JPMorgan - KASE

accordance with current legislation, industry practices and costs. Provision is being made for site
restoration costs that the Corporation expects to incur.
Revenue recognition
Sales of petroleum and refined products are recorded in the period in which the sale occurs.
Produced but unsold products are recorded as inventory until sold.
Use of estimates
The preparation of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. These estimates are
subject to measurement uncertainty. Actual results could differ from and affect the results
reported in these consolidated financial statements.
Income taxes
Effective January 1, 2000, the Corporation adopted the new recommendation of the Canadian
Institute of Chartered Accountants with respect to future income taxes. Under this method,
future income tax assets and liabilities are computed based on temporary differences between
the accounting and taxation basis of assets and liabilities. At January 1, 2000 the Corporation
recorded a future income tax asset of $19.1 million on the basis that realization of such asset is
more likely than not. This restatement was applied retroactively without restatement of figures
of prior years. This increased retained earnings at January 1, 2000 by $19.1 million.
Earnings per Share
Effective January 1, 2001, the Corporation adopted the new recommendation of the Canadian
Institute of Chartered Accountants with respect to earnings per share. The comparative diluted
earnings per share amounts for the years ended December 31, 2000 and 1999 have been restated,
as follows, to give effect to the new recommendation.
Reported
As Restated
Diluted net income per share 2000 ........................................ 1.92 2.12
Diluted net income per share 1999 ........................................ 0.19 0.19
Stock option plan
The Corporation has a stock option plan as described in Note 13. No compensation expense is
recognized for the plan when stock options are issued to employees.
2 Companies’ Creditors Arrangement Act
On May 14, 1999, Hurricane Hydrocarbons Ltd. and a subsidiary Hurricane Overseas Services Inc.
applied for and obtained an order from the Court of Queen’s Bench of Alberta (the “Court”)
under the Companies’ Creditors Arrangement Act. On February 28, 2000, the creditors of the
Corporation approved and the Court sanctioned the Fourth Amended and Restated Plan of
Compromise and Arrangement (“the Plan”).
The Plan was implemented on March 31, 2000; thereby releasing the Corporation from the
protection of the Companies’ Creditors Arrangement Act. Pursuant to the Plan the Corporation
has made the following payments to the holders of the U.S. and Canadian Notes:
(a)
On March 31, 2000, $87.0 million, comprised of $23.2 million for outstanding interest and
liquidated damages payments, $13.6 million in waiver fees and $50.2 million of principal
repayments;
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