Consolidated Balance Sheets Details

6 Months Ended

Aug. 31, 2023

Balance Sheet Related Disclosures [Abstract]

3. CONSOLIDATED BALANCE SHEET DETAILS

Accounts Receivable, Net of Allowance

The allowance for credit losses as at August 31, 2023 was $6 million (February 28, 2023 - $1 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 the 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:


	Carrying Amount

Beginning balance as of February 28, 2022	$	4
Prior period provision for expected credit losses	1
Write-offs charged against the allowance	(4)
Ending balance of the allowance for credit loss as at February 28, 2023	1

Current period provision for expected credit losses	5


Ending balance of the allowance for credit loss as at August 31, 2023	$	6

The allowance for credit losses as at August 31, 2023 consists of $2 million (February 28, 2023 - $1 million) relating to CECL estimated based on days past due and region and $4 million (February 28, 2023 - nil) relating to specific customers that were evaluated separately.

There was one customer that comprised more than 10% of accounts receivable as at August 31, 2023 (February 28, 2023 - two customers comprised more than 10%).

Other Receivables

As at August 31, 2023 and February 28, 2023, other receivables included items such as claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX, among other items, none of which were greater than 5% of the current assets balance.

Other Current Assets

Other current assets comprised the following:


	As at
	August 31, 2023		February 28, 2023


Intellectual property	$	—	$	141
Other	49		41
	$	49	$	182

As described in Note 10, on May 11, 2023, the Company completed its previously announced patent sale with Malikie Innovations Limited (“Malikie”) and recognized revenue of $218 million and cost of sales of $147 million, which is comprised of the carrying value of the intellectual property of $141 million referred to above, and $6 million of capitalized costs during the first quarter of fiscal 2024 related to patent maintenance. See Note 10 under the heading “Patent Sale”.

Other current assets also included the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5% of the current assets balance as at the balance sheet dates.

Property, Plant and Equipment, Net

Property, plant and equipment comprised the following:


	As at
	August 31, 2023		February 28, 2023
Cost
BlackBerry operations and other information technology	$	86	$	84
Leasehold improvements and other	20		19
Furniture and fixtures	8		9
Manufacturing, repair and research and development equipment	2		2
	116		114
Accumulated amortization	94		89
Net book value	$	22	$	25

Intangible Assets, Net

Intangible assets comprised the following:


	As at August 31, 2023
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	900	$	837	$	63
Other acquired intangibles	386		325		61
Intellectual property	124		67		57
	$	1,410	$	1,229	$	181


	As at February 28, 2023
	Cost		Accumulated Amortization		Net Book Value
Acquired technology	$	900	$	824	$	76
Other acquired intangibles	386		318		68
Intellectual property	123		64		59
	$	1,409	$	1,206	$	203

For the six months ended August 31, 2023, amortization expense related to intangible assets amounted to $26 million (six months ended August 31, 2022 - $50 million).

Total additions to intangible assets for the six months ended August 31, 2023 amounted to $10 million (six months ended August 31, 2022 - $16 million). During the six months ended August 31, 2023, 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 August 31, 2023, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2024 and each of the five succeeding years is expected to be as follows: fiscal 2024 - $22 million; fiscal 2025 - $42 million; fiscal 2026 - $37 million; fiscal 2027 - $32 million; fiscal 2028 - $19 million and fiscal 2029 - $6 million.

Goodwill

Changes to the carrying amount of goodwill during the six months ended August 31, 2023 were as follows:


	Carrying Amount
Carrying amount as at February 28, 2022	$	844
Goodwill impairment charge	(245)
Effect of foreign exchange on non-U.S. dollar denominated goodwill	(4)
Carrying amount as at February 28, 2023	595


Effect of foreign exchange on non-U.S. dollar denominated goodwill	2
Carrying amount as at August 31, 2023	$	597

Other Long-term Assets

As at August 31, 2023, other long-term assets included long-term receivables related to intellectual property sold, see Note 10 under the heading “Patent Sale”, long-term receivables, and the long-term portion of deferred commission, among other items, none of which were greater than 5% of the total assets balance.

As at February 28, 2023, other long-term assets included the long-term portion of deferred commission, among other items, none of which were greater than 5% of the total assets balance.

Accrued Liabilities

As at August 31, 2023 and February 28, 2023, other accrued liabilities included operating lease liabilities, current and accrued director fees, accrued vendor liabilities, variable incentive accrual, payroll withholding taxes and accrued royalties, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented.