Research In Motion

NASDAQ : RIMM
TSX : RIM


Research In Motion

March 31, 2010 16:15 ET

Research In Motion Reports Year-End and Fourth Quarter Results for Fiscal 2010

WATERLOO, ONTARIO--(Marketwire - March 31, 2010) - Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM), a world leader in the mobile communications market, today reported results for the three months and fiscal year ended February 27, 2010 (all figures in U.S. dollars and U.S. GAAP). 

Annual Highlights:

  • Revenue grew 35% over the prior fiscal year to $15 billion
  • BlackBerry® subscriber account base grew 65% over the prior fiscal year to over 41 million, with a record 4.9 million net new subscriber accounts added in Q4
  • BlackBerry smartphone shipments grew more than 40% over the prior fiscal year to 37 million
  • BlackBerry was the number one selling smartphone brand in the United States at the end of calendar 2009(1)
  • GAAP earnings per share grew 30% over the prior fiscal year to $4.31 per share diluted

Revenue for the fiscal year ended February 27, 2010 was $14.95 billion, up 35% from $11.07 billion last year. Revenue for the fourth quarter of fiscal 2010 was $4.08 billion, up 18% from $3.46 billion in the same quarter of last year and up 4% from $3.92 billion in the previous quarter. The revenue breakdown for the quarter was approximately 80% for devices, 16% for service, 2% for software and 2% for other revenue. Gross margin for the fourth quarter was 45.7% compared to 42.7% in the prior quarter. RIM shipped approximately 37 million devices during fiscal 2010 and approximately 10.5 million devices in the fourth quarter. 

Approximately 4.9 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 41 million. 

"RIM has completed another outstanding fiscal year with record revenue, earnings and subscriber results. Our company and partnerships continued to thrive within one of the most dynamic industries in the world. We managed to significantly expand our international market share while also maintaining our longstanding leadership in North America where BlackBerry continues to be the top selling smartphone brand," said Jim Balsillie, Co-CEO at Research In Motion. "We are off to a great start in fiscal 2011 and expect strong shipments, revenue, subscriber and earnings growth in Q1. We are also very excited about our portfolio of products and services for the coming year and we continue to see exceptional opportunity for sustained growth."

Net income for fiscal 2010 was $2.46 billion, or $4.31 per share diluted, up 29.8% over fiscal 2009. Net income for the quarter was $710.1 million, or $1.27 per share diluted, compared with net income of $628.4 million, or $1.10 per share diluted, in the prior quarter and net income of $518.3 million, or $0.90 per share diluted, in the same quarter last year. 

Revenue for the first quarter of fiscal 2011 ending May 29, 2010 is expected to be in the range of $4.25-4.45 billion. Gross margin for Q1 is expected to be approximately 44.5%. Net subscriber account additions in the first quarter are expected to be between 4.9-5.2 million. Earnings per share for the first quarter are expected to be in the range of $1.31 – $1.38 per share diluted. 

The total of cash, cash equivalents, short-term investments and long-term investments was $2.87 billion as at February 27, 2010, compared to $2.41 billion at the end of the previous quarter, an increase of $461 million over the prior quarter. Uses of cash in the quarter included capital expenditures of $258 million and the acquisition of intangible assets of $36 million.

A conference call and live webcast will be held beginning at 5 pm ET, March 31, 2010, which can be accessed by dialing 800-814-4859 (North America), 416-644-3414 (outside North America). The replay of the company's Q4 conference call can be accessed after 7 pm ET, March 31, 2010 until midnight ET, April 14, 2010. It can be accessed by dialing 416-640-1917 and entering passcode 4177292#. 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.

(1) IDC, "IDC announces the Top Ten Converged Mobile Devices in the United States for 4Q09", February 5, 2010

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 expectation and net subscriber account additions for the first quarter of fiscal 2011, the anticipated growth of RIM's business globally in fiscal 2011, and anticipated product and service launches in the coming year. The terms "continue", "expected", "opportunity" 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

   Three months ended    For the year ended
   February 27, 2010  November 28, 2009  February 28, 2009    February 27, 2010  February 28, 2009
                       
                       
Revenue $ 4,079,712 $ 3,924,310 $ 3,463,193   $ 14,953,224 $ 11,065,186
                       
Cost of sales   2,216,622   2,249,055   2,079,615     8,368,958   5,967,888
                       
Gross margin   1,863,090   1,675,255   1,383,578     6,584,266   5,097,298
                       
    Gross margin %   45.7%   42.7%   40.0%     44.0%   46.1%
                       
Operating expenses                      
  Research and development   267,164   242,329   182,535     964,841   684,702
  Selling, marketing and administration 497,642   465,717   406,493     1,907,398   1,495,697
  Amortization   86,540   83,129   61,595     310,357   194,803
  Litigation   -   -   -     163,800   -
    851,346   791,175   650,623     3,346,396   2,375,202
                       
Income from operations   1,011,744   884,080   732,955     3,237,870   2,722,096
                       
  Investment income   5,454   6,425   10,568     28,640   78,267
                  -    
Income before income taxes   1,017,198   890,505   743,523      3,266,510   2,800,363
                       
Provision for income taxes   307,076   262,134   225,264     809,366   907,747
                       
Net income $ 710,122 $ 628,371 $ 518,259   $ 2,457,144 $ 1,892,616
                       
Earnings per share                      
  Basic $ 1.27 $ 1.11 $ 0.92   $ 4.35 $ 3.35
  Diluted $ 1.27 $ 1.10 $ 0.90   $ 4.31 $ 3.30
                       
Weighted average number of common shares outstanding (000's)                      
  Basic   557,114   566,277   566,105     564,492   565,059
  Diluted   561,130   570,929   572,753     569,759   574,156
                       
Total common shares outstanding (000's)   557,328   556,913   566,219     557,328   566,219

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

Consolidated Balance Sheets

       
As at  February 27, 2010    February 28, 2009
           
Assets          
  Current          
    Cash and cash equivalents $ 1,550,861   $ 835,546
    Short-term investments   360,614     682,666
    Accounts receivable, net   2,593,742     2,112,117
    Other receivables   206,373     157,728
    Inventories   621,611     682,400
    Other current assets   285,539     187,257
    Deferred income tax asset   193,916     183,872
    5,812,656     4,841,586
           
           
Long-term investments   958,248     720,635
Property, plant and equipment, net   1,956,581     1,334,648
Intangible assets, net   1,326,363     1,066,527
Goodwill   150,561     137,572
Deferred income tax asset   -     404
  $ 10,204,409   $ 8,101,372
           
Liabilities          
  Current          
    Accounts payable $ 615,620   $ 448,339
    Accrued liabilities   1,638,260     1,238,602
    Income taxes payable   95,650     361,460
    Deferred revenue   67,573     53,834
    Deferred income tax liability   14,674     13,116
    2,431,777     2,115,351
           
Deferred income tax liability   141,382     87,917
Income taxes payable   28,587     23,976
    2,601,746     2,227,244
           
Shareholders' Equity          
Capital stock   2,207,609     2,208,235
Treasury stock   (94,463 )   -
Retained earnings   5,274,365     3,545,710
Additional paid-in capital   164,060     119,726
Accumulated other comprehensive income   51,092     457
     7,602,663     5,874,128
  $ 10,204,409   $ 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 year ended February 27, 2010    For the year ended February 28, 2009  
             
Cash flows from operating activities            
Net income $ 2,457,144   $ 1,892,616  
             
Adjustments to reconcile net income to net cash provided by operating activities:            
  Amortization   615,621     327,896  
  Deferred income taxes    51,363     (36,623 )
  Income taxes payable   4,611     (6,897 )
  Stock-based compensation   58,038     38,100  
  Other   8,806     5,867  
Net changes in working capital items   (160,709 )   (769,114 )
Net cash provided by operating activities   3,034,874     1,451,845  
             
Cash flows from investing activities            
Acquisition of long-term investments   (862,977 )   (507,082 )
Proceeds on sale or maturity of long-term investments   473,476     431,713  
Acquisition of property, plant and equipment   (1,009,416 )   (833,521 )
Acquisition of intangible assets   (421,400 )   (687,913 )
Business acquisitions, net of cash acquired   (143,375 )   (48,425 )
Acquisition of short-term investments    (476,956 )   (917,316 )
Proceeds on sale or maturity of short-term investments   970,521     739,021  
Net cash used in investing activities   (1,470,127 )   (1,823,523 )
             
Cash flows from financing activities            
Issuance of common shares   30,246     27,024  
Excess tax benefits from stock-based compensation    1,943     12,648  
Purchase of treasury stock   (94,463 )   -  
Common shares repurchased   (775,008 )   -  
Repayment of debt   (6,099 )   (14,305 )
Net cash provided by (used in) financing activities   (843,381 )   25,367  
Effect of foreign exchange loss on cash and cash equivalents   (6,051 )   (2,541 )
Net increase (decrease) in cash and cash equivalents for the year   715,315     (348,852 )
             
Cash and cash equivalents, beginning of year   835,546     1,184,398  
Cash and cash equivalents, end of year $ 1,550,861   $ 835,546  
             
             
             
As at    February 27, 2010      November 28, 2009  
             
             
Cash and cash equivalents $ 1,550,861   $ 1,286,309  
Short-term investments   360,614     341,205  
Long-term investments   958,248     781,206  
  $ 2,869,723   $ 2,408,720  

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