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96
RESEARCH IN MOTION LIMITED
notes to the consolidated financial statements continued
For the Years Ended March 3, 2007, March 4, 2006 and February 26, 2005
In thousands of United States dollars, except share and per share data, and except as otherwise indicated
14. PRODUCT WARRANTY
The Company estimates its warranty costs at the time of
revenue recognition based on historical warranty claims
experience and records the expense in Cost of sales. The
warranty accrual balance is reviewed quarterly to establish
that it materially reflects the remaining obligation based on
the anticipated future expenditures over the balance of the
obligation period. Adjustments are made when the actual
warranty claim experience differs from estimates.
The change in the Company’s accrued warranty
obligations from February 28, 2004 to March 3, 2007 as well
as the accrued warranty obligations as at March 3, 2007 are
set forth in the following table:
Accrued warranty obligations at February 28, 2004 $ 9,246
Actual warranty experience during fiscal 2005 (6,133)
Fiscal 2005 warranty provision 24,732
Adjustments for changes in estimate (13,188)
Accrued warranty obligations at February 26, 2005 14,657
Actual warranty experience during fiscal 2006 (24,669)
Fiscal 2006 warranty provision 28,180
Adjustments for changes in estimate 4,219
Accrued warranty obligations at March 4, 2006 22,387
Actual warranty experience during fiscal 2007 (38,554)
Fiscal 2007 warranty provision 49,736
Adjustments for changes in estimate 3,100
Accrued warranty obligations at March 3, 2007 $ 36,669
15. GOVERNMENT ASSISTANCE
The Company has previously entered into two project
development agreements with Technology Partnerships
Canada (“TPC”), which provide partial funding for certain
research and development projects.
Funding from TPC for the first agreement (“TPC-1”)
totalled $3,900 and was repayable in the form of royalties of
2.2% on gross product revenues resulting from the project.
The Company was obligated to pay royalties on all project
revenues up to a maximum of $6,100. The final repayment
with respect to TPC-1 was made during the first quarter of
fiscal 2005.
The second agreement with TPC is for a development
project (“TPC-2”) under which total contributions from TPC
have been $23,300. The Company has fulfilled all prerequisite
funding conditions and recorded all of the contributions as at
February 28, 2004. This contribution will be repayable to TPC
in the form of a royalty of 2.2% on gross business revenues,
subject to certain annual maximum amounts through fiscal
2015, not exceeding $39,300. The Company has recorded
$2,795 on account of TPC royalty repayment expense with
respect to TPC-2 during fiscal 2007 (March 4, 2006 – $1,929;
February 26, 2005 – $nil).