Press Release

June 23, 1999

Research In Motion Reports Record Results For Q1

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

Revenue for the first quarter of fiscal 2000 was $24.1 million, representing a 172% increase over $8.9 million in the same period last year. RIM's Inter@ctive™ Pager accounted for approximately 77% of revenue for the period, while OEM radio product sales accounted for approximately 20% of revenue.

"Momentum behind our products continues to build," said Mike Lazaradis, RIM President and Co-CEO. "The successful launch of BlackBerry™ Enterprise Server, together with separate announcements from major distribution partners including BellSouth, PageNet, Cantel, American Mobile and SkyTel suggests that we are beginning a very exciting period."

"Partnerships with industry leaders is the key," said Jim Balsillie, RIM Chairman and Co-CEO "RIM and Intel won an award for the best North American business alliance. We have also successfully partnered with Microsoft in delivering BlackBerry to Microsoft Exchange users."

Gross margin for the first quarter was 42%, compared to 43% in the first quarter of fiscal 1999 and 38% in the previous fourth quarter of fiscal 1999 ended February 28, 1999. Gross margin was higher than the fourth quarter as revenue included payments for non-recurring engineering for advanced development work.

Net income for the first quarter was $2.7 million (4 cents basic and fully diluted per share) compared to $0.8 million (1 cent basic and fully diluted per share) in the same quarter last year.

Gross research and development expenses were $3.6 million or 15% of revenue for the quarter as compared to $3.1 million (11% of revenue) in the fourth quarter of fiscal 1999 and $2.6 million (29% of revenue) in the first quarter of fiscal 1999.

Sales, Marketing and Administrative expenses remained consistent with the previous quarter at $3.4 million (14% of revenue) as RIM continues to support the BlackBerry rollout and the marketing efforts of channel partners.

RIM's cash position remains strong with $91 million in combined cash and short-term securities at May 31, 1999. Investment income of $1.1 million was generated on cash reserves for the quarter.

Highlights in the first quarter include:

  • RIM introduced BlackBerry Enterprise Server. A key component of the BlackBerry wireless email solution, BlackBerry Enterprise Server is optional, add-on software that runs on a server and allows centralized administration, increased scalability, enhanced performance and improved support for laptop users;
  • American Mobile announced their eLink™ wireless email service featuring the RIM Inter@ctive Pager 850. The eLink service operates on American Mobile's nationwide ARDIS network and offers advanced two-way messaging and wireless email services to customers with standard POP3 compliant email systems;
  • Wynd Communications, a leader in providing wireless communications services to people who are deaf or hard of hearing, and Rogers Cantel Inc., Canada's largest wireless communications company, announced a strategic alliance to deliver the WyndTell™ service in Canada using the RIM Inter@ctive Pager 950;
  • RIM announced an alliance with PageMart Canada Limited that will provide paging services such as numeric telephone dispatch, personal 800 numbers, custom greeting, voicemail, and web-based messaging to BlackBerry customers;
  • RIM was honoured as a Laureate during the 1999 Computerworld Smithsonian award ceremony held April 12, 1999 in Washington, DC, where the Company was named an "Innovator who use(s) information technology to benefit society." As part of the award, RIM's Inter@ctive Pager has been accepted into the Smithsonian Institution's Permanent Research Collection of Information Technology.
  • WolfeTech Corporation announced the availability of the PocketGenie service for BlackBerry. WolfeTech selects and filters some of the best content on the web and will deliver this high-value information directly to BlackBerry Handhelds through the PocketGenie service;
  • GoAmerica introduced the Go.Web service for the RIM Inter@ctive Pager 950 and BlackBerry. GoAmerica subscribers can access personalized web content such as stock, news, travel, sports and weather updates through the Go.Web service; and
  • Dynamic Mobile Data Systems, Inc. (DMD) introduced MobileDispatch - a two-way wireless dispatch solution that affordably enables time sensitive communications and status tracking through the RIM Inter@ctive Pager.

Shareholders are reminded that the Annual General Meeting will be held at 6:30 p.m. on July 20, 1999 at the Canadian Clay and Glass Gallery in Waterloo, Ontario.

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. A growth company, 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.

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

QUARTERLY STATEMENT OF OPERATIONS

For the three months ended May 31 (in thousands, except for earnings per share)
Fiscal 2000
Fiscal 1999
(unaudited)
(note 1)
 
Revenue
$24,117
$8,875
Cost of sales
     14,012
       5,082
 
     10,105
       3,793
 
Research and development, net of government assistance of $1,210 (1999-$901)
2,359
1,665
Selling, marketing and administration
3,424
1,840
Amortization
       1,376
          753
 
       7,159
       4,258
 
Income (loss) from operations
2,946
(465)
 
Investment income
       1,067
       1,492
Income before provision for taxes
4,013
1,027
 
 
 
Provision for income taxes
       1,355
          270
 
Net income
     $2,658
        $757
 
Earnings per share, basic
$.04
$.01
Earnings per share, fully diluted
$.04
$.01

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

BALANCE SHEET

As at May 31
(in thousands)

Fiscal 2000
Fiscal 1999
(unaudited)
(note 1)
CURRENT ASSETS
Cash and cash equivalents
$39,266
$109,755
Marketable Securities
51,721
-
Accounts Receivable
16,287
10,463
Inventory
32,092
15,531
Prepaid expenses
       6,389
       1,583
 
145,755
137,332
 
CAPITAL ASSETS
     23,981
     16,968
 
TOTAL ASSETS
  $169,736
  $154,300
 
CURRENT LIABILITIES
Accounts payable and accrued liabilities
$3,577
$2,025
Income taxes payable
1,680
452
Deferred revenue
       1,120
       1,013
 
       6,377
       3,490
 
SHAREHOLDERS' EQUITY
Capital stock
149,337
148,232
Retained earnings
     14,022
       2,578
 
   163,359
   150,810
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $169,736
  $154,300

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

 

STATEMENT OF CASH FLOWS

For the three months ended May 31
(in thousands)
Fiscal 2000
Fiscal 1999
(unaudited)
(note 1)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period
$2,658
$757
Items not requiring an outlay of cash:
Amortization
       1,376
          753
 
4,034
1,510
 
Net changes in non-cash working capital items
     (9,861)
       3,213
 
Total cash provided by (used in) operations
     (5,827)
       4,723
 
CASH FLOWS FROM FINANCING ACTIVITIES
Income tax reduction resulting from financial costs
200
-
Issuance of share capital, net of financing costs
446
-
Government funding received for capital expenditures
          150
          250
 
Total cash provided by financing activities
          796
          250
 
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of capital assets
(3,157)
(4,237)
Proceeds on sale and maturity of marketable securities
     33,134
     13,011
 
Total cash provided by investing activities
     29,977
       8,774
 
Increase in cash and cash equivalents for the period
24,946
13,747
 
Cash and cash equivalents, beginning of the period
     14,320
     96,008
 
Cash and cash equivalents, end of the period
   $39,266
  $109,755

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