Blackberry 2010 Annual Report Download - page 35

Total operating expenses for the fourth quarter of fiscal 2010 as a percentage of revenue increased by 0.7% to
20.9% of revenues when compared to the third quarter of fiscal 2010.
Research and Development
Research and development expenditures increased by $84.7 million to $267.2 million, or 6.6% of revenue, in the
fourth quarter of fiscal 2010, compared to $182.5 million, or 5.3% of revenue, in the fourth quarter of fiscal 2009.
The majority of the increases during the fourth quarter of fiscal 2010 compared to the fourth quarter of fiscal
2009 were attributable to salaries and benefits due to an increase in the average headcount associated with
research and development activities, new product development costs and office and building infrastructure
costs.
Selling, Marketing and Administration Expenses
Selling, marketing and administration expenses increased by $91.1 million to $497.6 million for the fourth
quarter of fiscal 2010 compared to $406.5 million for the comparable period in fiscal 2009. As a percentage of
revenue, selling, marketing and administration expenses increased to 12.2% in the fourth quarter of fiscal 2010
compared to 11.7% in the fourth quarter of fiscal 2009. The net increase was primarily attributable to increased
expenditures for marketing, advertising and promotion, including additional programs to support new product
launches, increased salary and benefits expenses primarily as a result of increased personnel, external
advisory fees and information technology costs.
Amortization Expense
The table below presents a comparison of amortization expense relating to capital assets and intangible
assets recorded as amortization or cost of sales for the quarter ended February 27, 2010 compared to the
quarter ended February 28, 2009. Intangible assets are comprised of patents, licenses and acquired
technology.
(in thousands)
February 27,
2010
February 28,
2009 Change
February 27,
2010
February 28,
2009 Change
Included in Amortization Included in Cost of sales
For the Three Months Ended
Capital assets .............. $ 53,340 $ 36,662 $ 16,678 $ 50,741 $ 28,347 $ 22,394
Intangible assets .......... 33,200 24,933 8,267 43,574 26,183 17,391
Total ............................ $ 86,540 $ 61,595 $ 24,945 $ 94,315 $ 54,530 $ 39,785
Amortization
The increased amortization expense in the fourth quarter of fiscal 2010 primarily reflects the impact of certain
capital assets and intangible asset additions made during fiscal 2010.
Cost of sales
The increased amortization expense in the fourth quarter of fiscal 2010, related to the Company’s
manufacturing operations and BlackBerry service operations, primarily reflects the impact of amortization
expense with respect to certain intangible assets and capital asset additions made during fiscal 2010.
Investment Income
Investment income decreased by $5.1 million to $5.5 million in the fourth quarter of fiscal 2010 from $10.6 million
in the fourth quarter of fiscal 2009. The decrease primarily reflects the decrease in yields on investments due
to lower interest rates compared to the same period in fiscal 2009, offset partially by an increase in the
Company’s average cash and cash equivalents, short-term investments and long-term investments balances.
See “Liquidity and Capital Resources”.
Income Taxes
For the fourth quarter of fiscal 2010, the Company’s income tax expense was $307.1 million, resulting in an
effective tax rate of 30.2% compared to income tax expense of $225.3 million and an effective tax rate of 30.3%
for the same period last year. The Company’s effective tax rate reflects the geographic mix of income in
jurisdictions with different tax rates.
Net Income
The Company’s net income for the fourth quarter of fiscal 2010 was $710.1 million, an increase of $191.9 million,
or 37.0%, compared to net income of $518.3 million in the fourth quarter of fiscal 2009. Basic EPS was $1.27 and
MD&A
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