Blackberry 2008 Annual Report Download - page 30

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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
28
been settled, additional lawsuits, including purported
class actions and additional derivative actions, may be
filed relating to the Company’s stock option granting
practices. The amount of time to resolve any such lawsuits
is unpredictable, and defending against such lawsuits
could require significant additional attention and resources
that could otherwise be devoted to the operation of the
Company’s business. In addition, an unfavorable outcome
in any such litigation could have a material adverse effect
on the Company’s business, financial condition and results
of operations.
• The Company could incur significant liabilities in
connection with any litigation relating to its stock option
granting practices, which liabilities may not be covered
by insurance. In addition, the Company has indemnity
obligations (including for legal expenses) for former and
current directors, officers and employees, which are
described in greater detail in the Management Information
Circular.
• As noted above, in connection with the Restatement, the
Company has applied judgment in choosing whether to
revise measurement dates for prior stock option grants.
While the Company believes it has made appropriate
judgments in determining the correct measurement
dates for its stock option grants in connection with the
Restatement, the issues surrounding past stock option
grants and financial statement restatements are complex
and guidance in these areas may continue to evolve. If new
guidance imposes additional or different requirements or
if the SEC or the OSC disagrees with the manner in which
the Company has accounted for and reported the financial
impact, there is a risk the Company may have to further
restate its prior financial statements, amend its filings with
the SEC or the OSC (including the Consolidated Financial
Statements and this MD&A), or take other actions not
currently contemplated. Additionally, if the SEC or the
OSC disagrees with the manner in which the Company has
accounted for and reported the financial impact of past
option grants, there could be delays in subsequent filings
with the SEC or the OSC.
• The Company may face challenges in hiring and retaining
qualified personnel due to the Restatement, the
investigations relating to the Company and any potential
tax consequences to employees who received grants of
stock options with incorrect accounting measurement
dates. In addition, restrictions on the Company’s ability
to grant stock options to new employees under its policy
on granting equity awards, which provides for quarterly
grants of stock options except in limited and exceptional
circumstances, may make it more difficult for the Company
to attract new employees. The loss of the services of any
of the Company’s key employees or challenges in hiring
new employees could have a material adverse effect
on its business and growth prospects. In addition, the
Company may receive claims by employees who may be
subject to adverse tax consequences as a result of errors in
connection with stock option grants.
Impact of Accounting Pronouncements Not Yet
Implemented
Fair Value Measurements
In September 2006, the FASB issued SFAS 157 Fair Value
Measurements. SFAS 157 clarifies the definition of fair value,
establishes a framework for measurement of fair value, and
expands disclosure about fair value measurements. SFAS 157
is effective for fiscal years beginning after November 15, 2008
except as amended by FSP SFAS 157-1 and FSP SFAS 157-2
and the Company will be required to adopt the standard
in the first quarter of fiscal 2010. The Company is currently
evaluating what impact, if any, SFAS 157 will have on its
consolidated financial statements.
The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of SFAS 115
In February 2007, the FASB issued SFAS 159 The Fair Value
Option for Financial Assets and Financial Liabilities - Including
an Amendment of SFAS 115. SFAS 159 permits entities to
measure many financial instruments and certain other items
at fair value that currently are not required to be measured