Research In Motion Reports First Quarter Fiscal 2012 Results and Revises Full Year Guidance
Announces Plans to Streamline Operations and Accelerate New Product Introductions
Board of Directors Approves Share Repurchase Program
WATERLOO, ONTARIO–(Marketwire – June 16, 2011) – Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM), a world leader in the mobile communications market, today reported first quarter results for the three months ended May 28, 2011 (all figures in U.S. dollars and U.S. GAAP).
Highlights:
- Revenue in the first quarter of fiscal 2012 grew 16% over the same quarter last year
- International revenue1 in Q1 grew 67% year over year
- Gross margin in the quarter was approximately 44%, slightly higher than expected due to product mix
- RIM launched the BlackBerry PlayBook tablet in North America and shipped approximately 500,000 units in the first quarter
Q1 Fiscal 2012 Results:
Revenue for the first quarter of fiscal 2012 was $4.9 billion, down 12% from $5.6 billion in the previous quarter and up 16% from $4.2 billion in the same quarter of last year. The revenue breakdown for the quarter was approximately 78% for hardware revenue, 20% for service and 2% for software and other revenue. During the quarter, RIM shipped approximately 13.2 million BlackBerry handheld devices and approximately 500,000 BlackBerry Playbook tablets.
“Fiscal 2012 has gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August is leading to a lower than expected outlook in the second quarter.” said Jim Balsillie, Co-CEO at Research In Motion. “RIM’s business is profitable and remains solid overall with growing market share in numerous markets around the world and a strong balance sheet with almost $3 billion in cash. We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012.”
Net income for the quarter was $695 million, or $1.33 per share diluted, compared with net income of $934 million, or $1.78 per share diluted, in the prior quarter and net income of $769 million, or $1.38 per share diluted, in the same quarter last year.
The total of cash, cash equivalents, short-term and long-term investments was $2.9 billion as of May 28, 2011, compared to $2.7 billion at the end of the previous quarter, an increase of approximately $170 million from the prior quarter. Cash flow from operations in Q1 was approximately $1 billion. Uses of cash included intangible asset additions of approximately $560 million, capital expenditures of approximately $220 million and business acquisitions of approximately $30 million.
1 Includes revenue outside of the U.S. and Canada
Cost Optimization Program:
The company also announced that it will begin a program to streamline operations across the organization, which will include a headcount reduction. This realignment will be focused on taking out redundancies and a reallocation of resources to allow us to focus on the areas that offer the highest growth opportunities and align with RIM strategic objectives, such as accelerating new product introductions. We expect to implement this program beginning in the second quarter with the benefits impacting results primarily in Q3 and beyond. Any one-time charges associated with this initiative are not included in our Q2 and full year outlook but will be identified and disclosed when we report our second quarter results.
Share Repurchase Program:
RIM’s Board of Directors today also approved a share repurchase program to purchase for cancellation through the facilities of the NASDAQ Stock Market (NASDAQ) or by way of private agreement up to 5% of RIM’s outstanding common shares. The share repurchase program may commence after July 10, 2011 and will remain in place for up to 12 months or until the purchases are completed or the program is terminated by RIM.
The price that RIM will pay for any shares purchased over NASDAQ will be the prevailing market price at the time of purchase. The share repurchase program will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, which contains restrictions on the number of shares that may be purchased on a single day, subject to certain exceptions for block purchases, based on the average daily trading volumes of RIM’s shares on NASDAQ. Any purchases made by way of private agreement may be at a discount to the prevailing market price at the time of purchase, and would be subject to regulatory approval.
RIM’s Board of Directors believes that a share repurchase program at this time is in the best interests of RIM and its shareholders, and will not impact RIM’s ability to execute its growth plans. Any shares purchased under the program will increase the proportionate interest of, and may be advantageous to, all remaining shareholders of RIM.
The actual number of shares purchased, the timing of purchases, and the price at which the shares would be bought under the share repurchase program will depend on future market conditions and upon potential alternative uses for cash resources. There is no assurance that any shares will be purchased under the share repurchase program and RIM may elect to suspend or discontinue the program at any time.
Q2 and Full Year 2012 Outlook:
Revenue for the second quarter of fiscal 2012 ending August 27, 2011 is expected to be in the range of $4.2-$4.8 billion. Gross margin percentage for the second quarter is expected to be approximately 39%. Earnings per share for the second quarter are expected to be $0.75-$1.05 diluted, excluding any one-time charges. Earnings per share for the full year fiscal 2012 are now expected to be between $5.25-$6.00 diluted, excluding any one-time charges or share repurchases.
Conference Call and Webcast:
A conference call and live webcast will be held beginning at 5 pm ET, June 16, 2011, which can be accessed by dialing 1-800-814-4859 (North America), 416-644-3414 (outside North America). The replay of the company’s Q1 conference call can be accessed after 7 pm ET, June 16, 2011 until midnight ET, June 30, 2011. It can be accessed by dialing 416-640-1917 and entering passcode 4445546#. 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.
Research In Motion LimitedIncorporated under the Laws of Ontario(United States dollars, in millions except for share and per share amounts) (unaudited) Consolidated Statements of Operations For the three months ended May 28, February 26, May 29, 2011 2011 2010 Revenue $ 4,908 $ 5,556 $ 4,235Cost of sales 2,752 3,103 2,312Gross margin 2,156 2,453 1,923 Gross margin % 43.9% 44.2% 45.4% Operating expenses Research and development 423 383 288 Selling, marketing and administration 704 705 483 Amortization 132 125 94 1,259 1,213 865 Income from operations 897 1,240 1,058 Investment income, net 7 3 10 Income before income taxes 904 1,243 1,068 Provision for income taxes 209 309 299 Net income $ 695 $ 934 $ 769 Earnings per share Basic $ 1.33 $ 1.79 $ 1.39 Diluted $ 1.33 $ 1.78 $ 1.38 Weighted average number of shares outstanding (000’s) Basic 523,983 522,764 554,672Diluted 524,524 524,334 558,189 Total common shares outstanding (000’s) 524,112 523,869 552,468 Research In Motion LimitedIncorporated under the Laws of Ontario(United States dollars, in millions) (unaudited) Consolidated Balance Sheets
| As at | ||||||||||
| May 28, | February 26, | |||||||||
| 2011 | 2011 | |||||||||
| Assets | ||||||||||
| Current | ||||||||||
| Cash and cash equivalents | $ | 1,986 | $ | 1,791 | ||||||
| Short-term investments | 403 | 330 | ||||||||
| Accounts receivable, net | 3,772 | 3,955 | ||||||||
| Other receivables | 463 | 324 | ||||||||
| Inventories | 943 | 618 | ||||||||
| Other current assets | 307 | 241 | ||||||||
| Deferred income tax asset | 226 | 229 | ||||||||
| 8,100 | 7,488 | |||||||||
| Long-term investments | 478 | 577 | ||||||||
| Property, plant and equipment, net | 2,576 | 2,504 | ||||||||
| Intangible assets, net | 2,164 | 1,798 | ||||||||
| Goodwill | 524 | 508 | ||||||||
| $ | 13,842 | $ | 12,875 | |||||||
| Liabilities | ||||||||||
| Current | ||||||||||
| Accounts payable | $ | 1,141 | $ | 832 | ||||||
| Accrued liabilities | 2,721 | 2,511 | ||||||||
| Income taxes payable | – | 179 | ||||||||
| Deferred revenue | 105 | 108 | ||||||||
| 3,967 | 3,630 | |||||||||
| Deferred income tax liability | 256 | 276 | ||||||||
| Income taxes payable | 31 | 31 | ||||||||
| 4,254 | 3,937 | |||||||||
| Shareholders’ Equity | ||||||||||
| Capital stock and additional paid-in capital | 2,382 | 2,359 | ||||||||
| Treasury stock | (180 | ) | (160 | ) | ||||||
| Retained earnings | 7,444 | 6,749 | ||||||||
| Accumulated other comprehensive loss | (58 | ) | (10 | ) | ||||||
| 9,588 | 8,938 | |||||||||
| $ | 13,842 | $ | 12,875 | |||||||
Consolidated Statements of Cash Flows For three months ended May 28, May 29, 2011 2010 Cash flows from operating activities Net income $ 695 $ 769 Adjustments to reconcile net income to net cash provided by operating activities: Amortization 355 186 Deferred income taxes 1 (40 ) Stock-based compensation 23 16 Other 23 29 Net changes in working capital items (77 ) 163 Net cash provided by operating activities 1,020 1,123 Cash flows from investing activities Acquisition of long-term investments (67 ) (295 )Proceeds on sale or maturity of long-term investments 43 149 Acquisition of property, plant and equipment (222 ) (226 )Acquisition of intangible assets (560 ) (42 )Business acquisitions, net of cash acquired (27 ) (14 )Acquisition of short-term investments (111 ) (108 )Proceeds on sale or maturity of short-term investments 162 150 Net cash used in investing activities (782 ) (386 )Cash flows from financing activities Issuance of common shares 7 8 Tax benefits (deficiencies) related to stock-based compensation (1 ) – Purchase of treasury stock (26 ) (7 )Common shares repurchased – (410 )Net cash used in financing activities (20 ) (409 )Effect of foreign exchange loss on cash and cash equivalents (23 ) (29 )Net increase in cash and cash equivalents for the period 195 299 Cash and cash equivalents, beginning of period 1,791 1,551 Cash and cash equivalents, end of period $ 1,986 $ 1,850 May 28, February 26, As at 2011 2011 Cash and cash equivalents $ 1,986 $ 1,791 Short-term investments 403 330 Long-term investments 478 577 $ 2,867 $ 2,698