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BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated
39
The following table shows the impact of derivative instruments that are not subject to hedge accounting on the
consolidated statement of operations for the year ended March 2, 2013:
Location of Gain (Loss) Recognized in
Income on Derivative Instruments
Amount of Gain (Loss) in
Income on Derivative
Instruments
Currency forward contracts Selling, marketing and administration $ 38
Currency option contracts Selling, marketing and administration 8
Credit Risk
The Company is exposed to credit risk on derivative financial instruments arising from the potential for counterparties to
default on their contractual obligations. The Company mitigates this risk by limiting counterparties to highly rated
financial institutions and by continuously monitoring their creditworthiness. The Company’s exposure to credit loss and
market risk will vary over time as a function of currency exchange rates. The Company measures its counterparty credit
exposure as a percentage of the total fair value of the applicable derivative instruments. Where the net fair value of
derivative instruments with any counterparty is negative, the Company deems the credit exposure to that counterparty to
be nil. As at March 1, 2014, the maximum credit exposure to a single counterparty, measured as a percentage of the total
fair value of derivative instruments with net unrealized gains, was 100% (March 2, 2013 - 29%; March 3, 2012 - 30%). As
at March 1, 2014, the Company had a total credit risk exposure across all counterparties with outstanding or unsettled
foreign exchange derivative instruments of nil on a notional value of $11 million (March 2, 2013 -$35 million total risk
exposure on a notional value of $1.8 billion).
The Company maintains Credit Support Annexes (“CSAs”) with several of its counterparties. These CSAs require that the
outstanding net position of all contracts to be made whole by the paying or receiving of collateral to or from the
counterparties on a daily basis, subject to exposure and transfer thresholds. As at March 1, 2014, the Company had paid
$15 million of collateral to counterparties, which approximated the fair value of those contracts. As with the derivatives
recorded in an unrealized loss position, this amount is recorded in other current liabilities.
The Company is exposed to market and credit risk on its investment portfolio. The Company reduces this risk by
investing in liquid, investment grade securities and by limiting exposure to any one entity or group of related entities. As
at March 1, 2014, no single issuer represented more than 33% of the total cash, cash equivalents and investments
(March 2, 2013 - no single issuer represented more than 22% of the total cash and cash equivalents and investments), and
that issuer was the United States Department of Treasury.
Interest Rate Risk
Cash and cash equivalents and investments are invested in certain instruments of varying maturities. Consequently, the
Company is exposed to interest rate risk as a result of holding investments of varying maturities. The fair value of
investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in
prevailing interest rates. The Company has also issued convertible debentures with a fixed interest rate. Consequently, the
Company is exposed to interest rate risk as a result of the long term of the debentures. The fair value of the debentures
will fluctuate with changes in prevailing interest rates. The Company does not currently utilize interest rate derivative
instruments to hedge its investment portfolio.
16. SEGMENT DISCLOSURES
The Company is organized and managed as a single reportable operating segment. The Company currently sells an
integrated BlackBerry wireless communications platform solution, which includes the sale of BlackBerry handheld
devices and the provision of data communication, compression and security infrastructure services, which enable
BlackBerry handheld wireless devices to send and receive wireless messages and data. For enterprise customers, the
Company currently sells an integrated BlackBerry Enterprise Server software solution that gives corporate and
government customers the ability to set and enforce specific information technology policies to manage their BlackBerry
handheld wireless devices when the data services pass through BlackBerry’s Relay and Provisioning infrastructure.