Form 10-Q BLACKBERRY Ltd For: Nov 30

December 22, 2021 4:33 PM EST

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2021

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to

Commission file number 001-38232
 ______________________________________________________
BlackBerry Limited
(Exact name of registrant as specified in its charter)
Canada
98-0164408
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2200 University Ave East
WaterlooOntarioCanada
N2K 0A7
(Address of Principal Executive Offices)
(Zip Code)
(519) 888-7465
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common SharesBBNew York Stock Exchange
Common SharesBBToronto Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  x   No  o 

1



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
Non-accelerated filer  
o
Smaller reporting company
Emerging growth company
                
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐   No  x

The registrant had 573,675,892 common shares issued and outstanding as of December 17, 2021.
 

2




BLACKBERRY LIMITED
TABLE OF CONTENTS
Page No.
PART I FINANCIAL INFORMATION
Item 1Financial Statements
Consolidated Balance Sheets as of November 30, 2021 (unaudited) and February 28, 2021
Consolidated Statements of Shareholders' Equity - Three and Nine Months Ended November 30, 2021 and 2020 (unaudited)
Consolidated Statements of Operations - Three and Nine Months Ended November 30, 2021 and 2020 (unaudited)
Consolidated Statements of Comprehensive Income (Loss) - Three and Nine Months Ended November 30, 2021 and 2020 (unaudited)
Consolidated Statements of Cash Flows - Nine Months Ended November 30, 2021 and 2020 (unaudited)
Notes to the Consolidated Financial Statements
Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3Quantitative and Qualitative Disclosures about Market Risk
Item 4Controls and Procedures
PART IIOTHER INFORMATION
Item 1Legal Proceedings
Item 6Exhibits
Signatures

3




Unless the context otherwise requires, all references to the “Company” and “BlackBerry” include BlackBerry Limited and its subsidiaries.

PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
4


BlackBerry Limited
Incorporated under the Laws of Ontario
(United States dollars, in millions) (unaudited)
Consolidated Balance Sheets
 As at
 November 30, 2021February 28, 2021
Assets
Current
Cash and cash equivalents (note 3)$271 $214 
Short-term investments (note 3)442 525 
Accounts receivable, net of allowance of $5 and $10, respectively (note 4)138 182 
Other receivables 17 25 
Income taxes receivable 9 10 
Other current assets (note 4)52 50 
929 1,006 
Restricted cash equivalents and restricted short-term investments (note 3)29 28 
Long-term investments (note 3)30 37 
Other long-term assets (note 4)8 16 
Operating lease right-of-use assets, net 54 63 
Property, plant and equipment, net (note 4)42 48 
Goodwill (note 4)845 849 
Intangible assets, net (note 4)662 771 
$2,599 $2,818 
Liabilities
Current
Accounts payable $26 $20 
Accrued liabilities (note 4)178 178 
Income taxes payable (note 5)11 6 
Deferred revenue, current (note 11)194 225 
409 429 
Deferred revenue, non-current (note 11)41 69 
Operating lease liabilities73 90 
Other long-term liabilities4 6 
Long-term debentures (note 6)673 720 
1,200 1,314 
Commitments and contingencies (note 10)
Shareholders’ equity
Capital stock and additional paid-in capital
Preferred shares: authorized unlimited number of non-voting, cumulative, redeemable and retractable  
Common shares: authorized unlimited number of non-voting, redeemable, retractable Class A common shares and unlimited number of voting common shares
Issued - 573,666,612 voting common shares (February 28, 2021 - 565,505,328 )2,857 2,823 
Deficit(1,438)(1,306)
Accumulated other comprehensive loss (note 9)(20)(13)
1,399 1,504 
$2,599 $2,818 
See notes to consolidated financial statements.

On behalf of the Board: 
John S. ChenLisa Disbrow
DirectorDirector
5


BlackBerry Limited
(United States dollars, in millions) (unaudited)
Consolidated Statements of Shareholders’ Equity

Three Months Ended November 30, 2021
Capital Stock
and Additional
Paid-in Capital
DeficitAccumulated
Other
Comprehensive Loss
Total
Balance as at August 31, 2021$2,845 $(1,512)$(15)$1,318 
Net income— 74 — 74 
Other comprehensive loss— — (5)(5)
Stock-based compensation8 — — 8 
Shares issued:
Employee share purchase plan4 — — 4 
Balance as at November 30, 2021$2,857 $(1,438)$(20)$1,399 

Three Months Ended November 30, 2020
Capital Stock
and Additional
Paid-in Capital
DeficitAccumulated
Other
Comprehensive Loss
Total
Balance as at August 31, 2020$2,788 $(861)$(13)$1,914 
Net loss— (130)— (130)
Other comprehensive income— — 4 4 
Stock-based compensation11 — — 11 
Shares issued:
Exercise of stock options 1 — — 1 
Employee share purchase plan 3 — — 3 
Balance as at November 30, 2020$2,803 $(991)$(9)$1,803 

See notes to consolidated financial statements.

6


BlackBerry Limited
(United States dollars, in millions) (unaudited)
Consolidated Statements of Shareholders’ Equity

Nine Months Ended November 30, 2021
Capital Stock
and Additional
Paid-in Capital
DeficitAccumulated
Other
Comprehensive Loss
Total
Balance as at February 28, 2021$2,823 $(1,306)$(13)$1,504 
Net loss— (132)— (132)
Other comprehensive loss— — (7)(7)
Stock-based compensation (note 7)25 — — 25 
Shares issued:
Exercise of stock options (note 7)2 — — 2 
Employee share purchase plan (note 7)7 — — 7 
Balance as at November 30, 2021$2,857 $(1,438)$(20)$1,399 

Nine Months Ended November 30, 2020
Capital Stock
and Additional
Paid-in Capital
DeficitAccumulated
Other
Comprehensive Loss
Total
Balance as at February 29, 2020$2,760 $(198)$(33)$2,529 
Net loss— (789)— (789)
Other comprehensive income— — 24 24 
Cumulative impact of adoption of ASC 326 (4) (4)
Stock-based compensation33 — — 33 
Shares issued:
Exercise of stock options 3 — — 3 
Employee share purchase plan7 — — 7 
Balance as at November 30, 2020$2,803 $(991)$(9)$1,803 

See notes to consolidated financial statements.

7


BlackBerry Limited
(United States dollars, in millions, except per share data) (unaudited)
Consolidated Statements of Operations
 
 Three Months EndedNine Months Ended
 November 30, 2021November 30, 2020November 30, 2021November 30, 2020
Revenue (note 11)$184 $218 $533 $683 
Cost of sales67 69 190 192 
Gross margin117 149 343 491 
Operating expenses
Research and development57 53 172 167 
Selling, marketing and administration77 83 233 252 
Amortization42 45 133 137 
Impairment of goodwill (note 3)   594 
Impairment of long-lived assets   21 
Debentures fair value adjustment (note 6)(110)95 (47)114 
66 276 491 1,285 
Operating income (loss)51 (127)(148)(794)
Investment income (loss), net (note 3 and note 6)25 (1)22 (6)
Income (loss) before income taxes76 (128)(126)(800)
Provision for (recovery of) income taxes (note 5)2 2 6 (11)
Net income (loss)$74 $(130)$(132)$(789)
Earnings (loss) per share (note 8)
Basic$0.13 $(0.23)$(0.23)$(1.41)
Diluted$(0.05)$(0.23)$(0.28)$(1.41)
See notes to consolidated financial statements.

8


BlackBerry Limited
(United States dollars, in millions) (unaudited)
Consolidated Statements of Comprehensive Income (Loss)
 
 Three Months Ended Nine Months Ended
 November 30, 2021November 30, 2020November 30, 2021November 30, 2020
Net income (loss)$74 $(130)$(132)$(789)
Other comprehensive income (loss)
Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and nine months ended November 30, 2021 and November 30, 2020 (note 9)  (1)3 
Foreign currency translation adjustment, net of income taxes of nil for the three and nine months ended November 30, 2021 (net of income taxes of $1 million and nil, respectively, for the three and nine months ended November 30, 2020)(4)1 (6)5 
Net change in fair value from instrument-specific credit risk on the Debentures, net of income taxes of nil for the three and nine months ended November 30, 2021 (net of income taxes of $2 million and nil, respectively, for the three and nine months ended November 30, 2020) (note 6)(1)3  16 
Other comprehensive income (loss)(5)4 (7)24 
Comprehensive income (loss)$69 $(126)$(139)$(765)
See notes to consolidated financial statements.

9


BlackBerry Limited
(United States dollars, in millions) (unaudited)
Consolidated Statements of Cash Flows
 Nine Months Ended
  November 30, 2021November 30, 2020
Cash flows from operating activities
Net loss$(132)$(789)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization142 149 
Stock-based compensation25 33 
Gain on sale of investment (note 3)(22) 
Impairment of goodwill (note 3) 594 
Impairment of long-lived assets 21 
Debentures fair value adjustment (note 6)(47)114 
Operating leases(12)(4)
Other(3)(4)
Net changes in working capital items
Accounts receivable, net of allowance44 (1)
Other receivables8 (7)
Income taxes receivable1 (4)
Other assets5 51 
Accounts payable6 (2)
Accrued liabilities2 (27)
Income taxes payable5 (13)
Deferred revenue(59)(81)
Net cash provided by (used in) operating activities(37)30 
Cash flows from investing activities
Acquisition of long-term investments(1)(1)
Distribution from long-term investments35  
Acquisition of property, plant and equipment(6)(5)
Acquisition of intangible assets(22)(23)
Acquisition of short-term investments(695)(770)
Proceeds on sale or maturity of restricted short-term investments24  
Proceeds on sale or maturity of short-term investments776 851 
Net cash provided by investing activities111 52 
Cash flows from financing activities
Issuance of common shares9 10 
Payment of finance lease liability  (1)
Repurchase of 3.75% Debentures (610)
Issuance of 1.75% Debentures 365 
Net cash provided by (used in) financing activities9 (236)
Effect of foreign exchange gain (loss) on cash, cash equivalents, restricted cash, and restricted cash equivalents(1)1 
Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period82 (153)
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period218 426 
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period$300 $273 
See notes to consolidated financial statements.
10

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)





1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
Basis of Presentation and Preparation
These interim consolidated financial statements have been prepared by management in accordance with United States generally accepted accounting principles (“U.S. GAAP”). They do not include all of the disclosures required by U.S. GAAP for annual financial statements and should be read in conjunction with the audited consolidated financial statements of BlackBerry Limited (the “Company”) for the year ended February 28, 2021 (the “Annual Financial Statements”), which have been prepared in accordance with U.S. GAAP. In the opinion of management, all normal recurring adjustments considered necessary for fair presentation have been included in these interim consolidated financial statements. Operating results for the three and nine months ended November 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending February 28, 2022. The consolidated balance sheet at February 28, 2021 was derived from the audited Annual Financial Statements but does not contain all of the footnote disclosures from the Annual Financial Statements.
Certain of the comparative figures have been reclassified to conform to the current period’s presentation.
In the first quarter of fiscal 2022, the Chief Operating Decision Maker (“CODM”), who is the Executive Chair and Chief Executive Officer (“CEO”) of the Company, began making decisions and assessing the performance of the Company using three operating segments, whereas the CODM previously made decisions and assessed the performance of the Company as a single operating segment. As a result of the internal reporting reorganization, the Company is now organized and managed as three reportable operating segments: Cybersecurity, IoT (collectively, “Software & Services”), and Licensing and Other, as further discussed in Note 11.
Risks and Uncertainties
In fiscal 2022 and fiscal 2021, the economic downturn and uncertainty caused by the novel coronavirus (“COVID-19”) resulted in the Company making significant judgments related to its estimates and assumptions concerning the impairment of goodwill, indefinite-lived intangible assets, certain operating lease right-of-use (“ROU”) assets and associated property, plant and equipment, and concerning the collectability of receivables.
As of the date of issuance of the financial statements, the Company is not aware of any additional events or circumstances which would require it to update its estimates, judgments, or revise the carrying value of its assets or liabilities, other than the COVID-19 pandemic as discussed below in Note 3. These estimates may change, as new events occur and additional information is obtained, and such changes will be recognized in the consolidated financial statements as soon as they become known. Actual results could differ from these estimates and any such differences may be material to the Company’s financial statements.
Significant Accounting Policies and Critical Accounting Estimates
There have been no material changes to the Company’s accounting policies or critical accounting estimates from those described in the Annual Financial Statements.
Accounting Standards Adopted During Fiscal 2022
ASC 740, Income Taxes
In December 2019, the Financial Accounting Standards Board (“FASB”) released ASU 2019-12 on the topic of simplifying the accounting for income taxes, as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. The amendments in this update remove certain exceptions from Topic 740, Income Taxes, including: (i) the exception to the incremental approach for intra-period tax allocation; (ii) the exception to accounting for basis differences when there are ownership changes in foreign investments; and (iii) the exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The update also simplifies U.S. GAAP in several other areas of Topic 740 such as: (i) franchise taxes and other taxes partially based on income; (ii) transactions with a government that result in a step up in the tax basis of goodwill; (iii) separate financial statements of entities not subject to tax; and (iv) enacted changes in tax laws in interim periods.
The guidance was effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The only aspect of ASU 2019-12 that impacts the Company is the removal of the exception related to intra-period tax allocation. As a result of its adoption of the new standard, the Company determines the tax attributable to continuing operations without regard to the tax effect of other items included in other comprehensive income. The Company adopted this guidance in the first quarter of fiscal 2022 and it did not have a material impact on the Company’s results of operations, financial position or disclosures.
11

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)





2.    ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED
In August 2020, the FASB issued a new accounting standard on the topic of debt with conversion and other options, ASU 2020-06. The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This update also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The guidance is effective for interim and annual periods beginning after December 15, 2021. The Company will adopt this guidance in the first quarter of fiscal 2023 and does not expect the adoption to have a material impact on its results of operations, financial position and disclosures as the accounting model used by the Company was not impacted and the Company already utilizes the if-converted method in its calculation of diluted earnings per share relating to the Debentures (as defined in Note 6).
In October 2021, the FASB issued a new accounting standard on the topic of business combinations, accounting for contract assets and contract liabilities from contracts with customers, ASU 2021-08. The amendment in this update improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency. This update requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. The guidance is effective for interim and annual periods beginning after December 15, 2022 and requires entities to prospectively apply business combinations occurring on or after the effective date of the amendments. The Company will adopt this guidance in the first quarter of fiscal 2024. The Company is currently evaluating the impact the standard will have on its results of operations, financial position and disclosures, but at this time the Company does not expect the adoption to have a material impact on its results of operations, financial position and disclosures for business combinations completed prior to adoption. Should the Company complete business acquisitions subsequent to adoption, the impact in future periods compared to current accounting standards will depend on the contract assets and contract liabilities acquired.
In November 2021, the FASB issued a new accounting standard on the topic of government assistance, ASU 2021-10. The standard requires additional disclosures for transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including: (i) information about the nature of the transactions and related accounting policy used to account for the transactions; (ii) the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line; and (iii) significant terms and conditions of the transactions, including commitments and contingencies. The update also requires entities that omit any of the information because it is legally prohibited from being disclosed to include a statement to that effect. The guidance is effective for annual periods beginning after December 15, 2021. The Company will adopt this guidance in the first quarter of fiscal 2023 and does not expect the adoption to have a material impact on its results of operations, financial position and disclosures.
3.    FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS
Fair Value
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use in pricing the asset or liability, such as inherent risk, non-performance risk and credit risk. The Company applies the following fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels:
Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Significant unobservable inputs that are supported by little or no market activity.
The fair value hierarchy also requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
12

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)





Recurring Fair Value Measurements
The Company’s cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities are measured at an amount that approximates their fair values (Level 2 measurement) due to their short maturities.
In determining the fair value of investments held, the Company primarily relies on an independent third-party valuator for the fair valuation of securities. The Company also reviews the inputs used in the valuation process and assesses the pricing of the securities for reasonableness after conducting its own internal collection of quoted prices from brokers. Fair values for all investment categories provided by the independent third-party valuator that are in excess of 0.5% from the fair values determined by the Company are communicated to the independent third-party valuator for consideration of reasonableness. The independent third-party valuator considers the information provided by the Company before determining whether a change in their original pricing is warranted.
The Company’s investments largely consist of debt securities issued by major corporate and banking organizations, the provincial and federal governments of Canada, international government banking organizations and the United States Department of the Treasury and are all investment grade. The Company also holds certain private equity investments without readily determinable fair value, as well as certain public equity securities obtained through an initial public offering of a previously held private equity investment.
For a description of how the fair values of the 1.75% Debentures (as defined in Note 6) and 3.75% Debentures (as defined in Note 6) were determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements. The 1.75% Debentures are classified as Level 3 and the 3.75% Debentures were classified as Level 2.
Non-Recurring Fair Value Measurements
Upon the occurrence of certain events, the Company re-measures the fair value of non-marketable equity investments for which it utilizes the measurement alternative, and long-lived assets, including property, plant and equipment, operating lease ROU assets, intangible assets and goodwill if an impairment or observable price adjustment is recognized in the current period.
Non-Marketable Equity Investments Measured Using the Measurement Alternative
Non-marketable equity investments measured using the measurement alternative include investments in privately held companies without readily determinable fair values in which the Company does not own a controlling interest or have significant influence. The estimation of fair value used in the fair value measurements required the use of significant unobservable inputs, and as a result, the fair value measurements were classified as Level 3.
Goodwill Impairment
During the first quarter of fiscal 2021, as a result of the deterioration in economic conditions caused by the global COVID-19 pandemic and its impact on the Company’s reporting units, and the decline of the trading value of the Company’s capital stock below the Company’s consolidated carrying value, the Company determined that it was more likely than not that the fair value of at least one of its reporting units was lower than its carrying value after including goodwill. As a result, the Company completed an analysis of the fair value of its reporting units to compare against their respective carrying values as of May 31, 2020. Based on the results of the goodwill impairment test, it was concluded that the carrying value of one reporting unit exceeded its fair value, necessitating an impairment charge for the amount of excess and reducing the carrying value of goodwill. Consequently, the Company recorded total non-cash goodwill impairment charges of $594 million in the BlackBerry Spark reporting unit (the “Goodwill Impairment Charge”). The estimated fair values of the Company’s other reporting units substantially exceeded their carrying values at May 31, 2020. The Company did not identify any goodwill impairment during its annual impairment test in the fourth quarter of fiscal 2021, and all reporting units substantially exceeded their carrying values. For further discussion of the Goodwill Impairment Charge in fiscal 2021, see Note 3 to the Annual Financial Statements.
In its annual goodwill impairment test in the fourth quarter of fiscal 2021, the Company’s estimate of cash flows indicated that such carrying values were expected to be recovered for all reporting units. Nonetheless, it is reasonably possible that future judgements, assumptions and estimates of cash flows may change resulting in the need to write down those assets to fair value. Reductions in the Company’s estimates of long-term revenue growth rates could potentially result in impacts that would be material to the consolidated financial statements, including the fair value of the Company’s goodwill, particularly in relation to its BlackBerry Spark reporting unit.

13

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)





Cash, Cash Equivalents and Investments
The components of cash, cash equivalents and investments by fair value level as at November 30, 2021 were as follows:
Cost Basis (1)
Unrealized
Gains
Unrealized
Losses
Fair ValueCash and
Cash
Equivalents
Short-term
Investments
Long-term
Investments
Restricted Cash Equivalents
Bank balances$109 $ $ $109 $108 $ $ $1 
Other investments8   8   8  
117   117 108  8 1 
Level 1:
Equity securities10  (9)1  1   
Level 2:
Term deposits, certificates of deposits, and GIC's140   140 53 59  28 
Bankers’ acceptances/bearer deposit notes20   20 12 8   
Commercial paper192   192 40 152   
Non-U.S. promissory notes127   127 46 81   
Non-U.S. government sponsored enterprise notes129   129  129   
Non-U.S. treasury bills/notes24   24 12 12   
632   632 163 441  28 
Level 3:
Other investments17 5  22   22  
$776 $5 $(9)$772 $271 $442 $30 $29 
______________________________
(1) Cost basis for other investments includes the effect of returns of capital.
14

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)





The components of cash, cash equivalents and investments by fair value level as at February 28, 2021 were as follows:
Cost BasisUnrealized
Losses
Fair ValueCash and
Cash
Equivalents
Short-term
Investments
Long-term
Investments
Restricted Cash EquivalentsRestricted Short-term Investments
Bank balances$165 $ $165 $165 $ $ $ $ 
Other investments37  37   37   
202  202 165  37   
Level 1:
Equity securities10 (7)3  3    
Level 2:
Term deposits, certificates of deposits, and GICs138  138 7 103  4 24 
Bearer deposit notes40  40  40    
Commercial paper162  162 15 147    
Non-U.S. promissory notes55  55 26 29    
Non-U.S. government sponsored enterprise notes154  154 1 153    
Non-U.S. treasury bills/notes25  25  25    
Corporate notes/bonds25  25  25    
599  599 49 522  4 24 
$811 $(7)$804 $214 $525 $37 $4 $24 
As at November 30, 2021, the Company had private non-marketable equity investments without readily determinable fair value of $30 million (February 28, 2021 - $37 million). During the three and nine months ended November 30, 2021, the Company recorded an upward adjustment to the carrying value of certain non-marketable equity investments without readily determinable fair value of $5 million resulting from observable price changes in orderly transactions for identical or similar securities which have been included in investment income (loss), net on the Company’s consolidated statements of operations. The Company also received a distribution from a non-marketable equity investment without readily determinable fair value in the amount of $35 million, consisting of a return of capital of $13 million and a realized gain of $22 million included in investment income (loss), net on the Company’s consolidated statements of operations.
There were no realized gains or losses on available-for-sale securities for the three and nine months ended November 30, 2021 (realized losses of nil for the three and nine months ended November 30, 2020).
The Company has restricted cash and cash equivalents and restricted short-term investments, consisting of cash and securities pledged as collateral to major banking partners in support of the Company’s requirements for letters of credit. These letters of credit support certain leasing arrangements entered into in the ordinary course of business. The letters of credit are for terms ranging from one month to four years. The Company is legally restricted from accessing these funds during the term of the leases for which the letters of credit have been issued; however, the Company can continue to invest the funds and receive investment income thereon.
The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at November 30, 2021 and February 28, 2021 from the consolidated balance sheets to the consolidated statements of cash flows:
As at
November 30, 2021February 28, 2021
Cash and cash equivalents$271 $214 
Restricted cash and cash equivalents29 4 
Total cash, cash equivalents, restricted cash, and restricted cash equivalents presented in the consolidated statements of cash flows
$300 $218 
15

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)





The contractual maturities of available-for-sale investments as at November 30, 2021 and February 28, 2021 were as follows:
As at
November 30, 2021February 28, 2021
Cost BasisFair ValueCost BasisFair Value
Due in one year or less $632 $632 $599 $599 
No fixed maturity 10 1 10 3 
$642 $633 $609 $602 
As at November 30, 2021 and February 28, 2021, the Company had no available-for-sale debt securities with continuous unrealized losses.
4.    CONSOLIDATED BALANCE SHEET DETAILS
Accounts Receivable, Net of Allowance
The allowance for credit losses as at November 30, 2021 was $5 million (February 28, 2021 - $10 million).
The Company recognizes current estimated credit losses for accounts receivable, net of allowance. The cumulative expected credit losses (“CECL”) for accounts receivable, net are estimated based on days past due and region for each customer in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics that operate under similar economic environments. The Company determined the CECL by estimating historical credit loss experience based on the past due status and region of the customers, adjusted as appropriate to reflect current conditions and estimates of future economic conditions, inclusive of the effect of the COVID-19 pandemic on credit losses. The duration and severity of the COVID-19 pandemic and the resulting market volatility are highly uncertain and, as such, the impact on expected credit losses is subject to significant judgment and may cause variability in the Company’s allowance for credit losses in future periods. When specific customers are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. The Company also has long-term accounts receivable included in Other Long-term Assets. The CECL for long-term accounts receivable is estimated using the probability of default method and the default exposure due to limited historical information. The exposure of default is represented by the assets’ amortized carrying amount at the reporting date.
The following table sets forth the activity in the Company’s allowance for credit losses:
As at
November 30, 2021
Beginning balance as of February 29, 2020$9 
Impact of adopting ASC 3264 
Prior period recovery for expected credit losses(3)
Ending balance of the allowance for credit loss as at February 28, 202110 
Current period recovery for expected credit losses (1)
Write-offs charged against the allowance(4)
Ending balance of the allowance for credit loss as at November 30, 2021$5 
The allowance for credit losses as at November 30, 2021 consists of $2 million (February 28, 2021 - $3 million) relating to CECL estimated based on days past due and region and $3 million (February 28, 2021 - $7 million) relating to specific customers that were evaluated separately.
There was one customer that comprised more than 10% of accounts receivable as at November 30, 2021 (February 28, 2021 - one customer comprised more than 10%).
16

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)





Other Current Assets
As at November 30, 2021 and February 28, 2021, other current assets included items such as the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5% of the current assets balance in any of the periods presented.
Property, Plant and Equipment, Net
Property, plant and equipment comprised the following:
 As at
 November 30, 2021February 28, 2021
Cost
Buildings, leasehold improvements and other$53 $67 
BlackBerry operations and other information technology92 110 
Manufacturing, repair and research and development equipment69 72 
Furniture and fixtures10 10 
224 259 
Accumulated amortization182 211 
Net book value$42 $48 
Intangible Assets, Net
Intangible assets comprised the following:
 As at November 30, 2021
 CostAccumulated
Amortization
Net Book
Value
Acquired technology$1,023 $763 $260 
Intellectual property505 323 182 
Other acquired intangibles494 274 220 
$2,022 $1,360 $662 
As at February 28, 2021
CostAccumulated
Amortization
Net Book
Value
Acquired technology$1,023 $712 $311 
Intellectual property498 299 199 
Other acquired intangibles494 233 261 
$2,015 $1,244 $771 
For the nine months ended November 30, 2021, amortization expense related to intangible assets amounted to $130 million (nine months ended November 30, 2020 - $133 million).
Total additions to intangible assets for the nine months ended November 30, 2021 amounted to $22 million (nine months ended November 30, 2020 - $23 million). During the nine months ended November 30, 2021, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.
Based on the carrying value of the identified intangible assets as at November 30, 2021, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2022 and each of the five succeeding years is expected to be as follows: fiscal 2022 - $34 million; fiscal 2023 - $123 million; fiscal 2024 - $