Aber Diamond (MM) (NASDAQ:ABER)
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From May 2019 to May 2024
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
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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
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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
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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
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$ 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
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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
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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
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For the three months
ended October 31, 2005 Mining Retail Total
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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
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Earnings from operations 68,505 3,177 71,682
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Interest and financing expenses (2,097) (1,256) (3,353)
Other income (expenses) 921 (126) 795
Foreign exchange loss (4,071) (113) (4,184)
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Segmented earnings before
income taxes $ 63,258 $ 1,682 $ 64,940
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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
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$ 725,094 $ 291,089 $ 1,016,183
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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
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For the nine months
ended October 31, 2006 Mining Retail Total
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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
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Earnings (loss) from operations 110,248 (666) 109,582
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Interest and financing expenses (8,996) (5,713) (14,709)
Other income 5,156 35 5,191
Foreign exchange loss (595) (454) (1,049)
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Segmented earnings (loss)
before income taxes $ 105,813 $ (6,798) $ 99,015
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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 $ 75,865 $ 14,118 $ 89,983
Other significant non-cash
items:
Income tax expense
(recovery) $ 12,306 $ (2,170) $ 10,136
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For the nine months
ended October 31, 2005 Mining Retail Total
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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
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145,264 64,254 209,518
Selling, general and
administrative expenses 12,908 57,386 70,294
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Earnings from operations 132,356 6,868 139,224
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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)
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Segmented earnings before
income taxes $ 122,324 $ 3,093 $ 125,417
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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
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$ 725,094 $ 291,089 $ 1,016,183
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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
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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