Blackberry 2008 Annual Report Download - page 64

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RESEARCH IN MOTION LIMITED
notes to the consolidated financial statements continued
In thousands of United States dollars, except share and per share data, and except as otherwise indicated
Investments with continuous unrealized losses for less than
and greater than 12 months and their related fair values were
as follows:
Less than 12 months 12 months or more Total
As at March 1, 2008 Fair Value Unrealized losses Fair Value Unrealized losses Fair Value Unrealized losses
Government sponsored enterprise notes $ 11,520 $ 67 $ - $ - $ 11,520 $ 67
Commercial paper and corporate bonds 199,726 36 10,648 18 210,374 54
Asset-backed securities 6,820 2 6,694 12 13,514 14
Auction-rate securities 37,326 3,230 - - 37,326 3,230
Bank certificates of deposit 30,175 2 - - 30,175 2
$ 285,567 $ 3,337 $ 17,342 $ 30 $ 302,909 $ 3,367
Less than 12 months 12 months or more Total
Fair Value Unrealized losses Fair Value Unrealized losses Fair Value Unrealized losses
As at March 3, 2007
Government sponsored enterprise notes $ 15,057 $ 6 $ 241,635 $ 2,677 $ 256,692 $ 2,683
Commercial paper and corporate bonds 25,440 3 227,775 3,128 253,215 3,131
Asset-backed securities - - 60,060 802 60,060 802
Bank certificates of deposit 12,118 10 - - 12,118 10
$ 52,615 $ 19 $ 529,470 $ 6,607 $ 582,085 $ 6,626
Auction-rate securities account for $3.2 million of the total
$3.4 million unrealized losses. Auction-rate securities are
debt instruments with long-term nominal maturity dates for
which the interest rates are reset through a dutch auction
process, typically every 7, 28 or 35 days. Interest is paid at
the end of each auction period, and the auction normally
serves as the mechanism for securities holders to sell their
existing positions to interested buyers. As at March 1, 2008,
the Company held $55.0 million in face value of auction
rate securities, all of which carry AAA ratings. Included in
this amount are $40.5 million in face value of auction rate
securities that are experiencing failed auctions as a result of
more sell orders than buy orders, and these auctions have
not yet returned to normal operations. The interest rate for
these securities has been set at the maximum rate specified
in the program documents (a predetermined basis points
spread over LIBOR), and interest continues to be paid every
28 days as scheduled. As a result of the lack of continuing
liquidity in these securities, the Company has adjusted the
reported value to reflect an unrealized loss of $3.2 million,
which the Company considers temporary and is reflected
in other comprehensive income. In valuing these securities,
the Company used a multi-year investment horizon and
considered the underlying risk of the securities and the
current market interest rate environment. The Company has
the ability and intent to hold these securities until such time
that market liquidity returns to normal levels and does not
consider the principal or interest amounts on these securities
to be materially at risk at this time. As there is uncertainty as
to when market liquidity for auction-rate securities will return
to normal, the Company has classified the failing auction-rate
securities as long-term investments on the balance sheet. As
at March 1, 2008, the Company does not consider these long-
term investments to be other-than-temporarily impaired.
The additional unrealized losses of $0.2 million for
investment grade debt securities were related to changes in
interest rates and overall market conditions. The Company
believes that it is probable that it will be able to collect all
amounts due according to the contractual terms of the
investments. The Company has the ability and intent to
hold these investments until there is a recovery of fair value
which may be at maturity. As a result, the Company does
not consider these investments to be other-than-temporarily
impaired as at March 1, 2008.
A Structured Investment Vehicle (“SIV”) is a fund that
seeks to generate investment returns by purchasing high
grade long-term fixed income instruments and funding those
purchases by issuing short-term debt instruments. In late
2007, widespread illiquidity in the market has prevented SIVs
from accessing necessary funding for ongoing operations.
As at March 1, 2008, the Company held $40.0 million face
value of SIV securities that were negatively impacted by the