Press Release

September 30, 2004

Research In Motion Reports Second Quarter Results

Waterloo, Ontario - Research In Motion Limited (RIM) (Nasdaq: RIMM; TSX: RIM), a world leader in the mobile communications market, today reported second quarter results for the three months ended August 28, 2004 (all figures in U.S. dollars and U.S. GAAP).

Revenue for the second quarter of fiscal 2005 was $310.2 million, up 15% from $269.6 million in the previous quarter and up 147% from $125.7 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 71% for handhelds, 18% for service, 8% for software licences and 3% for other revenue. The total number of BlackBerry® subscribers increased by approximately 317,000 from the prior quarter to 1,657,000 subscribers.

"RIM is reporting another strong quarter and we are pleased with our momentum as BlackBerry quickly approaches the two million subscriber mark," said Jim Balsillie, Chairman and Co-CEO at RIM. "The current quarter is off to a good start with RIM and its partners executing well and continuing to expand the market opportunity within existing geographies. We are also making steady progress in terms of geographic expansion and look forward to entering new markets, including China, in the coming months."

Net income for the quarter was at the high end of guidance at $70.6 million, or $0.36 per share diluted, compared to net income of $55.0 million or $0.28 per share diluted in the prior quarter. Excluding the patent litigation provision of $18.3 million or $0.09 per share diluted, the Company's adjusted net income and adjusted earnings per share was $88.9 million or $0.45 per share. The adjusted net income and adjusted diluted earnings per share do not have any standardized meaning prescribed by GAAP and thus are not comparable to similar measures presented by other issuers. These adjusted measures should be considered in the context of RIM's GAAP results.

RIM is updating revenue and earnings guidance for the third quarter of fiscal 2005 and introducing guidance for the fourth quarter. Revenue guidance for the third quarter of fiscal 2005 is unchanged, in the range of $340-$360 million. Revenue for the fourth quarter of fiscal 2005 is expected to be higher, in the range of $385-$410 million. RIM is increasing earnings guidance for the third quarter. GAAP earnings per share (EPS) for the third quarter is now expected to be in the range of $0.40-$0.44 per share diluted and adjusted EPS is expected to be in the range of $0.50-$0.55 per share. For the fourth quarter, RIM is expecting EPS to be between $0.45-$0.50 per share diluted on a GAAP basis and $0.57-$0.63 cents adjusted.

The total of cash, cash equivalents, short-term and long-term investments was approximately $1.59 billion as at August 28, 2004, compared to $1.55 billion at the end of the previous quarter, for a net increase of $46 million quarter over quarter.

Highlights of the second quarter:

  • RIM announced plans to introduce BlackBerry Enterprise Server for Novell GroupWise.
  • Sprint announced plans to offer BlackBerry in the US.
  • Rogers Wireless launched the BlackBerry 7780™ in Canada.
  • Cable & Wireless announced plans to offer BlackBerry in Jamaica.
  • T-Mobile launched BlackBerry in Hungary.
  • Orange launched BlackBerry for corporate customers in France.
  • Mobistar, part of the Orange group, announced plans to introduce BlackBerry in Belgium.
  • Vodafone announced plans to introduce BlackBerry in New Zealand.
  • Globe Telecom announced plans to introduce BlackBerry in the Philippines.
  • SMART introduced the BlackBerry 7230 and BlackBerry 7730 in the Philippines.
  • Hutchison introduced Chinese support for BlackBerry Internet Service in Hong Kong.
  • CSL introduced Chinese support for BlackBerry Internet Service in Hong Kong.
  • Optus introduced BlackBerry in Australia.
  • The Siemens SK65 mobile phone featuring BlackBerry Built-In technology was introduced.
  • RIM and Motorola announced plans for BlackBerry Connect support on Motorola MPx and MPx220 mobile devices.
  • BlackBerry ISV Alliance partners 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.
  • RIM was added to the S&P/TSX 60 and S&P Global 1200 indexes.

Highlights subsequent to quarter end:

  • China Mobile, the largest carrier in China, and RIM signed an initial Letter of Agreement focused on bringing BlackBerry to China Mobile's GSM/GPRS customers.
  • RIM introduced the new BlackBerry 7100 Series, which features the power of BlackBerry in a new sleek design with many enhanced phone features, quad-band and Bluetooth support, speakerphone, large color screen and SureType keyboard technology.
  • RIM introduced SureType, a breakthrough keyboard technology for smaller handsets.
  • RIM introduced the new BlackBerry 7290, which features quad-band and Bluetooth support, a brighter screen and enhanced memory.
  • T-Mobile introduced the BlackBerry 7100t in the U.S.
  • The BlackBerry 7100t won PC Magazine's "Editor's Choice" award in September.
  • Earthlink Wireless launched the BlackBerry 7750.
  • Cingular launched the BlackBerry 7290 in the U.S.
  • Vodafone introduced the BlackBerry 7100v in Europe and Australasia.
  • O2 launched the BlackBerry 7290 in Europe.
  • KPN launched BlackBerry in the Netherlands.
  • Polska Telefonica Cyfrowa announced plans to introduce BlackBerry in Poland.
  • Maxis Communications announced plans to bring BlackBerry to Malaysia.
  • Vodafone launched BlackBerry Internet Service in Australia.
  • Globe Telecom introduced BlackBerry Internet Service in the Philippines.
  • O2 announced that the XDA II is expected to feature BlackBerry Connect starting in January 2005.
  • Nokia announced plans to offer BlackBerry Connect support on Symbian OS-based Series 80 mobile devices.
  • RIM announced plans to offer an aftermarket BlackBerry Connect software download for the Palm OS.
  • RIM and PalmSource announced plans to make the email API that will be released with the first version of the PalmSource Mail client for BlackBerry Connect available to Palm OS developers.

The replay of the company's Q2 conference call can be accessed after 7 p.m. (eastern), September 30, 2004 until midnight (eastern), October 15, 2004. It can be accessed by dialing 416-640-1917 and entering reservation number 21041224#. The conference will also appear on the RIM web site, live at 5:00 pm and archived at http://www.rim.com/investors/events/index.shtml until midnight October 15, 2004.

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 to data. 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.

Forward-looking statements in this news release are made pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used herein, words such as "intend" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions made by and information available to Research In Motion Limited. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements include, without limitation, possible product defects and product liability, risks related to international sales and potential foreign currency exchange fluctuations, the initiation or outcome of litigation, acts or potential acts of terrorism, international conflicts, significant fluctuations of quarterly operating results, changes in Canadian and foreign laws and regulations, continued acceptance of RIM's products, increased levels of competition, technological changes and the successful development of new products, dependence on third-party networks to provide services, dependence on intellectual property rights and other risks and factors detailed from time to time in RIM's periodic reports filed with the United States Securities and Exchange Commission, and other regulatory authorities. The Company has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The BlackBerry, SureType 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)

Consolidated Statements of Operations

  For the three months ended
(unaudited) August 28,
2004		 May 29,
2004		 August 30,
2003 (1)
       
Revenue $310,182 $269,611 $125,679
Cost of sales 151,501 134,978 72,711
 
Gross margin 158,681 134,633 52,968
 
     Gross margin % 51.2% 49.9% 42.1%
       
Expenses      
Research and development, net of government funding 24,588 20,379 14,701
Selling, marketing and administration 44,016 40,822 25,424
Amortization 9,442 9,048 7,263
Litigation 18,304 15,579 5,653
 
  96,350 85,828 53,041
 
       
Income (loss) from operations 62,331 48,805 (73)
       
Investment income 8,588 6,460 2,222
 
Income before income taxes 70,919 55,265 2,149
Provision for income taxes 326 293 -
 
Net income $70,593 $54,972 $2,149
 
       
Earnings per share      
     Basic $0.38 $0.30 $0.01
 
     Diluted $0.36 $0.28 $0.01
 
Weighted average number of common shares outstanding (000's)      
     Basic 187,296 185,856 155,324
     Diluted 197,717 196,378 163,260

Note (1): Certain of the prior year's second quarter figures, as previously reported, have been reclassified for consistency with the current quarter's presentation. These reclassifications did not result in any change to previously reported net income (loss).

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

Consolidated Balance Sheets

As at August 28,
2004		 February 28,
2004
  (unaudited) (audited)
Assets    
Current    
Cash and cash equivalents $799,308 $1,156,419
Short-term investments 71,542 -
Trade receivables 122,851 95,213
Other receivables 24,806 12,149
Inventory 76,291 42,836
Restricted cash 69,600 36,261
Other current assets 17,007 12,527
 
  1,181,405 1,355,405
     
Investments 720,378 333,886
Capital assets 160,130 147,709
Intangible assets 64,552 64,269
Goodwill 30,109 30,109
 
  $2,156,574 $1,931,378
 
     
Liabilities    
Current    
Accounts payable and accrued liabilities $142,205 $106,108
Accrued litigation and related expenses 117,598 84,392
Income taxes payable 1,754 1,684
Deferred revenue 14,478 16,498
Current portion of long-term debt 203 193
 
  276,238 208,875
     
Long-term debt 6,240 6,240
 
  282,478 215,115
     
Shareholders' equity    
Share capital 1,861,136 1,829,388
Retained earnings (accumulated deficit) 6,359 (119,206)
Accumulated other comprehensive income 6,601 6,081
 
Total shareholders' equity 1,874,096 1,716,263
 
  $2,156,574 $1,931,378
 

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

Condensed Consolidated Statement of Cash Flows

  For the three months ended For the six
months ended
(unaudited) August 28, 2004 August 28, 2004
     
Cash flows from operating activities    
Net income $70,593 $125,565
     
Items not requiring an outlay of cash:    
Amortization 16,738 34,794
Loss (gain) on foreign currency translation of long-term debt (6) 32
 
  87,325 160,391
     
Net changes in non-cash working capital items (32,484) (43,157)
 
  54,841 117,234
 
Cash flows from financing activities    
Issuance of share capital 12,110 31,748
Repayment of debt (49) (95)
 
  12,061 31,653
 
Cash flows from investing activities    
Acquisition of investments (77,523) (428,362)
Proceeds on sale or maturity of investments 6,412 10,063
Acquisition of capital assets (19,688) (36,911)
Acquisition of intangible assets, net (9,200) (10,597)
Acquisition of short-term investments (15,110) (40,191)
 
  (115,109) (505,998)
 
     
Net decrease in cash and cash equivalents for the period (48,207) (357,111)
     
Cash and cash equivalents, beginning of period 847,515 1,156,419
 
Cash and cash equivalents, end of period $799,308 $799,308
 
     
  As at As at
  August 28, 2004 May 29, 2004
Cash and cash equivalents $799,308 $847,515
Short-term investments 71,542 24,976
Investments 720,378 672,734
 
  $1,591,228 $1,545,225