Blackberry 2012 Annual Report Download - page 177

Research In Motion Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
As part of the Company’s continuous effort to streamline its operations and increase efficiency, the Company has also commenced
the CORE program. The CORE program is a Company-wide initiative with the objective of improving the Company’s operations.
The program includes, among other things, a review of the Company’s research and development process to maximize the
Company’s return on investment, the implementation of stock keeping units (“SKUs”) rationalization, an evaluation of the product
development cycle to improve yield, warranty return rates and reduce manufacturing costs, an assessment of the Company’s sales and
marketing initiatives to maximize sales efforts and effectively leverage its marketing windows, and a comprehensive review of RIM’s
organizational structure to clearly define accountabilities for all key business, business processes and to eliminate fragmentation and
inefficiencies. The Company is currently targeting the CORE program to drive approximately $1.0 billion in savings by the end of
fiscal 2013 based on current run rates and the Company expects initial savings to be driven primarily by optimizing the cost position
of the Company’s products and services, and improved overall resource effectiveness and organizational efficiency.
Non-GAAP Financial Measures
As noted above, the Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, and information
contained in this MD&A is presented on that basis. On March 29, 2012, the Company announced financial results for fiscal 2012,
which included certain non-GAAP financial measures, including adjusted revenue, adjusted gross margin, adjusted gross margin
percentage, adjusted net income and adjusted diluted earnings per share that exclude the impact of the pre-tax charges in fiscal 2012
related to the PlayBook Inventory Provision, the Q4 BlackBerry 7 Inventory Provision, the service interruption that occurred in the
third quarter of fiscal 2012 (the “Q3 Service Interruption”) which resulted in the loss of service revenue and the payment of service
credits of approximately $54 million, approximately $40 million after tax, the Cost Optimization Program, and the non-cash goodwill
impairment charge described below (the “Q4 Goodwill Impairment Charge”) of approximately $355 million, approximately $346
million after tax. The term “non-GAAP financial measure” is used to refer to a numerical measure of a company’s historical or future
financial performance, financial position or cash flows that: (i) excludes amounts, or is subject to adjustments that have the effect of
excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S.
GAAP in a company’s statement of income, balance sheet or statement of cash flows; or (ii) includes amounts, or is subject to
adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and
presented. The Company believes that presenting non-GAAP financial measures that exclude the impact of those items enables it and
its shareholders to better assess the Company’s operating performance relative to its consolidated financial results in prior and future
periods and improves the comparability of the information presented. Readers are cautioned that adjusted revenue, adjusted gross
margin, adjusted gross margin percentage, adjusted net income and adjusted diluted earnings per share do not have any standardized
meaning prescribed by U.S. GAAP and are therefore unlikely to be comparable to similarly titled measures reported by other
companies. These non-GAAP financial measures should be considered in the context of the U.S. GAAP results, which are described
in this MD&A. A reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures was
included in the Company’s press release, dated March 29, 2012.
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