Blackberry 2007 Annual Report Download - page 67

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65
NATURE OF BUSINESS
Research In Motion Limited (“RIM” or the “Company”) is a
leading designer, manufacturer and marketer of innovative
wireless solutions for the worldwide mobile communications
market. Through the development of integrated hardware,
software and services that support multiple wireless network
standards, RIM provides platforms and solutions for seamless
access to time-sensitive information including email, phone,
short messaging service (SMS), Internet and intranet-based
applications. RIM technology also enables a broad array
of third party developers and manufacturers to enhance
their products and services with wireless connectivity to
data. RIM’s products, services and embedded technologies
are used by thousands of organizations around the world
and include the BlackBerry wireless platform, software
development tools, radio-modems and other hardware
and software. The Company’s sales and marketing efforts
include collaboration with strategic partners and distribution
channel relationships to promote the sales of its products and
services as well as its own supporting sales and marketing
teams. The Company was incorporated on March 7, 1984
under the Ontario Business Corporations Act. The Company’s
shares are traded on The Toronto Stock Exchange under the
symbol RIM and on the NASDAQ National Market under the
symbol RIMM.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General
These consolidated financial statements have been prepared
by management in accordance with United States generally
accepted accounting principles (“U.S. GAAP”) on a basis
consistent for all periods presented except as described in
note 2. The significant accounting policies used in these U.S.
GAAP consolidated financial statements are as follows:
(b) Fiscal year
The Company’s fiscal year end date is the 52 or 53 weeks
ending on the last Saturday of February, or the first Saturday
of March. The fiscal years ended March 3, 2007 and February
26, 2005 comprise 52 weeks compared to 53 weeks for the
fiscal year ended March 4, 2006.
(c) Basis of consolidation
The consolidated financial statements include the accounts
of all subsidiaries with intercompany transactions and
balances eliminated on consolidation. All of the Company’s
subsidiaries are wholly-owned and are considered to be fully-
integrated operations.
(d) Use of estimates
The preparation of the Company’s consolidated financial
statements in accordance with U.S. GAAP requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure
of contingent liabilities as at the dates of the consolidated
financial statements and the reported amounts of revenues
and expenses during the reporting periods. Significant
areas requiring the use of management estimates relate to
the determination of reserves for various litigation claims,
allowance for doubtful accounts, provision for excess
and obsolete inventory, fair values of assets acquired and
liabilities assumed in business combinations, amortization
expense, implied fair value of goodwill, realization of future
tax assets and the related components of the valuation
allowance, provision for warranty and the fair values of
financial instruments. Actual results could differ from these
estimates.
(e) Foreign currency translation
The U.S. dollar is the functional and reporting currency of
the Company. Foreign currency denominated assets and
liabilities of the Company and all of its subsidiaries are
translated into U.S. dollars using the temporal method.
Accordingly, monetary assets and liabilities are translated
using the exchange rates in effect at the consolidated
balance sheet date, non-monetary assets and liabilities at
historical exchange rates, and revenues and expenses at the
rates of exchange prevailing when the transactions occurred.
Resulting exchange gains and losses are included in income.
(f) Cash and cash equivalents
Cash and cash equivalents consist of balances with banks
and highly liquid investments with maturities of three months
or less at the date of acquisition and are carried on the
consolidated balance sheets at fair value.
(g) Trade receivables
Trade receivables which reflect invoiced and accrued revenue
are presented net of an allowance for doubtful accounts.
The allowance was $1,824 at March 3, 2007 (March 4, 2006 -
$1,551). Bad debt expense (recovery) was $274 for the year
RESEARCH IN MOTION LIMITED
notes to the consolidated financial statements
For the Years Ended March 3, 2007, March 4, 2006 and February 26, 2005
In thousands of United States dollars, except share and per share data, and except as otherwise indicated