Blackberry 2014 Annual Report Download - page 118

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
29
10. COMMITMENTS AND CONTINGENCIES
(a) Credit facility
The Company has a $525 million asset-backed lending arrangement (the “Facility”) for working capital and general
corporate purposes with a syndicate of commercial banks. The Facility, which is subject to certain availability criteria and
limits and customary financial covenants, expires on August 27, 2016 and is secured by the Company’s accounts
receivable, inventory, equipment, mortgages on certain real property and a stock pledge of certain subsidiaries. The
Company has utilized approximately $5 million of the Facility for its outstanding letters of credit as of March 1, 2014.
(b) Lease commitments
The Company is committed to future minimum annual lease payments related to real estate operating leases as follows:
For the fiscal years ending
2015 $ 47
2016 38
2017 28
2018 25
2019 20
Thereafter 38
$ 196
For the year ended March 1, 2014, the Company incurred rental expense of $80 million (March 2, 2013 - $91 million;
March 3, 2012 - $91 million).
(c) Litigation
The Company is involved in litigation in the normal course of its business, both as a defendant and as a plaintiff. The
Company is subject to a variety of claims (including claims related to patent infringement, purported class actions and
other claims in the normal course of business) and may be subject to additional claims either directly or through
indemnities against claims that it provides to certain of its partners and customers. In particular, the industry in which the
Company competes has many participants that own, or claim to own, intellectual property, including participants that have
been issued patents and may have filed patent applications or may obtain additional patents and proprietary rights for
technologies similar to those used by the Company in its products. The Company has received, and may receive in the
future, assertions and claims from third parties that the Company’s products infringe on their patents or other intellectual
property rights. Litigation has been, and will likely continue to be, necessary to determine the scope, enforceability and
validity of third-party proprietary rights or to establish the Company’s proprietary rights. Regardless of whether claims
against the Company have merit, those claims could be time-consuming to evaluate and defend, result in costly litigation,
divert management’s attention and resources, subject the Company to significant liabilities and could have the other
effects.
Management reviews all of the relevant facts for each claim and applies judgment in evaluating the likelihood and, if
applicable, the amount of any potential loss. Where it is considered probable for a material exposure to result and where
the amount of the claim is quantifiable, provisions for loss are made based on management’s assessment of the likely
outcome. The Company does not provide for claims that are considered unlikely to result in a significant loss, claims for
which the outcome is not determinable or claims where the amount of the loss cannot be reasonably estimated. Any
settlements or awards under such claims are provided for when reasonably determinable.
Additional lawsuits and claims, including purported class actions and derivative actions, may be filed or made based upon
the Company’s historical stock option granting practices. Management assesses such claims in accordance with the policy
described above.
As of March 1, 2014, there are claims outstanding for which the Company has assessed the potential loss as both probable
to result and reasonably estimable, therefore an accrual has been made that is not material to the Company's financial
statements. Further, there are claims outstanding for which the Company has assessed the potential loss as reasonably
possible to result, however an estimate of the amount of loss cannot reasonably be made. There are many reasons that the
Company cannot make these assessments, including, among others, one or more of the following: the early stages of a
proceeding, which does not require the claimant to specifically identify the patent that has allegedly been infringed;
damages sought that are unspecified, unsupportable, unexplained or uncertain; discovery not having been started or