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Research In Motion Reports Third Quarter Results

WATERLOO, ONTARIO--(Marketwire - 12/16/10) - Research In Motion Limited (RIM) (NASDAQ:RIMM - News)(TSX:RIM - News), 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 - News) and the Toronto Stock Exchange (TSX:RIM - News). 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 August November November November
27, 2010 28, 2010 28, 2009 27, 2010 28, 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
administrat-
ion 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 cash equivalents (5,821) (4,193)
---------------------------------------
Net increase (decrease) in cash and
cash equivalents for the 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
---------------------------------------
---------------------------------------