Blackberry 2004 Annual Report Download - page 23

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For the years ended February 28, 2004, March 1, 2003 and March 2, 2002
During the first quarter of fiscal 2004, the Company
recorded an expense of $7.5 million to provide for
additional estimated enhanced compensatory
damages and estimated prejudgment interest for
the period March 2, 2003 to May 31, 2003. The
$6.9 million attributable to enhanced compensatory
damages was classified as Restricted cash on the
Company’s consolidated balance sheets as at
May 31, 2003.
On August 5, 2003, the United States District Court
for the Eastern District of Virginia (the “Court”)
ruled on NTP’s request for an injunction with
respect to RIM continuing to sell the BlackBerry
solution (handhelds, software and service) in the
United States as well as entered judgment with
respect to several previously announced monetary
awards issued in favor of NTP. The Court granted
NTP the injunction requested; however, the Court
then immediately granted RIM’s request to stay the
injunction sought by NTP pending the completion of
RIM’s appeal to the Court of Appeals for the Federal
Circuit (the “Court of Appeals”). In its Final Order
dated August 5, 2003, the Court awarded monetary
damages of $53.7 million (the “Final Order”) as of
May 31, 2003, comprising the following:
•Enhanced compensatory damages $ 47.5 million
•Plaintiff attorney fees $ 4.2 million
•Prejudgment interest $ 2.0 million
•Total $53.7 million
The Company had previously recorded provisions
for all of the above components of the Final Order
in fiscal 2003 and the first quarter of fiscal
2004. The Company filed its Notice to Appeal
on August 29, 2003.
During the second quarter of fiscal 2004, the
Company recorded an expense of $5.7 million to
provide for enhanced compensatory damages for
the period June 1, 2003 to August 30, 2003,
postjudgment interest for the period August 6, 2003
to August 30, 2003 and other net adjustments.
On November 26, 2003, the Company filed its
opening appeal brief with the Court of Appeals.
During the third quarter of fiscal 2004, the
Company recorded an expense of $9.2 million
to provide for additional estimated enhanced
compensatory damages and estimated
postjudgment interest, for the three months
ended November 29, 2003.
NTP filed its Responding Brief on January 5, 2004.
The Company filed its Reply Brief on February 3, 2004.
During the fourth quarter of fiscal 2004, the Company
recorded an expense of $12.9 million to provide for
additional estimated enhanced compensatory damages
and estimated postjudgment interest, for the three
months ended February 28, 2004.
For the year ended February 28, 2004, the
Company has recorded a total provision of $35.2
million with respect to the NTP matter, representing
enhanced compensatory damages, postjudgment
interest for the period August 6, 2003 to February
28, 2004 and other net adjustments. The Company
has restricted cash of $36.3 million in connection
with the NTP matter as at February 28, 2004.
As at the end of the Company’s current fiscal year,
the likelihood of any further loss and the ultimate
amount of loss, if any, were not reasonably
determinable. Consequently, no additional amounts,
from those described above, have been provided for
as NTP litigation expenses as at February 28, 2004.
The actual resolution of the NTP matter may
materially differ from the estimates as at February
28, 2004 as a result of future appellate court
rulings at the conclusion of the appeals process,
therefore potentially causing future quarterly or
annual financial reporting to be materially affected,
either adversely or favorably.
During fiscal 2003 the Company recorded quarterly
charges in the second, third and fourth quarters
with respect to the NTP matter totalling $58.2
million to fully provide for enhanced compensatory
damages, current and estimated future costs with
respect to ongoing legal and professional fees,
plaintiff’s attorney fees and prejudgment interest.
While the jury verdict, rulings, damages and other
awards in the NTP matter remain subject to RIM’s
appeal, such appeal may not ultimately be
successful. If the appeal is unsuccessful, the jury
verdict in the NTP matter, as amended by the
District Court, requiring RIM to pay a royalty in
respect of all infringing revenues will have a