BlackBerry Reports First Quarter Fiscal 2014 Results

BlackBerry Reports First Quarter Fiscal 2014 Results 
WATERLOO, ONTARIO -- (Marketwired) -- 06/28/13 -- Research In Motion
Limited (doing business as BlackBerry(R)) (NASDAQ:BBRY)(TSX:BB), a
world leader in the mobile communications market, today reported
first quarter results for the three months ended June 1, 2013 (all
figures in U.S. dollars and U.S. GAAP, except where otherwise
indicated). 
Q1 Highlights: 


 
--  Revenue $3.1 billion, up 15% sequentially from the previous quarter 
--  North America revenue grows sequentially 30%, APAC revenue grows 35%,
    EMEA revenue grows 9% 
--  LATAM revenue declines 6% as Venezuela foreign currency restrictions
    negatively impact $72 million of service revenue recognition in the
    first quarter; company gross margins negatively impacted by 2% 
--  Shipments of 6.8 million smartphones, up 13% sequentially from the
    previous quarter 
--  GAAP loss from continuing operations of $84 million, or $0.16 per share 
--  Adjusted loss from continuing operations of $67 million, or $0.13 per
    share 
--  Venezuela foreign currency restrictions impact reported GAAP earnings
    and adjusted earnings by approximately $0.10 per share; excluding such
    impact, adjusted earnings in-line with previously provided outlook of
    approaching breakeven financial results 
--  Cash flow from operations of $630 million 
--  Cash and investments balance of $3.1 billion 

 
Q1 Results 
Revenue for the first quarter of fiscal 2014 was $3.1 billion, up 15%
from $2.7 billion in the previous quarter and up 9% from $2.8 billion
in the same quarter of fiscal 2013. The revenue breakdown for the
quarter was approximately 71% for hardware, 26% for service and 3%
for software and other revenue. During the quarter, the Company
shipped 6.8 million BlackBerry smartphones and approximately 100,000
BlackBerry PlayBook tablets. 
GAAP loss from continuing operations for the quarter was $84 million,
or $0.16 per share diluted, compared with a GAAP income from
continuing operations of $94 million, or diluted earnings per share
of $0.18, in the prior quarter and GAAP loss from continuing
operations of $510 million, or $0.97 per share diluted, in the same
quarter last year.  
Adjusted loss from continuing operations for the first quarter was
$67 million, or $0.13 per share diluted. Adjusted loss from
continuing operations and adjusted diluted loss per share exclude the
impact of pre-tax charges of $26 million ($17 million on an after tax
basis) related to the Cost Optimization and Resource Efficiency
("CORE") program. This impact on GAAP loss from continuing operations
and diluted loss per share from continuing operations are summarized
in the table below. 
The total of cash, cash equivalents, short-term and long-term
investments was $3.1 billion as of June 1, 2013, compared to $2.9
billion at the end of the previous quarter, an increase of
approximately $200 million from the prior quarter. Cash flow from
operations in the first quarter was approximately $630 million. Uses
of cash included intangible asset additions of approximately $335
million and capital expenditures of approximately $83 million. 
"During the first quarter, we continued to focus our efforts on the
global roll out of the BlackBerry 10 platform," said Thorsten Heins,
President and CEO of BlackBerry. "We are still in the early stages of
this launch, but already, the BlackBerry 10 platform and BlackBerry
Enterprise Service 10 are proving themselves to customers to be very
secure, flexible and dynamic mobile computing solutions. Over the
next three quarters, we will be increasing our investments to support
the roll out of new products and services, and to demonstrate that
BlackBerry has established itself as a leading and vibrant player in
next generation mobile computing solutions for both consumer and
enterprise customers." 
Outlook 
The smartphone market remains highly competitive, making it difficult
to estimate units, revenue and levels of profitability. Throughout
the remainder of fiscal 2014, the Company will invest in BlackBerry
10 smartphone launches, and the roll out of BlackBerry Enterprise
Service 10, to continue to establish the new BlackBerry 10 platform
in the marketplace. The Company will also invest resources to evolve
BlackBerry Messenger into a leading cross platform mobile social
messaging application, and launch other revenue initiatives
associated with new services and emerging mobile computing
opportunities. Based on the competitive market dynamics and these
investments, the company anticipates it will generate an operating
loss in the second quarter. The company will also continue to
implement the cost savings and process-improving initiatives it
started last year, in order to drive greater efficiency throughout
the company, and redirect capital from these savings to areas of
investment that will drive future revenue growth. 
Reconciliation of GAAP loss from continuing operations before income
taxes, loss from continuing operations and diluted loss per share
from continuing operations to adjusted loss from continuing
operations before income taxes, adjusted loss from continuing
operations and adjusted diluted loss per share from continuing
operations: 
(United States dollars, in millions except per share data) 


 
                                                 For the three months ended 
                                      --------------------------------------
                                                       CORE                 
As Reported:                                  GAAP   Charges(1)    Adjusted 
                                      --------------------------------------
                                                                            
Loss from continuing operations before                                      
 income taxes                          $      (164) $        26 $      (138)
                                                                            
Loss from continuing operations                (84)          17         (67)
                                                                            
                                      --------------------------------------
Diluted loss per share from continuing                                      
 operations                            $     (0.16) $      0.03 $     (0.13)
                                      --------------------------------------
                                      --------------------------------------
-----                                                                       
-    Adjusted loss from continuing operations and diluted loss per share    
     from continuing operations include the $72 million (approximately $50  
     million after tax or $0.10 per share) impact on service revenue        
     recognition of the Venezuela foreign currency restrictions noted above.

 
Note: Adjusted loss from continuing operations before tax, adjusted
loss from continuing operations and adjusted diluted loss per share
from continuing operations do not have a 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 loss from continuing operations before
taxes, adjusted loss from continuing operations and adjusted diluted
loss per share from continuing operations enables the Company and its
shareholders to better assess the Company'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 measures in the context of the Company's GAAP results. 
(1) As part of the Company's ongoing effort to streamline its
operations and increase efficiency, the Company commenced the CORE
program in March 2012. During the first quarter of fiscal 2014, the
Company incurred approximately $26 million in total pre-tax charges
related to the CORE program. Substantially all of the pre-tax charges
are related to one-time employee termination benefits and facilities
costs. During the first quarter of fiscal 2014, charges of
approximately $10 million were included in research and development
and charges of approximately $16 million were included in selling,
marketing, and administration expenses.  
Supplementary Geographic Revenue Breakdown 


 
          Research In Motion Limited (doing business as BlackBerry)         
                    (United States dollars, in millions)                    
                              Revenue by Region                             
                                     For the quarter ended                  
                   ---------------------------------------------------------
                                                                            
                              June 1,           March 2,        December 1, 
                                 2013               2013               2012 
                   ---------------------------------------------------------
North America       $     761    24.8% $     587    21.9% $     647    23.7%
Europe, Middle East                                                         
 and Africa             1,343    43.7%     1,227    45.8%     1,160    42.5%
Latin America             449    14.6%       479    17.9%       535    19.6%
Asia Pacific              518    16.9%       385    14.4%       385    14.1%
                   ---------------------------------------------------------
Total               $   3,071   100.0% $   2,678   100.0% $   2,727   100.0%
                   ---------------------------------------------------------
                   ---------------------------------------------------------
 
                           For the quarter ended         
                   --------------------------------------
                                                         
                         September 1,            June 2, 
                                 2012               2012 
                   --------------------------------------
North America       $     868    30.3% $     794    28.3%
Europe, Middle East                                      
 and Africa             1,087    38.0%     1,029    36.6%
Latin America             520    18.2%       580    20.7%
Asia Pacific              386    13.5%       405    14.4%
                   --------------------------------------
Total               $   2,861   100.0% $   2,808   100.0%
                   --------------------------------------
                   --------------------------------------

 
Conference Call and Webcast  
A conference call and live webcast will be held beginning at 8 am ET,
which can be accessed by dialing 1-800-814-4859 or through your
BlackBerry(R) 10 smartphone, personal computer or BlackBerry(R)
PlayBook(TM) tablet at
http://ca.blackberry.com/company/investors/events.html. A replay of
the conference call will also be available at approximately 10 am by
dialing (+1)416-640-1917 and entering pass code 4612565# or by
clicking the link above on your BlackBerry(R) 10 smartphone, personal
computer or BlackBerry(R) PlayBook(TM) tablet. This replay will be
available until midnight ET July 12, 2013. 
About BlackBerry 
A global leader in wireless innovation, BlackBerry(R) revolutionized
the mobile industry when it was introduced in 1999. Today, BlackBerry
aims to inspire the success of our millions of customers around the
world by continuously pushing the boundaries of mobile experiences.
Founded in 1984 and based in Waterloo, Ontario, BlackBerry operates
offices in North America, Europe, Asia Pacific and Latin America.
Research In Motion announced that effective January 30, 2013, the
Company would operate around the world under the iconic name
BlackBerry. The legal name of the Company has not changed, but the
Company will do business as BlackBerry pending approval of the
official change by shareholders, which will be sought at the
Company's Annual General Meeting later in 2013. Effective Monday,
February 4, 2013, the Company commenced trading under its new ticker
symbols "BB" on the Toronto Stock Exchange and "BBRY" on the NASDAQ.
For more information, visit 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 regarding:
BlackBerry's expectations regarding new product initiatives and
timing, including the BlackBerry 10 platform; BlackBerry's plans and
expectations regarding new service offerings, and assumptions
regarding its service revenue model; BlackBerry's plans, strategies
and objectives, and the anticipated opportunities and challenges in
fiscal 2014; anticipated demand for, and BlackBerry's plans and
expectations relating to, programs to drive sell-through of the
Company's BlackBerry 7 and 10 smartphones and BlackBerry PlayBook
tablets; BlackBerry's expectations regarding financial results for
the second quarter of fiscal 2014; BlackBerry's expectations with
respect to the sufficiency of its financial resources; BlackBerry's
ongoing efforts to streamline its operations and its expectations
relating to the benefits of its Cost Optimization and Resource
Efficiency ("CORE") program and similar strategies; BlackBerry's
plans and expectations regarding marketing and promotional programs;
and BlackBerry's estimates of purchase obligations and other
contractual commitments.
The terms and phrases "expects", "believe", "focused", "getting",
"opportunities", "we are seeing", "continuing", "drive", "improve",
"should", "will", "increasing", "anticipated", and similar terms and
phrases are intended to identify these forward-looking statements.
Forward-looking statements are based on estimates and assumptions
made by BlackBerry in light of its experience and its perception of
historical trends, current conditions and expected future
developments, as well as other factors that BlackBerry believes are
appropriate in the circumstances, including but not limited to the
launch timing and success of products based on the BlackBerry 10
platform, general economic conditions, product pricing levels and
competitive intensity, supply constraints, BlackBerry's expectations
regarding its business, strategy, opportunities and prospects,
including its ability to implement meaningful changes to address its
business challenges, and BlackBerry's expectations regarding the cash
flow generation of its business. Many factors could cause
BlackBerry's actual results, performance or achievements to differ
materially from those expressed or implied by the forward-looking
statements, including, without limitation: BlackBerry's ability to
enhance its current products and services, or develop new products
and services in a timely manner or at competitive prices, including
risks related to new product introductions; risks related to
BlackBerry's ability to mitigate the impact of the anticipated
decline in BlackBerry's infrastructure access fees on its
consolidated revenue by developing an integrated services and
software offering; intense competition, rapid change and significant
strategic alliances within BlackBerry's industry; BlackBerry's
reliance on carrier partners and distributors; risks associated with
BlackBerry's foreign operations, including risks related to recent
political and economic developments in Venezuela and the impact of
foreign currency restrictions;
risks relating to network disruptions and other business
interruptions, including costs, potential liabilities, lost revenues
and reputational damage associated with service interruptions; risks
related to BlackBerry's ability to implement and to realize the
anticipated benefits of its CORE program; BlackBerry's ability to
maintain or increase its cash balance; security risks; BlackBerry's
ability to attract and retain key personnel; risks related to
intellectual property rights; BlackBerry's ability to expand and
manage BlackBerry(R) World(TM); risks related to the collection,
storage, transmission, use and disclosure of confidential and
personal information; BlackBerry's ability to manage inventory and
asset risk; BlackBerry's reliance on suppliers of functional
components for its products and risks relating to its supply chain;
BlackBerry's ability to obtain rights to use software or components
supplied by third parties; BlackBerry's ability to successfully
maintain and enhance its brand; risks related to government
regulations, including regulations relating to encryption technology;
BlackBerry's ability to continue to adapt to recent board and
management changes and headcount reductions; reliance on strategic
alliances with third-party network infrastructure developers,
software platform vendors and service platform vendors; BlackBerry's
reliance on third-party manufacturers; potential defects and
vulnerabilities in BlackBerry's products; risks related to
litigation, including litigation claims arising from BlackBerry's
practice of providing forward-looking guidance; potential charges
relating to the impairment of intangible assets recorded on
BlackBerry's balance sheet; risks as a result of actions of activist
shareholders; government regulation of wireless spectrum and radio
frequencies; risks related to economic and geopolitical conditions;
risks associated with acquisitions; foreign exchange risks; and
difficulties in forecasting BlackBerry's financial results given the
rapid technological changes, evolving industry standards, intense
competition and short product life cycles that characterize the
wireless communications industry. These risk factors and others
relating to BlackBerry are discussed in greater detail in the "Risk
Factors" section of BlackBerry's Annual Information Form, which is
included in its Annual Report on Form 40-F and the "Cautionary Note
Regarding Forward-Looking Statements" section of BlackBerry'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 BlackBerry's
forward-looking statements. BlackBerry 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. 


 
          Research In Motion Limited (doing business as BlackBerry)         
                   Incorporated under the Laws of Ontario                   
   (United States dollars, in millions except share and per share amounts)  
                                 (unaudited)                                
                                                                            
                    Consolidated Statements of Operations                   
                                                                            
                                                 For the three months ended 
                                        ------------------------------------
                                            June 1,    March 2,     June 2, 
                                               2013        2013        2012 
----------------------------------------------------------------------------
                                                                            
Revenue                                  $    3,071  $    2,678  $    2,808 
Cost of sales                                 2,029       1,603       2,022 
                                        ------------------------------------
Gross margin                                  1,042       1,075         786 
                                        ------------------------------------
                                                                            
    Gross margin %                             33.9%       40.1%       28.0%
                                                                            
Operating expenses                                                          
  Research and development                      358         383         367 
  Selling, marketing and administration         673         523         547 
  Amortization                                  180         181         172 
  Impairment of goodwill                          -           -         335 
                                        ------------------------------------
                                              1,211       1,087       1,421 
                                        ------------------------------------
                                                                            
Operating loss                                 (169)        (12)       (635)
                                                                            
  Investment income (loss), net                   5          (6)          3 
                                        ------------------------------------
                                                                            
Loss from continuing operations before                                      
 income taxes                                  (164)        (18)       (632)
                                                                            
Recovery of income taxes                        (80)       (112)       (122)
                                        ------------------------------------
                                                                            
Income (loss) from continuing operations        (84)         94        (510)
                                                                            
Income (loss) from discontinued                                             
 operations, net of tax                           -           4          (8)
                                                                            
                                        ------------------------------------
Net income (loss)                        $      (84) $       98  $     (518)
                                        ------------------------------------
                                        ------------------------------------
                                                                            
Earnings (loss) per share                                                   
Basic and diluted earnings (loss) per                                       
 share from continuing operations        $    (0.16) $     0.18  $    (0.97)
Basic and diluted earnings (loss) per                                       
 share from discontinued operations      $        -  $     0.01  $    (0.02)
                                        ------------------------------------
Total basic and diluted earnings (loss)                                     
 per share                               $    (0.16) $     0.19  $    (0.99)
                                        ------------------------------------
                                        ------------------------------------
                                                                            
Weighted-average number of common shares                                    
 outstanding (000's)                                                        
    Basic                                   524,160     524,160     524,160 
    Diluted                                 524,160     527,222     524,160 
                                                                            
Total common shares outstanding (000's)     524,160     524,160     524,160 
                                                                            
          Research In Motion Limited (doing business as BlackBerry)         
                   Incorporated under the Laws of Ontario                   
   (United States dollars, in millions except per share data) (unaudited)   
                                                                            
                         Consolidated Balance Sheets                        
                                                                            
                                                             As at          
                                                    ------------------------
                                                        June 1,    March 2, 
                                                           2013        2013 
----------------------------------------------------------------------------
                                                                            
Assets                                                                      
  Current                                                                   
    Cash and cash equivalents                        $    1,591  $    1,549 
    Short-term investments                                1,233       1,105 
    Accounts receivable, net                              2,536       2,353 
    Other receivables                                       265         272 
    Inventories                                             887         603 
    Income taxes receivable                                  33         597 
    Other current assets                                    340         469 
    Deferred income tax asset                               127         139 
    Assets held for sale                                    105         106 
                                                    ------------------------
                                                          7,117       7,193 
                                                                            
Long-term investments                                       247         221 
Property, plant and equipment, net                        2,200       2,303 
Intangible assets, net                                    3,513       3,448 
                                                    ------------------------
                                                     $   13,077  $   13,165 
                                                    ------------------------
                                                    ------------------------
                                                                            
Liabilities                                                                 
  Current                                                                   
    Accounts payable                                 $    1,169  $    1,064 
    Accrued liabilities                                   1,921       1,842 
    Deferred revenue                                        346         542 
                                                          3,436       3,448 
                                                                            
Deferred income tax liability                               230         245 
Income taxes payable                                         12          12 
                                                    ------------------------
                                                          3,678       3,705 
                                                    ------------------------
                                                                            
Shareholders' Equity                                                        
Capital stock and additional paid-in capital              2,442       2,431 
Treasury stock                                             (226)       (234)
Retained earnings                                         7,183       7,267 
Accumulated other comprehensive loss                          -          (4)
                                                    ------------------------
                                                          9,399       9,460 
                                                    ------------------------
                                                     $   13,077  $   13,165 
                                                    ------------------------
                                                    ------------------------
                                                                            
          Research In Motion Limited (doing business as BlackBerry)         
                   Incorporated under the Laws of Ontario                   
   (United States dollars, in millions except per share data) (unaudited)   
                                                                            
                    Consolidated Statements of Cash Flows                   
                                                                            
                                                       For the three months 
                                                                      ended 
                                                    ------------------------
                                                        June 1,     June 2, 
                                                           2013        2012 
----------------------------------------------------------------------------
                                                                            
Cash flows from operating activities                                        
Loss from continuing operations                      $      (84) $     (510)
Loss from discontinued operations                             -          (8)
                                                    ------------------------
Net loss                                                    (84)       (518)
                                                                            
Adjustments to reconcile net loss to net cash                               
 provided by operating activities:                                          
  Amortization                                              399         480 
  Deferred income taxes                                      (6)        (16)
  Income taxes payable                                        -          (1)
  Stock-based compensation                                   20          25 
  Impairment of goodwill                                      -         335 
  Other                                                      25          11 
Net changes in working capital items                        276         395 
                                                    ------------------------
Net cash provided by operating activities                   630         711 
                                                    ------------------------
                                                                            
Cash flows from investing activities                                        
Acquisition of long-term investments                       (159)       (118)
Proceeds on sale or maturity of long-term                                   
 investments                                                 96          32 
Acquisition of property, plant and equipment                (83)       (153)
Acquisition of intangible assets                           (335)       (284)
Business acquisitions, net of cash acquired                  (7)       (105)
Acquisition of short-term investments                      (740)       (234)
Proceeds on sale or maturity of short-term                                  
 investments                                                649         103 
                                                    ------------------------
Net cash used in investing activities                      (579)       (759)
                                                    ------------------------
                                                                            
Cash flows from financing activities                                        
Tax deficiencies related to stock-based compensation         (1)         (4)
Net cash used in financing activities                        (1)         (4)
                                                    ------------------------
                                                                            
Effect of foreign exchange loss on cash and cash                            
 equivalents                                                 (8)         (8)
                                                    ------------------------
                                                                            
Net increase (decrease) in cash and cash equivalents                        
 for the period                                              42         (60)
Cash and cash equivalents, beginning of period            1,549       1,527 
                                                    ------------------------
Cash and cash equivalents, end of period             $    1,591  $    1,467 
                                                    ------------------------
                                                    ------------------------
                                                                            
                                                        June 1,    March 2, 
As at                                                      2013        2013 
----------------------------------------------------------------------------
                                                                            
Cash and cash equivalents                            $    1,591  $    1,549 
Short-term investments                                    1,233       1,105 
Long-term investments                                       247         221 
                                                    ------------------------
                                                     $    3,071  $    2,875 
                                                    ------------------------
                                                    ------------------------

Contacts:
Investor Contact:
BlackBerry Investor Relations
(519) 888-7465
investor_relations@blackberry.com
 
 
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