Blackberry 2011 Annual Report Download - page 43

Amortization Expense
The table below presents a comparison of amortization expense relating to property, plant and equipment and intangible assets
recorded as amortization or cost of sales for the quarter ended February 26, 2011 compared to the quarter ended February 27, 2010.
Intangible assets are comprised of acquired technology, licenses and patents.
(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 Three Months Ended
Property, plant and equipment $78 $53 $25 $ 66 $51 $15
Intangible assets 47 33 14 120 43 77
Total $125 $86 $39 $186 $94 $92
Amortization
Amortization expense relating to certain property, plant and equipment and certain intangible assets increased by $39 million to
$125 million for the fourth quarter of fiscal 2011 compared to $86 million for the comparable period in 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 $92 million to $186 million for the fourth quarter of fiscal
2011 compared to $94 million for the comparable period in fiscal 2010, which primarily reflects the impact of certain property, plant
and equipment and intangible asset additions made during fiscal 2011.
Investment Income
Investment income decreased by $2 million to $3 million in the fourth quarter of fiscal 2011 from $5 million in the fourth quarter of
fiscal 2010. The decrease primarily reflects an increase in interest expense when compared to the same period in fiscal 2010. See
“Liquidity and Capital Resources”.
Income Taxes
For the fourth quarter of fiscal 2011, the Company’s income tax expense was $309 million, resulting in an effective tax rate of 24.8%
compared to income tax expense of $307 million and an effective tax rate of 30.2% for the same period last year. The Company’s
effective tax rate reflects the geographic mix of income in jurisdictions with different tax rates. The lower effective tax rate in the fourth
quarter of fiscal 2011 is primarily a result of recent enacted tax changes.
Net Income
The Company’s net income for the fourth quarter of fiscal 2011 was $934 million, an increase of $224 million, or 31.5%, compared to
net income of $710 million in the fourth quarter of fiscal 2010. The increase in net income in the fourth quarter of fiscal 2011 in the
amount of $224 million from the fourth quarter of fiscal 2010 primarily reflects an increase in gross margin in the amount of
$590 million, resulting primarily from the increased number of device shipments, as well as an increase in service revenue as a result
of additional subscriber accounts, which was partially offset by the decrease of consolidated gross margin percentage, as well as an
increase of $362 million in operating expenses.
Basic EPS was $1.79 and diluted EPS was $1.78 in the fourth quarter of fiscal 2011 compared to $1.27 basic EPS and $1.27
diluted EPS in the fourth quarter of fiscal 2010, a 40.2% increase in diluted EPS when compared to fiscal 2010.
The weighted average number of shares outstanding was 523 million common shares for basic EPS and 524 million common shares
for diluted EPS for the quarter ended February 26, 2011 compared to 557 million common shares for basic EPS and 561 million
common shares for diluted EPS for the same period last fiscal year.
30 RESEARCH IN MOTION ANNUAL REPORT 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS