Blackberry 2005 Annual Report Download - page 19

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17
Stock-Based Compensation
The Company has a stock-based compensation plan, which is described in note 11 (b) to the Consolidated
Financial Statements. Stock options are granted with an exercise price equal to the fair market value of the
shares on the day of grant of the options. Any consideration paid by employees on exercise of stock options
is credited to share capital. Compensation expense is recognized when stock options are issued with an
exercise price of the stock option that is less than the market price of the underlying stock on the date of
grant. The difference between the exercise price of the stock option and the market price of the underlying
stock on the date of grant is recorded as compensation expense (“intrinsic value method”). As the exercise
price of options granted by the Company is equal to the market value of the underlying stock at the date of
grant, no compensation expense has been recognized. This method is consistent with U.S. GAAP, APB Opinion
25, Accounting for Stock Issued to Employees.
On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued amended Statement of
Financial Accounting Standards 123 (“SFAS 123(R)”) Accounting for Share-Based Payment, which requires
all companies to use the fair-value based method of accounting for stock-based compensation, and is in effect
for all interim periods beginning after June 15, 2005. SFAS 123(R) requires that all companies adopt either
the modified prospective transition (“MPT”) or modified retrospective transition (“MRT”) approach. Stock
compensation expense calculated using the MPT approach would be recognized on a prospective basis in
the financial statements over the requisite service period, while the MRT method allows a restatement of prior
period for amounts previously recorded as proforma expense.
On April 14, 2005, the SEC announced that it would provide for a phased-in implementation process for SFAS
123(R). The Company will now be required to adopt a fair-value based method in the first quarter of fiscal 2007.
Stock Split
The Company declared an effective two-for-one stock split in the form of a one-for-one stock dividend
payable on June 4, 2004 to all shareholders of record on May 27, 2004. All earnings (loss) per share data
for prior periods have been adjusted to reflect this stock split. See “Results of Operations – Net Income”
and note 11 (a) to the Consolidated Financial Statements.
Common Shares Outstanding
On April 22, 2005, there were 190,069,614 common shares and 11,057,176 options to purchase common
shares outstanding.
For the years ended February 26, 2005, February 28, 2004 and March 1, 2003