/SECOND AND FINAL ADD - TO403a - HARRY WINSTON DIAMOND CORPORATION/

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Howard Hldg Asd	LSE:HWD	London	Ordinary Share	QQ0031849458	ORD 10P (ASSD RUSHBROOK CASH)

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(c) Commitments Commitments include the cumulative maximum funding commitments secured by letters of credit of the Joint Venture's environmental and participation agreements at Harry Winston Diamond Corporation'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: 2009 $ 93,573 2010 95,340 2011 94,255 2012 91,106 2013 91,044 Thereafter 155,976 ------------------------------------------------------------------- NOTE 18: Employee Benefit Plans Year ended Year ended January 31, January 31, Expense for the year 2008 2007 ------------------------------------------------------------------------- Defined benefit pension plan - Harry Winston retail segment(a) $ 1,213 $ 61 Defined contribution plan - Harry Winston retail segment(b) 1,063 389 Defined contribution plan - Diavik Mine(b) 833 701 ------------------------------------------------------------------------- $ 3,109 $ 1,151 ------------------------ ------------------------ (a) Defined Benefit Pension Plan The Harry Winston retail segment sponsors three separate defined benefit pension plans covering substantially all of its employees in the United States, Japan and Switzerland. The principal pension plan is the Harry Winston Employee Retirement Plan for Harry Winston Inc. US employees. The benefits for the Harry Winston Inc. plan are based on years of service and the employee's compensation. In April 2001, Harry Winston Inc. amended its defined benefit pension plan. The amendment froze plan participation effective April 30, 2001. Harry Winston Inc.'s funding policy for the US plan is to contribute amounts to the plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974. Plan assets consisted primarily of fixed income, equity and other short-term investments. The other two defined benefit pension plans are sponsored by retail segment subsidiaries Harry Winston Japan, K.K. and Harry Winston S.A., which converted their previous pension plan arrangements into defined benefit plans effective February 1, 2007. Pension liabilities for these two non-US plans are funded in accordance with local laws and regulations. (i) Information about Harry Winston Inc.'s US defined benefit plan is as follows: 2008 2007 ------------------------------------------------------------- Accrued benefit obligation: Balance, beginning of year $ 11,784 $ 11,835 Interest cost 627 623 Actuarial loss (373) 410 Effects of changes in assumptions - (278) Benefits paid (742) (806) ------------------------------------------------------------- Balance, end of year 11,296 11,784 ------------------------------------------------------------- Plan assets: Fair value, beginning of year 10,574 9,594 Actual return on plan assets 397 1,203 Employer contributions 155 583 Benefits paid (742) (806) ------------------------------------------------------------- Fair value, end of year 10,384 10,574 ------------------------------------------------------------- Funded status - plan deficit (included in accrued liabilities) $ (912) $ (1,210) ------------------------ ------------------------ US plan assets represented approximately 63% of total Harry Winston retail segment plan assets at January 31, 2008. The unfunded status of the retail segment plans are comprised of $0.9 million attributed to the US-based Harry Winston Inc. plan, as reported in the table above, and $0.8 million attributed to the Harry Winston Japan, K.K. plan. The Harry Winston Japan, K.K. plan is non-funded with a benefit obligation of $0.8 million. The Harry Winston S.A. plan was fully funded at January 31, 2008 with a benefit obligation of $6.0 million offset by plan assets of the same amount. The following table provides the components of the net periodic pension costs for the three plans for the years ended January 31. 2008 2007 ------------------------------------------------------------- Service cost $ (1,357) $ - Interest cost (808) (623) Expected return on plan assets 952 705 Net actuarial loss - (103) ------------------------------------------------------------- Total (1,213) (21) ------------------------------------------------------------- ------------------------------------------------------------- (ii) Plan assets The asset allocation of Harry Winston Inc.'s US pension benefits at January 31, 2008 were as follows: 2008 2007 ------------------------------------------------------------- Asset category: Cash equivalents 2% 3% Equity securities 72% 72% Fixed income securities 24% 22% Other 2% 3% ------------------------------------------------------------- Total 100% 100% ------------------------------------------------------------- ------------------------------------------------------------- (iii) The significant assumptions used for Harry Winston Inc.'s US plan is as follows: 2008 2007 ------------------------------------------------------------- Accrued benefit obligation: Discount rate 6.24% 5.75% Expected long-term rate of return 7.50% 7.50% ------------------------------------------------------------- Benefit costs for the year: Discount rate 5.75% 5.50% Expected long-term rate of return on plan assets 7.50% 7.50% Rate of compensation increase 0.00% 0.00% ------------------------------------------------------------- Harry Winston Inc's overall expected long-term rate of return on assets is 7.50%. The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments. Harry Winston S.A's overall expected long-term rate of return on assets is 3.25%. Long-term rate of return for Harry Winston Japan, K.K. plan assets is not applicable due to the unfunded status of the plan. The weighted average assumptions used to determine the benefit obligations for Harry Winston Japan, K.K. and Harry Winston S.A. at January 31, 2008 are a discount rate and expected long-term rate of return of 2.00% and 0.00% and 3.00% and 3.25%, respectively. The weighted average assumptions used to determine the benefit costs for Harry Winston Japan, K.K. and Harry Winston S.A. at January 31, 2008 are a discount rate, expected long- term rate of return and a rate of compensation increase of 2.00%, 0.00% and 4.60% and 3.00%, 3.25% and 1.00%, respectively. (iv) Harry Winston retail segment expects to contribute $0.9 million to its pension plan in calendar 2008 Benefits of $1.3 million are expected to be paid by the retail segment in each calendar year from 2009 to 2012. The aggregate benefits expected to be paid in the five calendar years from 2013 to 2017 are $6.4 million. The expected benefits are based on the same assumptions used to measure the retail segment's benefit obligation at January 31, 2008. (b) Defined Contribution Plan Harry Winston Inc. has a defined contribution 401(k) plan covering substantially all employees in the United States. In the previous year, the Company provided employer-matching contributions based on amounts contributed by an employee, up to 50% of the first 6% of the employee's salary. For the fiscal year ended January 31, 2008, the Company elected to increase the employer-matching contribution to 100% of the first 6% of the employee's salary. Employees must meet minimum service requirements and be employed on December 31 of each year in order to receive this matching contribution. The Joint Venture sponsors a defined contribution plan whereby the employer contributes 6% of the employee's salary. (c) Deferred Compensation Plan On January 28, 2005, the Board of Directors of Harry Winston Inc. approved an Equity Participation Plan (the "Plan") for certain executives of Harry Winston Inc. The Plan involves "Phantom Stock" awards, as defined in the executives' employment agreements, which are payable in cash. These awards are split into a 40% time-vested award and a 60% cliff-vested award. The value of the award for each executive is calculated as a percentage of return on investment, as defined in the agreements as the excess of the fair value of Harry Winston Inc. at the date of calculation, over the fair value of Harry Winston Inc. at April 2, 2004, adjusted for certain items as defined in the agreements. The 40% time-vested award vests on the six annual anniversaries of each executive's designated start date and over the six-year period, the vesting percentages are 0%, 0%, 10%, 10%, 10% and 10%, respectively. The 60% cliff-vested award vests in full on the date that Harry Winston Diamond Corporation becomes the acquirer of 100% of the common stock of Harry Winston Inc. The executives must remain employed by Harry Winston Inc. through the vesting dates in order for the awards to vest. Both awards would vest immediately upon the date of any future change in control as defined in the employment agreements. On September 29, 2006, Harry Winston Diamond Corporation acquired 100% of the common stock of Harry Winston Inc. As a result, the cliff-vested award has vested. At January 31, 2008 and 2007, Harry Winston Inc. has recorded a liability of $6.3 million and $7.2 million, respectively, relating to the Plan. At January 21, 2008 and 2007, Harry Winston Inc. has recorded a liability of $5.8 million and $4.8 million, respectively, in connection with a deferred compensation plan for a key executive. According to the terms of this plan, the executive is entitled to deferred compensation of $5.0 million, which vests in equal installments on the first through the third anniversaries of the executive's first day of employment with Harry Winston Inc. On each vesting date, the vested portion of the deferred compensation will be paid to the executive unless the executive provides Harry Winston Inc. with prior written notice to defer receipt of all or a portion of the vested portion of the deferred compensation. All such vested amounts deferred at the request of the executive will be distributed to the executive upon the executive's termination of employment with Harry Winston Inc. The deferred compensation bears interest at LIBOR. NOTE 19: Related Parties Transactions with related parties for the twelve months ended January 31, 2008 include $1.8 million payable of rent (2007 - $1.8 million) relating to the New York salon, payable to a Harry Winston Inc. employee. NOTE 20: Insurance Settlement During the third quarter of fiscal 2008, approximately $23.2 million in Company-owned retail inventory at cost was stolen during a robbery at the Harry Winston Paris salon. The Company was fully insured against the loss, and recognized a pre-tax gain of $13.5 million in the fourth quarter on settlement of the insurance claim. NOTE 21: Subsequent Events On March 14, 2008, the Company completed a common share private placement. The non-brokered private placement sold 3 million common shares at CDN $25 per share. No fees or commissions were payable on this transaction which generated net proceeds of CDN $75.0 million. This transaction diluted the Company's issued and outstanding shares by 5%. On February 22, 2008, Harry Winston Inc. entered into a credit agreement with a syndicate of banks for $250.0 million, five-year revolving credit facility. No scheduled repayments are required before the maturity date. NOTE 22: Segmented Information The Company operates in two segments within the diamond industry, mining and retail, as of January 31, 2008. 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 Inc. This segment consists of the marketing of fine jewelry and watches on a worldwide basis. For the twelve months ended January 31, 2008 Mining Retail Total ------------------------------------------------------------------------- Revenue Canada $ 413,772 $ - $ 413,772 United States - 112,453 112,453 Europe - 81,429 81,429 Asia - 71,653 71,653 Cost of sales 169,680 141,507 311,187 ------------------------------------------------------------------------- Gross margin 244,092 124,028 368,120 Gross margin (%) 59.0% 46.7% 54.2% Selling, general and administrative expenses 23,359 127,086 150,445 ------------------------------------------------------------------------- Earnings (loss) from operations 220,733 (3,058) 217,675 ------------------------------------------------------------------------- Interest and financing expenses (14,940) (12,918) (27,858) Other income 2,326 432 2,758 Insurance settlement - 13,488 13,488 Foreign exchange gain (loss) (45,042) 1,651 (43,391) ------------------------------------------------------------------------- Segmented earnings (loss) before income taxes $ 163,077 $ (405) $ 162,672 -------------------------------------- -------------------------------------- Segmented assets as at January 31, 2008 Canada $ 856,841 $ - $ 856,841 United States - 459,525 459,525 Other foreign countries 22,466 155,116 177,582 ------------------------------------------------------------------------- $ 879,307 $ 614,641 $ 1,493,948 ------------------------------------------------------------------------- Goodwill as at January 31, 2008 $ - $ 93,780 $ 93,780 Capital expenditures $ 163,312 $ 38,533 $ 201,845 Other significant non-cash items: Income tax expense (recovery) $ 13,874 $ (5,296) $ 8,578 Amortization and accretion $ 71,840 $ 9,334 $ 81,174 ------------------------------------------------------------------------- For the twelve months ended January 31, 2007 Mining Retail Total ------------------------------------------------------------------------- Revenue Canada $ 332,573 $ - $ 332,573 United States - 97,989 97,989 Europe - 75,092 75,092 Asia - 53,139 53,139 Cost of sales 166,879 118,619 285,498 ------------------------------------------------------------------------- Gross margin 165,694 107,601 273,295 Gross margin (%) 49.8% 47.6% 48.9% Selling, general and administrative expenses 21,222 105,314 126,536 ------------------------------------------------------------------------- Earnings from operations 144,472 2,287 146,759 ------------------------------------------------------------------------- Interest and financing expenses (13,008) (8,142) (21,150) Other income (expense) 5,323 (242) 5,081 Foreign exchange gain (loss) 9,775 (991) 8,784 ------------------------------------------------------------------------- Segmented earnings (loss) before income taxes $ 146,562 $ (7,088) $ 139,474 -------------------------------------- -------------------------------------- Segmented assets as at January 31, 2007 Canada $ 731,194 $ - $ 731,194 United States - 451,934 451,934 Other foreign countries 14,775 90,011 104,786 ------------------------------------------------------------------------- $ 745,969 $ 541,945 $ 1,287,914 ------------------------------------------------------------------------- Goodwill as at January 31, 2007 $ - $ 98,142 $ 98,142 Capital expenditures $ 100,325 $ 19,579 $ 119,904 Other significant non-cash items: Income tax expense (recovery) $ 22,972 $ (2,905) $ 20,067 Amortization and accretion $ 62,553 $ 6,175 $ 68,728 ------------------------------------------------------------------------- Sales to one customer in the mining segment totalled $28.4 million (2007 - $29.0 million) for the twelve months ended January 31, 2008. Diavik Diamond Mine Mineral Reserve and Mineral Resource Statement as of December 31, 2007 Proven and Probable Reserves Proven and Proven Probable Probable ------------------------------------------------------------------------- Open Mill- Mill- Mill- Mill- Mill- Mill- pit and ions Carats ions ions Carats ions ions Carats ions underground of per of of per of of per of mining tonnes tonne carats tonnes tonne carats tonnes tonne carats ------------------------------------------------------------------------- A-154 South Open Pit 1.2 5.8 7.1 0.7 7.3 5.0 1.9 6.3 12.2 Underground - - - 3.0 4.9 14.8 3.0 4.9 14.8 ------------------------------------------------------------------------- Total A-154 South 1.2 5.8 7.1 3.7 5.4 19.8 4.9 5.5 27.0 ------------------------------------------------------------------------- A-154 North Open Pit 0.1 3.3 0.3 - - - 0.1 3.3 0.3 Underground 2.8 2.3 6.3 5.9 2.2 12.7 8.7 2.2 19.0 ------------------------------------------------------------------------- Total A-154 North 2.9 2.3 6.6 5.9 2.2 12.7 8.7 2.2 19.3 ------------------------------------------------------------------------- A-418 Open Pit 4.3 3.4 14.6 - - - 4.3 3.4 14.6 Underground 0.5 4.2 2.1 3.5 4.1 14.2 3.9 4.1 16.3 ------------------------------------------------------------------------- Total A-418 4.8 3.4 16.6 3.5 4.1 14.2 8.3 3.7 30.9 ------------------------------------------------------------------------- Total Open Pit 5.7 3.9 22.0 0.7 7.3 5.0 6.3 4.3 27.0 Underground 3.3 2.5 8.4 12.3 3.4 41.7 15.6 3.2 50.1 ------------------------------------------------------------------------- Total Reserves 9.0 3.4 30.3 13.0 3.6 46.7 21.9 3.5 77.1 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Note: Totals may not add up due to rounding. Additional Indicated and Inferred Resources ------------------------------------------------------------------------- Measured Indicated Inferred Resources Resources Resources ------------------------------------------------------------------------- Mill- Mill- Mill- Mill- Mill- Mill- ions Carats ions ions Carats ions ions Carats ions Kimberlite of per of of per of of per of pipe tonnes tonne carats tonnes tonne carats tonnes tonne carats ------------------------------------------------------------------------- A-154 South - - - - - - 0.6 4.3 2.5 A-154 North - - - - - - 1.7 2.6 4.4 A-418 - - - - - - 0.6 4.5 2.7 A-21 - - - 4.1 3.1 12.7 0.7 2.8 1.9 ------------------------------------------------------------------------- Total - - - 4.1 3.1 12.7 3.6 3.2 11.5 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Note: Totals may not add up due to rounding. The above mineral reserve and mineral resource statement was prepared by Diavik Diamond Mines Inc., operator of the Diavik Mine, under the supervision of Calvin Yip, P.Eng., Manager, Strategic Planning of Diavik Diamond Mines Inc., a Qualified Person within the meaning of National Instrument 43-101 of the Canadian Securities Administrators. For further details and information concerning Harry Winston Diamond Corporation's Mineral Reserves and Resources, readers should reference Harry Winston Diamond Corporation's Annual Information Form available through http://www.sedar.com/ and http://investor.harrywinston.com/. DATASOURCE: HARRY WINSTON DIAMOND CORPORATION CONTACT: PRNewswire - - 04/08/2008

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