Press Release

September 28, 2000

Research In Motion Reports Strong Second Quarter Growth

Waterloo, Ontario - Research In Motion Limited (Nasdaq: RIMM, TSE: RIM), a world leader in the mobile communications market, today reported second quarter results for the six months ended August 31, 2000. (all figures in US $ and Canadian GAAP)

Revenue for the second quarter of fiscal 2001 was $42.5 million. This marks a 57% increase over the prior quarter's revenue of $27.1 million and a 121% increase over the $19.3 million generated in the second quarter of last year. BlackBerry™ subscriber growth continues to be a main revenue driver. BlackBerry accounted for approximately 57% of the Company's quarterly revenue. RIM Wireless Handhelds™ accounted for 36%; and OEM radio modems and software sales accounted for the balance.

"The BlackBerry wireless email business continues to grow rapidly," said Jim Balsillie, Chairman and Co-CEO. "Acceptance of BlackBerry as a mainstream business tool has been achieved with both users and IT departments. During this next phase, our distribution partners will help RIM to further penetrate the enterprise market and enter the consumer market."

"Our main tasks ahead call for focused execution - drive ahead on research and development; continue to expand our sales and marketing initiatives; increase manufacturing capabilities; and grow our IT infrastructure."

Net loss for the quarter was $1.6 million ($0.02 per share basic and fully diluted) compared with a net income of $0.4 million in the prior quarter and $2.3 million in the same quarter last year. The earnings reflect the company's commitment to grow the BlackBerry subscriber base with increased investment in marketing and channel support costs.

Gross research and development expenditures for the quarter were $5.3 million, or 13% of revenue, compared to $4.5 million in the prior quarter, or 17% of revenue, and $2.8 million, or 15% of revenue, in the second quarter last year.

Selling, marketing and administration expenses were $15.7 million, or 37% of revenue, for the quarter compared to $10.4 million, or 38% of revenue in the previous quarter and $3.0 million, or 16% of revenue, in the second quarter of last year. Planned investments in BlackBerry marketing, co-operative marketing programs, and staffing increases in sales, marketing, and customer support have contributed to the increase.

Cash, cash equivalents and marketable securities were $183.8 million at August 31, 2000 as compared to $198.8 in the previous quarter. Changes in working capital, capital investments and investments in key strategic partners account for the decrease.

"BlackBerry growth and continuing strong sales of RIM Wireless Handhelds were the drivers for the significant revenue growth this quarter," said Dennis Kavelman, Chief Financial Officer. "Expenses increased in line with expectations as we executed on our plan to grow the business."

Highlights of the second quarter:

  • RIM announced an expanded relationship with Compaq Computer Corporation wherein the two companies began offering customers an end-to-end wireless email solution that is co-branded by Compaq and RIM. The new solution is named the iPAQ BlackBerry Wireless Email Solution and features RIM's advanced wireless handhelds, PC utilities, enterprise server software and wireless services together with server hardware, enterprise messaging software and professional services from Compaq.
  • BT Cellnet and RIM announced that the two companies are working together to offer the BlackBerry wireless email solution to BT Cellnet corporate customers in the UK. BlackBerry will support both Microsoft® Exchange and Lotus Notes environments and will operate over BT Cellnet's new GPRS (General Packet Radio Service) high speed network.
  • OracleMobile and RIM announced a joint-marketing agreement. The companies plan to work together to promote Ask@OracleMobile and Oracle "Portal-to-Go" via BlackBerry.
  • RIM and Brience, a leading provider of next-generation wireless and broadband solutions, announced they will work together to enable corporations to extend enterprise applications and information to BlackBerry Wireless Handhelds™, allowing mobile employees to manage eBusiness interactions on the go.
  • OneMain.com announced availability of BlackBerry Internet Edition. This initial roll-out will be offered where available through its integrated local operations in California, Tennessee, Illinois, Pennsylvania and Missouri. Further expansion plans include availability in 35 states.
  • RIM and Certicom, a leading provider of mobile eCommerce security, announced an agreement, which allows for large-scale deployment of Certicom's ECC technology across RIM's full line of wireless handhelds. Using Certicom's security technology, RIM's development community can provide secure, end-to-end mobile commerce solutions for a broad range of customers, including carriers, financial institutions and application service providers.
  • RxRite announced its e-prescription application built on the BlackBerry Wireless Email Solution. ePrescription enables physicians to connect with its Internet-based prescription service anywhere, anytime. This technology allows RxRite to deploy their e-prescription service directly into the hands of physicians, without requiring computers and Internet connectivity.
  • Rogers AT&T Wireless announced the availability of the Rogers AT&T Go.Web Microbrowser. The Rogers AT&T Go.Web Microbrowser enables customers to access any HTML web site anytime, anywhere and offers access to a variety of Canadian content partners, such as Canada.com, CBC and CTV Sportsnet.
  • RIM introduced its Development Environment for Java technology at the JavaOne conference. RIM demonstrated and distributed its Development Kit (Early Access Version) for the Java 2 Platform, Micro Edition (J2ME). RIM also distributed RIM Wireless Handhelds running an early release of the J2ME Connected Limited Device Configuration (CLDC).
  • Handango added support for RIM Wireless Handhelds to its Internet marketplace for handheld and wireless computing solutions. Handango offers a full suite of services to the RIM developer community, including a featured area on Handango.com to promote and sell RIM handhelds and applications.
  • Tucows.com, a leading distributor of software on the Internet, announced it will distribute software on its Tucows PDA site to support RIM Wireless Handhelds. With its distribution capabilities and eCommerce solutions, as well as its developer relationships, Tucows will be able to help create a strong market for third party applications, particularly Java-based applications, that support the RIM products and services.
  • In June, PC World Magazine awarded BlackBerry with the World Class Award for Best Wireless Communication Device.

Highlights subsequent to quarter end:

  • Bell Mobility announced it will offer BlackBerry for use on its Canadian ARDIS wireless data network. The agreement encompasses both BlackBerry Exchange Edition and BlackBerry Internet Edition.
  • Rogers AT&T Wireless announced the expansion of their existing distribution agreement to include BlackBerry Exchange Edition in addition to BlackBerry Internet Edition. While BlackBerry Internet Edition is currently available in Rogers Cantel retail outlets throughout Canada, BlackBerry Exchange Edition will be sold through Rogers AT&T Wireless' extensive corporate sales channels.
  • RIM announced the appointment of Don Morrison as Chief Operating Officer (COO). Morrison's mandate as the first COO of RIM is to strengthen the Company's international operations and help build a world-class service organization to support RIM's BlackBerry Wireless Email Solution. Morrison joins RIM following a number of leadership positions in Canada, Europe and the United States with AT&T and Bell Canada.

About Research In Motion

Research In Motion Limited is a leading designer, manufacturer and marketer of innovative wireless solutions for the mobile communications market. Through development and integration of hardware, software and services, RIM provides solutions for seamless access to time-sensitive information including email, messaging, Internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers around the world to enhance their products and services with wireless connectivity. RIM's portfolio of award-winning products includes the RIM Wireless Handheld™ product line, the BlackBerry™ wireless email solution, wireless personal computer card adapters, embedded radio-modems and software development tools. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in Canada, the United States and England. RIM is listed on the Nasdaq Stock Market (Nasdaq: RIMM) and the Toronto Stock Exchange (TSE: RIM). For more information, visit www.rim.net. Investors may contact investor_relations@rim.net. Customers may contact info@rim.net.

Research In Motion, RIM, the RIM logo, the RIM Wireless Handheld family of marks, BlackBerry, the BlackBerry logo, BlackBerry Exchange Edition and BlackBerry Internet Edition are trademarks of Research In Motion Limited. Research In Motion and RIM are registered with the U.S. Patent and Trademark Office. All other brands, products and company names mentioned herein may be trademarks or registered trademarks of their respective holders. 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. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, risks relating to possible product defects and product liability, risks related to international sales and potential foreign currency exchange fluctuations, risks related to the year 2000 issue, continued acceptance of RIM's products, increased levels of competition, technological changes, dependence on intellectual property rights and other risks detailed from time to time in RIM's periodic reports filed with the United States Securities and Exchange Commission and other regulatory authorities.

 

QUARTERLY CONSOLIDATED STATEMENT OF OPERATIONS

For the three months ended August 31
(in US$ thousands, except for earnings per share)		 Fiscal 2001 Fiscal 2000
(unaudited)    
     
Revenue $42,521 $19,278
Cost of sales      25,377      10,775
       17,144        8,503
     
Research and development, net of government assistance of $1,519 (2000 -$1,138) 3,816 1,681
Selling, marketing and administration 15,664 3,019
Amortization        1,891          887
       21,371       5,587
     
Income (loss) from operations (4,227) 2,916
     
Investment income       3,102         656
Income (loss) before provision for taxes (1,125) 3,572
     
Provision for income taxes          500       1,250
     
Net income (loss)    $(1,625)      $2,322
     
Earnings (loss) per share, basic $(0.02) $0.03
Earnings (loss) per share, fully diluted $(0.02) $0.03
See accompanying notes.    

 

YEAR TO DATE CONSOLIDATED STATEMENT OF OPERATIONS

For the six months ended August 31
(in US$ thousands, except for earnings per share)		 Fiscal 2001 Fiscal 2000
(unaudited)    
     
Revenue $69,619 $35,477
Cost of sales      40,335      20,187
       29,284      15,290
     
Research and development, net of government assistance of $3,419 (2000 -$1,951) 6,441 3,265
Selling, marketing and administration 26,068 5,319
Amortization        3,253        1,811
       35,762      10,395
     
Income (loss) from operations (6,478) 4,895
     
Investment income        5,991        1,373
Income (loss) before provision for taxes (487) 6,268
     
Provision for income taxes           750        2,159
     
Net income (loss)    $(1,237)      $4,109
     
Earnings per share, basic $(0.02) $0.06
Earnings per share, fully diluted $(0.02) $0.06
See accompanying notes.    

 

CONSOLIDATED BALANCE SHEET

As at August 31, 2000
(in US$ thousands)		 Fiscal 2001 Fiscal 2000
(unaudited)    
     
CURRENT ASSETS    
Cash and cash equivalents $ 29,584 $ 31,746
Marketable securities 154,221 33,990
Trade receivables 30,457 9,913
Other receivables 12,731 2,662
Inventory 40,400 19,598
Prepaid expenses        3,278        4,095
  270,671 102,004
     
FUTURE INCOME TAX ASSETS 4,395 -
     
INVESTMENTS 17,500 -
     
CAPITAL ASSETS      54,801      17,784
     
TOTAL ASSETS   $347,367   $119,788
     
CURRENT LIABILITIES    
Accounts payable and accrued liabilities $ 17,258 $ 4,237
Taxes payable 1,167 1,387
Deferred revenue 9,223 1,059
Future income tax liabilities - 336
Current portion of long-term debt         218             -
  27,866 7,019
     
LONG-TERM DEBT        6,833             -
  34,699 7,019
     
SHAREHOLDERS' EQUITY    
Common shares 295,775 101,028
Retained earnings      16,893      11,741
     312,668    112,769
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $347,367   $119,788

 

YEAR TO DATE CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended August 31
(in US$ thousands)		 Fiscal 2001 Fiscal 2000
(unaudited)    
     
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income (loss) for the period $ (1,237) $ 4,109
Items not requiring an outlay of cash:    
Amortization 3,553 1,811
Future income taxes 286 1,276
Foreign exchange loss (gain)             2          (21)
  2,604 7,175
     
Net changes in non-cash working capital items      (4,202)      (4,276)
Total cash provided by (used in) operations      (1,598)        2,899
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Income tax reduction resulting from financing costs - 269
Issuance of share capital and warrants, net of financing costs 1,380 517
Government funding received for capital expenditures 841 201
Repayment of debt           (99)               -
Total cash provided by financing activities        2,122           987
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Acquisition of capital assets (19,459) (4,784)
Acquisition of investments (15,500) -
Acquisition of marketable securities (194,244) (27,088)
Proceeds on sale and maturity of marketable securities    258,139      50,093
Total cash provided by investing activities      28,936      18,221
Foreign exchange effect on cash and cash equivalents            (2)            21
Increase in cash and cash equivalents for the period 29,458 22,128
Cash and cash equivalents, beginning of the period           126        9,618
Cash and cash equivalents, end of the period    $29,584    $31,746
     
Cash and cash equivalents are represented by:    
Balances with banks $27,134 $19,462
Short-term investments        2,450      12,284
Cash and cash equivalents, end of the period     $29,584     $31,746

 

Notes to Consolidated Financial Statements

NOTE 1: BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the subsidiaries with inter-company transactions and balances eliminated. All of the subsidiaries are wholly owned.

NOTE 2: CHANGE IN FUNCTIONAL AND REPORTING CURRENCY
Prior to September 1, 1999, the Company had measured and presented its consolidated financial statements in Canadian dollars. Effective September 1, 1999, as a result of the Company's increased economic activity in the U.S, the U. S. dollar has become the functional currency of the Company's operations. Effective the same date, the U. S. dollar has also been adopted as the reporting currency.
For periods up to and including August 31, 1999, the Canadian dollar financial statements of the Company have been restated into U.S. dollars, in accordance with accounting principles generally accepted in Canada, using the August 31, 1999 closing exchange rate being a rate of CDN $1.4888 per US $1.00.

NOTE 3: CAPITAL STOCK
The following are the number of outstanding common shares, common share purchase warrants and stock options at August 31:

  Fiscal 2001 Fiscal 2000
Common shares 71,529,551 64,532,082
Common share purchase warrants 214,000 214,000
Stock options 7,780,970 7,340,850

NOTE 4: RECLASSIFICATION OF COMPARATIVE FIGURES
Comparative figures have been restated to U.S. dollars as disclosed in Note 2 and have been reclassified to conform to the current year's presentation.