Blackberry 2013 Annual Report Download - page 198

Research In Motion Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Net Income (Loss)
The Company’s net loss from continuing operations for fiscal 2013 was $628 million, a decrease of $1.8 billion compared to net
income of $1.2 billion in fiscal 2012. The decrease takes into account the impact of an income tax benefit of $166 million related to
the settlement of uncertain tax positions, including related interest and foreign exchange gains, restructuring charges of $220 million
related to the CORE program and the Q1 Goodwill Impairment Charge of $335 million incurred in fiscal 2013, as well as the impacts
of the PlayBook Inventory Provision, the Q4 Goodwill Impairment Charge the Q4 BlackBerry 7 Inventory Provision, the Q3 Service
Interruption and restructuring charges of $125 million related to the Company’s previous cost optimization program incurred in fiscal
2012. The decrease is primarily attributable to a decrease in the Company’s gross margin, partially offset by a reduction in operating
expenses and a recovery of income taxes. The Company’s consolidated gross margin in fiscal 2013 was negatively impacted by the
lower shipment volumes due to the Company’s aging product portfolio in a very competitive environment in which multiple
competitors introduced new devices beginning in early fiscal 2013 as well as the continuation of pricing initiatives to drive sell-
through for BlackBerry 7 handheld devices and the impact of allocating certain fixed costs, including licensing costs, to lower
shipment volumes, compared to fiscal 2012. The decrease in gross margin was partially offset by the higher average selling prices
of BlackBerry 10 devices shipped, favorable renegotiations of key contracts associated with elements of the Company’s hardware
business and benefits from a leaner and re-architected supply chain.
Basic and diluted loss per share from continuing operations were both $1.20 in fiscal 2013, compared to basic and diluted EPS from
continuing operations of $2.23 in fiscal 2012.
The weighted average number of shares outstanding was 524 million common shares for basic and diluted loss per share for the fiscal
year ended March 2, 2013 and the fiscal year ended March 3, 2012.
The Company expects to increase its marketing spending in relation to the global launch of BlackBerry 10 during the first quarter of
fiscal 2014 by approximately 50% compared to the fourth quarter of fiscal 2013. However, the Company expects to approach
breakeven financial results in the first quarter of fiscal 2014 as a result of its lower cost base, more efficient supply chain and
improved hardware margins. This outlook excludes the impact of charges related to the CORE program. Further, sales of BlackBerry
7 devices may be impacted as some customers may alter purchasing decisions toward BlackBerry 10 devices. See “Cautionary Note
Regarding Forward-Looking Statements”.
Common Shares Outstanding
On March 26, 2013, there were 524 million voting common shares, options to purchase 7.2 million voting common shares,
15.1 million restricted share units and 0.3 million deferred share units outstanding.
The Company has not paid any cash dividends during the last three fiscal years.
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