Research In Motion

NASDAQ : RIMM
TSX : RIM


Research In Motion

December 16, 2010 16:11 ET

Research In Motion Reports Third Quarter Results

WATERLOO, ONTARIO--(Marketwire - Dec. 16, 2010) - Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM), a world leader in the mobile communications market, today reported record third quarter results for the three months ended November 27, 2010 (all figures in U.S. dollars and U.S. GAAP).

Highlights:

  • Record BlackBerry® smartphone shipments of 14.2 million grew 40% over the same quarter last year
  • Revenue grew 40% over the same quarter last year to $5.5 billion
  • Q3 Earnings per share of $1.74 were up 58% over the same quarter last year
  • Cash increased by $446 million to $2.5 billion at the end of the quarter

Q3 Results:

Revenue for the third quarter of fiscal 2011 was $5.49 billion, up 19% from $4.62 billion in the previous quarter and up 40% from $3.92 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 82% for devices, 15% for service, and 3% for software and other revenue. During the quarter, RIM shipped approximately 14.2 million devices.

Approximately 5.1 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was over 55 million.

"We are pleased to report another record quarter with strong growth in shipments of BlackBerry smartphones leading to record revenue, subscriber additions and earnings. RIM's business continues to grow and diversify as BlackBerry adoption accelerates in markets around the world," said Jim Balsillie, Co-CEO at Research In Motion. "With strong results and momentum from our recent product introductions, as well as growing excitement from our partners and customers around upcoming smartphone, tablet, software and service offerings, we are setting the stage for continuing success."

The Company's net income for the quarter was $911.1 million, or $1.74 per share diluted, compared with net income of $796.7 million, or $1.46 per share diluted, in the prior quarter and net income of $628.4 million, or $1.10 per share diluted, in the same quarter last year.

The total of cash, cash equivalents, short-term and long-term investments was $2.47 billion as of November 27, 2010, compared to $2.03 billion at the end of the previous quarter, an increase of $446 million from the prior quarter. Cash flow from operations in Q3 was approximately $975 million. Uses of cash included capital expenditures of approximately $300 million, common share repurchases of approximately $133 million, and intangible asset purchases of approximately $45 million.

Q4 Outlook:

Revenue for the fourth quarter of fiscal 2011 ending February 26, 2011 is expected to be in the range of $5.5-$5.7 billion. Gross margin percentage for the fourth quarter is expected to be similar to third quarter levels. Earnings per share for the fourth quarter are expected to be in the range of $1.74-$1.80 per share diluted.

Update on RIM's Board of Directors:

RIM announced today that its board of directors has appointed co-Chief Executive Officers Jim Balsillie and Mike Lazaridis as co-chairmen of the board. John Richardson remains as lead independent director of RIM and will continue to facilitate the functioning of the board independently of management. The board believes these appointments, in conjunction with Mr. Richardson serving as lead independent director, represent an appropriate and effective leadership structure for RIM. RIM also announced today that Jim Estill has resigned his position as a director of RIM due to a business conflict. RIM thanks Mr. Estill for his 13 years of service on the board.

Conference Call and Webcast:

A conference call and live webcast will be held beginning at 5 pm ET, December 16, 2010, which can be accessed by dialing 800-814-4859 (North America), 416-644-3414 (outside North America). The replay of the company's Q3 conference call can be accessed after 7 pm ET, December 16, 2010 until midnight ET, December 30, 2010. It can be accessed by dialing 416-640-1917 and entering passcode 4310313#. 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 and earnings expectations for the fourth quarter of fiscal 2011, anticipated customer demand, the diversification of RIM's business and continued adoption of BlackBerry around the world, product initiatives and timing, and anticipated growth. The terms and phrases "outlook", "expect", "continues", "accelerates", "look forward to", "upcoming", "setting the stage", "momentum", 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: risks relating to RIM's intellectual property rights; RIM's ability to enhance current products and develop new products and services; risks related to delays in new product launches; risks related to competition; RIM's reliance on carrier partners, third-party manufacturers, third-party network developers and suppliers; risks relating to network disruptions and other business interruptions; risks related to RIM's ability to manage its production facilities; security risks and risks related to encryption technology; risks related to RIM's international operations; and RIM's ability to manage growth. 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 nine months ended  
  November 27,   August 28,   November 28,     November 27,   November 28,  
  2010   2010   2009     2010   2009  
   
   
Revenue $ 5,494,501   $ 4,621,335   $ 3,924,310     $ 14,351,229   $ 10,873,512  
Cost of sales   3,100,886     2,565,769     2,249,055       7,978,732     6,152,336  
Gross margin   2,393,615     2,055,566     1,675,255       6,372,497     4,721,176  
   
  Gross margin %   43.6 %   44.5 %   42.7 %     44.4 %   43.4 %
   
Operating expenses                                
  Research and development   357,301     323,005     242,329       967,886     697,677  
  Selling, marketing and administration   666,086     546,077     465,717       1,695,004     1,409,756  
  Amortization   114,662     104,497     83,129       313,327     223,817  
  Litigation   -     -     -       -     163,800  
    1,138,049     973,579     791,175       2,976,217     2,495,050  
   
Income from operations   1,255,566     1,081,987     884,080       3,396,280     2,226,126  
   
  Investment income (loss) (1)   (10,787 )   6,406     6,425       4,812     23,186  
   
Income before income taxes   1,244,779     1,088,393     890,505       3,401,092     2,249,312  
   
   
Provision for income taxes   333,666     291,689     262,134       924,373     502,290  
   
Net income $ 911,113   $ 796,704   $ 628,371     $ 2,476,719   $ 1,747,022  
   
Earnings per share                                
  Basic $ 1.74   $ 1.46   $ 1.11     $ 4.58   $ 3.08  
  Diluted $ 1.74   $ 1.46   $ 1.10     $ 4.56   $ 3.05  
   
Weighted average number of common shares outstanding (000's)                                
  Basic   522,436     544,073     566,277       540,394     566,951  
  Diluted   524,406     546,387     570,929       543,024     572,608  
   
Total common shares outstanding (000's)   521,776     524,463     556,913       521,776     556,913  
 
(1) In the quarter ending November 27, 2010 Investment income (loss) reflects a charge of approximately $17 million relating to impairment of certain investments.
 
 
 
Research In Motion Limited  
Incorporated under the Laws of Ontario  
(United States dollars, in thousands except per share data) (unaudited)  
   
Consolidated Balance Sheets  
   
  November 27,   February 27,  
As at 2010   2010  
   
Assets            
  Current            
    Cash and cash equivalents $ 1,435,437   $ 1,550,861  
    Short-term investments   340,222     360,614  
    Accounts receivable, net   4,100,655     2,593,742  
    Other receivables   239,741     206,373  
    Inventories   678,878     659,943  
    Other current assets   280,246     247,207  
    Deferred income tax asset   223,799     193,916  
    7,298,978     5,812,656  
   
   
Long-term investments   695,698     958,248  
Property, plant and equipment, net   2,342,993     1,956,581  
Intangible assets, net   1,372,300     1,326,363  
Goodwill   375,428     150,561  
  $ 12,085,397   $ 10,204,409  
   
Liabilities            
  Current            
    Accounts payable $ 1,274,887   $ 615,620  
    Accrued liabilities   2,277,761     1,638,260  
    Income taxes payable   187,650     95,650  
    Deferred revenue   89,804     67,573  
    Deferred income tax liability   4,282     14,674  
    3,834,384     2,431,777  
   
Deferred income tax liability   216,865     141,382  
Income taxes payable   29,741     28,587  
    4,080,990     2,601,746  
   
Shareholders' Equity            
Capital stock   2,094,672     2,207,609  
Treasury stock   (145,017 )   (94,463 )
Retained earnings   5,815,411     5,274,365  
Additional paid-in capital   195,492     164,060  
Accumulated other comprehensive income   43,849     51,092  
    8,004,407     7,602,663  
  $ 12,085,397   $ 10,204,409  
       
       
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  
   
   
  Nine months ended   Nine months ended  
  November 27,   November 28,  
  2010   2009  
   
Cash flows from operating activities            
Net income $ 2,476,719   $ 1,747,022  
Adjustments to reconcile net income to net cash provided by operating activities:            
  Amortization   616,524     434,766  
  Deferred income taxes   24,366     2,282  
  Income taxes payable   1,154     4,379  
  Stock - based compensation   52,070     41,691  
  Other   22,578     (2,958 )
Net changes in working capital items   (188,913 )   36,341  
Net cash provided by operating activities   3,004,498     2,263,523  
   
Cash flows from investing activities            
Acquisition of long-term investments   (698,672 )   (605,429 )
Proceeds on sale or maturity of long-term investments   698,343     430,380  
Acquisition of property, plant and equipment   (735,151 )   (750,954 )
Acquisition of intangible assets   (192,310 )   (385,548 )
Business acquisitions, net of cash acquired   (332,910 )   (131,541 )
Acquisition of short-term investments   (410,365 )   (390,389 )
Proceeds on sale or maturity of short-term investments   676,766     868,066  
Net cash used in investing activities   (994,299 )   (965,415 )
Cash flows from financing activities            
Issuance of common shares   17,020     24,722  
Tax benefits (deficiencies) related to stock-based compensation   (304 )   2,046  
Purchase of treasury stock   (59,721 )   (88,813 )
Common shares repurchased   (2,076,797 )   (775,008 )
Repayment of debt   -     (6,099 )
Net cash used in financing activities   (2,119,802 )   (843,152 )
Effect of foreign exchange loss on cash and cashequivalents   (5,821 )   (4,193 )
Net increase (decrease) in cash and cash equivalents forthe period   (115,424 )   450,763  
Cash and cash equivalents, beginning of the period   1,550,861     835,546  
Cash and cash equivalents, end of the period $ 1,435,437   $ 1,286,309  
   
   
  November 27,   August 28,  
As at 2010   2010  
   
   
Cash and cash equivalents $ 1,435,437   $ 1,152,084  
Short-term investments   340,222     379,648  
Long-term investments   695,698     494,003  
  $ 2,471,357   $ 2,025,735  

Contact Information