Blackberry 2012 Annual Report Download - page 63

Risks related to RIM’s ability to implement and to realize the anticipated benefits of its cost optimization and CORE
programs.
On June 16, 2011, the Company announced a cost optimization program (the “Cost Optimization Program”) to streamline operations
across the organization. This realignment has focused on eliminating redundancies and reallocating resources to enable the Company
to focus on areas that offer the highest growth opportunities and align with RIM’s strategic objectives, such as accelerating new
product introductions. The Company believes that a more efficient cost structure will better enable it to respond to new market
opportunities and changes in the competitive environment. On July 25, 2011, the Company announced that it would be reducing its
global workforce across all functions by approximately 2,000 employees and that all impacted employees would receive severance
packages and outplacement support. The Cost Optimization Program also involved the identification and elimination of redundant
facilities. The Company incurred approximately $126 million in total pre-tax charges related to the Cost Optimization Program. As of
the end of the third quarter of fiscal 2012, the Cost Optimization Program, which was focused on headcount reductions and facilities
redundancies, was substantially complete, but the payments for charges relating to redundant facilities will continue to be made until
the end of the term of the facilities leases.
As part of the Company’s continuous effort to streamline its operations and increase efficiency, the Company has also commenced
the CORE program where a comprehensive review of all aspects of its business will be undertaken with the objective of improving
the Company’s operations. This includes, among other things, a review of product management and the number of stock keeping units
offered, the realization of supply chain efficiencies and bill of material cost reductions, marketing and advertising spending,
partnership and licensing opportunities, organizational and management structure as well as opportunities to leverage the BlackBerry
infrastructure. The Company expects the CORE program to drive significant improvement in efficiencies across all functions in the
organization and expects savings to be driven primarily by optimizing the cost position of its products and services, and improved
overall resource effectiveness and organizational efficiency.
The Company has incurred significant costs in implementing the Cost Optimization Program and will incur further significant costs in
implementing the CORE program, all of which has had and may continue to have a significant effect on net income. There can be no
guarantee either program will be successful or achieve any or all of the results desired or result in the optimal allocation of Company
resources.
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