Blackberry 2003 Annual Report Download - page 44
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ResearchInMotionLimited|IncorporatedUndertheLawsofOntario(UnitedStatesdollars,inthousandsexceptpersharedataorasotherwiseindicated)
43
FortheyearsendedMarch1,2003,March2,2002andFebruary28,2001
Fromtimetotime,theCompanyisinvolvedinotherclaimsinthenormalcourseofbusiness.
Managementassessessuchclaimsandwhereconsideredlikelytoresultinamaterialexposureand
wheretheamountoftheclaimisquantiable,provisionsforlossaremadebasedonmanagement’s
assessmentofthelikelyoutcome.TheCompanydoesnotprovideforclaimsthatareconsidered
unlikelytoresultinasignicantloss,claimsforwhichtheoutcomeisnotdeterminableorclaims
wheretheamountofthelosscannotbereasonablyestimated.Anysettlementsorawardsunder
suchclaimsareprovidedforwhenreasonablydeterminable.
12.GovernmentAssistance
(a)Currentexpense–TheCompanyhasenteredintotwoprojectdevelopmentagreementswith
TechnologyPartnershipsCanada(“TPC”),whichprovidepartialfundingforcertainresearchand
developmentprojects.
FundingfromTPCforthe“rstproject”totalled$3,900andisrepayableintheformofroyaltiesof2.2%
ongrossproductrevenuesresultingfromtheproject.TheCompanyisobligatedtopayroyaltieson
allprojectrevenuesuptoFebruary28,2003,afterwhichtimetheroyaltybaseisexpandedtoinclude
revenuesfromcertainadditionalproducts,androyaltieswillcontinuetobepaiduptoamaximum
of$6,100.
ThesecondagreementwithTPCisathree-yearresearchanddevelopmentproject(the“second
project”)underwhichtotalcontributionsfromTPCwillbeamaximumof$23,300(the“contribution”).
TheCompanyisoftheviewthatithasfullledallprerequisitefundingconditionsandhasrecorded
allofthecontributioncommitmentasatMarch1,2003andnofurtherTPCfundingreimbursements
areduetoRIMunderthesecondproject.Thiscontributionwillberepayableintheformofroyalties
of2.2%ongrossproductrevenuesresultingfromthesecondproject.TheCompanyisobligated
topayroyaltiesonallprojectrevenuesuptoFebruary28,2007,afterwhichtimetheroyaltybaseis
expandedtoincluderevenuesfromcertainadditionalproducts.Royaltieswillcontinuetobepaidup
toamaximumof$39,300.
TheCompanyhasrecorded$925onaccountofTPCroyaltyrepaymentexpensewithrespecttothe
rstproject(2002–$1,575,2001–$999).Noamountshavebeenrecordedwithrespecttothesecond
projectsincetheconditionsforrepaymenthavenotyetbeenmet.
TheCompanyalsoqualiesforinvestmenttaxcredits(“ITC’s”)oneligibleexpendituresonaccountof
scienticresearchandexperimentaldevelopment.TheCompanyhasnotrecordedthebenetofITC’s
inscal2003asintheCompany’sjudgement,theCompanydoesnothavereasonableassurancethat
theCompanywillrealizetheITC’s.
Governmentassistance,whichincludesbothTPCfundingandITC’s,hasbeenappliedtoreducegross
researchanddevelopmentexpenseasfollows:
Fortheyearended March1,2003 March2,2002 February28,2001
Grossresearchanddevelopment $ 64,952 $ 49,517 $ 25,675
Governmentfunding 9,036 12,071 7,394
Netresearchanddevelopment $ 55,916 $ 37,446 $ 18,281
(b)Capitalassets–TheCompanyreceived$nilingovernmentassistancewhichwasappliedtowards
thecostofcapitalassetsusedinresearchanddevelopmentactivities(2002–$1,672,2001–$2,585).
13.RestructuringCharges
Duringthethirdquarterof2003,aspartoftheimplementationofaplantoimproveoperatingresults,
theCompanyrecordedrestructuringchargesthatincludedtheterminationofemployees,related
costsandtheclosureandexitofcertainleasedfacilities.The254employeesidentiedinconnection
withtheworkforcereductioncomponentofthePlanweredismissedonoraboutNovember12,2002.