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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F
or
Research In Motion Limited
(Exact name of Registrant as specified in its charter)
295 Phillip Street
Waterloo, Ontario
Canada, N2L 3W8
(519) 888-7465
(Address and telephone number of Registrant’s principal executive offices)
Research In Motion Corporation
5000 Riverside Drive, Suite 100E,
Irving, Texas, USA 75039
(972) 650-6126
(Name, address and telephone number of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Common Shares, without par value
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
For annual reports, indicate by check mark the information filed with this Form:
Indicate the number of outstanding shares of each of the Registrant’s classes of capital or common stock as of the close of the
period covered by this annual report.
The Registrant had 524,159,844 Common Shares outstanding as at March 2, 2013
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.
Yes No
REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 2, 2013 Commission File Number
0
-29898
Ontario 3661 Not Applicable
(Province or other Jurisdiction
of Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No)
Annual information form Audited annual financial statements
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).
Yes No

Table of contents

  • Page 1
    ... Act: None ⌧ Annual information form For annual reports, indicate by check mark the information filed with this Form: ⌧ Audited annual financial statements Indicate the number of outstanding shares of each of the Registrant's classes of capital or common stock as of the close of the period...

  • Page 2
    ... of Operations for the fiscal year ended March 2, 2013, included in Exhibit No. 1.3 to this Annual Report, under the heading "Disclosure Controls and Procedures and Internal Controls - Management's Report on Internal Control Over Financial Reporting". C. Attestation Report of the Registered Public...

  • Page 3
    ... a copy by contacting the Corporate Secretary at the address that appears on the cover of this Annual Report on Form 40-F. H. Principal Accountant Fees and Services Audit Fees The aggregate fees billed by EY, the Company's independent auditor, for the fiscal years ended March 2, 2013 and March...

  • Page 4
    ... L. Critical Accounting Policies A discussion of the Registrant's critical accounting policies can be found in its Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended March 2, 2013, included in Exhibit No. 1.3 to this Annual Report, under...

  • Page 5
    ..., information relating to the securities in relation to which the obligation to file an annual report on Form 40-F arises or transactions in said securities. B. Consent to Service of Process The Registrant has previously filed with the Commission a Form F-X in connection with its Common Shares.

  • Page 6
    ... that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized. RESEARCH IN MOTION LIMITED Date: March 28, 2013 /s/ Brian Bidulka By: Name: Brian Bidulka Title: Chief Financial Officer

  • Page 7
    ... 31.1 32.1 101 Annual Information Form for the fiscal year ended March 2, 2013, dated March 28, 2013. Audited Consolidated Financial Statements for the fiscal year ended March 2, 2013, prepared in accordance with U.S. generally accepted accounting principles. Management's Discussion and Analysis of...

  • Page 8
    Exhibit 1.1 RESEARCH IN MOTION LIMITED 295 Phillip Street Waterloo, Ontario Canada N2L 3W8 Annual Information Form For the fiscal year ended March 2, 2013 DATE: March 28, 2013 1

  • Page 9
    ... OF THE BUSINESS INDUSTRY BACKGROUND SUCCESS FACTORS STRATEGY PRODUCTS AND SERVICES THIRD PARTY SOFTWARE DEVELOPERS INDUSTRY ASSOCIATIONS SALES, MARKETING AND DISTRIBUTION CUSTOMERS COMPETITION PRODUCT DESIGN, ENGINEERING AND RESEARCH & DEVELOPMENT INTELLECTUAL PROPERTY PRODUCTION REGULATORY MATTERS...

  • Page 10
    ... the Company's plans and expectations relating to, programs to drive sell-through of the Company's BlackBerry 7 smartphones and BlackBerry PlayBook tablets; the Company's revenue, loss, unit shipment, gross margin, operating expense, net subscriber and inventory expectations for the first quarter of...

  • Page 11
    ... and success of BlackBerry 10, general economic conditions, product pricing levels and competitive intensity, supply constraints, the Company's expectations regarding its business, strategy, opportunities and prospects, including its ability to implement meaningful changes to address its business...

  • Page 12
    ...ability to promote and advance the development of an ecosystem of applications and services for the BlackBerry 10 smartphones and the BlackBerry PlayBook tablets; the Company's reliance on third-party manufacturers for certain products and its ability to manage its production and repair process; the...

  • Page 13
    ...and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. CORPORATE STRUCTURE The Company The Company was incorporated under the Business Corporations Act (Ontario) ("OBCA...

  • Page 14
    ... iconic name BlackBerry, effective January 30, 2013. The Company will seek shareholder approval to change the legal name of the Company to BlackBerry at the Company's Annual and Special Meeting to be held in July 2013; Commenced trading under its new ticker symbols "BB" on The Toronto Stock Exchange...

  • Page 15
    ... network. Launched the BlackBerry Partners for enterprise portal to support independent software vendors, system integrators, application hosters, professional services organizations as well as corporate developers looking to enable or deploy BlackBerry 10 applications and services for enterprise...

  • Page 16
    ... BlackBerry PlayBook tablet with built-in support for cellular networks in August; Appointed Kristian Tear as Chief Operating Officer. Frank Boulben as Chief Marketing Officer and Steve Zipperstein as Chief Legal Officer; and Announced that three new members joined the Company's Board of Directors...

  • Page 17
    ... Management Centre and enterprises with the BlackBerry Business Cloud Services for Microsoft Office 365; The Company's Board of Directors appointed Thorsten Heins as President and Chief Executive Officer of the Company, and appointed Barbara Stymiest as the independent Chair of the Board as part...

  • Page 18
    ...America, Europe, Asia Pacific and Latin America. Effective January 30, 2013, the Company began to operate around the world under the iconic name BlackBerry. The Company will seek shareholder approval to change the legal name of the Company to BlackBerry at the Company's Annual and Special Meeting to...

  • Page 19
    ...CDMA/1xRTT/EVDO. The two primary international voice and data networks GSM/GPRS/EDGE/HSPA and CDMA/EVDO continue to be upgraded to offer greater speeds and increased abilities to support subscriber concentration in the same and new RF spectrums. The rollout of these technologies is well underway and...

  • Page 20
    ... web-browsing experience; extensive geographic coverage; competitive pricing; attractive industrial design; trusted brand; small size and light weight converged devices; reasonable battery life; multi-network support; connectivity to enterprise email and applications; efficient bandwidth use; end...

  • Page 21
    ...Through development of an integrated hardware, software and service platform that support multiple wireless network standards, the Company provides end-to-end wireless solutions for seamless access to information, including email, voice, instant messaging, short message service ("SMS"), Internet and...

  • Page 22
    ... and download/purchase of applications directly from their BlackBerry smartphone or tablet. Users can purchase applications using their personal PayPal® account, credit card and through carrier billing. With more than 50 carriers around the world, users are able to purchase applications and...

  • Page 23
    .... Building on the successful launch of BlackBerry 10 by continuing to roll out BlackBerry 10 to customers around the world while holding the position of BlackBerry 7 products for entry-level and low-cost markets. Furthering the Company's transformation by driving additional efficiencies, reducing...

  • Page 24
    ... the development of BlackBerry tools for Android Apps. Through the Company's Android Player, Android developers can easily port Android applications to BlackBerry World for BlackBerry PlayBook users, and BlackBerry 10 smartphones. The Company plans to continue to invest in this critical ecosystem to...

  • Page 25
    ... driving best in class operational metrics through the implementation of broad efficiency programs across all functions in the organization. Through the Company's CORE program, the Company is targeting areas such as product lifecycle management, supply chain management and business support services...

  • Page 26
    ...smartphones and tablets, service and software. BlackBerry service is provided through a combination of the Company's NOC and the wireless networks of the Company's carrier partners. The Company also generated other revenue from accessories, non-warranty repairs, BlackBerry World and gains and losses...

  • Page 27
    ... paragraphs describe the specific revenue recognition policies for each of the Company's major categories of revenue. Hardware Revenue from the sale of BlackBerry wireless hardware products (e.g. BlackBerry® handheld devices and BlackBerry® PlayBook™ tablets) is recognized when persuasive...

  • Page 28
    ... cost of sales. Shipping and handling costs that cannot be reasonably attributed to certain customers are included in selling, marketing and administration. Multiple-Element Arrangements The Company enters into revenue arrangements that may consist of multiple deliverables of its product and service...

  • Page 29
    ...objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. Beginning in January, 2013 the Company introduced its BlackBerry 10 devices which will use the Company's network infrastructure in a different manner than...

  • Page 30
    .... Using these services, developers can create applications that take advantage of integrated social networking services, push notifications, in-app payments and advertising, advanced location services, application usage information, and social gaming features. The Company embraces open standards...

  • Page 31
    ... download/purchase applications directly from their BlackBerry smartphone or BlackBerry PlayBook. Users can purchase applications using their personal PayPal® account, credit card and through carrier billing. With 57 carriers in 40 countries around the world, users are able to purchase applications...

  • Page 32
    ... to end users. The Company has a number of carrier-focused business units that support the sales and marketing efforts of the Company's carrier partners through training, technical account management and sales and marketing support. As of March 2, 2013, the Company's marketing, sales and business...

  • Page 33
    ... to sell devices that operate on LTE networks has also impacted the Company's market share, as these networks feature faster download speeds and allow carriers to offer higher-value data plans. The Company's first LTE devices are the BlackBerry 10 smartphones that were introduced on January 30, 2013...

  • Page 34
    ... Iron Inc.; Notify Technology Corporation; Openwave Systems Inc.; Seven Networks, Inc.; and Sybase, Inc. Some of the Company's competitors have greater name recognition, larger customer bases, and significantly greater financial, technical, marketing, public relations, sales, distribution and other...

  • Page 35
    ... new applications, network protocols and transmission frequencies. The Company's radio transceiver technology can be adapted to support multiple protocols in the wireless data communications market, supporting its position as a primary supplier of wireless and related hardware and software products...

  • Page 36
    ...and tablets; building device software including operating systems, radio code, graphics and media frameworks, application runtimes, networking technologies, and BlackBerry applications; developing server and desktop software for enterprise and consumer environments; developing infrastructure systems...

  • Page 37
    ...and academic financial assistance programs to support its research activities where available. The Company dedicates a major portion of its R&D investments to software for the BlackBerry wireless solution. This includes device and platform software as well as device applications, server software and...

  • Page 38
    ...new product introduction and supply chain planning activities through further integration with internal research and development activities. The Company generally controls sourcing decisions for materials and services that are incorporated into Company products. Outsourced manufacturing partners are...

  • Page 39
    ... selection processes, energy efficiency and packaging assessments as well as product take back programs. Additionally, the Company has formalized a number of policies to reflect the Company's commitment to responsible business practices and issues a Corporate Responsibility ("CR") report annually...

  • Page 40
    ... 800 in customer care and technical support; approximately 1,400 in manufacturing and supply chain; and approximately 3,900 in administration and business professional functions, which includes information technology, BlackBerry network operations and service development, finance, legal, facilities...

  • Page 41
    ... United States, primarily for research and development. Sales and marketing and distribution activities in Latin and South America are supported by approximately 19,800 square feet with locations in Uruguay, Brazil, Argentina and Mexico. EMEA - Europe, Middle East & Africa The Company's operations...

  • Page 42
    ... remedies" in the Company's Annual Information Form for the fiscal year ended March 3, 2012, which is included in the Company's Annual Report on Form 40-F. Management reviews all of the relevant facts for each claim and applies judgment in evaluating the likelihood and, if applicable, the amount of...

  • Page 43
    ...and closed the case with prejudice. On January 14, 2010, Kodak filed a complaint with the ITC against the Company and Apple Inc. alleging infringement of the '218 Patent and requesting the ITC to issue orders prohibiting certain of the Company's products from being imported into the U.S. and sold in...

  • Page 44
    ... November 20, 2012, the court dismissed with prejudice all claims based on any defendant's use of CSR Licensed Products. At this time, no date for trial has been set with respect to any other defendant, including the Company. The court held a Status Conference on January 11, 2013 and indicated that...

  • Page 45
    ... claim construction was held on May 31, 2012, and the trial was re-scheduled for April 2013. On July 2, 2012 Imperium issued its Claim Construction Order. On December 10, 2012, Imperium filed a motion to amend its complaint against the Company, asserting U.S. Patent 6,838,651 as well as Willfulness...

  • Page 46
    ...492 which are generally directed to GPRS technology. The complaint seeks monetary damages and other relief that the court may deem proper under the circumstances. On March 9, 2012 the Company's motion to transfer the case to Dallas was granted. The Dallas court has not scheduled a claim construction...

  • Page 47
    ... is scheduled to begin September 23, 2013. The court issued its claim construction Order on October 30, 2012. The Company and WiAV Networks, LLC settled all outstanding litigation on January 11, 2013 for an amount immaterial to the Consolidated Financial Statements. The court dismissed the case with...

  • Page 48
    ... infringes U.S. Patent 6,791,298 generally directed to battery charging technology. The complaint seeks money damages, an injunction, and other relief that the court deems just and proper. The Company filed its answer on June 11, 2012. The Court scheduled a claim construction hearing for January...

  • Page 49
    ... the Company infringes U.S. Patent 5,729,659 allegedly directed to voice command technology. The complaint seeks an injunction and monetary damages. A claim construction hearing has been scheduled for April 5, 2013. No trial date is currently set. Proceedings are ongoing. On May 3, 2012, Hunts Point...

  • Page 50
    ... 5, 2012, plaintiff filed the Consolidated Amended Class Action Complaint, alleging that during the period from December 16, 2010 through June 16, 2011, the Company and certain of its officers made materially false and misleading statements regarding the Company's financial condition and business...

  • Page 51
    ... adverse effect on the Company's business. The Company may not be able to enhance its current products and services, or develop new products and services, in a timely manner or at competitive prices. The wireless communications industry is characterized by increasingly rapid technological change...

  • Page 52
    ... and related hardware or software products and services that the Company develops will be brought to market by it or network operators as quickly as anticipated or that they will achieve broad customer acceptance among operators or end users. In the case of the Company's BlackBerry 10 smartphones...

  • Page 53
    ... and new enterprise customers to use the enhanced services offered by BlackBerry 10, the Company's ability to continue charging SAF for its BlackBerry 6 and BlackBerry 7 products, and the Company's ability to successfully develop over a transition period a compelling integrated services and software...

  • Page 54
    ... to drive sell-through for BlackBerry 7 handheld devices. The Company also expects that additional competition will develop, both from existing companies in the wireless communications industry and from new entrants, as demand for wireless access products and services expands and as the market for...

  • Page 55
    ...in an effort to capture or maintain market share, to reduce inventory levels or to sell other products and services. As demonstrated by promotional activities the Company undertook in fiscal 2013 to drive sell-through of the BlackBerry 7 smartphones to end customers, the Company has been, and in the...

  • Page 56
    ... develop new relationships, and to build on existing relationships with its network carrier partners, which the Company relies on to promote and deliver current and future products and services, and to grow its subscriber base, particularly in the United States, Canada and Europe where the Company...

  • Page 57
    ... adverse effect on the Company's business, results of operations and financial condition. There can be no assurance that the network carriers and distributors will act in a manner that will promote the success of the Company's products and services. The Company has a number of significant customers...

  • Page 58
    ... and network operations will work as planned in the event of a disaster. As the Company's subscriber base has grown, additional strain has been placed on the technology systems and networks, thereby increasing the relative risk of a network disruption or other business interruption. The Company has...

  • Page 59
    ... uses, the number of locations it manufactures from, how it provides after-market support services and the suppliers it uses, among other charges to its supply chain, that could result in production delays, quality issues and customer satisfaction issues which could significantly impact the Company...

  • Page 60
    ...successfully drive adoption of its next-generation of BlackBerry 10 smartphones, the first of which was available for sale in certain countries on January 31, 2013. In addition, if the Company fails to accurately predict emerging technological trends and the changing needs of customers and end users...

  • Page 61
    ... for highly skilled management, technical, research and development and other employees is intense and increasing in the wireless communications industry. The Company's restructuring activities (including headcount reductions relating to its Cost Optimization Program and continuing efforts...

  • Page 62
    ... of key employees could disrupt operations, impair the Company's ability to compete effectively, impact the Company's ability to successfully execute its strategies (including the transition to its next generation BlackBerry 10 smartphones), and affect its ability to address issues that may arise in...

  • Page 63
    ... to enter into costly royalty or licensing agreements; require the Company to develop possible workaround solutions that may be costly and disruptive to implement; and require the Company to cease certain activities or to cease selling its products and services in certain markets. In addition to...

  • Page 64
    ... can be costly and uncertain and can involve complex legal and factual questions. In addition, the laws of certain countries in which the Company's products are sold or licensed do not protect intellectual property rights to the same extent as the laws of Canada or the United States. Therefore...

  • Page 65
    ..., hence, the Company's revenue from the sale of its products, particularly to consumers. If the Company is unable to successfully expand and manage the BlackBerry World applications catalogue, the success of the Company's BlackBerry 10 smartphones and future products and services may be materially...

  • Page 66
    ... BlackBerry wireless solution or its existing security procedures for the personal information that its transmits and stores, its business, results of operations and financial condition may be adversely affected. The Company's network carriers or other customers, partners or members of its ecosystem...

  • Page 67
    ... the manufacturing and sale of these products and services, the Company must manage the liquidation of inventory, supplier commitments and customer expectations. In addition, the Company records a writedown for product and component inventories that have become obsolete, can no longer be sold or...

  • Page 68
    ... or of the desired quality; if the Company's sales volumes decrease or do not reach projected targets, it may face increased costs that could make its products less competitive. The Company's manufacturing activity depends on obtaining adequate supplies of functional components, such as displays...

  • Page 69
    ... have unused production capacity if its current volume projections are not met, increasing the Company's production cost per unit. In addition, some contracts require the Company to agree to a flat fee regardless of volumes, which can result in higher unit costs than anticipated if demand is lower...

  • Page 70
    ... business as BlackBerry pending shareholder approval of the new corporate name at the Company's Annual General and Special Meeting in July 2013. The Company also plans to make significant investmentsin marketing in cooperation with its U.S. carrier partners and its other global customers to promote...

  • Page 71
    ... effect on the Company's business, results of operations and financial condition. The Company is subject to government laws, regulations, orders, policies and restrictions, including on the sale of products and services that use encryption technology. Regulatory initiatives throughout the world...

  • Page 72
    ... in the Company's products and services. As a result, these competitors may be able to compete more effectively than the Company can in those markets. In addition, the United States, Canada and other countries have imposed export controls that prohibit the export of encryption technology to certain...

  • Page 73
    ..., in fiscal 2013, the Company hired a new Chief Operating Officer, a Chief Legal Officer and a Chief Marketing Officer. The Company's success depends on its ability to successfully adapt to these changes, to effectively integrate the Company's new management team, and to implement the strategies and...

  • Page 74
    ... fails to effectively manage its manufacturing and manufacturing processes so that its products are manufactured to meet quality standards, third party manufacturing may be adversely affected. The Company may experience difficulties in increasing or decreasing production at third party facilities...

  • Page 75
    ... Company's products are integrated into its customers' networks and equipment, are used with third party applications and are used to deliver confidential or personal information, the sale and support of these products and services may entail the risk of liability due to product liability, warranty...

  • Page 76
    ...'s entry into new markets or changes to the Company's technology, such as its transition to the BlackBerry 10 mobile computing platform, can increase the difficulty of forecasting financial results. Significant unanticipated sales and marketing, R&D, IT, professional and other costs, writedowns and...

  • Page 77
    ... the Company's financial results Under generally accepted accounting principles in the United States ("GAAP"), the Company reviews its intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. As at March 2, 2013, the Company's long...

  • Page 78
    ... to advocate certain governance changes or corporate actions such as financial restructuring, special dividends, share repurchases or even sales of assets or the entire company. Activist shareholders have publicly advocated for certain governance and strategic changes at the Company in the past, and...

  • Page 79
    ... have an adverse effect on the Company's cash position if all or a portion of the purchase price is paid in cash, and common shares issuable in an acquisition would dilute the percentage ownership of the Company's existing shareholders. Any such activity may not be successful in generating revenue...

  • Page 80
    ... requirements in Canada, Europe, Asia and other jurisdictions must also be met. Although the Company's products and solutions are designed to meet relevant safety standards and recommendations globally, when used as directed, any perceived risk of adverse health effects of wireless communication...

  • Page 81
    ... from public companies in the United States on or before May 31, 2014, may limit the sourcing and availability, or may increase the costs, of some of the metals used in the manufacture of the Company's products. The regulations may also reduce the number of suppliers who provide conflict-free metals...

  • Page 82
    ... such investment policies will reduce or eliminate market or credit risks. See "Financial Condition" in Management's Discussion and Analysis of Financial Condi and Results of Operations for fiscal 2013 for a discussion of certain liquidity issues relating to the Company's investments in auction rate...

  • Page 83
    ... continues to be volatile due in part to highly volatile markets generally, particularly for technology company shares. A variety of events, including news announcements by the Company or its competitors, trading volume, general market trends for technology companies and other factors, could result...

  • Page 84
    ... new markets and its introduction of new products may increase the difficulty of forecasting financial results. The Company's sales may also be impacted by current economic factors which more significantly impact other industry sectors, such as the financial, government and legal services sectors...

  • Page 85
    ... things, the Company's earnings, cash flows and financial requirements, as well as relevant legal and business considerations. DESCRIPTION OF SHARE CAPITAL The Company's authorized share capital consists of an unlimited number of voting common shares without par value, an unlimited number of non...

  • Page 86
    ...to the payment of dividends and the distribution of assets in the event that the Company is liquidated, dissolved or wound-up, rank prior to the common shares and the class A common shares. The Company's board of directors has the authority to issue series of preferred shares and determine the price...

  • Page 87
    ... San Francisco, CA Senior Partner, TPG Capital, LP David Kerr, CPA, CA (1) (2) (3) Toronto, Ontario Managing Partner, Edper Financial Group Claudia Kotchka, CPA (1) (3) (4) Cincinnati, Ohio Corporate Director 80 2012 2007 1984 2012 2007 2011 Director, President and Chief Executive Officer Director...

  • Page 88
    ... & Corporate Secretary, BlackBerry 1 2013 2007 2013 2003 2012 2007 N/A N/A N/A N/A Director Director Director Director Director Director Chief Financial Officer Chief Marketing Officer Chief Operating Officer Chief Legal Officer & Corporate Secretary Notes: Member of the Audit and Risk Management...

  • Page 89
    ... of the directors and executive officers of the Company has been engaged in their current principal occupation as specified above except: Mr. Thorsten Heins who prior to January 2012 was Chief Operating Officer, Product & Sales and formerly was Senior Vice President, Handheld Business Unit of the...

  • Page 90
    ... appointed to hold the assets of the director, executive officer or shareholder. b) On November 7, 2006, as a result of the Company failing to file its second quarter financial statements for fiscal 2007 before the statutory filing deadline of October 17, 2006 a management cease trade order (the...

  • Page 91
    ... held various senior management positions in the Royal Bank of Canada and served as a member of the Group Executive responsible for the overall strategic direction of the company. Prior to this, Ms. Stymiest held positions as Chief Executive Officer at TSX Group Inc., Executive Vice-President...

  • Page 92
    ... performance of the audit review of the Company's financial statements and are not reported above as audit fees were $107,000 and $195,000. Tax Fees The aggregate fees billed by EY for the fiscal years ended March 2, 2013 and March 3, 2012, respectively, for professional services rendered by EY for...

  • Page 93
    ... Auditors' Report to Shareholders in respect of the audited annual consolidated financial statements of the Company for the year ended March 2, 2013 and the Report to Shareholders of an Independent Registered Public Accounting Firm on the Company's internal controls over financial reporting. Ernst...

  • Page 94
    ... the move from analogue to digital (2G), which was followed by multi-media support (3G) and now 4G, which refers to all IP packet-switched networks and increases in data speeds. Analog transmission uses energy waves to transmit information. In the case of wireless voice transmission, the sound waves...

  • Page 95
    ... management is strategy for managing a company's interactions with customers and sales prospects. It involves using technology to organize, automate and synchronize business processes-principally sales related activities, but also those for marketing, customer service, and technical support...

  • Page 96
    ... into close proximity. Network Operations Centre. A central location for network management. It functions as a control centre for network monitoring, analysis and accounting. Private Branch Exchange. A private telephone network used within an enterprise. Users share a fixed number of outside lines...

  • Page 97
    ...devices. Once data has been written to a ROM chip, it cannot be removed and can only be read. Software Developers Kit. A set of software routines and utilities used to help programmers write an application. Small and Medium-sized Enterprise. Short Message Service. A text message service that enables...

  • Page 98
    ... risk management frameworks, principles and policies to ensure that management is effectively managing the Corporation's risks. It is the objective of the Committee to maintain free and open means of communication among the Board, the independent auditors and the financial and senior management of...

  • Page 99
    ... responsibilities. In addition, the Committee should meet or confer with the independent auditors and management to review the Corporation's financial statements, MD&A, annual and interim earnings press releases and related filings prior to their public release and filing with the Ontario Securities...

  • Page 100
    ... the oversight of the Corporation's accounting, financial reporting and risk management processes, including (i) the Corporation's internal controls, and the nomination and appointment (subject to Board and shareholder approval), compensation, retention, evaluation and oversight of the work of the...

  • Page 101
    ... to the Board as to the selection of the firm of independent public accountants to audit the books and accounts of the Corporation and its subsidiaries for each fiscal year; (2) Review and approve the Corporation's independent auditors' annual engagement letter, including the proposed fees contained...

  • Page 102
    ... auditors' work; (3) Review the results of the year-end audit of the Corporation, including (as applicable): (i) the audit reports on the Corporation's financial statements and management's assessment of internal control over financial reporting, the published financial statements, the management...

  • Page 103
    (4) Review the Corporation's interim financial statements and quarterly earnings press releases and report thereon to the Board before such documents are approved by the Board and disclosed to the public; (5) Review with management and the Corporation's independent auditors such accounting policies ...

  • Page 104
    ...) the integrity of the Company's internal control and management information systems are satisfactory; Oversight of Financial Reporting Process and Internal Controls (1) Review the adequacy and effectiveness of the Corporation's accounting and internal control policies and procedures through inquiry...

  • Page 105
    Other Matters (1) Meet at least annually with the general counsel, and outside counsel when appropriate, to review legal and regulatory matters, including any matters that may have a material impact on the financial statements of the Corporation; (2) Review the Corporation's policies relating to the...

  • Page 106
    ... funding, as determined by the Committee, for payment of any compensation (1) to any independent auditors engaged for the purpose of rendering or issuing an audit report or related work or performing other audit, review or attest services for the Corporation, and (2) to any independent counsel or...

  • Page 107
    ... of the Committee, and express viewpoints during meetings; Schedule and set the agenda for Committee meetings with input from other Committee members, the Committee's advisors, the Lead Director of the Board of Directors, the Co-CEOs, the Corporate Secretary and senior management as appropriate and...

  • Page 108
    4. 5. Following each meeting of the Committee, report to the Board of Directors on the activities, findings and any recommendations of the Committee. Perform such other duties, within the scope of its duties and responsibilities be assigned by the Board of Directors.

  • Page 109
    ... with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of March 2, 2013, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations...

  • Page 110
    ... Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as at March 2, 2013 and March 3, 2012, and the consolidated statements of operations, comprehensive income, shareholders' equity and cash flows for each of the years ended March 2, 2013, March...

  • Page 111
    ... timely Consolidated Financial Statements. The Company's Audit and Risk Management Committee of the Board of Directors, which consists entirely of non-management independent directors, usually meets two times per fiscal quarter with management and the independent registered public accounting firm to...

  • Page 112
    ...-term investments Accounts receivable, net Other receivables Inventories Income taxes receivable Other current assets Deferred income tax asset Assets held for sale Long-term investments Property, plant and equipment, net Goodwill Intangible assets, net Liabilities Current Accounts payable Accrued...

  • Page 113
    ... Balance as at March 3, 2012 Net loss Other comprehensive loss Shares issued: Stock-based compensation Tax deficiencies related to stock-based compensation Purchase of treasury stock Treasury stock vested Balance as at March 2, 2013 See notes to consolidated financial statements. $ 2,372 - - 67 72...

  • Page 114
    ... per share data) Consolidated Statements of Operations March 2, 2013 For the Year Ended February 26, March 3, 2011 2012 Revenue Hardware and other Service and software Cost of sales Hardware and other Service and software Gross margin Operating expenses Research and development Selling, marketing...

  • Page 115
    ... (United States dollars, in millions, except per share data) Consolidated Statements of Comprehensive Income (Loss) March 2, 2013 For the Year Ended February 26, March 3, 2011 2012 Net income (loss) Other comprehensive income (loss) Net change in unrealized losses on available-for-sale investments...

  • Page 116
    ... Other Net changes in working capital items Net cash provided by operating activities Cash flows from investing activities Acquisition of long-term investments Proceeds on sale or maturity of long-term investments Acquisition of property, plant and equipment Acquisition of intangible assets Business...

  • Page 117
    ...to information, including email, voice, instant messaging, short message service, Internet and intranet-based applications and browsing. The Company's technology also enables a broad array of third party developers and manufacturers to enhance their products and services through software development...

  • Page 118
    .... The Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit history of each new customer. When the Company becomes aware of a specific customer's inability to meet its financial obligations to the Company (such as in the case of...

  • Page 119
    Research In Motion Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated which are recorded in investment income. In the event of a decline in value which is other-than-temporary, the investment...

  • Page 120
    ... rates and methods: Buildings, leasehold improvements and other BlackBerry operations and other information technology Manufacturing equipment, research and development equipment and tooling Furniture and fixtures Goodwill Goodwill represents the excess of the acquisition price over the fair value...

  • Page 121
    ... ranging between two to ten years. Impairment of long-lived assets The Company reviews long-lived assets such as property, plant and equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be...

  • Page 122
    ... Motion Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred income tax assets...

  • Page 123
    ...software with technical support services. For the Company's arrangements involving multiple deliverables of BlackBerry 7 or earlier handheld devices with services, the consideration from the arrangement is allocated to each respective element based on its relative selling price, using vendorspecific...

  • Page 124
    .... Development costs for BlackBerry devices and licensed software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. The Company...

  • Page 125
    ... in net assets of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. The Company's reportable items of...

  • Page 126
    ... of future return rates and unit warranty repair costs. If the Company experiences increased or decreased warranty activity, or increased or decreased costs associated with servicing those obligations, revisions to the estimated warranty liability would be recognized in the reporting period when...

  • Page 127
    ... but consecutive statements. In May 2011, the FASB, as a result of work performed with the International Accounting Standards Board, issued authoritative guidance to achieve common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS...

  • Page 128
    ... Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated additional detail about those amounts. The new authoritative guidance will become effective for annual and interim reporting periods beginning on or after December 15, 2012...

  • Page 129
    ...In valuing these securities, the Company used a multi-year investment horizon and considered the underlying risk of the securities and the current market interest rate environment. The Company has the ability and intent to hold these securities until such time that market liquidity returns to normal...

  • Page 130
    Research In Motion Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated 5. FAIR VALUE MEASUREMENTS The Company defines fair value as the price that would be received to sell an asset or paid to...

  • Page 131
    ... by the Company utilizing quoted prices from vendors for identical securities as provided by U.S. government bond dealers. All U.S. treasury bills/notes held by the Company are issued by the United States Department of the Treasury and have investment grade ratings. The Company corroborates the...

  • Page 132
    ... Company utilizing quoted prices from vendors for identical securities, or the market prices of similar securities adjusted for observable inputs such as differences in swap rates and spreads, credit ratings, pricing changes relative to asset class, priority in capital structure, principal payment...

  • Page 133
    ..., except share and per share data, and except as otherwise indicated The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis: As at March 2, 2013 Level 1 Level 2 Level 3 Total Assets Available-for-sale investments Money market funds...

  • Page 134
    Research In Motion Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated As at March 3, 2012 Level 1 Level 2 Level 3 Total Assets Available-for-sale investments Money market funds Bankers' ...

  • Page 135
    ... Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated The following table summarizes the changes in fair value of the Company's Level 3 assets for the years ended March 3, 2012 and March 2, 2013: Level...

  • Page 136
    ... Increase/(decrease) (Decrease)/increase Corporate bonds/notes $ 5 Discounted cash flow Anticipated monthly principal and interest payments Yearly decrease in payments Collateral value (as a % of fair value) Current securities in technical default, by collateral grouping Average recovery rate...

  • Page 137
    ...: As at March 2, 2013 March 3, 2012 Cost Land Buildings, leasehold improvements and other BlackBerry operations and other information technology Manufacturing equipment, research and development equipment and tooling Furniture and fixtures Accumulated amortization Net book value $ 129 1,392 2,440...

  • Page 138
    ... Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated Intangible assets, net Intangible assets were comprised of the following: As at March 2, 2013 Accumulated Amortization Net Book Value Cost Acquired technology...

  • Page 139
    ... Company's market capitalization was used as a key input for the determination of fair value of the Company. The Company's market capitalization was determined by multiplying the number of shares outstanding as at June 2, 2012 by the average closing market price of the Company's common shares over...

  • Page 140
    ... carrying value of its goodwill, and reported this amount as a separate line item in the consolidated statements of operations. Accrued liabilities Accrued liabilities were comprised of the following: As at March 2, 2013 March 3, 2012 Marketing costs Vendor inventory liabilities Warranty Royalties...

  • Page 141
    Research In Motion Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated 7. BUSINESS ACQUISITIONS On March 8, 2012, the Company purchased for cash consideration 88% of the shares of Paratek ...

  • Page 142
    ... for fiscal 2013, fiscal 2012: For the year ended March 2, March 3, 2013 2012 Assets purchased Current assets Property, plant and equipment Other assets Customer relationship intangible Acquired technology In-process research and development Deferred income tax asset Goodwill(1) $ 4 2 4 10...

  • Page 143
    ... the year ended February 26, March 3, 2011 2012 Statutory Canadian tax rate Expected provision for (recovery of) income taxes from continuing operations Differences in income taxes resulting from: Investment tax credits Canadian tax rate differences Manufacturing and processing activities Change in...

  • Page 144
    ... Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated The provision for (recovery of) income taxes from continuing operations consists of the following: March 2, 2013 For the year ended March 3, 2012 February 26, 2011 Current...

  • Page 145
    Research In Motion Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated The Company determined that it is more likely than not that it can realize its deferred income tax assets. Accordingly, ...

  • Page 146
    ...penalties accrued as at March 2, 2013 was nominal (March 3, 2012 - nil). 9. CAPITAL STOCK The Company is authorized to issue an unlimited number of non-voting, redeemable, retractable Class A common shares, an unlimited number of voting common shares and an unlimited number of non-voting, cumulative...

  • Page 147
    ...Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated The following details the changes in issued and outstanding common shares for the three years ended March 2, 2013: Capital Stock and Additional Paid...

  • Page 148
    ...91 $ $ $ 29 27 - The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the aggregate difference between the closing stock price of the Company's common shares on March 2, 2013 and the exercise price for in-the-money options) that would have been received by...

  • Page 149
    ...to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated A summary of unvested stock options since March 3, 2012 is shown below: Options Outstanding Weighted-Average Grant Date Fair Number Value (000's) Balance...

  • Page 150
    ... Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated Restricted Share Unit Plan The Company recorded compensation expense with respect to RSUs of approximately $78 million in the year ended March 2, 2013 (March 3, 2012...

  • Page 151
    ... letters of credit as of March 2, 2013. The collateral is held with one of the Company's banking partners and is recorded within short-term investments. (b) Lease commitments The Company is committed to future minimum annual lease payments related to real estate operating leases as follows...

  • Page 152
    ..." in the Company's unaudited Annual Information Form for the fiscal year ended March 3, 2013, which is included in the Company's Annual Report on Form 40-F. Management reviews all of the relevant facts for each claim and applies judgment in evaluating the likelihood and, if applicable, the amount...

  • Page 153
    ...Motion Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated including those that are available from multiple sources. In addition, the Company has entered into various agreements for the supply...

  • Page 154
    ... Benefits Facilities Costs Manufacturing Costs Total Balance as at March 3, 2012 Charges incurred Cash payments made Balance as at March 2, 2013 The CORE charges incurred in fiscal 2013 were as follows: Cost of sales Research and development Selling, marketing and administration Total program...

  • Page 155
    ... under this plan. The following table sets forth the activity in the Company's 2012 Cost Optimization Program for fiscal 2013: Employee Termination Benefits Facilities Costs Total Balance as at March 3, 2012 Cash payments made Balance as at March 2, 2013 There were no cost optimization charges...

  • Page 156
    ... Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated 12. PRODUCT WARRANTY The Company estimates its warranty costs at the time of revenue recognition based on historical experience and expectations of future return rates...

  • Page 157
    ... Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated 13. EARNINGS (LOSS) PER SHARE The following table sets forth the computation of basic and diluted earnings (loss) per share: March 2, 2013 For the year ended March 3, 2012...

  • Page 158
    ... other than its functional currency, the U.S. dollar. The Company's currency risk management objective in holding derivative instruments is to reduce the volatility of current and future income as a result of changes in foreign currency exchange rates. To limit its exposure to adverse movements in...

  • Page 159
    ..., transaction rates, market quoted currency spot rates, forward points and interest rate yield curves. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative instrument and whether it is designated as a hedge. The Company's accounting policies for...

  • Page 160
    ...contracts Currency option contracts $ 7 (10) (1) - (2) - (1) (1) Revenue Revenue Cost of sales Cost of sales Selling, marketing and administration Selling, marketing and administration Research and development Research and development Location of Gain (Loss) Reclassified from Accumulated OCI into...

  • Page 161
    ... Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated The following table shows the impact of derivative instruments designated as cash flow hedges on the consolidated statement of operations for the year ended March 3, 2012...

  • Page 162
    ... 1 Other current assets Other current assets Accrued liabilities Accrued liabilities $ 13 - 28 - The following table shows the impact of derivative instruments that are not subject to hedge accounting on the consolidated statement of operations for the year ended March 2, 2013: Location of Gain...

  • Page 163
    ... wireless messages and data. For enterprise customers, the Company currently sells an integrated BlackBerry Enterprise Server software solution that gives corporate and government customers the ability to set and enforce specific information technology policies to manage their BlackBerry handheld...

  • Page 164
    ... Limited Notes to the Consolidated Financial Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated March 2, 2013 For the year ended March 3, 2012 February 26, 2011 Revenue mix Devices Service Software Other $ 6,648 3,910 261 254 $11...

  • Page 165
    ... Statements In millions of United States dollars, except share and per share data, and except as otherwise indicated 17. CASH FLOW INFORMATION (a) Cash flows resulting from net changes in working capital items are as follows: March 2, 2013 For the year ended March 3, 2012 February 26, 2011 Accounts...

  • Page 166
    ... in fiscal 2014; anticipated demand for, and the Company's plans and expectations relating to, programs to drive sell-through of the Company's BlackBerry 7 smartphones and BlackBerry PlayBook tablets; the Company's expectations regarding financial results for the first quarter of fiscal 2014; the...

  • Page 167
    ... Factors" section of the Company's Annual Information Form, which is included in the Company's Annual Report on Form 40-F the Company's ability to enhance its current products and services, or develop new products and services in a timely manner or at competitive prices, including risks related to...

  • Page 168
    ... platform vendors, including the Company's ability to promote and advance the development of an ecosystem of applications and services for the BlackBerry 10 platform; the Company's reliance on third-party manufacturers for certain products and its ability to manage its production and repair process...

  • Page 169
    ... Latin America. Effective January 30, 2013, the Company began to operate around the world under the iconic name BlackBerry. The Company will seek shareholder approval to change the legal name of the Company to BlackBerry at the Company's next Annual and Special Meeting. The Company's common shares...

  • Page 170
    ...'s market share, as these networks feature faster download speeds and allow carriers to offer higher-value data plans. The Company's first LTE smartphones were launched with the introduction of the Company's first BlackBerry 10 smartphones in certain markets in the fourth quarter of fiscal 2013 and...

  • Page 171
    ..., services and software. The BlackBerry wireless solution provides users with a wireless extension of their work and personal email accounts, including Microsoft® Outlook®, IBM® Lotus Notes®, Novell® GroupWise® and many ISP email services. The Company generates hardware revenues from sales...

  • Page 172
    ... of promotional activity in retail-channels to drive sell-through of the BlackBerry PlayBook tablet to end customers as a result of intense competition in the tablet market. The Company sold out of the 16G BlackBerry PlayBook tablets in the second quarter of fiscal 2013 and is continuing to sell its...

  • Page 173
    ... to be partially offset by cost savings related to the CORE program. Prior to the fourth quarter of fiscal 2013, the Company identified the BlackBerry subscriber account base as the total of all subscriber accounts that had an active status at the end of a reporting period. Each carrier instructed...

  • Page 174
    ... for each subscriber using the BlackBerry service via a BES; (iii) maintenance and upgrades to software; and (iv) technical support. Revenues are also generated from non-warranty repairs and sales of accessories. Cost Optimization and Resource Efficiency As part of the Company's ongoing effort...

  • Page 175
    ... Company's global repair services and re-engineering the Company's spare parts processes; a focus on reducing the Company's product costs from suppliers; targeted use of resources in the Company's sales and marketing initiatives to more effectively leverage marketing windows and prioritize marketing...

  • Page 176
    Research In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2013 Operating Results - Executive Summary The following table sets forth certain consolidated statement of operations data, which is expressed in millions of dollars, for the ...

  • Page 177
    ... of Operations As at and for the Fiscal Year Ended Change March 3, 2012 2013/2012 February 26, 2011 (in millions, except for share and per share amounts) Change 2012/2011 March 2, 2013 Revenue (5) Cost of sales(1,4) Gross margin Operating expenses Research and development(1) Selling, marketing and...

  • Page 178
    ... certain consolidated statement of operations data expressed as a percentage of revenue for the periods indicated: March 2, 2013 March 3, 2012 Change 2013/2012 February 26, 2011 Change 2012/2011 Revenue Cost of sales Gross margin Operating expenses Research and development Selling, marketing and...

  • Page 179
    ... 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...

  • Page 180
    ... paragraphs describe the specific revenue recognition policies for each of the Company's major categories of revenue. Hardware Revenue from the sale of BlackBerry wireless hardware products (e.g. BlackBerry® handheld devices and BlackBerry® PlayBook™ tablets) is recognized when persuasive...

  • Page 181
    Research In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations The Company records reductions to revenue for estimated commitments related to price protection, right of return and for customer incentive programs. Price protection is accrued as a ...

  • Page 182
    ... The objective of BESP is to determine the price at which the Company would transact a sale if the product or service was sold on a stand-alone basis. Beginning in January, 2013 the Company introduced its BlackBerry 10 devices which use the Company's network infrastructure in a different manner than...

  • Page 183
    ...inventory during each reporting period, which includes a review of, among other factors, demand requirements, component part purchase commitments of the Company and certain key suppliers, product life cycle and development plans, component cost trends, product pricing and quality issues. If customer...

  • Page 184
    ... over the fair value of the asset. The useful lives of intangible assets are evaluated quarterly to determine if events or circumstances warrant a revision to their remaining period of amortization. Legal, regulatory and contractual factors, the effects of obsolescence, demand, competition and other...

  • Page 185
    ...to the Consolidated Financial Statements. Income Sensitivity The Company estimates that a 10% change to either the current average unit warranty repair cost or the current average warranty return rate, measured against the device sales volumes currently under warranty as at March 2, 2013, would have...

  • Page 186
    Research In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations Investments The Company's cash equivalents and investments, other than cost method investments of $4 million and equity method investments of $48 million, consist of money market and ...

  • Page 187
    ... to uncertain income tax positions as interest expense, which is then netted and reported within investment income. The Company uses the flow-through method to account for investment tax credits ("ITCs") earned on eligible scientific research and experimental development expenditures. Under this...

  • Page 188
    ... Share Unit Plan (the "RSU Plan") under which eligible participants include any officer or employee of the Company or its subsidiaries. At the Company's discretion, Restricted Share Units ("RSUs") are redeemed for either common shares issued by the Company, common shares purchased on the open market...

  • Page 189
    Research In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations The Company has a Deferred Share Unit Plan (the "DSU Plan"), adopted by the Board of Directors on December 20, 2007, under which each non-executive director will be credited with Deferred...

  • Page 190
    ... Year Ended March 2, 2013 March 3, 2012 Change Fiscal 2013/2012 Millions of BlackBerry handheld devices shipped Millions of BlackBerry PlayBook tablets shipped Revenue (in millions) Hardware Service Software Other Revenue by Geography (in millions) North America Europe, Middle East and Africa Latin...

  • Page 191
    .... The Company sold out of the 16G BlackBerry PlayBook tablets in the second quarter of fiscal 2013 and is continuing to sell its 32G and 64G units as well as the 3G plus BlackBerry PlayBook tablet and 4G LTE BlackBerry PlayBook tablet, which launched in fiscal 2013. Service revenue decreased by...

  • Page 192
    Research In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations Software revenue, which includes fees from licensed BES software, CALs, technical support, maintenance and upgrades decreased by $57 million, or 17.9%, to $261 million, or 2.4% of ...

  • Page 193
    ... 31, 2013. Some of the larger markets comprising this region include South Africa, France and United Arab Emirates. Subscriber accounts in Europe, Middle East and Africa have remained stable, marginally increasing by 1% since the end of fiscal 2012. In addition to the United Kingdom, the Company has...

  • Page 194
    ...drive sell-through. 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 rearchitected supply chain...

  • Page 195
    ... In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations Research and Development Expenses Research and development expenses consist primarily of salaries and benefits for technical personnel, new product development costs, travel, office and building...

  • Page 196
    ... over the last four quarters. Cost of sales Amortization expense relating to certain property, plant and equipment and intangible assets employed in the Company's manufacturing operations and BlackBerry service operations increased by $241 million to $1.2 billion for fiscal 2013, compared to $952...

  • Page 197
    ... market price of the Company's common shares is volatile" in the Company's Annual Information Form. Investment Income Investment income decreased by $6 million to $15 million in fiscal 2013, from $21 million in fiscal 2012. The decrease in investment income is the result of decreases in the company...

  • Page 198
    ..., 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...

  • Page 199
    ..., principally increased competition in the Company's industry, particularly in the United States, as well as delays in new product introductions. In the first quarter of fiscal 2012, the Company observed that its then-existing portfolio of BlackBerry handheld devices had been in market for close to...

  • Page 200
    ...Africa and Venezuela. The international growth was offset by particularly weak results in fiscal 2012 in the United States where the Company experienced a net decrease in its subscriber base. Software revenue includes fees from licensed BES software, CALs, technical support, maintenance and upgrades...

  • Page 201
    ... mix of BlackBerry handheld devices sold during fiscal 2012, which were weighted towards in-life products with lower average selling prices and gross margins. The impact of the BlackBerry PlayBook sell-through programs conducted during the third and fourth quarters of fiscal 2012 further contributed...

  • Page 202
    ... salaries and benefits for technical personnel, new product development costs, travel, office and building infrastructure costs and other employee costs. Research and development expenditures increased by $205 million to $1.6 billion, or 8.4% of revenue, in fiscal 2012, compared to $1.4 billion, or...

  • Page 203
    ... and benefits, marketing, advertising and promotion, external advisory fees, information technology costs, office and related staffing infrastructure costs and travel expenses. Selling, marketing and administration expenses increased by $200 million to $2.6 billion for fiscal 2012 compared to...

  • Page 204
    ... Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations Impairment of Goodwill As stated under "Critical Accounting Policies and Estimates - Goodwill", goodwill represents the excess of the acquisition price over the fair value of identifiable net assets...

  • Page 205
    ... by the decreased number of BlackBerry handheld device shipments in fiscal 2012 compared to fiscal 2011, as well as a change in the mix of BlackBerry handheld devices sold, which were weighted towards products with lower average selling prices and gross margins. In addition, an increase in operating...

  • Page 206
    ... Months Ended March 2, 2013 March 3, 2012 (in million, except for share and per share amounts) Change Fiscal 2013/2012 Revenue Cost of sales Gross margin Operating expenses Research and development Selling, marketing and administration Amortization Impairment of Goodwill Operating loss Investment...

  • Page 207
    ... sell-through to end users due mainly to intense competition in the tablet market, especially in the United States. During the fourth quarter of fiscal 2013, the Company continued its ongoing promotional activities to encourage sell-through of the BlackBerry PlayBook tablets. The Company sold...

  • Page 208
    ... costs, to lower shipment volumes. The decrease was partially offset by the higher average selling prices and gross margins of BlackBerry 10 devices sold in the fourth quarter of fiscal 2013. Operating Expenses The table below presents a comparison of research and development, selling, marketing...

  • Page 209
    ... quarter of fiscal 2012, operating expenses decreased by $126 million. This decrease was due to cost savings related to vendor contracts and a net reduction in headcount related costs driven by the CORE program compared to the fourth quarter of fiscal 2012. Research and Development Expense Research...

  • Page 210
    ... new product introductions as well as a net reduction in headcount related costs driven by the CORE program compared to the fourth quarter of fiscal 2012. Research and development related headcount decreased by approximately 9%, compared to the fourth quarter of fiscal 2012. Selling, Marketing and...

  • Page 211
    ...fiscal 2013. Cost of sales Amortization expense relating to certain property, plant and equipment and certain intangible assets employed in the Company's manufacturing operations and BlackBerry service operations decreased by $24 million to $213 million for the fourth quarter of fiscal 2013 compared...

  • Page 212
    ... 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...

  • Page 213
    ... Company's unaudited quarterly consolidated results of operations data for each of the eight most recent quarters, including the quarter ended March 2, 2013. The information in the table below has been derived from the Company's unaudited interim consolidated financial statements that, in management...

  • Page 214
    ... 2012 Net cash flows provided by (used in): Operating activities Investing activities Financing activities Effect of foreign exchange gain (loss) on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash flows for the fiscal year ended March 2, 2013 Operating Activities...

  • Page 215
    ... and BlackBerry PlayBook tablets held in inventory as a result of improved supply chain efficiency compared to fiscal 2012. The decrease in other receivables of $224 million is due to a decrease in receivables from the Company's contract manufacturers. As of March 2, 2013, the Company has accounts...

  • Page 216
    ..., software, messaging services and other BlackBerry-related features as well as intangible assets associated with business acquisitions. The decrease in property, plant and equipment spending for fiscal 2013 was primarily due to the cost saving initiatives of the CORE program, reflecting the Company...

  • Page 217
    ... manufacturing and information technology, including service operations. The remaining balance consists of purchase orders or contracts with suppliers of raw materials, as well as other goods and services utilized in the operations of the Company including payments on account of licensing agreements...

  • Page 218
    ...'s Annual Report on Form 40-F for the fiscal year ended March 2, 2013, including the risk factor titled "The Company's ability to maintain or increase its cash balance could be adversely affected by its ability to offer competitive products and services in a timely manner at competitive prices...

  • Page 219
    ... 6,292,218 ("the '218 Patent") and 6,600,510 ("the '510 Patent") which are generally directed to digital camera technologies and U.S. Patent No. 5,226,161 which is directed to data sharing in applications. Kodak counterclaimed for infringement of these same patents seeking an injunction and monetary...

  • Page 220
    ...and closed the case with prejudice. On January 14, 2010, Kodak filed a complaint with the ITC against the Company and Apple Inc. alleging infringement of the '218 Patent and requesting the ITC to issue orders prohibiting certain of the Company's products from being imported into the U.S. and sold in...

  • Page 221
    Research In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations including mobile telephone user interfaces, call control, speech signal transmission and imaging. The complaint seeks an injunction and monetary damages. The claim construction hearing ...

  • Page 222
    ...492 which are generally directed to GPRS technology. The complaint seeks monetary damages and other relief that the court may deem proper under the circumstances. On March 9, 2012 the Company's motion to transfer the case to Dallas was granted. The Dallas court has not scheduled a claim construction...

  • Page 223
    ... 5, 2012 and the trial is set for July 1, 2013. The Company and NData settled all outstanding litigation on February 4, 2013 for an amount immaterial to the Consolidated Financial Statements. The court dismissed the case with prejudice on February 19, 2013. On September 12, 2011, WiAV Networks, LLC...

  • Page 224
    ... is scheduled to begin September 23, 2013. The court issued its claim construction Order on October 30, 2012. The Company and WiAV Networks, LLC settled all outstanding litigation on January 11, 2013 for an amount immaterial to the Consolidated Financial Statements. The court dismissed the case with...

  • Page 225
    .... Potter alleged that the Company infringes U.S. Patent 5,729,659 allegedly directed to voice command technology. The complaint seeks an injunction and monetary damages. A claim construction hearing has been scheduled for April 5, 2013. No trial date is currently set. Proceedings are ongoing...

  • Page 226
    ... No. 6,442,485, allegedly directed to automatic vehicle location, collision notification and synthetic voice technologies. The complaint seeks an injunction and monetary damages. The Company filed an answer on February 27, 2013. Proceedings are ongoing. On November 29, 2012, Arendi S.A.R.L. ("Arendi...

  • Page 227
    ... 5, 2012, plaintiff filed the Consolidated Amended Class Action Complaint, alleging that during the period from December 16, 2010 through June 16, 2011, the Company and certain of its officers made materially false and misleading statements regarding the Company's financial condition and business...

  • Page 228
    ... rate risk as a result of holding investments of varying maturities. The fair value of investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in prevailing interest rates. The Company does not currently use interest rate derivative financial...

  • Page 229
    ...growth in its carrier customer base in terms of numbers, sales and accounts receivable volumes, and in some instances, new or significantly increased credit limits. The Company, in the normal course of business, monitors the financial condition of its customers and reviews the credit history of each...

  • Page 230
    ... Internal control over financial reporting is defined in Rule 13(a)-15(f) and 15(d)-15(f) under the U.S. Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's Board of Directors, management...

  • Page 231
    Research In Motion Limited Management's Discussion and Analysis of Financial Condition and Results of Operations Changes in Internal Control Over Financial Reporting During the fiscal year ended March 2, 2013, no changes were made to the Company's internal control over financial reporting that have ...

  • Page 232
    ... option plans of our reports dated March 28, 2013 with respect to the consolidated financial statements of the Company included herein, and the effectiveness of internal control over financial reporting. Kitchener, Canada, March 28, 2013. /s/ Ernst & Young LLP Chartered Accountants Licensed Public...

  • Page 233
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who...

  • Page 234
    ...record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting. /s/ Brian Bidulka Name: Brian Bidulka Title: Chief Financial Officer...

  • Page 235
    ... with the Annual Report of Research In Motion Limited (the "Registrant") on Form 40-F for the year ended March 2, 2013, as filed with the Commission on the date hereof (the "Report"), Thorsten Heins, as Chief Executive Officer of the Registrant, and Brian Bidulka, as Chief Financial Officer of the...