Blackberry 2009 Annual Report Download - page 70

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68
RESEARCH IN MOTION LIMITED
notes to the consolidated financial statements continued
In thousands of United States dollars, except share and per share data, and except as otherwise indicated
As at February 28, 2009, the total unrecognized income tax
benefits of $137.4 million includes approximately $104.5 million
of unrecognized income tax benefits that have been netted
against related deferred income tax assets. The remaining
$32.9 million is recorded within current taxes payable and other
non-current taxes payable on the Company’s consolidated
balance sheet as of February 28, 2009.
The Company’s total unrecognized income tax benefits
that, if recognized, would affect the Company’s effective
tax rate were $175.4 million and $137.4 as March 2, 2008 and
February 28, 2009, respectively.
A summary of open tax years by major jurisdiction is
presented below:
Jurisdiction
Canada (1) Fiscal 2001 - 2009
United States (1) Fiscal 2003 - 2009
United Kingdom Fiscal 2004 - 2009
(1) Includes federal as well as provincial and state jurisdictions, as
applicable.
The Company is subject to ongoing examination by tax
authorities in the jurisdictions in which it operates. The
Company regularly assesses the status of these examinations
and the potential for adverse outcomes to determine the
adequacy of the provision for income taxes. Specifically,
the Canada Revenue Agency (“CRA”) recently concluded
examining Scientific Research and Experimental Investment
Tax Credit elements of the Company’s fiscal 2001 to fiscal
2005 Canadian corporate tax filings. At this time, the
Company cannot reasonably anticipate when the CRA will
complete the remaining elements of its’ fiscal 2001 to fiscal
2005 examination. The CRA has also given the Company
notice that it will begin examining the Company’s fiscal 2006,
fiscal 2007 and fiscal 2008 Canadian corporate tax filings in
the 2009 calendar year.
The Company has other non-Canadian income tax
audits pending. While the final resolution of these audits
is uncertain, the Company believes the ultimate resolution
of these audits will not have a material adverse effect on
its consolidated financial position, liquidity or results of
operations. The Company believes it is reasonably possible
that approximately $8.5 million of its gross unrecognized
income tax benefit will decrease during fiscal 2010.
The Company recognizes interest and penalties related
to unrecognized income tax benefits as interest expense
that is netted and reported within Investment income. The
amount of interest and penalties accrued as at March 2, 2008
and February 28, 2009 is approximately $4.4 million and $5.4
million, respectively.
On March 12, 2009, the Government of Canada enacted
changes to the Income Tax Act (Canada) that allows RIM to
calculate its fiscal 2009 Canadian income tax expense based
on the U.S. dollar (the Company’s functional currency). As
such, the Company will record net benefits of approximately
$70 - $100 million relating to the enactment of the changes to
the Income Tax Act (Canada) in the first quarter of fiscal 2010.
10. LONG-TERM DEBT
The Company repaid its outstanding mortgage balance on
February 27, 2009. Interest expense on long-term debt for the
year was $502 (March 1, 2008 - $518; March 3, 2007 - $494).
The Company has a $100.0 million Demand Credit Facility
(the “Facility”) to support and secure operating and financing
requirements. As at February 28, 2009, the Company has
utilized $6.5 million of the Facility for outstanding letters
of credit and $93.5 million of the Facility is unused. The
Company has pledged specific investments as security for
this Facility.
The Company has an additional $2.0 million Demand
Credit Facility (the “Additional Facility”). The Additional
Facility is used to support and secure other operating
and financing requirements. As at February 28, 2009, the
Company has utilized $1.1 million of the Additional Facility for
outstanding letters of credit and $915 of this facility is unused.
11. CAPITAL STOCK
(a) Share capital
The Company is authorized to issue an unlimited number
of non-voting, redeemable, retractable Class A common
shares, an unlimited number of voting common shares and
an unlimited number of non-voting, cumulative, redeemable,
retractable preferred shares. There are no Class A common
shares or preferred shares outstanding.
The Company declared a 3-for-1 stock split of the
Company’s outstanding common shares on June 28,
2007. The stock split was implemented by way of a stock
dividend. Shareholders received an additional two common
shares of the Company for each common share held. The
stock dividend was paid on August 20, 2007 to common
shareholders of record at the close of business on August 17,
2007. All share, earnings per share and stock option data have
been adjusted to reflect this stock dividend.