Westshore Terminals Income Fund

WESTSHORE TERMINALS INCOME FUND 

ANNUAL REPORT 

2003 

 
 
 
 
 
 
 
 
 
 
 
 
 
W 

estshore Terminals Income Fund (the “Fund”) is an open-ended trust which was 

created under the laws of British Columbia pursuant to a Declaration of Trust 

dated  December 2,  1996.  The  Fund owns  all of the common shares and  $470  million 

aggregate  principal  amount  of  subordinated  notes  of  Westshore  Terminals  Ltd. 

(“Westshore”). Westshore operates a bulk coal transportation terminal located in British 

Columbia. Income derived by the Fund from those securities, net of expenses, is distributed 

to Unitholders on a quarterly basis. Effective February 28, 2003, the Fund made a $150 

million investment in the Fording Canadian Coal Trust (the “Fording Trust”), representing 

approximately 9.1% of the outstanding units of the Fording Trust. During 2003 the Fund 

received its pro rata share of distributions from the Fording Trust totalling $15.8 million 

(net of debt service costs), which were, in turn, distributed to the Fund’s unitholders. The 

Fund has sold all of its Fording Trust units. As a result, the Fund’s distributions will be 

solely based on the distributions received from Westshore. The Fund does not conduct any 

active business. 

Table of Contents 

Financial Highlights 

Trustees’ Letter and Report to Unitholders 

Management’s Discussion and Analysis 

Operational Review 

Financial Statements 

Westshore Terminals Income Fund  

Westshore Terminals Ltd. 

Corporate Information 

1 

2 

4 

10 

15 

26 

38 

 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Financial Highlights 

Westshore Terminals Income Fund 
(In thousands of dollars except per unit amounts and tonnage) 

Distribution to Unitholders 

Cash flows from operating activities before changes in  
non-cash working capital 

Add (subtract) 

Fording Trust regular distributions in excess of the Fund’s  
 share of earnings 
Fording Trust special distributions 
Fording Trust special receipt 
Net proceeds on sale of Fording Trust units 
Repayment of long-term debt 
Distributable cash 
Distributions paid or declared during the period 
Distributions per unit 

Breakdown for Unitholder income tax purposes 

  Taxable income 

  Per unit 

  Return of capital 

  Per unit 

2003  

2002  

$ 

38,021 

$  43,354 

428 
6,414 
7,647 
125,161 
(120,626) 
57,045 
57,169 
0.812 

$ 

- 
- 
- 
- 
- 
43,354 
43,354 
0.616 

$ 

52,369 
$ 
$  0.74408 
$ 
4,800 
$  0.06820 

$  43,335 
$  0.61572 
$ 
19 
$  0.0003 

Units outstanding at December 31 

  70,381,111 

70,381,111 

Trading Statistics 2003 

  High 
  Low  
  Close 
  Volume 

$ 
7.65 
$ 
4.35 
7.25 
$ 
  29,630,727 

Westshore Terminals Ltd. 

Tonnage (in thousands) 
Earnings before depreciation,  interest, income taxes and 
extraordinary gain 

19,324 

19,434 

$ 

45,172 

$  53,354 

1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Trustees’ Letter and Report to Unitholders 

Dear Unitholder: 

For the twelve months ending December 31, 2003 the Westshore Terminals Income Fund (the “Fund”) declared 
distributions to Unitholders of $57.2 million ($0.812 per unit). The distributions for unitholder income tax purposes 
were comprised of income of $0.74408 per unit and a return of capital of $0.06820 per unit. 

The Fund’s distributions in 2003 consisted of a combination of interest received from Westshore Terminals Ltd. 
(“Westshore”) and distributions received from the Fund’s investment in the Fording Canadian Coal Trust (“Fording 
Trust”). On February 28, 2003, following Fording Inc.’s (“Fording”) shareholder approval, the Fording Trust was 
formed. Among other things this transaction resulted in Westshore securing a long-term handling contract, which 
expires February 29, 2012, with the Elk Valley Coal Partnership (“Coal Partnership”) covering the three mines 
previously owned by Fording, and the Fund investing $150 million in exchange for a 9.1% interest in the Fording 
Trust.  

During the course of 2003, the Fording Trust made a number of special and regular distributions. The Fund 
received its pro rata share of these distributions, which were in turn paid to the Fund’s unitholders. Total distributions 
from the Fording Trust during 2003 (net of debt service costs) were $15.8 million or $0.2249 per Fund unit. 

By December 31, 2003, the Fund had sold approximately 3.4 million of its 4.3 million units of the Fording Trust 
for net proceeds of $125.2 million. These proceeds were used to repay most of the $150 million debt incurred to buy 
the  units,  and  $4.7  million  was  distributed  to  the  Fund’s  unitholders  as  part  of  the  Q4  2003  distribution. By 
January 31, 2004, the Fund had sold the balance of the Fording Trust units. The Fund used the proceeds to repay the 
balance of the debt, and $11.7 million was paid to unitholders as a special distribution forming part of the Q1 2004 
distribution. 

With the disposition of the Fording Trust units, the Fund’s cash flows will as before be entirely dependent on 
Westshore’s cash flow. Since 2000, the interest rate on Westshore’s subordinated notes held by the Fund has been 
computed as 85% of Westshore’s earnings before depreciation,  interest, income taxes and extraordinary gain, subject 
to a floor rate. The directors of Westshore and trustees of the Fund have established that in future Westshore should 
distribute an additional 5% of its earnings before depreciation,  interest, income taxes and extraordinary gain, with the 
intent that the Fund’s distributions will be based on 90% of Westshore’s  earnings before depreciation,  interest, 
income taxes and extraordinary gain. 

During 2003, Westshore loaded 19.3 million tonnes of coal as compared to 19.4 million tonnes shipped in 2002. 
Lower tonnage levels resulted principally from the windstorm incident on January 2, 2003, which resulted in damage 
to two shiploaders at Berth 2, rendering it incapable of loading coal for approximately seven months. Repairs were 
completed in the summer of 2003 and Berth 2 was fully operational by August 2003. Westshore’s insurance covered 
both the costs of repair and most of the lost profits from reduction in shipments, net of applicable deductibles. 

Westshore’s earnings before depreciation,  interest, income taxes and extraordinary gain for 2003 was $45.2 million 
as  compared  to  $53.4  million  in  2002.  The  principal  reasons  for  this  change  were  a  $12.5  million  decline  in 
Westshore’s coal loading revenue as a result of lower rates and a $2.4 million increase in expenses, offset by a $6.7 
million increase in other income principally as a result of receipts of proceeds of business interruption insurance and 
hedging gains. 

2 

 
 
 
Westshore Terminals Income Fund 
Trustees’ Letter and Report to Unitholders 

After difficult negotiations, all three labour agreements with International Longshore and Warehouse Union (the 
longshoremen, the foremen and the clerical workers) were signed in 2003 and new four-year agreements are in place 
and all expire on January 31, 2007. 

As a result of Westshore’s arrangements with the Coal Partnership covering the former Fording mines and the 
Elkview mine, the loading rate for a majority of the coal loaded by Westshore is a function of the price in Canadian 
dollars realized by the Coal Partnership for that coal. Accordingly, a strengthening Canadian dollar against the U.S. 
dollar negatively impacts the throughput rate received by Westshore. For every US$0.01 increase in the value of the 
Canadian dollar, at current volumes and constant US dollar denominated coal prices and before the impact of any 
hedging arrangements, annual distributions can be expected to decrease by $0.021 per unit. Similarly, for every 
US$1.00 change in the price of metallurgical coal, at current volumes annual distributions can be expected to increase 
or decrease, as the case may be, by $0.032  per unit. 

2004 tonnage levels at Westshore were affected in January and February by a lack of coal inventory at the terminal 
and lower than normal levels of rail deliveries to Westshore. Westshore has been working with the Coal Partnership 
and the railroads to manage this situation. Shipments in March increased to more customary levels. At the present 
time total volume throughput at Westshore for 2004 is anticipated to be higher than 2003 levels. 

Audited financial statements for both the Fund and Westshore are attached. 

For the Board of Trustees, 

William W. Stinson 
Chairman of the Board of Trustees 

Vancouver, B.C. 
May 10, 2004 

3 

 
 
 
 
Westshore Terminals Income Fund 
Management’s Discussion & Analysis of 
Financial Condition and Results of Operations 

General 

Westshore Terminals Income Fund (the “Fund”) derives its cash inflows from its investment in Westshore Terminals 
Ltd. (“Westshore”) by way of interest on the $470 million unsecured subordinated notes (“Notes”) and dividends or return 
of capital on the common shares of Westshore. On February 28, 2003, the Fund acquired a 9.1% interest in the Fording 
Canadian Coal Trust (the “Fording Trust”) at a cost of $150 million. Distributions from the Fording Trust were received 
during 2003 and were in turn paid (net of debt service costs) to unitholders of the Fund. These distributions from the 
Fording Trust included a number of special non-recurring distributions and regular distributions from operations. 

By the end of 2003, the Fund had sold 3,360,714 of its 4,285,714 units of the Fording Trust and by January 30, 2004 
had sold the balance of its holdings. The proceeds from the sale of the Fording Trust units were used to repay the $150 
million debt incurred to buy the units and to pay the Fund’s unitholders a total of $16.4 million representing the gain from 
the sale. Of this amount, $4.7 million was paid as part of the Q4 2003 distribution and $11.7 million was paid as part of the 
Q1 2004 distribution. 

As a result of the sale of the Fording Trust units, distributions by the Fund will again be entirely dependent on the 
performance of Westshore. Westshore’s results are determined largely by the volume of coal shipped by its coal mine 
customers for sale in the export market, the rate per tonne charged by Westshore and Westshore’s costs. Since 2000, the 
interest rate on Westshore’s subordinated notes held by the Fund has been computed as 85% of Westshore’s earnings 
before depreciation,  interest, income taxes and extraordinary gain, subject to a floor and a ceiling.  The directors of 
Westshore and trustees of the Fund have established that in future Westshore should distribute an additional 5% of its 
earnings before depreciation,  interest, income taxes and extraordinary gain, with the intent that the Fund’s distributions 
will be based on 90% of Westshore’s earnings before depreciation,  interest, income taxes and extraordinary gain. 

This management’s discussion and analysis for the Fund and the operational review for Westshore refer to certain 
measures other than those prescribed by Generally Accepted Accounting Principles (“GAAP”). These measures do not 
have standardized meanings and may not be comparable to similar measures presented by other trusts or corporations.  
They are however determined by reference to the Fund’s financial statements. These non-GAAP measures are discussed 
because the Fund believes they provide investors with valuable information in understanding the results of the Fund’s and 
Westshore’s operations and financial position. 

Distributable  cash  refers  to  the  net  cash  received  by  the  Fund  that  is  available  for  distribution  to  the  Fund’s 
Unitholders. Refer to “Financial Highlights” for a reconciliation of the Fund’s distributable cash to cash flows from 
operating activities. 

4 

 
 
Westshore Terminals Income Fund 
Management’s Discussion & Analysis of 
Financial Condition and Results of Operations 

Structure of the Fund 

The following chart illustrates the primary structural and contractual relationship among the Unitholders, the Fund, 

Westshore and Westar Group Ltd. (“Westar”).  

Unitholders

Unitholders

Trust
Units

Administration
Agreement

Westshore Terminals
Income Fund

Westshore Terminals
Income Fund

Westar Group Ltd.

Westar Group Ltd.

Westshore Shares
(100%)

Notes
(100%)

Management
Agreement

Westshore Terminals
Ltd.

Westshore Terminals
Ltd.

Results of Operations and Distributions 

The following financial data is derived from the Fund’s audited financial statements for each of the three most recently 

complete financial years, which were prepared in Canadian dollars using Canadian GAAP. 

(In thousands of dollars except per unit amounts) 

   Interest income 
   Fording distributions 

Earnings before extraordinary gain 
Earnings before extraordinary gain per unit 
Net Earnings 
Net Earnings per unit 
Distributable cash 
Distributions declared 
Distributions declared per unit 
Total Assets 

2003 
37,302 
9,040 
46,342 
49,985 
0.710 
57,280 
0.814 
57,045 
57,169 
0.812 
558,831 

2002 
43,865 
- 
43,865 
38,337 
0.545 
38,337 
0.545 
43,354 
43,354 
0.616 
521,229 

2001 
50,164 
- 
50,164 
33,137 
0.471 
33,137 
0.471 
49,441 
49,441 
0.702 
530,841 

As shown above, cash distributions declared to Unitholders for 2003 were $57,169,000 ($0.812 per unit) compared to 
$43,354,000 ($0.616 per unit) for 2002. In 2003 the Fund paid $250,000 (excluding GST) to Westar for administration 
services provided under the Administration Agreement dated January 30, 1997 between the Fund and Westar. 

Distributions were made quarterly during 2003, with the final distribution declared on December 17, 2003 and paid on 
January 15, 2004. The distributions from the Fund in 2003 to Unitholders for income tax purposes were comprised of 

5 

 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Management’s Discussion & Analysis of 
Financial Condition and Results of Operations 

income of $52,369,000 ($0.74408 per unit) and return of capital of $4,800,000 ($0.06820 per unit). Of this amount, $36.7 
million or $0.5212 per unit was from Westshore, $15.8 million or $0.2249 was from the Fording Trust distributions (net of 
debt service costs), and $4.7 million or $0.0662 was from proceeds on the sale of the Fording Trust units. 

The following sets out selected financial information for the Fund on a quarterly basis for the last two financial years. 

(In thousands of dollars except per unit amounts) 
Income 

Interest 

  Fording Canadian Coal Trust distributions 
  Equity in (loss) earnings before extraordinary 

gain of Westshore 

  Amortization of purchase price discrepancy 

Expenses 
Interest 

  Administration  

Earnings before gain on sale of Fording 
Canadian Coal Trust units and extraordinary 
gain 
Gain on sale of  Fording Canadian Coal Trust 
units 

Earnings before extraordinary gain 

Extraordinary gain 

Net earnings 
Add: 

Equity in (loss) earnings before extraordinary 
gain of Westshore 
Amortization of purchase price discrepancy 
Gain on sale of Fording Canadian Coal Trust 
units 
Extraordinary gain 
Fording Canadian Coal Trust Distributions 
Net proceeds on sale of Fording Canadian 
Coal Trust Units  
Repayment of long-term debt 

Distributable cash 

Distributions declared 

12 Months Ended 
Dec 31, 2003 

Mar 31, 2003 

Jun 30, 2003 

Sep 30, 2003 

Dec 31, 2003 

Three Months Ended 

$  37,302 
9,040 

$   9,743 
1,114 

(859) 
(6,075) 
39,408 

7,574 
747 

8,321 

31,087 

18,898 

49,985 

7,295 

57,280 

859 
6,075 

(18,898) 
(7,295) 
14,489 

125,161 
(120,626) 

57,045 

57,169 

540 
(1,519) 
9,878 

802 
124 

926 

8,952 

- 

8,952 

6,908 

15,860 

(540) 
1,519 

- 
(6,908) 
10,882 

- 
- 

20,813 

14,428 

$  9,895 
3,143 

(1,677) 
(1,519) 
9,842 

2,393 
270 

2,663 

7,179 

- 

7,179 

(362) 

6,817 

1,677 
1,519 

- 
362 
3,243 

- 
- 

13,618 

11,965 

$  7,355 
2,543 

(281) 
(1,519) 
8,098 

2,265 
219 

2,484 

5,614 

- 

5,614 

459 

6,073 

281 
1,519 

- 
(459) 
(64) 

$  10,309 
2,240 

559 
(1,518) 
11,590 

2,114 
134 

2,248 

9,342 

18,898 

28,240 

290 

28,530 

(559) 
1,518 

(18,898) 
(290) 
428 

- 
- 

125,161 
(120,626) 

7,350 

11,965 

15,264 

18,811 

Distributions declared per Unit 

$  0.812 

$  0.205 

$  0.170 

$  0.170 

$  0.267 

Earnings before extraordinary gain per Unit 

$  0.710 

$  0.127 

$  0.102 

$  0.080 

$  0.401 

Net earnings per Unit 

$  0.814 

$  0.225 

$  0.097 

$  0.086 

$  0.406 

6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Management’s Discussion & Analysis of 
Financial Condition and Results of Operations 

Income 

Interest 
Equity in earnings (loss) of Westshore 
Amortization of purchase price discrepancy 

Expenses 

Administration costs 

Net earnings 
Add: 

Equity in (earnings) loss of Westshore 
Amortization of purchase price discrepancy 

Distributable cash 

Distributions declared 

12 Months Ended 
Dec 31, 2002 

Mar 31, 2002 

Jun 30, 2002 

Sep 30, 2002 

Dec 31, 2002 

Three Months Ended 

$  43,865 
831 
(5,848) 
38,848 

511 

38,337 

(831) 
5,848 

43,354 

43,354 

$   8,100 
2,040 
(1,989) 
8,151 

63 

8,088 

(2,040) 
1,989 

8,037 

9,853 

$  13,512 
(178) 
(1,989) 
11,345 

$  12,910 
(1,066) 
(1,990) 
9,854 

128 

11,217 

178 
1,989 

13,384 

11,261 

206 

9,648 

1,066 
1,990 

12,704 

11,261 

$  9,343 
35 
120 
9,498 

114 

9,384 

(35) 
(120) 

9,229 

10,979 

Distributions declared per Unit 

$  0.616 

$  0.140 

$  0.160 

$  0.160 

$  0.156 

Net earnings per Unit 

$  0.545 

$  0.115 

$  0.159 

$  0.137 

$  0.134 

Liquidity and Capital Resources 

During 2003, the Fund’s operating cash inflows were based on the interest income on the Notes and proceeds from the 
Fording Trust distributions. The interest on the Notes is at a variable rate and fluctuates in proportion to Westshore’s 
earnings before depreciation,  interest, income taxes and extraordinary gain. In 2003, cash inflows to the Fund were 
increased by the distributions received from the Fund’s investment in the Fording Trust, net of the interest costs on funds 
borrowed to finance the investment. As the Fund no longer holds any units of the Fording Trust, no distributions will be 
received from this source in the future. 

The Fund is obliged to distribute cash inflows to Unitholders, less administrative costs of the Fund and amounts 
required for the operation of the Fund and any amounts which may be paid in connection with any cash redemption of 
units. The Fund has no fixed distribution requirements, distributions being solely a function of amounts received by the 
Fund. Because the Fund’s investment in Westshore is of a passive nature, it is not anticipated that the Fund will require 
significant capital resources to maintain its investment in Westshore on an ongoing basis. 

With the retirement in January 2004 of the remaining debt incurred to fund the acquisition of the Fording Trust units, 
the Fund has no long term debt, nor does the Fund have any capital or operating leases, purchase obligations or other long 
term obligations. For a discussion of Westshore’s capital expenditures and its capital resources available to fund such 
expenditures, see “Westshore Terminals Ltd. – Operational Review”. 

Fording Trust 

On February 28, 2003, Fording Inc. (“Fording”) completed a Plan of Arrangement which created the Fording Trust. 
As part of the broader transactions relating to the Plan of Arrangement, the Fund subscribed for $150 million worth of 
trust units of the Fording Trust, representing approximately  9.1% of the units of the Fording Trust, and Fording and Teck 
Cominco Limited entered into the Coal Partnership which  acquired the metallurgical coal operations of Fording, Luscar 
and Teck Cominco Limited. The Fund financed its investment in the Fording Trust through two credit facilities that were 
negotiated together by the Fund with a Canadian chartered bank and Great Pacific Capital Corp., a member of The Jim 

7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Management’s Discussion & Analysis of 
Financial Condition and Results of Operations 

Pattison Group. Westar Group Ltd., another member of The Jim Pattison Group, is the manager of Westshore a nd the 
administrator of the Fund. 

During 2003, the Fund received a payment from Fording on closing of the Fording Trust transaction on account of 
expenses and costs in the amount of $7.6 million net of identifiable external costs such as financing and professional fees. 
In addition, the Fund received total distributions of $8.2 million from the Fording Trust (net of debt service costs) which 
were distributed to unitholders. 

By December 31, 2003, the Fund had sold 3,360,714 of its Fording Trust units. The proceeds were principally used to 
repay most of the $150 million debt (incurred to buy the units), and $4.7 million was distributed to the Fund’s unitholders 
as a special distribution. By January 31, 2004, the Fund had sold the balance of the Fording Trust units. The proceeds were 
used to repay the balance of the debt and to pay $11.7 million to unitholders as a final special distribution of the Fording 
Trust unit sale proceeds as part of the Q1 2004 distribution to the Fund’s unitholders. 

Effect on Customer Contracts 

Upon formation, the Coal Partnership became the world’s second-largest exporter of metallurgical coal. Westshore has 
contracts covering the five mines located in British Columbia owned by the Coal Partnership. In connection with the 
creation of the Coal Partnership, Westshore’s existing contract relating to the Elkview mine (which runs to 2010) was 
assigned to the Coal Partnership, and Westshore entered into a long-term port services contract, which will run to 
February 29, 2012, covering the three mines previously owned by Fording. These contracts provide that, subject to minor 
exceptions relating to customer preferences, all of the coal shipped from those mines through West Coast ports must be 
shipped through Westshore. 

As of April 1, 2003 and in accordance with the new agreements, the loading rates for coal shipped from the Elkview 
mine  and  for  a  portion  of  the  tonnage  from  the  Fording  River  and  Greenhills  mines,  and  therefore  a  majority  of 
Westshore’s revenue, are linked to the price in Canadian dollars realized by the Coal Partnership for that coal. 

The contract for the Line Creek mine, which was also assigned to the Coal Partnership, covers only a portion of the 
product of that mine. The remaining coal from the Line Creek mine is shipped through the Neptune terminal owned by 
Neptune Terminals Ltd. The Coal Partnership owns a 46% interest in Neptune Terminals. 

Westshore’s remaining contract is with Luscar Ltd. and covers the Obed Mountain and Coal Valley mines. The term of 
this contract has been extended to 2017.  In March 2003, Luscar Ltd. announced it was suspending production at its Obed 
Mountain mine for an indefinite period effective April 2003. 

The Fund’s significant accounting policies are found in note 2 of the Fund’s financial statements beginning on page 16. 
As the Fund’s income is again entirely dependent on the performance of Westshore, Westshore’s accounting estimates 
could have a significant impact on the Fund’s financial results. See “Westshore Terminals Ltd. – Operational Review – 
Critical Accounting Estimates”. 

8 

 
 
Westshore Terminals Income Fund 
Management’s Discussion & Analysis of 
Financial Condition and Results of Operations 

Outlook 

The Fund’s cash inflows are entirely dependent on Westshore’s earnings before depreciation,  interest, income taxes 
and extraordinary gain. This is significantly influenced by three variables:  the volume of coal shipped through the terminal; 
the US dollar denominated price received by Westshore’s customers for that coal; and the Canadian-US dollar exchange 
rate. 

Since December 2003 through to the end of February 2004, Westshore’s throughput has been negatively impacted by a 
lack of coal inventory at the terminal and lower than normal levels of rail deliveries. By late February 2004 shipments had 
increased to more customary levels. At present, Westshore’s throughput volume is anticipated to be greater in 2004 than in 
2003. 

The long-term handling contract covering the three mines previously owned by Fording has increased the impact on 
the Fund’s financial results of the Canadian dollar price realized for coal handled by Westshore. As a result of Westshore’s 
arrangements w ith the Coal Partnership covering the former Fording mines and the Elkview mine, the loading rate for a 
majority of the coal loaded by Westshore is a function of the price in Canadian dollars realized by the Coal Partnership for 
that coal. Accordingly that portion of Westshore’s revenues is directly affected by changes in the US dollar denominated 
coal price achieved by the Coal Partnership and by the US-Canadian dollar exchange rate. 

A strengthening Canadian dollar against the US dollar negatively impacts Westshore’s throughput rate it receives. For 
every US$0.01 increase in the value of the Canadian dollar, at current volumes and constant US dollar denominated coal 
prices and before the impact of any hedging arrangements, annual distributions can be expected to decrease by $0.021 per 
unit. Similarly, for every US$1.00 change in the price of metallurgical coal, at current volumes annual distributions can be 
expected to change by $0.032 per unit. 

Additional information on Westshore’s outlook is contained on page 13 of this Annual Report. The date of the Fund’s 
management’s discussion and analysis of financial condition and results of operations and the information on Westshore’s 
outlook is February 13, 2004. 

9 

 
 
Westshore Terminals Ltd. 
Operational Review 

General 

Westshore operates a coal storage and loading facility at Roberts Bank, British Columbia which is the largest coal 
loading facility on the west coast of North and South America. Westshore operates on a throughput basis and receives 
handling  charges  from  its  customers  based  on  volumes  of  coal  exported  through  the  terminal.  Under  Westshore’s 
contracts, Westshore does not take title to the coal it handles. Market conditions for coal affect the competitiveness of 
Westshore’s customers and as a result affect the volume of coal handled by Westshore. Westshore handles and loads coal 
from mines in British Columbia and Alberta and, occasionally, the northwestern United States. Coal shipped from the 
mines acquired by the Coal Partnership, which is now by far Westshore’s largest customer, accounted for  94% of 
Westshore’s revenues in 2003. 

Coal is delivered to the terminal in unit trains operated by Canadian Pacific Railway, Canadian National Railways and 
Burlington Northern Santa Fe Railway and is then unloaded and either directly transferred onto a ship or stockpiled for 
future ship loading. Ultimately, the coal is loaded onto ships that are destined for approximately 20 countries world-wide, 
with the largest volumes presently being shipped to Japan, Europe and South Korea. 

Markets & Customers 

Shipments of coal through the terminal by destination for the past three years were as follows: 

Shipments by Destination 
(Expressed in thousands of metric tonnes) 

Japan 
Europe 
S. Korea 
S. America 
Taiwan 
China 
Other 

Total 

2003 
Tonnes 
6,823 
5,669 
2,856 
1,696 
1,004 
531 
745 

% 
35 
29 
15 
9 
5 
3 
4 

2002 
Tonnes 
6,896 
5,469 
3,787 
2,064 
809 
- 
409 

% 
35 
28 
20 
11 
4 
- 
2 

2001 
Tonnes 
7,576 
7,087 
4,684 
2,775 
979 
- 
191 

% 
33 
30 
20 
12 
4 
0 
1 

19,324 

100.0 

19,434 

100.0 

23,292 

100.0 

With its five mines in British Columbia, the Coal Partnership is by far Westshore’s largest customer. These mines 
shipped 94% of the terminal’s throughput in 2003 as compared to 97% in 2002. There continues to be an emphasis on 
both the quality and blending of coal at the terminal to ensure that the customer receives the contractually specified type of 
coal. More than 90% of the coal product moving through the terminal is now blended. During 2003, 91% of Westshore’s 
volume was metallurgical coal (92% in 2002), with the remaining 9% being thermal coal (8% in 2002). 

All of Westshore’s customers compete with other suppliers of coal throughout the world. Australia is the most 
significant competitor. Its closer proximity to primary customers in Asia and, until recently, its lower dollar in relation to 
the Canadian dollar, among other reasons, have given Australian producers some competitive advantages over Westshore’s 
customers. 

There has been significant consolidation among producers of seaborne metallurgical coal. In Canada the Gregg River, 
Quintette, Smoky River, Bullmoose and Obed Mountain Mines have all closed in recent years, and the Cardinal River Mine 
is scheduled to close this year. Of these mines, the Gregg River Mine and the Obed Mountain Mine (and occasionally the 
Cardinal River Mine) shipped coal through Westshore. In part this consolidation resulted from a significant decrease in the 

10 

 
 
 
 
Westshore Terminals Ltd. 
Operational Review 

U.S. dollar denominated price for coal between 1997 and 2000. While prices have recovered since 2000, the trend to 
consolidation has continued.  

The most significant event from Westshore’s point of view is the formation of the Coal Partnership to become the 
world’s second largest exporter of metallurgical coal. Because of its contractual arrangements with the Coal Partnership, 
Westshore would benefit from any increased sales which the Coal Partnership is able to realize by virtue of enhanced 
marketing opportunities. Together the largest Australian producer and the Coal Partnership account for approximately 
50% of the world’s seaborne metallurgical coal trade. 

Results of Operations 

Westshore loaded 19.3 million tonnes of coal during 2003 as compared to 19.4 million tonnes during 2002 and 23.3 
million tonnes in 2001. The reduction in tonnage was principally due to windstorm damage to both shiploaders at Berth 2 
at the beginning of the year, which resulted in Westshore operating with only one berth for approximately seven months. 
Prior to the windstorm incident, 2003 tonnage levels through Westshore were expected to be somewhat higher than 2002 
levels. In the fourth quarter, Westshore loaded 6.0 million tonnes of coal compared with 4.3 million tonnes in the last 
quarter of 2002. The increase in tonnage was due to increased demand for coal from international buyers, some of which 
may have represented a catch-up of volumes not shipped during the earlier part of the year due to the windstorm incident. 

The January 2, 2003 windstorm incident resulted in significant damage to the two shiploaders at Berth 2, rendering it 
incapable of loading coal for approximately a seven month period. Repairs were completed and full operations at Berth 2 
resumed in August of 2003. Westshore’s insurance covered both the costs of repair of Berth 2 and most of the lost profits 
from reduction in shipments, net of applicable deductibles. 

The comparison of Westshore’s operating results for the past three years is as follows: 

Operating Results 
(Expressed in thousands of dollars) 

Revenue 
  Coal 
  Other  

Expenses 
  Operating & Administrative 
Earnings before depreciation,  interest, 
income taxes and extraordinary gain 

2003 

2002 

2001 

$  97,048 
8,813 
105,861 

60,689 

45,172 

$ 109,581 
2,085 
111,666 

58,312 

53,354 

$ 126,186 
879 
127,065 

68,208 

58,857 

Coal loading revenue decreased to $97.0 million in 2003 compared with $109.6 million in 2002. The decrease was 

primarily due to lower average loading rates.  

Subject to a floor rate, the loading rates for the majority of the coal handled at Westshore have since April 1, 2003 been 
tied to the average price in Canadian dollars realized by the Coal Partnership for that coal. The Canadian dollar coal price 
realized by the Coal Partnership in the period April 1, 2003 – December 31, 2003 was reduced by reason of a stronger 
Canadian dollar which rose by 14% during the period, and a decrease effective April 1, 2003 in the US dollar denominated 
price for metallurgical coal of approximately US$2.00 per tonne. As a result, there was a material reduction in the loading 
rates received by Westshore since April 1, 2003 for coal from each of the Fording River, Elkview and Greenhills mines, 
compared to the average rates received in the period April 1, 2002 – March 31, 2003 for coal from those mines. The 

11 

 
 
 
 
 
 
 
 
 
 
Westshore Terminals Ltd. 
Operational Review 

average loading rate per tonne in the period April 1 – December 31, 2003 was $4.86, reflecting in part the average US-
Canadian dollar exchange rate in that period. In the fourth quarter loading revenue was $28.7 million as compared to $22.8 
million in the fourth quarter of 2002. The increase was the result of higher tonnage, partly offset by the reduction in 
average loading rate described above. 

Westshore entered into some limited hedging arrangements in 2003 to counter the effect of the strengthening dollar, 

and also entered into similar hedging arrangements in 2004. 

Other revenue increased principally because of the inclusion of proceeds of business interruption insurance as a result 
of Berth 2 being inoperative. Westshore accounted for $6.0 million of such proceeds in 2003, which is most of what it 
expects to receive. A substantial portion was recognized in the fourth quarter, even though received on account of loss of 
profits from the earlier part of the year. In addition, other income increased due to the inclusion of hedging gains, and 
lower costs incurred for train detention. These increases were offset by higher demurrage charges, 80% of which were 
incurred in the fourth quarter when Westshore shipped 6.0 million tonnes of coal. 

Operating and administrative expenses increased from $58.3 million in 2002 to $60.7 million in 2003. This increase in 
operating expense was mainly due to additional benefit costs, including pension expense and other post-retirement 
benefits. Administrative expenses were higher than the prior year due  to legal and other services related to labour 
negotiations.  

As a result of the foregoing, Westshore’s earnings before depreciation, interest, income taxes and extraordinary gain for 
2003 were $45.2 million as compared to $53.4 million in 2002. The extraordinary gain represents the receipt by Westshore 
of insurance proceeds relating to the costs of repair of Berth 2 net of disposal costs and income taxes. Westshore’s 
insurance was adequate to cover substantially all of the costs of repair (excluding betterments) and most of the lost profits 
from reduction in shipments, net of applicable deductibles. 

Liqui dity and Capital Resources 

Westshore has in place with a Canadian chartered bank a $10 million secured operating facility which, if required, can 
be utilized to meet working capital requirements. This facility was not used during the year and remained undrawn at 
December 31, 2003. Westshore’s distribution policy leaves 10% of earnings before depreciation,  interest, income taxes 
and extraordinary gain (formerly 15% prior to approval on February 6, 2004 by the Trustees and Westshore’s Board of 
Directors to increase target distributions) to cover cash requirements not deducted in the computation of earnings before 
depreciation,  interest, income taxes and extraordinary gain, such as capital expenditures and special pension contributions. 
In 2003, Westshore made extraordinary capital expenditures to rebuild the shiploaders at Berth 2. These were covered by 
the proceeds of insurance, most of which Westshore received in 2003 and the balance is anticipated to be received in the 
second quarter of 2004. 

Westshore’s obligations under  operating leases are set out in note 10 to Westshore’s audited financial statements 
contained in this report. Westshore does not have any long-term debt, capital lease obligations, or other long-term 
obligations. 

12 

 
 
Westshore Terminals Ltd. 
Operational Review 

Labour 

After difficult negotiations, agreements with all three locals of the International Longshore and Warehouse Union 
(“ILWU”) (the longshoremen, foreman and the clerical workers) were negotiated for four-year terms. These agreements 
are now in place and expire on January 31, 2007. 

Transactions with Related Parties 

In  2003  Westshore  paid  $750,000  (excluding  GST)  to  Westar  for  management  services  provided  under  the 
Management Agreement dated January 30, 1997 between Westshore and Westar. Under the Governance Agreement, 
Westar is entitled to appoint a majority of the directors of Westshore. 

Critical Accounting Estimates 

The preparation of financial statements and related disclosure in accordance with GAAP requires Westshore to make 
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and contingencies. 
These estimates are based on historical experience and on assumptions that are considered at the time to be reasonable 
under the circumstances. Under different assumptions or conditions, the actual results may differ, potentially materially, 
from those previously estimated.  

Westshore’s significant accounting policies are found in note 2 of Westshore’s financial statements beginning on 
page 27. The following is a discussion of the accounting estimates of Westshore that are significant in determining 
Westshore’s financial results. 

Employee Future Benefits 

Westshore has post-retirement benefit obligations under its pension plans and other post-retirement benefit plans, the 
costs of which are based on estimates.  Actuarial calculations of benefit costs and obligations depend on Westshore’s 
assumptions about future events.  Major estimates and assumptions relate to expected plan investment performance, salary 
escalation, retirement ages of employees and expected health care costs, as well as discount rates, withdrawal rates and 
mortality rates. 

Provisions for Contingencies 

Westshore makes certain provisions for contingencies, including its portion of ship demurrage and train detention 
costs, which are often not finally determined until well after the year-end. While Westshore endeavours to ensure that that 
provisions for contingencies are reasonable in the circumstances, actual costs may be greater or less than the provisions 
made for those costs. 

Outlook 

With the completion of the long-term coal handling contract with the Coal Partnership, Westshore has secured an 
opportunity to maintain significant levels of coal throughput through the terminal for many years to come. Critical to 
Westshore’s ongoing success will be the ability of the Coal Partnership to maintain and increase its export volumes while 
competing with other suppliers for sales worldwide.  

13 

 
 
Westshore Terminals Ltd. 
Operational Review 

Since the start of 2004, throughput at Westshore has been impacted by a lack of coal inventory and lower than normal 
levels of rail deliveries to Westshore. By late February 2004, coal deliveries had increased to levels more consistent with 
historic levels. Westshore has been working with the Coal Partnership and the railroads to manage this situation. At the 
present time total volume throughput at Westshore for 2004 is anticipated to be higher than 2003 levels. 

As noted earlier, the loading rates for the majority of the coal handled at Westshore have since April 1, 2003 been tied 
to the average price in Canadian dollars received by the Coal Partnership for that coal. This variable rate is driven by the 
settlement by the Coal Partnership of prices for metallurgical coal in U.S. dollars and by the Canadian/U.S. dollar 
exchange rate. On December 19, 2003 the Fording Trust announced that the Coal Partnership had achieved sufficient 
settlements to indicate that its average price for coal sales in the period April 1, 2004 to March 31, 2005 is expected to be 
approximately 20% higher (in US dollars) than the average U.S. dollar price realized in the coal year ending March 31, 
2004. This represents sales for all products, not only those exported through Westshore. Such increase would more than 
offset the increase in the value of the Canadian dollar since April 1, 2003, when variable rates went into effect for most of 
the tonnage shipped through Westshore. 

14 

 
 
 
 
 
Westshore Terminals Income Fund 
Financial Reporting  

Management’s Report 

The financial statements and other information in this annual report have been prepared by and are the 
responsibility of the management of the Fund. The financial statements have been prepared in accordance with 
accounting principles generally accepted in Canada and reflect where necessary management’s best estimates and 
judgments. 

Management is also responsible for maintaining systems of internal and administrative controls to provide 
reasonable assurance that the Fund’s assets are safeguarded, that transactions are properly executed in accordance 
with appropriate authorization and that the accounting systems provide timely, accurate and reliable financial 
information. 

The Trustees are responsible for assuring that management fulfills its responsibility for financial reporting and 
internal control. The Trustees perform this responsibility at meetings where significant accounting, reporting and 
internal control matters are discussed and the financial statements and annual report are reviewed and approved. 

The financial statements have been audited on behalf of the Unitholders by PricewaterhouseCoopers LLP, 
Chartered Accountants, in accordance with Canadian generally accepted auditing standards. The Auditors’ Report 
outlines the scope of their examination and their independent professional opinion on the fairness of these 
financial statements. 

William W. Stinson 
Trustee 

M. Dallas H. Ross 
Trustee 

Auditors’ Report 
To the Unitholders of Westshore Terminals Income Fund 

We have audited the balance sheets of Westshore Terminals Income Fund (the Fund) as at December 31, 
2003 and 2002 and the statements of earnings and cumulative earnings and cash flows for the years then ended. 
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an 
opinion on these financial statements based on our audits. 

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards 
require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall financial statement presentation. 

In our opinion, these financial statements present fairly, in all material respects, the financial position of the 
Fund as at December 31, 2003 and 2002 and the results of its operations and its cash flows for the years then 
ended in accordance with Canadian generally accepted accounting principles. 

Chartered Accountants 
Vancouver, B.C. 
February 13, 2004 (except for note 5, which is as at March 1, 2004) 

15 

 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Balance Sheets 
As at December 31, 2003 and 2002 (in thousands of dollars) 

Assets 

Current assets 
Cash and cash equivalents 
Accounts receivable 
Other assets 

Investment in Fording Canadian Coal Trust (note 3) 

Investment in Westshore Terminals Ltd. (note 4) 

Liabilities and Unitholders’ Equity 

Current liabilities 
Accounts payable and accrued liabilities (note 8) 
Distribution payable to unitholders (note 7) 

Long-term debt (note 5) 

Unitholders’ equity 
Capital contributions (note 6) 
Cumulative earnings 
Cumulative distributions declared 

APPROVED BY THE TRUSTEES: 

2003 
$ 

2002 
$ 

17,361   
1,673   
52   

19,086   

29,248   

510,497   

558,831   

399   
18,811   

19,210   

29,374   

48,584   

663,602   
208,774   
(362,129)  

510,247   

558,831   

10,858 
- 
235 

11,093 

- 

510,136 

521,229 

114 
10,979 

11,093 

- 

11,093 

663,602 
151,494 
(304,960) 

510,136 

521,229 

William W. Stinson 
Trustee 

M. Dallas H. Ross 
Trustee 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
   
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
   
 
 
 
 
 
   
 
 
   
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Statements of Earnings and Cumulative Earnings 
For the years ended December 31, 2003 and 2002  
(in thousands of dollars, except unit amounts)  

Income 
Interest (note 4) 
Equity in (loss) earnings before extraordinary gain of  

Westshore Terminals Ltd. 

Amortization of purchase price discrepancy (note 4) 
Fording Canadian Coal Trust distributions 

Expenses 
Interest (note 5) 
Administration (note 8) 

Earnings before gain on sale of Fording Canadian Coal Trust 

units and extraordinary gain 

Gain on sale of Fording Canadian Coal Trust units (note 3) 

Earnings before extraordinary gain 

Extraordinary gain (note 9) 

Net earnings for the year 

Cumulative earnings - Beginning of year 

Cumulative earnings - End of year 

Earnings before extraordinary gain per trust unit 

Basic and diluted earnings per trust unit 

2003 

$   

37,302  

(859) 
(6,075) 
9,040  

39,408  

7,574  
747  

8,321  

31,087  

18,898  

49,985  

7,295  

57,280  

2002 
$ 

43,865 

831 
(5,848) 
- 

38,848 

- 
511 

 511 

38,337 

- 

38,337 

- 

38,337 

151,494  

113,157 

208,774  

151,494 

0.710   

0.814   

0.545 

0.545 

Weighted average number of trust units outstanding 

70,381,111  

70,381,111 

17 

 
 
 
 
 
   
 
 
 
   
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
  
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
Westshore Terminals Income Fund 
Statements of Cash Flows 
For the years ended December 31, 2003 and 2002 (in thousands of dollars) 

Cash flows from operating activities 
Net earnings for the year 

Items not affecting cash 

Equity in loss (earnings) before extraordinary gain of  

Westshore Terminals Ltd. 

Amortization of purchase price discrepancy 
Gain on sale of Fording Canadian Coal Trust units 
Extraordinary gain (note 9) 

Changes in non-cash working capital 

Cash flows from financing activities 
Proceeds from long-term debt 
Repayment of long-term debt 
Distributions paid to unitholders 

Cash flows from investing activities 
Investment in Fording Canadian Coal Trust 
Fording Canadian Coal Trust regular distributions in excess of Fund’s share 

of earnings 

Fording Canadian Coal Trust special distributions 
Fording Canadian Coal Trust special receipt 
Net proceeds on sale of Fording Canadian Coal Trust units 

Increase (decrease) in cash and cash equivalents 

Cash and cash equivalents - Beginning of year 

Cash and cash equivalents - End of year 

Supplemental cash flow information 

Cash paid for interest 

Cash received for interest 

2003 

$   

2002 
$ 

57,280 

38,337

859 
6,075 
(18,898) 
(7,295) 

38,021 
(1,205) 

36,816 

(831)
5,848
-
-

43,354
(709)

42,645

150,000 
(120,626) 
(49,337) 

-
-
(47,475)

(19,963) 

(47,475)

(150,000) 

428 
6,414 
7,647 
125,161 

(10,350) 

6,503 

10,858 

17,361 

-

-
-
-
-

-

(4,830)

15,688

10,858

7,282 

-

37,302 

43,865

18 

 
 
 
 
 
   
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars, except unit amounts) 

1  Organization and basis of presentation 

The Fund is an open-ended trust created under the laws of the Province of British Columbia by a Declaration of 
Trust made as of December 2, 1996. The Fund was created to acquire 100% of the issued and outstanding common 
shares and $470 million of unsecured subordinated notes (the Notes) of Westshore Terminals Ltd. (Westshore) from 
Westar Group Ltd. (Westar). T he acquisition of common shares and Notes was financed by the public issue of trust 
units of the Fund. 

While  the  Fund  owns  all  of  Westshore’s  issued  common  shares,  Westar  is  entitled  to  designate  three  of 
Westshore’s five directors. Accordingly, Westshore  does not meet the definition of a subsidiary for accounting 
purposes and the Fund accounts for its investment from the effective date of the acquisition of January 1, 1997 
using the equity method. Under this method, the cost of the investment is increased  (decreased) by Westshore’s 
earnings (loss) and reduced by the amortization of the purchase price discrepancy, any dividends paid to the Fund by 
Westshore, and repurchases of Westshore’s common shares held by the Fund. Periodically, the Fund reviews the 
carrying value of its investment in Westshore for impairment. The investment will be written down when there has 
been a decline in value that is considered to be other than temporary. 

2  Significant accounting policies 

Accounting principles 

These financial statements have been prepared in accordance with accounting principles generally accepted in 

Canada. 

Cash and cash equivalents 

Cash and cash equivalents consist of cash on deposit with banks and highly liquid short-term interest-bearing 

securities with maturities at their purchase date of three months or less. 

Amortization of purchase price discrepancy 

The excess of the cost of the Fund’s investment in Westshore’s common shares and Notes over the net book value 
at the date of acquisition has been allocated to plant and equipment, future income taxes and goodwill. The excess 
related  to  plant  and  equipment  is  depreciated  using  the  unit-of-production  method  over  the  estimated  useful 
production life of the assets. The estimated useful lives of plant and equipment range from 3 to 35 years. Goodwill is 
not amortized. 

Income taxes  

The Fund is a unit trust for income tax purposes. As such, the Fund is only taxable on any taxable income not 
allocated  to  the  unitholders.  During  2003  and  2002,  all  taxable  income  of  the  Fund  has  been  allocated  to  the 
unitholders. Income tax obligations relating to distributions from the Fund are the obligations of the unitholders. 

Westshore accounts for income taxes using the liability method. Under this method, current income taxes are 
recognized for the estimated income taxes payable or recoverable for the current period. Future income tax assets and 
liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and 
are measured using the substantially enacted tax rates and laws that will be in effect when the differences are expected 
to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in income in the 
period in which the change occurs. 

19 

Westshore Terminals Income Fund 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars, except unit amounts) 

Investment in Fording Canadian Coal Trust 

The investment in Fording Canadian Coal Trust (Fording Trust) is carried at cost. The Fund receives cash 
distributions from Fording Trust. Distributions received up to the Fund’s interest in the net earnings of Fording Trust 
are recorded as income. Any distributions received in excess of that amount are recorded as a reduction in the Fund’s 
investment in Fording Trust. 

When there has been a decline in value of the investment that is considered to be other than temporary, the 

investment will be written down. 

Use of estimates 

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. 

3  Investment in Fording Canadian Coal Trust 

Effective February 28, 2003, the Fund paid $150 million for 4.3 million units (9.1% interest) of the newly formed 
Fording Trust. The Fund financed this investment through term bank loans of $120 million from Canadian chartered 
banks  and  $30 million  from  an  affiliate  of  Westar.  Fording  Trust  holds  a  65%  interest  in  the  Elk  Valley  Coal 
Partnership (the Coal Partnership) and a 100% interest in Fording Inc.’s (Fording) industrial minerals business. On 
February 28, 2003, the Coal Partnership acquired all the metallurgical coal assets of Fording, Teck Cominco Limited 
(Teck) and the Luscar/CONSOL Joint Ventures (Luscar). Westshore’s coal handling contracts previously negotiated 
with Fording, Teck, and Luscar, including exclusivity agreements, will continue in effect. 

During 2003, the Fund sold 3.4 million units of Fording Trust for net proceeds of $125.2 million, resulting in a 
gain of $18.9 million. These proceeds were used to repay the $30 million loan from an affiliate of Westar and 
$90.6 million of the $120 million term bank loans and the balance will be distributed to unitholders.  

Subsequent to December 31, 2003, the Fund sold its remaining interest in Fording Trust for $41.2 million. The 
Fund used the proceeds to repay the remaining outstanding term bank loans and the remainder will be distributed to 
unitholders. 

The Fund’s investment in Fording Trust as at December 31, 2003 is as follows: 

Investment in Fording Trust 
Distributions received 

Regular distributions in excess of Fund’s share of earnings 
Special distributions 
Special receipt 

Sale of units 

$ 

150,000   

(428)   
(6,414)   
(7,647)   
(106,263)   

29,248   

20 

 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
   
 
 
Westshore Terminals Income Fund 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars, except unit amounts) 

4  Investment in Westshore Terminals Ltd. 

Common shares (177,964,001 shares) 
Notes 
Cumulative equity in (loss) earnings before extraordinary gain; and 

amortization of purchase price discrepancy 

Extraordinary gain (note 9) 

2003 
$ 

177,964 
470,000 

(144,762) 
7,295 

2002 
$ 

177,964 
470,000 

(137,828) 
- 

510,497 

510,136 

The Notes mature on March 31, 2022 and are unsecured and subordinated to all secured obligations of Westshore. 

Interest on the Notes is determined using a  variable interest rate based on a proportion of Westshore’s earnings 
before depreciation, interest, income taxes and extraordinary items calculated monthly. Interest for any month cannot 
be lower than 6% and not higher than 11.5%. 

During the year ended December 31, 2003, the Fund earned interest income of $37.3 million (2002 - $43.9 million) 

on the Notes. 

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.  During  the  year  ended  December 31,  2003,  in  addition  to  the  normal 
amortization  of  the  purchase  price  discrepancy  for  the  year  of  $6.1 million,  the  Fund  wrote  off  an  additional 
$3.1 million that represents the portion of the purchase price discrepancy related to the damaged equipment from the 
ship loader accident (note 9). The Fund’s purchase price discrepancy has been ascribed to plant and equipment, 
goodwill and future income taxes and has been amortized as follows: 

21 

 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars, except unit amounts) 

2003 

2002 

Purchase 
price 
discrepancy 
allocation 
$ 

175,754   
(80,143)   

95,611   

Accumulated 
amortization 
$ 

87,875   
(48,838)   

39,037   

Net 
$ 

87,879   
(31,305)   

56,574   
365,541   

422,115   

Net 
$ 

105,427 
(39,661) 

65,766 
365,541 

431,307 

Plant and equipment 
Future income taxes 

Goodwill 

5  Long-term debt 

The Fund financed its investment in Fording Trust (note 3) through term bank loans of $120 million from 

Canadian chartered banks and $30 million from an affiliate of Westar. 

The $120 million term bank loans bear interest at the bankers’ acceptance rate plus 1.75% to 3.00% and are due on 
February 28, 2006. The $30 million loan bears interest at the Bank of Nova Scotia prime rate plus 1.00% to 2.25% and 
is due on February 28, 2007. These loans are guaranteed by Westshore and are secured by a general security agreement 
covering all assets of the Fund and Westshore. 

As at December 31, 2003, the Fund’s long-term debt was as follows: 

Loan from Canadian chartered banks 

$ 

29,374   

The $30 million loan from an affiliate of Westar was repaid in full during the year, as well as $90.6 million of the 
term bank loans (note 3). Subsequent to December 31, 2003, the Fund repaid all of the outstanding balance of the 
$120 million term bank loans. 

Interest expense for the year ended December 31, 2003 on these loans was $7,733,000, of which $1,616,000 related 

to the loan from an affiliate of Westar. 

The Fund is subject to interest rate risk on the floating rate payments under its long-term debt. The Fund has 
managed this exposure by entering into an interest rate swap agreement. Payments and receipts under this agreement 
are recognized as adjustments to interest expense in a manner that matches them to interest payments under floating 
rate financial liabilities. 

As at December 31, 2003, the Fund had entered into an interest rate swap agreement expiring on April 10, 2005 to 
fix the interest rate on $50 million of its long-term debt at 4.02%. On March 1, 2004, the Fund paid $1,128,000 to 
retire its interest rate swap agreement. 

22 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
   
   
 
   
   
   
 
 
   
   
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Income Fund 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars, except unit amounts) 

6  Trust units 

The Declaration of Trust provides that an unlimited number of trust units may be issued. Each unit represents an 
equal and undivided beneficial interest in any distribution from the Fund and in the net assets in the event of 
termination or windup. All units are of the same class with equal rights and privileges. Units may be issued for 
consideration payable in instalments, with such units being held as security for unpaid instalments. 

Trust units are redeemable at the holders’ option at amounts related to market prices at the time, subject to a 
maximum of $250,000 in cash redemptions by the Fund in any particular month. This limitation can be waived at the 
discretion of the Trustees. Redemption in excess of this amount, assuming no waiving of the limitation, shall be paid 
by way of a distribution in specie of a pro rata number of Westshore common shares and Notes.  

Capital contributions as at December 31, 2003 and 2002 are as follows: 

Capital contributions 

7  Distributions to unitholders 

Number of 
units 

$ 

70,381,111   

663,602 

Distributions to unitholders are made quarterly with provision for an optional fifth distribution following the end 

of the fiscal year. 

During the year ended December 31, 2003, the Fund declared cash distributions to unitholders of $57,169,000 
(2002 - $43,354,000) or $0.812 (2002 - $0.616) per unit. The amounts and record dates of the distributions were as 
follows: 

March 31 
June 30 
September 30 
December 31 

2003 

2002 

Total 
$ 

14,428   
11,965   
11,965   
18,811   

Per unit 
$ 

0.205   
0.170   
0.170   
0.267   

57,169   

   0.812   

Total 
$ 

9,853   
11,261   
11,261   
10,979   

43,354   

Per unit 
$ 

0.140 
0.160 
0.160 
0.156 

 0.616 

The distribution of $18,811,000 ($0.267 per unit) payable to unitholders of record on December 31, 2003 was paid 

on or before January 15, 2004. 

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
 
 
Westshore Terminals Income Fund 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars, except unit amounts) 

The distributions declared in 2003 and 2002 have been allocated as follows for income tax purposes: 

2003 

2002 

Total 
$ 

Per unit 
$ 

Total 
$ 

Per unit 
$ 

Cash distributions 
Income 
Return of capital 

52,369     
4,800     

0.744   
0.068   

Total distribution 

57,169     

   0.812   

43,335   
19   

43,354   

0.615 
0.001 

   0.616 

8  Related party transactions 

Administration agreement 

The Fund has entered into an administration agreement with Westar, which is owned indirectly by a unitholder of 
the Fund. Under the terms of the agreement, Westar is responsible for administering and managing the Fund. Westar 
earns a fee of $250,000 per annum plus reimbursement of certain out-of-pocket costs for providing these services, and 
if the costs of administering the Fund exceed $400,000 in any year, Westar will also be reimbursed for such excess 
costs. The agreement can be terminated on 180 days’ notice, or immediately under certain circumstances. 

Westar earned a fee of $250,000 for the year ended December 31, 2003 (2002 - $250,000) under the administration 

agreement. These fees are included in administration on the statements of earnings and cumulative earnings. 

Accounts payable and accrued liabilities include $67,000 (2002 - $67,000) due to Westar for management fees and 

out-of-pocket expense reimbursement. 

Management agreement 

Westshore has entered into a management agreement with Westar effective February 1, 1997. Under the terms of 
the agreement, Westar is responsible for providing executive management and other services to Westshore. The initial 
term of the agreement is 15 years, and the agreement is renewed thereafter for successive five-year terms unless 
Westshore gives notice of non-renewal at least 12 months before the end of the relevant term. The management 
agreement may be terminated by Westshore in certain circumstances, and Westar can terminate the agreement at any 
time  on  12  months’  notice.  Westar  earns  a  fee  of  $750,000  per  annum  plus  reimbursement  of  reasonable 
out-of-pocket expenses for providing these services. In addition, as an incentive to Westar to enhance the cash flow of 
Westshore, Westar is entitled to earn incentive fees that will be payable annually when the per-unit cash distributions 
to unitholders exceed certain defined levels. 

Westar earned a fee of $750,000 for the year ended December 31, 2003 (2002 - $750,000) under the management 
agreement. The management fees are recorded in the accounts of Westshore and are included in equity in earnings of 
Westshore Terminals Ltd. on the statements of earnings and cumulative earnings. 

Also see notes 4 and 5. 

24 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
 
 
   
   
   
 
 
 
Westshore Terminals Income Fund 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars, except unit amounts) 

9  Ship loader accident 

On January 2, 2003, high winds caused the two ship loaders at Berth 2 at Westshore’s terminal site to collapse. 
Both ship loaders were severely damaged. The ship loader at Berth 1 was undamaged by the storm. Westshore’s 
insurers have confirmed Westshore’s coverage under the All Risk Property Policy, including business interruption 
compensation for the accident (net of applicable deductions). As of August 1, 2003, both ship loaders at Berth 2 had 
been replaced and were operational. 

For  accounting  purposes,  the  Fund  has  recorded  an  extraordinary  gain  of  $7,295,000,  which  represents 
Westshore’s estimated insurance proceeds to replace the damaged equipment less the equipment’s carrying value, 
disposal cost and related future income taxes and the write-off by the Fund of the portion of the associated purchase 
price discrepancy (note 4). The extraordinary gain comprises: 

Westshore - extraordinary gain 
The Fund - extraordinary loss 

$ 

10,412   
(3,117)   

7,295   

As at December 31, 2003, Westshore had received $18.2 million ($13.6 million - property damage, $4.6 million - 
business interruption) of the estimated $23.7 million of insurance proceeds, resulting in an account receivable of 
$5.5 million.  The  insurance  claims  are  being  reviewed  by  the  loss  adjustor  and  insurance  companies.  The  final 
settlement could differ from the estimates made by Westshore. 

10  Financial instruments 

Fair value of financial instruments 

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and 
distribution payable to unitholders approximate fair values based on the short-term maturity of these instruments. The 
fair value of the Fund’s investment in Westshore is not practicable to determine given the many factors, terms and 
conditions that would influence such a determination. The fair value of the Fund’s investment in Fording Trust as at 
December 31, 2003 was $42.6 million. The fair value of long-term debt approximates its carrying amount based on 
reference to current market prices for debt with similar terms and risks. 

Interest rate risk and exposure 

The interest rate on the long-term debt changes with fluctuations in the market interest rate (note 5). 

25 

 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
Westshore Terminals Ltd. 
Financial Reporting 

Auditors’ Report 
To the Shareholder of Westshore Terminals Ltd. 

We have audited the balance sheets of Westshore Terminals Ltd. as at December 31, 2003 and 
2002 and the statements of earnings and deficit and cash flows for the years then ended. These financial 
statements are the responsibility of the Company’s management. Our responsibility is to express an 
opinion on these financial statements based on our audits. 

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those 
standards require that we plan and perform an audit to obtain reasonable assurance whether the financial 
statements are free of material misstatement. An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the 
accounting principles used and significant estimates made by management, as well as evaluating the 
overall financial statement presentation. 

In our opinion, these financial statements present fairly, in all material respects, the financial position 
of the Company as at December 31, 2003 and 2002 and the results of its operations and its cash flows 
for the years then ended in accordance with Canadian generally accepted accounting principles. As 
required by the British Columbia Company Act, we report that, in our opinion, these principles have 
been applied on a consistent basis. 

Chartered Accountants 
Vancouver, B.C. 
February 13, 2004 

26 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Ltd. 
Balance Sheets 
As at December 31, 2003 and 2002 (in thousands of dollars) 

Assets 

Current assets 
Cash and cash equivalents 
Accounts receivable (notes 3 and 11) 
Inventories 
Prepaid expenses 
Income taxes receivable 

Plant and equipment 
At cost 
Accumulated depreciation 

Employee future benefits (note 9) 

Liabilities 

Current liabilities 
Accounts payable and accrued liabilities  
Income taxes payable 

Notes payable  (note 4) 

Future income taxes (note 6) 

Shareholder’s Deficiency 

Share capital (note 5) 

Deficit 

Commitments and guarantee (note 10) 

APPROVED BY THE DIRECTORS: 

2003 
$ 

2002 
$ 

10,284   
11,867   
4,646   
2,727   
-   

29,524   

282,494   
(187,073)   

95,421   

2,156   

4,293
10,432
5,736
2,333
1,873

24,667

265,465
(178,240)

87,225

1,061

127,101   

112,953

15,771   
355   

16,126   

470,000   

22,593   

508,719   

177,964   

(559,582)   

(381,618)   

127,101   

15,249
-

15,249

470,000

18,875

504,124

177,964

(569,135)

(391,171)

112,953

M. Dallas H. Ross 
Director 

Kirk Henderson 
Director 

27 

 
   
 
   
 
 
 
 
   
 
 
   
 
   
 
 
 
 
 
 
 
   
 
 
 
 
   
 
   
 
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
 
 
   
 
   
 
 
   
 
   
 
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
 
   
 
   
 
 
   
 
 
 
   
 
 
 
   
 
 
 
 
   
 
 
 
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Ltd. 
Statements of Earnings and Deficit 
For the years ended December 31, 2003 and 2002 (in thousands of dollars) 

Revenue 
Coal 
Other (note 3) 

Expenses 
Operating 
Administrative 

Earnings before depreciation, interest, income taxes and 

extraordinary gain 

Depreciation 

Interest expense (note 4) 

Loss before income taxes and extraordinary gain 

Recovery of income taxes (note 6) 

(Loss) earnings before extraordinary gain 

Extraordinary gain (note 3) 

Net earnings for the year 

Deficit - Beginning of year 

Deficit - End of year 

2003 
$ 

2002 
$ 

97,048   
8,813   

109,581
2,085

105,861   

111,666

54,508   
6,181   

60,689   

45,172   

10,090   

37,302   

(2,220)   

1,361   

(859)   

10,412   

9,553   

52,445
5,867

58,312

53,354

10,201

43,865

(712)

1,543

 831

-

 831

(569,135)   

(569,966)

(559,582)   

(569,135)

28 

 
   
 
   
 
 
 
 
   
 
 
 
 
   
 
 
 
 
   
 
   
 
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
Westshore Terminals Ltd. 
Statements of Cash Flows 
For the years ended December 31, 2003 and 2002 (in thousands of dollars) 

Cash flows from operating activities 
Net earnings for the year 

Items not affecting cash 
Depreciation 
Future income tax recovery 
Extraordinary gain (note 3) 
Increase in deferred employee future benefits costs 

Decrease (increase) in non-cash working capital 

Cash flows from investing activities 
Additions to plant and equipment 
Property damage insurance proceeds received - net of disposal  

costs (note 3) 

Increase (decrease) in cash and cash equivalents 

Cash and cash equivalents - Beginning of year 

Cash and cash equivalents - End of year 

Supplemental cash flow information 

Cash paid for interest 

Cash received for interest 

Income taxes (recovered) paid  

2003 
$ 

9,553 

10,090 
(2,162) 
(10,412) 
(1,095) 

5,974 
6,083 

2002 
$ 

831 

10,201 
(50) 
- 
(509) 

10,473 
(17,691) 

12,057 

(7,218) 

(18,816) 

12,750 

(6,066) 

5,991 

4,293 

10,284 

(691) 

- 

(691) 

(7,909) 

12,202 

4,293 

37,302 

43,865 

568 

(1,641) 

461 

1,391 

29 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

1  Organization and basis of presentation 

The Company operates a coal storage and loading facility at Roberts Bank, British Columbia. 

On January 30, 1997, Westar Group Ltd. (Westar) completed the sale of the Company to the Westshore 
Terminals Income Fund (the Fund). The sale had an effective date of January 1, 1997. Westar continues to provide 
management services to the Company (note 8). 

2  Significant accounting policies 

Accounting principles 

The Company prepares its accounts in accordance with Canadian generally accepted accounting principles. 

Cash and cash equivalents 

Cash and cash equivalents consist of cash on deposit with banks and highly liquid short-term interest-bearing 

securities with maturities at their purchase date of three months or less. 

Inventories 

Inventories of spare parts and supplies are valued at average cost less a provision for obsolescence. 

Plant and equipment 

Plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the 
unit-of-production method over the estimated useful production life of the assets. The estimated useful lives of 
plant and equipment range from 3 to 35 years. 

Revenue recognition 

Coal handling revenue is recognized when a customer’s coal is loaded onto a ship and ready for export from the 

terminal site. 

Income taxes 

The Company accounts for income taxes using the liability method. Under this method, current income taxes 
are recognized for the estimated income taxes payable or recoverable for the current period. Future income tax 
assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and 
liabilities and are measured using the substantially enacted tax rates and laws that will be in effect when the 
differences are expected to reverse. The effect on future income tax assets and liabilities of a change in tax rates is 
included in income in the period in which the change occurs. 

Use of estimates 

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. Significant areas requiring the use of management estimates relate to the 
determination of net recoverable value of assets, useful lives of plant and equipment, insurance proceeds receivable, 
determination of actuarial assumptions and provision for contingencies. Actual results could differ from those 
estimates. 

30 

 
Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

Financial instruments 

The Company uses forward exchange contracts to mitigate its exposure to fluctuations in foreign exchange 

rates. The gains and losses on these financial instruments are included in other revenue when realized. 

Employee future benefits 

The Company accrues its obligations under employee benefit plans, net of plan assets, and applies the following 

policies: 

a)  The cost of pensions and other retirement benefits earned by employees is actuarially determined using 
the projected accrued benefit method pro-rated on length of service and best estimates of expected plan 
investment performance, salary escalation, retirement ages of employees and expected health care costs. 

b)  For the purpose of calculating the expected return on plan assets, those assets are valued at fair value. 

c)  Past  service  costs  from  plan  amendments  are  amortized  on  a  straight-line  basis  over  the  average 

remaining service period of employees active at the date of amendment. 

d)  The excess of the net actuarial gain (loss) over 10% of the greater of the benefit obligation and the fair 
value of plan assets is amortized over the average remaining service period of active employees. 

3  Ship loader accident 

On January 2, 2003, high winds caused the two ship loaders at Berth 2 at the Company’s terminal site to 
collapse. Both ship loaders were severely damaged. The ship loader at Berth 1 was undamaged by the storm. The 
Company’s insurers have confirmed the Company’s coverage under the All Risk Property Policy, including business 
interruption compensation for the accident (net of applicable deductions). As of August 1, 2003, both ship loaders 
at Berth 2 had been replaced and were operational. 

For accounting purposes, the Company recorded an extraordinary gain of $10,412,000 determined as follows: 

Estimated insurance proceeds to replace the damaged equipment 
Less 

Carrying value of damaged equipment and supplies inventory 
Disposal costs 
Future income taxes  

$ 

17,700   

566   
842   
5,880   

10,412   

In addition, a business interruption insurance recovery of $6.0 million has been included in other revenue in the 

Company’s statement of earnings and deficit. 

As  at  December 31,  2003,  the  Company  had  received  $18.2 million  ($13.6 million  -  property  damage, 
$4.6 million - business interruption) of the estimated $23.7 million of insurance proceeds, resulting in an account 
receivable of $5.5 million. The insurance claim is being reviewed by the loss adjustor and insurance companies. The 
final settlement could differ from the estimates made by the Company. 

31 

 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
   
 
 
Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

The cost of replacement equipment has been capitalized to plant and equipment and depreciated in accordance 

with the Company’s depreciation policy. 

4  Notes payable 

The $470 million of notes payable (the Notes), all of which are held by the Fund, mature on March 31, 2022 

and are unsecured and subordinated to all secured obligations of the Company. 

Interest on the Notes is determined using a variable interest rate based on a proportion of the Company’s 
earnings before depreciation, interest, income taxes and extraordinary items calculated monthly. Interest for any 
month cannot be lower than 6% and not higher than 11.5%. 

During the year ended December 31, 2003, the Company incurred interest expense of $37.3 million (2002 - 

$43.9 million) on the Notes. 

On or about March 31, 2012, and from time to time thereafter, the Board of Directors of the Company (the 
Board) and the Trustees of the Fund (the Trustees) will jointly review the Company’s facilities and operations, the 
economic conditions relating to the coal industry, and the business prospects of the Company. If this review 
indicates, in the opinion of either the Board or the Trustees, that the indebtedness of the Company evidenced by 
the Notes is unlikely to be refinanced on the same terms and conditions upon maturity of such Notes, then the 
Company 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, the 
Company’s available cash will be utilized to the extent required to fund such repayments in lieu of dividends on the 
common shares. 

5  Share capital 

Authorized 

500,000,000 common shares without par value 

Number of 
shares 

Amount 
$ 

Issued and outstanding - December 31, 2003 and 2002 

177,964,001 

177,964 

6  Income taxes 

A reconciliation of income taxes at the statutory tax rate to actual income taxes is as follows: 

Income tax recovery at statutory Canadian rate 
Large corporations tax 
Reduction in future income tax rate 
Loss carry-back at higher tax rate 
Other 

Income tax recovery 

32 

2003 
$ 

835 
(262) 
938 
- 
(150) 

1,361 

2002 
$ 

282 
(204) 
1,202 
188 
75 

1,543 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

Represented by: 

Current income tax (provision) recovery 
Future income tax recovery 

2003 
$ 

(801) 
2,162 

1,361 

2002 
$ 

1,493 
50 

1,543 

The nature and tax effect of the temporary differences that give rise to future income tax assets and liabilities 

are as follow s: 

Plant and equipment 
Accounts payable and accrued liabilities 
Employee future benefits 

2003 
$ 

22,634 
(809) 
768 

2002 
$ 

19,856 
(1,380) 
399 

Future income tax liability 

22,593 

18,875 

7  Bank operating facility 

The Company has a $10 million (2002 - $10 million) secured operating facility. No amounts were outstanding 
on this facility as at December 31, 2003 and 2002. The Company has various interest options under the operating 
facility that are based on the lender’s prime lending rate. The lender charges a standby fee of 0.25% per annum on 
the undrawn portion of the facility. 

8  Related party transactions 

The Company has entered into a management agreement with Westar effective February 1, 1997. Westar, which 
is owned indirectly by a unitholder of the Fund, is entitled to designate three of the Company’s five directors. Under 
the terms of the agreement, Westar is responsible for providing executive management and other services to the 
Company. The initial term of the agreement is 15 years, and the agreement is renewed thereafter for successive five-
year terms unless the Company gives notice of non-renewal at least 12 months before the end of the relevant term. 
The management agreement may be terminated by the Company in certain circumstances, and Westar can terminate 
the agreement at any time on 12 months’ notice. Westar earns a fee of $750,000 per annum plus reimbursement of 
reasonable out-of-pocket expenses for providing these services. In addition, as an incentive to Westar to enhance 
the cash flow of the Company, Westar is entitled to earn incentive fees that will be payable annually when the per-
unit cash distributions to unitholders of the Fund exceed certain defined levels. 

Westar  earned  a  fee  of  $750,000  for  the  year  ended  December 31,  2003  (2002  -  $750,000)  under  the 

management agreement. 

Also see notes 4 and 10. 

33 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

9  Employee future benefits 

The Company has two defined benefit pension plans and provides other retirement and post-employment 

benefits for most of its employees. 

Information about the Company’s defined benefit pension plans and other benefit obligations is as follows: 

Accrued benefit obligation 

Balance - Beginning of year 
Actuarial losses 
Current service cost 
Interest cost 
Benefits paid 
Plan improvements 

Pension plan benefits 

Other benefits 

2003 
$ 

2002 
$ 

2003 
$ 

44,369   
3,017   
709   
3,037   
(1,832)   
2,562   

41,980   
667   
687   
2,888   
(1,853)   
-   

16,232   
1,258   
482   
1,153   
(668)   
613   

2002 
$ 

14,257 
1,152 
421 
1,053 
(651) 
- 

Balance - End of year 

51,862   

44,369   

19,070   

16,232 

Plan assets 

Fair value - Beginning of year  
Actual return on assets 
Benefits paid 
Employer contributions 

44,721   
5,286   
(1,832)   
3,685   

47,791   
(2,930)   
(1,853)   
1,713   

Fair value - End of year 

51,860   

44,721   

-   
-   
(668)   
668   

-   

- 
- 
(651) 
651 

- 

Balances - December 31 

Funded status - plan (deficit) surplus 
Unamortized net actuarial losses 
Unamortized past service costs 

(2)   
11,635   
3,583   

 352   
11,057   
1,246   

(19,070)   
4,246   
1,764   

(16,232) 
3,207 
1,431 

Accrued benefit asset (liability) 

15,216   

12,655   

(13,060)   

(11,594) 

All pension plans are fully funded by the Company. The other benefit plans have no assets. 

The significant actuarial assumptions adopted in measuring the Company’s accrued benefit obligations are as 

follows (weighted average assumptions as of December 31):  

Discount rate 

Expected rate of return on assets 

Pension plan benefits 

Other benefits 

2003 
% 

6.25   
8.0   

2002 
% 

6.75   
8.0   

2003 
% 

6.25   
-   

2002 
% 

6.75 
- 

34 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
   
   
   
 
 
   
   
   
 
   
   
   
 
 
   
   
   
 
 
   
   
   
 
   
   
   
 
 
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

For measurement purposes, a 25% annual rate of increase in the per capita cost of covered extended health care 
benefits was assumed over the next year. The rate was decreased to 10% for the next nine years and 6% thereafter. 
The annual rates of increase in the per capita cost of MSP and dental benefits are 0% and 3%, respectively. 

The Company’s net benefit plan expense (income) for the years ended December 31, 2003 and 2002 is as 

follows: 

Pension plan benefits 

Other benefits 

2003 
$ 

709   
3,037   
(3,651)   
804   
225   

1,124   

2002 
$ 

687   
2,888   
(3,817)   
27   
186   

(29)   

2003 
$ 

482   
1,153   
-   
219   
280   

2,134   

2002 
$ 

421 
1,053 
- 
211 
212 

1,897 

Current service cost 
Interest cost 
Expected return on plan assets 
Amortization of net actuarial losses 
Amortization of past service costs 

Net benefit plan expense (income) 

10  Commitments and guarantee 

Commitments 

The Company is committed under operating leases to the rental of property, facilities, and equipment. 

The Company’s terminal site is leased (the Lease) from the Vancouver Port Authority (the VPA). Charges 
payable by the Company under the Lease comprise an annual base land and waterlot rental fee and an annual 
participation rental based on the volume of coal shipped. A minimum participation rental per tonne is charged 
based on a minimum annual tonnage (MAT) of 17.6 million tonnes. A higher participation rental per tonne is 
charged on tonnage in excess of the MAT. 

The original term of the Lease expired on February 28, 2002. The Company exercised the first of two options 
to renew the Lease for an additional 10-year period, commencing March 1, 2002. The VPA did not increase the land 
and waterlot rental rate or the participation rates upon renewal. The VPA has the right to change the lease rates 
every three years during the renewal period. The Company has the right to seek redetermination of any increased 
rental by invoking an arbitration process. 

Future minimum operating lease payments for the years ending December 31 (assuming the VPA does not 

exercise its right to adjust the lease rates) are as follows: 

2004 
2005 
2006 
2007 
2008 
Thereafter 

Terminal 
lease 
$ 
11,665 
11,665 
11,665 
11,665 
11,665 
36,939 

35 

Other 
$ 
150 
150 
150 
- 
- 
- 

Total 
$ 
11,815 
11,815 
11,815 
11,665 
11,665 
36,939 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

Guarantee 

On February 28, 2003, the Fund paid $150 million for 4.3 million units (9.1% interest) of the newly formed 
Fording Canadian Coal Trust (Fording Trust). The Fund financed this investment through term bank loans of 
$120 million from Canadian chartered banks and $30 million from an affiliate of Westar. The $120 million term 
bank loans bear interest at the bankers’ acceptance rate plus 1.75% to 3.00% and are due on February 28, 2006. The 
$30 million loan from an affiliate of Westar bears interest at the Bank of Nova Scotia prime rate plus 1.00% to 
2.25% and is due on February 28, 2007. These loans are guaranteed by the Company and are secured by a general 
security agreement covering all the assets of the Fund and the Company. The Company guarantees the due and 
punctual payment, whether at stated maturity or otherwise, of all indebtedness of the Fund to the lenders. 

During 2003, the Fund sold 3.4 million units of Fording Trust for net proceeds of $125.2 million, resulting in a 
gain of $18.9 million. These proceeds were used to repay the $30 million loan from an affiliate of Westar and 
$90.6 million of the $120 million term bank loans. Subsequent to December 31, 2003, the Fund sold its remaining 
interest in Fording Trust for $41.2 million. The Fund used the proceeds to repay the remaining outstanding term 
bank loans and, as a result, the Company’s guarantee has been released. 

11  Significant customers 

Fording Trust holds a 65% interest in the Elk Valley Coal Partnership (the Coal Partnership) and a 100% 
interest in Fording Inc.’s (Fording) industrial minerals business. If certain events occur, Fording Trust’s interest in 
the Coal Partnership could be reduced to 60%. On February 28, 2003, the Coal Partnership acquired all the 
metallurgical coal assets of Fording, Teck Cominco Limited (Teck), and the Luscar/CONSOL Joint Ventures 
(Luscar). The Company’s coal handling contracts previously negotiated with Fording, Teck, and Luscar, including 
exclusivity agreements, will continue in effect. During the year ended December 31, 2003, approximately 94% (2002 
- 97%) of the Company’s revenue was earned from the mines acquired by the Coal Partnership. As at December 31, 
2003, the amount receivable from the Coal Partnership was $4.6 million. 

12  Financial instruments 

Interest rate risk and exposure 

The interest rate on the Notes changes with fluctuations in the Company’s earnings before depreciation, 
interest, income taxes and extraordinary items but must be between specified minimum and maximum limits 
(note 4). 

Foreign exchange risk 

The loading rate for approximately 88% of the Coal Partnership’s coal handled by the Company is a function of 
the Canadian dollar price realized by the Coal Partnership for its coal. As the Coal Partnership’s coal is sold to its 
customers based on a U.S. dollar selling price, the Company’s revenues will be affected by the conversion of the 
U.S. dollar sales to Canadian dollars. 

The Company uses forward exchange contracts to mitigate exposure to fluctuations in the relative exchange 

rates. 

36 

Westshore Terminals Ltd. 
Notes to Financial Statements 
December 31, 2003 and 2002 
(figures in tables are expressed in thousands of dollars) 

Fair value of financial instruments 

The carrying values of cash and cash equivalents, accounts receivable, and accounts payable and accrued 
liabilities approximate fair values based on the short-term maturity of those instruments. The fair value of the Notes 
is  not  practicable  to  determine  given  the  many  factors,  terms  and  conditions  that  would  influence  such  a 
determination. 

Fair value estimates for foreign exchange contracts are based on quoted market prices for comparable contracts 
and represent the  amount the Company would have received from, or paid to, a counterparty to unwind the 
contracts at the market rate in effect at December 31. As at December 31, 2003, the Company had a series of option 
contracts that allow it to sell an amount of US dollars equivalent to Cdn$4.0 million per month until April 2004 at 
1.425 if the Canadian dollar strengthens above this level and require it to sell an amount of US dollars equivalent to 
Cdn$4.0 million at an exchange rate of 1.5146 should the Canadian dollar weaken below that level. 

The fair value of the forward exchange contracts at December 31, 2003 was $1,440,000. 

37 

 
Corporate Information 

Westshore Terminals Income Fund 

Trustees 

William W. Stinson 
Chairman 
Chairman of the Board, Sun-Life Financial Inc. 
Corporate Director 

Gordon Gibson 
Corporate Director 

Michael J. Korenberg 
Managing Director, Vice Chairman 
The Jim Pattison Group 

M. Dallas H. Ross 
Partner 
Kinetic Capital Partners 

William C. Scheidt 
Retired Banker 

Jim G. Gardiner 
Corporate Director 

Secretary 

Nick Desmarais 
Managing Director, Legal Services 
The Jim Pattison Group 

Westshore Terminals Ltd. 

Directors 

Nick Desmarais 
Managing Director, Legal Services 
The Jim Pattison Group 

Kirk Henderson 
Managing Director, Vice-Chairman 
The Jim Pattison Group 

James A. Pattison 
Managing Director, Chairman & C.E.O. 
The Jim Pattison Group 

M. Dallas H. Ross 
Partner, Kinetic Capital Partners 

William W. Stinson 
Chairman of the Board, Sun-Life Financial Inc. 
Corporate Director 

38 

Auditors 

PricewaterhouseCoopers LLP 
Vancouver, British Columbia 

Principal Office 

1600 – 1055 West Hastings Street 
Vancouver, British Columbia  V6E 2H2 
Telephone:  604.488.5295 
604.687.2601 
Facsimile: 

Registrar and Transfer Agent 

Computershare Trust Company of Canada 
Vancouver and Toronto 

Stock Exchange Listing 

Toronto Stock Exchange 

Trading Symbol 
WTE.UN 

Annual General Meeting 

The Annual Meeting of Unitholders will be held 
on  Tuesday,  June  15,  2004 at 9:00  A.M. at the 
Marriott  Pinnacle  Hotel,  Vancouver,  British 
Columbia 

Officers 

Kirk Henderson 
President 

Denis Horgan 
Acting General Manager,  
Vice-President, Administration & Marketing  

Nick Desmarais 
Secretary 

Auditors 

PricewaterhouseCoopers LLP 
Vancouver, British Columbia