Blackberry 2011 Annual Report Download - page 47

investment horizon to value these securities and considered the underlying risk of the securities and the current market interest rate
environment. The Company has the ability and intent to hold these securities until such time that market liquidity return to normal
levels or a solution to the liquidity of the securities is determined, and does not consider the principal or interest amounts on these
securities to be materially at risk at this time. The auction rate securities are classified as long-term investments on the balance sheet
given the uncertainty as to when market liquidity for auction rate securities will return to normal.
Lehman Brothers International (Europe)
Since March 1, 2005, the Company has maintained an investment account with Lehman Brothers International (Europe) (“LBIE”). As of
September 30, 2008, the date of the last account statement received by the Company, the Company held in the account $81 million in
combined cash and aggregate principal amount of fixed-income securities issued by third parties unrelated to LBIE or any other affiliate
of Lehman Brothers Holdings Inc (“LBHI”). Due to the insolvency proceedings instituted by LBHI and its affiliates, including LBIE,
commencing on September 15, 2008, the Company’s regular access to information regarding the account has been disrupted.
Following the appointment of the Administrators to LBIE the Company has asserted a trust claim in specie (the “Trust Claim”) over the
assets held for it by LBIE for the return of those assets in accordance with the insolvency procedure in the United Kingdom. In the first
quarter of fiscal 2010, the Company received a Letter of Return (the “Letter”) from the Administrators of LBIE relating to the Trust
Claim. The Letter noted that, based on the work performed to date, the Administrators had identified certain assets belonging to the
Company within the records of LBIE and that they are continuing to investigate the records for the remaining assets included in the
Trust Claims: an additional asset was identified as belonging to the Company in the fourth quarter of fiscal 2010. In the fourth quarter
of fiscal 2010, the Company signed the “Form of Acceptance’ and “Claim Resolution Agreement’, which are the necessary steps to
have the identified assets returned. On June 8, 2010, the Company received a Claim Amount Notice from LBIE identifying amounts to
be paid out in respect to certain identified assets. On August 10, 2010, the Company received a payment net of fees in the amount of
$38 million representing monies for three of the identified assets listed in the Claim Amount Notice. The Company currently has trust
claims filed with the Administrators totalling $47 million for unreturned assets and continues to maintain it has a valid trust claim on
those assets. Based on communications with the Administrators, publicly available information published by the Administrators, as well
as the passage of time and the uncertainty associated with the Administrator not having specifically identified these funds as trust
funds, the Company recorded an other-than-temporary impairment charge to investment income in the amount of $11 million during
the third quarter of fiscal 2011.
As at February 26, 2011, the carrying value of the Company’s claim on LBIE assets is $36 million. The Company continues to work
with the Administrators for the return of the remaining assets, identified or not specifically identified, along with the past interest
accrued on these assets since LBIE began its administration proceedings. The Company will continue to take all actions it deems
appropriate to defend its rights to these holdings.
Aggregate Contractual Obligations
The following table sets out aggregate information about the Company’s contractual obligations and the periods in which payments are
due as at February 26, 2011:
(in millions)
Total
Less than
One Year
One to
Three Years
Four to
Five Years
Greater than
Five Years
Operating lease obligations $ 244 $ 41 $ 77 $ 55 $ 71
Purchase obligations and commitments 10,843 9,643 1,200 – –
Total $11,087 $9,684 $1,277 $ 55 $ 71
Purchase obligations and commitments amounted to approximately $10.8 billion as of February 26, 2011, with purchase orders
with contract manufacturers representing approximately $8.5 billion of the total. The Company also has commitments on account of
capital expenditures of approximately $144 million included in this total, primarily for manufacturing, facilities and information
technology, including service operations. The remaining balance consists of purchase orders or contracts with suppliers of raw
materials, as well as other goods and services utilized in the operations of the Company. The expected timing of payment of these
34 RESEARCH IN MOTION ANNUAL REPORT 2011
MANAGEMENT’S DISCUSSION AND ANALYSIS