Press Release

April 7, 2004

Research In Motion Reports Fourth Quarter and Year-End Results for Fiscal 2004

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

Revenue for the fourth quarter of fiscal 2004 was $210.6 million, up 37% from $153.9 million in the previous quarter and up 141% from $87.5 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 66% for handhelds, 23% for service, 8% for software licences and 3% for other revenue. Revenue for fiscal 2004 was $594.6 million versus $306.7 million in the prior year.

The total number of BlackBerry® subscribers in the quarter increased by 204,000 to approximately 1,069,000 total subscribers.

"Innovation and execution continued to drive RIM's business in the fourth quarter. We surpassed the pivotal one million subscribers mark and the continuing escalation of BlackBerry's popularity is evident in our fourth quarter results and outlook," said Jim Balsillie, Chairman and Co-CEO at RIM. "The past fiscal year saw dramatic progress on both operational and strategic fronts as RIM and its partners achieved significant traction in the market and continued to expand the reach of the BlackBerry platform around the world."

Net income for the quarter was $41.5 million, or $0.46 per share diluted, compared to net income of $16.3 million or $0.20 per share diluted in the prior quarter. Higher revenues and continued operating efficiencies contributed to the strong net income growth in the quarter. Excluding the litigation provision of $12.9 million and a tax recovery of $4.2 million, the Company's adjusted net income and adjusted diluted earnings per share were $50.2 million and $0.56 cents respectively. The adjusted net income and adjusted diluted earnings per share do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other issuers. These adjusted measures should be considered in the context of RIM's GAAP results.

RIM is increasing revenue and earnings guidance for the first quarter of fiscal 2005 and introducing guidance for the second quarter. This guidance reflects the effective 2 for 1 split of RIM's shares that was announced today. Revenue in the first quarter of fiscal 2005 is currently expected to be in the range of $250-265 million. Revenue for the second quarter of fiscal 2005 is currently expected to be in the range of $270-290 million. RIM is expecting GAAP earnings per share for the first quarter in the range of 21-26 cents per share diluted and adjusted EPS, excluding the litigation provision, in the range of 28-33 cents per share. For the second quarter, RIM is expecting earnings per share to be between 24-29 cents per share diluted on a GAAP basis and 32-37 cents adjusted.

The total of cash, cash equivalents, short-term and long-term investments was $1.49 billion as at February 28, 2004, compared to $532 million at the end of the previous quarter. The majority of the $958.7 million increase was due to the issue of 12.1 million shares during the quarter for net proceeds of approximately $905.2 million.

Highlights of the fourth quarter:

  • RIM closed a public offering of 12.1 million shares for net proceeds of $905.2 million.
  • BlackBerry surpassed the one-millionth subscriber milestone.
  • RIM was added to the NASDAQ-100 index.
  • Sony Ericsson announced plans to enable BlackBerry connectivity on Sony Ericsson mobile phones, starting with the P900 Symbian OS smartphone.
  • Samsung announced plans to enable BlackBerry connectivity on Samsung wireless handhelds.
  • PalmSource and RIM formalized a development relationship and began efforts to jointly develop a software client that enables BlackBerry connectivity to Palm OS.
  • Nextel introduced the BlackBerry 7510™ in the US.
  • Cingular Wireless introduced the BlackBerry 6280™ and BlackBerry 7280™ in the US.
  • Rogers Wireless introduced the BlackBerry 7280™ in Canada.
  • Cable & Wireless announced plans to introduce BlackBerry in the Cayman Islands.
  • Orange France announced plans to offer BlackBerry.
  • Vodafone UK introduced the BlackBerry 7730™ and BlackBerry Web Client™ service in the UK.
  • Vodafone Netherlands introduced the BlackBerry 7230™ and BlackBerry Web Client™ service.
  • 02 UK introduced BlackBerry Web Client™ service.
  • Swisscom in Switzerland and SFR in France introduced the BlackBerry 7730™.
  • TIM (Telecom Italia Mobile) launched pre-paid voice and data services for BlackBerry in Italy.
  • Telefonica Moviles Espana introduced the BlackBerry 7230™ in Spain.
  • StarHub introduced the BlackBerry 7230™ and BlackBerry Web Client™ service in Singapore.
  • 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.
  • BlackBerry continued to win recognition as an industry leader through a wide range of positive product reviews and awards including the CNET Editor's Choice award, the Law Technology News award and the MSD2D People's Choice Security award.

Highlights subsequent to quarter end:

  • Siemens AG announced plans to enable BlackBerry connectivity on Siemens mobile phones.
  • O2 announced plans to introduce BlackBerry services for the XDA II.
  • T-Mobile International announced plans to offer BlackBerry services for the MDA II, Sony Ericsson P900 and Nokia 6820 to customers in Europe.
  • RIM introduced the color BlackBerry 7750™ for CDMA2000 1X wireless networks, expected to be available from Verizon Wireless in April.
  • T-Mobile announced plans to offer the BlackBerry 7730™ in the US.
  • KPN announced plans to offer BlackBerry in the Netherlands, Germany and Belgium.
  • Vodafone Italy introduced the BlackBerry Web Client™ service.
  • Vodafone Austria announced plans to introduce BlackBerry.
  • SingTel announced plans to offer BlackBerry to mobile professionals in Singapore and in the Philippines (via Globe Telecom) and Australia (via Optus).
  • CSL introduced the BlackBerry 7730™ and BlackBerry 7230™ in Hong Kong.
  • Bharti and Research In Motion reached an agreement focused on bringing BlackBerry products and services to India.
  • RIM and Good Technology, Inc. signed a settlement and license agreement. RIM received a lump sum settlement and will receive ongoing quarterly royalties.

The replay of the company's Q4 conference call can be accessed after 7 p.m. (eastern), April 7, 2004 until midnight (eastern), April 14, 2004. It can be accessed by dialing 416-640-1917 and entering passcode 21041109#. The conference will also appear on the RIM web site, live at 5:00 pm (eastern) and archived at http://www.rim.com/investors/events/index.shtml until midnight April 21, 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. 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.

This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 relating to the anticipated demand for the BlackBerry platform, and RIM's revenue and earnings expectations for the first and second quarters of fiscal 2005. The phrases and terms "continuing escalation" and "expected to be" or "expecting" are intended to identify these forward-looking statements. Forward-looking statements are based on estimates and assumptions made by RIM in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that RIM believes are appropriate in the circumstances. Many factors could cause RIM's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation: risks relating to RIM's intellectual property; RIM's ability to enhance current products and develop new products; RIM's reliance on carrier partners, third-party network developers and suppliers; and intense competition. These risk factors and others relating to RIM's business and industry are discussed in greater detail in the "Risk Factors" and "MD&A" sections of RIM's filings with the United States Securities and Exchange Commission and securities regulators in Canada. These factors should be considered carefully, and readers should not place undue reliance on RIM's forward-looking statements. RIM has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The BlackBerry 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 For the year ended
  February 28, 2004 November 29, 2003 March 1, 2003 February 28, 2004 March 1, 2003
  (unaudited) (audited)
           
Revenue $210,585 $153,891 $87,502 $594,616 $306,732
Cost of sales 107,109 81,493 51,608 323,365 187,289
 
Gross margin 103,476 72,398 35,894 271,251 119,443
 
           
Gross Margin % 49.1% 47.0% 41.0% 45.6% 38.9%
           
Expenses          
Research and development, net 17,877 15,673 12,535 62,638 55,916
Selling, marketing and administration 32,310 26,233 24,980 108,492 104,978
Amortization 6,702 7,226 6,434 27,911 22,324
Restructuring charge - - - - 6,550
Litigation 12,874 9,201 25,540 35,187 58,210
 
  69,763 58,333 69,489 234,228 247,978
 
           
Income (loss) from operations 33,713 14,065 (33,595) 37,023 (128,535)
 
           
Investment income 3,624 2,264 2,498 10,606 11,430
 
Income (loss) before income taxes 37,337 16,329 (31,097) 47,629 (117,105)
Provision for (recovery of) income taxes (4,200) - - (4,200) 31,752
 
Net Income (loss) $41,537 $16,329 $(31,097) $51,829 $(148,857)
 
           
Earnings (loss) per share          
 
Basic $0.49 $0.21 $(0.40) $0.65 $(1.92)
 
Diluted $0.46 $0.20 $(0.40) $0.62 $(1.92)
 
Weighted average number of common shares outstanding (000’s)          
Basic 84,800 78,421 77,105 79,650 77,636
Diluted 90,308 83,025 77,105 83,690 77,636


 

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

Consolidated Balance Sheets

As at February 28, 2004 March 1, 2003
  (audited)
Assets    
Current    
Cash and cash equivalents $1,156,419 $340,681
Trade receivables 95,213 40,803
Other receivables 12,149 4,538
Inventory 42,836 31,275
Restricted cash 36,261 -
Other current assets 12,527 11,079
 
  1,355,405 428,376
     
Investments 333,886 190,030
Capital assets 147,709 161,183
Intangible assets 64,269 51,479
Goodwill 30,109 30,588
 
  $1,931,378 $861,656
 
     
Liabilities    
Current    
Accounts payable and accrued liabilities $106,108 $73,009
Accrued litigation and related expenses 84,392 50,702
Income taxes payable 1,684 4,909
Deferred revenue 16,498 14,336
Current portion of long-term debt 193 6,143
 
  208,875 149,099
     
Long-term debt 6,240 5,776
 
  215,115 154,875
 
     
Shareholders’ equity    
Capital stock 1,829,388 874,377
Accumulated deficit (119,206) (171,035)
Accumulated other comprehensive income 6,081 3,439
 
Total shareholders' equity 1,716,263 706,781
 
  $1,931,378 $861,656
 


 

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 February 28, 2004 For the year ended February 28, 2004
  (unaudited) (audited)
Cash flows from operating activities    
Net income $41,537 $51,829
     
Items not requiring an outlay of cash:    
Amortization 15,011 54,529
Gain (loss) on disposal of capital assets (1) 223
Loss on foreign currency translation of long-term debt 1,131 713
 
  57,678 107,294
     
Net changes in non-cash working capital items (17,630) (43,605)
 
  40,048 63,689
 
Cash flows from financing activities    
Issuance of share capital and warrants 975,104 994,640
Financing costs (39,629) (39,629)
Repayment of long-term debt (5,826) (6,130)
 
  929,649 948,881
 
Cash flows from investing activities    
Acquisition of investments (186,989) (186,989)
Proceeds on sale or maturity of investments 1,244 43,746
Acquisition of capital assets (9,046) (21,816)
Acquisition of intangible assets (2,581) (32,252)
Acquisition of subsidiaries - 479
Acquisition of short-term investments (53) (24,071)
Proceeds on sale or maturity of short-term investments 24,071 24,071
 
  (173,354) (196,832)
 
     
Net increase in cash and cash equivalents for the period 796,343 815,738
     
Cash and cash equivalents, beginning of period 360,076 340,681
 
Cash and cash equivalents, end of year $1,156,419 $1,156,419
 
     
  As at
Feb. 28, 2004		 As at
Nov. 29, 2003
  (audited) (unaudited)
     
Cash and cash equivalents $1,156,419 $360,076
Short-term investments - 24,018
Investments 333,886 147,528
 
Cash, cash equivalents, short-term investments and investments $1,490,305 $531,622