Blackberry 2002 Annual Report Download

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AN N U A L R E P O R T
TWOTHOUSANDTWO
RESEARCH IN MOTION

Table of contents

  • Page 1
    T W O T H O U S A N D T W O A R E N S N E A U R A C H L I R N E P O R T M O T I O N

  • Page 2
    ... the BlackBerry â„¢ wireless solution, the RIM Wireless Handheld â„¢ product line, embedded radio modems and software development tools. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in Canada, the United States and Europe. RIM is listed on the Nasdaq Stock Market (Nasdaq...

  • Page 3
    ...-down of investments Basic Diluted Earnings (loss) per share Basic Diluted Operating Data (percentage of revenue) Gross margin Research and development - gross Selling, marketing and administration Balance Sheet Data Cash, cash equivalents and marketable securities Total assets Shareholders' equity...

  • Page 4
    ...over 14,400 companies. Last year, we set forth a number of goals for fiscal 2002, which included growing the BlackBerry user base, launching BlackBerry in the UK and other European markets, launching BlackBerry with GSM/GPRS carriers in North America, completing the development of handhelds for CDMA...

  • Page 5
    ... working on applications for BlackBerry and announced relationships with such enterprise software companies as SAP, Siebel Systems, Xerox and Cognos. Our CDMA/1XRTT handhelds are currently being tested with carriers, our new 197,000 square foot manufacturing facility is up and running, and RIM...

  • Page 6
    RESEARCH IN MOTION LIMITED 2002 ANNUAL REPORT Excluding a write-down of raw materials inventory, product and services gross margins in fiscal 2002 were in line with prior years. We expect gross margin to continue to be strong in fiscal year 2003 due to the growing proportion of revenues from ...

  • Page 7
    2002 ANNUAL REPORT RESEARCH IN MOTION LIMITED > GSM/GPRS CARRIER PARTNERSHIPS FOR BLACKBERRY: AT&T Wireless (United States) VoiceStream (United States) Rogers AT&T Wireless (Canada) mm02 (UK, Ireland, Netherlands, Germany) Vodafone (UK) T-Mobile (Germany) Telecom Italia Mobile (Italy) ...

  • Page 8
    RESEARCH IN MOTION LIMITED 2002 ANNUAL REPORT Major projects for the coming year include new form factors for GSM/GPRS, the commercial launch of a CDMA/1XRTT BlackBerry handheld, the launch of BlackBerry for the iDEN network, the development of relationships with OEM and handset vendors for ...

  • Page 9
    ...for Exchange and Domino, as well as the BlackBerry handheld software, to take advantage of next-generation networks. 5. Expand the number of Java-based, third-party enterprise applications that are available for BlackBerry in order to drive value for our customers. 6. Grow the BlackBerry opportunity...

  • Page 10
    ... signed a multi-year agreement with Nextel Communications, Inc. to develop a BlackBerry Wireless Handheld for Nextel's iDEN® network. • RIM announced a new family of OEM radio modems for GSM/GPRS wireless networks, providing RIM the opportunity to access international markets. • RIM developed...

  • Page 11
    2002 ANNUAL REPORT RESEARCH IN MOTION LIMITED Summary Results of Operations OPERATING HIGHLIGHTS FISCAL 2002 FISCAL 2001 Revenue Gross margin Gross margin percentage Net income (loss) before write-down of investments Write-down of investments Net loss Basic & diluted loss per share $ 294,...

  • Page 12
    RESEARCH IN MOTION LIMITED 2002 ANNUAL REPORT REVENUE MIX Fiscal 2002 REVENUE MIX Fiscal 2001 Software and NRE 8.5% 61.3% 30.2% Software and NRE Hardware Service 7.9% 13.1% 79% Hardware Service A comparative revenue breakdown is set out in the following table: FISCAL YEAR 2002 FISCAL ...

  • Page 13
    ...for technical personnel, costs of related engineering materials, software tools and related information technology infrastructure support, as well as subcontracted research and development costs, increased by $23.8 million or 92.9% to $49.5 million or 16.8% of revenue in the year ended March 2, 2002...

  • Page 14
    RESEARCH IN MOTION LIMITED 2002 ANNUAL REPORT The Company's selling, marketing and administration expenses were impacted as follows with respect to a large customer previously in Chapter 11 bankruptcy proceedings as noted below: SELLING, MARKETING & ADMINISTRATION EXPENSES ("SM&A") TOTAL SM...

  • Page 15
    ... $580.2 million from the public offering of six million common shares in October 2000. Cash flows used in investing activities were $181.7 million for the year ended March 2, 2002, including capital and intangible asset expenditures of $73.9 million and $7.1 million respectively, the acquisition of...

  • Page 16
    RESEARCH IN MOTION LIMITED 2002 ANNUAL REPORT As at March 2, 2002, the Company has entered into forward foreign exchange contracts to sell U.S. dollars and purchase Canadian dollars with an aggregate notional value of U.S. $87.5 million (2001 - $44.5 million). These contracts mature at ...

  • Page 17
    ... to support global growth. Research and development remains an integral part of RIM's long-term strategy. RIM will continue to enhance the functionality of the BlackBerry solution by developing new innovative handheld devices, creating additional BlackBerry applications, and enhancing BlackBerry...

  • Page 18
    ... Kavelman Chief Financial Officer AUDITORS' REPORT To the Shareholders of Research In Motion Limited We have audited the consolidated balance sheets of Research In Motion Limited as at March 2, 2002 and February 28, 2001 and the consolidated statements of operations and retained earnings and cash...

  • Page 19
    ... 8) $ 46,934 2,446 9,773 385 59,538 Long-term debt (note 8) 11,874 71,412 Shareholders' equity Capital stock (note 9) Retained earnings (deficit) 894,750 (18,005) 876,745 $ Commitments and contingencies (note 10) See notes to the consolidated financial statements. $ 508,822 213,105 50,268 13,894...

  • Page 20
    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 MARCH 2, 2002 FEBRUARY 28, 2001, FEBRUARY 29, 2000 Revenue Cost of sales ...

  • Page 21
    ...transaction Write-down of investments Foreign exchange gain (loss) 17,740 (16,921) - 5,350 4 (22,306) Net changes in non-cash working capital items: Trade receivables Other receivables Inventory Prepaid expenses and other Accounts payable and accrued liabilities Income taxes payable Deferred revenue...

  • Page 22
    ... CONSOLIDATED FINANCIAL STATEMENTS Nature of Business Research In Motion Limited (the "Company") is a designer, manufacturer and marketer of wireless solutions for the mobile communications market. Through development and integration of hardware, software and services, the Company provides wireless...

  • Page 23
    .... Intangible assets are amortized as follows: Acquired technology Licences Patents - Straight-line over 2 to 5 years - Lesser of 5 years or the actual number of units sold during the terms of the licence agreements - Straight-line over 17 years Goodwill represents the excess of the purchase price...

  • Page 24
    ...assets used for research and development is credited against the cost of the related capital assets and all other assistance is credited against related expenses, as incurred. (o) Earnings (loss) per share - Basic earnings (loss) per share is calculated based on the weighted average number of shares...

  • Page 25
    ... with banks, money market investment funds, repurchase agreements, bank certificates of deposit and investment-grade commercial and government agency paper. Carrying values of these investments approximate market value, with approximate weighted average yields of 1.7% as at March 2, 2002 (2001...

  • Page 26
    RESEARCH IN MOTION LIMITED UNITED STATES DOLLARS, IN THOUSANDS EXCEPT PER SHARE DATA, AND EXCEPT AS OTHERWISE INDICATED. 5. Intangible Assets Intangible assets are comprised as follows: MARCH 2, 2002 COST ACCUMULATED AMORTIZATION NET BOOK VALUE Acquired technology Licences Patents Goodwill $ 2,...

  • Page 27
    ...3,650 - $ 9,731 $ 5,538 Assets Financing costs Non-deductible reserves Research and development incentives Tax losses Other tax carryforwards Less: valuation allowance Liabilities Capital assets Net future income tax assets $ 12,668 28,598 $ 5,561 12,011 $ 6,856 5,004 17,726 15,100 2,450 47,136...

  • Page 28
    ... the changes in issued and outstanding common shares and common share purchase warrants for the three years ended March 2, 2002: NUMBER OF COMMON SHARES OUTSTANDING (000's) COMMON SHARES COMMON SHARE PURCHASE WARRANTS TOTAL Balance as at February 28, 1999 Issued for cash Exercise of options Warrant...

  • Page 29
    ... 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 the date of grant. These options generally vest over a period...

  • Page 30
    ... acts of patent and trademark infringement, dilution, unfair competition and false advertising in connection with the development, marketing and sale of wireless handheld products. This matter has now been settled. During the current fiscal year, the Company was served with a complaint filed by NTP...

  • Page 31
    ...Capital assets - The Company received $1,672 in government assistance which was applied towards the cost of capital assets used in research and development activities (2001 - $2,585). 12. Write-Down of Investments During the year the Company undertook a review of the carrying values of companies in...

  • Page 32
    RESEARCH IN MOTION LIMITED UNITED STATES DOLLARS, IN THOUSANDS EXCEPT PER SHARE DATA, AND EXCEPT AS OTHERWISE INDICATED. 14. Supplemental Information (a) Statement of cash flows - The following summarizes interest and income taxes paid: FOR THE YEAR ENDED MARCH 2, 2002 FEBRUARY 28, 2001 FEBRUARY ...

  • Page 33
    ... managed as a single reportable business segment. The Company's operations are substantially all related to the research, design, manufacture and sales of wireless communications products. Selected financial information is as follows: MARCH 2, 2002 FEBRUARY 28, 2001 FEBRUARY 29, 2000 Sales Canada...

  • Page 34
    ... - Derivative financial instruments (b) Total liabilities under U.S. GAAP Total shareholders' equity under Canadian GAAP Adjustment - Start-up costs (a) Adjustment - Derivative financial instruments (b) Total shareholders' equity under U.S. GAAP Consolidated Statements of Operations MARCH 2, 2002...

  • Page 35
    ...dollars to U.S. dollars using the exchange rate in effect at August 31, 1999. Under U.S. GAAP, 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...

  • Page 36
    ... for employee stock options had been applied. The disclosures in the following table show the Company's net income and earnings per share on a proforma basis, using the fair value method as determined by using the Black-Scholes option pricing model, include: FOR THE YEAR ENDED MARCH 2, 2002 FEBRUARY...

  • Page 37
    FOR THE YEARS ENDED MARCH 2, 2002, FEBRUARY 28, 2001 AND FEBRUARY 29, 2000 (h) Recently issued pronouncements - Under Staff Accounting Bulletin 74, the Company is required to disclose certain information related to new accounting standards which have not yet been adopted due to delayed effective ...

  • Page 38
    ... 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: [email protected] Transfer Agent Computershare Trust Company of Canada...

  • 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
    R E S E A R C H I N M O T I O N L I M I T E D 295 Phillip Street, Waterloo Ontario, Canada N2L 3W8 Tel: 519.888.7465 Fax: 519.888.6906 Web site: www.rim.net Email: [email protected] 20 2