Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet liabilities when due. At April 30, 2011, the Company had $114.8 million of cash and marketable securities and had a secured bank credit facility of $10.0 million, less off balance sheet arrangements, as described in Note 18 to the fiscal 2010 Consolidated Financial Statements, to meet liabilities when due. The credit facility is collateralized by a general security agreement and contains no covenants.
All of the Company's financial liabilities, except for its "other long-term liabilities" and operating lease for its premises, have contractual maturities of less than 30 days.
The following chart indicates the contractual obligations to which the Company is bound over the following five years.
Payments Due by Period
(in thousands of dollar)
Less than After
Contractual Obligations Total 1 year 1-3 years 4-5 years 5 years
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Operation lease $ 1,266 $ 323 $ 647 $ 296 -
Other long-term obligations 44,584 11,383 13,043 20,158 -
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Total contractual
obligations $45,850 $11,706 $13,690 $20,454 -
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Fair Value
The fair values of cash, marketable securities, accounts receivable, accounts payable and accrued liabilities approximates their carrying values due to their short-term maturity. The recorded amounts of long-term monetary liabilities approximate fair value, estimated by discounting expected cash flows at rates currently offered to the Company for debts of the same remaining maturities and conditions.
Fair value of the forward exchange contracts reflects the cash flow due to or from the Company if settlement had taken place on the reporting date.
The fair value of employee and director deferred stock units is determined using the market price of the Company's common stock on the reporting date.
8. Capital Management
The Company's objective is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management defines capital as the Company's shareholders' equity excluding accumulated other comprehensive income.
The Company has certain credit facilities with a Canadian chartered bank, which consist of an operating line, a foreign exchange forward contract facility and standby letters of credit. The Board of Directors does not establish quantitative return on capital criteria for management, but rather promotes year over year sustainable profitable growth. The Board of Directors also reviews on a quarterly basis the level of dividends paid to the Company's shareholders and monitors the share repurchase program activities. There were no changes in the Company's approach to capital management during the period. Neither the Company nor any of its subsidiaries is subject to externally imposed capital requirements.
9. Business Segment Information
The Company operates in one operating segment licensing patented intellectual property in the areas of semiconductors and communications systems and developing semiconductor memory technology.
10. Commitment
On March 31, 2011 the Company entered into a binding agreement to acquire a portfolio of patents for US$9.5M. The transaction is expected to close in the first quarter of 2011. Payment is due within 30 days of the closing date.
Contacts: Michael Salter, Senior Director IR 613-599-9539 x 1205 Email Contact Joe Brown, Vice President and CFO 613-599-9539 x 1206 Email Contact
