Blackberry 2015 Annual Report Download - page 92

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
17
For information concerning the impact of foreign exchange on the consolidated statement of operations net of the above
derivative instruments, please see Note 16.
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 February 28, 2015, 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 47% (March 1, 2014 - 100%; March 2, 2013 -
29%). As at February 28, 2015, the Company had a total credit risk exposure across all counterparties with outstanding or
unsettled foreign exchange derivative instruments of $56 million on a notional value of $2.1 billion (March 1, 2014 - nil
total risk exposure on a notional value of $11 million).
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 February 28, 2015, the Company held
$15 million of collateral from counterparties, which approximated the fair value of those contracts. As with the derivatives
recorded in an unrealized gain position, this amount is recorded in other current assets.
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 February 28, 2015, no single issuer represented more than 28% of the total cash, cash equivalents and investments
(March 1, 2014 - no single issuer represented more than 33% 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 the 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.
6. CONSOLIDATED BALANCE SHEETS DETAILS
Accounts receivable, net
The allowance for doubtful accounts as at February 28, 2015 is $10 million (March 1, 2014 - $17 million).
There were no customers that comprised more than 10% of accounts receivable as at February 28, 2015 (March 1, 2014 –
no customers that comprised more than 10%).
Inventories
Inventories were comprised of the following:
As at
February 28, 2015 March 1, 2014
Raw materials $ 11 $ 51
Work in process 62 156
Finished goods 49 37
$ 122 $ 244