Blackberry 2016 Annual Report Download - page 84
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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
16
5. DERIVATIVE FINANCIAL INSTRUMENTS
The notional amounts and fair values of financial instruments outstanding were as follows:
As at February 29, 2016
Balance Sheet
Location
Fair Value of
Derivatives
Designated as
Cash Flow
Hedges
Fair Value of
Derivatives Not
Subject to
Hedge
Accounting
Total
Estimated Fair
Value Notional
Amount
Derivative Assets (1):
Currency forward contracts Other current assets $ — $ 2 $ 2 $ 118
Currency option contracts Other current assets 1 — 1 43
Total $ 1 $ 2 $ 3 $ 161
Derivative Liabilities (1):
Currency forward contracts Accrued liabilities $ — $ (2) $ (2) $ 166
Currency option contracts Accrued liabilities — — — 23
Total $ — $ (2) $ (2) $ 189
Currency option contracts - premium Accumulated other
comprehensive loss $ (2) $ — $ (2) $ —
______________________________
(1) The fair values of derivative assets and liabilities are measured using Level 2 fair value inputs.
As at February 28, 2015
Balance Sheet
Location
Fair Value of
Derivatives
Designated as
Cash Flow
Hedges
Fair Value of
Derivatives Not
Designated as
Cash Flow
Hedges
Fair Value of
Derivatives Not
Subject to
Hedge
Accounting
Total
Estimated Fair
Value Notional
Amount
Derivative Assets (1):
Currency forward contracts Other current assets $ — $ 19 $ 61 $ 80 $ 1,171
Currency option contracts Other current assets — 11 — 11 112
Total $ — $ 30 $ 61 $ 91 $ 1,283
Derivative Liabilities (1):
Currency forward contracts Accrued liabilities $ (13) $ (4) $ (4) $ (21) $ 654
Currency option contracts Accrued liabilities (13) (1) — (14) 134
Total $ (26) $ (5) $ (4) $ (35) $ 788
______________________________
(1) The fair values of derivative assets and liabilities are measured using Level 2 fair value inputs.
Foreign Exchange
The Company’s currency risk management objective in holding derivative instruments is to reduce the volatility of current
and future income as a result of changes in foreign currency exchange rates. To limit its exposure to adverse movements
in foreign currency exchange rates, the Company enters into foreign currency forward and option contracts.
The majority of the Company’s revenue for the fiscal year ended February 29, 2016 were transacted in U.S. dollars.
However, portions of the revenue are denominated in Canadian dollars, Euros, and British pounds. 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. The Company enters into forward and
option contracts to hedge portions of these anticipated transactions to reduce the volatility on income associated with the