content_image/48963.jpg
## NOTE 22. FINANCIAL INSTRUMENTS (CONT ’ D) 

The Corporation also entered into interest-rate swap agreements to convert certain of BC’s long-term debts from fixed to variable interest rates. The notional amount is $650 million US, for which the Corporation will pay one-month LIBOR and receive interest at fixed rates, ranging from 1.7% to 2.1% and the interest-rate swap agreements mature in fiscal year 2007. 

BC entered into interest-rate swap agreements to convert certain long-term debts and certain finance receivables from fixed to variable interest rates. The interest-rate swap agreements were as follows as at January 31: 

<img src='content_image/48963.jpg'>

BC also entered into basis swap agreements to convert certain of its securitized floorplan debts’ base interest rate from Libor to US prime. These contracts are used to align the base interest rate of certain debts to the same basis as their offsetting finance receivables. The total notional amount of the basis swaps was $827 million US as at January 31, 2004 ($800 million US as at January 31, 2003). The swaps mature in fiscal year 2005. 

## c) Cross-currency interest-rate swap agreements – BC 

Cross-currency interest-rate swap agreements are contracts in which counter-parties exchange principal and interest flows in different currencies over a period of time. These contracts are used to manage both the currency and the interest-rate exposure. 

BC enters into cross-currency interest-rate swap agreements that modify the characteristics of certain long-term debts from the euro and sterling pounds to the U.S. dollar.These contracts also change the interest rate from fixed to variable to match the variable interest of its finance receivables. The notional amount of the cross-currency interest-rate swap agreements outstanding as at January 31, 2004 was an equivalent of $1,551 million ($1,872 million as at January 31, 2003). These contracts mature between calendar years 2007 and 2010. 

## d) Interest-rate cap agreements 

Interest-rate cap agreements are used as a hedge against the exposure of the Corporation from interest rate increase protection granted in connection with certain sales commitments. The notional amount totals $253 million US ($336 million). The interest-rate cap varies between 1. 7% and 5.7%, and the agreements mature in 2012. 

## Fair value of financial instruments 

The fair value information presented herein is based on information available to management at the dates presented. The estimated fair value of certain financial instruments has been determined using available market information or other valuation methodologies that require considerable judgment in interpreting market data and developing estimates. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Corporation could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair values. 

