Blackberry 2013 Annual Report Download - page 82

The Company’s worldwide operations subject it to income, indirect and other taxes in many jurisdictions, and the
Company must exercise significant judgment in order to estimate its worldwide financial provision for income and other
taxes. There can be no assurances that the Company’s historical provisions and accruals for income and other taxes will
be adequate.
The Company is subject to income, indirect (such as sales tax, sales and use tax and value-added tax) and other taxes in Canada and
numerous foreign jurisdictions. Significant judgment is required in determining its worldwide liability for income, indirect and other
taxes, as well as potential penalties and interest. In the ordinary course of the Company’s business, there are many transactions and
calculations where the ultimate tax determination is uncertain. Although the Company believes that its tax estimates are reasonable,
there can be no assurances that the final determination of any tax audits will not be materially different from that which is reflected in
historical income, indirect and other tax provisions and accruals. Should additional taxes or penalties and interest be assessed as a
result of an audit, litigation or changes in tax laws, there could be a material adverse effect on the Company’s current and future
results and financial condition. In addition, there is a risk of recoverability of future deferred tax assets.
The Company’s future effective tax rate will depend on the relative profitability of the Company’s domestic and foreign operations,
the statutory tax rates and taxation laws of the related tax jurisdictions, the tax treaties between the countries in which the Company
operates, the timing of the release, if any, of the valuation allowance, and the relative proportion of research and development
incentives to the Company’s profitability.
A significant portion of the Company’s assets are held in cash, cash equivalents, short-term or long-term investments, all
of which are subject to market and credit risk.
The Company had total cash, cash equivalents and investments of $2.9 billion as at March 2, 2013, compared to $2.1 billion as at
March 3, 2012. Cash equivalents, short term and other investments are invested primarily in debt securities of varying maturities.
Consequently, the Company is exposed to interest rate risk and its results of operations may be adversely affected by changes in
interest rates. The fair value of short term and other investments, as well as the investment income derived from the investment
portfolio, will fluctuate with changes in prevailing interest rates.
Additionally, the Company is exposed to market and credit risk on its investment portfolio. While the Company’s investment policies
include investing in liquid, investment-grade securities and limiting investments in any single issuer, there can be no assurance that
such investment policies will reduce or eliminate market or credit risks. See “Financial Condition” in Management’s Discussion and
Analysis of Financial Condi and Results of Operations for fiscal 2013 for a discussion of certain liquidity issues relating to the
Company’s investments in auction rate securities, structured investment vehicles and fixed income securities maintained in an
investment account with State Street Bank and Trust Company for investments held in the United States and with State Street Trust
Company Canada for investments held in Canada.
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