TORONTO, Aug. 11 /PRNewswire-FirstCall/ -- Four Seasons Hotels Inc.
(TSX Symbol "FSH.SV"; NYSE Symbol "FS") today reported its results
for the second quarter ended June 30, 2005. As previously
announced, effective the first quarter of 2005, we have adopted US
dollars as our reporting currency. All amounts disclosed in this
news release (including amounts for prior periods) are in US
dollars unless otherwise noted.(1) Highlights of the Second Quarter
of 2005 As described in greater detail in the accompanying
Management's Discussion and Analysis, for the three months ended
June 30, 2005, in each case as compared to the same period in 2004:
- RevPAR(2) of worldwide and US Core Hotels(3) increased 12.8% and
13.6%, respectively. - Gross operating margins(4) at worldwide Core
Hotels increased 270 basis points to 33.1% and increased 290 basis
points to 30.7% at US Core Hotels. - Revenues under management
increased 18.5%. - Management fee revenues (excluding reimbursed
costs(5) and the impact of forward exchange contracts(6))(7)
increased 16.0%, including incentive fees which increased 36.7%. -
Net earnings were $15.8 million ($0.43 basic earnings per share and
$0.42 diluted earnings per share), as compared to net earnings of
$12.8 million ($0.36 basic earnings per share and $0.34 diluted
earnings per share). "Luxury travel demand trends continue the
strength shown over the past few quarters in virtually all of our
markets. The luxury segment continues to lead the industry in
occupancy and room rate improvements," said Douglas L. Ludwig,
Chief Financial Officer and Executive Vice President. "Some of this
improvement in hotel operating fundamentals may not be apparent in
our management operations earnings due to the further weakening of
the US dollar, which has negatively affected the pace of
improvement in these earnings when expressed in US dollars. The
near-term outlook for continued improvement in demand and room
rates is encouraging." Additionally, during the quarter: - We
finalized the sale of approximately 53% of our interest in Four
Seasons Hotel Shanghai, with the result that we now hold an
interest of approximately 10% in that property. - We entered into a
currency and interest rate swap related to our convertible senior
notes that is intended to reduce our net interest costs over the
near-term. - Four Seasons Hotel Doha and Four Seasons Private
Residences Whistler, British Columbia opened. Refining the
Portfolio We have now completed the disposition of The Pierre, a
significant milestone toward our long-term strategic objective of
reducing exposure to hotel ownership and the associated volatile
impact on earnings caused by, among other things, business cycles,
seasonality and event risks. This is the latest in a series of
refinements to the portfolio in the last several years aimed at
improving our financial position and strengthening the quality of
our hotel management portfolio through strategic divestitures and
significant enhancements to established hotels, as well as
important new openings. "Divesting of our ownership in The Pierre
this year and Four Seasons Hotel Berlin in 2004 reflects our focus
on hotel management, which is our expertise," said Isadore Sharp,
Chairman and Chief Executive Officer, Four Seasons Hotels and
Resorts. During the second quarter, we agreed to a sale process for
The Ritz- Carlton Chicago. Upon completion of a sale, we will cease
to manage that hotel and will be entitled to receive payment in an
amount that we believe will compensate us for the value of our
long-term management contract. "The owner of The Ritz-Carlton
Chicago is also the owner of Four Seasons Hotel Chicago and plans
to undertake significant enhancements to that hotel. This change
will give us the opportunity to reinforce the leadership position
our brand has long enjoyed in the Chicago market with a pre-eminent
position for Four Seasons Hotel Chicago," said Kathleen Taylor,
President, Worldwide Business Operations. The owner of Four Seasons
Hotel Newport Beach, The Irvine Company, has decided to
independently manage their hotel. Under the terms of this
management agreement, they would have the ability to make this
change to their management if they are prepared to change the use
of the property for an extended period of time. To avoid the
disruption to guests and employees that would be caused by such
change of use, Four Seasons and the owner have agreed to a monetary
settlement satisfactory to both of them. The transition is
scheduled to occur on October 31, 2005. "Although it is unusual for
us to cease management of a property before the contract term
expires, we do consider opportunities to improve our market
position by leaving one property to pursue others in the same
region," said Ms. Taylor. "This strategy has worked well for us in
destinations such as Hong Kong, San Francisco and Seattle, which
represent state of the art, landmark properties." "At the same
time, Four Seasons presence in California continues to grow," said
Ms. Taylor, "soon with the introduction of new hotels in Silicon
Valley and Westlake Village, near Los Angeles. We are also seeing
significant enhancement to California properties which we manage,
including the landmark Four Seasons Resort Santa Barbara and The
Regent Beverly Wilshire in Los Angeles. The trend to significantly
upgrade hotels under our management is reflected more broadly
throughout properties under our management. Hotels which have
undergone, or are in the process of undergoing, significant
enhancement include Four Seasons properties in New York,
Washington, Boston, Scottsdale, Philadelphia, Las Vegas and the
Maldives. Projects recently added to the development pipeline
include properties in Toronto and Marrakech. Looking Ahead Recent
terrorist activity may cause further disruptions to travel patterns
that currently cannot be predicted, which in turn makes it more
difficult to provide RevPAR and gross operating margins guidance at
this time. However, assuming the travel trends that we experienced
in 2004 and the first half of 2005 continue, and based on current
demand reflected in our reservation activity, we expect RevPAR for
worldwide Core Hotels in the third quarter of 2005 and the full
year 2005 to increase by approximately 10% and approximately 11%,
respectively, as compared to the corresponding periods in 2004. We
expect that this improvement will result from occupancy and pricing
improvements in all geographic regions. If current trends continue,
we expect gross operating margins of our worldwide Core Hotels to
increase more than 220 basis points for the full year of 2005, as
compared to the full year of 2004. SECOND QUARTER OF 2005
MANAGEMENT'S DISCUSSION AND ANALYSIS This Management's Discussion
and Analysis ("MD&A") for the three months and six months ended
June 30, 2005 is provided as of August 10, 2005. It should be read
in conjunction with the interim consolidated financial statements
for that period and the MD&A for the year ended December 31,
2004 and the audited consolidated financial statements for that
period. Except as disclosed in this MD&A and the MD&A for
the three months ended March 31, 2005, as of August 10, 2005 there
has been no material change in the information disclosed in the
MD&A for the year ended December 31, 2004. A summary of
consolidated revenues, management earnings, ownership and corporate
operations earnings and net earnings for the past eight quarters
can be found in note 8. Effective for the quarter ended March 31,
2005, we have adopted the US dollar as our reporting currency. We
have not changed our functional currency, which remains Canadian
dollars, or the functional currencies of any of our subsidiaries.
All amounts disclosed in this MD&A (including amounts for prior
periods) are in US dollars unless otherwise noted.(1) Operating
Environment --------------------- Seasonality Four Seasons hotels
and resorts are affected by normally recurring seasonal patterns,
and demand is usually lower in the period from December through
March than during the remainder of the year for most of our urban
properties. However, December through March is typically a period
of relatively strong demand at our resorts. As a result, our
management operations are affected by seasonal patterns, both in
terms of revenues and operating results. Urban hotels generally
experience lower revenues and operating results in the first
quarter. This negative impact on management revenues from those
properties is offset to some degree by increased travel to our
resorts in the period. Our ownership operations are particularly
affected by seasonal fluctuations, with lower revenue, higher
operating losses and lower cash flow in the first quarter, as
compared to the other quarters. With the disposition of our
leasehold interest in The Pierre at the end of the second quarter
of 2005 (as discussed below under "Disposition of Hotel
Investments"), we have substantially reduced the exposure to
seasonality in our ownership operations. It remains our objective
to further reduce our ownership exposure by modifying or
restructuring our leasehold interest in Four Seasons Hotel
Vancouver, our only remaining leasehold interest. There can be no
assurance that acceptable alternative arrangements can be found
with respect to this hotel or as to the terms of any such
arrangements. Hotel Operating Results
-------------------------------------------------------------------------
Three months ended Six months ended June 30, 2005 June 30, 2005
increase over increase over three months ended six months ended
June 30, 2004 June 30, 2004 (percentage change, (percentage change,
on US dollar basis) on US dollar basis)
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Gross Gross Gross Gross Operating Operating Operating Operating
Revenue Profit Revenue Profit Region RevPAR (GOR) (GOP) RevPAR
(GOR) (GOP)
-------------------------------------------------------------------------
Worldwide Core Hotels 12.8% 12.9% 22.7% 13.2% 12.2% 21.3%
-------------------------------------------------------------------------
US Core Hotels 13.6% 12.2% 23.9% 13.0% 11.1% 21.4%
-------------------------------------------------------------------------
Other Americas/ Caribbean Core Hotels 17.6% 19.5% 43.0% 18.4% 17.3%
32.8%
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Europe Core Hotels 4.6% 6.7% 2.2% 5.0% 6.8% 2.4%
-------------------------------------------------------------------------
Middle East Core Hotels 28.3% 35.3% 65.5% 26.9% 34.0% 62.3%
-------------------------------------------------------------------------
Asia/Pacific Core Hotels 14.1% 11.5% 23.2% 16.4% 11.7% 20.6%
-------------------------------------------------------------------------
Underlying these operating results: - RevPAR for worldwide Core
Hotels increased 12.8% in the second quarter of 2005, as compared
to the same period in 2004, reflecting increased demand and
improvements in achieved room rates in most markets. Revenue
improvements and continued cost management efforts at the
properties under management resulted in the significant increases
in gross operating profits (an increase of 22.7% as compared to the
second quarter of 2004) and gross operating margins (an increase of
270 basis points as compared to the second quarter of 2004),
despite continued pressure on profitability due to higher costs
relating primarily to labour (including health care, benefits and
worker's compensation) and energy. Similar improvements were
achieved for the first six months of 2005, as compared to the same
period in 2004, with RevPAR for worldwide Core Hotels increasing
13.2%, gross operating revenue improving 12.2%, gross operating
profit increasing 21.3% and gross operating margins increasing 230
basis points. - Virtually all of the US Core Hotels under
management realized improvements in RevPAR and gross operating
profits in the second quarter of 2005, as compared to the same
period in 2004, resulting in a 13.6% and 23.9% increase in RevPAR
and gross operating profits, respectively. The only exception was
Four Seasons Hotel Houston, which continues to experience pressure
on rates due to increased supply in that market. Properties under
management in Miami, New York, Jackson Hole, Chicago and
Philadelphia realized particularly strong improvements in RevPAR
and gross operating profits, relative to the average for the
region. For the six months ended June 30, 2005, RevPAR increased
13.0%, primarily as a result of a 460 basis point increase in
occupancy and a 6.0% increase in achieved room rates, and gross
operating profits increased 21.4%. - The Other Americas/Caribbean
Core Hotels experienced improved demand and higher achieved room
rates, resulting in a RevPAR improvement of 17.6% in the second
quarter of 2005, as compared to the second quarter of 2004. Also in
the second quarter of 2005, gross operating profits and gross
operating margins increased 43.0% and 510 basis points,
respectively, which was primarily attributable to strong
improvements at the properties under management in Exuma and Buenos
Aires. For the six months ended June 30, 2005, the 18.4%
improvement in RevPAR was mainly driven by a 7.7% increase in
achieved room rates. - For the second quarter of 2005, RevPAR in
the Europe Core Hotels increased 4.6%, reflecting strong operating
results at the hotels under management in Istanbul, Milan, Paris,
and Prague relative to the other hotels in the region. The hotel
under management in Lisbon continued to experience relatively large
RevPAR and gross operating profit declines in the quarter due to
lower corporate and group demand, as well as additional pressure on
rates in that market. Gross operating margins declined 180 basis
points in the second quarter of 2005, as compared to the same
period in 2004, as overall demand in Europe continued to lag behind
the other regions in which we manage hotels and resorts, in part as
a result of a more highly valued Euro relative to the US dollar.
For the six months ended June 30, 2005, RevPAR increased 5.0%.
However, the operating results of hotels under management in Lisbon
and Canary Wharf remained lower relative to the other hotels in the
region, primarily due to lower corporate and group demand and, in
the case of Canary Wharf, new supply coming into the market. While
there was a moderate 2.4% increase in gross operating profits,
gross operating margins declined 140 basis points to 34.0% in the
first six months of 2005, as compared to the first six months of
2004. - RevPAR improvements in the second quarter of 2005 at the
Middle East Core Hotels were primarily driven by an 18.3% increase
in achieved room rates, as compared to the same period in 2004.
Virtually all of the properties in the region experienced improved
demand during the second quarter and for the first six months of
2005, as compared to the same periods in the prior year. The Middle
East Core Hotels achieved a 65.5% improvement in gross operating
profits and an 860 basis points increase in gross operating margins
in the second quarter of 2005, as compared to the same period in
2004. For the first six months of 2005, RevPAR for the Middle East
Core Hotels improved 26.9% and gross operating margins increased
830 basis points, as compared to the same period in 2004. -
Asia/Pacific Core Hotels had a 14.1% RevPAR improvement in the
second quarter of 2005, as compared to the same period in 2004,
which was primarily driven by a 6.7% increase in achieved room
rates. Gross operating margins and gross operating profits in the
second quarter of 2005 improved 310 basis points and 23.2%,
respectively, compared to the same period in 2004. In particular,
properties in Jakarta, Singapore and Shanghai had strong
improvements in both RevPAR and gross operating profits. For the
first six months of 2005, RevPAR improved 16.4%, as compared to the
same period in 2004, reflecting a 470 basis point improvement in
occupancy and a 6.7% increase in achieved room rates. Financial
Review and Analysis ----------------------------- Three months and
six months ended June 30, 2005 compared to three months
------------------------------------------------------------------------
and six months ended June 30, 2004
---------------------------------- Management Operations For the
three months ended June 30, 2005, management fee revenues
(excluding reimbursed costs and the $2.8 million impact of forward
exchange contracts) increased 16.0% ($4.5 million) to $32.3
million, as compared to $27.8 million in the second quarter of
2004. Management fee revenues (including reimbursed costs and the
impact of forward exchange contracts) increased 9.2% ($4.1 million)
to $48.3 million in the second quarter of 2005, as compared to
$44.2 million in the second quarter of 2004. For the six months
ended June 30, 2005, management fee revenues (excluding reimbursed
costs and the $5.5 million impact of forward exchange contracts)
increased 21.6% ($10.9 million) to $61.3 million, as compared to
$50.4 million in the same period in 2004. Management fee revenues
(including reimbursed costs and the impact of forward exchange
contracts) increased 12.2% ($10.0 million) to $91.9 million in the
six months ended June 30, 2005, as compared to $81.9 million in the
same period in 2004. For the three months and six months ended June
30, 2005, reimbursed costs increased $2.4 million and $4.7 million,
respectively, as compared to the corresponding periods in 2004. The
increase was attributable to more properties opening and being
under development compared to the same periods in 2004. The
increases in management fee revenues for the three months and six
months ended June 30, 2005 noted above were the result of the
improvement in revenues under management stemming from RevPAR and
other revenue increases at the worldwide Core Hotels. Excluding the
impact of forward exchange contracts, incentive fees increased
36.7% and 40.6% in the three months and six months ended June 30,
2005, respectively, as compared to the same periods in 2004.
Including the impact of forward exchange contracts, incentive fees
increased 29.6% and 31.1% in the three months and six months ended
June 30, 2005, respectively, as compared to the same periods in
2004. 42 of the hotels and resorts under management accrued
incentive fees during these periods, as compared to 36 and 37
during the corresponding periods last year. The increase in
incentive fees was attributable primarily to the improvement in
gross operating profit at the properties under management in each
of the geographic regions in which we operate. All six of our
properties under management in the Middle East accrued incentive
fees during the second quarter and first six months of 2005, as
compared to two and three in the same periods in 2004. Despite the
strong operating fundamentals in the second quarter, management fee
revenue growth was more modest due to foreign exchange currency
fluctuations and lower residential fees earned in the second
quarter of 2005, as compared to the second quarter of 2004. The
$1.2 million decline in residential fees is primarily attributable
to no residential royalty fees in respect of our projects in
Whistler, Miami and Jackson Hole being earned in the second quarter
of 2005, as compared to the same period in 2004. The limited number
and size of our residential projects and their specialized target
market make it difficult to predict the timing of sales and the
resulting royalty fees that may be earned. As a result, it will
continue to be difficult to predict the timing of fee revenues from
our residential business. Several of the hotels and resorts under
our management are and will be undergoing significant renovations
during this year. We expect the majority of the renovations at Four
Seasons properties in Washington, Las Vegas and the Maldives to be
completed by the end of 2005. Significant renovation programs at
other hotels under management, including Boston, Santa Barbara,
Philadelphia and The Regent Beverly Wilshire are expected to be
substantially completed in 2006. Based on the scheduling and
staging of these renovations, we expect these programs to have
some, but not a material, effect on fee revenues in the last two
quarters of 2005. General and administrative expenses (excluding
reimbursed costs) increased 12.0% to $9.5 million in the second
quarter of 2005, as compared to $8.4 million for the same period in
2004. Including reimbursed costs, general and administrative
expenses increased 15.6% to $25.5 million in the second quarter of
2005, as compared to $22.1 million for the same period in 2004. The
majority of these costs are in Canadian dollars and, accordingly, a
substantial portion of this increase is attributable to the US
dollar having declined relative to the Canadian dollar since the
second quarter of 2004. On a Canadian dollar basis, general and
administrative expenses (excluding reimbursed costs) increased 2.6%
during the quarter, as compared to the same period last year. The
modest increase in these costs related primarily to an increase in
the number of employees at our corporate offices to handle the
significant unit growth in our portfolio, which was offset somewhat
by a reduction in certain costs, including relatively low travel
costs during the second quarter. General and administrative
expenses (excluding reimbursed costs) increased 15.1% to $19.2
million in the first six months of 2005, as compared to $16.7
million in the same period in 2004. General and administrative
expenses (including reimbursed costs) increased 16.8% to $49.8
million in the first six months of 2005, as compared to $42.6
million in the same period in 2004. On a Canadian dollar basis,
general and administrative expenses (excluding reimbursed costs)
increased 6.2% during the first half of 2005, as compared to the
same period last year. The increase in these costs related
primarily to an increase in the number of employees at our
corporate offices to handle the significant unit growth in our
portfolio and to cost of living increases for corporate employees
that were implemented at the beginning of 2005. As a result of the
items described above, our management operations earnings before
other operating items (excluding reimbursed costs and the impact of
forward exchange contracts) for the second quarter of 2005
increased 17.8% to $22.8 million, as compared to $19.3 million in
the second quarter of 2004. Our management operations profit
margin(9) (excluding reimbursed costs and the impact of forward
exchange contracts) increased 110 basis points to 70.7% in the
second quarter of 2005, as compared to 69.6% in the second quarter
of 2004. For the six months ended June 30, 2005, our management
operations earnings before other operating items (excluding
reimbursed costs and the impact of forward exchange contracts)
increased 24.8% to $42.1 million, as compared to $33.7 million for
the same period in 2004. Our management operations profit margin
(excluding reimbursed costs and the impact of forward exchange
contracts) increased to 68.7% for the six months ended June 30,
2005, as compared to 66.9% for the six months ended June 30, 2004.
Our management operations earnings before other operating items
(including reimbursed costs and the impact of forward exchange
contracts) for the three months ended June 30, 2005 remained
relatively unchanged at $22.8 million, compared to $22.1 million
for the same period in 2004. For the six months ended June 30,
2005, our management operations earnings before other operating
items (including reimbursed costs and the impact of forward
exchange contracts) increased 7.3% to $42.1 million, as compared to
$39.2 million in the same period in 2004. Our management operations
profit margin (including reimbursed costs and the impact of forward
exchange contracts) was 47.2% in the second quarter of 2005, as
compared to 50.1% in the second quarter of 2004 and 45.8% for the
six months ended June 30, 2005, as compared to 47.9% for the same
period in 2004. Ownership and Corporate Operations(10) In the
second quarter of 2005, operating results from ownership and
corporate operations before other operating items were a loss of
$2.3 million, as compared to a loss of $1.3 million in the second
quarter of 2004. For the six months ended June 30, 2005, operating
results from ownership and corporate operations before other
operating items were a loss of $9.1 million, as compared to a loss
of $8.7 million for the same period in 2004. Corporate Costs,
including Compliance Costs For the three months and six months
ended June 30, 2005, our corporate and compliance costs, including
the ongoing implementation of the substantive changes to governance
and disclosure requirements applicable to public companies in the
US and Canada and other public company costs, increased $0.8
million and $0.7 million to $3.1 million and $5.4 million,
respectively, as compared to $2.3 million and $4.7 million for the
respective periods in 2004. The majority of these costs are in
Canadian dollars and, accordingly, some of the increase is
attributable to the US dollar having declined relative to the
Canadian dollar since the second quarter of 2004. On a constant
currency basis, corporate and compliance costs for the three months
and six months ended June 30, 2005 increased $0.5 million and $0.2
million, respectively, as compared to the corresponding periods in
2004. The Pierre In June 2005, Four Seasons disposed of its
interest in The Pierre and ceased managing the property on June 30,
2005.(11) Further details on the disposition of this investment are
discussed below under "Disposition of Hotel Investments". RevPAR at
The Pierre increased 17.4% in the second quarter of 2005, as
compared to the same period in 2004, as a result of a 4.4%
improvement in occupancy and an 11.5% increase in achieved room
rates. These increases reflected the higher travel demand in New
York, particularly in leisure travel, during the quarter. As a
result, operating results at The Pierre improved by $0.2 million to
earnings of $1.2 million in the second quarter of 2005, as compared
to earnings of $1.0 million in second quarter of 2004. RevPAR at
The Pierre increased 20.1% in the first six months of 2005, as
compared to the same period in 2004, as a result of a 6.5%
improvement in occupancy and a 10.6% increase in achieved room
rates. As a result, operating results at The Pierre improved by
$0.7 million to a loss of $0.8 million in the first six months of
2005, as compared to a loss of $1.5 million in the first six months
of 2004. Four Seasons Hotel Vancouver RevPAR at Four Seasons Hotel
Vancouver decreased 1.6% for the three months ended June 30, 2005,
as compared to the same period in 2004, primarily as the result of
slight declines in occupancy and achieved room rates. Operating
results at the hotel remained relatively unchanged with a loss of
$0.2 million in both the second quarter of 2005 and 2004. RevPAR at
Four Seasons Hotel Vancouver increased 3.0% in the six months ended
June 30, 2005, as compared to the same period in 2004, primarily as
the result of an improvement in occupancy, partially offset by a
modest decrease in achieved room rates. Operating results at the
hotel remained relatively flat, with a loss of $2.4 million in the
first half of 2005, as compared to a loss of $2.2 million in the
first half of 2004, mainly due to an offsetting reduction in
banquet revenue. We are continuing to review options in respect of
Four Seasons Hotel Vancouver to determine what, if any,
alternatives may be available to modify or restructure our
operation of, or investment in, this hotel. There can be no
assurance that acceptable alternative arrangements can be found
with respect to this hotel or as to the terms of any such
alternative arrangements. Other Income/Expense, Net Other expense,
net for the second quarter of 2005 was $8.6 million, as compared to
other expense, net of $2.2 million for the same period in 2004.
Other expense, net for the six months ended June 30, 2005 was $11.4
million, as compared to other income, net of $1.1 million for the
same period in 2004. Disposition of Hotel Investments In April
2005, we sold approximately 53% of our equity interest in Four
Seasons Hotel Shanghai for gross proceeds of $9.5 million (cash of
$4.2 million and a loan receivable of $5.3 million), which
approximated book value, and reduced our interest in the hotel to
approximately 10%. As a result of the sale, we revalued this US
dollar investment at March 31, 2005 at current exchange rates and
recorded a loss of $1.9 million for the three months ended March
31, 2005. On June 30, 2005, we finalized the assignment of our
leases and the sale of the related assets in The Pierre for net
proceeds of $4.5 million. The net book value of our assets in The
Pierre was $7.8 million and, after deducting disposition costs, we
recorded a loss on sale of $5.0 million. We also recorded a tax
benefit in connection with the sale of $9.2 million, which is
discussed further under "Income Tax Expense" below. As part of the
sale of The Pierre, in accordance with statutory provisions, the
purchaser agreed to assume a portion of our contribution history
with a multi-employer pension fund for the unionized hotel
employees (the "NYC Pension"). This permitted us to withdraw from
the NYC Pension without incurring a withdrawal liability estimated
at $10.7 million. In certain limited circumstances, as a part of
our agreement, we may be required to pay a portion of the
purchaser's withdrawal liability, if any. We believe that the
likelihood of our being required to make a payment is remote, and
have not recorded any amount as at June 30, 2005 in respect of a
potential NYC Pension withdrawal liability. For further details,
please see note 5 to our interim consolidated financial statements
for the three months and six months ended June 30, 2005. Foreign
Exchange Other expense for the second quarter of 2005 included a
$3.3 million foreign exchange loss, as compared to a $2.2 million
foreign exchange loss for the same period in 2004. Other expense
for the six months ended June 30, 2005 included a $3.7 million
foreign exchange loss, as compared to a $1.3 million foreign
exchange gain for the same period in 2004. Foreign exchange gains
and losses arose primarily from the translation to Canadian dollars
(using current exchange rates at the end of each quarter) of our
foreign currency-denominated net monetary assets, which are not
included in our designated foreign self-sustaining subsidiaries.
They also reflected local currency foreign exchange gains and
losses on net monetary assets incurred by our designated foreign
self-sustaining subsidiaries. Net monetary assets is the difference
between our foreign currency-denominated monetary assets and our
foreign currency-denominated monetary liabilities, and consists
primarily of cash and cash equivalents, accounts receivable,
long-term receivables and long-term obligations, as determined
under Canadian generally accepted accounting principles ("GAAP").
As a result of the currency swap relating to our convertible senior
notes which is described below, our net US dollar asset position
increased significantly during the second quarter of 2005. This
combined with the strengthening of the Canadian dollar relative to
the US dollar resulted in the foreign exchange loss during the
second quarter of 2005. Ongoing fluctuations in rates of exchange
between currencies will likely result in future foreign exchange
gains or losses. Although we have engaged in hedging activities in
the past, we do not anticipate entering into any hedging
arrangements in the near-term due to the continued volatility of
many foreign currencies (and in particular the US dollar) and the
associated costs of these arrangements. Net Interest Income During
the second quarter of 2005, we had net interest income of $0.8
million, as compared to $0.5 million in the second quarter of 2004.
Net interest income is a combination of approximately $3.7 million
in interest income and approximately $2.9 million in interest
expense in the second quarter of 2005, as compared to $2.8 million
and $2.3 million, respectively, for the same period in 2004. The
increase in interest income for the second quarter of 2005, as
compared to the same period in 2004, was primarily attributable to
increased cash and cash equivalents as a result of the issuance of
our convertible senior notes in June 2004 and higher deposit
interest rates. During the six months ended June 30, 2005, we had
net interest income of $1.2 million, as compared to $1.4 million in
the six months ended June 30, 2004. Net interest income is a
combination of approximately $7.6 million in interest income and
approximately $6.4 million in interest expense in the first six
months of 2005, as compared to $6.0 million and $4.6 million,
respectively, for the same period in 2004. The increase in interest
income for the six months ended June 30, 2005, as compared to the
same period in 2004, was primarily attributable to increased cash
and cash equivalents and higher deposit interest rates, as well as
new loans to certain properties under our management. The increase
in interest expense was attributable, in part, to the variance in
interest expense relating to the convertible senior notes issued
during the second quarter of 2004, as compared to the interest
costs relating to our previously outstanding Liquid Yield Option
Notes ("LYONs") during 2004. For accounting purposes, the
convertible senior notes are bifurcated into debt and equity
components under Canadian GAAP, and a notional interest rate is
applied to the portion that is allocated to the debt component.
Although the interest rate that is applied to the convertible
senior notes is lower than the rate applied to the LYONs, a larger
component of the convertible senior notes is allocated to debt than
was the case with the LYONs. As a result, for accounting purposes,
the interest expense associated with the convertible senior notes
is higher than was the case for the LYONs. As discussed below in
"Liquidity and Capital Resources", we have entered into currency
and interest rate swap arrangements relating to the convertible
senior notes. Taking into account the amortization of the gain on a
terminated swap and the existing swap, the effective interest rate
on the convertible senior notes in the second quarter of 2005 was
approximately 3.4%, which represents $1.8 million of interest
expense for that period. For the six months ended June 30, 2005,
the effective interest rate on the convertible senior notes was
approximately 4.0%, which represents $4.3 million of interest
expense for the six months. Interest expense also includes amounts
relating to financing fees and to our international retirement
plan. Income Tax Expense Our effective tax rates for the three
months and six months ended June 30, 2005, prior to considering the
impact of our sale of The Pierre, were 19.3% and 22.6%,
respectively, as compared to effective tax rates of 22.5% and 22.2%
for the respective periods in 2004. The variation from our expected
24% tax rate is the result of certain items not being tax effected,
including a portion of the foreign exchange gains and losses, since
they will never be realized for tax purposes. Excluding these items
and prior to considering the tax impact of our sale of The Pierre,
our tax rate would have been our expected 24%. As a result of
disposing of The Pierre, we realized a tax benefit of approximately
$6.4 million on the disposition of the fixed assets, which included
significant leasehold improvements. In addition to the ordinary tax
loss on the fixed assets, we will incur a capital loss on the
dissolution of the partnership that operated The Pierre, which will
result in a tax benefit of approximately $2.8 million. Net Earnings
and Earnings per Share For the reasons outlined above, net earnings
for the quarter ended June 30, 2005 were $15.8 million ($0.43 basic
earnings per share and $0.42 diluted earnings per share), as
compared to net earnings of $12.8 million ($0.36 basic earnings per
share and $0.34 diluted earnings per share) for the quarter ended
June 30, 2004. For the reasons outlined above, net earnings for the
six months ended June 30, 2005 were $21.0 million ($0.57 basic
earnings per share and $0.55 diluted earnings per share), as
compared to net earnings of $21.5 million ($0.61 basic earnings per
share and $0.58 diluted earnings per share) for the six months
ended June 30, 2004. Liquidity and Capital Resources
------------------------------- Financing Activities During the
second quarter of 2004, we issued $250 million principal amount of
convertible senior notes. For details relating to the terms of the
convertible senior notes, please refer to our MD&A for the year
ended December 31, 2004. In accordance with Canadian GAAP, the
convertible senior notes are bifurcated on our financial statements
into a debt component (representing the principal value of a bond
of $211.8 million as at June 18, 2004, which was estimated based on
the present value of a $250 million bond maturing in 2009, yielding
5.33% per annum, compounded semi-annually, and paying interest at a
rate of 1.875% per annum) and an equity component of $39 million
(representing the value of the conversion feature of the
convertible senior notes) as at June 18, 2004. For further details,
see note 10(a) to our annual consolidated financial statements for
the year ended December 31, 2004. In connection with the offering
of the convertible senior notes, we entered into a five-year
interest rate swap agreement with an initial notional amount of
$211.8 million, pursuant to which we agreed to receive interest at
a fixed rate of 5.33% per year and pay interest at six-month LIBOR,
in arrears, plus 0.4904%. In October 2004, we terminated the
interest rate swap agreement and received proceeds of $9 million.
The recognition of the resulting gain was deferred and is being
amortized through to July 30, 2009, which would have been the
maturity date of the swap. In the second quarter of 2005, we
entered into a new currency and interest rate swap agreement to
July 30, 2009, pursuant to which we have agreed to receive interest
at a fixed rate of 5.33% per annum on an initial notional amount of
$215.8 million (C$269.2 million) and pay interest at a floating
rate of six-month Canadian Bankers Acceptances ("BA") in arrears
plus 1.1% per annum. On July 30, 2009, we will pay C$311.8 million
and receive $250 million under the swap. We have designated the
swap as a fair value hedge of our convertible senior notes. This
swap will allow us to take advantage of lower floating interest
rates, which should result in an economic and accounting savings of
approximately 136 basis points at current six-month BA rates, or
approximately $3.0 million on an annualized, pre-tax basis. This
approximation will change as BA rates change. As at June 30, 2005,
no amounts were borrowed under our $125 million bank credit
facility. However, approximately $4.0 million of letters of credit
were issued under that facility. No amounts have been drawn under
these letters of credit. We believe that, absent unusual
opportunities or developments, this credit facility, when combined
with cash on hand and internally generated cash flow, should be
more than adequate to allow us to finance our normal operating
needs and anticipated investment commitments related to our current
growth objectives. Our cash and cash equivalents were $218.6
million as at June 30, 2005, as compared to $226.4 million as at
December 31, 2004. The $7.8 million decrease in cash and cash
equivalents was primarily attributable to loans and other
investments made to properties under our management. Long-term
obligations (as determined under Canadian GAAP) increased from
$256.8 million as at December 31, 2004 to $261.1 million as at June
30, 2005, primarily as a result of the accretion of interest on the
convertible senior notes. Contractual Obligations and Other
Commitments We have provided certain guarantees and have other
similar commitments typically made in connection with properties
under our management totalling a maximum of $47.0 million. These
contractual obligations and other commitments are more fully
described in the MD&A for the year ended December 31, 2004.
Since December 31, 2004, we have reduced two of our bank
guarantees, reduced two of our other commitments, and extended one
new bank guarantee and two other commitments to two properties
under our management, resulting in a net increase in guarantees and
other commitments of $1.9 million. During the remainder of the
year, we expect to fund amounts relating to our management
opportunities described under "Investing/Divesting Activities"
below. In addition, we expect to fund approximately $21.0 million
over the next 18 months in connection with an expansion of our
corporate office which is currently underway. Cash From Operations
During the three months and six months ended June 30, 2005, we
generated $23.9 million and $19.3 million, respectively, in cash
from operations, as compared to $21.1 million and $24.8 million,
respectively, for the same periods in 2004. The increase in cash
from operations of $2.8 million in the second quarter of 2005
resulted primarily from a decrease in non-cash working capital of
$2.6 million and an increase in net interest received of $1.5
million, partially offset by an increase in income tax paid of $1.3
million. The decrease in cash from operations of $5.5 million in
the first six months of 2005 resulted primarily from an increase in
non-cash working capital of $5.0 million, largely related to the
settlement in the first quarter of 2005 of incentive compensation
accrued at December 31, 2004, and an increase in current income tax
paid of $4.2 million, partially offset by an increase in cash
contributed by management operations of $3.2 million.
Investing/Divesting Activities Part of our business strategy is to
invest a portion of available cash to obtain management agreements
or enhance existing management arrangements. These investments in,
or advances in respect of or to owners of, properties are made
where we believe that the overall economic return to Four Seasons
justifies the investment or advance. As described above under
"Disposition of Hotel Investments", during the second quarter of
2005, we sold approximately 53% of our equity interest in Four
Seasons Hotel Shanghai for gross proceeds of $9.5 million. We also
finalized the transfer of our leasehold interest and the sale of
the related assets in The Pierre for net proceeds of $4.5 million,
leaving Four Seasons Hotel Vancouver as our only leasehold
interest. In addition to these items which occurred during the
second quarter of 2005, during the six months ended June 30, 2005,
we also received gross proceeds of $5.3 million from our sale of
approximately 80% of our equity interest in Four Seasons Residence
Club Scottsdale at Troon North. During the three and six months
ended June 30, 2005, we were repaid $18.0 million and $19.1
million, respectively, in loans receivable, primarily from Four
Seasons Hotel San Francisco and Four Seasons Residence Club
Scottsdale at Troon North. For the three months ended June 30,
2005, we funded $17.2 million to properties under development or
management, including amounts advanced as loans receivable to
properties in Geneva, Exuma, Buenos Aires, Budapest and Hampshire,
as well as minor equity investments in properties in Punta Mita and
Palo Alto. For the six months ended June 30, 2005, we funded $27.4
million to properties under development or management, including
amounts advanced as loans receivable to properties in Toronto,
Geneva, Exuma, Washington, Buenos Aires, Scottsdale, Jackson Hole,
Budapest and Hampshire, as well as minor equity investments in
properties in Damascus, Punta Mita and Palo Alto. For the three
months and six months ended June 30, 2005, we also funded a total
of $11.0 million and $14.2 million, respectively, in connection
with an expansion of our corporate office, which is currently
underway, and our commitment related to the Four Seasons Centre for
the Performing Arts. These levels of investment were consistent
with our business plan. During the remaining six months of 2005, we
expect to fund up to $48.0 million in respect of investments in, or
advances in respect of or to owners of, various projects, including
properties in Buenos Aires, Punta Mita and Exuma, a new resort in
the Maldives and our project in Orlando, plus additional funding
for the property in Geneva and the expansion of our corporate
office facilities. In August 2005, we finalized an agreement with
the owner of Four Seasons Hotel Newport Beach pursuant to which,
effective October 31, 2005, the owner will begin to manage this
property as an independent hotel. At the time of transition, we
will receive a payment in an amount that will exceed the net book
value of our investment in the management contract. Over the
remainder of this year, we anticipate receiving at least $50
million as the result of repayment of investments made in certain
of our managed properties. Retirement Benefit Plan Since 1983, we
have maintained a non-qualified, non-registered unfunded,
multi-employer, non-contributory "defined benefit" plan on behalf
of the owners of our managed properties and for our senior
corporate employees. The current plan provides supplemental
retirement benefits for our senior corporate executives as well as
for our general managers and regional vice presidents based on a
formula that takes into account years and level of service and
annual salary. Our liability in connection with the current plan
for our corporate executives as at June 30, 2005 was $27.7 million.
Subject to approval of our Board, we are anticipating replacing the
existing plan later this year for the majority of the plan
participants with a fully-funded plan based on a "defined
contribution" format, which should increase the certainty and
predictability of the costs of the retirement benefits. The funding
requirements relating to this new arrangement are anticipated to be
in the range of $35 million to $40 million at current exchange
rates. If a new plan is implemented this year on the basis of the
structure currently contemplated, at current exchange rates, we
have estimated that the transition would result in a one-time,
after tax accounting loss in the range of $20 million to $25
million. We do not expect that the proposed change will have a
significant impact on the ongoing annual pension cost. Our costs
next year, in respect of the contemplated new plan, are expected to
be similar to the costs incurred in 2004 for the current plan,
increased by the cost of living and merit salary increases of the
participants. Long Term Incentive Plan Since 1986, long-term
incentives have been provided to a large group of our employees
through stock options. Changes in the rules governing compensation,
including accounting rules and regulations related to stock options
have caused us to re-evaluate the use of stock options as the
primary form of long-term incentive to our employees. As a result
of the re- evaluation, we have determined to significantly reduce
the use of stock options and are introducing a restricted stock
program. Under the restricted stock program, eligible employees
would be entitled to earn performance-based compensation, which
will be used to purchase shares on their behalf in the market.
Subject to limited exceptions, participants would not be able to
dispose of those shares for a three-year period. We expect the
expense for the full year 2005 related to the restricted stock
program will be approximately $500,000. Outstanding Share Data
-------------------------------------------------------------------------
Designation Outstanding as at August 3, 2005
-------------------------------------------------------------------------
Variable Multiple Voting Shares(a) 3,725,698
-------------------------------------------------------------------------
Limited Voting Shares 32,913,488
-------------------------------------------------------------------------
Options to acquire Limited Voting Shares:
-------------------------------------------------------------------------
Outstanding 4,540,843
-------------------------------------------------------------------------
Exercisable 3,383,821
-------------------------------------------------------------------------
Convertible Senior Notes issued June 2004 and due 2024(b) $250.05
million(c)
-------------------------------------------------------------------------
(a) Convertible into Limited Voting Shares at any time at the
option of the holder on a one-for-one basis. (b) Details on the
convertible senior notes are described more fully in our annual
MD&A for the year ended December 31, 2004. (c) This amount is
equal to the issue price of the convertible senior notes issued
June 2004 and due 2024 plus accrued interest calculated at 1.875%
per annum. Looking Ahead ------------- Recent terrorist activity
may cause further disruptions to travel patterns that currently
cannot be predicted, which in turn makes it more difficult to
provide RevPAR and gross operating margins guidance at this time.
However, assuming the travel trends that we experienced in 2004 and
the first half of 2005 continue, and based on current demand
reflected in our reservation activity, we expect RevPAR for
worldwide Core Hotels in the third quarter of 2005 and the full
year 2005 to increase by approximately 10% and approximately 11%,
respectively, as compared to the corresponding periods in 2004. We
expect that this improvement will result from occupancy and pricing
improvements in all geographic regions. If current trends continue,
we expect gross operating margins of our worldwide Core Hotels to
increase more than 220 basis points for the full year of 2005, as
compared to the full year of 2004. Change in Reporting Currency to
US Dollars ------------------------------------------ Effective the
first quarter of 2005, we have adopted US dollars as our reporting
currency. All amounts disclosed in this MD&A (including amounts
for prior periods) are in US dollars unless otherwise noted. The
consolidated financial statements in Canadian dollars have been
translated to US dollars using the foreign exchange rates
applicable at each balance sheet date for assets and liabilities,
and the weighted average exchange rates of the corresponding
quarters for the consolidated statements of operations,
consolidated statements of cash provided by operations and
consolidated statements of cash flow. Equity transactions have been
translated to US dollars at the historical exchange rates for 2005
and 2004 with opening equity accounts on January 1, 2004 translated
at the exchange rate on that date. These exchange rates are
disclosed in notes 1 and 8. Any resulting exchange gain or loss was
charged or credited to "Equity adjustment from foreign currency
translation", which is included as a separate component of
shareholders' equity. We have not changed the functional currency
of Four Seasons Hotels Inc., which remains Canadian dollars, or the
functional currencies of any of its subsidiaries. As a result,
while US dollar reporting will minimize the currency fluctuations
related to the majority of our US dollar management fee revenues,
it will not eliminate foreign currency fluctuations related to our
management fees in other currencies, or the majority of our
management operations general and administrative expenses, which
are incurred in Canadian dollars. It will also not eliminate
foreign currency gains and losses related to unhedged net monetary
asset and liability positions. Changes in Accounting Policies
------------------------------ During the first six months of 2005,
we adopted The Canadian Institute of Chartered Accountants'
("CICA") new accounting standards on variable interest entities and
temporary controlled investments, as discussed in note 1 to the
interim consolidated financial statements. The adoption of these
changes did not have a material impact on our consolidated
financial statements. In June 2005, the Emerging Issues Committee
of the CICA issued Abstract EIC-155, "The Effect of Contingently
Convertible Instruments on Diluted Earnings per Share", which
requires the application of the "if-converted method" to account
for the potential dilution relating to the conversion of
contingently convertible instruments, such as our convertible
senior notes. EIC-155 will be effective for periods beginning on or
after October 1, 2005. If we had adopted EIC-155 for the three
months and six months ended June 30, 2005, there would have been no
additional dilution for either period. Additional Information
---------------------- Additional information about us (including
our most recent annual information form, annual MD&A and our
audited financial statements for the year ended December 31, 2004)
is available on SEDAR at http://www.sedar.com/.
---------------------- 1. The following Canadian/US dollar foreign
exchange rates were used to translate the specified periods:
---------------------------------------------------------------------
Average foreign Foreign Average foreign Foreign exchange rate
exchange exchange rate exchange used for Second rate as at used for
Second rate as at Quarter 2005 June 30, 2005 Quarter 2004 December
31, 2004
---------------------------------------------------------------------
1.24401 1.23240 1.35860 1.20360
---------------------------------------------------------------------
2. RevPAR is defined as average room revenue per available room. It
is a non-GAAP measure. We use RevPAR because it is a commonly used
indicator of market performance for hotels and resorts and
represents the combination of the average daily room rate and the
average occupancy rate achieved during the period. RevPAR does not
include food and beverage or other ancillary revenues generated by
a hotel or resort. RevPAR is the most commonly used measure in the
lodging industry to measure the period-over-period performance of
comparable properties. Our calculation of RevPAR may be different
than the calculation used by other lodging companies. 3. The term
"Core Hotels" means hotels and resorts under management for the
full year of both 2005 and 2004. However, if a "Core Hotel" has
undergone or is undergoing an extensive renovation program in one
of those years that materially affects the operation of the
property in that year, it ceases to be included as a "Core Hotel"
in either year. Changes from the 2004/2003 Core Hotels are the
additions of Four Seasons Resort Jackson Hole, Four Seasons Hotel
Miami, Four Seasons Resort Great Exuma at Emerald Bay, Four Seasons
Hotel Prague, Four Seasons Hotel Riyadh and Four Seasons Hotel
Jakarta, and the deletions of Four Seasons Resort Maldives at Kuda
Huraa (due to its temporary closure caused by the tsunami) and The
Pierre in New York (due to its disposition on June 30, 2005). 4.
Gross operating margin represents gross operating profit as a
percentage of gross operating revenue. 5. Reimbursed costs includes
the reimbursement of all out-of-pocket costs, including sales and
marketing and advertising fees. 6. Effective January 1, 2004, we
ceased designating our US dollar forward contracts as hedges of our
US dollar fee revenues. These contracts were entered into during
2002, and all of these contracts matured during 2004. The foreign
exchange gains on these contracts of $11.2 million, which were
deferred prior to January 1, 2004, were recognized in 2004 as an
increase of fee revenues over the course of the year. Foreign
exchange gains on forward exchange contracts were recorded as
increases in management fee revenues in the quarters of 2004 and
2003 as follows:
---------------------------------------------------------------------
(In millions of First Second Third Fourth US dollars) Quarter
Quarter Quarter Quarter
---------------------------------------------------------------------
2004 $2.7 $2.8 $2.6 $3.1
---------------------------------------------------------------------
2003 $0.5 $1.5 $1.4 $2.3
---------------------------------------------------------------------
7. Including the reimbursed costs and forward exchange contracts,
management fee revenues increased 9.2%, or $4.1 million, to $48.3
million in the second quarter of 2005, as compared to $44.2 million
for the same period in 2004. We provide the information excluding
the above items because the foreign exchange contracts applied only
to the period in 2004 and the reimbursed costs have no net impact
on earnings from management operations. 8. Eight Quarter Summary:
-------------------------------------------------------------------------
(In millions of US dollars except per share amounts) Second Quarter
First Quarter
-------------------------------------------------------------------------
2005 2004 2005 2004
-------------------------------------------------------------------------
Consolidated revenues(b) $74.5 $71.4 $63.1 $57.1
-------------------------------------------------------------------------
Earnings (loss) before other operating items:
-------------------------------------------------------------------------
Management operations 22.8 22.1 19.3 17.1
-------------------------------------------------------------------------
Ownership and corporate operations (2.3) (1.3) (6.8) (7.4)
-------------------------------------------------------------------------
Net earnings (loss):
-------------------------------------------------------------------------
Total $15.8 $12.8 $5.2 $8.7
-------------------------------------------------------------------------
Basic earnings (loss) per share(c) $0.43 $0.36 $0.14 $0.25
-------------------------------------------------------------------------
Diluted earnings (loss) per share(c) $0.42 $0.34 $0.14 $0.24
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average Canadian/US foreign exchange rate used for specified
quarter 1.24401 1.35860 1.22652 1.31785
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(In millions of US dollars except per share amounts) Fourth Quarter
Third Quarter
-------------------------------------------------------------------------
2004 2003(a) 2004 2003(a)
-------------------------------------------------------------------------
Consolidated revenues(b) $69.5 $66.8 $63.3 $52.6
-------------------------------------------------------------------------
Earnings (loss) before other operating items:
-------------------------------------------------------------------------
Management operations 18.2 15.7 20.1 13.7
-------------------------------------------------------------------------
Ownership and corporate operations (3.1) (1.5) (4.9) (6.8)
-------------------------------------------------------------------------
Net earnings (loss):
-------------------------------------------------------------------------
Total $12.8 $8.9 $(8.5) $3.2
-------------------------------------------------------------------------
Basic earnings (loss) per share(c) $0.35 $0.25 $(0.24) $0.09
-------------------------------------------------------------------------
Diluted earnings (loss) per share(c) $0.34 $0.24 $(0.24) $0.09
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average Canadian/US foreign exchange rate used for specified
quarter 1.22033 1.31550 1.30758 1.37927
-------------------------------------------------------------------------
(a) In December 2003, the CICA amended Section 3870 of its Handbook
to require entities to account for employee stock options using the
fair value-based method, beginning January 1, 2004. In accordance
with one of the transitional alternatives permitted under amended
Section 3870, in the fourth quarter of 2003 we prospectively
adopted the fair value-based method with respect to all employee
stock options granted on or after January 1, 2003. Accordingly,
options granted prior to that date continue to be accounted for
using the settlement method. In accordance with the new standard,
however, the reported results for the first three quarters of 2003
are required to be restated. The prospective application of
adopting the fair value-based method effective January 1, 2003
resulted in the following restatements: Third Quarter and Fourth
Quarter 2003 - in each quarter, a decrease in net earnings of $0.3
million and a decrease in basic and diluted earnings per share of
$0.01 for each quarter. (b) As a result of adopting Section 1100,
"Generally Accepted Accounting Principles", which was issued by the
CICA in July 2003 and was effective January 1, 2004, we have
included the reimbursement of all out-of-pocket expenses in both
revenues and expenses, instead of recording certain reimbursed
costs as a "net" amount. As a result of this change, consolidated
revenues have been restated as follows: Third Quarter 2003 -
increase of $7.5 million; Fourth Quarter 2003 - increase of $9.6
million. Consolidated revenues is comprised of the following:
-------------------------------------------------------------------------
Second First Fourth Third Quarter Quarter Quarter Quarter (In
millions of -------------------------------------------------------
US dollars) 2005 2004 2005 2004 2004 2003 2004 2003
-------------------------------------------------------------------------
Revenues from Management Operations $48.3 $44.2 $43.6 $37.6 $44.3
$40.6 $41.9 $33.8
-------------------------------------------------------------------------
Revenues from Ownership and Corporate Operations 27.6 28.1 20.5
20.3 26.6 27.4 22.4 19.6
-------------------------------------------------------------------------
Distributions from hotel investments 0.1 0.3 0.0 0.0 0.0 0.0 0.0
0.1
-------------------------------------------------------------------------
Fees from Ownership and Corporate Operations to Management
Operations (1.5) (1.2) (1.0) (0.9) (1.4) (1.2) (1.0) (0.9)
-------------------------------------------------------------------------
$74.5 $71.4 $63.1 $57.1 $69.5 $66.8 $63.3 $52.6
-------------------------------------------------------------------------
(c) Quarterly computations of per share amounts are made
independently on a quarter-by-quarter basis and may not equate to
annual computations of per share amounts. DATASOURCE: Four Seasons
Hotels and Resorts CONTACT: Douglas L. Ludwig, Chief Financial
Officer and Executive Vice President, (416) 441-4320; Barbara
Henderson, Vice President, Corporate Finance, (416) 441-4329 /FIRST
AND FINAL ADD TO FOLLOW
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