During the year ended December 31, 2002, the Fund earned interest income of $43.9 million (2001 - $50.2 million) on the Notes. (Figures in tables are expressed in thousands of dollars, except unit amounts) Ahh. Westshore Terminals Income Fund Notes to Financial Statements December 31, 2002 and 2001 Distributions to unitholders are made on a quarterly basis with provision for an optional fifth distribution following the end of the fiscal year. The amount of cash to be distributed annually to unitholders is equal to the total of interest income earned on the Notes and cash held by the Fund, dividends received from Westshore, and any repurchases of common shares by Westshore, less administrative expenses incurred by the Fund, amounts paid in connection with any cash redemption of units and amounts required for the operation of the Fund. The method of calculating interest could produce significant variations by quarter in interest earned on the Notes. To avoid substantial variations in distributions by the Fund to unitholders, the unitholders passed an amendment to the Declaration of Trust at the Annual General Meeting in June 2000 to permit the Trustees to declare and pay in any quarter all or a portion of the interest accrued on the Notes in that quarter. The amendment allows the Trustees to attempt to make quarterly distributions of an equal amount within any given year. On or about March 31, 2012, and from time to time thereafter, the Board of Directors of Westshore (the Board) and the Trustees of the Fund (the Trustees) will jointly review Westshore’s facilities and operations, the economic conditions relating to the coal industry, and the business prospects of Westshore. If this review indicates, in the opinion of either the Board or the Trustees, that the indebtedness of Westshore evidenced by the Notes is unlikely to be refinanced on the same terms and conditions upon maturity of such Notes, then Westshore will commence principal repayments on the Notes so that the Notes are fully repaid upon maturity or reduced to the level that, in the opinion of the Board and the Trustees, could be so refinanced. In that event, Westshore’s available cash will be utilized to the extent required to fund such repayments in lieu of dividends on the common shares. The Fund has determined its purchase price discrepancy to be $557.3 million, representing the excess of the purchase price of the Fund’s investment in Westshore’s common shares and Notes over the related net book value of Westshore at the date of acquisition. The Fund’s purchase price discrepancy has been ascribed to plant and equipment, goodwill and future income taxes and has been amortized as follows: 14 Interest is determined using a variable interest rate based on a proportion of Westshore’s earnings before depreciation, interest and income taxes calculated on a monthly basis. Interest for any month cannot be lower than 6% and not higher than 11.5%. The Notes mature on March 31, 2022 and are unsecured and subordinated to all secured obligations of Westshote. The carrying values of cash and cash equivalents, accounts payable and accrued liabilities and distribution payable to unitholders approximate fair values based on the short-term maturity of these instruments. The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and accompanying notes. Accordingly, actual amounts could differ from those estimates. Cash distributions to unitholders 3. Investment in Westshore Terminals Ltd. Financial instruments Use of estimates 2002 2001 $ $ Common shares (177,964,001 shares) 177,964 177,964 Notes 470,000 470,000 Equity in net carnings and amortization of purchase price discrepancy (137,828) (132,811) 510,136 515,153