Blackberry 2014 Annual Report Download - page 120

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
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keyboards. The complaint seeks an injunction, monetary damages, and other relief that the court deems just and proper.
On January 22, 2014, the Company filed a motion for preliminary injunction to enjoin Typo from infringing U.S. Patent
No. 7,629,964 and U.S. Design Patent No. D.685,775. Typo filed its opposition on February 5, 2014, and the Company
filed a reply on February 12, 2014. Proceedings are ongoing.
Between May and August 2011, several purported class action lawsuits were filed against the Company and certain of its
present or former officers in the U.S. District Court for the Southern District of New York, two of which have been
voluntarily dismissed. On January 6, 2012, Judge Richard S. Sullivan consolidated the remaining three actions and
appointed both lead plaintiff and counsel. On April 5, 2012, plaintiff filed the Consolidated Amended Class Action
Complaint, alleging that during the period from December 16, 2010 through June 16, 2011, the Company and certain of
its officers made materially false and misleading statements regarding the Company’s financial condition and business
prospects, and seek unspecified damages. Defendants brought a motion to dismiss the claim with prejudice, which was
granted on March 29, 2013. On April 25, 2013, Plaintiff filed a Notice of Appeal. The appeal was argued on November 7,
2013 with judgment reserved. Proceedings are ongoing.
Between October and December 2013, several purported class action lawsuits and one individual lawsuit were filed
against the Company and certain of its former officers in various jurisdictions alleging that during the period from
September 27, 2012 through September 20, 2013, the Company and certain of its officers made materially false and
misleading statements regarding the Company’s financial condition and business prospects and that certain of the
Company’s financial statements contain material misstatements. The individual lawsuit was voluntarily dismissed. The
purported class action claims seek unspecified damages. Motions for the appointment of Lead Plaintiff and counsel have
been filed in the U.S. proceedings. Proceedings are ongoing in all cases.
(d) Concentrations in certain areas of the Company’s business
The Company attempts to ensure that most components essential to the Company’s business are generally available from
multiple sources, however certain components are currently obtained from limited sources within a competitive market,
which subjects the Company to significant supply, availability and pricing risks. Many components are at times subject to
industry-wide shortages and significant commodity pricing fluctuations 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 concentrate 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.
(e) Indemnifications
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.