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Press Release
June 25, 2003
Research In Motion Reports First Quarter Results
Research In Motion Limited (RIM) (Nasdaq: RIMM; TSX: RIM), a world leader in the mobile communications market, today reported first quarter results for the three months ended May 31, 2003 (all figures in U.S. dollars and U.S. GAAP). Beginning this quarter, the Company commenced reporting its consolidated financial results in accordance with U.S. GAAP.
Revenue for the first quarter of fiscal 2004 was $104.5 million, up from $87.5 million in the previous quarter. The revenue breakdown for the quarter was 50% for handhelds, 37% for service, 6% for software licences and development, and 7% for OEM radios and other revenue. The total number of BlackBerry® subscribers increased by approximately 81,000 from the prior quarter to 615,000 subscribers. The total number of organizations that currently have BlackBerry Enterprise Server™ installed increased to approximately 11,000, up from 10,000 at the end of the fiscal year. As expected, gross margins decreased slightly to 45.6% in the current quarter from 46.7% in the prior quarter.
"RIM continues to grow its business and strengthen its market position through close-knit alliances with leading product and service providers," said Jim Balsillie, Chairman and Co-CEO at RIM. "Together with our partners, we are expanding the global reach of the BlackBerry platform through new product, distribution and licensing initiatives."
The net loss for the quarter was $8.2 million, or $0.11 per share, compared to a net loss of $31.1 million or $0.40 per share in the prior quarter. As announced on May 26, 2003, the Company recorded a Q1 provision in relation to ongoing litigation. The amount of this provision recorded in the quarter was $7.5 million, of which $6.9 million represents the enhanced compensatory damages that will be deposited in escrow. Excluding the litigation provision, which is subject to appeal, the Company's adjusted loss and adjusted loss per share was approximately $0.7 million or $0.01 per share. The adjusted net loss and adjusted net loss 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 $509 million as at May 31, 2003, compared to $531 million at the end of the previous quarter, for a net decrease of $22 million quarter over quarter.
Highlights of the first quarter:
- RIM formally unveiled its BlackBerry Connect™ licensing program at the CTIA Wireless 2003 show. The BlackBerry Connect licensing program enables mobile device manufacturers such as Nokia to equip their handsets with the integrated ability to connect to BlackBerry Enterprise Server using RIM's secure, push-based wireless architecture and infrastructure.
- RIM and PalmSource announced plans to offer a BlackBerry wireless email and data connectivity solution for wireless Palm Powered™ handhelds and smartphones.
- RIM and Symbian began market development efforts to provide a BlackBerry connectivity solution for Symbian OS licensees and carriers to enable wireless email and corporate data services on Symbian OS phones.
- RIM announced plans to offer BlackBerry connectivity for Microsoft Windows Powered mobile devices and initiated development efforts with High Tech Computer Corp. (HTC) to enable Pocket PC and Smartphone devices from HTC to connect to BlackBerry Enterprise Server.
- RIM unveiled its Java-based BlackBerry 6210™ (world band) and BlackBerry 6220™ (dual band) handhelds for global GSM/GPRS networks. New handheld features include a smaller design with a light and comfortable feel, increased memory for greater application and data storage, as well as new support for wireless email synchronization and integrated attachment viewing.
- RIM was awarded the FIPS 140-2 security validation by the U.S. Government's National Institute of Standards and Technology (NIST) for the cryptographic firmware embedded in its Java-based series of BlackBerry Wireless Handhelds. Federal Information Processing Standards (FIPS) validation is an important and often mandatory purchasing criteria for many government organizations. The BlackBerry platform has now received FIPS approval for operation on all wireless network standards supported by BlackBerry including Mobitex, DataTAC, GSM/GPRS, Nextel and CDMA 1X.
- AT&T Wireless launched the BlackBerry 6210 for its GSM/GPRS network in the United States.
- Verizon Wireless launched the BlackBerry 6750™ for its CDMA2000 1X network in the United States.
- TELUS Mobility launched the BlackBerry 6750 for its CDMA2000 1X network in Canada.
- T-Mobile International and RIM announced plans to introduce a BlackBerry offering for professional consumers and smaller firms in Austria, Germany and the UK.
- Vodafone D2 and RIM announced plans to bring BlackBerry to Vodafone's corporate customers in Germany.
- SFR launched the BlackBerry 6720™ for its GSM/GPRS network in France.
- Telefónica Móviles España (TME) launched BlackBerry for the first time in Spain.
- StarHub launched BlackBerry for the first time in Singapore.
- SMART Communications and RIM announced an agreement to bring the BlackBerry wireless platform to the Philippines for the first time.
- BlackBerry continued to win recognition as the industry's leading wireless enterprise platform including receipt of the Best New Technology award at the FOSE government show and the Best Mobility Solution award from .NET Magazine.
- 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.
- RIM hosted the 2nd annual Wireless Enterprise Symposium in New Orleans. The two-day customer event was co-sponsored by many of RIM's partners with an impressive line-up of more than 50 wireless leaders including Nokia, Sun, HP, AT&T Wireless, Cingular Wireless, Motient, Nextel, Siebel Systems, Symbian, T-Mobile and Verizon Wireless.
Highlights subsequent to quarter end:
- RIM unveiled its new Java-based BlackBerry 7230™ (tri-band + color screen) and BlackBerry 6230™ (tri-band + monochrome screen) wireless handhelds in Europe. T-Mobile International launched the BlackBerry 7230 and BlackBerry 6230 handhelds with the new BlackBerry service for professional consumers and smaller firms in Austria, Germany and the UK.
- T-Mobile USA launched the BlackBerry 6210 for its GSM/GPRS network in the United States.
- Rogers AT&T Wireless launched the BlackBerry 6210 for its GSM/GPRS network in Canada.
- 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.
The replay of the company's Q1 conference call can be accessed after 7 p.m. (eastern), June 25, 2003 until midnight (eastern), July 2, 2003. It can be accessed by dialing 416-640-1917 and entering reservation number 21000715#. The conference will also appear on the RIM web site, live at 5:00 pm and archived at www.rim.com/investors/index.shtml until midnight July 2, 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 | |||
| May 31, 2003 | March 1, 2003 | June 1, 2002 | |
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| (unaudited) | (unaudited - adjusted to US GAAP) | ||
| Revenue | $104,461 | $87,502 | $71,636 |
| Cost of sales | 56,814 | 46,639 | 40,483 |
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| Gross margin | 47,647 | 40,863 | 31,153 |
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| Gross margin % | 45.6% | 46.7% | 43.5% |
| Expenses | |||
| Research and development, net of government funding | 14,387 | 12,535 | 12,625 |
| Selling, marketing and administration | 28,059 | 28,067 | 27,973 |
| Amortization | 8,424 | 8,316 | 7,056 |
| Litigation and related expenses | 7,459 | 25,540 | - |
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| 58,329 | 74,458 | 47,654 | |
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| Loss from operations | (10,682) | (33,595) | (16,501) |
| Investment income | 2,496 | 2,498 | 3,154 |
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| Loss before recovery of income taxes | (8,186) | (31,097) | (13,347) |
| Recovery of income taxes | - | - | (2,611) |
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| Net loss | $(8,186) | $(31,097) | $(10,736) |
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| Loss per share | |||
| Basic and diluted | $(0.11) | $(0.40) | $(0.14) |
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| Weighted average number of common shares outstanding (000’s) | |||
| Basic and diluted | 77,276 | 77,105 | 78,697 |
Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)
Consolidated Balance Sheets
| As at | May 31, 2003 | March 1, 2003 |
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| (unaudited) | (audited-adjusted to US GAAP) | |
| Assets | ||
| Current | ||
| Cash and cash equivalents | $350,963 | $340,681 |
| Restricted cash | 6,884 | - |
| Trade receivables | 39,921 | 40,803 |
| Other receivables | 7,155 | 4,538 |
| Inventory | 29,668 | 31,275 |
| Prepaid expenses and other assets | 18,596 | 11,079 |
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| 453,187 | 428,376 | |
| Investments held to maturity | 158,715 | 190,030 |
| Capital assets | 157,490 | 161,183 |
| Intangible assets | 72,053 | 51,479 |
| Goodwill | 30,588 | 30,588 |
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| $872,033 | $861,656 | |
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| Liabilities | ||
| Current | ||
| Accounts payable and accrued liabilities | $79,105 | $73,009 |
| Accrued litigation and related expenses | 57,209 | 50,702 |
| Income taxes payable | 5,918 | 4,909 |
| Deferred revenue | 13,471 | 14,336 |
| Current portion of long-term debt | 6,614 | 6,143 |
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| 162,317 | 149,099 | |
| Long-term debt | 6,248 | 5,776 |
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| 168,565 | 154,875 | |
| Shareholders’ equity | ||
| Share capital | 875,258 | 874,377 |
| Accumulated deficit | (179,221) | (171,035) |
| Accumulated other comprehensive income | 7,431 | 3,439 |
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| Total shareholders’ equity | 703,468 | 706,781 |
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| $872,033 | $861,656 | |
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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 | For the three months ended | |
| May 31, 2003 | June 1, 2002 | |
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| (unaudited) | (unaudited - adjusted to US GAAP) | |
| Cash flows from operating activities | ||
| Net loss | $(8,186) | $(10,736) |
| Items not requiring an outlay of cash: | ||
| Amortization | 10,837 | 7,197 |
| Future income taxes | - | (5,354) |
| Gain on foreign currency translation of long term debt | (341) | (286) |
| Unrealized foreign exchange gain | (50) | (213) |
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| 2,260 | (9,392) | |
| Net changes in non-cash working capital items | 10,466 | 15,186 |
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| 12,726 | 5,794 | |
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| Cash flows from financing activities | ||
| Change in restricted cash | (6,884) | - |
| Issuance of share capital and warrants | 881 | 358 |
| Buyback of common shares pursuant to Common Share Purchase Program | - | (10,128) |
| Repayment of debt | (89) | (121) |
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| (6,092) | (9,891) | |
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| Cash flows from investing activities | ||
| Proceeds on sale or maturity of investments held to maturity | 31,315 | - |
| Acquisition of capital assets | (3,591) | (18,187) |
| Acquisition of intangible assets | (24,126) | (6,498) |
| Acquisition of marketable securities available for sale, at market | - | (41,156) |
| Proceeds on sale and maturity of marketable securities available for sale, at market | - | 198,409 |
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| 3,598 | 132,568 | |
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| Foreign exchange effect on cash and cash equivalents | 50 | 213 |
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| Net increase in cash and cash equivalents for the period | 10,282 | 128,684 |
| Cash and cash equivalents, beginning of period | 340,681 | 340,476 |
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| Cash and cash equivalents, end of period | $350,963 | $469,160 |
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| As at | As at | |
| May 31, 2003 | March 1, 2003 | |
| Cash and cash equivalents | $350,963 | $340,681 |
| Investments held to maturity | 158,715 | 190,030 |
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| Cash, cash equivalents and investments held to maturity | $509,678 | $530,711 |
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