Blackberry 2005 Annual Report Download - page 26

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Research and Development, Selling, Marketing and Administration, and Amortization Expense
The table below presents a comparison of Research and development, Selling, marketing and administration,
and Amortization expenses for fiscal 2005 compared to fiscal 2004.
Fiscal year ended
February 26, 2005 February 28, 2004
$% of Revenue $% of Revenue
Revenue $1,350,447 $594,616
Research and development $101,180 7.5% $62,638 10.5%
Selling, marketing and administration 190,730 14.1% 108,492 18.2%
Amortization 35,941 2.7% 27,911 4.8%
$327,851 24.3% $199,041 33.5%
Research and Development
Research and development expenditures consist primarily of salaries for technical personnel, engineering
materials, certification and tooling expense, outsourcing and consulting services, software tools and related
information technology infrastructure support, and travel.
Research and development expenditures increased by $38.5 million to $101.2 million, or 7.5% of revenue, in
fiscal 2005 compared to $62.6 million, or 10.5% of revenue, in the previous year. The majority of the increases
during the current fiscal year, compared to fiscal 2004, were attributable to salaries and benefits (primarily as
a result of increased personnel to accommodate the Company’s growth), third-party new product development
costs, travel, recruiting, and materials, certification and tooling expenses.
Selling, Marketing and Administration
Selling, marketing and administrative expenses increased by $82.2 million to $190.7 million for fiscal 2005
compared to $108.5 million for fiscal 2004. As a percentage of revenue, selling, marketing and administrative
expenses declined to 14.1% in the current year compared to 18.2% in fiscal 2004.
The net increase of $82.2 million was primarily attributable to increased expenditures for marketing,
advertising and promotion expenses, compensation expense, legal fees, travel, consulting and external
advisory costs and recruiting. The cost increases were partially offset by a foreign exchange gain of
$0.4 million in fiscal 2005, compared to a foreign exchange gain of $2.2 million in fiscal 2004 (see note 18
to the Consolidated Financial Statements).
Amortization
Amortization expense on account of certain capital and all intangible assets other than licenses increased
by $8.0 million to $35.9 million for fiscal 2005 compared to $27.9 million for fiscal 2004. The increased
amortization expense in fiscal 2005 reflects the impact of a full year’s amortization expense with respect to
capital and certain intangible asset expenditures during fiscal 2004 and also incremental amortization with
respect to capital and certain intangible asset expenditures during fiscal 2005.
Cost of sales
Amortization expense with respect to capital assets employed in the Company’s manufacturing operations and
BlackBerry service operations increased to $14.3 million in fiscal 2005 compared to $7.9 million in fiscal 2004
and is charged to Cost of sales in the Consolidated Statements of Operations. The increased amortization
expense in fiscal 2005 reflects the impact of a full year’s amortization expense with respect to these capital
asset expenditures during fiscal 2004 and also incremental amortization with respect to capital asset
expenditures during fiscal 2005. See also note 6 to the Consolidated Financial Statements.
Research In Motion Limited •Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)