Official PR: Research In Motion Reports Fourth Quarter and Year-End Results for Fiscal 2005

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WATERLOO, Ontario– Research In Motion Limited (RIM) (Nasdaq:RIMM – News; TSX:RIM – New), a world leader in the mobile communications market, today reported fourth quarter results for the three months and fiscal year ended February 26, 2005 (all figures in U.S. dollars and U.S. GAAP). Revenue for the fourth quarter of fiscal 2004 was $404.8 million, up 11% from $365.9 million in the previous quarter and up 92% from $210.6 million in the same quarter of last year. The revenue breakdown for the quarter was approximately 66% for handhelds, 17% for service, 14% for software and 3% for other revenue. Revenue for fiscal 2005 was $1.35 billion versus $594.6 million in the prior year.


The total number of BlackBerry® subscribers in the quarter increased by 470,000 to approximately 2.51 million total subscribers. This represents a 135% increase over the 1.07 million subscribers at the end of the last fiscal year.

“Fiscal 2005 was a landmark year for RIM as the BlackBerry subscriber base more than doubled and revenue grew past $1 billion for the first time. Momentum continued throughout the fourth quarter with subscriber growth and operating results both exceeding expectations,” said Jim Balsillie, Chairman and Co-CEO at RIM. “We continue to execute our business plans effectively as demand for BlackBerry grows around the world. RIM expects to surpass 3 million BlackBerry subscribers in the current quarter and we are planning to launch BlackBerry with an additional 100 carriers this year.”

As previously disclosed, RIM and NTP Inc. have agreed to resolve their ongoing litigation resulting in a resolution amount of $450 million, of which approximately $137 million has been accrued in prior quarters. As a result, in Q4 RIM recorded an additional expense of $294.2 million, which includes the remaining resolution amount and estimated legal fees, and a $20 million intangible asset on the balance sheet.

In connection with the resolution of the litigation and other factors, RIM has recorded a write-up of its deferred tax asset resulting in a recovery of $151.6 million. In the absence of this deferred tax asset write-up, RIM would have recorded a Q4 tax provision of approximately $7 million, for a net tax recovery of $144.6 million. As a result of these changes, for fiscal 2006 RIM now expects to record a quarterly tax provision, beginning in Q1, at a rate of approximately 30% which is higher than anticipated prior to resolution of the litigation. Longer term expected tax rates are unchanged at 25-30%.

GAAP net loss for the quarter (after taking into account the resolution expense and the deferred tax asset write-up) was $2.6 million, or $(0.01) per share diluted, compared to net income of $90.4 million, or $0.46 per share diluted, in the prior quarter. Excluding the incremental charge of $294.2 million for the resolution of litigation and the related tax asset write-up of $151.6 million, adjusted net income for Q4 was $140.1 million, or $0.71 per share diluted. Adjusted net income was higher than previously forecast primarily due to higher gross margin in Q4.

GAAP net income for the year was $213.4 million, or $1.09 per share diluted, as compared with $51.8 million, or $0.31 per share diluted, in the prior year. Excluding the litigation charges of $352.6 million and net of the related tax recovery of $151.6 million, adjusted net income for the year was $414.5 million, or $2.11 per share diluted, an increase of 581% over the prior year. The adjusted net income and earnings per share do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other issuers. These adjusted measures should be considered in the context of RIM’s GAAP results.

Reconcilation of GAAP net loss as reported to adjusted net income
(United States dollars, in thousands except per share data)

For the three
months ended
Feb. 26, 2005
———————————————————————
GAAP net loss, as reported $(2,573)

Adjustment for non-recurring items:

Resolution Expense 294,194
Tax Recovery
Reported Tax Recovery $(144,556)
Notional Tax Provision, estimated at 5% (7,000) (151,556)
———-
———
Adjusted Net Income $140,065
———
———

Adjusted net income per share, diluted $0.71
———
———

Note: the adjusted net income and adjusted net income per share do not have any standardized meaning prescribed by 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 GAAP results.

RIM is providing revenue and earnings guidance for the first and second quarters of fiscal 2006. RIM continues to expect that revenue in the first quarter of fiscal 2006 will be in the range of $430-455 million. Subscriber additions in the first quarter are expected to be in the range of 560,000-590,000. Revenue for the second quarter of fiscal 2006 is currently expected to be in the range of $460-485 million. Factoring in the increase in taxes going forward, RIM is expecting GAAP earnings per share for the first quarter in the range of 51-56 cents per share diluted. For the second quarter, RIM is expecting earnings per share to be between 57-63 cents per share diluted.

The total of cash, cash equivalents, short-term and long-term investments was $1.7 billion as at February 26, 2005, compared to $1.64 billion at the end of the previous quarter, an increase of $56 million over the prior quarter. The $450 million resolution amount is currently recorded as a liability on RIM’s balance sheet. RIM’s cash position net of the resolution liability is approximately $1.34 billion as $90 million of the $450 million liability is already in escrow (recorded as restricted cash), and is not included in RIM’s cash balance.

Highlights of the fourth quarter:

- RIM launched BlackBerry Enterprise Server v4.0 along with its new Java Development Environment v.4.0 and S/MIME Support Package v4.0.

- BlackBerry Enterprise Server v4.0 received FIPS 140-2 security certification.

- RIM and various partners announced plans to develop location-enhanced applications for the BlackBerry platform.

- Cingular Wireless launched the BlackBerry 7100g in the US.

- Nextel launched the BlackBerry 7520 in the US.

- Verizon Wireless launched the BlackBerry 7250 in the US.

- EarthLink Wireless launched an enhanced BlackBerry browsing service in the US.

- Bell Mobility launched the BlackBerry 7250 in Canada.

- Telcel launched the BlackBerry 7280 in Mexico.

- TIM launched BlackBerry in Brazil.

- O2 launched the BlackBerry 7100x in Europe.

- BT Mobile Introduced BlackBerry Built-In to UK customers.

- T-Mobile International launched BlackBerry Built-In and BlackBerry Connect in Europe and announced plans to offer BlackBerry services with the T-Mobile MDA III, Sony Ericsson P910i, Siemens SK65 and Nokia 6820.

- T-Mobile U.K. launched the BlackBerry 7100t and BlackBerry 7290 in the UK.

- T-Mobile Deutschland launched the BlackBerry 7100t and BlackBerry 7290 in Germany.

- BASE launched the BlackBerry 7230, BlackBerry 7290 and BlackBerry 7730 in Belgium.

- Turkcell announced plans to launch BlackBerry in Turkey.

- 3 Hong Kong introduced the BlackBerry 7100g in Hong Kong.

- CSL introduced the BlackBerry 7290 and BlackBerry 7100g in Hong Kong.

- Hutchison Telecom launched the BlackBerry 7290 in Hong Kong.

- StarHub launched the BlackBerry 7290 and BlackBerry 7100g in Singapore.

- SingTel launched BlackBerry Internet Service in Singapore.

- Indosat launched BlackBerry in Indonesia.

- Comverse announced plans to offer an enhanced voicemail service for BlackBerry.

- 3Com and RIM announced plans to deliver WLAN mobility solutions for the enterprise.

- Nortel and RIM announced plans to integrate IP telephony with the BlackBerry platform.

- BlackBerry ISV alliance partners continued to build upon the BlackBerry platform with a range of new products and services that help customers extend their wireless data strategies beyond wireless email.

Highlights subsequent to quarter end:

- T-Mobile USA launched the BlackBerry 7290.

- TELUS Mobility launched the BlackBerry 7250 and BlackBerry 7520 in Canada.

- Cable & Wireless announced plans to bring BlackBerry to the Eastern Caribbean islands.

- T-Mobile launched the BlackBerry 7290 in Hungary and the Czech Republic.

- BASE launched BlackBerry Internet Service in Belgium.

- KPN launched BlackBerry Internet Service in the Netherlands.

- PTC launched BlackBerry in Poland.

- Telstra launched the BlackBerry 7250 in Australia.

- Indosat launched BlackBerry Internet Service in Indonesia.

- AOL and RIM announced plans to deliver AOL instant messaging via BlackBerry.

- Yahoo! and RIM announced plans to bring Yahoo! services to BlackBerry.

- HTC announced plans to provide global distribution of BlackBerry Connect on Windows Mobile-based devices from HTC.

The replay of the company’s Q4 conference call can be accessed after 7 p.m. (eastern), April 5, 2005 until midnight (eastern), April 19, 2005. It can be accessed by dialing 416-640-1917 and entering passcode 21041227#. The conference will also appear on the RIM web site, live at 5:00 pm (eastern) and archived at http://www.rim.com/investors/events/index.shtml until midnight April 19, 2005.

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 – 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 relating to RIM’s revenue and earnings expectations for the first and second quarters of fiscal 2006, anticipated growth in subscribers, plans relating to RIM’s carrier partners and RIM’s anticipated tax rates. The terms “expected”, “expecting”, “planning”, 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. 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; RIM’s reliance on carrier partners, third-party network developers and suppliers; 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 (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.

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)

Consolidated Statements of Operations
For the three months ended For the year ended
February November February February February
26, 2005 27, 2004 28, 2004 26, 2005 28, 2004
———————————————————————

Revenue $ 404,802 $ 365,852 $ 210,585 $ 1,350,447 $ 594,616
Cost of sales 174,878 174,557 107,109 635,914 323,365
—————————————————-
Gross margin 229,924 191,295 103,476 714,533 271,251
—————————————————-

Gross Margin % 56.8% 52.3% 49.1% 52.9% 45.6%

Expenses
Research and
development 29,076 27,137 17,877 101,180 62,638
Selling, marketing
and administration 56,595 49,297 32,310 190,730 108,492
Amortization 9,114 8,337 6,702 35,941 27,911
Litigation 294,194 24,551 12,874 352,628 35,187
—————————————————-
388,979 109,322 69,763 680,479 234,228
—————————————————-

Income (loss)
from operations (159,055) 81,973 33,713 34,054 37,023
—————————————————-

Investment income 11,926 10,133 3,624 37,107 10,606
—————————————————-
Income (loss)
before income
taxes (147,129) 92,106 37,337 71,161 47,629
Provision for
(recovery of)
income taxes (144,556) 1,711 (4,200) (142,226) (4,200)
—————————————————-
Net Income (loss) $ (2,573) $ 90,395 $ 41,537 $ 213,387 $ 51,829
—————————————————-
—————————————————-
Earnings (loss)
per share —————————————————-
Basic $ (0.01) $ 0.48 $ 0.24 $ 1.14 $ 0.33
—————————————————-
—————————————————-
Diluted $ (0.01) $ 0.46 $ 0.23 $ 1.09 $ 0.31
—————————————————-
—————————————————-
Weighted average
number of
common shares
outstanding
(000′s)
Basic 189,184 188,284 169,600 187,653 159,300
Diluted 189,184 197,825 180,616 196,439 167,380

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

Consolidated Balance Sheets

As at February 26, February 28,
2005 2004
———————————————————————
Assets
Current
Cash and cash equivalents $ 632,090 $ 1,156,419
Short-term investments 315,495 -
Trade receivables 210,459 95,213
Other receivables 30,416 12,149
Inventory 92,489 42,836
Restricted cash 90,242 36,261
Other current assets 22,857 12,527
Deferred income tax asset 150,200 -
—————————–
1,544,248 1,355,405

Investments 753,868 339,285
Capital assets 210,112 147,709
Intangible assets 83,740 64,269
Goodwill 29,026 30,109
—————————–
$ 2,620,994 $ 1,936,777
—————————–
—————————–

Liabilities
Current
Accounts payable $ 68,464 $ 35,570
Accrued liabilities 87,133 70,538
Accrued litigation and related expenses 455,610 84,392
Income taxes payable 3,149 1,684
Deferred revenue 16,235 16,498
Current portion of long-term debt 223 193
—————————–
630,814 208,875

Long-term debt 6,504 6,240
—————————–
637,318 215,115
—————————–

Shareholders’ equity
Capital stock 1,892,266 1,829,388
Retained earnings (accumulated deficit) 94,181 (119,206)
Accumulated other comprehensive
income (loss) (2,771) 11,480
—————————–
Total shareholders’ equity 1,983,676 1,721,662
—————————–
$ 2,620,994 $ 1,936,777
—————————–
—————————–

Research In Motion Limited
Incorporated under the Laws of Ontario
(United States dollars, in thousands except per share data)
Condensed Consolidated Statement of Cash Flows

For the three For the year
months ended ended
February 26, February 26,
2005 2005
———————————————————————

Cash flows from operating activities
Net income (loss) $ (2,573) $ 213,387

Items not requiring an outlay of cash:
Amortization 16,224 66,760
Deferred income taxes (143,651) (143,651)
Gain on disposal of capital assets (69) (69)
(Gain) loss on foreign currency
translation of long term debt (9) 8
——————————-
(130,078) 136,435

Net changes in non-cash working

capital items 260,342 183,359
——————————-
130,264 319,794
——————————-
Cash flows from financing activities
Issuance of share capital 4,445 54,151
Repayment of debt (53) (199)
——————————-
4,392 53,952
——————————-
Cash flows from investing activities
Acquisition of investments (52,108) (615,098)
Proceeds on sale or maturity of
investments 4,461 18,385
Acquisition of capital assets (47,200) (109,363)
Acquisition of intangible assets (22,786) (37,061)
Acquisition of subsidiaries (1,739) (3,888)
Acquisition of short-term investments (25,050) (220,572)
Proceeds on sale or maturity of
short-term investments 32,537 69,522
——————————-
(111,885) (898,075)
——————————-
Net increase (decrease) in cash and
cash equivalents for the period 22,771 (524,329)

Cash and cash equivalents, beginning
of period 609,319 1,156,419
——————————-
Cash and cash equivalents, end of
year $ 632,090 $ 632,090
——————————-
——————————-

As at As at
Feb. 26, 2005 Nov. 27, 2004
(audited) (unaudited)

Cash and cash equivalents $ 632,090 $ 609,319
Short-term investments 315,495 205,323
Investments 753,868 830,998
——————————-
Cash, cash equivalents, short-term
investments and investments $ 1,701,453 $ 1,645,640
——————————-
——————————-