Research In Motion
NASDAQ : RIMM
TSX : RIM

Research In Motion

September 24, 2009 16:05 ET

Research In Motion Reports Second Quarter Results

WATERLOO, ONTARIO--(Marketwire - Sept. 24, 2009) - 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 29, 2009 (all figures in U.S. dollars and U.S. GAAP, except where indicated).

Revenue for the second quarter of fiscal 2010 was $3.53 billion, up 3% from $3.42 billion in the previous quarter and up 37% from $2.58 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 81% for devices, 14% for service, 2% for software and 3% for other revenue. During the quarter, RIM shipped approximately 8.3 million devices.

Approximately 3.8 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was approximately 32 million.

"We are pleased to report a strong second quarter with excellent financial performance, successful product launches and accelerating growth in international markets and new market segments," said Jim Balsillie, Co-CEO at Research In Motion. "RIM is entering the second half of the fiscal year and approaching the holiday buying season with an impressive product portfolio, continuing business momentum and strong marketing support from our partners around the world."

GAAP net income for the quarter was $475.6 million, or $0.83 per share diluted, compared with GAAP net income of $643.0 million, or $1.12 per share diluted, in the prior quarter and net income of $495.5 million, or $0.86 per share diluted, in the same quarter last year. Adjusted net income for the second quarter was $588.4 million, or $1.03 per share diluted, reflecting a tax rate of 28.5%. Adjusted net income and adjusted diluted earnings per share exclude the impact of a charge of $112.8 million for the payment of the settlement of all outstanding worldwide patent litigation with Visto Corporation, the details of which were disclosed in a press release dated July 16, 2009. This charge and its related impacts on net income and diluted EPS are summarized in the table below.



Reconciliation of GAAP net income to adjusted net income
(United States dollars, in thousands except per share data)

For the quarter ended
August 29, 2009
Net Income Diluted EPS
----------------------------
As reported $ 475,621 $ 0.83

Adjustment:

Litigation, net of income tax(1) 112,809 0.20
----------------------------
Adjusted $ 588,430 $ 1.03
----------------------------
----------------------------

Note: Adjusted net income and adjusted diluted earnings per share do not
have any standardized meaning prescribed by GAAP and thus are not
comparable to similarly titled measures presented by other issuers.
The company believes that the presentation of adjusted net income and
adjusted diluted earnings per share enables the Company and its
shareholders to better assess RIM's operating results relative to
its operating results in prior periods and improves the comparability
of the information presented. Investors should consider these
non-GAAP financial measures in the context of RIM's GAAP results.

(1) In the second quarter of fiscal 2010, the Company settled all
outstanding worldwide litigation with Visto Corporation for a total
payment of $267.5 million of which $163.8 million ($112.8 million net of
tax) was expensed as a litigation charge in the second quarter of
fiscal 2010. The remainder of the payment was recorded as intangible
assets. Further details of the settlement were disclosed in a press
release dated July 16, 2009.


Revenue for the third quarter of fiscal 2010 ending November 28, 2009 is expected to be in the range of $3.60-$3.85 billion. Gross margin for Q3 is expected to be approximately 43%. Net subscriber account additions in the third quarter are expected to be in the range of 4.0-4.3 million. Earnings per share for the third quarter are expected to be in the range of $1.00-$1.08 per share diluted.

The total of cash, cash equivalents, short-term and long-term investments was $2.50 billion as at August 29, 2009, compared to $2.42 billion at the end of the previous quarter, an increase of $78.5 million over the prior quarter. Cash flow from operations in Q2 was approximately $564 million which was offset primarily by capital expenditures of approximately $307 million and intangible asset purchases of approximately $179 million.

A conference call and live webcast will be held beginning at 5 pm ET, September 24, 2009, which can be accessed by dialing 800-733-7571 (North America), 416-915-5761 (outside North America). The replay of the company's Q2 conference call can be accessed after 7 pm ET, September 24, 2009 until midnight ET, October 8, 2009. It can be accessed by dialing 416-640-1917 and entering passcode 21289982#. The conference call will also appear on the RIM website live at 5 pm ET and will be archived at http://www.rim.com/investors/events/index.shtml.

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 and Canadian securities laws, including statements relating to RIM's revenue, gross margin, earnings, net subscriber account additions and operating expense expectations for the third quarter of fiscal 2010, customer demand, penetration of new markets, product initiatives and anticipated growth. The terms and phrases "accelerating", "approaching", "continuing business momentum", "strong marketing support", "expected", and similar terms and phrases 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 including but not limited to general economic conditions, product pricing levels and competitive intensity, supply constraints and new product introductions. 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: reduced spending by customers and other risks relating to the uncertainty of economic and geopolitical conditions; risks relating to RIM's intellectual property rights; RIM's ability to enhance current products and develop new products and services; RIM's reliance on carrier partners, third-party manufacturers, third-party network developers and suppliers; risks relating to the efficient and uninterrupted operation of RIM's network operations centre; risks related to RIM's international operations; and intense competition. These risk factors and others relating to RIM are discussed in greater detail in the "Risk Factors" section of RIM's Annual Information Form, which is included in its Annual Report on Form 40-F and RIM's MD&A (copies of which filings may be obtained at www.sedar.com or www.sec.gov). 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, except as required by law.

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)(unaudited)

Consolidated Statements of Operations

For the three months ended For the six months ended
------------------------------------ -------------------------
August 29, May 30, August 30, August 29, August 30,
2009 2009 2008 2009 2008
----------------------------------------------------------------------------

Revenue $ 3,525,692 $ 3,423,510 $ 2,577,330 $ 6,949,202 $ 4,819,895
Cost of sales 1,971,296 1,931,985 1,270,473 3,903,281 2,375,681
------------------------------------ -------------------------
Gross margin 1,554,396 1,491,525 1,306,857 3,045,921 2,444,214
------------------------------------ -------------------------
Gross
margin % 44.1% 43.6% 50.7% 43.8% 50.7%

Operating
Expenses
Research
and
development 235,571 219,777 181,347 455,348 309,123
Selling,
marketing
and
administ-
ration 429,748 514,291 379,644 944,039 706,236
Amortization 73,292 67,396 43,633 140,688 80,185
Litigation 163,800 - - 163,800 -
------------------------------------ -------------------------
902,411 801,464 604,624 1,703,875 1,095,544
------------------------------------ -------------------------

Income from
operations 651,985 690,061 702,233 1,342,046 1,348,670

Investment
income 7,625 9,136 17,168 16,761 36,145
------------------------------------ -------------------------

Income before
income taxes 659,610 699,197 719,401 1,358,807 1,384,815
------------------------------------ -------------------------

Provision for
income taxes 183,989 56,167 223,855 240,156 406,754
------------------------------------ -------------------------
Net income $ 475,621 $ 643,030 $ 495,546 $ 1,118,651 $ 978,061
------------------------------------ -------------------------
------------------------------------ -------------------------

Earnings per
share
Basic $ 0.84 $ 1.13 $ 0.88 $ 1.97 $ 1.73
------------------------------------ -------------------------
------------------------------------ -------------------------
Diluted $ 0.83 $ 1.12 $ 0.86 $ 1.95 $ 1.70
------------------------------------ -------------------------
------------------------------------ -------------------------

Weighted
average
number of
common
shares
outstanding
(000's)
Basic 567,789 566,787 564,899 567,288 564,222
Diluted 573,565 573,259 574,831 573,441 574,738

Total
common
shares
outstanding
(000's) 568,219 567,368 565,370 568,219 565,370



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

Consolidated Balance Sheets

August 29, February 28,
As at 2009 2009
----------------------------------------------------------------------------

Assets
Current
Cash and cash equivalents $ 1,083,251 $ 835,546
Short-term investments 580,921 682,666
Trade receivables 2,365,106 2,112,117
Other receivables 248,162 157,728
Inventory 572,761 682,400
Other current assets 189,676 187,257
Deferred income tax asset 175,568 183,872
-----------------------------
5,215,445 4,841,586

Long-term investments 833,575 720,635
Capital assets 1,737,403 1,334,648
Intangible assets 1,291,454 1,066,527
Goodwill 146,557 137,572
Deferred income tax asset - 404
-----------------------------
$ 9,224,434 $ 8,101,372
-----------------------------
-----------------------------

Liabilities
Current
Accounts payable $ 496,005 $ 448,339
Accrued liabilities 1,603,842 1,238,602
Income taxes payable - 361,460
Deferred revenue 66,912 53,834
Deferred income tax liability - 13,116
-----------------------------
2,166,759 2,115,351

Deferred income tax liability 43,265 87,917
Income taxes payable 27,790 23,976
-----------------------------
2,237,814 2,227,244
-----------------------------

Shareholders' Equity
Capital stock 2,236,190 2,208,235
Treasury shares (45,081) -
Retained earnings 4,664,361 3,545,710
Additional paid-in capital 139,113 119,726
Accumulated other comprehensive income (loss) (7,963) 457
-----------------------------
6,986,620 5,874,128
-----------------------------
$ 9,224,434 $ 8,101,372
-----------------------------
-----------------------------



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

Consolidated Statements of Cash Flows

For the six For the six
months ended months ended
August 29, 2009 August 30, 2008
----------------------------------------------------------------------------

Cash flows from operating activities
Net income $ 1,118,651 $ 978,061

Items not requiring an outlay of cash:
Amortization 269,164 125,995
Deferred income taxes (19,621) (18,678)
Income taxes payable 3,814 (2,204)
Stock-based compensation 25,747 19,600
Other (7,915) 12,080
Net changes in working capital items (194,001) (515,775)
-------------------------------------
Net cash provided by operating
activities 1,195,839 599,079
-------------------------------------

Cash flows from investing activities
Acquisition of long-term investments (369,111) (173,642)
Proceeds on sale or maturity of
long-term investments 183,847 143,674
Acquisition of capital assets (554,558) (386,039)
Acquisition of intangible assets (242,379) (331,027)
Business Acquisitions (131,541) -
Acquisition of short-term investments (279,226) (335,768)
Proceeds on sale or maturity of
short-term investments 473,655 408,171
-------------------------------------
Net cash used in investing activities (919,313) (674,631)
-------------------------------------

Cash flows from financing activities
Issuance of common shares 18,890 21,927
Excess tax benefits from stock-based
compensation 2,705 12,146
Purchase of treasury shares (45,081) -
Repayment of debt (6,099) (166)
-------------------------------------
Net cash (used in) provided by
financing activities (29,585) 33,907
-------------------------------------

Effect of foreign exchange gain on
cash and cash equivalents 764 (11,679)
-------------------------------------
Net increase (decrease) in cash and
cash equivalents for the period 247,705 (53,324)
Cash and cash equivalents, beginning
of period 835,546 1,184,398
-------------------------------------
Cash and cash equivalents, end
of period $ 1,083,251 $ 1,131,074
-------------------------------------
-------------------------------------



As at August 29, 2009 May 30, 2009
----------------------------------------------------------------------------

Cash and cash equivalents $ 1,083,251 $ 1,135,325
Short-term investments 580,921 619,914
Long-term investments 833,575 663,990
-------------------------------------
$ 2,497,747 $ 2,419,229
-------------------------------------


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