Blackberry 2014 Annual Report Download - page 170

BlackBerry Limited
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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See “Cautionary Statement Regarding Forward-Looking Statements” and the “Risk Factors” section of the AIF, which is
included in the Annual Report, including the risk factor titled “The Company is subject to risks inherent in foreign operations”.
Current Liabilities
The decrease in current liabilities of $1.2 billion at the end of fiscal 2014 from the end of fiscal 2013 was primarily due to
decreases in accrued liabilities and accounts payable, partially offset by an increase in deferred revenue. As at March 1, 2014,
accrued liabilities were $1.2 billion, reflecting a decrease of $640 million compared to March 2, 2013, which was primarily
attributable to decreases in accrued royalties, employee incentives and warranty liabilities, partially offset by an increase in
vendor liabilities reflecting the Q3 Fiscal 2014 Inventory Charge, the Z10 Inventory Charge and the Q4 Fiscal 2014 Inventory
Recovery. Deferred revenue was $580 million, which reflects an increase of $38 million compared to March 2, 2013 due to an
increase in the volume of transactions that did not meet the criteria for revenue recognition as at March 1, 2014. Accounts
payable was $474 million as at March 1, 2014, reflecting a decrease of $590 million from March 2, 2013, which was primarily
attributable to timing of purchases at the end of fiscal 2014 compared to the end of fiscal 2013.
Cash flows for the fiscal year ended March 1, 2014 compared to the fiscal year ended March 2, 2013 were as follows:
For the Fiscal Year Ended
(in millions)
March 1, 2014 March 2, 2013
Net cash flows provided by (used in):
Operating activities $(159) $ 2,303
Investing activities (1,040)(2,240)
Financing activities 1,224 (36)
Effect of foreign exchange gain (loss) on cash and cash equivalents 5(5)
Net increase (decrease) in cash and cash equivalents $ 30 $ 22
Operating Activities
Net cash flows used in operating activities were $159 million for fiscal 2014 compared to net cash flows provided by operating
activities of $2.3 billion in fiscal 2013. The decrease primarily reflects the net loss incurred in fiscal 2014, partially offset by
changes in net working capital compared to the same period in the prior fiscal year.
Investing Activities
During the fiscal year ended March 1, 2014, cash flows used in investing activities were $1.0 billion and included intangible
asset additions of $1.1 billion, acquisitions of property, plant and equipment of $283 million and business acquisitions of $7
million, which were partially offset by cash flows provided by transactions involving the proceeds on sale or maturity of short-
term and long-term investments, net of the costs of acquisitions in the amount of $281 million and proceeds on the sale of
property, plant and equipment $49 million. For the same period of the prior fiscal year, cash flows used in investing activities
were $2.2 billion and included intangible asset additions of $1.0 billion, property, plant and equipment additions of $418
million and business acquisitions of $60 million, offset by cash flows used in transactions involving the proceeds on sale or
maturity of short-term investments and long-term investments, net of the costs of acquisitions, in the amount of $762 million.
During the fiscal year ended March 1, 2014, the additions of intangible assets primarily consisted of payments relating to
amended or renewed licensing agreements, as well as agreements with third parties for the use of intellectual property,
software, messaging services and other BlackBerry related features. The decrease in additions of property, plant and equipment
for fiscal 2014 was primarily due to the cost saving initiatives of the CORE program, reflecting the Company’s targeted
investment approach in research and development and manufacturing, as well as its continued investment in network
infrastructure, which remains a strategic priority for the Company. In the first quarter of fiscal 2015, the Company expects
capital expenditures to be approximately $50 million.
Financing Activities
Cash flows provided by financing activities were $1.2 billion for fiscal 2014, reflecting an increase of $1.3 billion from fiscal
2013 and is primarily attributable to the Company's issuance of the Debentures. See “Overview - Strategic Review, Debenture
Financing and Management Changes”.