Research In Motion Reports Second Quarter Results
- 24 September 2009
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WATERLOO, ONTARIO — (Marketwire) — 09/24/09 — 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 29, 2009 (all figures in U.S. dollars and U.S. GAAP, except where indicated).
Revenue for the second quarter of fiscal 2010 was $3.53 billion, up 3% from $3.42 billion in the previous quarter and up 37% from $2.58 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 81% for devices, 14% for service, 2% for software and 3% for other revenue. During the quarter, RIM shipped approximately 8.3 million devices.
Approximately 3.8 million net new BlackBerry® subscriber accounts were added in the quarter. At the end of the quarter, the total BlackBerry subscriber account base was approximately 32 million.
“We are pleased to report a strong second quarter with excellent financial performance, successful product launches and accelerating growth in international markets and new market segments,” said Jim Balsillie, Co-CEO at Research In Motion. “RIM is entering the second half of the fiscal year and approaching the holiday buying season with an impressive product portfolio, continuing business momentum and strong marketing support from our partners around the world.”
GAAP net income for the quarter was $475.6 million, or $0.83 per share diluted, compared with GAAP net income of $643.0 million, or $1.12 per share diluted, in the prior quarter and net income of $495.5 million, or $0.86 per share diluted, in the same quarter last year. Adjusted net income for the second quarter was $588.4 million, or $1.03 per share diluted, reflecting a tax rate of 28.5%. Adjusted net income and adjusted diluted earnings per share exclude the impact of a charge of $112.8 million for the payment of the settlement of all outstanding worldwide patent litigation with Visto Corporation, the details of which were disclosed in a press release dated July 16, 2009. This charge and its related impacts on net income and diluted EPS are summarized in the table below.
Reconciliation of GAAP net income to adjusted net income (United States dollars, in thousands except per share data) For the quarter ended August 29, 2009 Net Income Diluted EPS ---------------------------- As reported $ 475,621 $ 0.83 Adjustment: Litigation, net of income tax(1) 112,809 0.20 ---------------------------- Adjusted $ 588,430 $ 1.03 ---------------------------- ---------------------------- Note: Adjusted net income and adjusted diluted earnings per share do not have any standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The company believes that the presentation of adjusted net income and adjusted diluted earnings per share enables the Company and its shareholders to better assess RIM's operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP financial measures in the context of RIM's GAAP results. (1) In the second quarter of fiscal 2010, the Company settled all outstanding worldwide litigation with Visto Corporation for a total payment of $267.5 million of which $163.8 million ($112.8 million net of tax) was expensed as a litigation charge in the second quarter of fiscal 2010. The remainder of the payment was recorded as intangible assets. Further details of the settlement were disclosed in a press release dated July 16, 2009.
Revenue for the third quarter of fiscal 2010 ending November 28, 2009 is expected to be in the range of $3.60-$3.85 billion. Gross margin for Q3 is expected to be approximately 43%. Net subscriber account additions in the third quarter are expected to be in the range of 4.0-4.3 million. Earnings per share for the third quarter are expected to be in the range of $1.00-$1.08 per share diluted.
The total of cash, cash equivalents, short-term and long-term investments was $2.50 billion as at August 29, 2009, compared to $2.42 billion at the end of the previous quarter, an increase of $78.5 million over the prior quarter. Cash flow from operations in Q2 was approximately $564 million which was offset primarily by capital expenditures of approximately $307 million and intangible asset purchases of approximately $179 million.
A conference call and live webcast will be held beginning at 5 pm ET, September 24, 2009, which can be accessed by dialing 800-733-7571 (North America), 416-915-5761 (outside North America). The replay of the company’s Q2 conference call can be accessed after 7 pm ET, September 24, 2009 until midnight ET, October 8, 2009. It can be accessed by dialing 416-640-1917 and entering passcode 21289982#. 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(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 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, net subscriber account additions and operating expense expectations for the third quarter of fiscal 2010, customer demand, penetration of new markets, product initiatives and anticipated growth. The terms and phrases “accelerating”, “approaching”, “continuing business momentum”, “strong marketing support”, “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: 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 For the three months ended For the six months ended ------------------------------------ ------------------------- August 29, May 30, August 30, August 29, August 30, 2009 2009 2008 2009 2008 ---------------------------------------------------------------------------- Revenue $ 3,525,692 $ 3,423,510 $ 2,577,330 $ 6,949,202 $ 4,819,895 Cost of sales 1,971,296 1,931,985 1,270,473 3,903,281 2,375,681 ------------------------------------ ------------------------- Gross margin 1,554,396 1,491,525 1,306,857 3,045,921 2,444,214 ------------------------------------ ------------------------- Gross margin % 44.1% 43.6% 50.7% 43.8% 50.7% Operating Expenses Research and development 235,571 219,777 181,347 455,348 309,123 Selling, marketing and administ- ration 429,748 514,291 379,644 944,039 706,236 Amortization 73,292 67,396 43,633 140,688 80,185 Litigation 163,800 - - 163,800 - ------------------------------------ ------------------------- 902,411 801,464 604,624 1,703,875 1,095,544 ------------------------------------ ------------------------- Income from operations 651,985 690,061 702,233 1,342,046 1,348,670 Investment income 7,625 9,136 17,168 16,761 36,145 ------------------------------------ ------------------------- Income before income taxes 659,610 699,197 719,401 1,358,807 1,384,815 ------------------------------------ ------------------------- Provision for income taxes 183,989 56,167 223,855 240,156 406,754 ------------------------------------ ------------------------- Net income $ 475,621 $ 643,030 $ 495,546 $ 1,118,651 $ 978,061 ------------------------------------ ------------------------- ------------------------------------ ------------------------- Earnings per share Basic $ 0.84 $ 1.13 $ 0.88 $ 1.97 $ 1.73 ------------------------------------ ------------------------- ------------------------------------ ------------------------- Diluted $ 0.83 $ 1.12 $ 0.86 $ 1.95 $ 1.70 ------------------------------------ ------------------------- ------------------------------------ ------------------------- Weighted average number of common shares outstanding (000's) Basic 567,789 566,787 564,899 567,288 564,222 Diluted 573,565 573,259 574,831 573,441 574,738 Total common shares outstanding (000's) 568,219 567,368 565,370 568,219 565,370 Research In Motion Limited Incorporated under the Laws of Ontario (United States dollars, in thousands except per share data)(unaudited) Consolidated Balance Sheets August 29, February 28, As at 2009 2009 ---------------------------------------------------------------------------- Assets Current Cash and cash equivalents $ 1,083,251 $ 835,546 Short-term investments 580,921 682,666 Trade receivables 2,365,106 2,112,117 Other receivables 248,162 157,728 Inventory 572,761 682,400 Other current assets 189,676 187,257 Deferred income tax asset 175,568 183,872 ----------------------------- 5,215,445 4,841,586 Long-term investments 833,575 720,635 Capital assets 1,737,403 1,334,648 Intangible assets 1,291,454 1,066,527 Goodwill 146,557 137,572 Deferred income tax asset - 404 ----------------------------- $ 9,224,434 $ 8,101,372 ----------------------------- ----------------------------- Liabilities Current Accounts payable $ 496,005 $ 448,339 Accrued liabilities 1,603,842 1,238,602 Income taxes payable - 361,460 Deferred revenue 66,912 53,834 Deferred income tax liability - 13,116 ----------------------------- 2,166,759 2,115,351 Deferred income tax liability 43,265 87,917 Income taxes payable 27,790 23,976 ----------------------------- 2,237,814 2,227,244 ----------------------------- Shareholders' Equity Capital stock 2,236,190 2,208,235 Treasury shares (45,081) - Retained earnings 4,664,361 3,545,710 Additional paid-in capital 139,113 119,726 Accumulated other comprehensive income (loss) (7,963) 457 ----------------------------- 6,986,620 5,874,128 ----------------------------- $ 9,224,434 $ 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 six For the six months ended months ended August 29, 2009 August 30, 2008 ---------------------------------------------------------------------------- Cash flows from operating activities Net income $ 1,118,651 $ 978,061 Items not requiring an outlay of cash: Amortization 269,164 125,995 Deferred income taxes (19,621) (18,678) Income taxes payable 3,814 (2,204) Stock-based compensation 25,747 19,600 Other (7,915) 12,080 Net changes in working capital items (194,001) (515,775) ------------------------------------- Net cash provided by operating activities 1,195,839 599,079 ------------------------------------- Cash flows from investing activities Acquisition of long-term investments (369,111) (173,642) Proceeds on sale or maturity of long-term investments 183,847 143,674 Acquisition of capital assets (554,558) (386,039) Acquisition of intangible assets (242,379) (331,027) Business Acquisitions (131,541) - Acquisition of short-term investments (279,226) (335,768) Proceeds on sale or maturity of short-term investments 473,655 408,171 ------------------------------------- Net cash used in investing activities (919,313) (674,631) ------------------------------------- Cash flows from financing activities Issuance of common shares 18,890 21,927 Excess tax benefits from stock-based compensation 2,705 12,146 Purchase of treasury shares (45,081) - Repayment of debt (6,099) (166) ------------------------------------- Net cash (used in) provided by financing activities (29,585) 33,907 ------------------------------------- Effect of foreign exchange gain on cash and cash equivalents 764 (11,679) ------------------------------------- Net increase (decrease) in cash and cash equivalents for the period 247,705 (53,324) Cash and cash equivalents, beginning of period 835,546 1,184,398 ------------------------------------- Cash and cash equivalents, end of period $ 1,083,251 $ 1,131,074 ------------------------------------- ------------------------------------- As at August 29, 2009 May 30, 2009 ---------------------------------------------------------------------------- Cash and cash equivalents $ 1,083,251 $ 1,135,325 Short-term investments 580,921 619,914 Long-term investments 833,575 663,990 ------------------------------------- $ 2,497,747 $ 2,419,229 -------------------------------------
Contacts:
Media Contact:
Brodeur (PR Agency for RIM)
Marisa Conway
(212) 336-7509
mconway@brodeur.com
Investor Contact:
RIM Investor Relations
(519) 888-7465
investor_relations@rim.com
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