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Press Release
December 20, 2000
Research In Motion Reports 45% Sequential Revenue Growth In Q3
Waterloo, ON - Research In Motion Limited (RIM®) (Nasdaq: RIMM, TSE: RIM), a world leader in the mobile communications market, today reported third quarter results for the three months ended November 30, 2000. (all figures in US $ and Canadian GAAP)
Revenue for the third quarter of fiscal 2001 was $61.6 million. This marks a 45% increase over the prior quarter's revenue of $42.5 million and a 160% increase over the $23.7 million generated in the third quarter of last year. BlackBerry™ subscriber growth continues to be a main revenue driver. BlackBerry accounted for approximately 59% of the Company's quarterly revenue. RIM Wireless Handhelds™ accounted for 35% and OEM radio modems accounted for 6%.
"BlackBerry demand continues to ramp beyond our expectations," said Jim Balsillie, Chairman and Co-CEO. "The market has accepted BlackBerry as the clear leader in wireless email and we are working hard to ensure that we are able to continue on our current growth path. Strong revenue growth and execution of our business plan continue to be our key focus."
Net income for the quarter was $1.5 million ($0.02 per share basic and fully diluted) compared with a net loss of $1.6 million in the prior quarter and a net income of $3.2 million in the same quarter last year.
Gross research and development expenditures for the quarter were $6.7 million, or 11% of revenue, compared to $5.3 million in the prior quarter, or 13% of revenue, and $3.3 million, or 14% of revenue, in the third quarter last year.
Selling, marketing and administration expenses were $16.9 million, or 27% of revenue, for the quarter compared to $15.7 million, or 37% of revenue in the previous quarter and $3.5 million, or 15% of revenue, in the third 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 $733.9 million at November 30, 2000 as compared to $183.8 million in the previous quarter. A completed offering of 6,000,000 common shares during the quarter, closing for net proceeds of $585.3 million, accounted for the increase.
"The third quarter was successful by all accounts," said Dennis Kavelman, Chief Financial Officer. "It demonstrated sustained revenue growth, execution of key business objectives, as well as the completion of a significant financing round intended to provide the resources necessary for RIM's next growth stage. We are targeting continued growth in the fourth quarter and next fiscal year."
Highlights of the third quarter:
- America Online, Inc. announced availability of AOL Mobile CommunicatorSM, which provides wireless access to AOL email and instant messaging through RIM 950 Wireless Handheld™ technology.
- Following successful market tests earlier this year, EarthLink announced its launch of the BlackBerry wireless email solution as a kick off to the Company's EarthLink Everywhere initiative. America's second largest Internet service provider, EarthLink brings the Internet to more than 4.6 million subscribers.
- BellSouth Wireless Data renewed its reselling agreement with RIM with a supply agreement for 150,000 RIM Wireless Handhelds™. As part of the agreement, RIM also announced a distribution agreement to allow BellSouth to directly offer BlackBerry to its corporate customers, significantly expanding RIM's distribution for the BlackBerry solution.
- The RIM 857 Wireless Handheld™ was introduced for use over the Motient wireless data network in the US and the Bell Mobility ARDIS network in Canada. As part of the launch, RIM announced a new agreement to supply 25,000 RIM 857 Wireless Handhelds and 25,000 RIM 850 Wireless Handhelds™ to Motient. RIM also announced a supply agreement with Bell Mobility.
- Paradigm4 announced it will resell the BlackBerry wireless email solution including RIM's complete line of wireless handhelds. Paradigm4 plans to complement the BlackBerry solution with value-added services, support and industry-specific application development, such as the "E-Attach4" service (from Equinox Solutions Inc.) which allows users to view email attachments on their BlackBerry Wireless Handheld.
- Information Builders and RIM announced a strategic alliance to jointly market WebFOCUS-based applications integrated with BlackBerry. WebFOCUS is an integrated suite of Business Intelligence tools through which organizations can deliver information easily and instantly to management, employees, customers, partners and vendors.
Highlights subsequent to quarter end:
- QUALCOMM and RIM announced a Code Division Multiple Access (CDMA) subscriber unit license agreement. RIM was granted a license under QUALCOMM's CDMA technology and patents to develop, manufacture and sell subscriber products for CDMA and 1xEV wireless applications in North America.
- RIM announced an expanded business relationship with Motient Corporation, whereby RIM will resell Motient's wireless data network services in conjunction with BlackBerry through RIM's distribution channels. Fifty thousand BlackBerry subscribers are expected to be added to the Motient network within the next 12 months. This sales activity is incremental to RIM Wireless Handhelds sold through Motient's distribution channel.
- Microcell Connexions Inc. and RIM announced a wholesale agreement whereby RIM will purchase airtime and services from Microcell in order to offer RIM Wireless Handheld service over the company's Canadian General Packet Radio Service (GPRS) network.
- RIM announced the availability of BlackBerry to US Army representatives through an agreement with Intelligent Decisions, a systems integrator specializing in IT solutions for customers in the federal government, including many in the intelligence community. BlackBerry will be offered through Intelligent Decisions' Army Portable-3 contract, which is available to the US Army, DoD agencies, and all Federal Civilian agencies.
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 http://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 and the BlackBerry logo are trademarks of Research In Motion Limited. Research In Motion, RIM and 'Always On, Always Connected' 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, 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 November 30 (in US$ thousands, except for earnings per share) | Fiscal 2001 | Fiscal 2000 |
| (unaudited) | ||
| Revenue | $61,629 | $23,689 |
| Cost of sales | 37,925 | 12,853 |
| 23,704 | 10,836 | |
| Research and development, net of government assistance of $1,998 (2000 -$407) | 4,699 | 2,883 |
| Selling, marketing and administration | 16,860 | 3,505 |
| Amortization | 2,179 | 1,166 |
| 23,738 | 7,554 | |
| Income (loss) from operations | (34) | 3,282 |
| Investment income | 5,692 | 1,599 |
| Income before provision for taxes | 5,658 | 4,881 |
| Provision for income taxes | 4,162 | 1,700 |
| Net income | $1,496 | $3,181 |
| Earnings per share, basic | $0.02 | $0.05 |
| Earnings per share, fully diluted | $0.02 | $0.05 |
See accompanying notes.
YEAR TO DATE CONSOLIDATED STATEMENT OF OPERATIONS
| For the nine months ended November 30 (in US$ thousands, except for earnings per share) | Fiscal 2001 | Fiscal 2000 |
| (unaudited) | ||
| Revenue | $131,248 | $59,166 |
| Cost of sales | 78,259 | 33,040 |
| 52,989 | 26,126 | |
| Research and development, net of government assistance of $5,417 (2000 -$2,357) | 11,140 | 6,151 |
| Selling, marketing and administration | 42,928 | 8,822 |
| Amortization | 5,433 | 2,977 |
| 59,501 | 17,950 | |
| Income (loss) from operations | (6,512) | 8,176 |
| Investment income | 11,684 | 2,973 |
| Income before provision for taxes | 5,172 | 11,149 |
| Provision for income taxes | 4,912 | 3,859 |
| Net income | $260 | $7,290 |
| Earnings per share, basic | $0.00 | $0.11 |
| Earnings per share, fully diluted | $0.00 | $0.11 |
See accompanying notes.
CONSOLIDATED BALANCE SHEET
| As at November 30, 2000 (in US$ thousands) | Fiscal 2001 | Fiscal 2000 |
| (unaudited) | ||
| CURRENT ASSETS | ||
| Cash and cash equivalents | $653,671 | $86,478 |
| Marketable securities | 80,217 | 131,168 |
| Trade receivables | 47,358 | 19,348 |
| Other receivables | 15,587 | 3,177 |
| Inventory | 58,951 | 26,333 |
| Prepaid expenses | 3,161 | 6,802 |
| 858,945 | 273,306 | |
| FUTURE INCOME TAX ASSETS | 13,374 | 3,745 |
| INVESTMENTS | 18,527 | - |
| CAPITAL ASSETS | 72,466 | 22,271 |
| TOTAL ASSETS | $963,312 | $299,322 |
| CURRENT LIABILITIES | ||
| Accounts payable and accrued liabilities | $36,243 | $12,890 |
| Taxes payable | 2,106 | 2,101 |
| Deferred revenue | 9,836 | 2,398 |
| Current portion of long-term debt | 221 | - |
| 48,406 | 17,389 | |
| LONG-TERM DEBT | 6,776 | - |
| 55,182 | 17,389 | |
| SHAREHOLDERS' EQUITY | ||
| Common shares | 889,741 | 267,012 |
| Retained earnings | 18,389 | 14,921 |
| 908,130 | 281,933 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $963,312 | $299,322 |
QUARTERLY CONSOLIDATED STATEMENT OF CASH FLOWS
| For the nine months ended November 30 (in US$ thousands) | Fiscal 2001 | Fiscal 2000 |
| (unaudited) | ||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Net income for the period | $ 260 | $ 7,290 |
| Items not requiring an outlay of cash: | ||
| Amortization | 5,911 | 2,977 |
| Deferred income taxes | 2,510 | 1,346 |
| Foreign exchange loss (gain) | 72 | (19) |
| 8,753 | 11,594 | |
| Net changes in non-cash working capital items | (21,522) | (13,369) |
| Total cash used in operations | (12,769) | (1,775) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Income tax reduction resulting from financing costs | - | 481 |
| Issuance of share capital, net of financing costs | 583,808 | 162,542 |
| Government funding received for capital expenditures | 1,241 | 543 |
| Repayment of debt | (153) | - |
| Total cash provided by financing activities | 584,896 | 163,566 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Acquisition of capital assets | (39,882) | (10,779) |
| Acquisition of investments | (16,527) | - |
| Acquisition of marketable securities | (246,434) | (151,695) |
| Proceeds on sale and maturity of marketable securities | 384,333 | 77,524 |
| Total cash provided by investing activities | 81,490 | (84,950) |
| Foreign exchange effect on cash and cash equivalents | (72) | 19 |
| Increase in cash and cash equivalents for the period | 653,545 | 76,860 |
| Cash and cash equivalents, beginning of the period | 126 | 9,618 |
| Cash and cash equivalents, end of the period | $653,671 | $86,478 |
| Cash and cash equivalents are represented by: | ||
| Balances with banks | $595,110 | $25,613 |
| Short-term investments | 58,561 | 60,865 |
| Cash and cash equivalents, end of the period | $653,671 | $86,478 |
See accompanying notes.
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 November 30:
| Fiscal 2001 | Fiscal 2000 | |
| Common shares | 77,836,836 | 70,211,624 |
| Common share purchase warrants | 214,000 | 214,000 |
| Stock options | 7,836,740 | 7,542,350 |
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.
