What changed in this filing

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Item 1. Financial Statements

2020-12-18 compared with 2020-09-24 · 189 added, 167 removed, 644 unchanged (36% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

August 31, 2020 February 29, 2020

November 30, 2020 February 29, 2020

Cash and cash equivalents (note 3) $ 223 $ 377

20 unchanged sentences

Other long-term liabilities (note 4) 7 9

Long-term debentures (note 6) 459 —

Commitments and contingencies (note 10)

16 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Three Months Ended August 31, 2020

Three Months Ended November 30, 2020

Capital Stock

2 unchanged sentences

Comprehensive Loss Total

Balance as at May 31, 2020 $ 2,777 $ ( 838 ) $ ( 26 ) $ 1,913

Balance as at August 31, 2020 $ 2,788 $ ( 861 ) $ ( 13 ) $ 1,914

Net loss — ( 130 ) — ( 130 )

3 unchanged sentences

Exercise of stock options 1 — — 1

Balance as at August 31, 2020 $ 2,788 $ ( 861 ) $ ( 13 ) $ 1,914

Three Months Ended August 31, 2019

Employee share purchase plan 3 — — 3

Balance as at November 30, 2020 $ 2,803 $ ( 991 ) $ ( 9 ) $ 1,803

Three Months Ended November 30, 2019

Capital Stock

2 unchanged sentences

Comprehensive Loss Total

Balance as at May 31, 2019 $ 2,708 $ ( 81 ) $ ( 30 ) $ 2,597

Balance as at August 31, 2019 $ 2,722 $ ( 125 ) $ ( 35 ) $ 2,562

Net loss — ( 32 ) — ( 32 )

1 unchanged sentence

Stock-based compensation 15 — — 15

Balance as at August 31, 2019 $ 2,722 $ ( 125 ) $ ( 35 ) $ 2,562

Shares issued:

Exercise of stock options 1 — — 1

Employee share purchase plan 4 — — 4

Balance as at November 30, 2019 $ 2,742 $ ( 157 ) $ ( 37 ) $ 2,548

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Six Months Ended August 31, 2020

Nine Months Ended November 30, 2020

Capital Stock

10 unchanged sentences

Employee share purchase plan (note 7) 7 — — 7

Balance as at August 31, 2020 $ 2,788 $ ( 861 ) $ ( 13 ) $ 1,914

Six Months Ended August 31, 2019

Balance as at November 30, 2020 $ 2,803 $ ( 991 ) $ ( 9 ) $ 1,803

Nine Months Ended November 30, 2019

Capital Stock

10 unchanged sentences

Employee share purchase plan 6 — — 6

Balance as at August 31, 2019 $ 2,722 $ ( 125 ) $ ( 35 ) $ 2,562

Balance as at November 30, 2019 $ 2,742 $ ( 157 ) $ ( 37 ) $ 2,548

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Operations

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Revenue (note 11) $ 218 $ 267 $ 683 $ 758

21 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Net loss $ ( 130 ) $ ( 32 ) $ ( 789 ) $ ( 111 )

Other comprehensive income (loss)

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and six months ended August 31, 2020 and August 31, 2019 4 1 3 —

Foreign currency translation adjustment, net of income taxes of $1 million and $1 million, respectively, for the three and six months ended August 31, 2020 (net of income taxes of nil for the three and six months ended August 31, 2019) 2 ( 1 ) 3 ( 2 )

Net change in fair value from instrument-specific credit risk on the Debentures, net of income taxes of $1 million and $2 million, respectively, for the three and six months ended August 31, 2020 (net of income taxes of nil for the three and six months ended August 31, 2019) (note 6) 7 ( 6 ) 14 ( 13 )

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and nine months ended November 30, 2020 and November 30, 2019 — — 3 —

Foreign currency translation adjustment, net of income taxes of $1 million and nil, respectively, for the three and nine months ended November 30, 2020 (net of income taxes of nil for the three and nine months ended November 30, 2019) 1 — 5 ( 2 )

Net change in fair value from instrument-specific credit risk on the Debentures, net of income taxes of $2 million and nil, respectively, for the three and nine months ended November 30, 2020 (net of income taxes of nil for the three and nine months ended November 30, 2019) (note 6) 3 ( 2 ) 16 ( 15 )

Other comprehensive income (loss) 4 ( 2 ) 24 ( 17 )

4 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

August 31, 2020 August 31, 2019

Nine Months Ended

November 30, 2020 November 30, 2019

Cash flows from operating activities

Net loss $ ( 789 ) $ ( 111 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Amortization 149 160

15 unchanged sentences

Deferred revenue ( 81 ) ( 10 )

Net cash used in operating activities — ( 47 )

Net cash provided by (used in) operating activities 30 ( 8 )

Cash flows from investing activities

9 unchanged sentences

Payment of finance lease liability ( 1 ) ( 2 )

Net cash provided by financing activities 5 2

Repurchase of 3.75% Debentures ( 610 ) —

Issuance of 1.75% Debentures 365 —

Net cash provided by (used in) financing activities ( 236 ) 6

Effect of foreign exchange gain (loss) on cash, cash equivalents, restricted cash, and restricted cash equivalents 1 ( 1 )

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period 460 ( 88 )

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period ( 153 ) ( 35 )

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period 426 582

10 unchanged sentences

In the opinion of management, all normal recurring adjustments considered necessary for fair presentation have been included in these interim consolidated financial statements.

Operating results for the three and six months ended August 31, 2020 are not necessarily indicative of the results that may be expected for the full year ending February 28, 2021.

Operating results for the three and nine months ended November 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending February 28, 2021.

The consolidated balance sheet at February 29, 2020 was derived from the audited Annual Financial Statements but does not contain all of the footnote disclosures from the Annual Financial Statements.

4 unchanged sentences

In March 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) as a global pandemic and extraordinary actions have been taken by international, federal, state, provincial and local governmental authorities to contain and combat the spread of COVID-19 in regions throughout the world.

The COVID-19 outbreak and related public health measures, including orders to shelter-in-place, travel restrictions and mandated business closures, have adversely affected workforces, organizations, consumers, economies, and financial markets globally, leading to an economic downturn and increased market volatility.

The COVID-19 outbreak and related public health measures, including orders to shelter-in-place, travel restrictions and mandated business closures, have adversely affected workforces, organizations, consumers and economies leading to an economic downturn and increased market volatility.

The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on certain developments, including the duration of the outbreak, impact on the Company’s customers and its sales cycles, and impact on the Company’s employees.

The economic downturn and uncertainty caused by the COVID-19 outbreak and the measures undertaken to contain its spread have negatively affected the Company’s QNX automotive software business and have caused volatility in demand for the Company’s products and services, adversely affecting the ability of the Company’s sales and professional services teams to meet with customers and provide service, impacted spending from new customers and increased sales cycle times.

The economic downturn and uncertainty caused by the COVID-19 outbreak and the measures undertaken to contain its spread have negatively affected the Company’s QNX automotive software business and have caused volatility in demand for the Company’s products and services, adversely affected the ability of the Company’s sales and professional services teams to meet with customers and provide service, impacted spending from new customers and increased sales cycle times.

The Company continues to evaluate the current and potential impact of the COVID-19 outbreak on its business, results of operations and consolidated financial statements, including the impairment of goodwill and indefinite-lived intangible assets and the collectability of receivables.

1 unchanged sentence

During the second quarter of fiscal 2021, this uncertainty resulted in the Company making significant judgements related to its estimates and assumptions concerning impairment of certain operating lease right-of-use (“ROU”) assets and associated property, plant and equipment.

During the third quarter of fiscal 2021, this uncertainty did not result in additional significant judgements.

As of the date of issuance of the financial statements, the Company is not aware of any additional events or circumstances which would require it to update its estimates, judgements, or revise the carrying value of its assets or liabilities, other than the COVID-19 pandemic as discussed above and below in Note 3.

2 unchanged sentences

The Company remains focused on continuity plans and preparedness measures in the event that certain jurisdictions or sectors of the economy remain closed for an extended period or are shut down again.

Although the Company experienced sequential revenue growth and observed a partial recovery in global automotive production volumes in the second quarter of fiscal 2021, the Company believes that the COVID-19 pandemic has had and may continue to have a material adverse impact on the Company’s consolidated business, results of operations and financial condition in fiscal 2021.

Although the Company experienced sequential Software & Services revenue growth and observed a partial recovery in global automotive production volumes in the second and third quarters of fiscal 2021, the COVID-19 pandemic has had and the Company believes may continue to have a material adverse impact on the Company’s consolidated business, results of operations and financial condition in fiscal 2021.

Further, the effects of the pandemic may not be fully reflected in the Company’s business until future periods.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

effects of the pandemic may not be fully reflected in the Company’s business until future periods.

The Company does not expect the COVID-19 pandemic and its related economic impact to materially adversely affect its liquidity position.

1 unchanged sentence

There have been no material changes to the Company’s accounting policies or critical accounting estimates from those

described in the Annual Financial Statements, except as described below, which were adopted during fiscal 2021.

described in the Annual Financial Statements, except in Note 6 relating to the issuance of the 1.75% Debentures (as defined in Note 6) and as described below, which were adopted during fiscal 2021.

Accounting Standards Adopted During Fiscal 2021

27 unchanged sentences

In its analysis, the Company utilized multiple valuation techniques, including the income approach, discounted future cash flows, the market-based approach, and the asset value approach.

The analysis requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts,

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

estimation of the long-term rate of revenue growth for our reporting units, estimation of the useful life over which cash flows will occur, terminal growth rate, profitability measures, and determination of the discount rates for the reporting units.

requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of revenue growth for our reporting units, estimation of the useful life over which cash flows will occur, terminal growth rate, profitability measures, and determination of the discount rates for the reporting units.

The carrying amount of the Company’s assets was assigned to reporting units using reasonable methodologies based on the asset type.

64 unchanged sentences

The Company also holds a limited amount of equity securities following the initial public offering by the issuer of a previous private equity investment.

For a description of how the fair values of the 3.75% Debentures (as defined in Note 6) are determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements.

For a description of how the fair values of the 3.75% Debentures (as defined in Note 6) were determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements.

The 3.75% Debentures were classified as Level 2.

For a description of how the fair values of the 1.75% Debentures (as defined in Note 6) are determined, see Note 6.

The 1.75% Debentures are classified as Level 3.

Non-Recurring Fair Value Measurements

17 unchanged sentences

The impairment was determined by comparing the fair value of the impacted ROU asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment, using Level 2 inputs.

The fair value of the ROU asset was based on the estimated sublease income for certain facilities taking into consideration the time period it will take to obtain a sublessor, the applicable discount rate and the sublease rate (six months ended August 31, 2019 - $ 2 million impairment charge related to ROU assets).

The fair value of the ROU asset was based on the estimated sublease income for certain facilities taking into consideration the time period it will take to obtain a sublessor, the applicable discount rate and the sublease rate (nine months ended November 30, 2019 - $ 5 million impairment charge related to ROU assets).

Cash, Cash Equivalents and Investments

The components of cash, cash equivalents and investments by fair value level as at August 31, 2020 were as follows:

The components of cash, cash equivalents and investments by fair value level as at November 30, 2020 were as follows:

Cost Basis Unrealized

3 unchanged sentences

Investments Long-term

Investments Restricted Cash

Investments Restricted Cash and Cash Equivalents

Bank balances $ 163 $ — $ — $ 163 $ 163 $ — $ — $ —

2 unchanged sentences

Equity securities 10 — ( 8 ) 2 — 2 — —

Term deposits and certificates of deposits 49 — — 49 — — — 49

Bearer deposit notes 19 — — 19 19 — — —

Corporate notes/bonds 25 — — 25 — 25 — —

Term deposits, certificates of deposits, and GIC's 120 — — 120 25 45 — 50

Commercial paper 231 — — 231 35 196 — —

promissory notes 35 — — 35 — 35 — —

government sponsored enterprise notes 98 — — 98 — 98 — —

treasury bills/notes 50 — — 50 — 50 — —

559 — — 559 60 449 — 50

23 unchanged sentences

$ 998 $ — $ ( 8 ) $ 990 $ 377 $ 532 $ 32 $ 49

As at August 31, 2020, the Company had private equity investments without readily determinable fair value of $ 33 million (February 29, 2020 - $ 32 million).

There were no realized gains or losses on available-for-sale securities for the three and six months ended August 31, 2020 (realized losses of nil for the three and six months ended August 31, 2019).

As at November 30, 2020, the Company had private equity investments without readily determinable fair value of $ 33 million (February 29, 2020 - $ 32 million).

There were no realized gains or losses on available-for-sale securities for the three and nine months ended November 30, 2020 (realized losses of nil for the three and nine months ended November 30, 2019).

The Company has restricted cash and cash equivalents, consisting of cash and securities pledged as collateral to major banking partners in support of the Company’s requirements for letters of credit.

6 unchanged sentences

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at August 31, 2020 and February 29, 2020 from the consolidated balance sheets to the consolidated statements of cash flows:

August 31, 2020 February 29, 2020

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at November 30, 2020 and February 29, 2020 from the consolidated balance sheets to the consolidated statements of cash flows:

November 30, 2020 February 29, 2020

Cash and cash equivalents $ 223 $ 377

1 unchanged sentence

Total cash, cash equivalents, restricted cash, and restricted cash equivalents presented in the consolidated statements of cash flows

The contractual maturities of available-for-sale investments as at August 31, 2020 and February 29, 2020 were as follows:

August 31, 2020 February 29, 2020

The contractual maturities of available-for-sale investments as at November 30, 2020 and February 29, 2020 were as follows:

November 30, 2020 February 29, 2020

Cost Basis Fair Value Cost Basis Fair Value

2 unchanged sentences

$ 569 $ 561 $ 866 $ 858

As at August 31, 2020, the Company had investments with continuous unrealized losses totaling $ 8 million, consisting of unrealized losses on equity securities (February 29, 2020 - continuous unrealized losses totaling $ 8 million).

As at November 30, 2020, the Company had investments with continuous unrealized losses totaling $ 8 million, consisting of unrealized losses on equity securities (February 29, 2020 - continuous unrealized losses totaling $ 8 million).

CONSOLIDATED BALANCE SHEET DETAILS

Accounts Receivable, Net

The allowance for credit losses as at August 31, 2020 was $ 14 million (February 29, 2020 - $ 9 million).

The allowance for credit losses as at November 30, 2020 was $ 13 million (February 29, 2020 - $ 9 million).

The Company recognizes current estimated credit losses for accounts receivable, net.

7 unchanged sentences

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

Six Months Ended

August 31, 2020

Nine Months Ended

November 30, 2020

Beginning balance as of February 29, 2020 $ 9

1 unchanged sentence

Current period provision for expected credit losses —

Ending balance of the allowance for credit loss as at August 31, 2020 $ 14

The allowance for credit losses as at August 31, 2020 consists of $ 5 million relating to CECL estimated based on days past due and region, $ 7 million relating to specific customers that were evaluated separately and $ 2 million relating to CECL estimated for long-term accounts receivables.

Ending balance of the allowance for credit loss as at November 30, 2020 $ 13

The allowance for credit losses as at November 30, 2020 consists of $ 6 million relating to CECL estimated based on days past due and region and $ 7 million relating to specific customers that were evaluated separately.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

There were two customers that comprised more than 10% of accounts receivable as at August 31, 2020 (February 29, 2020 - two customers comprised more than 10%).

There were two customers that comprised more than 10% of accounts receivable as at November 30, 2020 (February 29, 2020 - two customers comprised more than 10%).

Other Current Assets

As at August 31, 2020, other current assets include 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 all periods presented.

As at November 30, 2020, other current assets include 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 all periods presented.

Property, Plant and Equipment, Net

Property, plant and equipment comprised the following:

August 31, 2020 February 29, 2020

November 30, 2020 February 29, 2020

Buildings, leasehold improvements and other $ 68 $ 72

6 unchanged sentences

Intangible assets comprised the following:

As at August 31, 2020

As at November 30, 2020

Cost Accumulated

11 unchanged sentences

$ 2,002 $ 1,087 $ 915

For the six months ended August 31, 2020, amortization expense related to intangible assets amounted to $ 89 million (six months ended August 31, 2019 - $ 95 million)

Total additions to intangible assets for six months ended August 31, 2020 amounted to $ 16 million (six months ended August 31, 2019 - $ 16 million).

During the six months ended August 31, 2020, 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, 2020, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2021 and each of the five succeeding years is expected to be as follows:

For the nine months ended November 30, 2020, amortization expense related to intangible assets amounted to $ 133 million (nine months ended November 30, 2019 - $ 142 million)

Total additions to intangible assets for nine months ended November 30, 2020 amounted to $ 23 million (nine months ended November 30, 2019 - $ 24 million).

During the nine months ended November 30, 2020, 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 November 30, 2020, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2021 and each of the five

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 (unaudited)

succeeding years is expected to be as follows:

fiscal 2021 - $ 43 million;

3 unchanged sentences

fiscal 2025 - $ 101 million and fiscal 2026 - $ 95 million.

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 (unaudited)

Changes to the carrying amount of goodwill during the six months ended August 31, 2020 were as follows:

Changes to the carrying amount of goodwill during the nine months ended November 30, 2020 were as follows:

Carrying Amount

3 unchanged sentences

dollar denominated goodwill 6

Carrying amount as at August 31, 2020 $ 848

Carrying amount as at November 30, 2020 $ 849

Other Long-term Assets

As at August 31, 2020, other long-term assets include 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.

As at November 30, 2020, other long-term assets include 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 includes the current portion of operating lease liabilities, 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.

Accrued liabilities comprised the following:

November 30, 2020 February 29, 2020

Operating lease liabilities, current $ 31 $ 31

Other 142 171

Other accrued liabilities includes 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.

Other Long-term Liabilities

Other long-term liabilities consist of the long-term portion of finance lease liabilities and non-lease components of Resource Allocation Program liabilities.

For the six months ended August 31, 2020, the Company’s net effective income tax recovery rate was approximately 2 % compared to a net effective income tax expense rate of 4 % for the six months ended August 31, 2019.

The Company’s income tax rate reflects the change in unrecognized income tax benefit and the fact that the Company has a significant valuation allowance against its deferred income tax assets, and in particular, the change in fair value of the Debentures, amongst other items, is offset by a corresponding adjustment of the valuation allowance.

Other long-term liabilities consist of the long-term portion of finance lease liabilities and non-lease component liabilities related to the Company’s previous Resource Allocation Program entered into in order to transition the Company from a legacy hardware manufacturer to a licensing driven software business.

For the nine months ended November 30, 2020, the Company’s net effective income tax recovery rate was approximately 1 % compared to a net effective income tax expense rate of 5 % for the nine months ended November 30, 2019.

The Company’s income tax rate reflects the change in unrecognized income tax benefit and the fact that the Company has a significant valuation allowance against its deferred income tax assets, and in particular, the change in fair value of the Debentures (as defined in Note 6), amongst other items, is offset by a corresponding adjustment of the valuation allowance.

The Company’s net effective income tax rate also reflects the geographic mix of earnings in jurisdictions with different income tax rates.

The Company’s total unrecognized income tax benefits as at August 31, 2020 were $ 36 million (February 29, 2020 - $ 72 million).

As at August 31, 2020, $ 32 million of the unrecognized income tax benefits have been netted against deferred income tax assets and $ 4 million has been recorded within income taxes payable on the Company’s consolidated balance sheets.

The Company’s total unrecognized income tax benefits as at November 30, 2020 were $ 35 million (February 29, 2020 - $ 72 million).

As at November 30, 2020, $ 33 million of the unrecognized income tax benefits have been netted against deferred income tax assets and $ 2 million has been recorded within income taxes payable on the Company’s consolidated balance sheets.

The Company is subject to ongoing examination by tax authorities in certain jurisdictions in which it operates.

1 unchanged sentence

While the final resolution of audits is uncertain, the Company believes the ultimate resolution of these audits will not have a material adverse effect on its consolidated financial position, liquidity or results of operations.

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 (unaudited)

1.75% Convertible Debentures

On September 7, 2016, Fairfax Financial Holdings Limited (“Fairfax”) and other institutional investors invested in the Company through a private placement of new debentures in an aggregate amount of $ 605 million (the “3.75% Debentures”).

On September 1, 2020, Hamblin Watsa Investment Counsel Ltd., in its capacity as investment manager of Fairfax Financial Holdings Limited ("Fairfax") and another institutional investor invested in the Company through a $ 365 million private placement of new debentures (the “1.75% Debentures”), which replaced $ 605 million of debentures issued in a private placement on September 7, 2016 (the “3.75% Debentures”) as described below (collectively, the “Debentures”).

Interest on the 1.75% Debentures is payable quarterly in arrears at a rate of 1.75 % per annum.

3 unchanged sentences

During an event of default, the interest rate rises to 5.75 % per annum.

The 1.75% Debentures are subject to a change of control provision whereby the Company would be required to make an offer to repurchase the 1.75% Debentures at 115 % of par value if a person or group (not affiliated with Fairfax) acquires 35 % of the Company’s outstanding common shares, acquires all or substantially all of its assets, or if the Company merges with another entity and the Company’s existing shareholders hold less than 50 % of the common shares of the surviving entity.

Additionally, the 1.75% Debentures cannot be converted to the extent that, after giving effect to the conversion, the holder would beneficially own or exercise control or direction over more than 19.99 % of the Company’s then issued and outstanding shares (the “Blocker Provision”).

Due to the conversion option and other embedded derivatives within the 1.75% Debentures, and consistent with the Company’s accounting for the 3.75% Debentures, the Company has elected to record the 1.75% Debentures, including the debt itself and all embedded derivatives, at fair value and present the 1.75% Debentures as a single hybrid financial instrument.

No portion of the fair value of the 1.75% Debentures has been recorded as equity, nor would be if the embedded derivatives were bifurcated from the host debt contract.

Each period, the fair value of the 1.75% Debentures is recalculated and resulting gains and losses from the change in fair value of the Debentures associated with non-credit components are recognized in income, while the change in fair value associated with credit components is recognized in AOCL.

The fair value of the Debentures has been determined using the significant level 2 inputs of principal value, interest rate spreads and curves, any observable trades of the Debentures that occurred during the period, the market price and volatility of the Company’s listed common shares, and the significant level 3 inputs related to credit spread and the implied discount of the 1.75% Debentures at issuance.

The Company determined its credit spread by calibrating to observable trades of the 3.75% Debentures and trending the calibrated spread to valuation dates utilizing an appropriate credit index.

The Company’s credit spread was determined to be 7.90 % as of the issuance date of the 1.75% Debentures and 6.98 % as of November 30, 2020.

An increase in credit spread will result in a decrease in the fair value of 1.75% Debentures and vice versa.

The fair value of the 1.75% Debentures on September 1, 2020 was determined to be approximately $ 456 million and the implied discount approximately $ 91 million.

The Company determined the implied discount on the 1.75% Debentures by calculating the fair value of the 1.75% Debentures on September 1, 2020 utilizing the above credit spread and other inputs described above.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

The 3.75% Debentures are subject to a change of control provision whereby the Company would be required to make an offer to repurchase the 3.75% Debentures at 115 % of par value if a person or group (not affiliated with Fairfax) acquires 35 % of the Company’s outstanding common shares, acquires all or substantially all of its assets, or if the Company merges with another entity and the Company’s existing shareholders hold less than 50 % of the common shares of the surviving entity.

On July 22, 2020, the Company announced that, with the required approval of the holders of the 3.75% Debentures, it would redeem the 3.75% Debentures for a redemption amount of approximately $ 615 million (the “Redemption Amount”), which would settle all outstanding obligations of the Company in respect of the 3.75% Debentures.

The redemption was completed on September 1, 2020 , after the end of the second quarter of fiscal 2021.

As at August 31, 2020, the fair value of the 3.75% Debentures was determined to be the Redemption Amount of $ 615 million, which includes $ 5 million in accrued interest.

The following table summarizes the change in fair value of the 3.75% Debentures for the six months ended August 31, 2020:

August 31, 2020

Balance as at February 29, 2020 606

The following table summarizes the change in fair value of the 1.75% Debentures for the three months ended November 30, 2020, which also represents the total changes through earnings of items classified as level 3 in the fair value hierarchy:

November 30, 2020

Principal received as of September 1, 2020 $ 365

Change in fair value of the Debentures 94

Balance as at August 31, 2020 $ 610

Balance as at November 30, 2020 $ 459

The difference between the fair value of the 1.75% Debentures and the unpaid principal balance of $ 365 million is $ 94 million.

The fair value of the 3.75% Debentures is measured using Level 2 fair value inputs.

The following table shows the impact of the changes in fair value of the 3.75% Debentures for the three and six months ended August 31, 2020 and August 31, 2019:

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ ( 18 ) $ 23 $ ( 19 ) $ 51

Income (charge) associated with the change in fair value from instrument-specific credit components recorded in AOCL 7 ( 6 ) 15 ( 13 )

Total decrease (increase) in the fair value of the 3.75% Debentures $ ( 11 ) $ 17 $ ( 4 ) $ 38

For the three and six months ended August 31, 2020, the Company recorded interest expense related to the 3.75% Debentures of $ 6 million and $ 11 million, respectively, which has been included in investment income, net on the Company’s consolidated statements of operations (three and six months ended August 31, 2019 - $ 6 million and $ 11 million, respectively).

The following table shows the impact of the changes in fair value of the 1.75% Debentures for the three and nine months ended November 30, 2020 and November 30, 2019:

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Charge associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ ( 89 ) $ — $ ( 89 ) $ —

Charge associated with the change in fair value from instrument-specific credit components recorded in AOCL ( 5 ) — ( 5 ) —

Total increase in the fair value of the 1.75% Debentures $ ( 94 ) $ — $ ( 94 ) $ —

For the three and nine months ended November 30, 2020, the Company recorded interest expense related to the Debentures of $ 2 million and $ 13 million, respectively, which has been included in investment income, net on the Company’s consolidated statements of operations (three and nine months ended November 30, 2019 - $ 6 million and $ 17 million, respectively).

Fairfax, a related party under U.S.

GAAP, purchased $ 500 million principal amount of the 3.75% Debentures.

As such, the payment to Fairfax of interest on the 3.75% Debentures represents a related-party transaction.

GAAP due to its beneficial ownership of common shares in the Company after taking into account potential conversion of the Debentures, owned $ 500 million principal amount of the original 3.75% Debentures and also purchased $ 330 million principal amount of the 1.75% Debentures.

As such, the redemption of Fairfax’s portion of the 3.75% Debentures, the investment by Fairfax in the 1.75% Debentures and the payment of interest on the Debentures represent related party transactions.

Fairfax receives interest at the same rate as other holders of the Debentures.

3.75% Convertible Debentures

On July 22, 2020, as subsequently updated on August 28, 2020, the Company announced that it had entered into an agreement with Fairfax and another institutional investor for the issuance of an aggregate of $ 365 million principal amount of new 1.75 % unsecured convertible debentures maturing on November 13, 2023 (the “1.75% Debentures”) on a private placement basis.

These were issued on September 1, 2020 , after the end of the second quarter of fiscal 2021.

Fairfax agreed to acquire $ 330 million principal amount of the 1.75% Debentures and receives interest at the same rate as the other holder of the 1.75% Debentures.

The 1.75% Debentures have terms that are substantially identical to those of the 3.75% Debentures except that the 1.75% Debentures are convertible into common shares at a price of $ 6.00 per common share, bear a lower rate of interest at 1.75 % per annum, are subject to a higher approval threshold for extraordinary resolutions and mature in 2023.

Additionally, the 1.75% Debentures cannot be converted to the extent that, after giving

On September 7, 2016, Fairfax and other institutional investors invested in the Company through a $ 605 million private placement of the 3.75% Debentures.

The terms of the 3.75% Debentures were substantially similar to those of the 1.75% Debentures, except that the 3.75 % Debentures had a higher interest rate, were convertible into common shares at a price of $ 10.00 per common share, were subject to a lower approval threshold for extraordinary resolutions, did not contain the Blocker Provision and had a maturity date of November 13, 2020 .

The redemption was completed on September 1, 2020 .

As the Redemption Amount represented fair value at August 31, 2020 and the Company elected the fair value option for the 3.75% Debentures, the impact of the redemption on the fair value was recorded in the second quarter of fiscal 2021.

A portion of the fair value associated with changes in instrument-specific credit components in the amount of $ 6 million remained in OCI until redemption on September 1, 2020 at which point $ 6 million was discharged to the consolidated statement of operations and is included in the table below.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

effect to the conversion, the holder would beneficially own or exercise control or direction over more than 19.99 % of the Company’s then issued and outstanding shares.

Quarterly and annual interest expense on the 1.75% Debentures will be approximately $ 2 million and $ 6 million, respectively.

The following table shows the impact of the changes in fair value of the 3.75% Debentures for the three and nine months ended November 30, 2020 and November 30, 2019:

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ — $ 20 $ ( 19 ) $ 71

Income (charge) associated with the change in fair value from instrument-specific credit components recorded in AOCL — ( 2 ) 15 ( 15 )

Realized charges associated with the change in fair value from credit components recorded in the consolidated statements of operations on redemption ( 6 ) — ( 6 ) —

Realized charges associated with the change in fair value from credit components released from AOCL on redemption 6 — 6 —

Total decrease (increase) in the fair value of the 3.75% Debentures $ — $ 18 $ ( 4 ) $ 56

CAPITAL STOCK

The following details the changes in issued and outstanding common shares for the six months ended August 31, 2020:

The following details the changes in issued and outstanding common shares for the nine months ended November 30, 2020:

Capital Stock and

6 unchanged sentences

Common shares issued for employee share purchase plan 1,525 7

Common shares outstanding as at August 31, 2020 556,468 $ 2,788

The Company had 557 million voting common shares outstanding, 4 million options to purchase voting common shares, 24 million RSUs and 1 million DSUs outstanding as at September 21, 2020.

In addition, 60.5 million common shares are issuable upon conversion in full of the 3.75% Debentures as described in Note 6, prior to their redemption.

An aggregate of 60.8 million common shares are issuable upon conversion in full of the 1.75% Debentures as described in Note 6.

Common shares outstanding as at November 30, 2020 562,016 $ 2,803

The Company had 563 million voting common shares outstanding, 3 million options to purchase voting common shares, 19 million RSUs and 1 million DSUs outstanding as at December 15, 2020.

In addition, 60.8 million common shares are issuable upon conversion in full of the 1.75% Debentures as described in Note 6.

BlackBerry Limited

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The following table sets forth the computation of basic and diluted loss per share:

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Net loss for basic and diluted loss per share available to common shareholders $ ( 130 ) $ ( 32 ) $ ( 789 ) $ ( 111 )

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______________________________

(1) The Company has not presented the dilutive effect of the 3.75% Debentures using the if-converted method in the calculation of diluted loss per share for the three and six months ended August 31, 2020, as to do so would be antidilutive.

(1) The Company has not presented the dilutive effect of the Debentures using the if-converted method in the calculation of diluted loss per share for the three and nine months ended November 30, 2020, as to do so would be antidilutive.

See Note 6 for details on the Debentures.

(2) The Company has presented the dilutive effect of the 3.75% Debentures using the if-converted method, assuming conversion at the beginning of the quarter for the three and six months ended August 31, 2019.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by eliminating the fair value adjustment made to the 3.75% Debentures and interest expense incurred on the 3.75% Debentures in the three and six months ended August 31, 2019, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

(2) The Company has presented the dilutive effect of the 3.75% Debentures using the if-converted method, assuming conversion at the beginning of the quarter for the three and nine months ended November 30, 2019.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by eliminating the fair value adjustment made to the 3.75% Debentures and interest expense incurred on the 3.75% Debentures in the three and nine months ended November 30, 2019, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

See Note 6 for details on the 3.75% Debentures.

(3) The three and six months ended August 31, 2020, includes 2,802,067 common shares remaining to be issued in equal installments on the next two anniversary dates of the Cylance acquisition, in consideration for the acquisition.

The three and six months ended August 31, 2019, includes 4,182,189 common shares to be issued in equal installments on the three anniversary dates of the Cylance acquisition, in consideration for the acquisition.

(3) The three and nine months ended November 30, 2020, includes 2,802,067 common shares remaining to be issued in equal installments on the next two anniversary dates of the Cylance acquisition, in consideration for the acquisition.

The three and nine months ended November 30, 2019, includes 4,182,189 common shares to be issued in equal installments on the three anniversary dates of the Cylance acquisition, in consideration for the acquisition.

There are no service or other requirements associated with the issuance of these shares.

(4) The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted loss per share for the three and six months ended August 31, 2020, and three and six months ended August 31, 2019, as to do so would be antidilutive.

(4) The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted loss per share for the three and nine months ended November 30, 2020, and three and nine months ended November 30, 2019, as to do so would be antidilutive.

BlackBerry Limited

2 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in AOCL by component net of tax, for the six months ended August 31, 2020 were as follows:

The changes in AOCL by component net of tax, for the nine months ended November 30, 2020 were as follows:

Foreign Currency Cumulative Translation Adjustment Accumulated Net Unrealized Losses on Cash Flow Hedges Other Post-Employment Benefit Obligations Change in fair value from instrument-specific credit risk on Debentures Total

2 unchanged sentences

Amounts reclassified from AOCL into net loss — 1 — 6 7

Change in cumulative comprehensive income (loss) for the period 3 3 — 14 20

AOCL as at August 31, 2020 $ ( 6 ) $ 2 $ ( 1 ) $ ( 8 ) $ ( 13 )

During the three and six months ended August 31, 2020, nil losses and $ 2 million in losses (pre-tax and post-tax), respectively, associated with cash flow hedges were reclassified from AOCL into selling, marketing and administration expenses (three and six months ended August 31, 2019 - nil losses).

Change in cumulative comprehensive income for the period 5 3 — 16 24

AOCL as at November 30, 2020 $ ( 4 ) $ 2 $ ( 1 ) $ ( 6 ) $ ( 9 )

During the three and nine months ended November 30, 2020, $ 1 million in gains and $ 1 million in losses (pre-tax and post-tax), respectively, associated with cash flow hedges were reclassified from AOCL into selling, marketing and administration expenses (three and nine months ended November 30, 2019 - nil losses).

COMMITMENTS AND CONTINGENCIES

(a) Letters of Credit

The Company had $ 49 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business and in support of patent litigation in certain jurisdictions as of August 31, 2020.

The Company had $ 50 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business and in support of patent litigation in certain jurisdictions as of November 30, 2020.

See the discussion of restricted cash in Note 3.

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Any settlements or awards under such claims are provided for when reasonably determinable.

As of August 31, 2020, there are no material claims outstanding for which the Company has assessed the potential loss as both probable to result and reasonably estimable;

As of November 30, 2020, there are no material claims outstanding for which the Company has assessed the potential loss as both probable to result and reasonably estimable;

therefore, no material accrual has been made.

Further, there are claims

Further, there are

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

outstanding for which the Company has assessed the potential loss as reasonably probable to result;

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.

26 unchanged sentences

On October 17, 2019, Cho and Ulug filed a Notice of Appeal.

Cho and Ulug filed their opening brief on February 20, 2020, the Company filed its opposition brief on May 21, 2020, and Cho and Ulug filed their reply brief on June 11, 2020.

Fact discovery was completed on January 31, 2020, and expert discovery is scheduled to be completed by November 13, 2020.

Cho and Ulug filed their opening brief on February 20, 2020, the Company filed its opposition brief on May 21, 2020, Cho and Ulug filed their reply brief on June 11, 2020, and oral argument was held on October 30, 2020.

The Court removed the case from its suspense calendar on May 29, 2020.

Plaintiffs filed a motion for class certification on June 8, 2020, the defendants filed oppositions on August 10, 2020, and the plaintiffs’ reply is due September 28, 2020.

Plaintiffs filed a motion for class certification on June 8, 2020, the defendants filed oppositions on August 10, 2020, and the plaintiffs filed a reply on September 28, 2020.

All discovery was completed as of November 13, 2020.

No other dates have been set.

11 unchanged sentences

The Statement of Claim alleges that actions the Company took when certain of its employees decided to accept offers of employment from Ford Motor Company of Canada amounted to a wrongful termination of the employees’ employment with the Company.

The claim seeks (i) an unspecified quantum of statutory, contractual, or common law

The claim seeks (i) an unspecified quantum of statutory, contractual, or common law termination entitlements;

(ii) punitive or breach of duty of good faith damages of CAD$20,000,000, or such other amount

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

termination entitlements;

(ii) punitive or breach of duty of good faith damages of CAD$20,000,000, or such other amount as the Court finds appropriate, (iii) pre- and post- judgment interest, (iv) attorneys’ fees and costs, and (v) such other relief as the Court deems just.

as the Court finds appropriate, (iii) pre- and post- judgment interest, (iv) attorneys’ fees and costs, and (v) such other relief as the Court deems just.

The Court granted the plaintiffs’ motion to certify the class action on May 27, 2019.

1 unchanged sentence

The Court denied the motion for leave to appeal on September 17, 2019.

On February 4, 2019, a putative employment class action and California Private Attorney General Act claim was filed against the Company in the San Joaquin County Superior Court alleging the Company (i) failed to provide itemized wage statements in violation of California Labor Code Section 226(a);

and (ii) failed to pay all wages due at termination in violation of California Labor Code Section 201.

The complaint seeks statutory penalties, injunctive relief, interest, costs, and attorneys’ fees.

The Company filed its answer denying the allegations in the complaint on March 18, 2019.

On August 22, 2019, the Company filed a Motion for Summary Adjudication of the named plaintiff’s wage statement claims.

The Court denied the motion on January 21, 2020.

The parties entered into a settlement agreement on June 4, 2020.

The Court granted preliminary settlement approval and certified the proposed class on July 16, 2020.

The final settlement approval hearing is scheduled for October 20, 2020.

The Company filed its Statement of Defence on December 19, 2019, and discovery is proceeding.

Other contingencies

2 unchanged sentences

As the award is triggered by the Company’s share price, it is considered stock-based compensation and accounted for as a share-based liability award.

As at August 31, 2020, the liability recorded in association with this award is approximately $ 2 million (February 29, 2020 - $ 1 million).

As at August 31, 2020, the Company has received $ 13 million in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX.

As at November 30, 2020, the liability recorded in association with this award is approximately $ 3 million (February 29, 2020 - $ 1 million).

As at November 30, 2020, the Company has received $ 14 million in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX.

A portion of this amount may be repayable in the future under certain circumstances if certain terms and conditions are not met by the Company, which is not probable at this time.

13 unchanged sentences

The Company has not encountered material costs as a result of such indemnifications in the current period.

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 (unaudited)

REVENUE AND SEGMENT DISCLOSURES

1 unchanged sentence

The Company’s revenue, classified by major geographic region in which the Company’s customers are located, was as follows:

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

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 (unaudited)

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

North America (1)

11 unchanged sentences

Total revenue, classified by product and service type, was as follows:

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Software and Services $ 162 $ 185 $ 461 $ 521

3 unchanged sentences

The BlackBerry Spark platform includes a suite of security software products and services, including the BlackBerry Spark® Unified Endpoint Security Suite, BlackBerry® UEM, BlackBerry® Dynamics™ and BlackBerry® Workspaces.

BlackBerry IoT Solutions includes revenue from BlackBerry Technology Solutions, which consists of BlackBerry® QNX®, BlackBerry Certicom®, BlackBerry Radar® and other IoT applications, and from BlackBerry® AtHoc® and SecuSUITE.

Software and Services revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

2 unchanged sentences

Revenue, classified by timing of recognition, was as follows:

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Products and services transferred over time $ 121 $ 122 $ 362 $ 391

5 unchanged sentences

Revenue contract balances

The following table sets forth the activity in the Company’s revenue contract balances for the six months ended August 31, 2020:

The following table sets forth the activity in the Company’s revenue contract balances for the nine months ended November 30, 2020:

Accounts Receivable Deferred Revenue Deferred Commissions

3 unchanged sentences

Decrease, net ( 46 ) ( 81 ) ( 6 )

Closing balance as at August 31, 2020 $ 258 $ 316 $ 23

Closing balance as at November 30, 2020 $ 221 $ 292 $ 22

Transaction price allocated to the remaining performance obligations

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at August 31, 2020 and the time frame in which the Company expects to recognize this revenue.

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at November 30, 2020 and the time frame in which the Company expects to recognize this revenue.

The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

As at August 31, 2020

As at November 30, 2020

Less than 12 Months 12 to 24 Months Thereafter Total

1 unchanged sentence

Revenue recognized for performance obligations satisfied in prior periods

For the three and six months ended August 31, 2020, nil and $ 1 million of revenue was recognized relating to performance obligations satisfied in a prior period (three and six months ended August 31, 2019 - nil ).

For the three and nine months ended November 30, 2020, $ 2 million and $ 2 million of revenue was recognized for performance obligations satisfied in a prior period (three and nine months ended November 30, 2019 - nil ) relating to legacy SAF customers.

Segment Disclosures

3 unchanged sentences

Property, plant and equipment, intangible assets, operating lease ROU assets and goodwill, classified by geographic region in which the Company’s assets are located, were as follows:

August 31, 2020 February 29, 2020

November 30, 2020 February 29, 2020

Property, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and Goodwill Total Assets Property, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and Goodwill Total Assets

3 unchanged sentences

$ 1,797 $ 2,870 $ 2,546 $ 3,888

Information About Major Customers

There was one customer that comprised 40 % and 34 % of the Company’s revenue in three and six months ended August 31, 2020, respectively (three and six months ended August 31, 2019 - two customers that comprised 15 % and 10 % and one customer that comprised 12 %, respectively).

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

Information About Major Customers

There was one customer that comprised 13 % and 27 % of the Company’s revenue in three and nine months ended November 30, 2020, respectively (three and nine months ended November 30, 2019 - one customer that comprised 20 % and one customer that comprised 15 %, respectively).

CASH FLOW AND ADDITIONAL INFORMATION

(a) Certain consolidated statements of cash flow information related to interest and income taxes paid is summarized as follows:

Three Months Ended Six Months Ended

August 31, 2020 August 31, 2019 August 31, 2020 August 31, 2019

Three Months Ended Nine Months Ended

November 30, 2020 November 30, 2019 November 30, 2020 November 30, 2019

Interest paid during the period $ 2 $ 6 $ 13 $ 17

4 unchanged sentences

The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its functional currency, the U.S.

The majority of the Company’s revenue in the second quarter of fiscal 2021 was transacted in U.S.

The majority of the Company’s revenue in the third quarter of fiscal 2021 was transacted in U.S.

Portions of the revenue were denominated in Canadian dollars, euros and British pounds.

1 unchanged sentence

dollars, euros and British pounds.

At August 31, 2020, approximately 5 % of cash and cash equivalents, 12 % of accounts receivable and 46 % of accounts payable were denominated in foreign currencies (February 29, 2020 – 12 %, 17 % and 17 %, respectively).

At November 30, 2020, approximately 17 % of cash and cash equivalents, 20 % of accounts receivable and 56 % of accounts payable were denominated in foreign currencies (February 29, 2020 – 12 %, 17 % and 17 %, respectively).

These foreign currencies primarily include the Canadian dollar, euro and British pound.

11 unchanged sentences

The Company reduces this risk by investing in liquid, investment-grade securities and by limiting exposure to any one entity or group of related entities.

As at August 31, 2020, no single issuer represented more than 31 % of the total cash, cash equivalents and investments (February 29, 2020 - no single issuer represented more than 8 % of the total cash, cash equivalents and investments), representing cash balances at one of the Company’s banking counterparties.

As at November 30, 2020, no single issuer represented more than 17 % of the total cash, cash equivalents and investments (February 29, 2020 - no single issuer represented more than 8 % of the total cash, cash equivalents and investments), representing cash balances at one of the Company’s banking counterparties.

The Company maintains Credit Support Annexes (“CSAs”) with several of its counterparties.

These CSAs require the outstanding net position of all contracts be made whole by the paying or receiving of collateral to or from the counterparties on a daily basis, subject to exposure and transfer thresholds.

As at August 31, 2020, the Company had no collateral held or posted with counterparties (February 29, 2020 - $ 1 million in collateral posted).

As at November 30, 2020, the Company had no collateral held or posted with counterparties (February 29, 2020 - $ 1 million in collateral posted).

Liquidity risk

Cash, cash equivalents, and investments were approximately $ 977 million as at August 31, 2020.

Cash, cash equivalents, and investments were approximately $ 757 million as at November 30, 2020.

The Company’s management remains focused on efficiently managing working capital balances and managing the liquidity needs of the business.

Based on its current financial projections, the Company believes its financial resources, together with expected future operating cash generating and operating expense reduction activities and access to other potential financing arrangements, should be sufficient to meet funding requirements for current financial commitments and future operating expenditures not yet committed, and should provide the necessary financial capacity for the foreseeable future.

Based on its current financial projections, the Company believes its financial resources, together with expected

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated (unaudited)

On July 22, 2020, the Company announced that, with the required approval of the holders of the 3.75% Debentures, it would redeem the 3.75% Debentures for a redemption amount of approximately $ 615 million, which would settle all outstanding obligations of the Company in respect of the 3.75% Debentures.

The redemption was completed on September 1, 2020 , after the end of the second quarter of fiscal 2021.

Also on July 22, 2020, as subsequently updated on August 28, 2020, the Company announced that it had entered into an agreement with Fairfax and another institutional investor for the issuance of an aggregate of $ 365 million principal amount of the 1.75% Debentures maturing on November 13, 2023 .

These were issued on September 1, 2020 , after the end of the second quarter of fiscal 2021.

future operating cash generating and operating expense reduction activities and access to other potential financing arrangements, should be sufficient to meet funding requirements for current financial commitments and future operating expenditures not yet committed, and should provide the necessary financial capacity for the foreseeable future.

Government subsidies

During the first quarter of fiscal 2021, the Government of Canada announced the Canada Emergency Wage Subsidy (“CEWS”) for Canadian employers whose businesses were affected by the COVID-19 pandemic.

The CEWS provides a subsidy of up to 75% of eligible employees’ employment insurable remuneration, subject to certain criteria.

Accordingly, the Company applied for the CEWS to the extent it met the requirements to receive the subsidy and during the three and six months ended August 31, 2020, recorded $ 18 million and $ 27 million, respectively, in government subsidies as a reduction to operating expenses in the consolidated statement of operations.

The program was subsequently extended to December 2020 and the Government of Canada has announced plans for an additional extension to June 2021.

The CEWS originally provided a subsidy of up to 75 % of eligible employees’ employment insurable remuneration, subject to certain criteria, which subsequently declined to up to 65 %.

Accordingly, the Company applied for the CEWS to the extent it met the requirements to receive the subsidy and during the three and nine months ended November 30, 2020, recorded $ 10 million and $ 37 million, respectively, in government subsidies as a reduction to operating expenses in the consolidated statement of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements