Blackberry 1999 Annual Report Download - page 17

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Management’s Discussion and Analysis
OVERVIEW
Research In Motion more than doubled revenue to $70.5 million and generated net income of $9.5 million ($0.15 per
share) in the fiscal year ended February 28, 1999. Results reflected strong growth over revenues of $31.1 million and
net income of $540,000 ($0.01 per share) last year as RIM successfully developed and launched the Inter@ctive
Pager 950 while continuing to supply OEM radio modems to new and existing customers.
Tight execution of RIM’s business plan contributed to the success of fiscal 1999. Growing demand for wireless
messaging products, new contract wins and deliveries, increased exposure through numerous positive product
reviews, awards, and enhanced marketing efforts resulted in strong growth in all facets of the Company’s business.
RESULTS OF OPERATIONS
Operating Highlights
(CDN$000’s) Fiscal 1999 Fiscal 1998*
Revenue $ 70,483 $ 31,118
Gross Profit $ 27,654 $ 9,674
Net Income $ 9,541 $ 540
* In fiscal 1999, the Company ceased to include Government Assistance and Investment Tax Credits in reported revenue. These items are now
netted against gross research and development expenses. Previous years’ financial results have been restated accordingly.
REVENUE
Revenue for the year was $70.5 million, more than double the $31.1 million reported last year. Results reflect
continued shipments of the Inter@ctive Pager 950 to BellSouth and Cantel and sales of radio modems to OEM
customers in the mobile computing, in-vehicle application, wireless point-of-sale, telemetry, and wireless alarming
industries. The Inter@ctive Pager 950 accounted for approximately 80% of total product revenue, while radio
modems accounted for the balance. This compares to a revenue breakdown for the prior year of 78% for the
Inter@ctive Pager, with the balance consisting of radio modem products.
The United States continues to be the biggest market for RIM’s products, accounting for 95% of fiscal 1999 sales.
Canada and Asia represent the balance. In fiscal 1998, 90% of revenue was derived from the United States and the
remaining 10% came from Canadian and Asian customers. Economic uncertainty and currency devaluation resulted
in a decrease in shipments to Asian customers. Opportunities for future sales in Asia will depend on its ongoing
economic situation. RIM will continue to foster long term relationships in Asia in the pursuit of future contracts. Other
regions, such as Europe and South America will continue to be assessed to further increase market penetration.
GROSS MARGIN
Gross margins increased to 39% in fiscal 1999 from 31% in fiscal 1998. The year-over-year improvement resulted
from lower cost, second generation products and economies of scale derived from increased utilization in the
manufacturing facility and lower component pricing benefits gained from higher production volumes.
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