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Research In Motion >2001 Annual Report

Table of contents

  • Page 1
    Research In Motion > 2001 Annual Report

  • Page 2
    ...BlackBerryâ„¢ wireless email solution, embedded radio modems and software development tools. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in Canada, the United States and England. RIM is listed on the Nasdaq Stock Market (Nasdaq: RIMM) and the Toronto Stock Exchange (TSE: RIM...

  • Page 3
    ... t > Research In Motion Limited Annual Revenue 250 225 200 175 $ millions 150 100 50 47.3 75 6.6 25 0 97 98 99 00 01 20.9 Year ended last day of February (in thousands of U.S. dollars, except per share amounts) Financial Highlights 2001 2000 1999 Statement of Operations Data Revenue Gross margin...

  • Page 4
    ... number of companies adopting BlackBerry grew from 2,900 to over 7,800. The specific goals we laid out in last year's annual report were to substantially increase the BlackBerry user base, to deliver BlackBerry Enterprise Edition™ for Lotus® Domino™ , to implement Java™ support and to develop...

  • Page 5
    ...0 01 A n n u a l R e p o r t > Research In Motion Limited Management Team We have added significant strength to the RIM team across all levels and departments. Three significant additions are Don Morrison - Chief Operating Officer of BlackBerry, Larry Conlee - Chief Operating Officer of Production...

  • Page 6
    ... for growth. Larry Conlee Chief Operating Officer, Production and Manufacturing In North America, we added many channel partners for BlackBerry during the past year. , Cingular, Compaq® Computer Corporation, GoAmerica Aether™ Systems Inc., Bell Mobility ® Communications Corp., Motient...

  • Page 7
    ... Major projects in the upcoming year include the launch of next-generation products, the development of new product form-factors, the extension of RIM's enterprise software capabilities and continuous improvements to the BlackBerry offering. Chief Information Officer Sales and Marketing Last year...

  • Page 8
    ... alliances due to our strategy of enabling and extending the business plans of our partners rather than placing ourselves in contention with other members of the value chain. To be integrated with the wireless plan of so many carriers, computer manufacturers, software companies, portals and Internet...

  • Page 9
    ...issues are magnified, but remaining focused on execution in research and development, manufacturing, sales, marketing and information technology will continue to move us forward. In the upcoming year, we are targeting continued strong growth in demand for BlackBerry, both in North America and Europe...

  • Page 10
    ..., including our industry-leading radio modems and award-winning RIM Wireless Handhelds. RIM's radio modems are a family of high-performance radio-frequency transceivers designed for integration into products by value-added resellers, system integrators and original equipment manufacturers. They are...

  • Page 11
    ... SM Fortified with Yahoo!â„¢ and Cingular's Interactive Messaging PLUS service. RIM Wireless Handhelds are also an integral component of RIM's BlackBerry wireless email solution. BlackBerry Enterprise Edition, an end-to-end solution developed by RIM, is a complete, secure, integrated wireless email...

  • Page 12
    A part of BlackBerry's success can be attributed to the strategic alliances that RIM has formed with many multinational companies to deliver BlackBerry to enterprise customers. Some of these partners include Aether, Bell Mobility, Cingular, Compaq, IBM, Motient, Rogers AT&T, Vaultus and more. These ...

  • Page 13
    ...professional. In addition to email and Short Messaging Service (SMS), RIM will also ship the BlackBerry 5800 Series of handhelds with built-in support for voice. These handhelds will also have integrated support for Java 2 Micro Edition (J2ME), which opens application development to a large, growing...

  • Page 14
    ... calendar are automatically synchronized over-the-air without need of a cradle. Now, with wireless email and calendar, customers can stay connected to the information that drives their day. Finally, we are very proud of having the BlackBerry Wireless Handheld awarded the FIPS 140-1 Validation...

  • Page 15
    .... "As a wireless email client, it's a dream." ZDNET > Bell Mobility - September 2000: Bell Mobility announced they will offer BlackBerry Enterprise Edition and BlackBerry Internet Edition in Canada. > Cingular - November 2000: RIM signs supply agreement with Cingular for RIM handhelds as well as...

  • Page 16
    ... engineering development services • software licences. Sales and marketing channels include direct sales to corporate customers, distribution by network carriers and Internet service providers and distribution by value-added resellers for the BlackBerry solution. Basis of Presentation The Company...

  • Page 17
    ... for 37% of the Company's revenues. The remaining 9% of revenue was comprised of OEM radio modems, software licence revenue, non-recurring engineering charges and wireless PC cards. For the year ended February 29, 2000, BlackBerry accounted for 19% of revenue, the RIM Wireless Handhelds for 56% and...

  • Page 18
    ...year, compared to $13.9 million for fiscal 2000. Consistent with its long-term strategic objectives and planning, RIM increased its expense levels and personnel numbers to support BlackBerry and other sales and distribution channels including Cingular Interactive, Aether Systems, Motient Corporation...

  • Page 19
    ... their prospects were limited, both in the current public and venture capital markets • in certain cases, the investment was made based upon a business model and /or plan that, in the Company's view, is no longer likely to be successfully executed, if at all • in certain cases actual "cash burn...

  • Page 20
    ... accounted for 74% of total assets at February 28, 2001 compared to 65% in the prior year. Market Risk of Financial Instruments The Company is engaged in operational and financing activities that generate risk in generally three primary areas: Foreign Exchange The majority of the Company's revenues...

  • Page 21
    ... the launch of BlackBerry over their network in the summer of this year. We have opened a European office from which we expect to manage sales, marketing and channel relationships. Research and development remains an integral part of the Company's long-term growth outlook. RIM believes that the...

  • Page 22
    ... have full and free access to the Audit Committee to discuss audit findings, financial reporting and other related matters. > Waterloo, Ontario Mike Lazaridis President & Co-CEO Dennis Kavelman Chief Financial Officer Auditors' Report To the Shareholders of Research In Motion Limited We have...

  • Page 23
    ... assets (note 6) $ Liabilities Current Accounts payable and accrued liabilities Income taxes payable Deferred revenue Current portion of long-term debt (note 7) $ 45,892 3,842 10,870 198 60,802 Long-term debt (note 7) 6,328 67,130 Shareholders' equity Capital stock (note 8) Retained earnings Total...

  • Page 24
    Research In Motion Limited > Incorporated Under the Laws of Ontario > United States dollars, in thousands except per share data Consolidated Statements of Operations and Retained Earnings For the year ended February 28, 2001 February 29, 2000, February 28, 1999 Revenue Cost of sales Gross ...

  • Page 25
    ... of long-term investments (note 11) Foreign exchange gain 9,123 5,011 - 14,750 (8) 22,665 Net changes in non-cash working capital items related to operations: Trade receivables Other receivables Inventory Prepaid expenses Accounts payable and accrued liabilities Income taxes payable Deferred revenue...

  • Page 26
    ... Ontario > United States dollars, in thousands except per share data Notes to the Consolidated Financial Statements Nature of Business Research In Motion Limited (the "Company") is in the business of designing, manufacturing and marketing wireless Internet appliances and services and radio modems...

  • Page 27
    ... used for research and development is credited against the related capital assets and all other assistance is credited against related expenses, as incurred. (o) Earnings per share - Basic earnings per share is calculated based on the weighted average number of shares outstanding during the year...

  • Page 28
    ...funds, corporate bonds, bank certificates of deposit, high grade commercial and government agency paper and government treasury bills. Carrying values of these investments approximate market value and will generate an approximate weighted average yield of 5.3% as at February 28, 2001. The short-term...

  • Page 29
    ... significant temporary differences are as follows: February 28, 2001 Assets Financing costs Non-deductible reserves Research and development incentives Other tax carryforwards Less: valuation allowance Liabilities Capital assets Net future income tax assets $ 5,561 12,011 $ 11,779 3,245 4,286 1,507...

  • Page 30
    ... due December 1, 2003, with total monthly principal and interest payments of $52. The long-term debt principal payments for the years 2002 through 2004 are as follows: For the year ending 2002 2003 2004 $ $ 198 211 6,117 6,526 At February 28, 2001 and February 29, 2000, the Company had not drawn on...

  • Page 31
    ... one year, volatility of 60%, risk free interest rate of 4.5% and no expected dividend yield. (b) Stock option plan - The Company has an incentive stock option plan for all of its directors, officers and employees. The option exercise price is the fair market value of the Company's common shares at...

  • Page 32
    ...been recorded in these financial statements. 10. Government Assistance (a) Current expense - The Company has entered into two project development agreements with Technology Partnerships Canada ("TPC"), which provide partial funding for certain research and development projects. Funding from TPC for...

  • Page 33
    ... assistance towards the cost of capital assets used in research and development activities (2000 - $2,177). The Company was in compliance with all terms and conditions in respect to its two project development agreements with TPC as at February 28, 2001 and February 29, 2000. 11. Write-Down of Long...

  • Page 34
    Research In Motion Limited > Incorporated Under the Laws of Ontario > United States dollars, in thousands except per share data The Company mitigates this risk in part by maintaining Canadian dollar funds. The Company also utilizes certain financial instruments to manage the risk associated ...

  • Page 35
    ... - Start-up costs (b) Total shareholders' equity under U.S. GAAP Consolidated Statements of Operations $ 970,063 - (1,357) $ 337,227 1,158 - $ $ 968,706 902,933 - (1,357) $ $ 338,385 311,391 1,158 - $ 901,576 $ 312,549 For the year ended February 28, 2001 February 29, 2000 February...

  • Page 36
    ..., the financial statements for the periods prior to the change in reporting currency must be translated to U.S. dollars using the current rate method, which uses specific year end and specific annual average exchange rates as appropriate. The significant differences arising from the application of...

  • Page 37
    ... using the Black-Scholes option pricing model with the following assumptions: For the year ended February 28, 2001 February 29, 2000 February 28, 1999 Weighted average Black-Scholes value of options Assumptions: Risk free interest rates Expected life in years Expected dividend yield Volatility...

  • Page 38
    ... Cork 1,2 Managing Director, Sentinel Associates Ltd. Jim Estill 1 President & Chief Executive Officer, EMJ Data Systems Ltd. 1 2 Shareholder Inquiries Investor Relations Research In Motion Limited 295 Phillip Street Waterloo, Ontario, N2L 3W8 Tel: (+1) 519.888.7465 Fax: (+1) 519.888.6906 Email...

  • Page 39
    ... and RIM families of related marks, images and symbols are the exclusive properties and trademarks of Research In Motion Limited. RIM, Research In Motion, "Always On, Always Connected" , the 'envelope in motion' symbol and the BlackBerry logo are registered with the U.S. Patent and Trademark Office...

  • Page 40
    Research In Motion Limited 295 Phillip Street, Waterloo Ontario Canada N2L 3W8 Tel : 519.888.7465 Fax : 519.888.6906 Web site : www.rim.net Email : investor_ [email protected]