Blackberry 2009 Annual Report Download - page 30

RESEARCH IN MOTION LIMITED
management’s discussion and analysis of financial
condition and results of operations continued
FOR THE THREE MONTHS AND FISCAL YEAR ENDED FEBRUARY 28, 2009
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Review Costs
Included in the Company’s selling, marketing and
administration expenses in fiscal 2008 and fiscal 2009 are
legal, accounting and other professional costs incurred by
the Company as well as other costs incurred by the Company
under indemnity agreements in favor of certain officers and
directors of the Company, in each case in connection with the
Review, the Restatement, and the regulatory investigations
and litigation related thereto.
As noted above, Jim Balsillie and Mike Lazaridis, the
Company’s Co-Chief Executive Officers, voluntarily offered to
assist the Company in defraying costs incurred in connection
with the Review and the Restatement by contributing CAD
$10.0 million (CAD $5.0 million each) of those costs. The
Company received these voluntary payments in the second
quarter of fiscal 2008, which were recorded net of income
taxes as an increase to additional paid-in capital. In addition,
as part of the Notice of Application that was filed with the
Ontario Superior Court of Justice-Commercial List by a
pension fund shareholder, seeking various orders against the
Company and named directors, the Company and the other
defendants entered into an agreement with the shareholder
to settle the Application and a proposed derivative action.
Under the settlement, among other things, the Company
agreed to the payment of CAD $1.1 million on account of the
shareholder’s legal costs, and consistent with their earlier
voluntary agreement to contribute CAD $5.0 million each
to defray the costs incurred by RIM in connection with the
Review, Jim Balsillie and Mike Lazaridis, agreed to pay RIM
a further CAD $2.5 million each to defray the Review costs
incurred by the Company. The Company received these
voluntary payments of CAD $2.5 million each in the third
quarter of fiscal 2008, which were recorded net of income
taxes as an increase to additional paid-in capital. Under the
OSC settlement, Jim Balsillie, Mike Lazaridis and Dennis
Kavelman agreed to contribute an additional CAD $29.8
million (a total of CAD $44.8 million) to defray costs incurred
by the Company in the investigation and remediation of stock
options, granting practices and related governance practices
at the Company. These contributions are being made through
Jim Balsillie, Mike Lazaridis and Dennis Kavelman undertaking
not to exercise vested RIM options to acquire an aggregate
of 1,160,129 common shares of the Company. These options
have a fair value equal to the aggregate contribution amounts
determined using a BSM calculation based on the last trading
day prior to the day the OSC issued a notice of hearing in
respect of the matters giving rise to the settlement.
Risks Related to the Company’s Historical Stock Option
Granting Practices
As a result of the events described above, the Company
continues to be subject to risks which are discussed in
greater detail in the “Risk Factors” section of RIM’s Annual
Information Form, which is included in RIM’s Annual Report
on Form 40-F.
Results of Operations – Fiscal 2009 Compared to
Fiscal 2008 and Fiscal 2007
Fiscal year end February 28, 2009 compared to fiscal year
ended March 1, 2008
Revenue
Revenue for fiscal 2009 was $11.07 billion, an increase of $5.06
billion, or 84.1%, from $6.01 billion in fiscal 2008.
A comparative breakdown of the significant revenue streams
is set forth in the following table:
Fiscal 2009 Fiscal 2008 Change - Fiscal 2009/2008
Number of devices sold 26,009,000 13,780,000 12,229,000 88.7%
Average Selling Price (“ASP”) $ 349 $ 346 $ 3 0.9%
Revenues (in thousands)
Devices $ 9,089,736 82.1% $ 4,768,610 79.4% $ 4,321,126 90.6%
Service 1,402,560 12.7% 860,641 14.3% 541,919 63.0%
Software 251,871 2.3% 234,388 3.9% 17,483 7.5%
Other 321,019 2.9% 145,756 2.4% 175,263 120.2%
$ 11,065,186 100.0% $ 6,009,395 100.0% $ 5,055,791 84.1%