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BlackBerry Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
34
For the Three Months Ended
(in millions)
March 1, 2014 November 30, 2013 March 2, 2013
% of
Revenue % of
Revenue % of
Revenue
Revenue $ 976 $ 1,193 $ 2,678
Operating expenses
Research and development(1) 246 25.2% 322 27.0 % 383 14.3%
Selling, marketing and administration(1) 355 36.4% 548 45.9 % 523 19.5%
Amortization 107 11.0% 148 12.4 % 181 6.8%
Impairment of long-lived assets(2) — —% 2,748 230.3 % — —%
Impairment of goodwill — —% — — % — —%
Debentures fair value adjustment(3) 382 39.1% (5) (0.4)% — —%
Total $ 1,090 111.7% $ 3,761 315.2 % $ 1,087 40.6%
(1) Research and development and selling, marketing and administration expenses for the fourth quarter of fiscal 2014
included charges of approximately $21 million and $110 million, respectively, related to the Company's CORE
program.
(2) In the third quarter of fiscal 2014, the Company recorded the LLA Impairment Charge of approximately $2.7 billion.
See “Overview - Long-Lived Asset Impairment Charge” and “Non-GAAP Financial Measures”.
(3) In the fourth quarter of fiscal 2014, the Company recorded the Q4 Fiscal 2014 Debentures Fair Value Adjustment of
approximately $382 million. See “Overview - Debentures Fair Value Adjustment" and “Non-GAAP Financial
Measures”.
Operating expenses decreased by $2.7 billion, or 71.0%, to $1.1 billion, or 111.7% of revenue, in the fourth quarter of fiscal
2014, compared to $3.8 billion, or 315.2% of revenue, in the third quarter of fiscal 2014. Excluding the impact of the Q4 Fiscal
2014 Debentures Fair Value Adjustment and charges incurred as part of the Company's CORE program during the fourth
quarter of fiscal 2014, of which $131 million were attributable to operating expenditures, as well as the impact of the LLA
Impairment Charge of approximately $2.7 billion and the charges incurred as part of the CORE program during the third
quarter of fiscal 2014, of which $190 million were attributable to operating expenditures, operating expenses decreased by
$246 million (see “Non-GAAP Financial Measures”). The decrease was primarily attributable to decreases in consulting,
advertising and promotion spend, salaries and benefit costs due to a reduction in headcount related to the CORE program and
research and development device costs as a result of the cancellation of two planned devices.
Operating expenses decreased by $3 million, or 0.3%, to $1.1 billion, or 111.7% of revenue, in the fourth quarter of fiscal 2014,
compared to $1.1 billion or 40.6% of revenue, in the fourth quarter of fiscal 2013. Excluding the impact of the Q4 Fiscal 2014
Debentures Fair Value Adjustment and charges incurred as part of the CORE program during the fourth quarter of fiscal 2014,
of which $131 million were attributable to operating expenditures (see “Non-GAAP Financial Measures”) and charges incurred
as part of the CORE program during the fourth quarter of fiscal 2013, of which $33 million were attributable to operating
expenses, operating expenses decreased by $477 million. This decrease was primarily attributable to decreases in marketing
and advertising expenses, salaries and benefits due to a reduction in headcount related to the CORE program, consulting,
outsourcing and legal costs and research and development device costs as a result of the cancellation of two planned devices.
Research and Development Expense
Research and development expenses decreased by $76 million, or 23.6% to $246 million in the fourth quarter of fiscal 2014
compared to $322 million in the third quarter of fiscal 2014. Excluding the impact of charges related to the CORE program
incurred during the fourth quarter of fiscal 2014 of $21 million, that were attributable to research and development
expenditures, and the charges related to the CORE program incurred during the third quarter of fiscal 2014 of $37 million, that
were attributable to research and development expenditures, research and development expenses decreased by $60 million,
which was primarily attributable to decreases in salaries and benefits costs due to a reduction in headcount related to the CORE
program, consulting and outsourcing costs and research and development device costs as a result of the cancellation of two
planned devices. Research and development related headcount decreased by approximately 11%, compared to the third quarter
of fiscal 2014.
Research and development expenses decreased by $137 million, or 35.8% to $246 million in the fourth quarter of fiscal 2014
compared to $383 million in the fourth quarter of fiscal 2013. Excluding the impact of charges incurred as part of the CORE
program during the fourth quarter of fiscal 2014, of which $21 million were attributable to research and development