Blackberry 2005 Annual Report Download - page 66

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64
The change in the Company’s accrued warranty obligations from March 2, 2002 to February 26, 2005 was
as follows:
Accrued warranty obligations at March 2, 2002 $ 3,355
Actual warranty experience during fiscal 2003 (577)
Fiscal 2003 warranty provision 5,465
Adjustments for changes in estimate (3,073)
Accrued warranty obligations at March 1, 2003 $ 5,170
Actual warranty experience during fiscal 2004 (3,946)
Fiscal 2004 warranty provision 8,648
Adjustments for changes in estimate (626)
Accrued warranty obligations at February 28, 2004 $ 9,246
Actual warranty experience during fiscal 2005 (6,133)
Fiscal 2005 warranty provision 24,732
Adjustments for changes in estimate (13,188)
Accrued warranty obligations at February 26, 2005 $14,657
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 $nil on account of TPC royalty repayment expense with respect to TPC-1 during
fiscal 2005 (February 28, 2004 – $2,530; March 1, 2003 – $925). The final repayment with respect to TPC-1
was made during the first quarter of fiscal 2005.
The second agreement with TPC was for a three-year research and development project (“TPC-2”) under which
total contributions from TPC would be a maximum amount of $23,300 (the “contribution commitment”).
The Company is of the view that it had fulfilled all prerequisite funding conditions and had 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 revenues
arising from the sale of certain products. The Company is obligated to pay royalties on revenues from the sale
of third-generation wireless handheld devices up to February 28, 2007, after which time the royalty base is
expanded to include revenues from additional products. Royalties would continue to be paid up to a maximum
amount of $39,300. No liability amounts have been recorded with respect to TPC-2 since the conditions for
repayment have not yet been met.
Government assistance has been applied to reduce gross research and development expense as follows:
For the year ended February 26, 2005 February 28, 2004 March 1, 2003
Gross research and development $101,180 $62,638 $ 64,952
Government funding – – 9,036
Net research and development $101,180 $62,638 $ 55,916
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)