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Press Release
June 21, 2001
Research In Motion Reports First Quarter Results
Waterloo, ON - Research In Motion Limited (RIM) (Nasdaq: RIMM, TSE: RIM), a world leader in innovative wireless solutions for the mobile communications market, today reported first quarter results for the three months ended June 2, 2001. (all figures in US $ and Canadian GAAP)
Revenue for the first quarter of fiscal 2002 was $77.0 million, an increase of 184% over the $27.1 million in the first quarter last year. As expected, this was lower than the $90.1 million in the previous quarter. BlackBerry™ accounted for approximately 65% of the Company's current quarterly revenue, RIM Wireless Handhelds™ accounted for 27% and OEM radio modems and other revenue accounted for 8%.
"We're pleased that we've been able to continue to perform well in a challenging economic environment," said Jim Balsillie, Chairman and Co-CEO. "With a growing BlackBerry subscriber base and impending product launches in Europe, the company is prepared to execute on the large growth phase expected this Fall."
Net income for the quarter was $3.8 million or $0.05 per share basic and diluted compared to $0.4 million or $0.01 per share basic and $0.00 diluted in the first quarter of fiscal 2001. The net increase was due primarily to the significant increase in the scale of the business, with increases in gross profit and investment income being larger than offsetting increases in operating costs.
Gross research and development costs for the quarter were $9.6 million or 13% of revenue, compared to $9.1 million or 10% of revenue in the fourth quarter of fiscal 2001 and $4.5 million or 17% of revenue in the first quarter of fiscal 2001. The increase was primarily due to increased staffing levels, costs related to pending new product launches and growth in technology infrastructure. Net research and development costs were $7.3 million.
Selling, marketing and administration expenses were $21.9 million or 28% of revenue, compared to $22.3 million or 25% of revenue in the prior quarter of fiscal 2001 and $10.4 million or 38% of revenue in the first quarter of fiscal 2001. As expected, SM&A was relatively flat with the prior quarter. The company continues to ramp sales and marketing resources as well as add additional IT infrastructure. The expansion of RIM's European operations continues as the BlackBerry launch in Europe approaches.
Investment income decreased to $9.2 million in the current quarter from $11.2 million in the fourth quarter of fiscal 2001 and increased from $2.9 million in the first quarter of the prior year. The decrease in interest income was primarily attributable to reduced interest rate yields and a slightly lower average balance of cash, cash equivalents and marketable securities during the first quarter.
Cash, cash equivalents and marketable securities were $698.6 million as at June 2, 2001 compared to $721.9 million as at February 28, 2001. Working capital investment and capital expenditures in property and buildings accounted for the majority of the $23.3 million reduction.
"Results were in line with expectations despite some areas of weakness in the BlackBerry reseller channel," said Dennis Kavelman, Chief Financial Officer. "We are maintaining guidance for the second quarter and maintaining our positive outlook on the second half of the year."
Highlights of the first quarter:
- RIM announced that the United States Patent and Trademark Office issued a patent to RIM for the BlackBerry Single Mailbox Integration system. This patent covers a system and method invented by RIM that was commercialized as an important architectural element of RIM's BlackBerry wireless email solution.
- RIM announced another major breakthrough in wireless enterprise applications with the introduction of wireless calendar support for BlackBerry. With wireless calendar synchronization, BlackBerry Enterprise Server and BlackBerry Wireless Handhelds exchange calendar events wirelessly and securely. The user's online calendar and handheld calendar are automatically synchronized over-the-air without need of a cradle.
- GoAmerica and RIM announced that Go.Web™ version 6.0 will be bundled with BlackBerry. Go.Web 6.0 includes enhanced features for mobile access to web and corporate information.
- The BlackBerry Wireless Handheld was awarded the FIPS 140-1 Validation for its embedded encryption technology by the National Institute of Standards and Technology (NIST). FIPS 140-1 Validation is an important, and often mandatory, purchasing criteria for many organizations and will help facilitate continued adoption of BlackBerry in the government sector.
- Wynd Communications and RIM demonstrated the WyndTell accessibility solution at the FOSE 2001 show. WyndTell with RIM Wireless Handhelds is designed to meet the needs of people who are deaf or hard of hearing by enabling users to communicate using two-way technology.
- Yahoo! and Motient added RIM 857 Wireless Handheld support allowing wireless access to Yahoo! content and services via Motient's wireless data network. Motient also announced continued deployment of the RDLAP protocol in one hundred cities to provide increased speed and capacity to the Motient wireless data network.
- Lucent Technologies and RIM announced an alliance focused on accelerating commercialization of third generation (3G) mobile solutions. Lucent and RIM will cooperate in interoperability testing for next-generation networks and coordinate trials with mobile network operators around the world.
- Aether Systems announced the availability of Reuters MarketClip on RIM Wireless Handhelds™. Reuters MarketClip, a collaborative effort by Aether Systems and Reuters, is designed to provide real-time stock quotes and associated financial information. It also allows users to create and track their portfolios, set alerts and request a wide range of market content.
- Cingular Interactive announced availability of its Corporate Email PLUS service featuring the BlackBerry wireless email solution. BlackBerry won the "Cingular Best Solution" award at Cingular's WAVE 2001 conference after being selected by a panel of media judges. Cingular also announced plans for new base stations and system software to triple its core Mobitex network capacity.
Highlights subsequent to quarter end:
- RIM and Neomar announced an expanded strategic alliance in which the companies will offer Fortune 1000 companies the ability to securely access additional enterprise applications via BlackBerry™. The first output of this alliance will be support for Lotus Sametime Everyplace using BlackBerry Wireless Handhelds. RIM demonstrated Lotus Sametime Everyplace with BlackBerry at the Lotus DevCon 2001 conference this week.
- RIM and Sun Microsystems, Inc. announced RIM's implementation of Java 2 Micro Edition (J2ME) as the core operating system for the BlackBerry wireless handheld. RIM demonstrated the first wireless handheld based entirely on J2ME at the JavaOne conference.
- BT Cellnet announced that it is now accepting advance orders for BlackBerry from corporate customers in the UK. BlackBerry will run over BT Cellnet's GPRS network.
RIM's annual shareholder's meeting will take place at 6:30 pm on July 31, 2001 at the Canadian Clay and Glass Gallery in Waterloo, Ontario.
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 England. 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, the RIM logo, the RIM Wireless Handheld family of marks, RIM 802D, RIM 902M, BlackBerry, the BlackBerry logo, BlackBerry Exchange Edition, BlackBerry Notes 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 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 and Retained Earnings
| For the Three Months Ended | ||
| June 2, 2001 | May 31, 2000 | |
| | ||
| (unaudited) | ||
| Revenue | $77,005 | $27,098 |
| Cost of sales | 47,640 | 14,957 |
| | ||
| Gross margin | 29,365 | 12,141 |
| Expenses | ||
| Research and development, net of government funding of $2,305 (2001 - $1,900) | 7,297 | 2,625 |
| Selling, marketing and administration | 21,886 | 10,404 |
| Amortization | 3,412 | 1,363 |
| | ||
| 32,595 | 14,392 | |
| | ||
| Loss from operations | (3,230) | (2,251) |
| Investment income | 9,167 | 2,890 |
| | ||
| Earnings before income taxes | 5,937 | 639 |
| Provision for income taxes | 2,089 | 251 |
| | ||
| Net income | 3,848 | 388 |
| Retained earnings, beginning of period | 11,919 | 18,130 |
| | ||
| Retained earnings, end of period | $15,767 | $18,518 |
| | ||
| Earnings per share | ||
| Basic | $0.05 | $0.01 |
| | ||
| Diluted | $0.05 | $0.00 |
| | ||
| Weighted average number of common shares outstanding (000's) | ||
| Basic | 78,337 | 71,223 |
| Diluted | 83,384 | 77,972 |
Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)
Consolidated Balance Sheets
| As at | June 2, 2001 | February 28, 2001 |
| | ||
| (unaudited) | ||
| Assets | ||
| Current | ||
| Cash and cash equivalents | $457,060 | $508,822 |
| Marketable securities | 241,560 | 213,105 |
| Trade receivables | 43,203 | 50,268 |
| Other receivables | 11,962 | 13,894 |
| Inventory | 85,245 | 68,044 |
| Prepaid expenses | 5,963 | 2,932 |
| | ||
| 844,993 | 857,065 | |
| | ||
| Capital assets | 118,394 | 95,208 |
| Investments | 5,779 | 5,779 |
| Future income tax assets | 13,946 | 12,011 |
| | ||
| $983,112 | $970,063 | |
| | ||
| Liabilities | ||
| Current | ||
| Accounts payable and accrued liabilities | $45,239 | $45,892 |
| Income taxes payable | 5,878 | 3,842 |
| Deferred revenue | 12,291 | 10,870 |
| Current portion of long-term debt | 333 | 198 |
| | ||
| 63,741 | 60,802 | |
| Long-term debt | 12,115 | 6,328 |
| | ||
| 75,856 | 67,130 | |
| | ||
| Shareholders' equity | ||
| Capital stock | 891,489 | 891,014 |
| Retained earnings | 15,767 | 11,919 |
| | ||
| Total shareholders' equity | 907,256 | 902,933 |
| | ||
| $983,112 | $970,063 | |
| | ||
