Press Release

September 23, 1999

Research In Motion Reports Strong Second Quarter Results

Waterloo, Ontario - Research In Motion Limited (NASDAQ: RIMM, TSE: RIM), a leader in wireless email and two-way wireless data communications, today reported second quarter results for the three months ended August 31, 1999. (All amounts are reported in Canadian dollars unless otherwise stated.)

Revenue for the second quarter, fiscal 2000, was $28.7 million, more than triple the $8.4 million in the same period last year. RIM's Inter@ctive™ Pager accounted for approximately 68% of revenue for the most recent quarter. BlackBerry™ product and service revenues accounted for approximately 5% of revenue, OEM radio modem product sales accounted for approximately 19% of revenue, and software licenses and non-recurring engineering fees accounted for the remaining 8%.

"Market awareness and acceptance of RIM products continued to grow" said Mike Lazaridis, RIM President and Co-CEO. "The rollout of BlackBerry Exchange Edition™ is proceeding quickly as customers realize the business value of wireless email. The launch of BlackBerry Internet Edition™ this fall, along with the Inter@ctive Pager initiatives planned by our business partners, will expose RIM's products to an even broader user base."

"The RIM team continues to grow quickly and now exceeds 400 employees," said Jim Balsillie, RIM Chairman and Co-CEO. "Increasing commitments to research and development, new sales and marketing programs and expanding manufacturing capabilities continue to be integral components of RIM's business plan."

Gross margin for the second quarter was 44%, compared to 34% in the second quarter of fiscal 1999 and 42% in the previous first quarter of fiscal 2000. Gross margin was higher as revenue included software and non-recurring engineering charges which have higher gross margins than traditional revenues from the sale of hardware devices.

Net income for the second quarter was $3.5 million (5 cents basic and fully diluted per share) compared to $269,000 (1 cent basic and fully diluted per share) in the same quarter last year.

Gross research and development expenses were $4.2 million or 15% of revenue for the quarter as compared to $3.6 million (15% of revenue) in the first quarter of fiscal 2000 and $3.2 million (38% of revenue) in the second quarter of fiscal 1999. Research and development expenditures reflect continued focus on the expansion of product development teams, enhancement of current products and services and applied research and development of next generation products.

Sales, marketing and administration expenses were $4.5 million or 16% compared to $3.4 million or 14% of revenue in the first quarter of fiscal 2000 and $1.2 million or 14% of revenue in the second quarter of fiscal 1999. The increase primarily reflects continued support of the BlackBerry rollout and ongoing initiatives for new and existing channel marketing campaigns.

At August 31, 1999, RIM had a total of $97.9 million in combined cash, cash equivalents and marketable securities. Investment income of $977,000 was generated on cash reserves for the quarter.

Highlights in the second quarter included:

  • Wired Magazine nominated BlackBerry in the Best Business Product category of the 1999 Readers' Raves Awards. BlackBerry is among the top eight business products recognized including products from Apple, Casio, Ericsson, Intel, Motorola, Silicon Graphics and 3Com. Wired is hosting an Awards Gala in October and the results will be published in the November issue.
  • Intel and RIM were recognized as the best alliance in North America and received the prestigious 1999 Award for Canadian-American Business Achievement.
  • RIM announced an agreement with RCN Corporation to supply BlackBerry Internet Edition for RCN customers. Through this agreement, RCN became the first Internet Service Provider (ISP) to offer the BlackBerry wireless email solution. RCN plans to make BlackBerry available to its 500,000+ subscribers.
  • RIM rolled out BlackBerry Enterprise Server to a large number of Fortune 2000 companies and continued to sign up and train additional BlackBerry Wireless Solution Providers. BlackBerry trials and deployments have now begun in over one thousand organizations.
  • The Federal Communications Commission (FCC) granted regulatory approval for the new RIM Inter@ctive Pager 850. The Inter@ctive Pager 850 will be distributed through American Mobile Satellite Corporation and SkyTel.
  • RIM announced its first international sale of the Inter@ctive Pager 950. Telcel Celular, a telecommunications company in Venezuela, will resell a Spanish-language version of the Inter@ctive Pager 950.
  • w-Trade Technologies announced the w-Bank™ wireless banking system which supports the RIM Inter@ctive Pager. w-Bank enables financial institutions to offer customers access to online banking services. Services include checking or savings account balance information, funds transfer between different bank accounts, electronic bill payment and intelligent alerts that inform customers when deposits have cleared, checks have been paid, or when other changes to their accounts have occurred.
  • GoAmerica Communications Corp. announced POP3 email access support through the GoAmerica Go.Web™ browser. The Go.Web browser supports both the RIM Inter@ctive Pager 950 and BlackBerry.
  • ReachNet announced their Wireless TTY service, which uses the RIM Inter@ctive Pager 950 to provide deaf and hard-of-hearing individuals with the ability to send and receive messages to and from other TTY machines, relay services or email.
  • Several third-party developers announced hardware and software products that support the RIM Inter@ctive Pager. Lavelle Engineering Technologies announced their Internet-based OnSite Dispatch software package. Global Wireless Data announced commercial availability of their CompUtil PowerCradle 950 for Global Positioning System (GPS) tracking. DataMaxx Applied Technologies Inc. announced a pilot project using the RIM Inter@ctive Pager 950 to allow front-line law enforcement officers to run critical identification inquiries on persons, articles, guns and vehicles without relying on the assistance of a dispatcher.
  • BellSouth Wireless Data announced several initiatives supporting the BellSouth Interactive Paging Service including a distribution partnership with BellSouth Mobility Inc. in the Southeast, a nationwide advertising campaign, a new version of BellSouth Powertool to support third party developers and the continued deployment of new base stations across the United States.

About Research In Motion

Research In Motion Limited (RIM) 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 in North America and around the world to enhance their products and services with wireless connectivity. RIM's portfolio of award-winning products includes the RIM Inter@ctive™ Pager 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 is listed on the Nasdaq Stock Market (NASDAQ: RIMM) and the Toronto Stock Exchange (TSE: RIM). Investors may contact investor_relations@rim.net. Customers may contact info@rim.net. Web site: www.rim.net

Research In Motion, RIM, the RIM logo, Inter@ctive, Inter@ctive Pager, 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 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.

YEAR TO DATE STATEMENT OF OPERATIONS

For the six months ended August 31
(in thousands, except for earnings per share)		 Fiscal
2000		 Fiscal
1999

 

(unaudited)

 

(note 1)

 

Revenue

$52,818 $17,297

 

Cost of sales      30,054      10,618

 

 

     22,764        6,679

 

 

 

 

 

Research and development, net of government assistance of $2,904 (1999-$2,272)
4,861
3,506

 

Selling, marketing and administration 7,919 3,047

 

Amortization        2,696        1,611

 

 

     15,476        8,164

 

 

 

 

 

Income (loss) from operations 7,288 (1,485)

 

 

 

 

 

Investment income        2,044        2,926

 

Income before provision for taxes 9,332 1,441

 

 

 

 

 

Provision for income taxes        3,215           415

 

 

 

 

 

Net income      $6,117      $1,026

 

 

 

 

 

Earnings per share, basic $.09 $.02

 

Earnings per share, fully diluted $.09 $.02

Note 1: Comparative figures have been reclassified to conform to the current year’s presentation.

 

QUARTERLY STATEMENT OF OPERATIONS

For the three months ended August 31
(in thousands, except for earnings per share)

Fiscal
2000		 Fiscal
1999

 

(unaudited)

 

(note 1)

 

Revenue $28,701 $8,424

 

Cost of sales      16,042        5,536

 

 

     12,659        2,888

 

 

 

 

 

Research and development, net of government assistance of $1,694 (1999-$1,371)

  2,502

  1,842

 

Selling, marketing and administration 4,495 1,209

 

Amortization        1,320           857

 

 

       8,317        3,908

 

 

 

 

 

Income (loss) from operations 4,342 (1,020)

 

 

 

 

 

Investment income           977        1,434

 

Income before provision for taxes 5,319 414

 

 

 

 

 

Provision for income taxes        1,860           145

 

 

 

 

 

Net income      $3,459         $269

 


 

 

 

Earnings per share, basic $.05 $.01

 

Earnings per share, fully diluted $.05 $.01

Note 1: Comparative figures have been reclassified to conform to the current year’s presentation.

 

BALANCE SHEET

As at August 31
(in thousands)		 Fiscal
2000		 Fiscal
1999

 

(unaudited)

 

 

 

 

CURRENT ASSETS

 

 

 

Cash and cash equivalents $47,263 $107,389

 

Marketable securities 50,605 -

 

Accounts receivable 18,722 9,365

 

Inventory 29,178 16,357

 

Prepaid expenses        6,096        3,160

 

 

151,864 136,271

 

 

 

 

 

CAPITAL ASSETS

     26,476      19,477

 

 

 

 

 

TOTAL ASSETS

  $178,340   $155,748

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

Accounts payable and accrued liabilities $6,309 $3,260

 

Taxes payable 2,065 392

 

Deferred revenue        1,576        1,018

 


9,950 4,670

 

DEFERRED INCOME TAXES

          500               -

 

 

10,450 4,670

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

Common shares 150,410 148,231

 

Retained earnings      17,480        2,847

 

 

   167,890    151,078

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $178,340   $155,748

 

STATEMENT OF CASH FLOWS

For the six months ended August 31
(in thousands)

Fiscal
2000

Fiscal
1999

 

(unaudited)

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

Net income for the period $6,117 $1,026

 

Items not requiring an outlay of cash:

 

 

 

Amortization 2,696 1,611

 

Deferred income taxes        1,900               -

 

 

10,713 2,637

 

 

 

 

 

Net changes in non-cash working capital items      (6,367)        3,089

 

 

 

 

 

 

       4,346        5,726

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Income tax reduction resulting from financing costs 400 -

 

Issuance of share capital, and warrants 769 -

 

Government funding received for capital expenditures           300           248

 

 

 

 

 

 

       1,469           248

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Acquisition of capital assets (7,122) (7,604)

 

Proceeds on sale and maturity of marketable securities 74,578 13,011

 

Acquisition of marketable securities      (40,328)               -

 

 

 

 

 

 

     27,128        5,407

 

 

 

 

 

Net increase in cash and cash equivalents for the period 32,943 11,381

 

 

 

 

 

Cash and cash equivalents, beginning of the period      14,320      96,008

 

 

 

 

 

Cash and cash equivalents, end of the period    $47,263   $107,389