##### 



Exhibit B
 
 CONSOLIDATED FINANCIAL
STATEMENTS
2007




---



##### 



MANAGEMENTS REPORT
  Managements Responsibility for the Financial Statements
    Managements Report on Internal Control over Financial Reporting
  /s/ Boyd Payne
    
    /s/ R. James BrownBoyd Payne
    
    R. James BrownPresident
    
    Vice President and Chief Financial Officer
  2




---



##### 



Independent Auditors Report
 To the Unitholders of  Fording Canadian Coal Trust
  Consolidated Financial statements
    Internal control over financial reporting
 Internal Control  Integrated Framework
   3




---



##### 



4




---



##### 



FORDING CANADIAN COAL TRUST
CONSOLIDATED BALANCE SHEETS
 As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006AssetsCurrent assetsCash and cash equivalents *
    
    $
    151.5
    
    
    $
    141.4Accounts receivable
    
    
    72.4
    
    
    
    128.5Fair value of foreign exchange forward contracts (note 10)
    
    
    38.7
    
    
    
    Inventory (note 4)
    
    
    134.0
    
    
    
    125.4Prepaid expenses
    
    
    4.9
    
    
    
    4.9NYCO assets held for sale (note 16)
    
    
    
    
    
    
    23.9401.5
    
    
    
    424.1Capital assets(note 5)
    
    
    652.8
    
    
    
    603.2Goodwill
    
    
    12.9
    
    
    
    12.9Other assets(note 6)
    
    
    19.6
    
    
    
    20.8NYCO assets held for sale(note 16)
    
    
    
    
    
    
    12.8$
    1,086.8
    
    
    $
    1,073.8LiabilitiesCurrent liabilitiesAccounts payable and accrued liabilities
    
    $
    111.5
    
    
    $
    119.6Income taxes payable
    
    
    18.3
    
    
    
    31.8Distributions payable
    
    
    78.6
    
    
    
    139.7Current portion of long-term debt (note 7)
    
    
    1.6
    
    
    
    1.7NYCO liabilities held for sale (note 16)
    
    
    
    
    
    
    4.4210.0
    
    
    
    297.2Long-term debt(note 7)
    
    
    280.9
    
    
    
    312.5Other long-term liabilities(note 8)
    
    
    157.2
    
    
    
    100.1Future income taxes(note 9)
    
    
    126.9
    
    
    
    53.9NYCO liabilities held for sale(note 16)
    
    
    
    
    
    
    3.4775.0
    
    
    
    767.1Commitments and contingencies(note 10)Unitholders equity(note 11)Trust units
    
    
    399.3
    
    
    
    359.7Accumulated earnings
    
    
    2,005.9
    
    
    
    1,672.6Accumulated cash distributions
    
    
    (2,093.4
    )
    
    
    (1,734.6
    )Accumulated other comprehensive income
    
    
    
    
    
    
    9.0311.8
    
    
    
    306.7$
    1,086.8
    
    
    $
    1,073.8
 *
    
    Note that cash and cash equivalents for 2006 exclude $3.2 million of NYCO cash, which is included
in NYCO assets held for sale. The accompanying notes to the consolidated financial statements are an integral part of these statements.
  5




---



##### 



FORDING CANADIAN COAL TRUST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 (millions of Canadian dollars,
    
    Years ended December 31except per unit amounts)
    
    2007
    
    
    2006
    
    
    2005Revenues
    
    $
    1,427.3
    
    
    $
    1,798.2
    
    
    $
    1,829.9ExpensesCost of product sold
    
    
    562.0
    
    
    
    532.3
    
    
    
    469.2Transportation
    
    
    478.0
    
    
    
    500.3
    
    
    
    510.2Selling, general and administration
    
    
    28.3
    
    
    
    33.3
    
    
    
    26.4Depreciation and depletion
    
    
    50.8
    
    
    
    49.4
    
    
    
    47.91,119.1
    
    
    
    1,115.3
    
    
    
    1,053.7Income from operations
    
    
    308.2
    
    
    
    682.9
    
    
    
    776.2Other income (expenses)Interest expense
    
    
    (21.4
    )
    
    
    (18.8
    )
    
    
    (11.3
    )Other items, net (note 13)
    
    
    147.4
    
    
    
    (36.8
    )
    
    
    35.0Income before taxes
    
    
    434.2
    
    
    
    627.3
    
    
    
    799.9Income tax expense (reversal)(note 9)
    
    
    111.7
    
    
    
    84.4
    
    
    
    (34.4
    )Net income from continuing operations
    
    $
    322.5
    
    
    $
    542.9
    
    
    $
    834.3Income (loss) from discontinued operation  NYCO(note 16)
    
    
    10.8
    
    
    
    (45.0
    )
    
    
    (0.1
    )Net income
    
    $
    333.3
    
    
    $
    497.9
    
    
    $
    834.2Other comprehensive income (loss) (note 11)
    
    
    (4.5
    )
    
    
    4.1
    
    
    
    (2.6
    )Comprehensive income
    
    $
    328.8
    
    
    $
    502.0
    
    
    $
    831.6Weighted average number of units
outstanding (millions)(note 11)Basic
    
    
    147.9
    
    
    
    147.0
    
    
    
    147.0Diluted
    
    
    147.9
    
    
    
    147.1
    
    
    
    147.0Basic and diluted earnings per unitNet income from continuing operations
    
    $
    2.18
    
    
    $
    3.69
    
    
    $
    5.68Net income (loss) from discontinued operation  NYCO
    
    $
    0.07
    
    
    $
    (0.30
    )
    
    $
    (0.01
    )Net Income
    
    $
    2.25
    
    
    $
    3.39
    
    
    $
    5.67
 CONSOLIDATED STATEMENTS OF ACCUMULATED EARNINGS
 Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Balance   beginning of year
    
    $
    1,672.6
    
    
    $
    1,174.8
    
    
    $
    340.6Net income
    
    
    333.3
    
    
    
    497.9
    
    
    
    834.2Redemption of units
    
    
    
    
    
    
    (0.1
    )
    
    
    Balance   end of year
    
    $
    2,005.9
    
    
    $
    1,672.6
    
    
    $
    1,174.8
 The accompanying notes to the consolidated financial statements are an integral part of these statements.
  6




---



##### 



FORDING CANADIAN COAL TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Operating activitiesNet income from continuing operations
    
    $
    322.5
    
    
    $
    542.9
    
    
    $
    834.3Items not using (providing) cash:Depreciation and depletion
    
    
    50.8
    
    
    
    49.4
    
    
    
    47.9Loss (gain) on disposal of assets
    
    
    (2.0
    )
    
    
    (1.7
    )
    
    
    0.3Provision for asset retirement obligations, net
    
    
    2.7
    
    
    
    3.2
    
    
    
    3.1Unrealized gain on foreign exchange forward contracts
    
    
    (38.7
    )
    
    
    
    
    
    
    Unrealized foreign exchange loss (gain) on long-term debt
    
    
    (47.2
    )
    
    
    4.2
    
    
    
    (8.1
    )Future income tax expense (reversal)
    
    
    73.0
    
    
    
    9.2
    
    
    
    (97.0
    )Other items, net
    
    
    5.0
    
    
    
    1.8
    
    
    
    0.6Non-controlling interest
    
    
    3.4
    
    
    
    6.8
    
    
    
    3.9Change in accounting policy for in-process inventory (note 13)
    
    
    
    
    
    
    31.7
    
    
    
    Gain on reduction of interest in EVCP
    
    
    
    
    
    
    
    
    
    
    (6.1
    )Gain on issuance of partnership interest (note 8)
    
    
    
    
    
    
    
    
    
    
    (27.2
    )Operating cash flow from discontinued
operation  NYCO (note 16)
    
    
    (0.3
    )
    
    
    2.3
    
    
    
    5.4369.2
    
    
    
    649.8
    
    
    
    757.1Decrease (increase) in non-cash working capital (note 14)
    
    
    17.9
    
    
    
    40.6
    
    
    
    (124.3
    )Cash from operating activities
    
    
    387.1
    
    
    
    690.4
    
    
    
    632.8Investing activitiesAdditions to capital assets
    
    
    (49.0
    )
    
    
    (29.2
    )
    
    
    (118.8
    )Proceeds on disposal of assets
    
    
    4.0
    
    
    
    2.1
    
    
    
    1.4Other investing activities, net
    
    
    (0.1
    )
    
    
    2.1
    
    
    
    (1.8
    )Proceeds on sale of NYCO (note 16)
    
    
    34.3
    
    
    
    
    
    
    
    Investing cash flow from discontinued
operation  NYCO (note 16)


    (0.6
    )
    
    
    (0.8
    )
    
    
    (2.2
    )Cash used in investing activities
    
    
    (11.4
    )
    
    
    (25.8
    )
    
    
    (121.4
    )Financing activitiesDistributions paid (notes 11 and 14)
    
    
    (380.4
    )
    
    
    (705.7
    )
    
    
    (529.0
    )Increase in long-term debt
    
    
    17.1
    
    
    
    94.8
    
    
    
    23.1Issuance of units, net
    
    
    
    
    
    
    0.3
    
    
    
    1.7Redemption of units
    
    
    
    
    
    
    (0.1
    )
    
    
    Other financing activities, net
    
    
    (5.5
    )
    
    
    (9.4
    )
    
    
    (3.0
    )Proceeds on issuance of partnership interest
    
    
    
    
    
    
    
    
    
    
    36.4Financing cash flow from discontinued
operation  NYCO (note 16)
    
    
    
    
    
    
    
    
    
    
    (5.0
    )Cash used in financing activities
    
    
    (368.8
    )
    
    
    (620.1
    )
    
    
    (475.8
    )Increase in cash and cash equivalents
    
    
    6.9
    
    
    
    44.5
    
    
    
    35.6Cash and cash equivalents  beginning of year
    
    
    144.6
    
    
    
    100.1
    
    
    
    64.5Cash and cash equivalents  end of year
    
    $
    151.5
    
    
    $
    144.6
    
    
    $
    100.1
 The accompanying notes to the consolidated financial statements are an integral part of these statements.
  7




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
 1. STRUCTURE OF FORDING CANADIAN COAL TRUST AND NATURE OF OPERATIONS
         8




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
 2. SIGNIFICANT ACCOUNTING POLICIES
 Basis of presentation
     Use of estimates
  Asset retirement obligations
  Income taxes
   9




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
 Capital assets, including coal reserves, depreciation and depletion, and impairment testing
    Employee future benefits
  Inventory valuation
  Cash and cash equivalents
   10




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
 Accounts receivable
  Inventory
   Capital assets
      11




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
  Goodwill
  Research and development
   Capitalized interest
  Asset retirement obligations
  Foreign currency translation
  Financial instruments
    12




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
    Revenue recognition
  Income taxes
  Unit-based compensation
     13




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
 Employee future benefits
     3. RECENT AND UPCOMING CHANGES IN ACCOUNTING POLICIES
 Financial instruments, hedges and comprehensive income
 Financial Instruments  Recognition and Measurement Hedges Comprehensive Income
  Hedging Relationships
    14




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007
  Inventories
  Financial instruments and capital disclosures
 Capital Disclosures Financial
Instruments  Presentation
 Intangible assets
 Intangible Assets, Goodwill and Other Intangible Assets
 International financial reporting standards (IFRS)
   15




---



##### 



FORDING CANADIAN COAL TRUST  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31, 2007
 4. INVENTORY
 As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Finished and in-process product inventories
    
    $
    86.7
    
    
    $
    82.0Stores and materials
    
    
    47.3
    
    
    
    43.4$
    134.0
    
    
    $
    125.4
 5. CAPITAL ASSETS
 As at December 31, 2007Accumulated
    
    
    Net book(millions of Canadian dollars)
    
    Cost
    
    
    Amortization
    
    
    ValueLand, buildings and equipment
    
    $
    793.6
    
    
    
    486.0
    
    
    
    307.6Mineral properties and development
    
    
    479.1
    
    
    
    136.3
    
    
    
    342.8Capital leases
    
    
    3.2
    
    
    
    0.8
    
    
    
    2.4$
    1,275.9
    
    
    
    623.1
    
    
    
    652.8
 As at December 31, 2006Accumulated
    
    
    Net book(millions of Canadian dollars)
    
    Cost
    
    
    Amortization
    
    
    ValueLand, buildings and equipment
    
    $
    686.7
    
    
    
    459.5
    
    
    
    227.2Mineral properties and development
    
    
    495.3
    
    
    
    121.9
    
    
    
    373.4Capital leases
    
    
    3.1
    
    
    
    0.5
    
    
    
    2.6$
    1,185.1
    
    
    $
    581.9
    
    
    $
    603.2
    16




---



##### 



FORDING CANADIAN COAL TRUST  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31, 2007
 6. OTHER ASSETS
 As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Long-term receivables
    
    $
    6.3
    
    
    $
    6.5Accrued pension benefits (note 8)
    
    
    11.2
    
    
    
    12.0Other
    
    
    2.1
    
    
    
    2.3$
    19.6
    
    
    $
    20.8
 7. LONG-TERM DEBT AND BANKING FACILITIES
 As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Long-term debtFive-year bank credit facilities:US$283.0 million (2006 - US$250.0 million) in LIBOR rate loans
with an average interest rate of 5.5% (2006 - 5.9%)
    
    $
    279.6
    
    
    $
    291.3Revolving bankers acceptances
    
    
    
    
    
    
    18.0Other debtEquipment financing due 2009
bearing an interest rate of 5.1%
    
    
    1.4
    
    
    
    2.8Capital lease obligations expiring in 2011
with an interest rate of 5.3%
    
    
    1.5
    
    
    
    2.1282.5
    
    
    
    314.2Less current portion
    
    
    (1.6
    )
    
    
    (1.7
    )$
    280.9
    
    
    $
    312.5
   17




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##### 



FORDING CANADIAN COAL TRUST  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31, 2007
  As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Other use of bank credit facilitiesIssued and outstanding letters of credit
and guarantee:The Trust
    
    $
    
    
    
    $
    0.1Elk Valley Coal (Trusts share)
    
    
    47.3
    
    
    
    51.3$
    47.3
    
    
    $
    51.4Unused bank credit facilitiesThe Trust
    
    $
    153.0
    
    
    $
    108.6Elk Valley Coal (Trusts share)
    
    
    40.1
    
    
    
    50.7$
    193.1
    
    
    $
    159.3
 8. OTHER LONG-TERM LIABILITIES
 As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Asset retirement obligations
    
    $
    119.9
    
    
    $
    67.5Pension and other post-retirement benefits
    
    
    29.0
    
    
    
    24.7Non-controlling interest
    
    
    6.4
    
    
    
    7.0Other, net
    
    
    1.9
    
    
    
    0.9$
    157.2
    
    
    $
    100.1
 Asset retirement obligations
   18




---



##### 



FORDING CANADIAN COAL TRUST  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31, 2007
  As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Balance  beginning of year
    
    $
    67.5
    
    
    $
    69.5Liabilities incurred
    
    
    1.0
    
    
    
    1.6Liabilities settled
    
    
    (2.6
    )
    
    
    (1.6
    )Accretion expense
    
    
    4.4
    
    
    
    4.3Revision in estimated costs
    
    
    49.4
    
    
    
    (6.9
    )Other
    
    
    0.2
    
    
    
    0.6Balance  end of year
    
    $
    119.9
    
    
    $
    67.5
  Pension and other post-retirement benefit obligations
 As at December 31(millions of Canadian of dollars)
    
    2007
    
    
    2006Pensions
    
    $
    13.6
    
    
    $
    11.7Other post retirement benefits
    
    
    15.4
    
    
    
    13.0$
    29.0
    
    
    $
    24.7
      19




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
    Years ended December 312007
    
    
    2006
    
    
    2005Defined
    
    
    
    
    
    
    Defined
    
    
    
    
    
    
    Definedbenefit
    
    
    Other post-
    
    
    benefit
    
    
    Other post-
    
    
    benefit
    
    
    Other post-pension
    
    
    retirement
    
    
    pension
    
    
    retirement
    
    
    pension
    
    
    retirement(millions of Canadian dollars)
    
    plans
    
    
    benefits
    
    
    plans
    
    
    benefits
    
    
    plans
    
    
    benefitsCurrent service cost of benefits
    
    $
    7.3
    
    
    $
    0.9
    
    
    $
    6.4
    
    
    $
    0.9
    
    
    $
    4.6
    
    
    $
    0.7Interest cost on projected benefit obligation
    
    
    9.8
    
    
    
    1.2
    
    
    
    9.0
    
    
    
    0.9
    
    
    
    7.7
    
    
    
    0.7Actual return on pension fund assets
    
    
    (2.3
    )
    
    
    
    
    
    
    (16.1
    )
    
    
    
    
    
    
    (11.8
    )
    
    
    Difference between actual and
expected rate of return on plan assets
    
    
    (7.6
    )
    
    
    
    
    
    
    8.5
    
    
    
    
    
    
    
    4.8
    
    
    
    Amortization of actuarial losses
    
    
    1.5
    
    
    
    0.6
    
    
    
    2.9
    
    
    
    
    
    
    
    1.2
    
    
    
    Amortization of past service costs
    
    
    3.3
    
    
    
    
    
    
    
    2.9
    
    
    
    
    
    
    
    0.7
    
    
    
    Net expense
    
    $
    12.0
    
    
    $
    2.7
    
    
    $
    13.6
    
    
    $
    1.8
    
    
    $
    7.2
    
    
    $
    1.4
  20




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  Years ended December 312007
    
    
    2006
    
    
    2005Defined
    
    
    
    
    
    
    Defined
    
    
    
    
    
    
    Definedbenefit
    
    
    Other post-
    
    
    benefit
    
    
    Other post-
    
    
    benefit
    
    
    Other post-pension
    
    
    retirement
    
    
    pension
    
    
    retirement
    
    
    pension
    
    
    retirement(millions of Canadian dollars)
    
    plans
    
    
    benefits
    
    
    plans
    
    
    benefits
    
    
    plans
    
    
    benefitsNet pension expense above
    
    $
    12.0
    
    
    $
    2.7
    
    
    $
    13.6
    
    
    $
    1.8
    
    
    $
    7.2
    
    
    $
    1.4Amounts deferred for later recognition:Difference between expected and
actual return on plan assets
    
    
    7.6
    
    
    
    
    
    
    
    (8.5
    )
    
    
    
    
    
    
    (4.8
    )
    
    
    Difference between past service costs
amortized and past service costs
incurred
    
    
    (3.3
    )
    
    
    
    
    
    
    13.8
    
    
    
    
    
    
    
    (0.7
    )
    
    
    Difference between actuarial losses
amortized and actuarial losses
(gains) incurred
    
    
    (16.2
    )
    
    
    (0.6
    )
    
    
    2.9
    
    
    
    
    
    
    
    24.4
    
    
    
    $
    0.1
    
    
    $
    2.1
    
    
    $
    21.8
    
    
    $
    1.8
    
    
    $
    26.1
    
    
    $
    1.4
  21




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  2007
    
    
    2006Defined
    
    
    
    
    
    
    Definedbenefit
    
    
    Other post-
    
    
    benefit
    
    
    Other post-pension
    
    
    retirement
    
    
    pension
    
    
    retirement(millions of Canadian dollars)
    
    plan
    
    
    benefits
    
    
    plan
    
    
    benefitsChange in benefit obligationsBenefit obligations  beginning of year
    
    $
    191.2
    
    
    $
    21.3
    
    
    $
    159.0
    
    
    $
    17.6Actuarial revaluation
    
    
    (6.1
    )
    
    
    1.1
    
    
    
    5.8
    
    
    
    Current service cost
    
    
    7.3
    
    
    
    0.9
    
    
    
    6.4
    
    
    
    0.9Interest cost
    
    
    9.8
    
    
    
    1.2
    
    
    
    9.0
    
    
    
    0.9Benefits paid
    
    
    (6.4
    )
    
    
    (0.4
    )
    
    
    (5.8
    )
    
    
    (0.3
    )Transfers to other plans
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    Impact of new discount rate
    
    
    (8.6
    )
    
    
    (1.1
    )
    
    
    
    
    
    
    Plan improvements
    
    
    
    
    
    
    
    
    
    
    16.7
    
    
    
    Other
    
    
    (0.2
    )
    
    
    0.1
    
    
    
    0.1
    
    
    
    2.2Benefit obligations  end of year
    
    
    187.4
    
    
    
    23.1
    
    
    
    191.2
    
    
    
    21.3Change in fund assetsFair value of fund assets  beginning of year
    
    
    139.1
    
    
    
    
    
    
    
    112.3
    
    
    
    Actual return on fund assets
    
    
    2.3
    
    
    
    
    
    
    
    16.1
    
    
    
    Employer contributions
    
    
    9.3
    
    
    
    0.4
    
    
    
    16.4
    
    
    
    0.3Benefits paid
    
    
    (6.4
    )
    
    
    (0.4
    )
    
    
    (5.8
    )
    
    
    (0.3
    )Other
    
    
    0.4
    
    
    
    
    
    
    
    0.1
    
    
    
    Fair value of fund assets  end of year
    
    
    144.7
    
    
    
    
    
    
    
    139.1
    
    
    
    Funded status  plan deficit
    
    
    (42.7
    )
    
    
    (23.1
    )
    
    
    (52.1
    )
    
    
    (21.3
    )Unamortized prior service cost
    
    
    11.1
    
    
    
    
    
    
    
    14.4
    
    
    
    Unamortized net actuarial loss
    
    
    29.2
    
    
    
    7.7
    
    
    
    38.0
    
    
    
    8.3Accrued benefit asset (liability)
    
    $
    (2.4
    )
    
    $
    (15.4
    )
    
    $
    0.3
    
    
    $
    (13.0
    )Represented by:Accrued benefit assets (note 6)
    
    $
    11.2
    
    
    $
    
    
    
    $
    12.0
    
    
    $
    Accrued pension liability
    
    
    (13.6
    )
    
    
    (15.4
    )
    
    
    (11.7
    )
    
    
    (13.0
    )$
    (2.4
    )
    
    $
    (15.4
    )
    
    $
    0.3
    
    
    $
    (13.0
    )
   22




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Cash and cash equivalents
    
    $
    0.6
    
    
    $
    3.2Fixed income
    
    
    52.8
    
    
    
    53.4Canadian equity
    
    
    32.3
    
    
    
    43.0U.S. equity
    
    
    26.7
    
    
    
    25.4European, Australian and Asian equity
    
    
    21.4
    
    
    
    14.1Real estate
    
    
    7.6
    
    
    
    Infrastructure
    
    
    3.3
    
    
    
    $
    144.7
    
    
    $
    139.1
    OtherPension
    
    
    Post-Retirement(millions of Canadian dollars)
    
    Benefits
    
    
    Benefits2008
    
    
    7.2
    
    
    
    0.42009
    
    
    8.2
    
    
    
    0.52010
    
    
    9.4
    
    
    
    0.52011
    
    
    10.7
    
    
    
    0.62012
    
    
    12.4
    
    
    
    0.72013 to 2017
    
    
    118.7
    
    
    
    6.9
  23




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  Years ended December 312007
    
    
    2006
    
    
    2005Discount rate for plan expense
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    6.0
    %Discount rate for plan obligations
    
    
    5.3
    %
    
    
    5.0
    %
    
    
    5.0
    %Projected future salary increases
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    4.0
    %Expected rate of return on fund assets
    
    
    7.0
    %
    
    
    7.0
    %
    
    
    7.3
    %Projected health care cost increases:Provincial
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    3.0
    %Extended care
    
    
    9.0
    %
    
    
    10.0
    %
    
    
    9.5
    %Assumed health care cost trend rate*
    
    9.0% to 5.0%
    
    10.0% to 5.0%
    
    9.5% to 5.0%
 *
    
    Ultimate trend rate expected to be achieved in 2011.  Sensitivities
  (millions of Canadian dollars)
    
    1% increase
    
    
    1% decreaseIncrease (decrease) in total service and interest cost
    
    $
    0.1
    
    
    $
    (0.1
    )Increase (decrease) in benefit obligation
    
    $
    0.2
    
    
    $
    (0.1
    )
 Non-controlling interest
   24




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 9. INCOME TAXES
 :
 Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Current income tax expense (reversal):Provincial mineral taxes and Crown royalties
    
    $
    38.3
    
    
    $
    75.5
    
    
    $
    58.7Canadian corporate income taxes
    
    $
    0.4
    
    
    
    (0.3
    )
    
    
    3.938.7
    
    
    
    75.2
    
    
    
    62.6Future income tax expense (reversal) :Provincial mineral taxes and Crown royalties
    
    
    2.0
    
    
    
    9.2
    
    
    
    31.3Canadian corporate income taxes
    
    
    71.0
    
    
    
    
    
    
    
    (128.3
    )73.0
    
    
    
    9.2
    
    
    
    (97.0
    )Total income tax expense (reversal)
    
    $
    111.7
    
    
    $
    84.4
    
    
    $
    (34.4
    )
   Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Expected income tax expense at Canadian statutory tax
rate of 39% (2006 - 39%; 2005 - 39%)
    
    $
    169.3
    
    
    $
    244.6
    
    
    $
    312.0Increase (decrease) in taxes resulting from:Allocation of net income to unitholders
    
    
    (169.1
    )
    
    
    (246.3
    )
    
    
    (231.6
    )Provincial mineral taxes and Crown royalties
    
    
    40.5
    
    
    
    84.7
    
    
    
    89.9Future Canadian corporate income taxes recognized as a result
of the taxation change
    
    
    71.0
    
    
    
    
    
    
    
    Loss on reduction of interest in Elk Valley Coal
    
    
    
    
    
    
    
    
    
    
    (3.7
    )Resource allowance
    
    
    
    
    
    
    
    
    
    
    (26.1
    )Gain on issuance of partnership interest
    
    
    
    
    
    
    
    
    
    
    (10.6
    )Reversal of future income taxes
    
    
    
    
    
    
    
    
    
    
    (164.3
    )Other
    
    
    
    
    
    
    1.4
    
    
    
    Income tax expense (reversal)
    
    $
    111.7
    
    
    $
    84.4
    
    
    $
    (34.4
    )
  25




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Future income tax assets:Asset retirement obligations
    
    $
    48.2
    
    
    $
    8.5Future income tax liabilities:Capital assets carrying value in excess of tax basis
    
    
    187.7
    
    
    
    63.1Other
    
    
    (12.6
    )
    
    
    (0.7
    )175.1
    
    
    
    62.4Net future income tax liabilities
    
    $
    126.9
    
    
    $
    53.9
  10. COMMITMENTS, CONTINGENCIES, CREDIT RISK MANAGEMENT AND FAIR VALUES
 Foreign exchange forward contracts
   Leases
  Total CDN$(millions of dollars)
    
    US$
    
    
    CDN$
    
    
    Equivalent2008
    
    $
    1.8
    
    
    $
    15.1
    
    
    $
    16.82009
    
    
    0.9
    
    
    
    4.7
    
    
    
    5.52010
    
    
    0.4
    
    
    
    1.6
    
    
    
    2.12011
    
    
    0.4
    
    
    
    0.8
    
    
    
    1.22012 and thereafter
    
    
    0.4
    
    
    
    0.6
    
    
    
    1.0$
    3.9
    
    
    $
    22.8
    
    
    $
    26.6
   26




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 Credit risk management
   Fair values
  Sale of receivables
   Neptune Terminals
  Other
   27




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 11. UNITHOLDERS EQUITY
 Authorized
   Trust units
 (millions of units and Canadian dollars)
    
    Units
    
    
    AmountBalance at December 31, 2005
    
    
    147.0
    
    
    $
    359.4Units issued on exercise of options
    
    
    
    
    
    
    0.3Balance at December 31, 2006
    
    
    147.0
    
    
    
    359.7Units issued on exercise of options
    
    
    0.1
    
    
    
    0.1Units issued under distribution reinvestment plan
    
    
    1.2
    
    
    
    39.5Balance at December 31, 2007
    
    
    148.3
    
    
    $
    399.3
 Distribution reinvestment plan
    28




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 Accumulated cash distributions
  As at December 31(millions of Canadian dollars)
    
    2007
    
    
    2006Balance
 beginning of year
    
    $
    1,734.6
    
    
    $
    1,124.4Distributions declared
    
    
    358.8
    
    
    
    610.2Balance  end of year
    
    $
    2,093.4
    
    
    $
    1,734.6
  Accumulated other comprehensive income
  Years ended December 31,(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Accumulated other comprehensive income, beginning of yearForeign currency translation account balance
    
    $
    9.0
    
    
    $
    4.9
    
    
    $
    7.5Fair value of foreign exchange forward contracts outstanding
on January 1, 2007
    
    
    (4.5
    )
    
    
    
    
    
    
    4.5
    
    
    
    4.9
    
    
    
    7.5Other comprehensive income (loss):Settlement of foreign exchange forward contracts outstanding
on January 1, 2007
    
    
    4.5
    
    
    
    
    
    
    
    Release of foreign currency translation account balance
on sale of NYCO
    
    
    (6.8
    )
    
    
    
    
    
    
    Foreign currency translation adjustments related to NYCO
    
    
    (2.2
    )
    
    
    4.1
    
    
    
    (2.6
    )(4.5
    )
    
    
    4.1
    
    
    
    (2.6
    )Accumulated other comprehensive income, end of year
    
    $
    
    
    
    $
    9.0
    
    
    $
    4.9
   29




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  Earnings per unit
  As at December 31(millions of units)
    
    2007
    
    
    2006
    
    
    2005Weighted average number of units outstanding, basic
    
    
    147.9
    
    
    
    147.0
    
    
    
    147.0Effect of dilutive securities, unit options
    
    
    
    
    
    
    0.1
    
    
    
    Weighted average number of units outstanding, diluted
    
    
    147.9
    
    
    
    147.1
    
    
    
    147.0
 12. UNIT-BASED COMPENSATION
  Option plan
  WeightedAverageExerciseNumber
    
    
    PriceOptions  December 31, 2005
    
    
    92,358
    
    
    $
    5.21Exercised
    
    
    50,130
    
    
    
    6.34Outstanding  December 31, 2006
    
    
    42,228
    
    
    
    3.87Exercised
    
    
    12,684
    
    
    
    3.66Expired
    
    
    7,725
    
    
    
    3.80Outstanding  December 31, 2007
    
    
    21,819
    
    
    $
    4.01
  30




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  WeightedNumber
    
    
    Average
    
    
    WeightedRange of
    
    
    
    
    Outstanding
    
    
    Remaining
    
    
    AverageExercise
    
    
    
    
    and
    
    
    Contractual
    
    
    ExercisePrices
    
    
    
    
    Exercisable
    
    
    Life
    
    
    Price$
    3-5
    
    
    
    
    
    17,919
    
    
    
    2.2
    
    
    $
    3.195-10
    
    
    
    
    
    3,900
    
    
    
    4.0
    
    
    
    7.79$
    3-10
    
    
    
    
    
    21,819
    
    
    
    2.5
    
    
    $
    4.01
 Employee unit purchase plan
   Unit equivalent plan
  Deferred unit equivalent incentive plan
   31




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 13. OTHER ITEMS, NET
 Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Interest and investment income
    
    $
    6.0
    
    
    $
    4.7
    
    
    $
    2.0Net foreign exchange gains (losses)
    
    
    31.0
    
    
    
    (5.6
    )
    
    
    4.2Realized gains on foreign exchange forward contracts
    
    
    74.5
    
    
    
    
    
    
    
    Unrealized gains on foreign exchange
forward contracts
    
    
    38.7
    
    
    
    
    
    
    
    Non-controlling interest
    
    
    (3.4
    )
    
    
    (6.8
    )
    
    
    (3.9
    )Other
    
    
    0.6
    
    
    
    2.6
    
    
    
    0.1Change in accounting policy for in-process inventory
    
    
    
    
    
    
    (31.7
    )
    
    
    Gain on issuance of partnership interest (note 8)
    
    
    
    
    
    
    
    
    
    
    27.2Gain on corporate reorganization
    
    
    
    
    
    
    
    
    
    
    5.4$
    147.4
    
    
    $
    (36.8
    )
    
    $
    35.0
  Stripping Costs Incurred in the Production
Phase of a Mining Operation
 14. SUPPLEMENTAL INFORMATION
 Changes in non-cash working capital
 Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Decrease (increase) in current assets:Accounts receivable
    
    $
    56.1
    
    
    $
    16.9
    
    
    $
    (66.6
    )Inventory, net of change in accounting policy for in-process inventory
    
    
    (8.6
    )
    
    
    19.3
    
    
    
    (72.3
    )Prepaid expenses
    
    
    
    
    
    
    (2.3
    )
    
    
    (0.9
    )Increase (decrease) in current liabilities:Accounts payable, excluding capital accruals
    
    
    (11.1
    )
    
    
    9.1
    
    
    
    (16.0
    )Income taxes payable
    
    
    (13.5
    )
    
    
    (4.0
    )
    
    
    25.5Other
    
    
    (5.0
    )
    
    
    1.6
    
    
    
    6.0$
    17.9
    
    
    $
    40.6
    
    
    $
    (124.3
    )
  32




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 Financing activities related to distributions
 Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Distributions declared
    
    $
    (358.8
    )
    
    $
    (610.2
    )
    
    $
    (700.6
    )Increase (decrease) in distributions payable
    
    
    (61.1
    )
    
    
    (95.5
    )
    
    
    171.6Distribution reinvestment plan (note 11)
    
    
    39.5
    
    
    
    
    
    
    
    Distributions paid
    
    $
    (380.4
    )
    
    $
    (705.7
    )
    
    $
    (529.0
    )
 Interests in joint ventures
  Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Revenues
    
    $
    1,427.3
    
    
    $
    1,767.7
    
    
    $
    1,797.1Operating and other expenses
    
    
    1,122.2
    
    
    
    1,143.1
    
    
    
    1,032.3Net income
    
    
    305.1
    
    
    
    624.6
    
    
    
    764.8Current assets
    
    
    218.9
    
    
    
    270.9
    
    
    
    325.9Long-term assets
    
    
    655.3
    
    
    
    607.1
    
    
    
    628.4Current liabilities
    
    
    106.6
    
    
    
    113.3
    
    
    
    107.9Long-term obligations
    
    
    168.0
    
    
    
    136.9
    
    
    
    126.6Cash from operating activities
    
    
    399.7
    
    
    
    746.8
    
    
    
    628.9Cash from financing activities
    
    
    15.2
    
    
    
    0.6
    
    
    
    16.4Cash used in investing activities
    
    
    (48.0
    )
    
    
    (23.3
    )
    
    
    (82.9
    )
 Cash transactions
  Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Income taxes paid
    
    $
    55.0
    
    
    $
    81.7
    
    
    $
    39.9Interest paid
    
    $
    21.3
    
    
    $
    18.0
    
    
    $
    9.9
  33




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 Geographic information
  Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Number of customers contributing
greater than 10% of revenues
    
    
    3
    
    
    
    1
    
    
    
    1% of revenue from these customers
    
    
    35.0
    %
    
    
    10.7
    %
    
    
    10.2
    %
  Economic dependence
  15. RELATED PARTY TRANSACTIONS
   16. DISCONTINUED OPERATION  NYCO
    34




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
     Years ended December 31(millions of Canadian dollars)
    
    2007
    
    
    2006
    
    
    2005Revenues
    
    $
    19.4
    
    
    $
    47.1
    
    
    $
    44.9Cost of product sold
    
    
    (13.6
    )
    
    
    (29.1
    )
    
    
    (28.2
    )Transportation
    
    
    (3.7
    )
    
    
    (8.7
    )
    
    
    (7.3
    )Selling, general and administration
    
    
    (0.7
    )
    
    
    (4.1
    )
    
    
    (4.3
    )Depreciation and depletion
    
    
    (1.5
    )
    
    
    (3.7
    )
    
    
    (4.4
    )Income (loss) from operations
    
    
    (0.1
    )
    
    
    1.5
    
    
    
    0.7Write-down of NYCO
    
    
    
    
    
    
    (52.5
    )
    
    
    Gain on sale of NYCO
    
    
    4.0
    
    
    
    
    
    
    
    Release of foreign currency translation account
on sale of NYCO
    
    
    6.8
    
    
    
    
    
    
    
    Interest expense
    
    
    
    
    
    
    0.1
    
    
    
    Other expenses
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.3
    )Income tax reversal (expense)
    
    
    0.1
    
    
    
    6.0
    
    
    
    (0.5
    )Income (loss) from discontinued operation
    
    $
    10.8
    
    
    $
    (45.0
    )
    
    $
    (0.1
    )
 17. UNITED STATES ACCOUNTING PRINCIPLES AND REPORTING
  Joint ventures
   35




---



##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 Consolidated statements of cash flows
  A) Derivative instruments and hedging
 Accounting for Derivative Instruments and Hedging Activities
 Financial Instruments  Recognition and Measurement Hedges,
  B) Employee future benefits
 Employers Accounting for Pensions,
 Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans
   36




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##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 C) Comprehensive income
 Comprehensive Income,
 D) Production-phase deferred stripping costs
 Accounting for Stripping Costs Incurred during Production in the Mining Industry
  E) Write-down of NYCO
  F) Income taxes
 Accounting for Uncertainty in Income Taxesan Interpretation of FASB
Statement No. 109 Accounting for Income Taxes
   37




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##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  Years ended December 31(millions of Canadian dollars)
    
    REF
    
    2007
    
    
    2006
    
    
    2005Net income   Canadian GAAP
    
    
    
    $
    333.3
    
    
    $
    497.9
    
    
    $
    834.2Increased (decreased) by:Derivative instruments  foreign exchange
forward contracts
    
    A
    
    
    
    
    
    
    (11.8
    )
    
    
    (23.2
    )Production-phase deferred stripping costs
    
    D
    
    
    1.3
    
    
    
    1.3
    
    
    
    Write-down of NYCO
    
    E
    
    
    (3.1
    )
    
    
    3.1
    
    
    
    Income tax (expense) recovery
    
    A,F
    
    
    (12.0
    )
    
    
    (0.2
    )
    
    
    40.1Net income   U.S. GAAP
    
    
    
    $
    319.5
    
    
    $
    490.3
    
    
    $
    851.1Other comprehensive incomeEmployee future benefits
(net of tax of nil in 2007, 2006 and 2005)
    
    B
    
    $
    15.6
    
    
    $
    1.7
    
    
    $
    (13.4
    )Realization of foreign exchange forward contracts
outstanding on December 31, 2006
    
    A
    
    
    33.7
    
    
    
    
    
    
    
    Unrealized losses on derivative
instruments  foreign exchange forward contracts
(net of tax of nil for 2006 and 2005)
    
    A
    
    
    
    
    
    
    (51.5
    )
    
    
    (34.2
    )Foreign currency translation adjustments
related to NYCO
    
    C
    
    
    (9.0
    )
    
    
    4.1
    
    
    
    (2.6
    )Comprehensive income
    
    
    
    $
    359.8
    
    
    $
    444.6
    
    
    $
    800.9Basic and diluted earnings per unitNet income  U.S. GAAP
    
    
    
    $
    2.16
    
    
    $
    3.34
    
    
    $
    5.79
  38




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##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
  As at December 31(millions of Canadian dollars)
    
    REF
    
    2007
    
    
    2006AssetsNon-current assetsCapital assetsProduction-phase deferred stripping costs
    
    D
    
    $
    (36.5
    )
    
    $
    (37.8
    )Accrued pension benefit
    
    B
    
    
    (11.2
    )
    
    
    (11.9
    )NYCO assets held for sale
    
    
    
    
    
    
    
    
    0.7Total assets
    
    
    
    $
    (47.7
    )
    
    $
    (49.0
    )Liabilities and unitholders equityCurrent liabilitiesDerivative instruments  foreign exchange forward contracts
    
    A
    
    $
    
    
    
    $
    4.5Income taxes payable
    
    F
    
    
    (2.2
    )
    
    
    Non-current liabilitiesEmployee future benefits
    
    B
    
    
    36.8
    
    
    
    48.6Future taxes
    
    D,F
    
    
    (25.7
    )
    
    
    (4.9
    )NYCO liabilities held for sale
    
    
    
    
    
    
    
    
    0.68.9
    
    
    
    48.8Unitholders equityAccumulated earnings
    
    D
    
    
    (13.8
    )
    
    
    (5.8
    )Accumulated other comprehensive income
    
    B,C
    
    
    (42.8
    )
    
    
    (92.0
    )(56.6
    )
    
    
    (97.8
    )Total liabilities and unitholders equity
    
    
    
    $
    (47.7
    )
    
    $
    (49.0
    )
 Recent and upcoming changes in U.S. accounting principles
 Fair value measurements
 Fair Value Measurements
  39




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##### 



FORDING CANADIAN COAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
 The fair value option for financial assets and financial liabilities
 The Fair Value Option for Financial Assets and Financial Liabilities
 Non-controlling interest in consolidated financial statements
 Non-controlling Interest in Consolidated
Financial Statements
  40