Blackberry 2010 Annual Report Download - page 25

new permanent full-time positions which have been filled, respectively, by an employee with expertise in U.S.
GAAP and an employee with expertise in securities disclosure and compliance. The latter employee is
assisting in the administration of the Company’s equity awards granting program.
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.
Jim Balsillie and Mike Lazaridis, the Company’s Co-CEOs, 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 Settlement Agreement, the Co-CEOs and RIM’s former Chief Financial Officer 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 those individuals 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 2010 Compared to Fiscal 2009 and Fiscal 2008
Fiscal year end February 27, 2010 compared to fiscal year ended February 28, 2009
Revenue
Revenue for fiscal 2010 was $14.95 billion, an increase of $3.88 billion, or 35.1%, from $11.07 billion in fiscal 2009.
A comparative breakdown of the significant revenue streams is set forth in the following table:
February 27, 2010 February 28, 2009
Change Fiscal
2010/2009
For the Fiscal Year Ended
Number of devices sold ................. 36,707,000 26,009,000 10,698,000 41.1%
Average Selling Price ...................... $ 330 $349 $ (19) (5.4%)
Revenue (in thousands)
Devices .......................................... $ 12,115,765 81.0% $ 9,089,736 82.1% $ 3,026,029 33.3%
Service........................................... 2,158,591 14.4% 1,402,560 12.7% 756,031 53.9%
Software ........................................ 258,635 1.7% 251,871 2.3% 6,764 2.7%
Other ............................................. 420,233 2.9% 321,019 2.9% 99,214 30.9%
$ 14,953,224 100.0% $ 11,065,186 100.0% $ 3,888,038 35.1%
Device revenue increased by $3.03 billion, or 33.3%, to $12.12 billion, or 81.0% of consolidated revenue, in fiscal
2010 compared to $9.09 billion, or 82.1%, of consolidated revenue in fiscal 2009. This increase in device revenue
MD&A
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