Blackberry 2007 Annual Report Download - page 19

17
Fiscal Year
(US dollars in millions) Expense/(recovery) Total 2006 2005 2004 2003 2002 2001 2000
Cumulative
to fiscal
1999 (1)
Variable accounting relating to “net
settlement” feature $ 223.3 $ 0.5 $ 1.1 $ 3.6 $ 11.3 $ (46.5) $ (317.1) $ 551.2 $ 19.2
Share-based awards granted prior to the
Stock Option Plan 9.2 - - - - - 0.2 0.5 8.5
Intrinsic value related to options issued
subsequent to February 27, 2002 5.0 1.9 1.8 1.1 0.2 - - - -
Payroll taxes 5.0 2.1 2.1 0.8 - - - - -
Pre-tax amount 242.5 4.5 5.0 5.5 11.5 (46.5) (316.9) 551.7 27.7
Tax impact of restatement 5.7 2.9 2.8 - - - - - -
After-tax impact on net income (2) $ 248.2 $ 7.4 $ 7.8 $ 5.5 $ 11.5 $ (46.5) $ (316.9) $ 551.7 $ 27.7
Cumulative impact on retained
earnings (deficit) $ 248.2 $248.2 $240.8 $233.0 $ 227.5 $ 216.0 $ 262.5 $ 579.4 $ 27.7
Selected share price data (see discussion on variable accounting below (3))
Average share price in fiscal year
TSX $ 19.18 $ 53.85 $ 26.01
NASDAQ $ 12.37 $ 36.30 $ 17.35
Closing share price (4)
TSX $ 18.81 $ 29.50 $ 101.00
NASDAQ $ 11.94 $ 19.34 $ 67.62
Note 1: The annual charge to Net Income is as follows: $0.7 million in Fiscal 1997, $9.7 million in Fiscal 1998 and $17.3 million in Fiscal 1999.
Note 2: Additionally, the Company has restated the pro forma expense under SFAS 123 in Note 12(b) to the Consolidated Financial
Statements.
Note 3: The application of variable plan accounting causes significant fluctuations in the accounting expense/recovery when the Company’s
share price is experiencing periods of high volatility. The variable plan accounting non-cash expense for options issued during the period
of the “net settlement” feature includes (1) all realized gains on exercise of stock options prior to February 27, 2002, and (2) an allocation
of all unrealized gains for unexercised stock options based on the stock’s trading price at each reporting period. On February 27, 2002,
the unexercised awards became fixed awards and the remaining unamortized compensation cost became fixed and is expensed over the
remaining vesting period of the related options. All share data has been adjusted to reflect the 2-for-1 stock split on May 27, 2004.
Note 4: The closing share price noted for Fiscal 2002 reflects the February 27, 2002 closing share price, being the day that the variable awards
became fixed awards for accounting purposes.
(1) Variable Accounting for the “Net Settlement” Feature
Under a “net settlement” feature that existed in the Stock
Option Plan prior to February 27, 2002, instead of paying
the total consideration of the options exercised in cash, an
employee could forgo the receipt of a number of Company
shares equal in value to the total exercise consideration
otherwise payable upon exercise of the options. Prior to
2004, there were no accounting implications relating to this
feature under Canadian GAAP, which the Company used as
its primary GAAP at that time. However, under U.S. GAAP,
the Company is required to apply variable plan accounting for
all stock options granted prior to February 27, 2002 because
the total number of shares an individual employee was
entitled to receive under the “net settlement” feature was not
fixed. Variable plan accounting for these options ceased on
February 27, 2002 with the elimination of the “net settlement”
feature from the Stock Option Plan. On that date, all
unexercised awards became fixed awards and the remaining
unamortized compensation cost became fixed and is
required to be expensed over the remaining vesting period of
the related options. The variable plan accounting non-cash
compensation expense for options issued during the period
of the “net settlement” feature includes (1) all realized gains
on exercise of stock options prior to February 27, 2002, and