Blackberry 1998 Annual Report Download
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Table of contents
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Page 1
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Page 2
..., wireless PC card adapters and embedded OEM radio modems. These products are sold to a range of major multinational companies, including wireless network suppliers, original equipment manufacturers, and value-added resellers. The Company is listed on The Toronto Stock Exchange under the symbol RIM...
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Page 3
..., except per share amounts)
Year ended February 28,
1998
1997
Income Statement Data
Revenue Gross Profit Net Income Net Income Per Share (basic and fully diluted) $ $ $ $ 33,159 11,715 540 0.01 $ $ $ $ 12,071 6,390 44 0.00
Balance Sheet Data
Total Assets Shareholders' Equity $ $ 153,347 150,054...
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Page 4
... as we continue to fill backlogged orders for our leading-edge two-way pagers, radio modems and PC cards. RIM's order backlog stood at $100 million at our February 28, 1998 year end. We also exceeded our earnings expectations in fiscal 1998, with net income of $540,000 versus the $44,000 earned...
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Page 5
.... During the year, RIM continued to sell its Wireless PC Card modems under its own brand name through a network of partners who coordinate sales to large corporate users. This product now has a sizable share of the wireless communications peripheral market in the US. 3
JIM BALSILLIE CHAIRMAN & CO...
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Page 6
... at 1998 year end, we were able to produce approximately 600 devices per day. We expect to increase this number to an estimated 4,000
Outlook
The two-way paging industry in the US is poised for significant growth. In addition, the number of applications for wireless messaging using RIM's OEM radio...
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Page 7
...
Finance & Admin. Sales & Marketing Manufacturing Research & Development 29 15 85 71
6
4
2
0 95 96 97 98
benefits of RIM's core two-way paging technology give it a significant competitive advantage over the limited applications of one-way products which cannot respond to or initiate messages...
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Page 8
...for corporate applications such as wireless e-mail, stock quotes and portfolio management, and maintaining constant communications with others. Many consumer applications such as the ability to respond to a page
are the technical advantages of two-way networks, significant advances in access device...
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Page 9
"Market research overwhelmingly indicates that most users of pagers would like to be able to reply. I think on that basis the ultimate success of the category (of two-way paging) is simply inevitable." - Wireless Integration Magazine
An integrated PDA/phone device will not capture more than 5 ...
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Page 10
..., network subscribers are expected to continue using cellular phones mainly 8
for voice communication and use separate access devices such as two-way pagers for wireless messaging and related data applications.
Impor t antl y, RIM is the wor ld's onl y manufacturer of two-way paging devices for...
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Page 11
...
access by the year 2000." - Yankee Group
in the near term. A competing network protocol is the Motoroladeveloped "one and a half way" paging technology called ReFLEX, which allows users to acknowledge receipt of pages and return canned responses only. Two of RIM's main competitors, Motorola...
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Page 12
"You don't need a
weathervane to
see which way the
wind is blowing.
The
masses
are building behind
wireless e-mail
and wireless Internet/Intranet access."
- The Strategis Group
10
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Page 13
...product sales in fiscal
Inter@ctive Pager
RIM's next-generation Inter@ctive Pager scheduled for launch this summer exemplifies the Company's size, cost, coverage, battery life and functionality. The Inter@ctive Pager provides full two-way five primary competitive advantages in the areas of
paging...
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Page 14
... for integration into products by value-added resellers, system integrators, and original equipment manufacturers (OEMs). Radio modems are ideally suited for applications such as in-vehicle communications, handheld devices, ruggedized terminals, laptops, point-of-sale terminals, wireless telemetry...
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Page 15
... credit card. This means RIM's modems can be integrated into very small handheld devices. RIM's modems are also typified by long battery life, ease of integration for the customer, and high immunity to nearby radio frequency noise. The product's high noise immunity dramatically increases reliability...
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Page 16
...versus 4% last year. However, OEM embedded radio modems and Wireless PC Cards also made solid contributions. OEM radio sales of $5.0 million represented 15% of total revenue (1997: 2%), while sales of Wireless PC Cards represented 6% of revenue (1997: 59%) at $1.9 million.
Gross Margin
Gross profit...
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Page 17
... sales growth. Increased total spending was a result of the expansion of product development teams in preparation for the launch of next-generation products. R&D expenditures consisted largely of salaries for technical personnel, the cost of related engineering materials, software tools and support...
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Page 18
... requirements.
Management's long-term target is to achieve gross margin of 35-40%. In fiscal 1999, economies of scale associated with rising production should increase RIM's gross margin above 35%. The 36% gross margin achieved in the fourth quarter of fiscal 1998 suggests margins are normalizing...
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Page 19
... President & Co-CEO
Dennis Kavelman Chief Financial Officer
Waterloo, Ontario April 16, 1998
Auditors' Repor ts
To the Shareholders of Research In Motion Limited
We have audited the balance sheets of Research In Motion Limited as at February 28, 1998 and 1997 and the statements of operations...
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Page 20
... $ 2,026,713 1,480,364 141,628 3,648,705
Shareholders' Equity
Capital Stock (note 11) Retained Earnings Total Shareholders' Equity $
See accompanying notes.
148,232,648 1,821,501 150,054,149 153,346,559 $
39,095,217 1,671,268 40,766,485 44,415,190
On Behalf of the Board
Director
Director
18
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Page 21
... (Deficit)
For the year ended February 28,
1998
1997
Balance, beginning of the year: As previously reported Adjustment to reallocate share issue costs (note 14) As restated Net income for the year Capital dividend paid during the year (note 12) Balance, end of the year
See accompanying notes...
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Page 22
...year ended February 28,
1998 $ 33,158,630 21,443,295 11,715,335 $
1997 12,070,696 5,680,605 6,390,091
Revenue Cost of Sales Gross Profit
Expenses
Research and development... Income Taxes
Current Deferred 385,263 ___ 385,263 Net Income Net Income Per Share Basic Fully diluted
See accompanying notes....
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Page 23
... funding received to offset capital asset acquisitions Dividends paid Repayments to shareholders 116,890,309 (8,058,878) 306,000 (1,480,364) 295,000 (389,732) ___ 107,562,335 Cash Used in Investing Activities Acquisition of capital assets Increase in Cash and Short-Term Investments for the Year...
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Page 24
... Business
February 28, 1998
The company is in the business of developing, manufacturing and supplying radios and other network access devices for use in wireless data communications systems. The company was incorporated on March 7, 1984 under the Ontario Business Corporations Act.
1. Amalgamation...
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Page 25
... Ontario Technology Fund, Technology Partnerships Canada and in the form of investment tax credits. Assistance related to the acquisition of capital assets used for research and development is credited against the related capital assets and all other assistance is credited to income. (j) Net income...
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Page 26
... of amounts owing from the Ontario Technology Fund and Technology Partnerships Canada. Agreements have been signed which provide the company with government assistance equal to 50% of current and capital research and development expenditures with respect to the Ontario Technology Fund and 30% with...
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Page 27
... for Ontario tax purposes which have arisen primarily as a result of the provincial super-allowance on the company's research and development expenditures and $125,000 for federal tax purposes. These carry-forwards expire as follows: Investment tax credits In the year ending February 28, 2000 2001...
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Page 28
... year ended February 28,
1998
1997
Provision for (recovery of) income taxes based on a Canadian income tax rate of 44.62% Increase (decrease) in taxes resulting from: Research and development tax incentives Corporate minimum taxes and other Losses not tax effected Non-taxable portion of capital...
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Page 29
...1998:
RESEARCH IN MOTION Incorporated Under the Laws of Ontario
The company has an unlimited number of authorized non-voting, redeemable, retractable Class A common
Number
Common Class A Common shares Balance, February 29, 1996 Issued during the year Conversion of Class A common shares and special...
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Page 30
...2003, the royalty payments paid or due do not equal or exceed $9,100,000, royalty payments will continue to be payable to a limit of $9,100,000, but such royalty payments shall be payable on revenue from all two-way pager products instead of solely products developed with the TPC funding. No amounts...
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Page 31
... of the University of Waterloo and a director of COM DEV, Electrohome, Meloche Monnex, and a number of other corporations. He also serves on the board of the Ontario Research and Development Challenge Fund and acts as an advisor to Canadian Imperial Bank of Commerce.
RESEARCH IN MOTION Incorporated...
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Page 32
... competition, to the many communications tools people already use...It makes everyday business communications much more efficient and effective." - MCI
RESEARCH IN MOTION LIMITED
295 Phillip Street Waterloo, Ontario, Canada N2L 3W8 Tel. 1 519 888 7465 • Fax 1 519 888 6906 • web site www.rim.net