Blackberry 2003 Annual Report Download - page 44

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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
From฀time฀to฀time,฀the฀Company฀is฀involved฀in฀other฀claims฀in฀the฀normal฀course฀of฀business.฀
Management฀assesses฀such฀claims฀and฀where฀considered฀likely฀to฀result฀in฀a฀material฀exposure฀and฀
where฀the฀amount฀of฀the฀claim฀is฀quantiable,฀provisions฀for฀loss฀are฀made฀based฀on฀management’s฀
assessment฀of฀the฀likely฀outcome.฀The฀Company฀does฀not฀provide฀for฀claims฀that฀are฀considered฀
unlikely฀to฀result฀in฀a฀signicant฀loss,฀claims฀for฀which฀the฀outcome฀is฀not฀determinable฀or฀claims฀
where฀the฀amount฀of฀the฀loss฀cannot฀be฀reasonably฀estimated.฀Any฀settlements฀or฀awards฀under฀
such฀claims฀are฀provided฀for฀when฀reasonably฀determinable.
12.฀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฀the฀“rst฀project”฀totalled฀$3,900฀and฀is฀repayable฀in฀the฀form฀of฀royalties฀of฀2.2%฀
on฀gross฀product฀revenues฀resulting฀from฀the฀project.฀The฀Company฀is฀obligated฀to฀pay฀royalties฀on฀
all฀project฀revenues฀up฀to฀February฀28,฀2003,฀after฀which฀time฀the฀royalty฀base฀is฀expanded฀to฀include฀
revenues฀from฀certain฀additional฀products,฀and฀royalties฀will฀continue฀to฀be฀paid฀up฀to฀a฀maximum฀
of฀$6,100.฀
The฀second฀agreement฀with฀TPC฀is฀a฀three-year฀research฀and฀development฀project฀(the฀“second฀
project”)฀under฀which฀total฀contributions฀from฀TPC฀will฀be฀a฀maximum฀of฀$23,300฀(the฀“contribution”).฀
The฀Company฀is฀of฀the฀view฀that฀it฀has฀fullled฀all฀prerequisite฀funding฀conditions฀and฀has฀recorded฀
all฀of฀the฀contribution฀commitment฀as฀at฀March฀1,฀2003฀and฀no฀further฀TPC฀funding฀reimbursements฀
are฀due฀to฀RIM฀under฀the฀second฀project.฀This฀contribution฀will฀be฀repayable฀in฀the฀form฀of฀royalties฀
of฀2.2%฀on฀gross฀product฀revenues฀resulting฀from฀the฀second฀project.฀The฀Company฀is฀obligated฀
to฀pay฀royalties฀on฀all฀project฀revenues฀up฀to฀February฀28,฀2007,฀after฀which฀time฀the฀royalty฀base฀is฀
expanded฀to฀include฀revenues฀from฀certain฀additional฀products.฀Royalties฀will฀continue฀to฀be฀paid฀up฀
to฀a฀maximum฀of฀$39,300.฀
The฀Company฀has฀recorded฀$925฀on฀account฀of฀TPC฀royalty฀repayment฀expense฀with฀respect฀to฀the฀
rst฀project฀(2002฀–฀$1,575,฀2001฀–฀$999).฀No฀amounts฀have฀been฀recorded฀with฀respect฀to฀the฀second฀
project฀since฀the฀conditions฀for฀repayment฀have฀not฀yet฀been฀met.
The฀Company฀also฀qualies฀for฀investment฀tax฀credits฀(“ITC’s”)฀on฀eligible฀expenditures฀on฀account฀of฀
scientic฀research฀and฀experimental฀development.฀The฀Company฀has฀not฀recorded฀the฀benet฀of฀ITC’s฀
in฀scal฀2003฀as฀in฀the฀Company’s฀judgement,฀the฀Company฀does฀not฀have฀reasonable฀assurance฀that฀
the฀Company฀will฀realize฀the฀ITC’s.
Government฀assistance,฀which฀includes฀both฀TPC฀funding฀and฀ITC’s,฀has฀been฀applied฀to฀reduce฀gross฀
research฀and฀development฀expense฀as฀follows:
For฀the฀year฀ended฀฀ ฀ March฀1,฀2003฀ March฀2,฀2002฀ February฀28,฀2001
Gross฀research฀and฀development฀฀ ฀$฀ 64,952฀฀ ฀$฀ 49,517฀฀ ฀$฀ 25,675฀
Government฀funding฀ ฀฀ 9,036฀฀ ฀฀ 12,071฀฀ ฀ ฀7,394฀
Net฀research฀and฀development฀฀ ฀$฀ 55,916฀฀ ฀$฀ 37,446฀฀ ฀$฀ 18,281฀
(b)฀Capital฀assets฀–฀The฀Company฀received฀$nil฀in฀government฀assistance฀which฀was฀applied฀towards฀
the฀cost฀of฀capital฀assets฀used฀in฀research฀and฀development฀activities฀(2002฀–฀$1,672,฀2001฀–฀$2,585).
13.฀Restructuring฀Charges
During฀the฀third฀quarter฀of฀2003,฀as฀part฀of฀the฀implementation฀of฀a฀plan฀to฀improve฀operating฀results,฀
the฀Company฀recorded฀restructuring฀charges฀that฀included฀the฀termination฀of฀employees,฀related฀
costs฀and฀the฀closure฀and฀exit฀of฀certain฀leased฀facilities.฀The฀254฀employees฀identied฀in฀connection฀
with฀the฀workforce฀reduction฀component฀of฀the฀Plan฀were฀dismissed฀on฀or฀about฀November฀12,฀2002.฀