Blackberry 2008 Annual Report Download - page 41

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Research and Development
Research and development expenditures increased by
$37.3 million to $104.6 million, or 5.6% of revenue, in the
quarter ended March 1, 2008 compared to $67.3 million,
or 7.2% of revenue in the fourth quarter of fiscal 2007.
The majority of the increases during the fourth quarter of
fiscal 2008 compared to the fourth quarter of fiscal 2007
were attributable to salaries and benefits, new product
development costs, office and related staffing infrastructure
costs and travel.
Selling, Marketing and Administration Expenses
Selling, marketing and administrative expenses increased by
$100.8 million to $267.9 million, or 14.2% of revenue, for the
fourth quarter of fiscal 2008 compared to $167.1 million, or
18.0% of revenue for the comparable period in fiscal 2007.
The net increase of $100.8 million was primarily attributable
to increased expenditures for marketing, advertising and
promotion expenses including additional programs to
support new product launches as well as salary and benefit
expense primarily as a result of increased personnel. Other
increases were attributable to travel expenses and office
and related staffing infrastructure costs. The increase also
includes legal, accounting and other professional costs
incurred by the Company in the fourth quarter of fiscal
2008 as well as other costs incurred by the Company under
indemnity agreements in favor of certain officers and
directors of the Company, in each case in connection with the
Review, the Restatement, regulatory investigations relating
to the Company’s historical option granting practices and
related matters.
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 the quarter ended March 1, 2008
compared to the quarter ended March 3, 2007. The Company
believes it is meaningful to also provide data for the third
quarter of fiscal 2008 given the quarterly increases in revenue
realized by the Company during fiscal 2008.
Three Month Fiscal Periods Ended
March 1, 2008 December 1, 2007 March 3, 2007
$% of Revenue $% of Revenue $% of Revenue
Revenue $ 1,882,705 $ 1,672,529 $ 930,393
Research and development $ 104,573 5.6% $ 92,150 5.5% $ 67,321 7.2%
Selling, marketing and administration 267,881 14.2% 238,175 14.2% 167,112 18.0%
Amortization 31,314 1.7% 27,653 1.7% 22,021 2.4%
$ 403,768 21.4% $ 357,978 21.4% $ 256,454 27.6%
Amortization
Amortization expense relating to certain capital and all
intangible assets other than licenses increased by $9.3 million
to $31.3 million for the fourth quarter of fiscal 2008 compared
to $22.0 million for the comparable period in fiscal 2007. The
increased amortization expense primarily reflects the impact
of amortization expense with respect to capital and certain
intangible asset expenditures incurred primarily during fiscal
2007 and the first three quarters of fiscal 2008.
Investment Income
Investment income increased by $5.3 million to $20.1 million
in the fourth quarter of fiscal 2008 from $14.8 million in the
comparable period of fiscal 2007. The increase primarily
reflects the increase in cash and cash equivalents, short-term
investments and long-term investments when compared
to the prior year’s quarter. See also “Liquidity and Capital
Resources”.
Income Taxes
For the fourth quarter of fiscal 2008, the Company’s income
tax expense was $172.1 million resulting in an effective tax
rate of 29.4% compared to an income tax expense of
$68.3 million and an effective tax rate of 26.7% for the same
period last year. The Company’s effective tax rate reflects
the geographic mix of earnings in jurisdictions with different
tax rates. The fourth quarter fiscal 2008 tax provision was
impacted by the enactment of Canadian federal income
tax rate reductions in the fourth quarter of fiscal 2008 on
the Company’s deferred tax asset and liability balances and
current tax liability balances.