Fair Value Measurements, Cash, Cash Equivalents and Investments

12 Months Ended

Feb. 29, 2020

Cash and Cash Equivalents [Abstract]

Fair Value Measurements, Cash, Cash Equivalents and Investments

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

Fair Value

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use in pricing the asset or liability, such as inherent risk, non-performance risk and credit risk. The Company applies the following fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels:

•Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

•Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

•Level 3 - Significant unobservable inputs that are supported by little or no market activity.

The fair value hierarchy also requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Recurring Fair Value Measurements

The Company’s cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities are measured at an amount that approximates their fair values (Level 2 measurement) due to their short maturities.

In determining the fair value of investments held (other than those classified as Level 3), the Company primarily relies on an independent third-party valuator for the fair valuation of securities. The Company also reviews the inputs used in the valuation process and assesses the pricing of the securities for reasonableness after conducting its own internal collection of quoted prices from brokers. Fair values for all investment categories provided by the independent third-party valuator that are in excess of 0.5% from the fair values determined by the Company are communicated to the independent third-party valuator for consideration of reasonableness. The independent third-party valuator considers the information provided by the Company before determining whether a change in their original pricing is warranted.

The Company’s investments (other than those classified as Level 3) largely consist of securities issued by major corporate and banking organizations, the provincial and federal governments of Canada, international government banking organizations and the United States Department of the Treasury and are all investment grade. The Company also holds a

limited amount of equity securities following the initial public offering by the issuer of a previous private equity investment.

The following table summarizes the changes in fair value of the Company’s Level 3 assets for the years ended February 29, 2020 and February 28, 2019:


	Level 3
Balance at February 28, 2018	$	20
Principal repayments	(1)


Balance at February 28, 2019	19
Principal repayments	(19)


Balance at February 29, 2020	$	—

The Company recognizes transfers in and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurred. There were no significant transfers in or out of Level 3 assets during the years ended February 29, 2020 or February 28, 2019.

The Company’s Level 3 assets previously consisted of auction rate securities. The Company realized $3 million in gains on auction rate securities. The Company no longer has Level 3 assets as of February 29, 2020.

Cash, Cash Equivalents and Investments

The components of cash, cash equivalents and investments by fair value level as at February 29, 2020 were as follows:


	Cost Basis		Unrealized Gains		Unrealized Losses		Other-than- temporary Impairment		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Restricted Cash
Bank balances	$	100	$	—	$	—	$	—	$	100	$	100	$	—	$	—	$	—
Other investments	32		—		—		—		32		—		—		32		—
	132		—		—		—		132		100		—		32		—
Level 1:

Equity securities	10		—		(8)		—		2		—		2		—		—


Level 2:
Term deposits, certificates of deposits, and GICs	118		—		—		—		118		44		25		—		49
Bankers’ acceptances/bearer deposit notes	84		—		—		—		84		30		54		—		—
Commercial paper	276		—		—		—		276		108		168		—		—
Non-U.S. promissory notes	133		—		—		—		133		25		108		—		—

Non-U.S. government sponsored enterprise notes	144		—		—		—		144		—		144		—		—
Non-U.S. treasury bills/notes	56		—		—		—		56		25		31		—		—
U.S. treasury bills/notes	45		—		—		—		45		45		—		—		—

	856		—		—		—		856		277		530		—		49





	$	998	$	—	$	(8)	$	—	$	990	$	377	$	532	$	32	$	49

The components of cash, cash equivalents and investments by fair value level as at February 28, 2019 were as follows:


	Cost Basis		Unrealized Gains		Unrealized Losses		Other-than- temporary Impairment		Fair Value		Cash and Cash Equivalents		Short-term Investments		Long-term Investments		Restricted Cash and Cash Equivalents
Bank balances	$	326	$	—	$	—	$	—	$	326	$	322	$	—	$	—	$	4
Other investments	36		—		—		—		36		—		—		36		—
	362		—		—		—		362		322		—		36		4
Level 1:
Equity securities	10		—		(10)		—		—		—		—		—		—

Level 2:
Term deposits, certificates of deposits, and GICs	85		—		—		—		85		—		55		—		30
Bankers’ acceptances	39		—		—		—		39		4		35		—		—
Commercial paper	264		—		—		—		264		177		87		—		—
Non-U.S. promissory notes	20		—		—		—		20		20		—		—		—

Non-U.S. government sponsored enterprise notes	139		—		—		—		139		25		114		—		—
Non-U.S. treasury bills/notes	35		—		—		—		35		—		35		—		—
U.S. treasury bills/notes	42		—		—		—		42		—		42		—		—

	624		—		—		—		624		226		368		—		30
Level 3:

Auction rate securities	20		2		—		(3)		19		—		—		19		—

	$	1,016	$	2	$	(10)	$	(3)	$	1,005	$	548	$	368	$	55	$	34

As at February 29, 2020, the Company had private equity investments without readily determinable fair value of $32 million (February 28, 2019 - $36 million).

During the year ended February 29, 2020, there was a $3 million impairment recognized relating to a certain private equity investment without readily determinable fair value (February 28, 2019 and February 28, 2018 - nil).

There were no realized gains or losses on available-for-sale securities for the year ended February 29, 2020 (realized losses of nil and $1 million for the years ended February 28, 2019 and February 28, 2018, respectively).

The Company has restricted cash and cash equivalents, consisting of cash and securities pledged as collateral to major banking partners in support of the Company’s requirements for letters of credit. These letters of credit support certain leasing arrangements entered into in the ordinary course of business and also support patent litigation in certain jurisdictions. The letters of credit are for terms ranging from one month to six years. The Company is legally restricted from accessing these funds during the term of the leases for which the letters of credit have been issued; however, the Company can continue to invest the funds and receive investment income thereon.

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at February 29, 2020, February 28, 2019 and February 28, 2018 from the consolidated balance sheets to the consolidated statements of cash flows:


	As at
	February 29, 2020		February 28, 2019		February 28, 2018
Cash and cash equivalents	$	377	$	548	$	816
Restricted cash and cash equivalents	49		34		39
Total cash, cash equivalents, restricted cash, and restricted cash equivalents presented in the consolidated statements of cash flows	$	426	$	582	$	855

The contractual maturities of available-for-sale investments as at February 29, 2020 and February 28, 2019 were as follows:


	As at
	February 29, 2020						February 28, 2019
	Cost Basis		Fair Value		Cost Basis ⁽¹⁾		Fair Value
Due in one year or less	$	856	$	856	$	624	$	624
Due after five years	—		—		17		19

No fixed maturity	10		2		10		—
	$	866	$	858	$	651	$	643

^{______________________________}

⁽¹⁾Cost basis includes other-than-temporary impairment.

As at February 29, 2020, the Company had investments with continuous unrealized losses totaling $8 million, consisting of unrealized losses on equity securities (February 28, 2019 - continuous unrealized losses totaling $10 million).