BlackBerry Reports Fiscal Fourth Quarter Adjusted Loss Per Share of $0.08 vs. $0.67 in Previous Quarter

 

Waterloo, ON  – BlackBerry Limited (NASDAQ: BBRY; TSX: BB), a global leader in mobile communications, today reported financial results for the three months and fiscal year ended March 1, 2014 (all figures in U.S. dollars and U.S. GAAP, except where otherwise indicated).

 

Q4 Highlights:

•                      Cash and investments balance of $2.7B at the end of the fiscal fourth quarter

•                      Adjusted Q4 gross margin of 43%, up from 34% in the prior quarter

•                      Channel inventory down 30% from the prior quarter

•                      Reduced adjusted operating expenses by approximately 51% from Q1FY14

•                      Revenue for the fourth quarter of approximately $976 million

 

Q4 Results

 

Revenue for the fourth quarter of fiscal 2014 was approximately $976 million, down $217 million or 18% from approximately $1.2 billion in the previous quarter and down 64% from $2.7 billion in the same quarter of fiscal 2013.  The revenue breakdown for the quarter was approximately 37% for hardware, 56% for services and 7% for software and other revenue.  During the fourth quarter, the Company recognized hardware revenue on approximately 1.3 million BlackBerry smartphones compared to approximately 1.9 million BlackBerry smartphones in the previous quarter. During the fourth quarter, approximately 3.4 million BlackBerry smartphones were sold through to end customers, which included shipments made and recognized prior to the fourth quarter and which reduced the Company’s inventory in channel.  Of the BlackBerry smartphones sold through to end customers in the fourth quarter, approximately 2.3 million were BlackBerry 7 devices.

 

GAAP loss from continuing operations for the fourth quarter was $423 million, or $0.80 per share diluted. The loss includes a non-cash charge associated with the change in the fair value of the Debentures of approximately $382 million (the „Q4 Fiscal 2014 Debentures Fair Value Adjustment“), a pre-tax recovery of previously recorded inventory charges of approximately $149 million (the „Q4 Fiscal 2014 Inventory Recovery“) and pre-tax restructuring charges of approximately $148 million related to the Cost Optimization and Resource Efficiency (“CORE”) program. This compares with a GAAP loss from continuing operations of $4.4 billion, or $8.37 per share diluted in the prior quarter, and GAAP income from continuing operations of $94 million, or $0.18 per share diluted, in the same quarter last year.

 

Adjusted loss from continuing operations for the fourth quarter was $42 million, or $0.08 per share diluted. Adjusted loss from continuing operations and adjusted diluted loss per share exclude the impact of the non-cash Q4 Fiscal 2014 Debentures Fair Value Adjustment of approximately $382 million ($382 million after tax), the Q4 Fiscal 2014 Inventory Recovery of approximately $149 million ($106 million after tax), and pre-tax restructuring  charges of approximately $148 million ($105 million after tax) related to the CORE program incurred in the fourth quarter of fiscal 2014. These impacts on GAAP loss from continuing operations and diluted loss per share from continuing operations are summarized in the table below.

 

The total of cash, cash equivalents, short-term and long-term investments was approximately $2.7 billion as of March 1, 2014, compared to $3.2 billion at the end of the previous quarter. Cash flow used in operations in the fourth quarter was approximately $553 million. Cash flows provided by financing activities in the fourth quarter were approximately $251 million, which includes the additional issuance of $250 million of convertible debentures.  Cash flows used in investing activities included intangible asset additions of approximately $243 million. Purchase obligations and other commitments amounted to approximately $1.9 billion as at March 1, 2014, with purchase orders with contract manufacturers representing approximately $586 million of the total.

 

„I am very pleased with our progress and execution in fiscal Q4 against the strategy we laid out three months ago.  We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule,“ said John Chen, Executive Chairman and Chief Executive Officer of BlackBerry. „BlackBerry is on sounder financial footing today with a path to returning to growth and profitability.“

 

 

Outlook

 

The Company anticipates maintaining its strong cash position and continuing to look for opportunities to streamline operations. The Company is targeting break even cash flow results by the end of fiscal 2015.

 

Reconciliation of GAAP gross margin, gross margin percentage, loss from continuing operations before income taxes, loss from continuing operations and diluted loss per share from continuing operations to adjusted gross margin, adjusted gross margin percentage, adjusted loss from continuing operations before income taxes, adjusted loss from continuing operations and adjusted diluted loss per share from continuing operations:

(United States dollars, in millions except per share data)

 

 

		Gross Margin(1) (before taxes)				Gross Margin %(1) (before taxes)			Loss from continuing operations before income taxes				Loss from Continuing Operations				Diluted loss per share from continuing operations
As reported		$	553			57	%		$	(557	)		$	(423	)		$	(0.80	)
Adjustments:
CORE charges (2)		17				2	%		148				105				0.20
Q4 Fiscal 2014 Debenture Fair Value Adjustment (3)									382				382				0.73
Q4 Fiscal 2014 Inventory Recovery (4)		(149		)		(15	)%		(149		)		(106		)		(0.20		)
Adjusted		$	421			43	%		$	(176	)		$	(42	)		$	(0.08	)

 

Note: Adjusted gross margin, adjusted gross margin percentage, adjusted loss from continuing operations before tax, adjusted loss from continuing operations and adjusted diluted loss per share from continuing operations do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of these non-GAAP measures enables the Company and its shareholders to better assess the Company’s operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of the Company’s GAAP results.

 

(1)   During the fourth quarter of fiscal 2014, the Company reported GAAP gross margin of $553 million or 57% of revenue.  Excluding the impact of the CORE charges included in cost of sales and the Q4 Fiscal 2014 Inventory Recovery, the adjusted gross margin was $421 million, or 43%.

(2)   As part of the Company’s ongoing effort to streamline its operations and increase efficiency, the Company commenced the CORE program in March 2012. During the fourth quarter of fiscal 2014, the Company incurred charges related to the CORE program of approximately $148 million pre-tax, or $105 million after tax. Substantially all of the pre-tax charges are related to one-time employee termination benefits, facilities and manufacturing costs. During the fourth quarter of fiscal 2014, charges of approximately $17 million were included in cost of sales, charges of approximately $21 million were included in research and development and charges of approximately $110 million were included in selling, marketing, and administration expenses.

(3)   During the fourth quarter of fiscal 2014, the Company recorded a non-cash charge associated with the change in the fair value of the Debentures of approximately $382 million. This adjustment was presented on a separate line in the Statements of Operations.

(4)   During the fourth quarter of fiscal 2014, the Company recorded a recovery of previous charges against inventory and supply commitments of approximately $149 million, or $106 million after tax, to reflect increased sell through rates, relative to the estimates and assumptions previously considered, resulting from discounted pricing and revised orders on hand for devices and components of BlackBerry 10 products.

 

 

Fiscal 2014 Results

 

Revenue from continuing operations for the fiscal year ended March 1, 2014 was $6.8 billion, down 38% from $11.1 billion in fiscal 2013. The Company’s GAAP net loss from continuing operations for fiscal 2014 was $5.9 billion, or $11.18 per share diluted, compared with GAAP net loss from continuing operations of $628 million, or $1.20 per share diluted in fiscal 2013. Adjusted net loss from continuing operations for fiscal 2014 was $711 million, or $1.35 per share diluted. Adjusted net loss from continuing operations and adjusted diluted loss per share for fiscal 2014 exclude the pre-tax impacts of an LLA impairment charge of $2.7 billion ($2.5 billion after tax), the Q4 Fiscal 2014 Inventory Recovery of $1.6 billion ($1.3 billion after tax), the Z10 inventory charge of $934 million ($666 million after tax), the Q4 Fiscal 2014 Debentures Fair Value Adjustment of $382 million ($382 million after tax), charges of $512 million ($398 million after tax) related to the Company’s CORE program and strategic review process and the Q4 Fiscal 2014 Inventory Recovery of $149 million ($106 million after tax). These charges and their related impacts on GAAP net loss from continuing operations and diluted loss per share from continuing operations are summarized in the table below.

 

Reconciliation of GAAP gross margin, gross margin percentage, loss from continuing operations before income taxes, loss from continuing operations and diluted loss per share from continuing operations to adjusted gross margin, adjusted gross margin percentage, adjusted loss from continuing operations before income taxes, adjusted loss from continuing operations and adjusted diluted loss per share from continuing operations:

(United States dollars, in millions except per share data)

 

 

		For the fiscal year ended March 1, 2014
		Gross Margin(1) (before taxes)				Gross Margin %(1) (before taxes)			Loss from continuing operations before income taxes				Loss from Continuing Operations				Diluted loss per share from continuing operations
As reported		$	(43	)		(1	)%		$	(7,184	)		$	(5,873	)		$	(11.18	)
Adjustments:
CORE charges (1)		103				2	%		512				398				0.76
Q4 Fiscal 2014 Debenture Fair Value Adjustment (2)									382				382				0.73
Q4 Fiscal 2014 Inventory Recovery (3)		(149		)		(2	)%		(149		)		(106		)		(0.20		)
LLA Impairment Charge (4)									2,748				2,475				4.71
Q3 Fiscal 2014 Inventory Charge (5)		1,592				23	%		1,592				1,347				2.56
Z10 Inventory Charge (6)		934				14	%		934				666				1.27
Adjusted		$	2,437			36	%		$	(1,165	)		$	(711	)		$	(1.35	)

 

Note: Adjusted gross margin, adjusted gross margin percentage, adjusted loss from continuing operations before tax, adjusted loss from continuing operations and adjusted diluted loss per share from continuing operations do not have a standardized meaning prescribed by GAAP and thus are not comparable to similarly titled measures presented by other issuers. The Company believes that the presentation of these non-GAAP measures enables the Company and its shareholders to better assess the Company’s operating results relative to its operating results in prior periods and improves the comparability of the information presented. Investors should consider these non-GAAP measures in the context of the Company’s GAAP results.

 

(1)     As part of the Company’s ongoing effort to streamline its operations and increase efficiency, the Company commenced the CORE program in March 2012. Further, the Company announced the formation of a special committee to conduct an organizational strategic review on August 12, 2013. During fiscal 2014, the Company incurred approximately $512 million in total pre-tax charges related to the CORE program and strategic review process. Substantially all of the pre-tax charges are related to one-time employee termination benefits, facilities and manufacturing costs related to the CORE program and legal and financial advisory costs related to the strategic review process. During fiscal 2014, pre-tax charges of approximately $103 million were included in cost of sales, charges of approximately $76 million were included in research and development and charges of approximately $333 million were included in selling, marketing, and administration expenses.

(2)     During the fourth quarter of fiscal 2014, the Company recorded a non-cash charge associated with the change in the fair value of the Debentures of approximately $382 million. This adjustment was presented on a separate line in the Statements of Operations.

(3)     During the fourth quarter of fiscal 2014, the Company recorded a recovery of previous charges against inventory and supply commitments of approximately $149 million, or $106 million after tax, to reflect increased sell through rates, relative to the estimates and assumptions previously considered, resulting from discounted pricing and revised orders on hand for devices and components of BlackBerry 10 products.

(4)     During the third quarter of fiscal 2014 the Company performed a long-lived asset impairment test and based  on the results of that test, the Company  recorded  a non-cash  LLA  Impairment  Charge of approximately $2.7 billion pre-tax, or $2.5 billion after tax.

(5)     During the third quarter of fiscal 2014, the Company recorded a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $1.6 billion, or $1.3 billion after tax, which was primarily attributable to BlackBerry 10 devices.

(6)     During the second quarter of fiscal 2014, the Company recorded a primarily non-cash, pre-tax charge against inventory and supply commitments of approximately $934 million, or $666 million after tax, which was primarily attributable to BlackBerry Z10 devices.

 

 

Supplementary Geographic Revenue Breakdown

 

 

BlackBerry Limited

(United States dollars, in millions)

Revenue by Region

 

 

		For the quarter ended
		March 1, 2014							November 30, 2013							August 31, 2013							June 1, 2013							March 2, 2013
North America		$	297			30.4	%		$	340			28.5	%		$	414			26.3	%		$	761			24.8	%		$	587			21.9	%
Europe, Middle East and Africa		412				42.2	%		549				46.0	%		686				43.6	%		1,343				43.7	%		1,227				45.8	%
Latin America		127				13.0	%		135				11.3	%		196				12.5	%		449				14.6	%		479				17.9	%
Asia Pacific		140				14.4	%		169				14.2	%		277				17.6	%		518				16.9	%		385				14.4	%
Total		$	976			100.0	%		$	1,193			100.0	%		$	1,573			100.0	%		$	3,071			100.0	%		$	2,678			100.0	%

 

 

BlackBerry ernennt Stefan Mennecke zum Managing Director Deutschland

Düsseldorf, 10. März 2014 – BlackBerry hat heute die Ernennung von Stefan Mennecke zum Managing Director (MD) Deutschland bekannt gegeben. Stefan Mennecke verantwortet somit die Weiterentwicklung der gesamten Geschäftsstrategie und das Wachstum von BlackBerry in Deutschland. Mennecke leitete bisher das Deutschland-Geschäft mit Unternehmens-, Regierungs- und Behördenkunden sowie den Systemhäusern. Stefan Mennecke folgt auf Markus C. Müller, der kürzlich zum Regional Managing Director Europe bei BlackBerry ernannt wurde.

Markus C. Müller zur Ernennung des neuen deutschen MD: „Deutschland ist für BlackBerry einer der Kernmärkte. Wir freuen uns, dass Stefan Mennecke als Markt- und Enterprise-Experte die Verantwortung des Deutschland MD übernimmt und damit weiterhin das Wachstum der BlackBerry 10 Plattform und die Verbreitung des BlackBerry Enterprise Service 10 unter den Unternehmenskunden in Deutschland vorantreibt.“

Vor seinem Wechsel zu BlackBerry im Jahr 2011 nach der Übernahme von ubitexx, wo Stefan Mennecke als Vice President Sales tätig war, hatte er verschiedene leitende Positionen in der Mobilfunk- und IT-Branche inne, darunter bei Swisscom Eurospot und Telefonica. Stefan Mennecke hat einen Abschluss in Marketing und Kommunikation.

Companies Strike Joint Development and Manufacturing Agreement

Indonesia Targeted for First Joint Product in Early 2014

Waterloo, ON – BlackBerry Limited (NASDAQ:BBRY; TSX:BB), a global leader in wireless innovation, announced today that it has entered into a five-year strategic partnership with Foxconn, the world’s largest manufacturer of electronic products and components. The initial focus of the partnership will be a smartphone for Indonesia and other fast-growing markets targeting early 2014.

“This partnership demonstrates BlackBerry’s commitment to the device market for the long-term and our determination to remain the innovation leader in secure end-to-end mobile solutions,” said John Chen, Executive Chair and CEO of BlackBerry. “Partnering with Foxconn allows BlackBerry to focus on what we do best – iconic design, world-class security, software development and enterprise mobility management – while simultaneously addressing fast-growing markets leveraging Foxconn’s scale and efficiency that will allow us to compete more effectively.”

Under the partnership, Foxconn will manufacture products for BlackBerry at facilities in Indonesia and Mexico. BlackBerry will own all of its intellectual property and perform product assurance on devices through the Foxconn partnership, as it does currently with all third-party manufacturers.

“BlackBerry is an iconic brand with great technology and a loyal international fan base,” said Terry Gou, Founder and Chairman, Foxconn. “We are pleased to be working with BlackBerry as it positions itself for future growth and we look forward to a successful strategic partnership in which Foxconn will jointly develop and manufacture new BlackBerry devices in both Indonesia and Mexico for new and existing markets.”

BlackBerry will focus heavily, via internal development, on market segments where its continuous innovations in secure hardware, software and services remain critical and integral to enterprise and government customers. BlackBerry will also drive adoption of its multi-platform BBM (BlackBerry Messenger), deliver real-time, reliable and secure messaging through its Network Operations Center (NOC), and grow its enterprise mobility and mobile device management business through on-premise and cloud-based solutions for cross-platform devices as well as its own.

Waterloo, ON, and Toronto, ON – (November 4, 2013) – BlackBerry (Nasdaq: BBRY; TSX: BB), a world leader in the mobile communications market, today announced that it has entered into an agreement pursuant to which Fairfax Financial Holdings Limited (“Fairfax”) and other institutional investors (collectively, the “Purchasers”) will invest in BlackBerry through a U.S. $1 billion private placement of convertible debentures.  Fairfax has agreed to acquire U.S.$250 million principal amount of the Debentures.  The transaction is expected to be completed within the next two weeks.

Under the terms of the transaction, the Purchasers will subscribe for U.S. $1 billion aggregate principal amount of 6% unsecured subordinated convertible debentures (the “Debentures”) convertible into common shares of BlackBerry at a price of U.S. $10.00 per common share (the “Transaction”), a 28.7% premium to the closing price of BlackBerry common shares on November 1, 2013.  The Debentures have a term of seven years.  Based on the number of common shares currently outstanding, if all of the U.S. $1 billion of Debentures were converted, the common shares issued upon conversion would represent approximately 16% of the common shares outstanding after giving effect to the conversion.

Upon the closing of the transaction, John S. Chen will be appointed Executive Chair of BlackBerry’s Board of Directors and, in that role, will be responsible for the strategic direction, strategic relationships and organizational goals of BlackBerry.  Prem Watsa, Chairman and CEO of Fairfax, will be appointed Lead Director and Chair of the Compensation, Nomination and Governance Committee and Thorsten Heins and David Kerr intend to resign from the Board at closing.

In addition, Mr. Heins will step down as Chief Executive Officer at closing and Mr. Chen will serve as Interim Chief Executive Officer pending completion of a search for a new Chief Executive Officer.

Today’s announcement marks the conclusion of the review of strategic alternatives previously announced on August 12, 2013.

“Today’s announcement represents a significant vote of confidence in BlackBerry and its future by this group of preeminent, long-term investors,” said Barbara Stymiest, Chair of BlackBerry’s Board.  “The BlackBerry Board conducted a thorough review of strategic alternatives and pursued the course of action that it concluded is in the best interests of BlackBerry and its constituents, including its shareholders.  This financing provides an immediate cash injection on terms favorable to BlackBerry, enhancing our substantial cash position.   Some of the most important customers in the world rely on BlackBerry and we are implementing the changes necessary to strengthen the company and ensure we remain a strong and innovative partner for their needs.”

Ms. Stymiest added, “I am also pleased that John Chen, a distinguished and proven leader in the technology industry, has agreed to serve as BlackBerry’s Executive Chairman.  I look forward to continuing to serve BlackBerry as a member of its Board of Directors and chair of the Board’s Audit and Risk Management Committee.  On behalf of the Board, I would also like to thank Thorsten for his service to BlackBerry over the past six years.  Under his leadership, BlackBerry established a more efficient cost structure, developed new products, saw the adoption of BES 10 and delivered the BlackBerry 10 platform. These are all significant accomplishments. We are grateful for his contributions and wish him well in his future endeavors.”

“Fairfax is a long-time supporter, investor and partner to BlackBerry and, with this investment, reinforces its deep commitment to the future success of this company,” said Prem Watsa, Chairman and CEO of Fairfax.  “I look forward to rejoining the BlackBerry Board and to working with the other directors and management team, under John Chen’s leadership, to shape the next stage of BlackBerry’s strategy and growth.”

“I am pleased to join a company with as much potential as BlackBerry,” said Mr. Chen. “BlackBerry is an iconic brand with enormous potential – but it’s going to take time, discipline and tough decisions to reclaim our success.  I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees.”

The closing of the transaction is subject to customary conditions, including approval from the Toronto Stock Exchange.

Pursuant to the Transaction agreement, the investors have an option to purchase up to an additional U.S. $250 million principal amount of Debentures within 30 days following closing.  If an additional U.S. $250 million of Debentures is issued and all U.S. $1.25 billion of Debentures were converted, the common shares issued upon conversion would represent approximately 19.2% of the common shares after giving effect to the conversion, based on the number of common shares currently outstanding.

 

About John Chen

John Chen previously served as the chairman and CEO of Sybase Inc., beginning in 1998. Under Mr. Chen’s leadership, Sybase was transformed from a mature technology company into a high-growth enterprise data management, data warehousing, mobility management and analytics innovator that was acquired by SAP AG in 2010.  At Sybase, Mr. Chen introduced the concept of the “Unwired Enterprise”, extending enterprise applications to mobile users.  Prior to Sybase, Mr. Chen held a series of executive positions at Siemens AG, Pyramid Technology Corp., and Burroughs Corp.  He started his career as a design engineer with Unisys Corp.  Mr. Chen is currently a director of Wells Fargo & Company and The Walt Disney Company.

 

About Prem Watsa

Prem Watsa is the Chairman of the Board of Directors and the Chief Executive Officer of Fairfax Financial Holdings Limited, a financial services holding company whose corporate objective is to achieve a high rate of return on invested capital and build long-term shareholder value, since 1985.  He is also Vice President of Hamblin Watsa Investment Counsel Ltd. since 1985.

J.P. Morgan Securities LLC, Perella Weinberg Partners and RBC Capital Markets are serving as financial advisors to BlackBerry and Skadden, Arps, Slate, Meagher & Flom LLP, Torys LLP and Blake, Cassels & Graydon LLP are serving as legal advisors.  BDT & Company, LLC, BofA Merrill Lynch and BMO Capital Markets are acting as financial advisors to Fairfax, and Shearman & Sterling LLP and McCarthy Tétrault LLP are acting as legal advisors.  BMO Capital Markets is also acting as the sole bookrunner for the private placement.

About BlackBerry
A global leader in wireless innovation, BlackBerry® revolutionized the mobile industry when it was introduced in 1999. Today, BlackBerry aims to inspire the success of our millions of customers around the world by continuously pushing the boundaries of mobile experiences. Founded in 1984 and based in Waterloo, Ontario, BlackBerry operates offices in North America, Europe, Asia Pacific and Latin America. BlackBerry is listed on the NASDAQ Stock Market (NASDAQ: BBRY) and the Toronto Stock Exchange (TSX: BB). For more information, visit www.blackberry.com.

Contacts:

BlackBerry

Media Contact:

BlackBerry Media Relations

519-888-7465 x77273
mediarelations@blackberry.com

Investor Contact:

BlackBerry Investor Relations

(519) 888-7465

investor_relations@blackberry.com

 

Fairfax

Fairfax Financial Holdings Limited

John Varnell

Vice President, Corporate Development

(416) 367-4941

(416) 367-4946 (FAX)

WATERLOO, ONTARIO – BlackBerry Limited (NASDAQ:BBRY) (TSX:BB), a world leader in the mobile communications market, today announced that the Company’s Board of Directors has formed a Special Committee to explore strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment.  These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions.

The Special Committee of the Board is comprised of Barbara Stymiest, Thorsten Heins, Richard Lynch and Bert Nordberg, and will be chaired by Timothy Dattels.

With the announcement of the Special Committee, Prem Watsa, Chairman and CEO of Fairfax Financial informed the Company that he felt it was appropriate to resign due to potential conflicts that may arise during the process.  Fairfax Financial is the largest BlackBerry shareholder. Mr. Watsa said, „I continue to be a strong supporter of the Company, the Board and Management as they move forward during this process, and Fairfax Financial has no current intention of selling its shares.“

“During the past year, management and the Board have been focused on launching the BlackBerry 10 platform and BES 10, establishing a strong financial position, and evaluating the best approach to delivering long-term value for customers and shareholders,” said Timothy Dattels, Chairman of BlackBerry’s Special Committee of the Board.  “Given the importance and strength of our technology, and the evolving industry and competitive landscape, we believe that now is the right time to explore strategic alternatives.”

Thorsten Heins, President and Chief Executive Officer of BlackBerry, added, “We continue to see compelling long-term opportunities for BlackBerry 10, we have exceptional technology that customers are embracing, we have a strong balance sheet and we are pleased with the progress that has been made in our transition.  As the Special Committee focuses on exploring alternatives, we will be continuing with our strategy of reducing cost, driving efficiency and accelerating the deployment of BES 10, as well as driving adoption of BlackBerry 10 smartphones, launching the multi-platform BBM social messaging service, and pursuing mobile computing opportunities by leveraging the secure and reliable BlackBerry Global Data Network.”

JP Morgan Securities LLC is serving as financial advisor to BlackBerry and Skadden, Arps, Slate, Meagher & Flom LLP and Torys LLP are serving as legal advisors.

There can be no assurance that this exploration process will result in any transaction. The Company does not currently intend to disclose further developments with respect to this process, unless and until its Board of Directors approves a specific transaction or otherwise concludes the review of strategic alternatives.