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16
Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
17
For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
Compensation฀expense฀increased฀by฀$20.3฀million฀in฀scal฀2003.฀Other฀signicant฀scal฀2003฀expense฀
increases฀were฀for฀travel,฀promotion,฀marketing฀support฀programs฀and฀IT฀support,฀infrastructure฀and฀
maintenance฀expenses.
In฀scal฀2003,฀bad฀debt฀expense฀has฀decreased฀$5.5฀million฀versus฀the฀prior฀year.฀Fiscal฀2002฀included฀
a฀net฀$3.9฀million฀expense฀with฀respect฀to฀a฀large฀customer’s฀Chapter฀11฀bankruptcy฀protection฀ling฀
and฀related฀trade฀receivable฀write-off.฀Sales฀commissions฀to฀wireless฀service฀provider฀and฀agents฀were฀
also฀reduced฀in฀scal฀2003.
Amortization฀
Amortization฀expense฀on฀account฀of฀capital฀and฀intangible฀assets฀increased฀by฀$12.9฀million฀to฀
$30.4฀million฀for฀the฀year฀ended฀March฀1,฀2003฀compared฀to฀$17.5฀million฀for฀the฀prior฀year.฀The฀
Company฀made฀expenditures฀with฀respect฀to฀capital฀and฀intangible฀assets฀of฀$39.7฀million฀and฀
$31.0฀million฀respectively฀in฀scal฀2003฀versus฀$73.9฀million฀and฀$7.1฀million฀in฀the฀previous฀year.฀
Major฀capital฀asset฀additions฀in฀2003฀included฀production฀equipment฀and฀tooling,฀research฀and฀
development฀computers฀and฀equipment฀and฀computer฀infrastructure฀for฀the฀BlackBerry฀solution,฀
as฀well฀as฀capital฀equipment฀required฀for฀the฀expansion฀of฀operations฀internationally.฀Additionally,฀
RIM฀continued฀to฀invest฀in฀the฀further฀acquisition,฀conguration฀and฀implementation฀of฀its฀fully฀
integrated฀enterprise฀resource฀planning฀SAP฀software.฀
During฀scal฀2003,฀the฀Company’s฀acquisition฀of฀intangible฀assets฀included฀licence฀payments฀
amounting฀to฀$18.7฀million,฀patents฀of฀$12.3฀million฀and฀the฀purchase฀of฀$7.3฀million฀of฀technology฀
as฀part฀of฀the฀Company’s฀four฀corporate฀acquisitions฀in฀scal฀2003฀(see฀notes฀6฀and฀7฀to฀the฀Consolidated฀
Financial฀Statements).฀
Restructuring฀Charges
During฀the฀third฀quarter฀of฀2003,฀as฀part฀of฀a฀plan฀(the฀“Plan”)฀to฀improve฀operating฀results฀by฀stream-
lining฀its฀operations฀and฀reducing฀expenses,฀the฀Company฀recorded฀restructuring฀charges฀of฀$6.5฀
million฀which฀consisted฀of฀workforce฀reduction฀costs฀across฀all฀of฀the฀organization’s฀employee฀groups฀
and฀excess฀facilities฀and฀related฀costs฀for฀operating฀lease฀commitments฀with฀respect฀to฀space฀no฀
longer฀needed฀to฀support฀ongoing฀operations.฀See฀note฀13฀–฀Restructuring฀Charges.
All฀employees฀identied฀in฀connection฀with฀the฀workforce฀reduction฀component฀of฀the฀Plan฀were฀
terminated฀on฀or฀about฀November฀12,฀2002.฀The฀Company฀expects฀to฀complete฀the฀remaining฀
elements฀of฀the฀Plan฀during฀the฀rst฀half฀of฀scal฀2004.฀
The฀Company฀expects฀cost฀savings฀as฀a฀result฀of฀these฀cost฀restructuring฀measures฀to฀be฀approxi-
mately฀$20฀–฀25฀million฀per฀year.฀The฀savings฀began฀in฀the฀scal฀fourth฀quarter฀of฀2003,฀with฀the฀full฀
impact฀of฀savings฀anticipated฀in฀the฀rst฀quarter฀of฀2004.฀
Litigation฀
See฀also฀note฀14฀–฀Litigation.
Fiscal฀2002
During฀November฀2001,฀the฀Company฀was฀served฀with฀a฀complaint฀led฀by฀NTP,฀Inc.฀(“NTP”)฀alleging฀
that฀the฀Company฀infringed฀on฀eight฀of฀its฀patents฀(the฀“NTP฀matter”).฀฀฀
Fiscal฀2003฀Second฀Quarter
During฀the฀second฀quarter฀of฀scal฀2003,฀the฀Company฀recorded฀an฀expense฀of฀$4.9฀million฀for฀its฀
current฀and฀estimated฀future฀costs฀with฀respect฀to฀ongoing฀legal฀fees฀for฀the฀NTP฀matter.฀