Press Release

June 29, 2006

Research In Motion Reports First Quarter Results

Waterloo, ON - Research In Motion Limited (RIM) (Nasdaq: RIMM; TSX: RIM), a world leader in the mobile communications market, today reported first quarter results for the three months ended June 3, 2006 (all figures in U.S. dollars and U.S. GAAP).

Revenue for the first quarter of fiscal 2007 was $613.1 million, up 9.2% from $561.2 million in the previous quarter and up 35.1% from $453.9 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 71% for handhelds, 19% for service, 7% for software and 3% for other revenue. During the quarter, RIM shipped 1.2 million devices.

The total number of BlackBerry subscriber accounts in the quarter increased by approximately 680,000, in-line with the forecast provided in RIM’s press release on Q4 results, to approximately 5.5 million total subscriber accounts.

“RIM delivered a solid quarter with strong revenue, earnings and subscriber results,” said Jim Balsillie, Chairman and Co-CEO at RIM. “BlackBerry’s ongoing competitive dominance is driving strong growth in existing markets and fuelling substantial international expansion.”

GAAP net income for the quarter was $129.8 million, or $0.68 per share diluted, as compared with net income of $18.4 million, or $0.10 per share diluted, in the prior quarter. Operating expenses increased in-line with our expectations as RIM continued to invest in new product development and international market expansion.   Adjusted net income excluding stock option expense was $134.2 million, or $0.70 per share diluted.  

The adjusted net income and earnings per share do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other issuers.   These adjusted measures should be considered in the context of RIM’s GAAP results.

Revenue for the second quarter of fiscal 2007 ending September 2, 2006 is expected to be in the range of $620-$650 million.   Subscriber account additions in the second quarter are expected to be in the range of 675,000-700,000.   GAAP earnings per share for the second quarter are expected to be in the range of 67-73 cents per share diluted.  Adjusted earnings per share for the second quarter, which excludes estimated stock option expense of between $4.0-$5.0 million, are forecast to be in the range of 69-75 cents per share diluted.   

The total of cash, cash equivalents, short-term and long-term investments was $1.26 billion as at June 3, 2006, compared to $1.25 billion at the end of the previous quarter, an increase of $6.5 million over the prior quarter. Uses of cash in the quarter included the acquisition of Ascendent Systems.

Reconciliation of GAAP net income to Adjusted net income
(United States dollars, in thousands except per share data)  
 
  For the three months ended June 3, 2006
   
GAAP net income, as reported $129,773
   
Adjustment:  
   
   Stock option expense 4,400
   
 
Adjusted net income $134,173
 
   
Adjusted net income per share, diluted $0.70
 
Note: Adjusted net income and adjusted net income per share do not have any standardized meaning prescribed by GAAP and thus are not comparable to similar measures presented by other issuers. Investors are encouraged to consider this adjusted measure in the context of RIM's GAAP results.

Highlights of the first quarter:

  • RIM surpassed the 5 million subscriber milestone.
  • RIM acquired Ascendent Systems.
  • Yahoo! and RIM announced an expanded global relationship.
  • RIM launched BlackBerry Enterprise Server™ v4.1 and BlackBerry Enterprise Server – Small Business Edition v4.1 for Microsoft Exchange, IBM Lotus Domino and Novell GroupWise.
  • RIM launched BlackBerry Enterprise Server Express™ for small and medium-sized businesses.
  • IBM and RIM announced plans for further collaboration.
  • RIM launched BlackBerry Enterprise Server for MDS Applications™.
  • RIM announced support for Cisco Unified CallManager 5.0 with the BlackBerry WLAN solution.
  • CESG approved BlackBerry for use by government workers handling restricted data in the U.K.
  • Sprint launched the BlackBerry 7130e™ in the U.S.
  • Alltel launched the BlackBerry 7130e in the U.S.
  • Dobson Cellular Systems launched the BlackBerry 8700g™ in the U.S.
  • SouthernLINC announced plans to introduce BlackBerry in the U.S.
  • T-Mobile USA launched the BlackBerry 8700g in the U.S.
  • SunCom launched the BlackBerry 8700g in the U.S.
  • NTELOS launched BlackBerry in the U.S.
  • Cbeyond launched BlackBerry in the U.S.
  • TELUS launched the BlackBerry 7100i™ in Canada.
  • Entel PCS launched the BlackBerry 8700g in Chile.
  • America Móvil Perú (Claro) launched the BlackBerry 7100g™ and the BlackBerry 7290™ in Peru.
  • America Movil Argentina (CTI Móvil) announced plans to introduce the BlackBerry 7100g and the BlackBerry 7290 in Argentina.
  • America Movil Colombia (Comcel) launched the BlackBerry 7100g and the BlackBerry 7290 in Colombia.
  • Etisalat launched BlackBerry in the United Arab Emirates.
  • KPN launched the BlackBerry 8700g in the Netherlands.
  • Mobistar launched the BlackBerry 8700f™ in Belgium.
  • Si.mobil launched the BlackBerry 8700v™ in Slovenia.
  • Vodafone Germany launched the BlackBerry 8707v in Germany.
  • Vodafone U.K. launched the BlackBerry 8707v in the U.K.
  • SFR launched the BlackBerry 8707v in France.
  • O2 launched the BlackBerry 7130g in the UK.
  • China Mobile launched BlackBerry service in China.
  • KT Powertel launched BlackBerry in Korea.
  • Vodafone Fiji launched BlackBerry in Fiji.
  • PCCW launched BlackBerry in Hong Kong.
  • CSL launched the BlackBerry 8700g in Hong Kong.
  • 3 Hong Kong launched the BlackBerry 8700g in Hong Kong.
  • SmarTone-Vodafone launched the BlackBerry 8700v in Hong Kong.
  • Airtel launched the BlackBerry 8700g in India.
  • AIS launched the BlackBerry 8700g in Thailand.
  • TrueMove launched the BlackBerry 8700g in Thailand.
  • Globe Telecom launched the BlackBerry 8700g in the Philippines.
  • Maxis launched the BlackBerry 8700g in Malaysia.
  • MobileOne launched the BlackBerry 8700v in Singapore.
  • SingTel launched the BlackBerry 8700g in Singapore.
  • StarHub launched the BlackBerry 8700g in Singapore
  • Telkomsel launched the BlackBerry 8700g in Indonesia.
  • Telstra launched the BlackBerry 8700g in Australia.
  • SingTel launched BlackBerry® Connect™ for the Palm® Treo™ 650 in Singapore.
  • Telstra launched BlackBerry Connect for the Palm Treo 650 in Australia.
  • Optus launched BlackBerry Connect for the Palm Treo 650 in Australia.
  • StarHub launched BlackBerry Connect for the Palm Treo 650 in Singapore.
  • BlackBerry ISV Alliance members continued to build upon the BlackBerry platform with a range of new products and services that help customers extend their wireless data strategies beyond wireless email.

Highlights Subsequent to Quarter End:

  • Cingular launched the BlackBerry 7130c™ in the U.S.
  • Rogers launched the BlackBerry 7130g in Canada.
  • Amena launched the BlackBerry 8700g in Spain.
  • Mobiltel launched BlackBerry in Bulgaria.
  • LUXGSM launched the BlackBerry 8707v in Luxembourg.
  • Vodafone Spain launched the BlackBerry 8707v in Spain.
  • Vodafone Ireland launched the BlackBerry 8707v in Ireland.
  • Vodafone Netherlands launched the BlackBerry 8707v in the Netherlands.
  • Vodafone U.K. launched the BlackBerry 7130v in the U.K.
  • Proximus launched the BlackBerry 8707v in Belgium.
  • SmarTone-Vodafone launched the BlackBerry 8707v in Hong Kong.
  • Optus launched the BlackBerry 7130g in Australia.
  • Telstra launched the BlackBerry 7130g in Australia.
  • Smart launched the BlackBerry 8700g in the Philippines.
  • NTT DoCoMo announced plans to launch BlackBerry in Japan.
  • Taiwan Mobile announced plans to launch BlackBerry in Taiwan.

The replay of the company’s Q1 conference call can be accessed after 7 p.m. (eastern), June 29, 2006 until midnight (eastern), July 13, 2006.   It can be accessed by dialing 416-640-1917 and entering passcode 21193373#.   The conference will also appear on the RIM web site, live at 5:00 pm (eastern) and archived at http://www.rim.com/investors/events/index.shtml until midnight July 13, 2006.

About Research In Motion (RIM)

Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, Internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. RIM’s portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world and include the BlackBerry® wireless platform, the RIM Wireless Handheld™ product line, software development tools, radio-modems and software/hardware licensing agreements. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and Asia Pacific. RIM is listed on the Nasdaq Stock Market (Nasdaq: RIMM) and the Toronto Stock Exchange (TSX: RIM). For more information, visit www.rim.com or www.blackberry.com.

This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws relating to RIM’s revenue and earnings expectations for the second quarter of fiscal 2007, anticipated growth in subscribers, competition, and plans relating to RIM and its carrier partners. The terms and phrases “continuing to”, “estimated”, “forecast”, “expected”, “expecting” and similar terms and phrases are intended to identify these forward-looking statements.  Forward-looking statements are based on estimates and assumptions made by RIM in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that RIM believes are appropriate in the circumstances.  Many factors could cause RIM’s actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: risks relating to RIM’s intellectual property rights; RIM’s ability to enhance current products and develop new products; RIM’s reliance on carrier partners, third-party network developers and suppliers; and intense competition.  These risk factors and others relating to RIM are discussed in greater detail in the “Risk Factors” section of RIM’s Annual Information Form, which is included in its Annual Report on Form 40-F (copies of which filings may be obtained at www.sedar.com or www.sec.gov) and RIM’s other public filings with the Securities and Exchange Commission and Canadian securities regulators.   These factors should be considered carefully, and readers should not place undue reliance on RIM’s forward-looking statements.   RIM has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The BlackBerry and RIM families of related marks, images and symbols are the exclusive properties and trademarks of Research In Motion Limited.   RIM, Research In Motion and BlackBerry are registered with the U.S. Patent and Trademark Office and may be pending or registered in other countries.   All other brands, product names, company names, trademarks and service marks are the properties of their respective owners.

Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)(unaudited)

Consolidated Statements of Operations

  For the three months ended
  June 3,
2006 		March 4,
2006 		May 28,
2005
Revenue $ 613,116 $ 561,219 $ 453,948
Cost of sales 275,269 252,566 203,731
 
Gross margin 337,847 308,653 250,217
 
Gross Margin % 55.1% 55.0% 55.1%
 
Expenses
   Research and development 51,518 43,851 34,534
   Selling, marketing and administration 107,255 92,321 62,871
   Amortization 16,071 15,322 10,283
   Litigation - 162,500 6,475
 
  174,844 313,994 114,163
 
 
Income (loss) from operations 163,003 (5,341) 136,054
 
   Investment income 12,051 19,219 13,816
 
Income before income taxes 175,054 13,878 149,870
 
Provision for (recovery of) income taxes
   Current 11,255 (70,725) 2,630
   Deferred 34,026 66,249 14,720
 
  45,281 (4,476) 17,350
 
Net income $ 129,773 $ 18,354 $ 132,520
 
Earnings per share
 
   Basic $ 0.70 $ 0.10 $ 0.70
 
   Diluted $ 0.68 $ 0.10 $ 0.67
 
 
Weighted average number of common shares outstanding (000’s)      
   Basic 186,282 185,558 190,098
   Diluted 192,061 191,509 197,872


Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)(unaudited)

Consolidated Balance Sheets

As at June 3,
2006 		March 4,
2006
Assets
  Current
   Cash and cash equivalents $ 556,874 $ 459,540
   Short-term investments 166,275 175,553
   Trade receivables 393,721 315,278
   Other receivables 31,657 31,861
   Inventory 134,437 134,523
   Other current assets 52,870 45,035
   Deferred income tax asset 66,292 94,789
 
1,402,126 1,256,579
 
Investments 532,749 614,309
Capital assets 350,420 326,313
Intangible assets 93,681 85,929
Goodwill 60,233 29,026
 
$ 2,439,209 $ 2,312,156
 
Liabilities
  Current
   Accounts payable $ 76,040 $ 94,954
   Accrued liabilities 149,724 144,912
   Income taxes payable 13,450 17,584
   Deferred revenue 20,017 20,968
   Current portion of long-term debt 274 262
 
  259,505 278,680
 
Long-term debt 6,971 6,851
Deferred income tax liability 26,774 27,858
 
  293,250 313,389
Shareholders’ Equity
Capital stock 1,862,874 1,852,554
Paid in capital 4,679 159
Retained earnings 277,801 148,028
Accumulated other comprehensive income (loss) 605 (1,974)
 
  2,145,959 1,998,767
 
  $ 2,439,209 $ 2,312,156
 


Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)(unaudited)

Consolidated Statements of Cash Flows

  For the three months ended
  June 3, 2006 May 28, 2006
Cash flows from operating activities    
Net income $ 129,773 $ 132,520
 
Items not requiring an outlay of cash:    
   Amortization 26,809 18,226
   Deferred income taxes 31,430 17,389
   Share-based payments 4,520 -
   Other (913) 612
Net changes in working capital items (92,591) (32,881)
 
Net cash provided by operating activities 99,028 135,866
 
Cash flows from financing activities
Issuance of share capital 10,320 8,240
Repayment of long-term debt (63) (53)
 
Net cash provided by financing activities 10,257 8,187
 
Cash flows from investing activities
Acquisition of investments (5,100) (12,408)
Proceeds on sale or maturity of investments 17,880 21,255
Acquisition of capital assets (44,065) (31,289)
Acquisition of intangible assets (22,091) (6,352)
Business acquisitions (38,878) (3,795)
Acquisition of short-term investments (778) (98,193)
Proceeds on sale and maturity of short-term investments 79,987 289,283
 
Net cash (used in) provided by investing activities (13,045) 158,501
 
Effect of foreign exchange gain (loss) on cash and cash equivalents 1,094 (584)
 
Net increase in cash and cash equivalents for the period 97,334 301,970
Cash and cash equivalents, beginning of year 459,540 610,354
 
Cash and cash equivalents, end of period $ 556,874 $ 912,324
 
 
 
As at June 3, 2006 March 4, 2006
Cash and cash equivalents $ 556,874 $ 459,540
Short-term investments 166,275 175,553
Investments 532,749 614,309
 
  $ 1,255,898 $ 1,249,402