Financial Statements and Notes - Canadian Oil Sands

) Syncrude Incentive Phantom Share Units Plan
Syncrude implemented a stock-based compensation plan during 2002 which awarded phantom units
to certain employees. The phantom units have value if the composite value of the weighted-average
stock price of 60 per cent of Canadian Oil Sands Trust’s Units and 40 per cent of various other joint
venture owners’ shares at the time of exercise by Syncrude employees exceeds the issue price of
the awards. The phantom units vest based on a graded vesting schedule: after the first year of issuance,
50 per cent of the phantom units are exercisable, 25 per cent the following year and 25 per cent after
year three. If the awards are exercised, they will be settled in cash. They expire after seven years from
the date of issue. At December 31, 2003, a total of 124,050 Syncrude phantom units were exercisable.
At December 31, 2003, a total of 504,800 phantom units were outstanding (2002 – 249,100 ). In 2003,
Canadian Oil Sands recorded approximately $5.1 million in operating expenses related to its share
of Syncrude’s stock-based compensation expense. In 2002, there was no compensation expense
recognized in Canadian Oil Sands’ financial statements as the market value at December 31, 2002
was less than the issue price of the phantom units when they were awarded.
15. INTEREST EXPENSE, NET
2003 2002
Interest expense $ 72,054 $ 48,654
Interest income and other (4,222) (9,917)
Interest expense, net $ 67,832 $ 38,737
16. UNITHOLDER DISTRIBUTIONS
The Consolidated Statement of Distributions is provided to assist Unitholders in reconciling funds
from operations to Unitholder distributions.
Distributions are paid to Unitholders on the last business day of February, May, August and November.
Consolidated Statements of Unitholder Distributions
For the years ended December 31 ($ thousands, except per Unit amounts) 2003 2002
Funds from operations $ 272,851 $ 326,444
Add (Deduct):
Capital expenditures (785,587) (403,203)
Non-acquisition financing, net (1) 683,542 156,106
Change in non-cash working capital 2,754 37,867
Reclamation trust funding (3,675) (2,559)
Unitholder distributions $ 169,885 $ 114,655
Unitholder distributions per Unit $ 2.00 $ 2.00
(1) Represents financing to fund Canadian Oil Sands’ share of Syncrude’s Stage 3 expansion.
69
Notes to Consolidated Financial Statements