Blackberry 2013 Annual Report Download - page 153

Research In Motion Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated
including those that are available from multiple sources. In addition, the Company has entered into various agreements for the
supply of components, the manufacturing of its products and agreements that allow the Company to use intellectual property
owned by other companies; however, there can be no guarantee that the Company will be able to extend or renew these
agreements on similar terms, or at all. Therefore, the Company remains subject to significant risks of supply shortages,
intellectual property litigation risk as well as potential price increases that can materially adversely affect its financial condition
and operating results.
The Company also uses some custom components that are not common to the rest of the industry, and new products introduced
by the Company often utilize custom components available from only one source for a period of time. When a component or
product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing
capacity has increased. If the Company’s supply of components for a new or existing product were delayed or constrained the
Company’s financial condition and operating results could be materially adversely affected. Further, if the Company was not
able to find an alternative source for the necessary quantities, the Company’s business and financial performance could also be
materially adversely affected. Continued availability of these components at acceptable prices, or at all, may be affected if those
suppliers concentrated on the production of common components instead of components customized to meet the Company’s
requirements.
Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in
Europe, Asia or Mexico. A significant concentration of this manufacturing is currently performed by a small number of
outsourcing partners. Although the Company works closely with its outsourcing partners on manufacturing schedules, the
Company’s operating results could be adversely affected if its outsourcing partners were unable to meet their production
commitments.
The Company enters into certain agreements that contain indemnification provisions under which the Company could be subject
to costs and damages, including in the event of an infringement claim against the Company or an indemnified third party. Such
intellectual property infringement indemnification clauses are generally not subject to any dollar limits and remain in effect for
the term of the Company’s agreements. To date, the Company has not encountered material costs as a result of such
indemnifications.
The Company has entered into indemnification agreements with its directors and executive officers. Under these agreements, the
Company agreed, subject to applicable law, to indemnify its directors and executive officers against all costs, charges and
expenses reasonably incurred by such individuals in respect of any civil, criminal or administrative action which could arise by
reason of their status as directors or officers. The Company maintains liability insurance coverage for the benefit of its directors
and executive officers to reduce its exposure to such obligations. The Company has not encountered material costs as a result of
such indemnifications in the current year. See the Company’s Management Information Circular for fiscal 2012 for additional
information regarding the Company’s indemnification agreements with its directors and executive officers.
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(e) Indemnifications