Blackberry 2008 Annual Report Download - page 26

RESEARCH IN MOTION LIMITED
management’s discussion and analysis of financial
condition and results of operations continued
FOR THE THREE MONTHS AND FISCAL YEAR ENDED MARCH 1, 2008
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In connection with the Review and the Restatement, the
Company has applied judgment in choosing whether to
revise measurement dates for prior option grants. Information
regarding the Review and the Restatement is set forth
below under “Restatement of Previously Issued Financial
Statements”.
The Company has a Restricted Share Unit Plan (the “RSU
Plan”) under which eligible participants include any officer or
employee of the Company or its subsidiaries. The RSU Plan
was approved at the Company’s Annual General Meeting
on July 18, 2005 and received regulatory approval in
August 2005. Restricted Share Units (“RSUs”) are redeemed
for either common shares issued by the Company, common
shares purchased on the open market or the cash equivalent
on the vesting dates established by the Company. The
compensation expense is calculated based on the fair value
of the award as defined in SFAS 123(R) and the amount is
recognized over the vesting period of the RSU.
On December 20, 2007, the Board of Directors adopted a
Deferred Share Unit Plan (the “DSU Plan”) under which each
independent director will be credited with Deferred Share
Units (“DSUs”) in satisfaction of all or a portion of the cash
fees otherwise payable to them for serving as a director of
the Company. Grants under the DSU plan replace the stock
option awards that were historically granted to independent
members of the Board of Directors. After such a director
ceases to be a director, DSUs will be redeemed for cash
with the redemption value of each DSU or, at the Company’s
option and subject to receipt of shareholder approval, by
way of shares purchased on the open market or issued by
the Company. DSUs are accounted for as liability-classified
awards under the provisions of SFAS 123(R).
For further details on the Company’s stock-based
compensation, refer to Note 11 of the Consolidated Financial
Statements.
Restatement of Previously Issued Financial Statements
Overview
As discussed in greater detail under “Explanatory Note
Regarding the Restatement of Previously Issued Financial
Statements” in the MD&A for the fiscal year ended
March 3, 2007 and Note 4 to the audited consolidated
earned in Canada versus other operating jurisdictions and
the rate of taxes payable in respect of those other operating
jurisdictions. The Company enters into transactions and
arrangements in the ordinary course of business in which
the tax treatment is not entirely certain. In particular,
certain countries in which it operates could seek to tax a
greater share of income than has been provided. The final
outcome of any audits by taxation authorities may differ
from estimates and assumptions used in determining the
Company’s consolidated tax provision and accruals, which
could result in a material effect on the consolidated income
tax provision and the net income for the period in which such
determinations are made.
Stock-Based Compensation
The Company has an incentive stock option plan for directors,
officers and employees of the Company or its subsidiaries.
No stock options were granted to independent directors in
fiscal 2008.
Effective March 5, 2006, the Company adopted the
provisions of SFAS 123(R), Share-Based Payment (“SFAS
123(R)”). Under the provisions of SFAS 123(R), stock-based
compensation expense is estimated at the grant date based
on the award’s fair value as calculated by the Black-Scholes-
Merton (“BSM”) option-pricing model and is recognized
rateably over the vesting period. The BSM model requires
various judgmental assumptions including volatility, forfeiture
rates and expected option life. If any of the assumptions
used in the BSM model change significantly, stock-based
compensation expense may differ materially in the future
from that recorded in the current period.
Prior to fiscal 2007, the Company accounted for stock-
based compensation using Accounting Principles Board
No. 25 Accounting for Stock Issued to Employees (“APB 25”)
and related interpretations. Under APB 25, compensation
expense is measured as of the date on which the number
of shares subject to the option and exercise price becomes
fixed. Generally, this occurs on the grant date and the award
is accounted for as a fixed award. If the number of shares
subject to the option and grant price are not fixed as of the
grant date, the stock option is accounted for as a variable
award until such time as the number of shares subject to the
option and/or exercise prices becomes fixed, or the stock
option is exercised, is cancelled, or expires.