I would be seriously shocked if #1 was a valid reason. Products for which the source is completely lost after they are shipped? Can it happen before the release? Why there were no backups?
This has happened to a product I worked on. There were 2 companies working on it, and when we were done there were 2 backups that I made after we'd finished it.
Backup #1 (USB HD, kept by development company A) was lost in a flood. Of course, this sort of thing is why you have 2+ backups...
Backup #2 (USB HD, kept by development company B, the one I worked for) was lent to the client after they wanted to take a copy of it themselves. Then fast forward 6 months, and:
US: Please would you return our backup drive of product XYZ?
THEM: [paraphrased] Who are you?
This product was a one-off, and not key to company B, so nobody chased this up (not that they could do much anyway because the backup drive was presumed lost forever). We only found out about the loss of backup #1 when company A asked us for our backup, because they needed the code for a project they were thinking of doing...
Happens all the time dude. I worked for a financial institution a couple of years ago and was involved in a data center move. The IT guys took care of moving/replicating the servers and data, and it was my job to move the applications and services. You have no idea how many console apps and windows services I had to decompile in order to change the connection strings (they were hardcoded previously ... well before I started working there). Thankfully, they were written in .NET, so decompiling changing and recompiling was trivial ... But, this kind of thing is par for the course in some large and old organizations.
It doesn't have to be "completely" lost. If it doesn't build on the current version of the compiler, and the compiler that was originally used to build only runs on an OS version for which you can't buy the hardware any more, then it might as well be lost, even if you have it right there in front of you. I have stuff on my Mac right now (I keep migrating my home directory forwards from machine to machine) that I keep basically as a souvenir, I know perfectly well that while it built on a NeXT in 1998 it won't have a chance in hell of compiling now.
Let's say you find the backups. They're likely in some obsolete tape format, and you would have to reconstruct an ancient Novell/NT/Unix environment to recover them. That's assuming you even know the source code is on a tape labeled something like "Server03".
I worked for a company in the 90s where the source repository was wiped because the idiot admin tried to run a backup in the wrong place at the wrong time and nuked the repo. Or something like that -- I never really understood his excuse for what had happened.
We lost all the history, but (after they escorted the guy from the building) we were able to restart with source trees pulled off dev workstations.
No surprise that I got an email from one of the VPs of the nearly-defunct company a few years later asking if I might know the master password to the source control database. So yeah, they had a backup, but it was useless because of course it had been encrypted to prevent theft but nobody thought of recording the password somewhere secure.
