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IAMGOLD Corporation
Reconciliation with United States Generally Accepted Accounting Principles—Item 18
Years Ended December 31, 2007, 2006 and 2005
IAMGOLD Corporation (the "Company") prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles ("Canadian GAAP") which principles differ in certain respects from those applicable in the United States ("U.S. GAAP") and from practices prescribed by the United States Securities and Exchange Commission ("SEC").
Consolidated Statements of Earnings (Restated—Note 1):
(in 000's) | 2007—Restated | 2006—Restated | 2005 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | |||||||
Net earnings(loss) from continuing operations for the year reported under Canadian GAAP | (42,060 | ) | 72,388 | 20,494 | ||||||
Earnings from Sadiola and Yatela under Canadian GAAP, using proportionate consolidation (Note 2(a)) | (51,948 | ) | (70,693 | ) | (16,561 | ) | ||||
Equity earnings of Sadiola under U.S. GAAP (Note 2(a)) | 21,851 | 36,213 | 8,945 | |||||||
Equity earnings of Yatela under U.S. GAAP (Note 2(a)) | 24,364 | 37,241 | 1,931 | |||||||
Tarkwa and Damang stripping costs (Note 1) | (7,832 | ) | (6,212 | ) | — | |||||
Exploration expensed (Note 2(b)) | (22,190 | ) | (9,656 | ) | (962 | ) | ||||
Stock-based compensation (Note 2(c)) | — | (2 | ) | (4 | ) | |||||
Amortization of royalty interests (Note 2(d)) | (495 | ) | 111 | (775 | ) | |||||
Interest income (Note 2(f)) | — | 145 | — | |||||||
Non-hedge derivative gain (Note 2(f)) | — | (40 | ) | — | ||||||
Warrants (Note 2(g)) | 13,232 | (2,712 | ) | — | ||||||
Forward sales liability (Note 2(h)) | (370 | ) | 623 | — | ||||||
Other | 201 | — | — | |||||||
Income taxes on the above | 6,266 | 1,464 | 249 | |||||||
Net earnings (loss) from continuing operations, U.S. GAAP | (58,981 | ) | 58,870 | 13,317 | ||||||
Net earnings form discontinued operations | — | 93 | — | |||||||
Net earnings (loss), U.S. GAAP | (58,981 | ) | 58,963 | 13,317 | ||||||
| 2007— Restated | 2006— Restated | 2005 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | |||||||
Basic and diluted net earnings (loss) from continuing operations per share | (0.20 | ) | 0.32 | 0.09 | ||||||
Basic and diluted net earnings (loss) per share | (0.20 | ) | 0.32 | 0.09 | ||||||
Dividends per share | 0.06 | 0.06 | 0.06 |
1
Consolidated Statements of Comprehensive Income (Restated—Note 1):
(in 000's) | 2007— Restated | 2006— Restated | 2005 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | ||||||||
Net earnings (loss), U.S. GAAP | (58,981 | ) | 58,963 | 13,317 | |||||||
Other comprehensive income (loss): | |||||||||||
Marketable securities (Note 2(e)) | (2,245 | ) | 1,439 | (258 | ) | ||||||
Cumulative translation adjustment | 28,895 | (4,836 | ) | — | |||||||
Comprehensive income (loss), U.S. GAAP | (32,331 | ) | 55,566 | 13,059 | |||||||
Consolidated Statements of Shareholder's Equity (Restated—Note 1):
(in 000's) | 2007— Restated | 2006— Restated | 2005 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | |||||||
Shareholders' equity based on Canadian GAAP | 1,751,316 | 1,773,351 | 411,002 | |||||||
Impact on shareholders' equity of U.S. GAAP adjustments: | ||||||||||
Equity accounting of Sadiola and Yatela (Note 2(a)) | (13,052 | ) | (7,319 | ) | (10,078 | ) | ||||
Tarkwa and Damang stripping costs (Note 1) | (14,044 | ) | (6,212 | ) | — | |||||
Accumulated exploration expensed (Note 2(b)) | (33,795 | ) | (10,618 | ) | (962 | ) | ||||
Accumulated amortization of royalty interests (Note 2(d)) | (2,058 | ) | (1,563 | ) | (1,674 | ) | ||||
Interest income (Note 2(f)) | — | 145 | — | |||||||
Non-hedge derivative gain (Note 2(f)) | — | (40 | ) | — | ||||||
Warrants (Note 2(g)) | (13,872 | ) | (27,115 | ) | — | |||||
Forward sales liability (Note 2(h)) | 253 | 623 | — | |||||||
Income taxes on the above | 8,291 | 2,025 | 561 | |||||||
Marketable securities (Note 2(e)) | — | 1,417 | (22 | ) | ||||||
Shareholders' equity based on U.S. GAAP | 1,683,039 | 1,724,694 | 398,827 | |||||||
Consolidated Statements of Cash Flows:
(in 000's) | 2007 | 2006 | 2005 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | |||||||
Operating Activities | 65,484 | 3,425 | 8,922 | |||||||
Investing Activities | (50,799 | ) | 43,141 | 3,457 | ||||||
Financing Activities | (41,380 | ) | (11,450 | ) | (836 | ) | ||||
Cash from (used in) discontinued operations | 28,451 | (1,579 | ) | — |
2
Consolidated Balance Sheets (Restated—Note 1):
As at December 31, 2007 | Cdn GAAP | Adjustments (Note 2(a)) | Other US GAAP Adjustments | US GAAP | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | $ | ||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | 113,265 | (17,572 | ) | — | 95,693 | |||||||||
Gold bullion | 53,982 | — | — | 53,982 | ||||||||||
Receivables and other current assets (Note 10) | 77,221 | (18,139 | ) | — | 59,082 | |||||||||
Inventories | 89,230 | (17,422 | ) | — | 71,808 | |||||||||
333,698 | (53,133 | ) | — | 280,565 | ||||||||||
Other long-term assets | 88,416 | (56,919 | ) | — | 31,497 | |||||||||
Equity investments (Notes 2(a), 3) | 112,478 | 91,165 | — | 203,643 | ||||||||||
Royalty interests (Note 2(d)) | 34,835 | — | (2,055 | ) | 32,780 | |||||||||
Mining assets | 1,023,961 | (65,737 | ) | — | 958,224 | |||||||||
Exploration and development (Note 2(b)) | 225,473 | — | (33,796 | ) | 191,677 | |||||||||
Goodwill | 361,648 | — | — | 361,648 | ||||||||||
Other intangible assets (Note 11) | 15,103 | — | — | 15,103 | ||||||||||
2,195,612 | (84,624 | ) | (35,851 | ) | 2,075,137 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued liabilities (Note 12) | 127,672 | (36,060 | ) | (2,147 | ) | 89,465 | ||||||||
Dividends payable | 17,625 | — | — | 17,625 | ||||||||||
Current portion of long-term liabilities (Note 2(h)) | 32,430 | (1,192 | ) | (205 | ) | 31,033 | ||||||||
Deferred revenues | — | — | 2,147 | 2,147 | ||||||||||
177,727 | (37,252 | ) | (205 | ) | 140,270 | |||||||||
Long-term liabilities: | ||||||||||||||
Long-term debt (Note 6) | 5,696 | — | — | 5,696 | ||||||||||
Future income and mining tax liability (Notes 2(b),(d), 8) | 157,956 | (4,517 | ) | (8,288 | ) | 145,151 | ||||||||
Asset retirement obligations | 77,506 | (15,760 | ) | — | 61,746 | |||||||||
Accrued benefit liability | 6,360 | — | — | 6,360 | ||||||||||
Warrants (Note 2(g)) | — | — | 13,872 | 13,872 | ||||||||||
Long-term portion of forward sales liability (Note 2(h)) | 10,472 | — | (48 | ) | 10,424 | |||||||||
257,990 | (20,277 | ) | 5,536 | 243,249 | ||||||||||
Non-controlling interest | 8,579 | — | — | 8,579 | ||||||||||
Shareholders' equity: | ||||||||||||||
Common shares (Note 2(c)) | 1,633,119 | — | 9,542 | 1,642,661 | ||||||||||
Contributed surplus (Notes 2(c), 4, 5) | 20,034 | — | 33 | 20,067 | ||||||||||
Warrants (Note 2(g)) | 24,391 | — | (24,391 | ) | — | |||||||||
Retained earnings (Notes 2(a),(b),(c),(d),(h)) | 49,553 | (27,095 | ) | (25,378 | ) | (2,920 | ) | |||||||
Accumulated other comprehensive income (loss) (Note 2(b)) | 24,219 | — | (988 | ) | 23,231 | |||||||||
1,751,316 | (27,095 | ) | (41,182 | ) | 1,683,039 | |||||||||
2,195,612 | (84,624 | ) | (35,851 | ) | 2,075,137 | |||||||||
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As at December 31, 2006 (in 000's) | Cdn GAAP | Adjustments (Note 2(a)) | Other US GAAP Adjustments | US GAAP | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | $ | ||||||||||
ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | 124,325 | (30,388 | ) | — | 93,937 | |||||||||
Short term deposits | 39 | — | — | 39 | ||||||||||
Gold bullion | 49,012 | — | — | 49,012 | ||||||||||
Receivables and other current assets (Note 10) | 65,942 | (22,353 | ) | (42 | ) | 43,547 | ||||||||
Inventories | 61,325 | (16,371 | ) | — | 44,954 | |||||||||
Current assets held for sale | 17,924 | — | — | 17,924 | ||||||||||
318,567 | (69,112 | ) | (42 | ) | 249,413 | |||||||||
Other long-term assets (Notes 2(e),(f)) | 83,844 | (37,344 | ) | 1,877 | 48,377 | |||||||||
Equity investments (Notes 2(a), 3) | 87,086 | 101,883 | — | 188,969 | ||||||||||
Royalty interests (Note 2(d)) | 39,786 | — | (1,562 | ) | 38,224 | |||||||||
Mining assets | 1,050,664 | (53,115 | ) | — | 997,549 | |||||||||
Exploration and development (Note 2(b)) | 200,588 | — | (10,618 | ) | 189,970 | |||||||||
Goodwill | 464,975 | — | — | 464,975 | ||||||||||
Long-term assets held for sale | 33,166 | — | — | 33,166 | ||||||||||
2,278,676 | (57,688 | ) | (10,345 | ) | 2,210,643 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued liabilities (Note 12) | 119,741 | (33,637 | ) | — | 86,104 | |||||||||
Dividends payable | 17,570 | — | — | 17,570 | ||||||||||
Current portion of long-term liabilities (Note 2(h)) | 69,960 | — | (369 | ) | 69,591 | |||||||||
Current liabilities relating to assets held for sale | 9,240 | — | — | 9,240 | ||||||||||
216,511 | (33,637 | ) | (369 | ) | 182,505 | |||||||||
Long-term liabilities: | ||||||||||||||
Long-term debt | 9,625 | — | — | 9,625 | ||||||||||
Future income and mining tax liability (Notes 2(b),(d), 8) | 185,015 | (2,939 | ) | (1,710 | ) | 180,366 | ||||||||
Asset retirement obligations | 39,933 | (7,583 | ) | — | 32,350 | |||||||||
Accrued benefit liability | 6,321 | — | — | 6,321 | ||||||||||
Warrants (Note 2(g)) | — | — | 27,115 | 27,115 | ||||||||||
Long-term portion of forward sales liability (Note 2(h)) | 28,346 | — | (253 | ) | 28,093 | |||||||||
Long-term liabilities relating to assets held for sale | 15,862 | — | — | 15,862 | ||||||||||
285,102 | (10,522 | ) | 25,152 | 299,732 | ||||||||||
Non-controlling interest | 3,712 | — | — | 3,712 | ||||||||||
Shareholders' equity: | ||||||||||||||
Common shares (Note 2(c)) | 1,625,994 | — | 9,542 | 1,635,536 | ||||||||||
Contributed surplus (Notes 2(c), 4) | 19,153 | — | 33 | 19,186 | ||||||||||
Warrants (Note 2(g)) | 24,403 | — | (24,403 | ) | — | |||||||||
Share purchase loans | (295 | ) | — | — | (295 | ) | ||||||||
Retained earnings (Notes 2(a),(b),(c),(d),(f),(g),(h)) | 108,932 | (13,529 | ) | (21,717 | ) | 73,686 | ||||||||
Accumulated other comprehensive income (loss) (Note 2(e)) | (4,836 | ) | — | 1,417 | (3,419 | ) | ||||||||
1,773,351 | (13,529 | ) | (35,128 | ) | 1,724,694 | |||||||||
2,278,676 | (57,688 | ) | (10,345 | ) | 2,210,643 | |||||||||
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Notes to U.S. GAAP Reconciliation:
1. Restatement of consolidated financial statements:
The costs associated with the Gold Fields Ghana Limited ("Tarkwa") and Abosso Goldfields Limited ("Damang") stripping programs were capitalized as betterments under Canadian GAAP. Under U.S. GAAP, the Company's accounting policy is to account for stripping costs in accordance with Emerging Issues Task Force (EITF) 04-6 "Accounting for Stripping Costs Incurred during Production in the Mining Industry" ("EITF 04-6") and Statement of Financial Accounting Standards (SFAS) 151, Inventories. EITF 04-6 requires that stripping costs incurred during production be treated as variable inventory costs. The requirements of EITF 04-6 were effective for the Company's fiscal year beginning January 1, 2006, with the effect of initially applying the EITF to be recognized as a cumulative effect adjustment recorded in the opening balance of retained earnings in the year of adoption. The above noted stripping costs were not previously identified as a reconciling item between Canadian and U.S. GAAP and the Company has restated its reconciliation with U.S. GAAP to account for stripping costs in accordance with EITF 04-6.
The following is a summary of the significant effects of the restatement on the Company's consolidated balance sheets as of December 31, 2007 and 2006 under U.S. GAAP and its consolidated statements of earnings under U.S GAAP for the fiscal years ended December 31, 2007 and 2006. The impact of the adoption of EITF 04-6 on retained earnings as at January 1, 2006 with respect to these stripping costs was not material.
| December 31, 2007 | December 31, 2006 | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(000's except per share amounts) | As previously reported | Adjustment | As restated | As previously reported | Adjustment | As restated | ||||||||||||||
| $ | $ | $ | $ | $ | $ | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||||||||
Equity investments | 217,687 | (14,044 | ) | 203,643 | 195,181 | (6,212 | ) | 188,969 | ||||||||||||
Retained earnings | 11,124 | (14,044 | ) | (2,920 | ) | 79,898 | (6,212 | ) | 73,686 | |||||||||||
Consolidated Statement of Earnings | ||||||||||||||||||||
Equity earnings | 71,606 | (7,832 | ) | 63,774 | 102,328 | (6,212 | ) | 96,116 | ||||||||||||
Net earnings (loss) from continuing operations, U.S. GAAP | (51,149 | ) | (7,832 | ) | (58,981 | ) | 65,082 | (6,212 | ) | 58,870 | ||||||||||
Net income (loss) for the year, U.S. GAAP | (51,149 | ) | (7,832 | ) | (58,981 | ) | 65,175 | (6,212 | ) | 58,963 | ||||||||||
Basic and diluted net earnings (loss) from continuing operations per share | (0.17 | ) | (0.03 | ) | (0.20 | ) | 0.35 | (0.03 | ) | 0.32 | ||||||||||
Basic and diluted net earnings (loss) per share | (0.17 | ) | (0.03 | ) | (0.20 | ) | 0.35 | (0.03 | ) | 0.32 |
2. Notes to the U.S. GAAP reconciliation:
a) Equity Method Investments in Sadiola, Yatela, Tarkwa and Damang:
Under Canadian GAAP, the Company accounts for its interests in the Sadiola and Yatela joint ventures by the proportionate consolidation method and its interest in the Tarkwa and Damang mines under the equity method as working interests. Under U.S. GAAP, the Company is required to equity account for all of its investments and record in earnings its proportionate share of their net income measured in accordance with U.S. GAAP.
5
- (i)
- Exploration and development costs:
For equity method investments, the accounting for these investments represents the aggregate of: (a) capital contributions to the joint ventures, (b) the Company's proportionate share of the net earnings or loss of the joint ventures, net of amortization of the purchase price adjustment and (c) distributions from the joint ventures.
For U.S. GAAP purposes, the Company's share of earnings from its investments have been adjusted for the following items:
- (ii)
- Start-up costs:
Under U.S. GAAP, the Company is required to expense all costs prior to the completion of a definitive feasibility study which establishes proven and probable reserves. Under Canadian GAAP, costs subsequent to establishing that a property has mineral resources which have the potential of being economically recoverable, are capitalized.
- (iii)
- Deferred stripping costs:
- (iv)
- Future income taxes:
U.S. GAAP requires start-up costs to be expensed as incurred. Canadian GAAP allows start-up costs to be capitalized until commercial production is established.
Under Canadian GAAP, the Company capitalized stripping costs incurred during the year relating to betterments at Yatela, Tarkwa and Damang. These costs will be amortized on a units-of-production basis over the reserves that directly benefit from the stripping activity. Under U.S. GAAP, the Company accounts for stripping costs in conjunction with EITF 04-6, and Statement of Financial Accounting Standards (SFAS) 151, Inventories.
Tax adjustments related to the above items.
b) Exploration Expensed:
Under U.S. GAAP, the Company is required to expense all costs prior to the completion of a definitive feasibility study which establishes proven and probable reserves. Under Canadian GAAP, costs subsequent to establishing that a property has mineral resources which have the potential of being economically recoverable, are capitalized.
c) Stock-based compensation:
Effective January 1, 2006, the Company adopted SFAS 123(R), Share-Based Payments, to account for share based payments to employees, directors and consultants. The adoption of SFAS 123(R) did not have a material impact on stock-based compensation expense for 2006. Prior to January 1, 2006, the Company accounted for stock-based compensation in accordance with SFAS 123.
d) Royalty Interests:
Under Canadian GAAP, depreciation and amortization of royalty interests is calculated on the units-of-production method based upon the estimated mine life corresponding to the property's reserves and resources whereas under U.S. GAAP, the calculations are made based upon proven and probable mineable reserves. This results in a higher amortization charge under U.S. GAAP for revenue producing royalties.
6
e) Marketable securities:
Under Canadian GAAP, since January 1, 2007, marketable securities and debenture receivable are classified as available-for-sale assets and are measured at fair value using the last quoted price. Unrealized gains or losses related to changes in market value as well as the related tax impact are accounted for in other comprehensive income (OCI) until the marketable security is sold or other than temporarily impaired. When it is sold or other than temporarily impaired, the accumulated variation in OCI is reversed and the actual gain or loss on disposal is accounted for in the statement of earnings. The Company also owns warrants included in marketable securities. These warrants were measured at fair value using the Black-Scholes pricing model. Unrealized gains or losses related to changes in market value are reported under "non-hedge derivative gain or loss" in the consolidated statement of earnings. Before January 1, 2007, investments in marketable securities were recorded at cost under Canadian GAAP.
For all periods presented under U.S. GAAP, marketable securities are accounted as per the rules adopted under Canadian GAAP on January 1, 2007.
f) Gold receivable:
Under Canadian GAAP, since January 1, 2007, gold receivable is considered a hybrid instrument composed of a receivable and an embedded derivative that must be accounted for separately. The receivable is accounted for as an interest bearing receivable, with accrued interest charged to earnings. The embedded derivative is marked-to-market at each balance sheet date based on the change in gold price with the variation charged to earnings under "non-hedge derivative gain or loss". Before January 1, 2007, the gold receivable was revaluated at each balance sheet date at the current spot price and the variation was accounted for under the "non-hedge derivative gain" caption in the statement of earnings. The discount was amortized up to the time of deliveries and accounted for under the "investment income" caption in the statement of earnings.
For all periods presented under U.S. GAAP, the gold receivable was accounted for in the same manner as the new Canadian standards adopted in January 2007.
g) Warrants:
Under Canadian GAAP, warrants to purchase common shares are accounted for as a component of shareholders' equity. Under U.S. GAAP, issuers having warrants with an exercise price denominated in a currency other than the issuer's functional currency are required to treat the fair value of the warrants as a liability and to mark to market those warrants through net earnings.
h) Forward sales liability:
Under Canadian GAAP, forward gold sales contracts for the Mupane mine are accounted for as normal purchase and sale contracts from the date of acquisition. Under U.S. GAAP, the forward contracts were accounted for as normal purchase and sale contracts from June 26, 2006, the date documentation of the accounting treatment for these contracts was finalized. Prior to June 26, 2006, the forward contracts were accounted for on a mark-to-market basis.
7
3. Equity method investments:
The changes in the Company's equity method investments pursuant to U.S. GAAP are as follows:
(in 000's) | 2007—as restated | 2006—as restated | 2005 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
| $ | $ | $ | ||||||||
Equity method investments, beginning of year | 188,969 | 192,868 | 203,465 | ||||||||
Net earnings | 63,774 | 96,116 | 26,713 | ||||||||
Distributions received | (49,100 | ) | (100,015 | ) | (37,310 | ) | |||||
Equity method investments, end of year | 203,643 | 188,969 | 192,868 | ||||||||
Condensed balance sheet information for the Company's equity method investments is summarized below:
| 2007 | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in 000's) | Tarkwa | Damang | Sadiola | Yatela | Other | ||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||
Current assets | 161,238 | 38,730 | 78,371 | 56,848 | 362 | ||||||||||||
Long-term assets, net | 488,021 | 37,926 | 217,463 | 50,938 | — | ||||||||||||
649,259 | 76,656 | 295,834 | 107,786 | 362 | |||||||||||||
Current liabilities | 63,852 | 19,243 | 38,826 | 56,025 | 176 | ||||||||||||
Long-term obligations and other | 114,397 | 7,608 | 28,126 | 6,408 | — | ||||||||||||
Equity | 471,010 | 49,805 | 228,882 | 45,353 | 186 | ||||||||||||
649,259 | 76,656 | 295,834 | 107,786 | 362 | |||||||||||||
| 2006 | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in 000's) | Tarkwa | Damang | Sadiola | Yatela | Other | ||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||
Current assets | 136,550 | 40,884 | 117,176 | 61,010 | 362 | ||||||||||||
Long-term assets, net | 393,894 | 33,852 | 163,542 | 42,640 | — | ||||||||||||
530,444 | 74,736 | 280,718 | 103,650 | 362 | |||||||||||||
Current liabilities | 64,333 | 15,323 | 55,160 | 31,475 | 176 | ||||||||||||
Long-term obligations and other | 89,201 | 8,413 | 9,182 | 7,730 | — | ||||||||||||
Equity | 376,910 | 51,000 | 216,376 | 64,445 | 186 | ||||||||||||
530,444 | 74,736 | 280,718 | 103,650 | 362 | |||||||||||||
8
Condensed income statement information for the Company's equity method investments is summarized below:
| 2007 | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in 000's) | Tarkwa | Damang | Sadiola | Yatela | Other | ||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||
Revenue | 456,608 | 124,931 | 267,911 | 208,845 | — | ||||||||||||
Expenses | 362,508 | 126,127 | 210,408 | 147,935 | — | ||||||||||||
Net earnings | 94,100 | (1,196 | ) | 57,503 | 60,910 | — | |||||||||||
| 2006 | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in 000's) | Tarkwa | Damang | Sadiola | Yatela | Other | ||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||
Revenue | 433,974 | 130,836 | 300,726 | 214,500 | — | ||||||||||||
Expenses | 321,429 | 123,476 | 205,429 | 121,398 | — | ||||||||||||
Net earnings | 112,545 | 7,360 | 95,297 | 93,102 | — | ||||||||||||
| 2005 | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in 000's) | Tarkwa | Damang | Sadiola | Yatela | Other | ||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||
Revenue | 321,074 | 102,048 | 198,139 | 110,250 | — | ||||||||||||
Expenses | 248,397 | 92,889 | 174,600 | 105,423 | (760 | ) | |||||||||||
Net earnings | 72,677 | 9,159 | 23,539 | 4,827 | 760 | ||||||||||||
4. Contributed Surplus:
(in 000's) | 2007 | 2006 | 2005 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Balance, beginning of year | 19,186 | 7,277 | 9,466 | ||||||||
Stock-based compensation | 2,855 | 3,102 | 1,240 | ||||||||
Exercise of share options | (1,974 | ) | (4,255 | ) | (3,429 | ) | |||||
Cambior purchase consideration | — | 13,062 | — | ||||||||
Balance, end of year | 20,067 | 19,186 | 7,277 | ||||||||
5. Stock-based compensation:
A summary of the status of the Company's nonvested share options as of December 31, 2007 and the changes during the year ended December 31, 2007, is presented below:
| Awards | Weighted Average Grant-Date Fair-value | ||||||
---|---|---|---|---|---|---|---|---|
Nonvested as of January 1, 2007 | 2,034,998 | 2.86 | ||||||
Granted | 1,976,000 | 2.62 | ||||||
Vested | 829,997 | 2.71 | ||||||
Forfeited | 627,000 | 2.89 | ||||||
Nonvested, December 31, 2007 | 2,554,001 | 2.71 | ||||||
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The weighted average grant-date fair value of options granted during 2007 was $2.62 (2006—$3.08, 2005—$2.27).
The total intrinsic value of options exercised during 2007 was $4.9 million (2006—$10.0 million, 2005—$6.2 million). The total fair value of options that vested during 2007 was $2.2 million (2006—$1.2 million, 2005—$1.3 million).
As at December 31, 2007 and 2006, the aggregate intrinsic value of options outstanding was $Nil and $12.9 million, respectively, while the aggregate intrinsic value of the options that are currently exercisable was $1.7 million and $12.6 million, respectively.
As at December 31, 2007, there was $2.8 million of total unrecognized compensation costs related to non-vested stock options. The Company expects to recognize this expense over a weighted average period of 1.9 years.
6. Long Term Debt:
The priority in which the Company's long term debt will be repaid is as follows:
(in 000's) | $ | ||||
---|---|---|---|---|---|
Credit facility | 4,000 | ||||
Financing agreement with Hydro-Quebec | 1,174 | ||||
Other | 327 | ||||
Non-participating shares | 800 | ||||
Purchase price payable—Camp Caiman | 3,928 | ||||
10,229 | |||||
Less: Current portion | (4,533 | ) | |||
Long-term portion | 5,696 | ||||
7. Earnings per share from discontinued operations:
The Company recorded net earnings from discontinued operations for the years ended December 31, 2007, 2006 and 2005 of Nil, $0.1 million and Nil, respectively. Net earnings from discontinued operations did not result in any changes in basic or diluted earnings per share for any of the periods presented.
8. Income taxes:
The Company's future tax liability for each tax jurisdiction was as follows:
(in 000's) | 2007 | 2006 | ||||||
---|---|---|---|---|---|---|---|---|
| $ | $ | ||||||
Suriname | 98,585 | 134,093 | ||||||
Canada | 29,940 | 12,284 | ||||||
Tanzania | 11,587 | 20,919 | ||||||
Botswana | — | 8,279 | ||||||
Peru | 5,039 | 4,791 | ||||||
145,151 | 180,366 | |||||||
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9. Income tax uncertainty:
Income tax liabilities as of December 31, 2007 included a total of $2.9 million for unrecognized income tax benefits, excluding accrued interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in 000's) | $ | ||||
---|---|---|---|---|---|
Balance at January 1, 2007 | 2,884 | ||||
Additions based on tax positions related to the current year | — | ||||
Additions related to tax positions of prior years | — | ||||
Settlements of tax positions | — | ||||
Balance as at December 31, 2007 | 2,884 | ||||
As at December 31, 2007, $1.1 million of income tax for unrecognized tax benefits, if recognized in future periods, would impact the Company's effective tax rate. The Company does not believe that there will be any material changes in its unrecognized tax positions over the next twelve months.
The Company recognizes interest and penalty expense related to unrecognized tax benefits in interest expense in the consolidated statement of earnings. No interest or penalties were recorded in the year ended December 31, 2007. As at December 31, 2007, the Company did not have any accrued interest or penalties with respect to its unrecognized tax benefits recorded on its consolidated balance sheet.
In some cases, the Company's tax positions are related to years that remain subject to examination by tax authorities. The following table outlines the open years, by tax jurisdiction, as at December 31, 2007:
Jurisdiction | Open Years: | ||||
---|---|---|---|---|---|
Canada | 2004 to present | ||||
Suriname | 2005 to present | ||||
Mali | 2007 to present |
10. Receivables and other current assets:
Receivables and other current assets on the Company's consolidated balance sheet consist of the following:
(in 000's) | 2007 | 2006 | ||||||
---|---|---|---|---|---|---|---|---|
| $ | $ | ||||||
Trade receivables | 33,380 | 24,516 | ||||||
Other receivables | 19,625 | 9,983 | ||||||
Prepaid expenses | 6,077 | 7,309 | ||||||
Other current assets | — | 1,739 | ||||||
59,082 | 43,547 | |||||||
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11. Other intangible assets:
The weighted average amortization period for the Company's favorable supplier contracts is approximately 10 years. The estimated amortization expense for the Company's other intangible assets for each of the next five years and thereafter is as follows:
(in 000's) | Amortization of other intangible assets | ||||
---|---|---|---|---|---|
| $ | ||||
2008 | 3,059 | ||||
2009 | 3,059 | ||||
2010 | 3,059 | ||||
2011 | 582 | ||||
2012 | 356 | ||||
Thereafter | 4,988 | ||||
15,103 | |||||
12. Accounts payable and accrued liabilities:
Accounts payable & accrued liabilities on the Company's consolidated balance sheet consist of the following:
(in 000's) | 2007 | 2006 | ||||||
---|---|---|---|---|---|---|---|---|
| $ | $ | ||||||
Trade payables | 47,124 | 66,452 | ||||||
Accrued liabilities | 42,341 | 8,981 | ||||||
Taxes payable | — | 10,015 | ||||||
Other | — | 656 | ||||||
89,465 | 86,104 | |||||||
13. Recently issued accounting pronouncements:
(a) Accounting for uncertainty in income taxes:
In June 2006, the FASB issued FIN 48 "Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 provides guidance on the recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. FIN 48 requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. It also provides criteria for the derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The interpretation is effective for fiscal years beginning after December 15, 2006 with the cumulative effect of the change in accounting principle recorded as an adjustment to the opening balance of retained earnings. Adoption of this statement did not have a material impact on the Company's financial statements.
(b) Fair value measurements:
In September 2006, the FASB issued SFAS 157, "Fair Value Measurements" ("SFAS 157"), which defines fair value, establishes a framework for measuring fair value and a framework for measuring assets and liabilities at fair values when a particular standard describes it. In
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- •
- Measuring the assets acquired, the liabilities assumed, and any non-controlling interest at their fair values;
- •
- Recognizing assets acquired and liabilities assumed arising from contingencies;
- •
- Recognizing contingent consideration at the acquisition date, measured at its fair value;
- •
- Recognizing a gain in the event of a bargain purchase (i.e. previously negative goodwill).
addition, SFAS 157 prescribes a more enhanced disclosure of fair value measures and requires additional expanded disclosure when non-market data is used to assess fair values. The provisions of SFAS 157 are effective for fiscal years beginning after November 15, 2007.
In February 2008, the FASB issued FSP FAS157-2, which delays the effective date of FAS 157 for nonfinancial assets or liabilities that are not required or permitted to be measured at fair value on a recurring basis to fiscal years beginning after November 15, 2008, and interim periods within those years. The Company is currently evaluating the impact that FSP FAS 157-2 may have on its financial statements.
(c) Fair value option for financial assets and financial liabilities:
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115". This pronouncement permits entities to use the fair value method to measure certain financial assets and liabilities by electing an irrevocable option to use the fair value method at specific election dates. After election of the option, subsequent changes in fair value would result in the recognition of unrealized gains or losses as period costs during the period the change occurred. SFAS No. 159 becomes effective as of the beginning of the first fiscal year that begins after November 15, 2007, with early adoption permitted. However, entities may not retroactively apply the provisions of SFAS No. 159 to fiscal years preceding the date of adoption. The Company is currently evaluating the impact that SFAS No. 159 may have on its financial statements.
(d) Business combinations:
The FASB issued, FAS 141(R), Business combinations. This pronouncement retains the fundamental requirements in FAS 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. The following are some of the significant changes this new statement makes to how the acquisition method is applied:
This pronouncement will apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company will adopt this pronouncement accordingly.
(e) Non-controlling interests in consolidated financial statements:
The FASB issued FAS 160, Non-controlling interests in consolidated financial statements which amends ARB 51 to establish accounting and reporting standards for a non-controlling interest in a subsidiary and for deconsolidation of a subsidiary. This pronouncement will apply prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company will adopt this pronouncement accordingly.
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IAMGOLD Corporation Reconciliation with United States Generally Accepted Accounting Principles—Item 18 Years Ended December 31, 2007, 2006 and 2005