Press Release

December 21, 2006

Research In Motion Reports Preliminary Third Quarter Results

Waterloo, ON - Research In Motion Limited (RIM) (Nasdaq: RIMM; TSX: RIM), a world leader in the mobile communications market, today reported preliminary third quarter results for the three months ended December 2, 2006 (all figures in U.S. dollars).

The results reported today are preliminary pending the restatement related to RIM's historical non-cash charges associated with past option grants.  As disclosed previously, RIM is completing a management-initiated, voluntary review of RIM's historical option granting practices.  It is the Company’s belief that the impact of any restatement on GAAP and adjusted operating results for fiscal 2007, including the third quarter, will be immaterial.  RIM will file final financial statements for the second and third quarters of fiscal 2007 following the completion of the review, which is expected prior to RIM’s fiscal year end of March 3, 2007.

Revenue for the third quarter of fiscal 2007 was $835.1 million, up 26.8% from $658.5 million in the previous quarter and up 49% from $560.6 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 75% for handhelds, 17% for service, 5% for software, and 3% for other revenue.  Approximately 875,000 BlackBerry subscriber accounts were added in the quarter.  At the end of the quarter, the total BlackBerry subscriber account base was approximately 7 million.  Revenue and subscriber account additions will not be impacted by the restatement referenced above. 

"We are extremely pleased with the strong revenue and subscriber account growth achieved in the third quarter," said Jim Balsillie, Chairman and Co-CEO at RIM. "New product launches during the past few months have exceeded our expectations and we look forward to continuing this momentum into the new year."

Preliminary GAAP net income for the quarter was $176.0 million, or $0.93 per share diluted.  Excluding regular stock option expense of $3.6 million, preliminary adjusted net income was $179.6 million, or $0.95 per share diluted.  The preliminary adjusted net income and preliminary adjusted net income 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.  The adjusted measures should be considered in the context of RIM’s preliminary GAAP results.

Revenue for the fourth quarter of fiscal 2007 ending March 3, 2007 is expected to be in the range of $900-$940 million.  Subscriber account additions in the fourth quarter are expected to be in the range of 950,000-975,000.  GAAP earnings per share for the fourth quarter are expected to be in the range of $0.92-$0.99 cents per share diluted.  Adjusted earnings per share for the fourth quarter, which excludes regular stock option expense of approximately $5 million, are forecast to be in the range of $0.95-$1.02 per share diluted. 

The total of cash, cash equivalents, short-term and long-term investments was $1.3 billion as at December 2, 2006, compared to $1.2 billion at the end of the previous quarter, an increase of $155 million over the prior quarter.  Cash was provided by operating activities as well as issuance of share capital.  These were offset in part by capital expenditures.

Reconciliation of preliminary GAAP net income to preliminary adjusted net income
(United Statesdollars, in thousands except per share data)
For the three months ended December 2 , 2006
 
Preliminary GAAP net income, as reported $ 176,017
 
Adjustment:
 
   Regular stock option expense, net of tax 3,609
 
Preliminary adjusted net income $ 179,626
 
Preliminary adjusted net income per share, diluted $ 0.95
 
Note: Preliminary adjusted net income and preliminary 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 preliminary GAAP results.

Highlights of the third quarter:

• RIM introduced the BlackBerry® Pearl™ smartphone.
• RIM introduced the BlackBerry 8703e.
• RIM introduced BlackBerry Enterprise Server for MDS Applications.
• RIM introduced an enhanced BlackBerry Smart Card Reader.
• T-Mobile USA launched the BlackBerry Pearl in the U.S.
• Cingular launched the BlackBerry Pearl in the U.S.
• Verizon Wireless launched the BlackBerry 8703e in the U.S.
• Sprint launched the BlackBerry 8703e in the U.S.
• U.S. Cellular launched the BlackBerry 8703e in the U.S.
• Rogers Wireless launched the BlackBerry Pearl in Canada.
• Bell launched the BlackBerry 8703e in Canada.
• Telus launched the BlackBerry 8703e in Canada.
• Digicel launched BlackBerry in Martinique.
• Entel PCS launched the BlackBerry Pearl in Chile.
• Movistar Chile launched the BlackBerry Pearl in Chile.
• CLARO launched the BlackBerry 7130g in Chile.
• CLARO launched BlackBerry in El Salvador.
• CLARO launched BlackBerry in Guatemala.
• O2 launched the BlackBerry Pearl in the UK.
• Orange launched the BlackBerry Pearl in the UK.
• T-Mobile launched the BlackBerry Pearl in Germany.
• T-Mobile launched the BlackBerry Pearl in Austria.
• T-Mobile launched the BlackBerry Pearl in the UK.
• Vodafone launched the BlackBerry Pearl in Spain.
• Vodafone launched the BlackBerry Pearl in Germany.
• Vodafone launched the BlackBerry Pearl in Italy.
• Vodafone launched the BlackBerry Pearl in the UK.
• SFR launched the BlackBerry Pearl in France.
• Telecom Italia launched the BlackBerry Pearl in Italy.
• Trigcom launched the BlackBerry 8700g and the BlackBerry Pearl in Norway.
• Mobilkom launched the BlackBerry Pearl in Austria.
• Telefonica launched the BlackBerry Pearl in Spain.
• Mobistar launched the BlackBerry 7130g and the BlackBerry Pearl in Belgium.
• Orange launched BlackBerry in Slovakia.
• T-Mobile Slovakia launched the BlackBerry 8700g in Slovakia.
• CellPlus announced plans to launch BlackBerry in Mauritius.
• Mobily announced plans to launch BlackBerry in Saudi Arabia.
• Batelco and EMS launched BlackBerry in Bahrain.
• Etisalat launched BlackBerry Internet Service in the United Arab Emirates.
• Djezzy launched BlackBerry in Algeria.
• NTT DoCoMo launched the BlackBerry 8707h in Japan.
• Maxis launched the BlackBerry 8707g in Malaysia.
• Indosat launched the BlackBerry 8700g in Indonesia.
• MPULSE launched BlackBerry in Guam.
• Vodafone launched the BlackBerry 7130v in New Zealand.
• Airtel launched the BlackBerry 7130g and BlackBerry Pearl in India.
• CSL launched the BlackBerry Pearl in Hong Kong.
• SmarTone-Vodafone launched the BlackBerry Pearl in Hong Kong.
• SingTel launched the BlackBerry Pearl in Singapore.
• Vodafone launched the BlackBerry Pearl in Australia.
• Optus launched the BlackBerry Pearl in Australia.
• Cingular launched BlackBerry Connect for the Nokia E62.
• 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:

• Alltel Wireless launched the BlackBerry 8703e in the U.S.
• Cbeyond launched the BlackBerry 8703e in the U.S.
• Telcel Mexico launched the BlackBerry Pearl in Mexico.
• CLARO launched the BlackBerry Pearl in Chile.
• Comcel launched the BlackBerry Pearl in Colombia.
• TSTT launched the BlackBerry Pearl in Trinidad & Tobago.
• Wind launched the BlackBerry 8700g in Italy.
• Orange launched the BlackBerry Pearl in France.
• Orange launched the BlackBerry Pearl in Spain.
• Swisscom launched the BlackBerry Pearl in Switzerland.
• Vodafone launched the BlackBerry Pearl in Croatia.
• Vipnet launched the BlackBerry Pearl in Croatia.
• Hutch launched BlackBerry in India.
• Telstra launched the BlackBerry Pearl in Australia.
• Vodafone launched the BlackBerry Pearl in New Zealand.
• Taiwan Mobile launched the BlackBerry 7290 and the BlackBerry 8700 in Taiwan.
• Rogers Wireless launched BlackBerry Connect for the Nokia E62 in Canada.
• Dopod International launched BlackBerry Connect in Asia.
• Digicel launched BlackBerry Connect for the Sony Ericsson P990 in the Caribbean.

The replay of the company’s Q3 conference call can be accessed after 7 p.m. (eastern), December 21, 2006 until midnight (eastern), January 14, 2007.  It can be accessed by dialing 416-640-1917 and entering passcode 21212410#.   The conference will also appear on the RIM web site, live at 5:30 pm (eastern) and archived at http://www.rim.com/investors/events/index.shtml until midnight January 14, 2007.

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, including statements relating to RIM's revenue and earnings expectations for the fourth quarter of fiscal 2006, anticipated growth in subscribers, plans relating to RIM, including plans for new product launches, its expectations regarding its carrier partners, and RIM’s expectations relating to the outcome of its ongoing management-initiated, voluntary review of its historical option granting practices. The terms and phrases, “belief”, “will”, “continuing this momentum”, “expected”, “forecast”, “plans” 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 ongoing management-initiated, voluntary review of its historical option granting practices, including the risks described in the cautionary note regarding forward-looking statements in RIM’s biweekly status update in a separate press release issued today; risks relating to RIM's intellectual property rights, including; 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).  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)

Preliminary Consolidated Statements of Operations

  For the three months ended
(unaudited) December 2, 2006 September 2, 2006 November 26, 2005
 
Revenue $ 835,053 $ 658,541 $ 560,596
Cost of sales 382,295 288,369 247,851
 
Gross margin 452,758 370,172 312,745
 
 
Gross Margin % 54.2% 56.2% 55.8%
 
Expenses
   Research and development 60,833 55,622 41,567
   Selling, marketing and administration 145,903 115,860 83,965
   Amortization 20,334 18,453 12,797
   Litigation - - 26,176
 
227,070 189,935 164,505
 
 
Income from operations 225,688 180,237 148,240
 
   Investment income 12,666 12,606 17,483
 
Income before income taxes 238,354 192,843 165,723
 
 
Provision for income taxes
   Current 50,775 30,740 75,929
   Deferred 11,562 21,326 (30,355)
 
62,337 52,066 45,574
 
Net Income $ 176,017 $ 140,777 $ 120,149
 
 
Earnings per share
   Basic $ 0.95 $ 0.76 $ 0.63
 
   Diluted $ 0.93 $ 0.74 $ 0.61
 
 
Weighted average number of common shares outstanding (000’s)
   Basic 184,321 185,054 189,341
   Diluted 189,821 189,627 196,339
 
Total common shares outstanding (000's) 185,601 183,808 185,114
 

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

Preliminary Consolidated Balance Sheets

As at (unaudited) September 2, 2006 March 4, 2006
 
 
Assets
Current
   Cash and cash equivalents $ 612,817 $ 459,540
   Short-term investments 280,635 175,553
   Trade receivables 448,697 315,278
   Other receivables 34,335 31,861
   Inventory 216,075 134,523
   Other current assets 33,301 45,035
   Deferred income tax asset 30,327 94,789
 
1,656,187 1,256,579
 
Investments 426,595 614,309
Capital assets 437,020 326,313
Intangible assets 134,966 85,929
Goodwill 114,752 29,026
 
$ 2,769,520 $ 2,312,156
 
     
Liabilities
Current
   Accounts payable $ 110,773 $ 94,954
   Accrued liabilities 225,993 144,912
   Income taxes payable 78,272 17,584
   Deferred revenue 25,971 20,968
   Current portion of long-term debt 274 262
 
441,283 278,680
 
Long-term debt 6,591 6,851
Deferred income tax liability 26,195 27,858
 
474,069 313,389
 
Shareholders’ equity 2,295,451 1,998,767
 
$ 2,769,520 $ 2,312,156
 

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

Preliminary Consolidated Statements of Cash Flows

(unaudited) For the three months ended December 2, 2006 For the nine months ended December 2, 2006
     
Cash flows from operating activities
Net income $ 176,017 $ 446,567
     
Items not requiring an outlay of cash:
   Amortization 34,642 92,041
   Deferred income taxes 16,673 69,525
   Share-based payments 3,682 12,591
   Other (840) (685)
Net changes in working capital items (14,880) (53,452)
 
Net cash provided by operating activities 215,294 566,587
 
     
Cash flows from financing activities
Issuance of share capital 22,221 39,421
Common shares repurchased pursuant to Common Share
   Repurchase Program - (203,933)
Repayment of long-term debt (67) (196)
Net cash provided by (used in) financing activities 22,154 (164,708)
 
     
Cash flows from investing activities
Acquisition of investments (35,555) (44,567)
Proceeds on sale or maturity of investments 30,464 66,165
Acquisition of capital assets (64,139) (176,843)
Acquisition of intangible assets (18,720) (49,412)
Business acquisitions (4,574) (116,030)
Acquisition of short-term investments (41,750) (63,506)
Proceeds on sale and maturity of short-term investments 49,282 134,878
 
Net cash used in investing activities (84,992) (249,315)
 
     
Effect of foreign exchange gain on cash and cash equivalents 713 713
 
Net increase in cash and cash equivalents
   for the period 153,169 153,277
Cash and cash equivalents, beginning of period 459,648 459,540
 
Cash and cash equivalents, end of period $ 612,817 $ 612,817
 
     
     
As at December 2, 2006 September 2, 2006
Cash and cash equivalents $ 612,817 $ 459,648
Short-term investments 280,635 237,670
Investments 426,595 467,324
 
Cash, cash equivalents, short-term and long-term investments $ 1,320,047 $ 1,164,642