Blackberry 1999 Annual Report Download - page 19

AMORTIZATION
In keeping with the expansion of RIM’s capital spending and associated
build-up of depreciable assets given the record growth in all facets of RIM’s
business, amortization expense increased to $4.1 million in fiscal 1999 from
$2.2 million last year.
Capital asset expenditures totalled $13.2 million for fiscal 1999, increasing
significantly from capital additions of $8.3 million last year. Significant
additions included computer workstations to accommodate growth of the
Company’s employee base, technological infrastructure, production tooling,
and R&D and production test equipment. In addition, significant
expenditures were incurred at the manufacturing facility to increase unit
capacity and to streamline the production process to increase efficiency.
INVESTMENT INCOME
The significant rise in investment income to $5.6 million reflected the
Company’s higher average cash balances throughout the year. Investment
income was $2.0 million in fiscal 1998. The Company will continue to invest
treasury funds in high grade instruments.
INCOME TAXES
The Company’s R&D activities have given rise to income tax loss carry-
forwards and investment tax credits (ITCs). In addition, the Company can
claim further tax deductions for past financing costs related to the issuance
of shares. RIM used loss carry-forwards to reduce its provision for income
taxes to $3.3 million in fiscal 1999. In addition, the company further used
ITCs and allocable financing costs to reduce the amount of income
taxes payable.
As at February 28, 1999, the Company had remaining tax loss
carry-forwards, allocable financing costs, and ITCs sufficient to shelter
approximately $21.4 million of federal taxable income and approximately
$18.6 million of provincial taxable income. As RIM intends to invest further
in R&D, tax incentives arising from such investment, together with the
utilization of remaining tax loss carry-forwards and allocable financing costs,
will continue to reduce the Company’s income tax liability.
NET INCOME
Net income was $9.5 million, or 14% of revenue, versus $0.5 million, or
2% of fiscal 1998 revenue. The improvement was attributable to increases
in revenue and gross margin, as well as investment income. Both basic
and fully diluted earnings per share for the year were $0.15, up from
$0.01 last year.
17
RESEARCH IN MOTION LIMITED
Incorporated Under the Laws of Ontario
Selling, Marketing
and Administration
(CDN $ million)
0
2
4
6
8
10
1.4
1.5
2.8
4.0
96 97 98 99
9.7
95
Gross Research
and Development
(CDN $ million)
0
2
4
6
8
10
12
1.5
2.5
4.5
6.5
96 97 98 99
11.8
95