Blackberry 1999 Annual Report Download - page 18

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RESEARCH AND DEVELOPMENT
Gross R&D investment increased by 82% to $11.8 million, or 17% of revenue, versus $6.5 million, or 21% of revenue
last year. Significant expenditures were made for the completion of RIM’s Inter@ctive Pager 950 which was
launched in August 1998, together with continued research to improve and enhance current and future products.
R&D expenditures continue to be augmented by product development partnerships with industry leaders such as
Intel, universities such as University of Waterloo, MacMaster University and University of Toronto, and government
agencies such as Technology Partnerships Canada, Canarie Inc., and the Ministry of Energy, Science and
Technology. Gross R&D spending declined as a percent of revenue due to another year of strong revenue growth.
RIM received $5.3 million in government assistance in fiscal 1999, which primarily consisted of funding received
from the Technology Partnerships Canada program and investment tax credits. This compares to $2.0 million
received in government R&D assistance in fiscal 1998. RIM will continue to use these external parties as sources
of financing to promote development of future generation concepts and designs.
SELLING, MARKETING AND ADMINISTRATIVE EXPENSES
Selling, marketing and administrative expenses increased to $9.7 million in fiscal 1999 from $4.1 million last year,
reflecting the increased level of sales, marketing, public relations, and recruitment activities required to support the
Company’s overall growth. As a percentage of revenue, these expenses increased only slightly to 14% versus 13%
last year. Expenditures were in line with management’s expectations.
It is anticipated that sales and marketing costs will continue to increase in the coming year as RIM continues to
roll out the BlackBerry service, continues to support BellSouth’s channel marketing campaign, and continues to
support American Mobile as it approaches the launch of its service using RIM’s products.
16
Management’s Discussion and Analysis (continued)
Quarterly Revenue
(CDN $ millions)
0
5
10
15
20
25
$30
1.0
1.5
0.3
Q2 Q3 Q4
7.0
Q1 Q2 Q3 Q4
Q1 Q2 Q3 Q4
Q1
1997 1998 1999
1.2
6.0
11.0
12.9
8.9
8.4
26.1
27.1
0
10
20
30
40
50
60
$70
3.0
6.4
9.8
31.1
96* 97* 98* 99
70.5
95*
Annual Revenue
(CDN $ million)
Net Income
(CDN $ million)
0
2
4
6
8
$10
0.6
0.7
0.04
0.5
96 97 98 99
9.5
95