(tabular dollar amounts in thousands of Canadian Dollars, except per share amounts)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with Canadian generally accounting principles (GAAP) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements.
In the opinion of management, all adjustments consisting of normal recurring adjustments, considered necessary for a fair presentation of the Company's financial position, results of operations and cash flows have been included. Operating results for the interim period presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the full fiscal year ending April 30, 2008.
The accounting policies used in preparing these interim financial statements are consistent with those used in preparing the annual financial statements, except as follows:
Comprehensive Income
The CICA issued section 1530 of the CICA Handbook, Comprehensive Income. The section is effective for fiscal years beginning on or after October 1, 2006. It describes how to report and disclose comprehensive income and its components.
Comprehensive income is the change in a company's net assets that results from transactions, events and circumstances from sources other than the company's shareholders. It includes items that would not normally be included in net earnings, such as:
- changes in the currency translation adjustment relating to self-sustaining foreign operations;
- unrealized gains or losses on available-for-sale investments; and
- gains and losses on cash flow hedges.
The CICA also made changes to section 3250 of the CICA Handbook, Surplus, and reissued it as section 3251, Equity. The section is also effective for fiscal years beginning on or after October 1, 2006. The changes in how to report and disclose equity and changes in equity are consistent with the new requirements of section 1530, Comprehensive Income.
Financial Instruments - Recognition and Measurement
The CICA issued section 3855 of the CICA Handbook, Financial Instruments - Recognition and Measurement. The section is effective for fiscal years beginning on or after October 1, 2006. It describes the standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. This section requires that:
- all financial assets be measured at fair value, with some exceptions such as loans and investments that are classified as held to maturity;
- all financial liabilities be measured at fair value if they are derivatives or classified as held for trading purposes. Other financial liabilities are measured at their amortized cost; and
- all derivative financial instruments be measured at fair value, even when they are part of a hedging relationship.
The CICA has also reissued section 3860 of the CICA Handbook as section 3861, Financial Instruments -- Disclosure and Presentation, which establishes standards for presentation of financial instruments and non-financial derivatives, and identifies the information that should be disclosed about them. These revisions come into effect for fiscal years beginning on or after October 1, 2006.
Hedges
The CICA issued section 3865 of the CICA Handbook, Hedges. The section is effective for fiscal years beginning on or after October 1, 2006, and describes when and how hedge accounting can be used. On May 1, 2007, the Company adopted section 3865 of the CICA Handbook, Hedges on a prospective basis.
Hedging is an activity used by a company to change an exposure to one or more risks by creating an offset between:
- changes in the fair value of a hedged item and a hedging item;
- changes in the cash flows attributable to a hedged item and a hedging item; or
- changes resulting from a risk exposure relating to a hedged item and a hedging item.
Hedge accounting makes sure that all gains, losses, revenues and expenses from the derivative and the item it hedges are recorded in the statement of operations in the same period.
As a result of adopting the above, the Company has:
- recorded its foreign exchange risk management derivatives at fair value as at the reporting date on the balance sheet as "Other liabilities;"
- recorded the effective portion of its derivatives on the balance sheet in "Accumulated other comprehensive income;"
- classified all of its cash equivalents and marketable securities as "Held-for-trading" and recorded those securities at their fair value as at the reporting date, with changes in fair value being recognized in income immediately;
- accounts receivable are classified as "Loans and receivables," which are recorded at amortized cost using the effective interest method;
- mortgage payable is classified as "Other liabilities," which is recorded at amortized cost using the effective interest method;
- accounts payable and accrued liabilities are classified as "Other liabilities," which are recorded at amortized cost using the effective interest method;
- classified its long-term liabilities as "Other liabilities," which are recorded at amortized cost using the effective interest method; and
- reported comprehensive income and its components and accumulated other comprehensive income and its components in the Notes to the consolidated financial statements.
As a result of adoption of the above policies, there was no material
impact on the Statement of Operations.
2. Shareholders' equity and other comprehensive income
The following are the changes in shareholders' equity for the year ended
April 30, 2008:
-------------------------------------------------------------------------
Common Common Contri- Retained Accumu- Total
shares shares buted earnings lated ($)
(number) ($) surplus ($) other
($) compre-
hensive
income
($)
-------------------------------------------------------------------------
Balance at
April 30,
2007 11,055,376 $102,276 $2,992 $16,901 $ - $122,169
-------------------------------------------------------------------------
Net income - - - 18,474 - 18,474
-------------------------------------------------------------------------
Dividends - - - (10,958) - (10,958)
-------------------------------------------------------------------------
Employee
Stock
Option
Program 219,283 3,267 (627) - - 2,640
-------------------------------------------------------------------------
Employee
Share
Purchase
Program 4,731 64 22 - - 86
-------------------------------------------------------------------------
Stock-based
compensation - - 610 - - 610
-------------------------------------------------------------------------
Normal course
issuer bid (559,583) (5,204) (5,120) - (10,324)
-------------------------------------------------------------------------
Unrealized
derivative
gains on
cash flow
hedges - net - - - - (318) (318)
-------------------------------------------------------------------------
Balance at
April 30,
2008 10,719,807 $100,403 $2,997 $19,297 ($318) $122,379
-------------------------------------------------------------------------
3. Net Interest Income
