agreed-upon amounts for some obligations.
The Company has commitments on account of capital
expenditures of approximately $25.9 million included in
the $1.37 billion above, primarily for manufacturing and IT,
including service operations. The Company intends to fund
current and future capital asset expenditure requirements
from existing financial resources and cash flows.
The Company has not declared any cash dividends in the last
three fiscal years.
Cash, cash equivalents, short-term investments and
investments were $1.41 billion as at March 3, 2007. The
Company believes its financial resources, together with
expected future earnings, are sufficient to meet funding
requirements for current financial commitments, for future
operating and capital expenditures not yet committed, and
also provide the necessary financial capacity to meet current
and future growth expectations.
During fiscal 2007, the Company amended an existing
credit facility and now has a $100 million Demand Credit
Facility (“the Facility”). The Company has utilized $15.9
million of the Facility to secure operating and financing
requirements. As at March 3, 2007, $84.1 million of the
Facility was unused. The Company has pledged specific
investments as security for this Facility. The Company had
previously utilized $48 million of the Facility in order to fund a
letter of credit to partially satisfy the Company’s liability and
funding obligation in the NTP litigation matter. As a result
of the settlement of the NTP litigation matter, the Company
cancelled the letter of credit on March 6, 2006.
The Company has an additional demand facility in
the amount of $17.0 million to support and secure other
operating and financing requirements. As at March 3, 2007,
$15.6 million of this facility was unused. A general security
agreement and a general assignment of book debts have
been provided as collateral for this facility.
Market Risk of Financial Instruments
The Company is engaged in operating and financing
activities that generate risk in three primary areas:
Foreign Exchange
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 2007 are transacted in U.S. dollars. Portions
of the revenues are denominated in British Pounds, Canadian
dollars, and Euros. Purchases of raw materials are primarily
transacted in U.S. dollars. Other expenses, consisting
of the majority of salaries, certain operating costs and
manufacturing overhead are incurred primarily in Canadian
dollars. At March 3, 2007, approximately 3% of cash and cash
equivalents, 30% of trade receivables and 14% of accounts
payable and accrued liabilities are denominated in foreign
currencies (March 4, 2006 – 5%, 28% and 19%, respectively).
These foreign currencies primarily include the British Pound,
Canadian dollar, 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 currency forward contracts and