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52
Research In Motion Limited • Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)
15. Restructuring Charges
During the third quarter of 2003, as part of the
implementation of a plan to improve operating
results (the “Plan”), 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
identified in connection with the workforce
reduction component of the Plan were dismissed on
or about November 12, 2002. The cost of the
employees was previously included as part of Cost of
sales, Selling, marketing and administration, and
Research and development.
The Company has yet to vacate a leased facility
deemed redundant as part of the Plan. The
Company expects to complete the remaining
elements of the Plan during fiscal 2005.
The pre-tax financial components of the Plan are summarized below:
Balances as at Cash Balances as at
March 1, 2003 Payments Write-offs February 28, 2004
Workforce reduction and related costs $ 648 $ (648) $ – $ –
Excess facilities and capital assets 1,924 (431) (230) 1,263
$ 2,572 $ (1,079) $ (230) $ 1,263
Balances as at Cash Balances as at
November 12, 2002 Payments Write-offs March 1, 2003
Workforce reduction and related costs $ 4,056 $ (3,408) $ – $ 648
Excess facilities and capital assets 2,494 (63) (507) 1,924
$ 6,550 $ (3,471) $ (507) $ 2,572
The balance of the restructuring provision of $1,263 as at February 28, 2004 is included in Accrued
liabilities on the Consolidated Balance Sheets.
16. Litigation Award
The Company is the defendant in a patent litigation
matter brought by NTP, Inc. (“NTP”) alleging that
the Company infringed on eight of NTP’s patents
(the “NTP matter”).
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.
On May 23, 2003 the Court ruled on the issues of
enhanced compensatory damages, plaintiff’s
attorney fees and certain other matters.
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
Consolidated Balance Sheets as at May 31, 2003
and the Company funded the $6.9 million into a
cash escrow bank account subsequent to the end of
the first quarter of fiscal 2003, as required by the
Court.
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