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ResearchInMotion2003AnnualReport
Table of contents
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Page 1
Research฀In฀Motion฀2003฀Annual฀Report -
Page 2
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Page 3
...฀services฀...BlackBerry®฀wireless฀platform,฀the฀RIM฀ Wireless฀Handheld™฀product฀line,฀software฀development฀tools,฀radio-modems฀and฀software/hardware฀ licensing฀agreements.฀Founded฀in฀1984฀and฀based฀in฀Waterloo,฀Ontario,฀RIM฀operates฀offices... -
Page 4
...of฀U.S.฀dollars,฀except฀per฀share฀amounts)฀ March฀1,฀2003฀...write-down฀of฀long-term฀investments฀ ฀ and฀income฀tax฀ ฀ Write-down฀of฀long...��� ��� 85.0 47.3 �� � 99 00 01 02 03 RIM฀Annual฀Revenue฀(in฀millions฀of฀dollars) 2 -
Page 5
...฀fiscal฀2003฀and฀there฀are฀now฀in฀excess฀of฀10,000฀ corporations฀using฀BlackBerry฀Enterprise฀Server™฀software.฀We฀are฀also฀pleased฀to฀report฀that฀we฀have฀ accomplished฀the฀goals฀we฀set฀out฀in฀last฀year's฀Annual฀Report.฀This... -
Page 6
...Vodafone฀Netherlands Switzerland Swisscom฀Mobile Germany T-Mobile Vodafone mm02 Austria T-Mobile Italy Telecom฀Italia฀Mobile Singapore StarHub Australia Telstra France SFR UK mmO2 Vodafone T-Mobile Ireland mmO2 Spain Telefonica Hong฀Kong Hutchison฀Telecom Philippines SMART BlackBerry... -
Page 7
...CDMA2000฀1X;฀America฀Movil฀ (TelCel),฀RIM's฀first฀Latin฀American฀carrier฀partner;฀SwissCom฀in฀Switzerland;฀StarHub฀in฀Singapore;฀TELUS฀ Mobility฀in฀Canada;฀SMART฀in฀the฀Philippines;฀and฀Telefonica฀in฀Spain. BlackBerry฀Handhelds RIM฀launched... -
Page 8
...BlackBerry฀continued฀to฀grow฀ and฀drive฀value฀for฀our฀customers.฀In฀addition,฀we฀launched฀the฀Mobile฀Data฀Service...฀year.฀RIM฀signed฀ agreements฀with฀such฀global฀leaders...Marketing 900 During฀fiscal฀2003,฀RIM฀successfully฀launched฀multiple... -
Page 9
...฀subscriber฀base฀continues฀to฀grow. Our฀goals฀for฀fiscal฀2004฀include: 1.฀ Continue฀to฀significantly฀grow฀the฀BlackBerry฀user฀base฀both฀in฀North฀America฀and฀globally 2.฀ Grow฀revenue฀while฀managing฀costs฀effectively฀ 3.฀ Work฀closely... -
Page 10
...annual...dollars...services฀with฀wireless฀connectivity.฀RIM฀derives฀its฀revenues฀from฀the฀BlackBerry฀wireless฀ platform,฀the฀RIM฀Wireless฀Handheld฀product฀line,฀software฀development฀tools,฀radio-modems฀and฀ software/hardware฀licensing฀agreements...reported... -
Page 11
...of฀the฀licence฀term฀and฀in฀accordance฀ with฀SOP฀97-2.฀Revenue฀from฀software฀maintenance,฀unspecified฀upgrades฀and฀technical฀support฀ contracts฀is฀recognized฀over฀the฀period฀that฀such฀items฀are฀delivered฀or฀that฀services฀are฀provided... -
Page 12
...of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per...฀for฀inventory฀write-offs฀could฀differ...฀off. Valuation฀of฀long-lived฀assets,฀intangible฀assets...goodwill฀as฀at฀March฀1,฀2003฀and฀March฀3,฀2002฀and...the฀financial฀ reporting฀and฀tax... -
Page 13
...฀and฀service฀and฀through฀the฀licensing฀ of฀software. Highlights฀for฀fiscal฀2003:฀ •฀ The฀BlackBerry฀subscriber฀base฀grew฀to฀approximately฀534,000฀users.฀ •฀ Launched฀the฀BlackBerry฀6510฀handheld฀which฀operates฀on฀Nextel's฀iDEN... -
Page 14
...dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated) •฀ Launched฀BlackBerry...BlackBerry฀solution฀through฀the฀development฀ of฀additional฀carrier฀relationships. Selected฀Quarterly฀Financial฀Data฀-฀Unaudited฀ 2003...฀a฀write-down... -
Page 15
...customers.฀Revenue฀from฀software฀is฀derived฀from฀BlackBerry฀ Enterprise฀Server฀software,฀Client฀Access฀Licences฀("CAL's"),฀which฀are฀charged฀for฀each฀subscriber฀using฀ the฀BlackBerry฀service,฀and฀through฀upgrades฀for฀software. Revenues฀are... -
Page 16
...฀1,฀2003,฀will฀result฀from฀the฀unit฀sales฀growth฀of฀the฀2.5G฀ handheld฀product฀lines฀and฀subsequent฀BlackBerry฀subscriber฀activations.฀RIM's฀ASP฀for฀service฀revenue฀ will฀decline฀as฀the฀percentage฀of฀its฀BlackBerry฀service฀revenue... -
Page 17
...฀as฀royalties฀and฀warranty.฀ Additionally,฀RIM฀expects...service฀and฀software฀as฀well฀as฀any฀impact฀of฀BlackBerry฀Connect฀and฀Technical฀ Support฀Services฀revenues. Expenses Expenses,฀as฀reported...฀the฀fiscal฀2003฀ annual฀expense฀figures฀for... -
Page 18
...year.฀ The฀Company's฀current฀development฀agreement฀with฀Technology฀Partnerships฀Canada฀("TPC")฀was฀ related฀to฀a฀three-...with฀its฀long-term฀strategic฀objectives,฀RIM฀continued฀to฀increase฀its฀expense฀levels฀ to฀support฀BlackBerry฀and฀other... -
Page 19
...receivable฀write-off.฀Sales฀commissions฀to฀wireless฀service฀provider฀and฀agents฀were฀ also฀reduced฀in฀fiscal฀2003. ...฀software.฀ During฀fiscal฀2003,฀the฀Company's฀acquisition฀of฀intangible฀assets฀included฀licence฀payments฀ amounting฀to฀$... -
Page 20
...฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated) Fiscal฀2003฀Third...fees;฀and฀an฀ application฀for฀a฀permanent฀injunction.฀The฀injunction฀application฀seeks฀to฀prohibit฀the฀Company฀from฀ providing฀BlackBerry฀service... -
Page 21
...฀handheld,฀ service฀and฀software฀revenues฀in฀the฀United฀States;฀ii)฀the฀Court฀ordered฀that฀NTP฀be฀awarded฀plaintiff's฀ attorney฀fees฀for฀the฀period฀up฀to฀February฀22,฀2003,฀at฀a฀factor฀of฀0.8฀or฀80%฀of฀actual฀fees฀incurred... -
Page 22
...Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated) Write-Down฀of฀Investments....6฀million฀ for฀fiscal฀2003.฀The฀valuation฀allowance,฀combined฀with฀the฀decision฀to฀report฀results฀from฀operations฀ ... -
Page 23
...million฀for฀the฀year฀ended฀March฀1,฀2003,฀which฀included฀the฀acquisition฀of฀long-term฀ portfolio฀investments฀of฀$190.0฀...and฀manufacturing฀overhead,฀are฀incurred฀primarily฀in฀Canadian฀dollars.฀ The฀Company฀is฀exposed฀to฀foreign฀exchange... -
Page 24
...latest฀being฀December฀1,฀2003.฀These฀contracts฀have฀been฀...long-term฀debt,฀the฀Company฀has฀ entered฀into฀forward฀foreign฀exchange฀contracts฀to฀sell฀U.S.฀dollars฀and฀purchase฀Canadian฀dollars...฀in฀this฀Annual฀Report฀are฀made฀pursuant... -
Page 25
...฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀...and฀levels฀of฀service •฀ dependence฀on฀...of฀cash฀equivalents฀and฀long-term฀portfolio฀investment฀instruments ...time฀to฀time฀in฀RIM's฀periodic฀reports฀filed฀with฀the฀U.S.฀Securities฀and฀... -
Page 26
...฀dollars,฀...Guideline...฀Long...guarantees฀on฀the฀balance฀sheet฀nor฀does฀it฀extend฀to฀product฀warranties.฀AcG-14฀is฀to฀be฀applied฀to฀ interim฀and฀annual฀financial฀reporting฀beginning฀on฀or฀after฀January฀1,฀2003...drive฀BlackBerry฀subscriber... -
Page 27
...฀impairment฀of฀long฀lived฀assets,฀goodwill฀and฀other฀intangible฀ assets฀and฀stock฀based฀compensation,฀respectively. Toronto,฀Canada,฀March฀28,฀2003฀(except฀as฀to฀note฀14฀which฀is฀as฀of฀May฀28,฀2003). Auditors'฀Report Ernst฀&฀Young... -
Page 28
...dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated) Consolidated฀ Balance฀Sheets As฀at฀ ฀ ฀ ฀ March฀1,฀2003...฀ ฀ ฀ Current฀portion฀of฀long-term฀debt฀( note฀9 Long-term฀debt฀(note฀9 Shareholders'฀equity Capital... -
Page 29
...฀28,฀2001 For฀the฀year฀ended฀ March฀1,฀2003฀ March฀2,฀2002฀ February฀28,฀2001 Consolidated฀Statements...Loss฀from฀operations฀ ฀ Investment฀income฀ Income฀(loss)฀before฀write-down฀of฀investments฀ ฀ and฀income฀taxes Writedown฀of฀... -
Page 30
...฀31,600฀ ฀ Future฀income฀taxes 28,598฀ ฀ Loss฀on฀write-down฀of฀capital฀assets฀ ฀ ฀502฀ ฀ Gain฀on฀foreign฀currency฀translation฀of฀long฀term฀debt฀ ฀ ฀(359)฀ ฀ Write-down฀of฀investments Foreign฀exchange฀gain฀(loss)฀ ฀ ฀20 88... -
Page 31
...services...warranty,฀and฀the฀fair฀values฀of฀financial฀instruments.฀Actual฀results฀could฀differ฀from฀ these฀estimates. (d)฀Foreign฀currency฀translation฀-฀The฀U.S.฀dollar฀is฀the฀functional฀and฀reporting...market฀value. (g)฀Long-term฀portfolio฀... -
Page 32
...Ontario฀(United฀States฀dollars,฀in฀thousands฀... Information฀technology฀ ฀ ฀ Furniture,฀fixtures,฀tooling,฀and฀equipment฀฀...during฀the฀terms฀of฀the฀licence฀agreements Straight-line฀over฀17฀...the฀ impairment฀of฀long-lived฀assets฀and฀accordingly... -
Page 33
...฀as฀at฀March฀1,฀2003฀and฀March฀3,฀2002฀...tested฀for฀impairment฀annually,฀or฀more฀ frequently...Company฀has฀one฀reporting฀unit,฀which฀is...฀delivered฀or฀the฀services฀have฀been฀provided...฀of฀sale฀for฀warranties,฀royalties฀and฀estimated฀... -
Page 34
...inception฀of฀the฀licence฀term฀and฀in฀ accordance฀with฀SOP฀97-2.฀Revenue฀from฀software฀maintenance,฀unspecified฀upgrades฀and฀technical฀ support฀contracts฀is฀recognized฀over฀the฀period฀such฀items฀are฀delivered฀or฀services฀are฀provided... -
Page 35
...money฀market฀investment฀ funds,฀repurchase฀agreements,฀bank฀certificates฀of฀deposit,฀and฀...฀$฀ -฀ -฀ -฀ - Long-term฀portfolio฀investments฀carry฀weighted฀average฀yields฀of฀3.8%฀as฀at฀March฀1,฀2003฀ (2002฀-฀n/a)฀and฀have฀maturities... -
Page 36
...2003฀ Accumulated฀฀ amortization฀ ฀ ฀ Net฀book ฀ value Land฀ Buildings฀and฀leaseholds฀ Information฀technology฀ Furniture...Cost฀ March฀1,฀2003฀ Accumulated฀฀ amortization฀ ฀ ฀ Net฀book ฀ value Acquired฀technology฀ Licences฀ Patents ฀... -
Page 37
...email฀ attachments฀with฀BlackBerry฀Wireless฀Handhelds™.฀Effective฀August...closing฀date฀up฀to฀March฀1,฀2003.฀ On฀October฀31,฀2001,฀...Consideration฀ ฀ Cash฀ ฀ Assumption฀of฀acquiree฀long-term฀debt฀ ฀ Capital฀stock 317฀฀ 7,326... -
Page 38
...Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀...28,598฀ ฀ During฀the฀third฀quarter฀of฀fiscal฀2003,฀the฀Company฀determined฀that฀a฀significant฀degree฀of฀ uncertainty฀existed฀... -
Page 39
...฀mortgage฀loans฀are฀denominated฀in฀Canadian฀dollars. The฀long-term฀debt฀principal฀payments฀for฀the฀...฀ (2002฀-฀$37.6฀million).฀As฀at฀March฀1,฀2003,฀the฀Company฀had฀drawn฀down฀on฀its...฀subject฀to฀a฀general฀security฀agreement.฀ 37 -
Page 40
...Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as...pursuant฀ ฀ to฀Common฀Share฀Purchase฀Program฀ Balance฀as฀at฀March฀1,฀2003฀ 292,891฀฀ 610,664฀฀ 4,887฀฀ (30,462)฀ 12,664... -
Page 41
...17,฀2004฀and฀give฀ the฀owner฀the฀right฀to฀acquire฀75฀...฀for฀all฀of฀its฀directors,฀officers฀ and฀employees.฀The฀option฀exercise...option฀plan฀at฀the฀Annual฀General฀Meeting฀on฀...756.฀ As฀at฀March฀1,฀2003,฀there฀were฀10,101฀options... -
Page 42
...dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated) The฀weighted฀average฀characteristics฀of฀options฀outstanding฀as฀at฀March฀1,฀2003...For฀the฀year฀ended March฀1,฀2003 Net฀loss฀-฀as฀reported 148,664) Estimated฀stock-... -
Page 43
...2003,฀March฀2,฀2002฀and฀February฀28,฀2001 11.฀Commitments฀and฀Contingencies (a)฀Lease฀commitment฀-฀The฀Company฀is฀committed฀to฀annual...Orange.฀In฀ this฀complaint,฀both฀Good฀and฀a฀Good฀Vice฀President฀have฀been฀named...attorneys'฀fees฀and... -
Page 44
...฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or...development฀agreements฀with฀ Technology฀Partnerships฀Canada฀("TPC...฀contribution฀commitment฀as฀at฀March฀1,฀2003฀and฀no฀further฀TPC฀funding฀reimbursements... -
Page 45
...fees;฀and฀ an฀application฀for฀a฀permanent฀injunction.฀The฀injunction฀application฀seeks฀to฀prohibit฀the฀Company฀ from฀providing฀BlackBerry฀service...trial.฀ During฀the฀hearing฀on฀February฀28,฀2003,฀the฀Court฀heard฀arguments฀in฀relation฀to... -
Page 46
...dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated) Based฀upon฀the฀Court's฀Order฀dated฀March฀11,฀2003...now฀include฀all฀BlackBerry฀handheld,฀service฀ and฀software฀...฀ fees฀for฀the฀period฀up฀to฀March฀1,฀2003.฀This... -
Page 47
...to฀February฀28,฀2003;฀and฀additional฀current฀ and฀estimated฀future฀costs฀with฀respect฀to฀ongoing฀legal฀fees.฀ The฀total฀expense...฀or฀annual฀financial฀reporting฀to฀be฀materially฀affected,฀ either฀adversely฀or฀favourably. 15.฀Write-down฀... -
Page 48
...฀dates,฀with฀the฀latest฀being฀December฀1,฀2003.฀These฀contracts฀have฀been฀ designated฀as฀cash฀flow...long-term฀debt,฀the฀Company฀has฀ entered฀into฀forward฀foreign฀exchange฀contracts฀to฀sell฀U.S.฀dollars฀and฀purchase฀Canadian฀dollars... -
Page 49
...cash฀equivalents,฀marketable฀securities฀and฀long-term฀debt฀are฀ carried฀at...and฀managed฀as฀a฀single฀reportable฀business฀segment.฀The฀...2003฀฀ ฀March฀2,฀2002฀ February฀28,฀2001฀ Sales ฀ Canada฀ ฀ United฀States฀ ฀ Foreign Sales ฀ Canada... -
Page 50
...of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per...฀ (GAAP)฀in฀Canada฀and฀the฀United฀...,฀Statement฀of฀Position฀ 98-5,฀Reporting฀on฀the฀Cost฀of฀Start...under฀U.S.฀GAAP฀for฀2003. (b)฀Derivative฀Financial...฀(forward฀contracts),฀to฀... -
Page 51
...Loss)฀is฀as฀follows: For฀the฀year฀ended March฀1,฀2003฀ March฀2,฀2002 Net฀change฀in฀derivative฀fair฀value฀during฀...those฀resulting฀from฀ investments฀by฀owners฀and฀distributions฀to฀owners.฀The฀reportable฀item฀of฀comprehensive฀income฀ ... -
Page 52
...United฀States฀dollars,฀in฀...warranty฀obligations฀from฀March฀2,฀2002฀ to฀March฀1,฀2003฀was฀as฀follows: Accrued฀warranty฀obligations฀at฀March฀2,฀2002฀ Actual฀warranty฀experience฀during฀2003฀ 2003฀warranty...฀of฀tangible฀long-lived฀assets฀... -
Page 53
...guarantees.฀The฀disclosure฀requirements฀of฀ FIN฀45฀are฀effective฀for฀the฀Company's฀year฀ended฀March฀1,฀2003.฀An฀additional฀disclosure฀requirement฀under฀FIN฀45฀relates฀to฀product฀warranty...of฀multiple฀products,฀services,฀and/or฀rights฀... -
Page 54
..., BlackBerry Charles฀Meyer Chief฀Legal฀Officer฀and Corporate฀Secretary Shareholder฀Information Annual฀Meeting฀of฀Shareholders Monday,฀July฀21,฀2003฀at฀6:30pm At฀the฀Canadian฀Clay฀and฀Glass฀Gallery 25฀Caroline฀Street฀North Waterloo,฀Ontario,฀Canada... -
Page 55
...฀Office฀and฀may฀be฀pending฀or฀registered฀in฀other฀countries.฀All฀other฀brands,฀ product฀names,฀company฀names,฀trademarks฀and฀service฀marks฀are฀the฀properties฀of฀their฀respective฀owners. Forward-looking฀statements฀in฀this฀Annual฀Report... -
Page 56
295฀Phillip฀Street,฀Waterloo, Ontario,฀Canada฀N2L฀3W8 Tel:฀519.888.7465 Fax:฀519.888.6906 email:฀[email protected] www.rim.com