Press Release

September 25, 2003

RIM Reports Second Quarter Results

Waterloo, ON - Research In Motion Limited (RIM) (Nasdaq: RIMM; TSX: RIM), a world leader in the mobile communications market, today reported second quarter results for the three months ended August 30, 2003 (all figures in U.S. dollars and U.S. GAAP).

Revenue for the second quarter of fiscal 2004 was $125.7 million, up 20% from $104.5 million in the previous quarter and up 70% from $73.4 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 53% for handhelds, 32% for service, 9% for software licences and 6% for OEM radios and other revenue. The total number of BlackBerry® subscribers increased by approximately 96,000 from the prior quarter to 711,000 subscribers. Gross margins increased to 46.3% in the current quarter from 45.6% in the prior quarter.

"RIM's technology and business plans remained on track during the second quarter as the global popularity of BlackBerry continued to grow," said Jim Balsillie, Chairman and Co-CEO at RIM. "Our outlook for further growth in the second half of the fiscal year is supported by ongoing product leadership, channel strength and sales momentum."

Net income for the quarter was $2.1 million, or $0.03 per share basic and diluted, compared to a net loss of $8.2 million or $0.11 per share in the prior quarter. The patent litigation provision recorded for the quarter was $5.7 million (Note: RIM filed its notice of appeal in the NTP patent case with the Court of Appeals on August 29, 2003). Excluding the litigation charge, the Company's adjusted net income and adjusted earnings per share was $7.8 million or $0.10 per share, basic and diluted. The adjusted net income and adjusted earnings per share do not have any standardized meaning prescribed by GAAP and thus are not comparable to similar measures presented by other issuers. This adjusted measure should be considered in the context of RIM's GAAP results.

The total of cash, cash equivalents and investments held to maturity was approximately $528 million as at August 30, 2003, compared to $510 million at the end of the previous quarter, for a net increase of $18 million quarter over quarter.

Highlights of the second quarter:

  • RIM unveiled its new Java-based BlackBerry 7230™ (color), BlackBerry 7210™ (color) and BlackBerry 6230™ (monochrome) handhelds.
  • T-Mobile International launched the BlackBerry 7230 and BlackBerry 6230 models with the new BlackBerry service designed for professional consumers and smaller firms in Austria, Germany and the UK.
  • T-Mobile USA launched the BlackBerry 7230 and BlackBerry 6210 handhelds in the United States.
  • AT&T Wireless launched the BlackBerry 7210 (color) handheld in the United States.
  • Rogers AT&T Wireless launched the BlackBerry 6210 in Canada.
  • Telstra launched the BlackBerry 7230 in Australia.
  • RIM introduced a new version of its BlackBerry Development Environment for J2ME that incorporates support for Over-The-Air application deployment and new BlackBerry API specifications that allow developers to leverage and integrate with BlackBerry email and PIM applications.
  • RIM announced support for the IBM Lotus Instant Messaging Everyplace 3 application on Java-based BlackBerry Wireless Handhelds.
  • BlackBerry ISV Alliance partners continued to build upon the BlackBerry platform with a wide range of new products, services and tools that help customers extend their wireless data strategies beyond wireless email.

Highlights subsequent to quarter end:

  • O2 announced availability of the BlackBerry 7230 for enterprise customers in the UK and Germany (with availability in Ireland expected in October).
  • RIM announced the availability of its S/MIME (Secure Multipurpose Internet Mail Extensions) Support Package v1.5 for Java-based BlackBerry handhelds.
  • IBM and RIM announced an agreement to provide mobile workers with better access to enterprise information and applications using WebSphere Everyplace Access mobile middleware and BlackBerry Enterprise Server.
  • BlackBerry was ranked #1 by customers in the legal industry with over 85% of the AmLaw 100 and 70% of the AmLaw 200 law firms already using BlackBerry.

The replay of the company's Q2 conference call can be accessed after 7 p.m. (eastern), September 25, 2003 until midnight (eastern), October 2, 2003. It can be accessed by dialing 416-640-1917 and entering reservation number 21000721#. The conference will also appear on the RIM web site, live at 5:00 pm and archived at http://www.rim.com/investors/events/index.shtml until midnight October 10, 2003.

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.

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. When used herein, words such as "intend" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions made by and information available to Research In Motion Limited. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements include, without limitation, possible product defects and product liability, risks related to international sales and potential foreign currency exchange fluctuations, the initiation or outcome of litigation, acts or potential acts of terrorism, international conflicts, significant fluctuations of quarterly operating results, changes in Canadian and foreign laws and regulations, continued acceptance of RIM's products, increased levels of competition, technological changes and the successful development of new products, dependence on third-party networks to provide services, dependence on intellectual property rights and other risks and factors detailed from time to time in RIM's periodic reports filed with the United States Securities and Exchange Commission, and other regulatory authorities. The Company has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Research In Motion, RIM and BlackBerry are trademarks of Research In Motion Limited. Research In Motion and RIM are registered with the U.S. Patent and Trademark Office and may be pending or registered in other countries. All other brands, products and company names mentioned herein may be trademarks or registered trademarks of their respective holders.

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
  August 30, 2003 May 31, 2003 August 31, 2002
  (unaudited) (unaudited) (unaudited - adjusted to US GAAP)
       
Revenue $125,679 $104,461 $73,418
Cost of sales 67,549 56,814 39,823
 
Gross margin 58,130 47,647 33,595
 
   Gross margin % 46.3% 45.6% 45.8%
       
Expenses      
Research and development, net of government funding 14,701 14,387 13,913
Selling, marketing and administration 28,970 28,059 28,529
Amortization 8,879 8,424 6,927
Litigation and related expenses 5,653 7,459 4,910
 
  58,203 58,329 54,279
 
       
Loss from operations (73) (10,682) (20,684)
       
Investment income 2,222 2,496 2,877
 
Income (loss) before recovery of income taxes 2,149 (8,186) (17,807)
Recovery of income taxes - - (3,575)
 
Net income (loss) $2,149 $(8,186) $(14,232)
 
       
Income (loss) per share      
   Basic $0.03 $(0.11) $(0.18)
 
   Diluted $0.03 $(0.11) $(0.18)
 
Weighted average number of common shares outstanding (000’s)      
   Basic 77,662 77,276 77,753
   Diluted 81,630 77,276 77,753


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

Consolidated Balance Sheets

As at August 30, 2003 March 1, 2003
  (unaudited) (audited-adjusted to US GAAP)
Assets    
Current    
Current Cash and cash equivalents $369,746 $340,681
Restricted cash 14,498 -
Trade receivables 50,259 40,803
Other receivables 6,266 4,538
Inventory 28,582 31,275
Prepaid expenses and other assets 15,225 11,079
 
  484,576 428,376
     
Investments held to maturity 158,342 190,030
Capital assets 152,208 161,183
Intangible assets 69,109 51,479
Goodwill 30,588 30,588
 
  $894,823 $861,656
 
     
Liabilities    
Current    
Accounts payable and accrued liabilities $90,686 $73,009
Accrued litigation and related expenses 62,471 50,702
Income taxes payable 5,958 4,909
Deferred revenue 14,641 14,336
Current portion of long-term debt 6,454 6,143
 
  180,210 149,099
     
Long-term debt 6,109 5,776
 
  186,319 154,875
     
Shareholders’ equity    
Share capital 879,949 874,377
Accumulated deficit (177,072) (171,035)
Accumulated other comprehensive income 5,627 3,439
 
Total shareholders’ equity 708,504 706,781
 
  $894,823 $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 August 30, 2003 For the six months ended August 30, 2003
  (unaudited)
     
Cash flows from operating activities    
Net income (loss) $2,149 $(6,037)
     
Items not requiring an outlay of cash:    
Amortization 14,824 25,661
Unrealized foreign exchange gain (loss) (98) (439)
 
  16,875 19,185
     
Net changes in non-cash working capital items 11,164 21,630
 
  28,039 40,815
 
     
Cash flows from financing activities    
Change in restricted cash (7,614) (14,498)
Issuance of share capital and warrants 4,691 5,572
Repayment of debt (108) (197)
 
  (3,031) (9,123)
 
     
Cash flows from investing activities    
Proceeds on sale or maturity of investments held to maturity 373 31,688
Acquisition of capital assets (3,071) (6,662)
Acquisition of intangible assets (3,527) (27,653)
 
  (6,225) (2,627)
   
     
Net increase in cash and cash equivalents for the period 18,783 29,065
     
Cash and cash equivalents, beginning of period 350,963 340,681
 
Cash and cash equivalents, end of period $369,746 $369,746
 
     
  As at As at
  August 30, 2003 May 31, 2003
     
Cash and cash equivalents $369,746 $350,963
Investments held to maturity 158,342 158,715
 
Cash, cash equivalents and investments held to maturity $528,088 $509,678