Blackberry 2009 Annual Report Download - page 59

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(s) Earnings per share
Earnings per share is calculated based on the weighted-
average number of shares outstanding during the year.
The treasury stock method is used for the calculation of the
dilutive effect of stock options.
(t) Stock-based compensation plans
The Company has stock-based compensation plans, which
are described in note 11(b).
The Company records stock-based compensation expense in
accordance with SFAS 123(R) Share-Based Payment. 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 and expected option life. In addition, judgment is also
applied in estimating the amount of share-based awards that are
expected to be forfeited, and if actual results differ significantly
from these estimates, stock-based compensation expense and
our results of operations would be impacted.
The BSM option-pricing model used in SFAS 123(R) is
consistent with that used in pro forma disclosures under SFAS
123 Accounting for Stock-Based Compensation, however,
SFAS 123(R) requires the Company to factor in an expected
forfeiture rate in establishing the expense while under SFAS
123 the Company accounted for forfeitures as they occurred.
In fiscal 2007, the Company used the modified prospective
transition (“MPT”) method as permitted by SFAS 123(R) to
record stock-based compensation expense. Stock-based
compensation expense calculated using the MPT approach is
recognized on a prospective basis in the financial statements
for all new and unvested stock options that are ultimately
expected to vest as the requisite service is rendered
beginning in the Company’s fiscal 2007 year. Stock-based
compensation expense for awards granted prior to fiscal 2007
is based on the grant-date fair value as determined under the
pro forma provisions of SFAS 123.
Under SFAS 123(R), any consideration paid by employees
on exercise of stock options plus any recorded stock-based
compensation within additional paid-in capital related to that
stock option is credited to capital stock.
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. 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
Multiple-element arrangements
The Company enters into transactions that represent
multiple-element arrangements which may include any
combination of hardware, service and software. These
multiple-element arrangements are assessed to determine
whether they can be separated into more than one unit
of accounting or element for the purpose of revenue
recognition. When the appropriate criteria for separating
revenue into more than one unit of accounting is met and
there is vendor specific objective evidence of fair value for
all units of accounting or elements in an arrangement, the
arrangement consideration is allocated to the separate units
of accounting or elements based on each unit’s relative fair
value. This vendor specific objective evidence of fair value is
established through prices charged for each revenue element
when that element is sold separately. The revenue recognition
policies described above are then applied to each unit of
accounting.
(q) Research and development
Research costs are expensed as incurred. Development costs
for BlackBerry devices and licensed software to be sold,
leased or otherwise marketed are subject to capitalization
beginning when a product’s technological feasibility has
been established and ending when a product is available
for general release to customers pursuant to SFAS 86
Accounting for the Costs of Computer Software to be Sold,
Leased, of Otherwise Marketed. The Company’s products
are generally released soon after technological feasibility has
been established and therefore cost incurred subsequent to
achievement of technological feasibility are not significant
and have been expensed as incurred.
(r) Comprehensive income (loss)
SFAS 130 Reporting Comprehensive Income establishes
standards for the reporting and display of comprehensive
income and its components in general-purpose financial
statements. Comprehensive income is defined as the change
in net assets of a business enterprise during a period from
transactions and other events and circumstances from
non-owner sources and includes all changes in equity
during a period except those resulting from investments by
owners and distributions to owners. The reportable items of
comprehensive income are cash flow hedges as described in
note 17 and changes in the fair value of investments available
for sale as described in note 4. Realized gains or losses on
available-for-sale investments are reclassified into earnings
using the specific identification basis.