WATERLOO, ONTARIO--(Oct. 13, 2006) - Following the announcement of its preliminary second quarter results on September 28, 2006, Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX:RIM) announced today that the filing of its interim financial statements for the three months ended September 2, 2006 will be delayed pending completion of its management-initiated, voluntary review of historical stock option grants.

As previously announced on September 28, 2006, the Audit Committee of RIM's Board of Directors, comprised solely of independent directors, is completing a management-initiated, voluntary review of RIM's historical option granting practices. While the Audit Committee has not completed its review, it had made a preliminary determination that GAAP accounting errors were made around the administration of certain historical stock options granted from fiscal 1998 to present, and made a preliminary determination that a restatement of RIM's historical financial statements will be required to reflect this. As a result, management will delay the filing of RIM's second quarter financial statements, which are due to be filed by October 17, 2006, in order for the Audit Committee to complete its review and to effect the restatement. RIM will file the financial statements as soon as practicable.

In connection with the ongoing review, and subsequent to September 28, 2006, the Company identified an additional technical error under U.S. GAAP that will likely require a further adjustment to its historical financial statements. This error stems from a difference in the historical application of U.S. GAAP and Canadian GAAP accounting rules. While the Company is unable to specify the additional adjustment resulting from this error as the review is ongoing, the Company does not currently anticipate a material adjustment to the preliminary second quarter operating results reported on September 28, 2006 or to current or future financial years' operating results.

This technical error relates to a "net settlement" feature that existed in RIM's stock option plan prior to February 2002. Under this feature, instead of paying the exercise price in cash, the employee could apply to receive a lesser number of RIM common shares equal in value to the difference between the grant price and market price at the time of exercise multiplied by the number of options exercised. RIM has a broadly based stock option plan and this feature was designed to facilitate the exercise of stock options by employees who lacked the financial resources to fund the exercise price. This specific feature was eliminated from RIM's stock option plan effective February 2002 and only a small fraction of the total options granted prior to February 2002 were exercised using this feature. Prior to 2002, there were no accounting implications relating to this feature under Canadian GAAP, which RIM used as its primary GAAP at that time. However, in connection with its current internal review, RIM has been advised that it was required under U.S. GAAP to presume that all employees receiving options under a plan containing this feature would exercise their stock options in this manner regardless of the fact that only a small percentage of its employees actually used this feature. As a result, variable accounting was required under U.S. GAAP for all stock options granted prior to February, 2002.

Variable accounting requires RIM to recognize a non-cash compensation expense for all stock options, which includes (1) all realized gains on exercise of stock options, and (2) an allocation of all unrealized gains for unexercised stock options based on the stock's trading price at each reporting period. The elimination of this feature in February, 2002 limits the impact of variable accounting for subsequent periods, but given the historical volatility of RIM's share price over these periods, variable accounting will result in significant fluctuations in non-cash compensation charges from year to year. The net effect of the variable accounting will be to substantially increase the amount of RIM's previously estimated non-cash charges associated with past option grants and thereby reduce the amount of the Company's previously reported U.S. GAAP earnings over the periods to be restated. As noted above, the Company does not currently anticipate a material adjustment to its preliminary second quarter operating results or current or future financial years' operating results.

In accordance with applicable Canadian securities laws, RIM will request that the Canadian securities regulators issue a "Management and Insider Cease Trade Order" that prohibits trading in RIM's securities by its senior officers, directors and other insiders, who are already subject to a Company-initiated blackout, until the required financial statements are filed. Pending the filing of the financial statements, RIM intends to satisfy the alternative information guidelines recommended by OSC Policy 57-603 and Canadian Securities Administrators' Staff Notice 57-301 by issuing a news release every two weeks to update the shareholders on the filing delay. RIM is also required to disclose that if the second quarter financial statements and MD&A are not filed by December 17, 2006, Canadian securities regulators may impose an issuer cease trade order.

Research In Motion Delays Results on Options Review (Update1)
By Rebecca Barr


Oct. 13 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry e-mail phone, delayed filing its second-quarter financial report as it completes a review of its stock-option practices and restates earnings.
The audit committee found further errors in the way it accounted for some grants in addition to backdating announced last month, the Waterloo, Ontario-based company said today in a statement distributed by Market Wire.
The discovery adds to Research In Motion's September announcement that incorrect dates on stock-option grants since 1998 will cut net income by as much as $45 million. The probe, carried out by independent directors at the request of executives, found the company wrongly accounted for options that allowed some holders to avoid paying the exercise price in cash by foregoing some shares.
Shares of Research In Motion, up 72 percent this year, fell $1.54 to $112.30 in extended trading. They gained $2.81 to close at $113.84 in Nasdaq Stock Market composite trading today.
Research In Motion said it doesn't expect a material adjustment to the second-quarter results.
At least 144 companies have disclosed investigations, according to Bloomberg data. More than 60 companies revised or restated earnings, or said they may record more expenses when option probes are completed. So far, restatements, revisions and charges exceed $2.5 billion.


To contact the reporter on this story: Rebecca Barr in New York at rbarr1@bloomberg.net .



Research In Motion Delays Results on Options Review (Update2)

By Rebecca Barr

Oct. 13 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry e-mail phone, delayed filing its second-quarter financial report as it completes a review of its stock-option practices and restates earnings.
The audit committee found further errors in the way it accounted for some grants in addition to backdating announced last month, the Waterloo, Ontario-based company said today in a statement distributed by Market Wire.
The discovery adds to Research In Motion's September announcement that incorrect dates on stock-option grants since 1998 will cut net income by as much as $45 million. Since then, the probe uncovered accounting mistakes in options that allowed some holders to avoid paying the exercise price in cash by foregoing some shares, the company said today.
Shares of Research In Motion, up 72 percent this year, fell $1.24 to $112.60 in extended trading. They gained $2.81 to close at $113.84 in Nasdaq Stock Market composite trading today.
Research In Motion said it doesn't expect a material adjustment to the second-quarter results. The on-going probe is being carried out by independent directors at the request of executives.
At least 144 companies have disclosed investigations, according to Bloomberg data. More than 60 companies revised or restated earnings, or said they may record more expenses when option probes are completed. So far, restatements, revisions and charges exceed $2.5 billion.
Research In Motion last month said second-quarter profit rose 27 percent to $140.8 million, or 74 cents a share, in the period ended Sept. 2. Sales rose 34 percent to $658.5 million.


To contact the reporter on this story: Rebecca Barr in New York at rbarr1@bloomberg.net .

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