Financial Statements and Notes - Canadian Oil Sands

As at December 31, 2003, the following options were issued:
Weighted
Number of
Average
Date Options Exercise Price
Outstanding at January 1, 2002 – $ –
Granted in 2002 256.0 38.67
Outstanding at December 31, 2002 256.0 38.67
Granted in 2003 127.9 39.32
Cancelled in 2003 (60.0) 39.08
Outstanding at December 31, 2003 323.9 38.85
Exercisable at December 31, 2003 65.3 $ 38.55
There were no options exercisable at December 31, 2002.
The range of exercise prices of the options is $34.73 to $40.61.
The exercise price deemed for options is based on the weighted-average price of the Units for the
five trading days immediately prior to the grant date which may be less than, equal to or greater
than the grant date market value of such Units. For options granted in each of 2003 and 2002, the
exercise price was not materially different from the price of the Units on the grant date.
The fair value of each option is estimated on the grant date using the Black-Scholes option-pricing
model. The weighted-average fair values of the options granted during the various periods and the
weighted-average assumptions used in their determination are as noted below:
2003 2002
Risk-free interest rate (%) 4.07 4.60
Expected life (years) 5.00 5.00
Expected volatility (%) 20.00 27.00
Expected distribution per Trust unit ($) 2.00 2.00
Fair value per stock option ($) 5.00 6.79
The weighted average fair value of all options granted during the year is approximately $0.6 million
(2002 – $1.7 million).
As a result of the retroactive change in accounting policy related to stock-based compensation as
explained in Note 3, compensation costs of $0.6 million have been included in Administration expenses
in Canadian Oil Sands’ net income, with a corresponding increase to contributed surplus included
in Unitholders’ Equity. Stock-based compensation expense of $0.2 million relating to options
granted in 2002 has been charged to opening retained earnings with a corresponding increase
to contributed surplus.
Canadian Oil Sands Trust Annual Report 2003