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Operating Expenses
The table below presents a comparison of research and development, selling, marketing and administration, amortization and litigation
expenses for fiscal 2010 compared to fiscal 2009.
(in millions)
%of
Revenue
%of
Revenue
%of
Change
February 27,
2010
February 28,
2009
Change
2010/2009
For the Fiscal Year Ended
Revenue $14,953 $11,065 $3,888 35.1%
Operating expenses
Research and development $ 965 6.5% $ 685 6.2% $ 280 40.9%
Selling, marketing and administration
(1)
1,907 12.8% 1,495 13.5% 412 27.5%
Amortization 310 2.1% 195 1.8% 115 59.3%
Litigation
(2)
164 1.1% –– 164 –
Total $ 3,346 22.5% $ 2,375 21.5% $ 971 40.9%
(1) Selling, marketing and administration in fiscal 2010 included unusual charges of $96 million recognized in the first quarter of fiscal 2010. The
unusual charges related to a charge for the payment on account of certain employee tax liabilities related to certain previously-exercised stock
options with measurement date issues that were exercised during certain time periods and the foreign exchange impact of the enactment of func-
tional currency tax legislation in Canada. See “Results of Operations — Selling, Marketing and Administrative Expenses” for the fiscal year ended
February 27, 2010.
(2) In fiscal 2010, the Company settled the Visto Litigation. The key terms of the settlement involved the Company receiving a perpetual and fully-paid
license on all Visto patents, a transfer of certain Visto intellectual property, a one-time payment by the Company of $268 million and the parties exe-
cuting full and final releases in respect of the Visto Litigation. Of the total payment by the Company, $164 million was expensed as a litigation charge
in the second quarter of fiscal 2010. The remainder of the payment was recorded as intangible assets. See “Results of Operations — Litigation
Expense” for the fiscal year ended February 27, 2010.
Total operating expenses for fiscal 2010 as a percentage of revenue increased by 1.0% to 22.5% of revenue compared to fiscal 2009.
Research and Development Expenses
Research and development expenditures increased by $280 million to $965 million, or 6.5% of revenue, in fiscal 2010, compared to
$685 million, or 6.2% of revenue, in fiscal 2009. The majority of the increases during fiscal 2010 compared to fiscal 2009 were
attributable to salaries and benefits due to an increase in the 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 $412 million to $1.9 billion for fiscal 2010 compared to $1.5 billion for
fiscal 2009. As a percentage of revenue, selling, marketing and administration expenses decreased to 12.8% in fiscal 2010 versus
13.5% in fiscal 2009. The net increase of $412 million 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.
With the enactment of changes to the functional currency tax legislation by the Government of Canada in the first quarter of fiscal
2010, the Company changed the basis for calculating its income tax provision for its Canadian operations from Canadian dollars to the
U.S. dollar, its reporting currency, with the effective date being the beginning of fiscal 2009. Gains realized on the revaluation of these
tax liabilities previously denominated in Canadian dollars throughout 2009 were reversed upon enactment of the changes to the rules
in the first quarter of fiscal 2010. Included in the total selling, marketing and administration for fiscal 2010 is a $54 million charge
primarily relating to the reversal of foreign exchange gains previously recorded in fiscal 2009 on the revaluation of Canadian dollar
24 RESEARCH IN MOTION ANNUAL REPORT 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS