Consolidated Balance Sheets Details

3 Months Ended

May 31, 2022

Balance Sheet Related Disclosures [Abstract]

3. CONSOLIDATED BALANCE SHEET DETAILS

Accounts Receivable, Net of Allowance

The allowance for credit losses as at May 31, 2022 was $4 million (February 28, 2022 - $4 million).

The Company recognizes current estimated credit losses (“CECL”) for accounts receivable. The CECL for accounts receivable are estimated based on days past due and region for each customer in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics that operate under similar economic environments. The Company determined the CECL by estimating historical credit loss experience based on the past due status and region of the customers, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. When specific customers are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. The Company also has long-term accounts receivable included in Other Long-term Assets. The CECL for long-term accounts receivable is estimated using the probability of default method and the default exposure due to limited historical information. The exposure of default is represented by the assets’ amortized carrying amount at the reporting date.

The following table sets forth the activity in the Company’s allowance for credit losses:


	As at
	May 31, 2022
Beginning balance as of February 28, 2021	$	10

Prior period recovery for expected credit losses	(2)
Write-offs charged against the allowance	(4)
Ending balance of the allowance for credit loss as at February 28, 2022	4

Current period recovery for expected credit losses	—


Ending balance of the allowance for credit loss as at May 31, 2022	$	4

The allowance for credit losses as at May 31, 2022 consists of $1 million (February 28, 2022 - $2 million) relating to CECL estimated based on days past due and region and $3 million (February 28, 2022 - $2 million) relating to specific customers that were evaluated separately.

There was no customer that comprised more than 10% of accounts receivable as at May 31, 2022 (February 28, 2022 - no customer comprised more than 10%).

Other Receivables

As at May 31, 2022 and February 28, 2022, other receivables included items such as receivables from the Government of Canada’s Hardest-Hit Business Recovery Program (“HHBRP”) and an intellectual property licensing receivable, among other items, none of which were greater than 5% of the current assets balance in any of the periods presented.

Other Current Assets

Other current assets comprised the following:


	As at
	May 31, 2022		February 28, 2022


Intellectual property	$	118	$	118
Other	51		41
	$	169	$	159

On January 29, 2022, the Company entered into a patent sale agreement with Catapult IP Innovations, Inc. (“Catapult”), pursuant to which the Company agreed to sell substantially all of its non-core patent assets to Catapult for a total transaction price of $600 million. Patents that are essential to the Company’s current core business operations are excluded from the transaction. Pursuant to the patent sale agreement, the Company would receive a license back to the patents being sold, which relate primarily to mobile devices, messaging and wireless networking. Completion of the revenue transaction is subject to the satisfaction of closing conditions. Catapult continues to work on securing its required financing; however, the Company is no longer under exclusivity with Catapult and is exploring alternative options in parallel. For the year ended February 28, 2022, the Company had classified $118 million of intellectual property that would be sold under the patent sale agreement with Catapult as other current assets on the Company’s consolidated balance sheets relating to the patent sale agreement. As at May 31, 2022, the Company continues to classify the intellectual property as other current assets on the Company’s consolidated balance sheets.

Other current assets also included items such as the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5% of the current assets balance in any of the periods presented.

Property, Plant and Equipment, Net

Property, plant and equipment comprised the following:


	As at
	May 31, 2022		February 28, 2022
Cost
BlackBerry operations and other information technology	$	93	$	92
Leasehold improvements and other	54		53
Furniture and fixtures	9		10
Manufacturing, repair and research and development equipment	1		1
	157		156
Accumulated amortization	119		115
Net book value	$	38	$	41

Intangible Assets, Net

Intangible assets comprised the following:


	As at May 31, 2022
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	789	$	234
Other acquired intangibles	494		293		201
Intellectual property	120		50		70
	$	1,637	$	1,132	$	505


	As at February 28, 2022
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	1,023	$	776	$	247
Other acquired intangibles	494		283		211
Intellectual property	117		53		64
	$	1,634	$	1,112	$	522

For the three months ended May 31, 2022, amortization expense related to intangible assets amounted to $25 million (three months ended May 31, 2021 - $45 million).

Total additions to intangible assets for the three months ended May 31, 2022 amounted to $8 million (three months ended May 31, 2021 - $6 million). During the three months ended May 31, 2022, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

Based on the carrying value of the identified intangible assets as at May 31, 2022, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2023 and each of the five succeeding years is expected to be as follows: fiscal 2023 - $74 million; fiscal 2024 - $94 million; fiscal 2025 - $90 million; fiscal 2026 - $85 million; fiscal 2027 - $79 million and fiscal 2028 - $43 million.

Goodwill

Changes to the carrying amount of goodwill during the three months ended May 31, 2022 were as follows:


	Carrying Amount
Carrying amount as at February 28, 2021	$	849

Effect of foreign exchange on non-U.S. dollar denominated goodwill	(5)
Carrying amount as at February 28, 2022	844


Effect of foreign exchange on non-U.S. dollar denominated goodwill	(3)
Carrying amount as at May 31, 2022	$	841

In the fourth quarter of fiscal 2022, the Company announced that it had agreed to the sale of a significant amount of patent assets to Catapult subject to the satisfaction of closing conditions. The completion of the sale would accelerate the timing of estimated cash flows for the Intellectual Property reporting unit and, based upon changes in the estimates to future cash flows following the contemplated sale, could potentially result in impacts that would be material to the consolidated financial statements in relation to the fair value of the goodwill of that reporting unit.

Other Long-term Assets

As at May 31, 2022 and February 28, 2022, other long-term assets included long-term portion of deferred commission and long-term receivables, among other items, none of which were greater than 5% of total assets in any of the periods presented.

Accrued Liabilities

Accrued liabilities comprised the following:


	As at
	May 31, 2022		February 28, 2022
Accrued settlement (note 9)	$	165	$	—
Accrued royalties	20		20

Operating lease liabilities, current	27		28
Other	92		109
	$	304	$	157

Other accrued liabilities include accrued director fees, accrued vendor liabilities, accrued carrier liabilities, variable incentive accrual and payroll withholding taxes, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented.