Blackberry 2011 Annual Report Download - page 63

services. The Company expects the majority of its accounts receivable balances to continue to come from large customers as it sells
the majority of its devices and software products and service relay access through network carriers and resellers rather than directly.
The Company evaluates the collectability of its accounts receivables based upon a combination of factors on a periodic basis such
as specific credit risk of its customers, historical trends and economic circumstances. The Company, in the normal course of business,
monitors the financial condition of its customers and reviews the credit history of each new customer. 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 accounts receivable to its estimated net realizable value. If circumstances related to
specific customers change, the Company’s estimates of the recoverability of accounts receivables balances could be further adjusted.
The allowance for doubtful accounts as at February 26, 2011 is $2 million (February 27, 2010 — $2 million).
While the Company sells its products and services to a variety of customers, there were two customers that comprised 11% each of
the Company’s revenue (February 27, 2010 — three customers comprised 20%, 13% and 10%; February 28, 2009 — three customers
comprised 23%, 14% and 10%).
Investments
The Company’s cash equivalents and investments, other than cost method investments of $15 million (February 27, 2010 — $3 million)
and equity method investments of $11 million (February 27, 2010 — $4 million), 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 one year or less, as well as any investments that management intends to hold for less than one year,
are classified as short-term investments. Investments with maturities in excess of one year are classified as long-term investments.
The Company determines the appropriate classification of investments at the time of purchase and subsequently reassesses the
classification of such investments at each balance sheet date. Investments classified as available- for-sale are carried at fair value with
unrealized gains and losses recorded in accumulated other comprehensive income (loss) until such investments mature or are sold.
The Company uses the specific identification method of determining the cost basis in computing realized gains or losses on
available-for-sale investments which are recorded in investment income.
The Company assesses individual investments in an unrealized loss position to determine whether the unrealized loss is
other-than-temporary. The Company makes this assessment by considering available evidence, including changes in general market
conditions, specific industry and individual company data, the length of time and the extent to which the fair value has been less than
cost, the financial condition, the near-term prospects of the individual investment and the Company’s intent and ability to hold the
investments. In the event that a decline in the fair value of an investment occurs and the decline in value is considered to be
other-than-temporary, an impairment charge is recorded in investment income equal to the difference between the cost basis and the
fair value of the individual investment at the balance sheet date of the reporting period for which the assessment was made. The fair
value of the investment then becomes the new cost basis of the investment.
Effective in the second quarter of fiscal 2010, if a debt security’s market value is below its amortized cost and the Company either
intends to sell the security or it is more likely than not that the Company will be required to sell the security before its anticipated
recovery, the Company records an other-than-temporary impairment charge to investment income for the entire amount of the
impairment. For other-than-temporary impairments on debt securities that the Company does not intend to sell and it is not more likely
than not that the entity will be required to sell the security before its anticipated recovery, the Company would separate the
other-than-temporary impairment into the amount representing the credit loss and the amount related to all other factors. The
Company would record the other-than-temporary impairment related to the credit loss as a charge to investment income and the
remaining other-than-temporary impairment would be recorded as a component of accumulated other comprehensive income.
Derivative financial instruments
The Company uses derivative financial instruments, including forward contracts and options, to hedge certain foreign currency
exposures. The Company does not use derivative financial instruments for speculative purposes.
50 RESEARCH IN MOTION ANNUAL REPORT 2011
RESEARCH IN MOTION LIMITED
Notes to the Consolidated Financial Statements continued
In millions of United States dollars, except share and per share data, and except as otherwise indicated