Blackberry 2012 Annual Report Download - page 218

Research In Motion Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Property, plant and equipment additions for the fiscal year ended March 3, 2012 were lower as compared to the fiscal year ended
February 26, 2011, as a result of the Cost Optimization and CORE programs. During the fiscal year ended March 3, 2012, the
additions to intangible assets consisted of licenses acquired in relation to amended or renewed licensing agreements relating to 3G
and 4G technologies, certain patents acquired as a result of patent assignment and transfer agreements, as well as agreements with
third parties for the use of intellectual property, software, messaging services and other BlackBerry related features, as well as
intangible assets associated with business acquisitions. Business acquisitions during fiscal 2012 related to the purchase of a company
whose proprietary software will be incorporated into the Company’s software. Business acquisitions during fiscal 2011 related to the
purchase of a company whose acquired technology is being incorporated through a BlackBerry application, a subsidiary of TAT The
Astonishing Tribe, QNX Software Systems, as well as the purchase of a company whose proprietary software will be incorporated
into the Company’s software, the purchase of a company whose acquired technologies will enhance document access and handling
capacities, and the purchase of a company whose acquired technologies will enhance the Company’s ability to manage application
store fronts and data collection.
Financing Activities
Cash flows used in financing activities were $149 million for fiscal 2012 and were primarily attributable to the purchases of common
shares on the open market by a trustee selected by the Company in connection with its Restricted Share Unit Plan, which are
classified on the balance sheet for accounting purposes as treasury stock, in the amount of $156 million. Cash flows used in financing
activities were $2.1 billion for fiscal 2011 and were primarily attributable to the common share repurchase programs described above
in the amount of $2.1 billion, as well as the purchases of common shares on the open market by a trustee selected by the Company in
connection with its Restricted Share Unit Plan, which are classified on the balance sheet for accounting purposes as treasury stock, in
the amount of $76 million, partially offset by proceeds from the issuance of common shares in the amount of $67 million.
A
uction Rate Securities
Auction rate securities are debt instruments with long-term nominal maturity dates for which the interest rates are reset through a
dutch auction process, typically every 7, 28 or 35 days. Interest is paid at the end of each auction period, and the auction normally
serves as the mechanism for securities holders to sell their existing positions to interested buyers. As at March 3, 2012, the Company
held $41 million in face value of investment grade auction rate securities for which auctions are not taking place. The interest rate for
these securities has been set at the maximum rate specified in the program documents and interest continues to be paid every 28 days
as scheduled. As a result of the continuing lack of liquidity in these securities, the Company recognized through investment income,
in the third quarter of fiscal 2011, an other-than-temporary impairment charge of $6 million. The Company did not record any further
other-than-temporary impairment in fiscal 2012. The Company used a multi-year investment horizon to value these securities and
considered the underlying risk of the securities and the current market interest rate environment. The Company has the ability and
intent to hold these securities until such time that market liquidity return to normal levels or a solution to the liquidity of the securities
is determined, and does not consider the principal or interest amounts on these securities to be materially at risk at this time. The
auction rate securities are classified as long-term investments on the balance sheet given the uncertainty as to when market liquidity
for auction rate securities will return to normal.
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