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Press Release
December 20, 2001
Research In Motion Reports Third Quarter Results
Waterloo, ON - Research In Motion Limited (RIM) (Nasdaq: RIMM, TSE: RIM), a world leader in the mobile communications market, today reported results for the third quarter ended December 1, 2001. (all figures in US $ and Canadian GAAP)
Revenue for the third quarter of fiscal 2002 was $70.9 million, an increase of 15% over the $61.6 million in the corresponding quarter last year. BlackBerry™ accounted for approximately 82% of the Company's current quarterly revenue, RIM Wireless Handhelds™ accounted for 12%, OEM radio modems and other revenue accounted for 6%. Revenue for the nine months ended December 1, 2001 was $227.9 million, an increase of 74% over revenue of $131.2 million for the same period in the prior year.
The total number of BlackBerry subscribers increased to approximately 289,000 as at December 1, 2001. Over 13,200 companies were using BlackBerry in their organizations, a 10% increase in company deployment over the prior quarter.
"I am pleased that we were able to execute and meet our forecasted revenue and earnings this quarter given the current economic conditions and delays in the rollout of the GPRS networks," said Jim Balsillie, Chairman and Co-CEO. "We continued to announce new agreements with major European and North American carriers, such as Telecom Italia Group, VoiceStream and Nextel. These new relationships will significantly increase our BlackBerry distribution channels and market coverage next year."
The net loss for the quarter was $6.3 million or $0.08 per share basic and diluted compared to net income of $1.5 million or $0.02 per share basic and fully diluted in the third quarter of fiscal 2001. For the nine months ended December 1, 2001, the net loss was $19.9 million or $0.25 per share.
Gross research and development expenditures were $14.1 million, or 20% of revenue in the quarter ended December 1, 2001, compared to $11.0 million or 14% of revenue in the prior quarter. Net research and development expenditures were $10.5 million for the three months ended December 1, 2001 as compared to $7.6 million last quarter. Continued focus on development of next generation handhelds, together with ongoing development of the BlackBerry platform, has driven the continued increase in research and development.
Selling, marketing and administration expenses were $25.7 million or 36% of revenue, compared to $16.9 million or 27% of revenue in the third quarter of fiscal 2001 and $21.3 million or 27% of revenue, which excludes the $6.9 million provision recorded for Motient Corporation, in the prior quarter. Expenditures increased as RIM invested heavily in building branding and infrastructure required for expansion in Europe and other international markets.
Cash, cash equivalents and marketable securities were $656.3 million as at December 1, 2001 compared to $672.9 million at the end of the previous quarter, for a net decrease of $16.6 million quarter over quarter. The decrease primarily reflects cash payments of $5.5 million to repurchase 370,000 common shares pursuant to the Company's previously announced Normal Course Issuer Bid and $9.8 million in cash consideration paid for the acquisition of Plazmic Inc. In addition, the Company invested $27.1 million in capital and other assets, with an offsetting $24.9 million resulting from cash flows from operating activities. Capital expenditures were primarily made for the completion of a new research and development facility, software licences and additional production equipment for RIM's manufacturing facilities.
Highlights of the third quarter:
- RIM announced a supply agreement with VoiceStream Wireless Corporation in the United States. VoiceStream will purchase BlackBerry Wireless Handhelds with associated software and service for distribution throughout its nationwide service area. The handhelds will operate on VoiceStream's GSM/GPRS network.
- BT Cellnet officially launched BlackBerry in the UK. BlackBerry is now available and operating on BT Cellnet's GPRS network.
- Hewlett-Packard and RIM announced plans to jointly develop mobile printing applications for RIM's BlackBerry wireless email solution and HP printers. The HP Mobile Enterprise Printing application will enable users to wirelessly print email messages and email attachments on network printers via their BlackBerry handheld.
- PeopleSoft Inc. announced its support for BlackBerry in Europe with a mobile solution that enables users to update PeopleSoft's Internet applications using BlackBerry Wireless Handhelds on GPRS networks.
- BitFlash announced its BitFlash Mobile Messaging Suite, which provides BlackBerry users with the ability to view visually rich email attachments on their handhelds.
- Informatica Corporation and RIM announced plans to support BlackBerry with the Informatica Analytics Delivery. The Informatica Analytics Delivery Platform enables mobile alerts and easy interaction with key business metrics such as sales trends, customer order records, support logs and enterprise communications tools.
- RIM and 01 Communique Inc. formed an alliance to further develop interoperability between 01's I'm InTouch™ software architecture and BlackBerry allowing mobile professionals to easily and wirelessly access their PC information from the convenience of their BlackBerry handheld.
- Novarra, Inc. announced it will provide access to business-critical Internet, intranet and extranet applications for BlackBerry through its Novarra WirelessWeb Enterprise Suite.
- RIM and Dejima Inc. formed an alliance to support BlackBerry on the Dejima Direct™ platform. Using Dejima's natural interaction technology, mobile sales and field professionals will be able to use their BlackBerry handhelds to request and receive customer information, such as shipment status, order history, or credit line issues.
- EarthLink announced the addition of wireless Internet access as part of its BlackBerry service offering. The new service features a mobile Internet browser, powered by Neomar, that provides users with secure access to wireless web sites, content categories, web search and directory services.
- RIM's Wireless Handhelds received several product awards from industry leading publications and organizations, including: Forbes (Hottest Product in the handheld category), International Engineering Consortium (InfoVision Award in the wireless category), and Mobile Computing and Communications Magazine (Mobile Innovators Award for Best Communications Device).
- RIM received a variety of corporate awards from industry leading publications and organizations including: Deloitte & Touche (Technology Fast 500 Award - US and Technology Fast 50 Award - Canada), Federal Computer Week (Ten Companies to Watch), M-Business (Ten Top Market Drivers) and Ipsos-Reid (Seventh Annual Survey: Top Ten Most Admired and Respected Canadian Corporations).
- RIM was one of only ten companies to win the "Marketers Of The Year" award from BRANDWEEK Magazine. The award recognized the strength of the BlackBerry brand alongside enduring brand leaders such as Heinz, Nike and Budweiser.
- During the quarter, RIM acquired Plazmic Inc., a small software developer of Java-based applications for mobile devices. Total cash and share consideration was approximately $16.0 million.
Highlights subsequent to quarter end:
- Telecom Italia Group (TIM) and Research In Motion announced that they will work together to introduce BlackBerry to corporate customers in the Italian market. Both TIM and Research In Motion also announced plans to work together with Italy's DADA for system integration and software management applications.
- RIM announced a multi-year agreement with Nextel Communications to develop a BlackBerry Wireless Handheld for Nextel's iDEN network.
- mFormation Technologies Inc. announced it has signed a BlackBerry ISV alliance agreement with RIM to provide support for BlackBerry Wireless Handhelds with mFormation's Wireless Infrastructure Management software.
The replay of the company's Q3 conference call can be accessed after 7 p.m. (eastern time) December 20, 2001 until midnight (eastern) December 27, 2001. It can be accessed by calling (416) 640-1917 and entering reservation number 157014#. The conference will also appear on the RIM web site, live and archived, at www.rim.net/investors until January 4, 2002.
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, embedded radio-modems and software development tools. Founded in 1984 and based in Waterloo, Ontario RIM operates offices in Canada, the United States and Europe. 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 and BlackBerry are trademarks of Research In Motion Limited. Research In Motion and RIM are registered with the U.S. Patent and Trademark Office and may be pending or registered in other countries. Plazmic is a trademark of Plazmic Inc. 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, 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.
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 | For the Nine Months Ended | |||
| December 1, 2001 | November 30, 2000 | December 1, 2001 | November 30, 2000 | |
| | ||||
| (unaudited) | ||||
| Revenue | $ 70,857 | $61,629 | $227,921 | $131,248 |
| Cost of sales | 44,385 | 37,925 | 157,187 | 78,259 |
| | ||||
| Gross margin | 26,472 | 23,704 | 70,734 | 52,989 |
| Expenses | ||||
| Research and development, net of government funding | 10,485 | 4,699 | 25,430 | 11,140 |
| Selling, marketing and administration | 25,650 | 16,860 | 75,759 | 42,928 |
| Amortization | 4,427 | 2,179 | 11,724 | 5,433 |
| | ||||
| 40,562 | 23,738 | 112,913 | 59,501 | |
| | ||||
| Loss from operations | (14,090) | (34) | (42,179) | (6,512) |
| Investment income | 5,164 | 5,692 | 21,407 | 11,684 |
| | ||||
| Income (loss) before write-down of long- term investments and income taxes | (8,926) | 5,658 | (20,772) | 5,172 |
| Write down of investments | - | - | 5,350 | - |
| | ||||
| Earnings (loss) before income taxes | (8,926) | 5,658 | (26,122) | 5,172 |
| Provision for (recovery of) income taxes | (2,668) | 4,162 | (6,193) | 4,912 |
| | ||||
| Net income (loss) | $(6,258) | $1,496 | $(19,929) | $260 |
| | ||||
| Earnings (loss) per share | ||||
| Basic | $(0.08) | $0.02 | $(0.25) | $0.00 |
| | ||||
| Diluted | $(0.08) | $0.02 | $(0.25) | $0.00 |
| | ||||
| Weighted average number of common shares outstanding (000's) | ||||
| Basic | 78,435 | 73,663 | 78,403 | 72,096 |
| Diluted | N/A | 80,633 | N/A | 78,571 |
Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)
Consolidated Balance Sheets
| As at | December 1, 2001 | February 28, 2001 |
| | ||
| (unaudited) | ||
| Assets | ||
| Current | ||
| Cash and cash equivalents | $209,545 | $508,822 |
| Marketable securities | 446,736 | 213,105 |
| Trade receivables | 42,240 | 50,268 |
| Other receivables | 13,936 | 13,894 |
| Inventory | 48,411 | 68,044 |
| Prepaid expenses and other assets | 5,815 | 8,711 |
| | ||
| 766,683 | 862,844 | |
| Capital and other assets | 172,176 | 95,208 |
| Future income tax assets | 27,002 | 12,011 |
| | ||
| $965,861 | $970,063 | |
| | ||
| Liabilities | ||
| Current | ||
| Accounts payable and accrued liabilities | $54,187 | $45,892 |
| Income taxes payable | 6,718 | 3,842 |
| Deferred revenue | 7,989 | 10,870 |
| Current portion of long-term debt | 387 | 198 |
| | ||
| 69,281 | 60,802 | |
| Long-term debt | 11,965 | 6,328 |
| | ||
| 81,246 | 67,130 | |
| | ||
| Shareholders' equity | ||
| Capital stock | 894,070 | 891,014 |
| Retained earnings (deficit) | (9,455) | 11,919 |
| | ||
| Total shareholders' equity | 884,615 | 902,933 |
| | ||
| $965,861 | $970,063 | |
| | ||
