Blackberry 2011 Annual Report Download - page 34

(in millions)
February 26,
2011
February 27,
2010 Change
February 26,
2011
February 27,
2010 Change
Included in Amortization Included in Cost of sales
For the Fiscal Year Ended
Property, plant and equipment $272 $185 $ 87 $ 225 $ 160 $65
Intangible assets 166 125 41 264 146 118
Total $ 438 $310 $ 128 $ 489 $ 306 $ 183
Amortization
Amortization expense relating to certain property, plant and equipment and certain intangible assets increased by $128 million to
$438 million for fiscal 2011 compared to $310 million for fiscal 2010, which primarily reflects the impact of certain property, plant and
equipment and intangible asset additions made during fiscal 2011.
Cost of sales
Amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company’s
manufacturing operations and BlackBerry service operations increased by $183 million to $489 million for fiscal 2011 compared to
$306 million for fiscal 2010, which primarily reflects the impact of certain property, plant and equipment and intangible asset additions
made during fiscal 2011.
Litigation Expense
In fiscal 2010, the Company settled the Visto Litigation. The key terms of the settlement involved the Company receiving a perpetual
and fully-paid license on all Visto patents, a transfer of certain Visto intellectual property, a one-time payment by the Company of
$268 million and the parties executing full and final releases in respect of the Visto Litigation. Of the total payment by the Company,
$164 million was expensed as a litigation charge in the second quarter of fiscal 2010. The remainder of the payment was recorded as
intangible assets.
Investment Income
Investment income decreased by $20 million to $8 million in fiscal 2011 from $28 million in fiscal 2010. The decrease primarily
reflects impairment charges recognized in the third quarter of fiscal 2011 of $17 million. The decrease was also partially attributed to
slight decreases in yields due to lower interest rates when compared to the prior fiscal year. See “Financial Condition — Liquidity and
Capital Resources”, “Financial Condition — Lehman Brothers International (Europe)” and “Financial Condition — Auction Rate
Securities”.
Income Taxes
For fiscal 2011, the Company’s income tax expense was $1,233 million, resulting in an effective tax rate of 26.6% compared to income
tax expense of $809 million and an effective tax rate of 24.8% for the same period last year. The Company’s effective tax rate reflects
the geographic mix of earnings in jurisdictions with different tax rates.
On March 12, 2009, the Government of Canada enacted changes to the Income Tax Act (Canada) that allowed the Company to
calculate its fiscal 2009 and subsequent fiscal year Canadian income tax expense based on the U.S. dollar (the Company’s functional
currency). As such, the Company recorded tax benefits of $145 million related to the enactment of the functional currency rules in the
first quarter of fiscal 2010, resulting in the lower effective rate in fiscal 2010.
Management anticipates that the Company’s effective tax rate for fiscal 2012 will be approximately 25%.
The Company has not provided for Canadian income taxes or foreign withholding taxes that would apply on the distribution of
income of its non-Canadian subsidiaries, as this income is intended to be reinvested indefinitely by these subsidiaries.
RESEARCH IN MOTION ANNUAL REPORT 2011 21