NOTE 6: Diavik Joint Venture The following represents Aber's 40%
proportionate interest in the Joint Venture as at October 31, 2006
and January 31, 2006. October 31, January 31, 2006 2006
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Current assets $ 76,495 $ 52,845 Long-term assets 457,629 408,967
Current liabilities 27,083 14,600 Long-term liabilities and
participant's account 507,041 447,212 Three months Three months
Nine months Nine months ended ended ended ended Oct. 31, 2006 Oct.
31, 2005 Oct. 31, 2006 Oct. 31, 2005 Net expense 46,209 33,778
127,127 97,874 Cash flows resulting from operating activities
(28,960) (16,679) (80,079) (66,778) Cash flows resulting from
financing activities 59,597 28,641 161,640 121,080 Cash flows
resulting from investing activities (35,354) (15,597) (74,076)
(51,478)
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The Company is contingently liable for the other participant's
portion of the liabilities of the Joint Venture and, to the extent
the Company's participating interest has increased because of the
failure of the other participant to make a cash contribution when
required, the Company would have access to an increased portion of
the assets of the Joint Venture to settle such liabilities. NOTE 7:
Share Capital (a) Authorized Unlimited common shares without par
value. (b) Issued Number of shares Amount
---------------------------------------------------------------------
Balance, January 31, 2006 58,133,780 $ 297,114 Shares issued for:
Cash on exercise of options 221,450 2,786
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Balance, October 31, 2006 58,355,230 $ 299,900
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(c) Restricted and Deferred Share Unit Plans ("RSU" and "DSU"
Plans) Number of units
---------------------------------------------------------------------
Balance, January 31, 2006 145,038 Awards during the period (net):
RSU 64,898 DSU 17,083
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Balance, October 31, 2006 227,019
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---------------------------------------------------------------------
Three months Three months Nine months Nine months Expenses ended
ended ended ended for the Oct. 31, Oct. 31, Oct. 31, Oct. 31,
period: 2006 2005 2006 2005
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RSU $ 151 $ 324 $ 676 $ 657 DSU 404 373 367 625
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$ 555 $ 697 $ 1,043 $ 1,282
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During the three months ended October 31, 2006, the Company granted
4 RSUs (net of decreases) and 3,683 DSUs under an employee and
director incentive compensation program, respectively. The RSU and
DSU Plans are full value phantom shares that mirror the value of
Aber's publicly traded common shares. Grants under the RSU Plan are
on a discretionary basis to employees of the Company subject to
Board of Director approval. Each RSU grant vests on the third
anniversary of the grant date, subject to special rules for death
and disability. The Company anticipates paying out cash on maturity
of RSUs and DSUs. Only non-executive directors of the Company are
eligible for grants under the DSU Plan. Each DSU grant vests
immediately on the grant date. The expenses related to the RSUs and
DSUs are accrued based on the price of Aber's common shares at the
end of the period and the probability of vesting. This expense is
recognized on a straight-line basis over the term of the grant.
NOTE 8: Commitments and Guarantees (a) Environmental Agreement
Through negotiations of environmental and other agreements, the
Joint Venture must provide funding for the Environmental Monitoring
Advisory Board. Aber's share of this funding requirement was $0.2
million for calendar 2006. Further funding will be required in
future years; however, specific amounts have not yet been
determined. These agreements also state the Joint Venture must
provide security deposits for the performance by the Joint Venture
of its reclamation and abandonment obligations under all
environmental laws and regulations. Aber's share of the Joint
Venture's letters of credit outstanding with respect to the
environmental agreements as at October 31, 2006 was $46.1 million.
The agreement specifically provides that these funding requirements
will be reduced by amounts incurred by the Joint Venture on
reclamation and abandonment activities. (b) Participation
Agreements The Joint Venture has signed participation agreements
with various native groups. These agreements are expected to
contribute to the social, economic and cultural well-being of the
Aboriginal bands. The agreements are each for an initial term of
twelve years and shall be automatically renewed on terms to be
agreed for successive periods of six years thereafter until
termination. The agreements terminate in the event the mine
permanently ceases to operate. (c) Commitments Commitments include
the cumulative maximum funding commitments secured by letters of
credit of the Joint Venture's environmental and participation
agreements at Aber's 40% share, before any reduction of future
reclamation activities and future minimum annual rentals under
non-cancellable operating and capital leases for retail salons and
corporate office space, and are as follows: 2006 $ 67,802 2007
80,132 2008 82,013 2009 82,546 2010 79,842 Thereafter 132,254
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NOTE 9: Employee Benefit Plans Three months Three months Nine
months Nine months ended ended ended ended Expenses for the Oct.
31, Oct. 31, Oct. 31, Oct. 31, period: 2006 2005 2006 2005
-------------------------------------------------------------------------
Defined benefit pension plan at Harry Winston $ 70 $ 36 $ 130 $ 108
Defined contribution plan at Harry Winston 90 66 270 198 Defined
contribution plan at the Diavik Mine 174 137 538 420
-------------------------------------------------------------------------
$ 334 $ 239 $ 938 $ 726
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NOTE 10: Related Parties Transactions with related parties for the
nine months ended October 31, 2006 include $1.3 million (fiscal
2006 - $1.3 million) of rent relating to the New York salon,
payable to an employee. NOTE 11: Segmented Information The Company
operates in two segments within the diamond industry, mining and
retail, for the three months ended October 31, 2006. The mining
segment consists of the Company's rough diamond business. This
business includes the 40% interest in the Diavik group of mineral
claims and the sale of rough diamonds in the market-place. The
retail segment consists of the Company's ownership in Harry
Winston. This segment consists of the marketing of fine jewelry and
watches on a worldwide basis. For the three months ended October
31, 2006 Mining Retail Total
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Sales Canada $ 90,754 $ - $ 90,754 United States - 24,919 24,919
Europe - 18,724 18,724 Asia - 10,835 10,835 Cost of sales 45,461
29,175 74,636
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45,293 25,303 70,596 Selling, general and administrative expenses
4,665 28,815 33,480
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Earnings (loss) from operations 40,628 (3,512) 37,116
-------------------------------------------------------------------------
Interest and financing expenses (3,484) (2,086) (5,570) Other
income (expenses) 1,782 (18) 1,764 Foreign exchange loss (836)
(724) (1,560)
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Segmented earnings (loss) before income taxes $ 38,090 $ (6,340) $
31,750
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Segmented assets as at October 31, 2006 Canada $ 726,180 $ - $
726,180 United States - 417,211 417,211 Other foreign countries
20,316 82,777 103,093
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$ 746,496 $ 499,988 $ 1,246,484
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-------------------------------------------------------------------------
Goodwill as at October 31, 2006 $ - $ 154,915 $ 154,915 Capital
expenditures $ 35,524 $ 5,102 $ 40,626 Other significant non-cash
items: Income tax expense (recovery) $ 9,628 $ (571) $ 9,057
-------------------------------------------------------------------------
For the three months ended October 31, 2005 Mining Retail Total
-------------------------------------------------------------------------
Sales Canada $ 112,243 $ - $ 112,243 United States - 15,953 15,953
Europe - 14,740 14,740 Asia - 10,576 10,576 Cost of sales 38,929
18,712 57,641
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73,314 22,557 95,871 Selling, general and administrative expenses
4,809 19,380 24,189
-------------------------------------------------------------------------
Earnings from operations 68,505 3,177 71,682
-------------------------------------------------------------------------
Interest and financing expenses (2,097) (1,256) (3,353) Other
income (expenses) 921 (126) 795 Foreign exchange loss (4,071) (113)
(4,184)
-------------------------------------------------------------------------
Segmented earnings before income taxes $ 63,258 $ 1,682 $ 64,940
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Segmented assets as at October 31, 2005 Canada $ 707,243 $ - $
707,243 United States - 228,247 228,247 Other foreign countries
17,851 62,842 80,693
-------------------------------------------------------------------------
$ 725,094 $ 291,089 $ 1,016,183
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Goodwill as at October 31, 2005 $ - $ 41,966 $ 41,966 Capital
expenditures $ 18,892 $ 1,670 $ 20,562 Other significant non-cash
items: Income tax expense (recovery) $ 29,976 $ 399 $ 30,375
-------------------------------------------------------------------------
For the nine months ended October 31, 2006 Mining Retail Total
-------------------------------------------------------------------------
Sales Canada $ 251,538 $ - $ 251,538 United States - 64,252 64,252
Europe - 49,959 49,959 Asia - 38,716 38,716 Cost of sales 127,466
79,473 206,939
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124,072 73,454 197,526 Selling, general and administrative expenses
13,824 74,120 87,944
-------------------------------------------------------------------------
Earnings (loss) from operations 110,248 (666) 109,582
-------------------------------------------------------------------------
Interest and financing expenses (8,996) (5,713) (14,709) Other
income 5,156 35 5,191 Foreign exchange loss (595) (454) (1,049)
-------------------------------------------------------------------------
Segmented earnings (loss) before income taxes $ 105,813 $ (6,798) $
99,015
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Segmented assets as at October 31, 2006 Canada $ 726,180 $ - $
726,180 United States - 417,211 417,211 Other foreign countries
20,316 82,777 103,093
-------------------------------------------------------------------------
$ 746,496 $ 499,988 $ 1,246,484
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Goodwill as at October 31, 2006 $ - $ 154,915 $ 154,915 Capital
expenditures $ 75,865 $ 14,118 $ 89,983 Other significant non-cash
items: Income tax expense (recovery) $ 12,306 $ (2,170) $ 10,136
-------------------------------------------------------------------------
For the nine months ended October 31, 2005 Mining Retail Total
-------------------------------------------------------------------------
Sales Canada $ 251,545 $ - $ 251,545 United States - 48,897 48,897
Europe - 45,473 45,473 Asia - 33,428 33,428 Cost of sales 106,281
63,544 169,825
-------------------------------------------------------------------------
145,264 64,254 209,518 Selling, general and administrative expenses
12,908 57,386 70,294
-------------------------------------------------------------------------
Earnings from operations 132,356 6,868 139,224
-------------------------------------------------------------------------
Interest and financing expenses (6,971) (3,451) (10,422) Other
income 2,501 65 2,566 Foreign exchange loss (5,562) (389) (5,951)
-------------------------------------------------------------------------
Segmented earnings before income taxes $ 122,324 $ 3,093 $ 125,417
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Segmented assets as at October 31, 2005 Canada $ 707,243 $ - $
707,243 United States - 228,247 228,247 Other foreign countries
17,851 62,842 80,693
-------------------------------------------------------------------------
$ 725,094 $ 291,089 $ 1,016,183
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Goodwill as at October 31, 2005 $ - $ 41,966 $ 41,966 Capital
expenditures $ 26,850 $ 3,755 $ 30,605 Other significant non-cash
items: Income tax expense (recovery) $ 48,624 $ (141) $ 48,483
-------------------------------------------------------------------------
Sales to one customer in the mining segment totalled $22.1 million
(fiscal 2006 - $19.5 million) for the nine months ended October 31,
2006. DATASOURCE: Aber Diamond Corporation CONTACT: PRNewswire - -
12/14/2006
Copyright