Blackberry 2003 Annual Report Download - page 21

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Research฀In฀Motion฀Limited฀฀|฀฀Incorporated฀Under฀the฀Laws฀of฀Ontario฀(United฀States฀dollars,฀in฀thousands฀except฀per฀share฀data฀or฀as฀otherwise฀indicated)
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For฀the฀years฀ended฀March฀1,฀2003,฀March฀2,฀2002฀and฀February฀28,฀2001
The฀Court฀did฀not฀rule฀at฀that฀time฀on฀other฀post-trial฀motions฀and฀ordered฀the฀parties฀to฀mediation฀
before฀a฀U.S.฀Magistrate฀Judge.฀No฀denitive฀time฀frame฀was฀set฀for฀the฀mediation฀process.฀
On฀May฀23,฀2003฀the฀Court฀ruled฀as฀follows:฀i)฀the฀Court฀ordered฀that฀NTP฀be฀awarded฀compensatory฀
damages฀such฀that฀all฀infringing฀revenues฀subsequent฀to฀the฀date฀of฀the฀jury฀verdict฀are฀enhanced฀
by฀a฀factor฀of฀0.5฀or฀50%฀to฀8.55%฀and฀that฀infringing฀revenues฀now฀include฀all฀BlackBerry฀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฀by฀
NTP฀in฀this฀matter;฀and฀iii)฀the฀Court฀ordered฀that฀postjudgement฀interest฀be฀computed฀on฀enhanced฀
compensatory฀damages.
The฀Court฀has฀not฀yet฀ruled฀on฀other฀matters,฀including฀whether฀or฀not฀an฀injunction฀will฀be฀granted฀
to฀NTP.
As฀the฀May฀23,฀2003฀ruling฀was฀received฀before฀the฀completion฀of฀the฀Company’s฀annual฀consolidated฀
nancial฀statements,฀the฀Company฀recorded,฀during฀the฀fourth฀quarter฀of฀scal฀2003,฀an฀expense฀
of฀$25.5฀million฀with฀respect฀to฀the฀NTP฀matter฀to฀provide฀for฀additional฀estimated฀compensatory฀
damages฀for฀the฀period฀November฀1,฀2002฀to฀February฀28,฀2003;฀enhanced฀compensatory฀damages฀
awarded฀by฀the฀Court,฀plaintiff’s฀attorney฀fees฀awarded฀by฀the฀Court,฀prejudgment฀interest฀from฀
the฀date฀of฀the฀Company’s฀rst฀alleged฀infringing฀activity฀to฀the฀jury฀verdict฀on฀November฀21,฀2002,฀
postjudgment฀interest฀for฀the฀period฀November฀22,฀2002฀to฀March฀1,฀2003;฀and฀additional฀current฀and฀
estimated฀future฀costs฀with฀respect฀to฀ongoing฀legal฀fees.฀
The฀total฀expense฀recorded฀in฀relation฀to฀the฀NTP฀matter฀for฀the฀scal฀year฀is฀$58.2฀million.฀
As฀of฀the฀completion฀of฀these฀consolidated฀nancial฀statements,฀the฀likelihood฀of฀any฀further฀loss฀and฀
the฀ultimate฀amount฀of฀loss,฀if฀any,฀was฀not฀reasonably฀determinable;฀consequently,฀the฀Company฀has฀
not฀recorded฀any฀additional฀amounts฀from฀those฀noted฀above.฀฀
The฀Company’s฀management฀remains฀of฀the฀view฀that฀the฀Company’s฀products฀and฀services฀do฀not฀
infringe฀upon฀any฀of฀NTP’s฀patents฀and฀that฀the฀patents฀are฀invalid.฀The฀Company฀will฀continue฀to฀
contest฀this฀matter.
Trending฀into฀Fiscal฀2004฀
The฀Company฀anticipates฀that฀the฀scal฀2004฀quarterly฀earnings฀charge฀with฀respect฀to฀estimated฀
compensatory฀damages,฀estimated฀enhanced฀(by฀a฀factor฀of฀0.5)฀compensatory฀damages฀and฀
estimated฀postjudgment฀interest฀be฀between฀$8.0฀million฀to฀$9.0฀million฀for฀each฀of฀the฀rst฀two฀
quarters฀and฀increase฀thereafter฀as฀the฀quarterly฀compensatory฀damages฀are฀variable฀to฀the฀Company’s฀
expected฀2004฀BlackBerry฀revenue฀growth,฀the฀majority฀of฀which฀would฀be฀infringing฀revenues,฀as฀
determined฀by฀the฀Court.
Investment฀Income
Investment฀income฀decreased฀in฀scal฀2003฀by฀$14.3฀million฀to฀$11.4฀million฀from฀$25.7฀million฀in฀the฀
year฀ended฀March฀2,฀2002.฀The฀decrease฀reects฀lower฀average฀interest฀rates฀realized฀in฀the฀current฀
year฀versus฀the฀prior฀year.฀Additionally,฀the฀Company’s฀average฀total฀balance฀of฀cash,฀cash฀equiva-
lents,฀marketable฀securities฀and฀long-term฀portfolio฀investments฀was฀lower฀during฀the฀current฀year฀
compared฀with฀the฀comparable฀average฀total฀balance฀of฀cash,฀cash฀equivalents฀and฀marketable฀
securities฀in฀the฀preceding฀scal฀year.฀The฀weighted฀average฀yield฀for฀cash฀and฀cash฀equivalents฀as฀at฀
March฀1,฀2003฀is฀1.3%฀(March฀2,฀2002฀–฀1.7%)฀and฀was฀2.7%฀for฀marketable฀securities฀as฀at฀March฀2,฀2002.฀
During฀scal฀2003฀the฀Company฀invested฀$190.0฀million฀in฀long-term฀portfolio฀investments฀that฀have฀
an฀average฀yield฀of฀3.8%฀as฀at฀March฀1,฀2003.