December 18, 2008: 04:05 PM ET
Research In Motion Limited (RIM) (NASDAQ: RIMM)(TSX: RIM), a world leader in the mobile communications market, today reported third quarter results for the three months ended November 29, 2008 (all figures in U.S. dollars and U.S. GAAP, except where noted). The third quarter results reported today by RIM are in line with the preliminary third quarter results reported by RIM on December 2, 2008.
Revenue for the third quarter of fiscal 2009 was $2.78 billion, up 7.9% from $2.58 billion in the previous quarter and up 66.3% from $1.67 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 81% for devices, 13% for service, 2% for software and 4% for other revenue. During the quarter, RIM shipped approximately 6.7 million devices.
Approximately 2.6 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base increased from the prior quarter by approximately 14% to approximately 21 million.
"We are pleased to report record revenue results for the third quarter and we have entered the fourth quarter with strong momentum despite the challenging general economic conditions. In fact we have enjoyed our best ever start to the holiday buying season over the past few weeks," said Jim Balsillie, Co-CEO at RIM. "RIM launched an unprecedented number of BlackBerry smartphones in the third quarter and these new products are being adopted at an even faster pace than we expected. Our industry leading product portfolio is positioned well to capitalize on the increasing market opportunity in the fourth quarter of fiscal 2009 and beyond."
Net income for the quarter was $396.3 million, or $0.69 per share diluted, compared with net income of $495.5 million, or $0.86 per share diluted, in the prior quarter and net income of $370.5 million, or $0.65 per share diluted, in the same quarter last year. Adjusted net income for the quarter was $477.3 million, or $0.83 per share diluted. Adjusted earnings per share excludes a negative impact on RIM's tax rate due to the significant depreciation of the Canadian dollar in Q3 and its effect on RIM's U.S. dollar denominated assets and liabilities held by RIM's Canadian operating companies that are subject to tax in Canadian dollars.(1)
Reconciliation of U.S. GAAP net income to adjusted net income
(United States dollars, in thousands except per share data)
For the three
months ended
November 29, 2008
----------------------------------------------------------------------------
U.S. GAAP net income, as reported $ 396,296
Adjustment:
Impact of foreign exchange on tax provision (1) 81,000
------------------
Adjusted net income $ 477,296
------------------
------------------
U.S. GAAP earnings per share, diluted $ 0.69
------------------
------------------
Adjusted earnings per share, diluted $ 0.83
------------------
------------------
Note: Adjusted net income and adjusted earnings per share do not have any
standardized meaning prescribed by U.S. GAAP and thus are not
comparable to similar measures presented by other issuers. Investors
are encouraged to consider this adjusted measure in the context of
RIM's U.S. GAAP results.
Revenue for the fourth quarter of fiscal 2009 ending February 28, 2009 is expected to be in the range of $3.30-$3.50 billion. Net subscriber account additions in the fourth quarter are expected to be approximately 2.9 million. Earnings per share for the fourth quarter are expected to be in the range of $0.83-$0.91 per share diluted based on a gross margin of between 40-41%, a tax rate of 29-30% and operating expenses that are approximately 2% lower as a percentage of revenue than in the third quarter. Based on RIM's current expectations for product mix and device average selling prices, RIM expects gross margins in fiscal 2010 to be similar to or slightly better than Q4.
The total of cash, cash equivalents, short-term and long-term investments was $2.49 billion as at November 29, 2008, compared to $2.24 billion at the end of the previous quarter, an increase of $249 million over the prior quarter. Uses of cash in the quarter included capital expenditures of approximately $196 million and intangible asset purchases of approximately $135 million.
A conference call and live webcast will be held beginning at 5 pm ET, December 18, 2008, which can be accessed by dialing 800-733-7571 (North America), 416-644-3418 (outside North America). The replay of the company's Q3 conference call can be accessed after 7 pm ET, December 18, 2008 until midnight ET, January 8, 2009. It can be accessed by dialing 416-640-1917 and entering passcode 21252987#. The conference call will also appear on the RIM web site live at 5 pm ET and will be archived at http://www.rim.com/investors/events/index.shtml [1].
(1) Note: As set out in RIM's press release dated December 2, 2008, there are proposed changes to the existing Canadian laws that will allow RIM to calculate its fiscal 2009 Canadian tax expense based on the U.S. dollar (the Company's functional currency). While the Company elected for Canadian tax purposes to adopt these rules in Q3, the Company cannot recognize the related tax benefit of electing to adopt these rules for U.S. GAAP financial reporting purposes until they are formally enacted resulting in the higher tax provision for Q3. Once these new rules are enacted, the incremental tax expense in Q3 will be reversed, additional tax benefits from prior quarters of fiscal 2009 will be realized and future tax rate volatility will be reduced. The Company expects the proposed rules to be enacted sometime in calendar 2009. As a result the Company believes that the presentation of adjusted net income and adjusted earnings per share diluted enables the Company and the shareholders to better assess RIM's operating results relative to its operating results in prior periods.
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(TM) 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 [2] or www.blackberry.com [3].
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 and earnings expectations for the fourth quarter of fiscal 2009, anticipated growth in subscribers, product shipments, expectations relating to RIM's margin, tax rate and operating expenses in the fourth quarter of fiscal 2009, RIM's expectation as to the timing of the enactment of changes to tax laws, and other plans relating to RIM. The terms and phrases "momentum", "capitalize", "continues", "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: risks relating to the restatement of RIM's previously-filed financial statements as a result of the internal review of RIM's historical option granting practices, and regulatory investigations and litigation relating to those matters, including possible sanctions or penalties against the Company or its directors or officers; risks relating to RIM's intellectual property rights; RIM's ability to enhance current products and develop new products; RIM's reliance on carrier partners, third-party network developers and suppliers; risks relating to the efficient and uninterrupted operation of RIM's network operations center; 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 [4] or www.sec.gov [5]), and RIM's other public filings with the Securities and Exchange Commission and Canadian securities regulators. 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 29, August 30, December 1, November 29, December 1,
2008 2008 2007 2008 2007
------------------------------------------------- --------------------------
Revenue $ 2,782,098 $ 2,577,330 $ 1,672,529 $ 7,601,993 $ 4,126,690
Cost of sales 1,512,592 1,270,473 824,657 3,888,273 2,014,331
------------------------------------ --------------------------
Gross margin 1,269,506 1,306,857 847,872 3,713,720 2,112,359
------------------------------------ --------------------------
Gross
margin % 45.6% 50.7% 50.7% 48.9% 51.2%
Expenses
Research
and
development 193,044 181,347 92,150 502,167 255,255
Selling,
marketing
and
adminis-
tration 382,968 379,644 238,175 1,089,204 613,601
Amortization 53,023 43,633 27,653 133,208 76,798
------------------------------------ --------------------------
629,035 604,624 357,978 1,724,579 945,654
------------------------------------ --------------------------
Income from
operations 640,471 702,233 489,894 1,989,141 1,166,705
Investment
income 31,554 17,168 23,816 67,699 59,247
------------------------------------ --------------------------
Income before
income taxes 672,025 719,401 513,710 2,056,840 1,225,952
------------------------------------ --------------------------
Provision for
income taxes
Current 298,646 200,918 141,457 725,222 409,266
Deferred (22,917) 22,937 1,792 (42,739) (64,680)
------------------------------------ --------------------------
275,729 223,855 143,249 682,483 344,586
------------------------------------ --------------------------
Net income $ 396,296 $ 495,546 $ 370,461 $ 1,374,357 $ 881,366
------------------------------------ --------------------------
------------------------------------ --------------------------
Earnings per
share
Basic $ 0.70 $ 0.88 $ 0.66 $ 2.43 $ 1.58
------------------------------------ --------------------------
------------------------------------ --------------------------
Diluted $ 0.69 $ 0.86 $ 0.65 $ 2.39 $ 1.54
------------------------------------ --------------------------
------------------------------------ --------------------------
Weighted
average
number of
common
shares
outstanding
(000's)
Basic 565,687 564,899 560,400 564,710 559,100
Diluted 573,514 574,831 573,700 574,469 572,300
Total common
shares
outstanding
(000's) 565,998 565,370 561,003 565,998 561,003
Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)(unaudited)
Consolidated Balance Sheets
November 29, March 1,
As at 2008 2008
----------------------------------------------------------------------------
Assets
Current
Cash and cash equivalents $ 1,101,714 $ 1,184,398
Short-term investments 574,279 420,709
Trade receivables 1,831,475 1,174,692
Other receivables 103,408 74,689
Inventory 599,068 396,267
Other current assets 171,691 135,849
Deferred income tax asset 156,861 90,750
-------------------------
4,538,496 3,477,354
Long-term investments 812,638 738,889
Capital assets 1,147,357 705,955
Intangible assets 1,052,180 469,988
Goodwill 114,455 114,455
Deferred income tax asset - 4,546
-------------------------
$ 7,665,126 $ 5,511,187
-------------------------
-------------------------
Liabilities
Current
Accounts payable $ 614,468 $ 271,076
Accrued liabilities 1,254,402 690,442
Income taxes payable 291,173 475,328
Deferred revenue 56,067 37,236
Current portion of long-term debt 5,815 349
-------------------------
2,221,925 1,474,431
Long-term debt - 7,259
Deferred income tax liability 72,586 65,058
Income taxes payable 24,432 30,873
-------------------------
2,318,943 1,577,621
-------------------------
Shareholders' Equity
Capital stock 2,204,934 2,169,856
Retained earnings 3,027,451 1,653,094
Paid-in capital 111,996 80,333
Accumulated other comprehensive income 1,802 30,283
-------------------------
5,346,183 3,933,566
-------------------------
$ 7,665,126 $ 5,511,187
-------------------------
-------------------------
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 three For the nine
months ended months ended
November 29, 2008 November 29, 2008
----------------------------------------------------------------------------
Cash flows from operating activities
Net income $ 396,296 $ 1,374,357
Items not requiring an outlay of cash:
Amortization 85,776 211,771
Deferred income taxes (21,236) (39,914)
Income taxes payable (4,237) (6,441)
Stock-based compensation 9,600 29,200
Other (8,140) (7,739)
Net changes in working capital items 107,636 (408,139)
--------------------------------------
Net cash provided by operating
activities 565,695 1,153,095
--------------------------------------
Cash flows from financing activities
Issuance of common shares 2,914 24,841
Excess tax benefits from stock-based
compensation 554 12,700
Repayment of long-term debt (78) (244)
--------------------------------------
Net cash provided by financing
activities 3,390 37,297
--------------------------------------
Cash flows from investing activities
Acquisition of long-term investments (266,114) (439,756)
Proceeds on sale or maturity of
long-term investments 160,991 304,665
Acquisition of capital assets (195,550) (581,589)
Acquisition of intangible assets (134,922) (465,949)
Acquisition of short-term investments (331,530) (667,298)
Proceeds on sale or maturity of
short-term investments 160,672 568,843
--------------------------------------
Net cash used in investing activities (606,453) (1,281,084)
--------------------------------------
Effect of foreign exchange gain on
cash and cash equivalents 8,008 8,008
--------------------------------------
Net decrease in cash and cash
equivalents for the period (29,360) (82,684)
Cash and cash equivalents, beginning
of period 1,131,074 1,184,398
--------------------------------------
Cash and cash equivalents, end of
period $ 1,101,714 $ 1,101,714
--------------------------------------
--------------------------------------
As at November 29, 2008 August 30, 2008
----------------------------------------------------------------------------
Cash and cash equivalents $ 1,101,714 $ 1,131,074
Short-term investments 574,279 422,121
Long-term investments 812,638 686,457
--------------------------------------
$ 2,488,631 $ 2,239,652
--------------------------------------
--------------------------------------
Contacts:
Media Contact:
Brodeur Partners (PR Agency for RIM)
Marisa Conway
(212) 515-1924
Email: mconway@brodeur.com [6]
Investor Contact:
RIM Investor Relations
(519) 888-7465
Email: investor_relations@rim.com [7]
Links:
[1] http://www.rim.com/investors/events/index.shtml
[2] http://www.rim.com/
[3] http://www.blackberry.com/
[4] http://www.sedar.com/
[5] http://www.sec.gov/
[6] mailto:mconway@brodeur.com
[7] mailto:investor_relations@rim.com