Blackberry 2004 Annual Report Download - page 53

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51
For the years ended February 28, 2004, March 1, 2003 and March 2, 2002
14. Government Assistance
The Company has previously entered into two
project development agreements with Technology
Partnerships Canada (“TPC”), which provide partial
funding for certain research and development
projects.
Funding from TPC for the first agreement (“TPC-1”)
totalled $3,900 and was repayable in the form of
royalties of 2.2% on gross product revenues
resulting from the project. The Company was
obligated to pay royalties on all project revenues up
to February 28, 2003, after which time the royalty
base is expanded to include revenues from certain
additional products, and royalties will continue to be
paid up to a maximum of $6,100.
The Company has recorded $2,530 on account of
TPC royalty repayment expense with respect to TPC-
1 (March 1, 2003 - $925; March 2, 2002 -
$1,575). The final payment with respect to TPC-1
is expected to be made during the first quarter of
fiscal 2005.
The second agreement with TPC is a three-year
research and development project (“TPC-2”) under
which total contributions from TPC will be a
maximum of $23,300 (the “contribution”). The
Company is of the view that it has fulfilled all
prerequisite funding conditions and has recorded all
of the contribution commitment as at February 28,
2004 and no further TPC funding reimbursements
are due to RIM under TPC-2. This contribution will
be repayable to TPC in the form of royalties of 2.2%
on gross product revenues resulting from project and
then other revenues. The Company is obligated to
pay royalties on all project revenues up to February
28, 2007, after which time the royalty base is
expanded to include revenues from certain
additional products. Royalties will continue to be
paid up to a maximum of $39,300. No amounts
have been recorded with respect to TPC-2 since the
conditions for repayment have not yet been met.
The Company also qualifies for investment tax
credits (“ITCs”) on eligible expenditures on account
of scientific research and experimental
development. The Company has not recorded the
benefit of ITCs in fiscal 2003 or fiscal 2004, as in
the Company’s judgement, the Company does not
have reasonable assurance that the Company will
realize the ITCs.
Government assistance, which includes both TPC
funding and ITCs, has been applied to reduce gross
research and development expense as follows:
For the year ended February 28, 2004 March 1, 2003 March 2, 2002
Gross research and development $ 62,638 $ 64,952 $ 49,517
Government funding –9,036 12,071
Net research and development $ 62,638 $ 55,916 $ 37,446