New Accounting Pronouncements

Effective January 1, 2007, the Trust will be applying the accounting rules related to the new financial instruments accounting framework, which encompasses three new Canadian Institute of Chartered Accountant (“CICA”) Handbook Sections: 3855 “Financial Instruments - Recognition and Measurement”, 3865 “Hedges”, and 1530 “Comprehensive Income”. There was an additional Handbook section released related to disclosure and presentation of financial instruments (Section 3861), but it is not effective until 2008 for the Trust.  The new accounting pronouncements that are effective for 2007 determine how reporting entities recognize and measure financial assets, financial liabilities and non-financial derivatives.

As a result of these new Handbook sections, and effective January 1, 2007, the Trust’s deferred currency hedging gains of $35 million on its balance sheet will be recognized immediately as an increase to accumulated other comprehensive income (“AOCI”), a new category of the Trust’s Consolidated Balance Sheet included in Unitholders’ Equity, in accordance with Handbook Section 1530. The amount temporarily recorded in AOCI will be reclassified to net income over the remaining term of the hedged item, which is June 30, 2016.

Effective January 1, 2007, the Trust will no longer be applying hedge accounting to its existing foreign currency hedges and the interest rate swaps on its 3.95% medium term notes (the Trust does not apply hedge accounting to the other interest rate swaps on its US$70 million Senior Notes). On January 1, 2007, the Trust will mark-to-market the existing positions and will record the fair values of approximately $5 million on the Consolidated Balance Sheet as a deferred asset, with a corresponding increase to AOCI. Subsequent changes in the fair value of the positions will be recorded in net income. The amount recorded in AOCI will be drawn down over the term of the positions.