Research In Motion
NASDAQ : RIMM
TSX : RIM

Research In Motion

September 16, 2010 16:10 ET

Research In Motion Reports Second Quarter Results

WATERLOO, ONTARIO--(Marketwire - Sept. 16, 2010) - 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 28, 2010 (all figures in U.S. dollars and U.S. GAAP).

Highlights:

  • Revenue grew 31% over the same quarter last year to $4.62 billion
  • Earnings per share in the second quarter increased 76% to $1.46 over the second quarter last year(1)
  • BlackBerry® smartphone shipments grew more than 45% over the same quarter last year to 12.1 million and RIM has shipped approximately 115 million BlackBerry smartphones to date
  • BlackBerry subscriber account base grew approximately 56% over the prior year to over 50 million

Q2 Results:

Revenue for the second quarter of fiscal 2011 was $4.62 billion, up 9% from $4.24 billion in the previous quarter and up 31% from $3.53 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 79% for devices, 17% for service, 1% for software and 3% for other revenue. During the quarter, RIM shipped approximately 12.1 million devices.

Approximately 4.5 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 50 million. 

"RIM set another new record in the quarter by shipping over 12 million BlackBerry smartphones. This accomplishment and RIM's solid financial results during the second quarter were driven by effective business execution and strong demand for RIM's portfolio of BlackBerry smartphones and services in markets around the world," said Jim Balsillie, Co-CEO at Research In Motion. "We expect a continuation of this momentum in the third quarter as we extend the rollout of new products including the BlackBerry Torch into additional markets and benefit from heavy promotional activities and increasing customer demand as we head into the holiday buying season."

The Company's net income for the quarter was $796.7 million, or $1.46 per share diluted, compared with net income of $768.9 million, or $1.38 per share diluted, in the prior quarter and net income of $475.6 million, or $0.83 per share diluted, in the same quarter last year. The impact of Q2 share repurchases on second quarter fiscal 2011 earnings per share was approximately $0.02 per share.

The total of cash, cash equivalents, short-term and long-term investments was $2.03 billion as at August 28, 2010, compared to $3.27 billion at the end of the previous quarter, a decrease of $1.24 billion from the prior quarter. Cash flow from operations in Q2 was approximately $938 million. Uses of cash included common share repurchases of approximately $1.5 billion, business acquisitions of approximately $320 million, capital expenditures of approximately $200 million and intangible asset purchases of approximately $100 million.

Q3 Outlook

Revenue for the third quarter of fiscal 2011 ending November 27, 2010 is expected to be in the range of $5.30-$5.55 billion. Gross margin for Q3 is expected to be approximately 42%. Net subscriber account additions in the third quarter are expected to be in the range of 5.0-5.4 million. Earnings per share for the third quarter are expected to be in the range of $1.62-$1.70 per share diluted.

Conference Call and Webcast

A conference call and live webcast will be held beginning at 5 pm ET, September 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 Q2 conference call can be accessed after 7 pm ET, September 16, 2010 until midnight ET, September 30, 2010. It can be accessed by dialing 416-640-1917 and entering passcode 4310309#. 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) Earnings per share in the second quarter of fiscal 2010 included a charge of $0.20 relating to the settlement of all outstanding worldwide patent litigation with Visto Corporation.

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, net subscriber account additions and earnings expectations for the third quarter of fiscal 2010, anticipated customer demand and promotional activity, penetration of new markets, product initiatives and anticipated growth. The terms "expect", "continuation", "momentum", "extend", "benefit", 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 six months ended  
    August 28,       May 29,     August 29,     August 28,     August 29,  
    2010       2010       2009       2010     2009  
   
   
Revenue $ 4,621,335     $ 4,235,393     $ 3,525,692     $ 8,856,728   $ 6,949,202  
Cost of sales   2,565,769       2,312,077       1,971,296       4,877,846     3,903,281  
Gross margin   2,055,566       1,923,316       1,554,396       3,978,882     3,045,921  
   
  Gross margin %   44.5 %     45.4 %     44.1 %     44.9 %   43.8 %
   
Operating expenses                                    
  Research and development   323,005       287,580       235,571       610,585     455,348  
  Selling, marketing and administration   546,077       482,841       429,748       1,028,918     944,039  
  Amortization   104,497       94,168       73,292       198,665     140,688  
  Litigation   -       -       163,800       -     163,800  
    973,579       864,589       902,411       1,838,168     1,703,875  
   
Income from operations   1,081,987       1,058,727       651,985       2,140,714     1,342,046  
   
  Investment income   6,406       9,193       7,625       15,599     16,761  
   
Income before income taxes   1,088,393       1,067,920       659,610       2,156,313     1,358,807  
   
   
Provision for income taxes   291,689       299,018       183,989       590,707     240,156  
   
Net income $ 796,704     $ 768,902     $ 475,621     $ 1,565,606   $ 1,118,651  
   
Earnings per share                                    
  Basic $ 1.46     $ 1.39     $ 0.84     $ 2.85   $ 1.97  
  Diluted $ 1.46     $ 1.38     $ 0.83     $ 2.83   $ 1.95  
   
Weighted average number of common shares outstanding (000's)                                    
  Basic   544,073       554,672       567,789       549,372     567,288  
  Diluted    546,387       558,189       573,565       552,254     573,441  
   
Total common shares outstanding (000's)   524,463       552,468       568,219       524,463     568,219  

 

   
   
Research In Motion Limited  
Incorporated under the Laws of Ontario  
(United States dollars, in thousands except per share data) (unaudited)  
   
Consolidated Balance Sheets  
   
  August 28,   February 27,  
As at   2010     2010  
   
Assets            
  Current            
    Cash and cash equivalents $ 1,152,084   $ 1,550,861  
    Short-term investments   379,648     360,614  
    Accounts receivable, net   3,216,462     2,593,742  
    Other receivables   147,565     206,373  
    Inventories   645,267     659,943  
    Other current assets   216,601     247,207  
    Deferred income tax asset   221,449     193,916  
    5,979,076     5,812,656  
   
   
Long-term investments   494,003     958,248  
Property, plant and equipment, net   2,169,271     1,956,581  
Intangible assets, net   1,421,472     1,326,363  
Goodwill   375,428     150,561  
  $ 10,439,250   $ 10,204,409  
   
Liabilities            
  Current            
    Accounts payable $ 890,845   $ 615,620  
    Accrued liabilities   1,923,669     1,638,260  
    Income taxes payable   116,162     95,650  
    Deferred revenue   79,170     67,573  
    Deferred income tax liability   7,954     14,674  
    3,017,800     2,431,777  
   
Deferred income tax liability   179,102     141,382  
Income taxes payable   28,578     28,587  
    3,225,480     2,601,746  
   
Shareholders' Equity            
Capital stock   2,098,583     2,207,609  
Treasury stock   (109,578 )   (94,463 )
Retained earnings   5,026,555     5,274,365  
Additional paid-in capital   180,651     164,060  
Accumulated other comprehensive income   17,559     51,092  
    7,213,770     7,602,663  
  $ 10,439,250   $ 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  
   
  Six months ended     Six months ended  
    August 28,     August 29,  
    2010     2009  
   
Cash flows from operating activities            
Net income $ 1,565,606   $ 1,118,651  
Adjustments to reconcile net income to net cash provided by operating activities:            
  Amortization   394,410     269,164  
  Deferred income taxes   1,230     (19,621 )
  Income taxes payable   (9 )   3,814  
  Stock-based compensation   32,789     25,747  
  Other   2,556     (7,915 )
Net changes in working capital items   35,111     (194,001 )
Net cash provided by operating activities   2,031,693     1,195,839  
Cash flows from investing activities            
Acquisition of long-term investments   (376,106 )   (369,111 )
Proceeds on sale or maturity of long-term investments   609,713     183,847  
Acquisition of property, plant and equipment   (434,037 )   (554,558 )
Acquisition of intangible assets   (146,833 )   (242,379 )
Business acquisitions, net of cash acquired   (332,910 )   (131,541 )
Acquisition of short-term investments   (286,137 )   (279,226 )
Proceeds on sale or maturity of short-term investments   492,072     473,655  
Net cash used in investing activities   (474,238 )   (919,313 )
Cash flows from financing activities            
Issuance of common shares   12,000     18,890  
Tax benefits (deficiencies) related to stock-based compensation   (313 )   2,705  
Purchase of treasury stock   (21,853 )   (45,081 )
Common shares repurchased   (1,943,589 )   -  
Repayment of debt   -     (6,099 )
Net cash used in financing activities   (1,953,755 )   (29,585 )
Effect of foreign exchange gain (loss) on cash and cash equivalents   (2,477 )   764  
Net increase (decrease) in cash and cash equivalents for the period   (398,777 )   247,705  
Cash and cash equivalents, beginning of period   1,550,861     835,546  
Cash and cash equivalents, end of period $ 1,152,084   $ 1,083,251  
   
    August 28,     May 29,  
As at   2010     2010  
   
Cash and cash equivalents $ 1,152,084   $ 1,850,199  
Short-term investments   379,648     498,127  
Long-term investments   494,003     918,849  
  $ 2,025,735   $ 3,267,175  

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