FOUR SEASONS HOTELS INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three months ended Nine months ended (In thousands of
US dollars September 30, September 30, except per share amounts)
2006 2005 2006 2005
-------------------------------------------------------------------------
Revenues: Hotel management fees $ 27,193 $ 22,531 $ 90,623 $ 75,602
Other fees 3,568 3,471 13,305 9,991 Hotel ownership revenues 8,781
9,749 24,741 57,970 Reimbursed costs 18,675 16,453 54,990 46,277
----------------------------------------------- 58,217 52,204
183,659 189,840 -----------------------------------------------
Expenses: General and administrative expenses (15,166) (15,625)
(44,067) (41,495) Hotel ownership cost of sales and expenses
(7,764) (8,417) (23,814) (58,189) Reimbursed costs (18,675)
(16,453) (54,990) (46,277)
----------------------------------------------- (41,605) (40,495)
(122,871) (145,961) -----------------------------------------------
Operating earnings before other items 16,612 11,709 60,788 43,879
Depreciation and amortization (4,433) (2,575) (9,875) (8,512) Other
income (expenses), net (note 4) 632 (21,064) (6,995) (32,419)
Interest income 5,823 3,974 15,922 11,590 Interest expense (3,601)
(2,766) (11,359) (8,401)
----------------------------------------------- Earnings (loss)
before income taxes 15,033 (10,722) 48,481 6,137
----------------------------------------------- Income tax recovery
(expense) (note 5): Current (3,155) 2,925 (10,169) (389) Future
(937) (3,644) (4,904) 3,799
----------------------------------------------- (4,092) (719)
(15,073) 3,410 ----------------------------------------------- Net
earnings (loss) $ 10,941 $ (11,441) $ 33,408 $ 9,547
-----------------------------------------------
----------------------------------------------- Basic earnings
(loss) per share (note 3(a)) $ 0.30 $ (0.31) $ 0.91 $ 0.26
-----------------------------------------------
----------------------------------------------- Diluted earnings
(loss) per share (note 3(a)) $ 0.29 $ (0.31) $ 0.89 $ 0.25
-----------------------------------------------
----------------------------------------------- See accompanying
notes to consolidated financial statements. FOUR SEASONS HOTELS
INC. CONSOLIDATED BALANCE SHEETS As at As at (Unaudited) September
30, December 31, (In thousands of US dollars) 2006 2005
-------------------------------------------------------------------------
ASSETS Current assets: Cash and cash equivalents $ 254,242 $
242,178 Receivables 66,118 69,690 Inventory 3,476 7,326 Prepaid
expenses 3,067 2,950 -------------------------- 326,903 322,144
Long-term receivables 201,702 175,374 Investments in hotel
partnerships and corporations (note 2) 89,012 99,928 Fixed assets
80,551 64,850 Investment in management contracts (note 2) 192,297
164,932 Investment in trademarks and trade names 4,344 4,210 Future
income tax assets 10,104 14,439 Other assets 51,432 34,324
-------------------------- $ 956,345 $ 880,201
-------------------------- -------------------------- LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and
accrued liabilities $ 57,450 $ 54,797 Long-term obligations due
within one year 1,881 4,853 -------------------------- 59,331
59,650 Long-term obligations 290,039 273,825 Shareholders' equity
(note 3): Capital stock 256,115 250,430 Convertible notes 36,920
36,920 Contributed surplus 13,104 10,861 Retained earnings 192,441
160,741 Equity adjustment from foreign currency translation 108,395
87,774 -------------------------- 606,975 546,726
-------------------------- $ 956,345 $ 880,201
-------------------------- -------------------------- See
accompanying notes to consolidated financial statements. FOUR
SEASONS HOTELS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Three
months ended Nine months ended (Unaudited) September 30, September
30, (In thousands of US dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
Operating activities: Net earnings (loss) $ 10,941 $ (11,441) $
33,408 $ 9,547 Items not affecting cash: Stock-based compensation
expense 556 486 1,642 1,494 Depreciation and amortization 4,433
2,575 9,875 8,512 Other (income) expenses, net (632) 21,064 6,995
32,419 Future income tax (recovery) expense 937 3,644 4,904 (3,799)
Other 220 959 1,189 1,487 Changes in non-cash working capital
13,490 (232) (482) (13,276)
----------------------------------------------- Cash provided by
operating activities 29,945 17,055 57,531 36,384
----------------------------------------------- Investing
activities: Advances of long-term receivables (3,837) (4,633)
(21,781) (38,649) Receipt of long-term receivables 4,367 126 14,436
19,402 Investments in hotel partnerships and corporations (2,497)
(1,368) (700) (10,813) Disposal of hotel partnerships and
corporations - - 707 12,672 Purchase of fixed assets (6,291)
(4,761) (16,148) (12,821) Investments in trademarks, trade names
and management contracts (2,227) (202) (16,851) (675) Other assets
(924) (1,042) (6,526) (7,902)
----------------------------------------------- Cash used in
investing activities (11,409) (11,880) (46,863) (38,786)
----------------------------------------------- Financing
activities: Long-term obligations, including current portion (231)
278 (2,776) (1,220) Issuance of shares 277 156 5,636 6,992
Dividends paid (1,721) (1,584) (3,378) (3,142)
----------------------------------------------- Cash provided by
(used in) financing activities (1,675) (1,150) (518) 2,630
----------------------------------------------- Increase in cash
and cash equivalents 16,861 4,025 10,150 228 Increase (decrease) in
cash and cash equivalents due to unrealized foreign exchange gain
(loss) 570 (1,189) 1,914 (5,133) Cash and cash equivalents,
beginning of period 236,811 218,636 242,178 226,377
----------------------------------------------- Cash and cash
equivalents, end of period $ 254,242 $ 221,472 $ 254,242 $ 221,472
-----------------------------------------------
----------------------------------------------- Supplementary
information: Interest received $ 3,977 $ 2,772 $ 13,125 $ 10,449
Interest paid (3,333) (1,754) (6,071) (4,916) Income taxes received
(paid) 876 (1,442) (2,125) (6,897) See accompanying notes to
consolidated financial statements. FOUR SEASONS HOTELS INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Nine months ended
(Unaudited) September 30, (In thousands of US dollars) 2006 2005
-------------------------------------------------------------------------
Retained earnings, beginning of period $ 160,741 $ 192,129 Net
earnings 33,408 9,547 Dividends declared (1,708) (1,537)
------------------------- Retained earnings, end of period $
192,441 $ 200,139 -------------------------
------------------------- See accompanying notes to consolidated
financial statements. FOUR SEASONS HOTELS INC. NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (In thousands of US
dollars except per share amounts)
-------------------------------------------------------------------------
In these interim consolidated financial statements, the words,
"we", "us", "our", and other similar words are references to Four
Seasons Hotels Inc.("FSHI") and its consolidated subsidiaries.
These interim consolidated financial statements do not include all
disclosures required by Canadian generally accepted accounting
principles for annual financial statements and should be read in
conjunction with our most recently prepared annual consolidated
financial statements for the year ended December 31, 2005. 1.
Significant accounting policies: The significant accounting
policies used in preparing these interim consolidated financial
statements are consistent with those used in preparing our annual
consolidated financial statements for the year ended December 31,
2005, except as disclosed below: (a) Non-monetary transactions: In
June 2005, The Canadian Institute of Chartered Accountants ("CICA")
issued Section 3831, "Non-Monetary Transactions", which introduces
new requirements for non-monetary transactions initiated on or
after January 1, 2006. The amended requirements will result in
non-monetary transactions being measured at fair values unless
certain criteria are met, in which case, the transaction is
measured at carrying value. The implementation of Section 3831, on
a prospective basis for transactions initiated on or after January
1, 2006, did not have any impact on our consolidated financial
statements for the three months and nine months ended September 30,
2006. (b) Financial instruments: In January 2005, the CICA issued
Section 1530 "Comprehensive Income", Section 3855 "Financial
Instruments - Recognition and Measurement", and Section 3865
"Hedges". These standards are effective for fiscal years beginning
on or after October 1, 2006. We have not yet determined the impact
of implementation of these standards on our consolidated financial
statements. (c) Comparative figures: Certain 2005 comparative
figures have been reclassified to conform with the financial
statement presentation adopted for 2006. 2. Hotel investment
transaction: In February 2006, we contributed our equity interest
in a property under our management in exchange for a management
contract enhancement of approximately the same fair value. No gain
or loss was recorded in connection with this transaction. 3.
Shareholders' equity: As at September 30, 2006, we have 3,725,698
outstanding Variable Multiple Voting Shares ("VMVS"), 33,078,418
outstanding Limited Voting Shares ("LVS"), and 4,289,343
outstanding stock options (weighted average exercise price of
C$59.82 ($53.55)). (a) Earnings (loss) per share: A reconciliation
of the net earnings (loss) and weighted average number of VMVS and
LVS used to calculate basic and diluted earnings (loss) per share
is as follows: Three months ended September 30, 2006 2005
-----------------------------------------------------------------------
Net earnings Shares Net loss Shares
-----------------------------------------------------------------------
Basic earnings (loss) per share amounts $ 10,941 36,799,139 $
(11,441) 36,638,577 Effect of assumed dilutive conversions: Stock
option plan - 640,485 - -
------------------------------------------------ Diluted earnings
(loss) per share amounts $ 10,941 37,439,624 $ (11,441) 36,638,577
------------------------------------------------
------------------------------------------------ Nine months ended
September 30, 2006 2005
-----------------------------------------------------------------------
Net earnings Shares Net earnings Shares
-----------------------------------------------------------------------
Basic earnings per share amounts $ 33,408 36,750,775 $ 9,547
36,624,036 Effect of assumed dilutive conversions: Stock option
plan - 633,746 - 1,314,393
------------------------------------------------ Diluted earnings
per share amounts $ 33,408 37,384,521 $ 9,547 37,938,429
------------------------------------------------
------------------------------------------------ The diluted
earnings (loss) per share calculation excluded the effect of the
assumed conversions of 1,461,976 stock options to LVS, under our
stock option plan, during the three months and nine months ended
September 30, 2006 (2005 - 4,540,843 and 693,056 stock options,
respectively), as the inclusion of these options would have
resulted in an anti-dilutive effect. As we incurred a net loss for
the three months ended September 30, 2005, all outstanding stock
options were excluded from the calculation of diluted loss per
share for this period. There was no dilution in 2006 and 2005
relating to our convertible notes. (b) Stock-based compensation: We
use the fair value-based method to account for all employee stock
options granted or modified on or after January 1, 2003.
Accordingly, options granted prior to that date continue to be
accounted for using the settlement method. Stock options to acquire
41,650 LVS were granted in the nine months ended September 30, 2006
at a weighted average exercise price of C$62.61 ($53.65). The fair
value of stock options granted in the nine months ended September
30, 2006 was estimated using the Black-Scholes options pricing
model with the following assumptions: risk-free interest rates
ranging from 4.09% to 4.17%; semi-annual dividend per LVS of
C$0.055; volatility factor of the expected market price of our LVS
of 27%; and expected lives of the options ranging between four and
seven years, depending on the level of the employee who was granted
stock options. For the options granted in the nine months ended
September 30, 2006, the weighted average fair value of the options
at the grant dates was C$21.49 ($18.41). For purposes of stock
option expense and pro forma disclosures, the estimated fair value
of the options is amortized to compensation expense over the
options' vesting period. There were no stock options granted in the
three months ended September 30, 2006 and the nine months ended
September 30, 2005. Pro forma disclosure is required to show the
effect of the application of the fair value-based method to
employee stock options granted during 2002, which were not
accounted for using the fair value-based method. For the three
months and nine months ended September 30, 2006 and 2005, if we had
applied the fair value-based method to options granted during 2002,
our net earnings (loss) and basic and diluted earnings (loss) per
share would have been adjusted to the pro forma amounts indicated
below: Three months ended Nine months ended September 30, September
30, 2006 2005 2006 2005
-------------------------------------------------------------------------
Stock-based compensation expense $ (556) $ (486) $ (1,642) $
(1,494) -------------------------------------------
------------------------------------------- Net earnings (loss), as
reported $ 10,941 $ (11,441) $ 33,408 $ 9,547 Increase in
stock-based compensation expense that would have been recorded if
all stock options granted during 2002 had been expensed (650) (717)
(1,954) (2,089) ------------------------------------------- Pro
forma net earnings (loss) $ 10,291 $ (12,158) $ 31,454 $ 7,458
-------------------------------------------
------------------------------------------- Earnings (loss) per
share: Basic, as reported $ 0.30 $ (0.31) $ 0.91 $ 0.26 Basic, pro
forma 0.28 (0.33) 0.86 0.20 Diluted, as reported 0.29 (0.31) 0.89
0.25 Diluted, pro forma 0.28 (0.33) 0.84 0.20 4. Other income
(expenses), net: Three months ended Nine months ended September 30,
September 30, 2006 2005 2006 2005
-------------------------------------------------------------------------
Foreign exchange gain (loss) $ 1,286 $ (16,172) $ (6,633) $
(19,854) Asset provisions and write downs (654) (4,624) (362)
(6,725) Loss on disposition of assets - (268) - (5,840)
------------------------------------------- $ 632 $ (21,064) $
(6,995) $ (32,419) -------------------------------------------
------------------------------------------- The foreign exchange
gain (loss) in 2006 and 2005 related primarily to the foreign
currency translation gains and losses on unhedged net monetary
asset and liability positions, primarily in US dollars, euros,
pounds sterling and Australian dollars, and local currency foreign
exchange gains and losses on net monetary assets incurred by our
designated foreign self-sustaining subsidiaries. As at September
30, 2006, we have foreign exchange forward contracts in place to
sell forward $44,211 of US dollars to receive Canadian dollars at a
weighted average forward exchange rate of 1.114 Canadian dollars to
a US dollar maturing over the period to March 2008. All our foreign
exchange forward contracts are being marked-to-market on a monthly
basis with the resulting changes in fair values being recorded as a
foreign exchange gain or loss. This resulted in a $176 foreign
exchange loss and $1,268 foreign exchange gain being recorded in
the three months and nine months ended September 30, 2006,
respectively. We did not sell forward US dollars during the nine
months ended September 30, 2005. Subsequent to September 30, 2006,
we have sold forward an additional $3,543 of US dollars to receive
Canadian dollars at a weighted average forward exchange rate of
1.129 Canadian dollars to a US dollar maturing over the period to
April 2008. 5. Income taxes: During the three months and nine
months ended September 30, 2006, we recorded an additional
valuation allowance of $211 and $1,957 respectively, related to not
recognizing a tax benefit on certain foreign exchange losses, due
to the uncertainty associated with the utilization of these losses.
This increased our income tax expense for the three months and nine
months ended September 30, 2006 by this amount. In connection with
the disposition of The Pierre in June 2005, we recorded an income
tax benefit of approximately $9,200 for the nine months ended
September 30, 2005. 6. Pension expense: The pension expense for the
three months and nine months ended September 30, 2006 was $855 and
$2,681, respectively (2005 - $1,134 and $2,351, respectively). 7.
Guarantees and commitments: We have provided certain guarantees and
have other similar commitments typically made in connection with
properties under our management. These contractual obligations and
other commitments are more fully described in the consolidated
financial statements for the year ended December 31, 2005. Since
December 31, 2005, we have decreased our guarantees and commitments
by approximately $1,300. 8. Segmented information: Our strategy is
to focus on hotel management rather than hotel ownership. Four
Seasons Hotel Vancouver is our only remaining hotel whose results
we consolidate. As a result, commencing January 1, 2006, corporate
expenses are reflected in our results as general and administrative
expenses in the consolidated statements of operations for the three
months and nine months ended September 30, 2006. Corporate expenses
for the three months and nine months ended September 30, 2005 that
previously were included in our Ownership Operations segment have
been reclassified to the Management Operations segment and included
in general and administrative expenses in the consolidated
statements of operations. Three months ended September 30, 2006
----------------------------------- Management Ownership Operations
Operations Total
-------------------------------------------------------------------------
Revenues: Hotel management fees $ 27,193 $ - $ 27,193 Other fees
3,568 - 3,568 ----------------------------------- 30,761 - 30,761
Hotel ownership revenues - 8,781 8,781 Reimbursed costs 18,675 -
18,675 ----------------------------------- 49,436 8,781 58,217
----------------------------------- Expenses: General and
administrative expenses (15,166) - (15,166) Hotel ownership cost of
sales and expenses - (7,764) (7,764) Reimbursed costs (18,675) -
(18,675) ----------------------------------- (33,841) (7,764)
(41,605) ----------------------------------- Operating earnings
before other items $ 15,595 $ 1,017 $ 16,612
-----------------------------------
----------------------------------- Three months ended September
30, 2005 ----------------------------------- Management Ownership
Operations Operations Total
-------------------------------------------------------------------------
Revenues: Hotel management fees $ 22,531 $ - $ 22,531 Other fees
3,471 - 3,471 ----------------------------------- 26,002 - 26,002
Hotel ownership revenues - 9,749 9,749 Reimbursed costs 16,453 -
16,453 ----------------------------------- 42,455 9,749 52,204
----------------------------------- Expenses: General and
administrative expenses (15,625) - (15,625) Hotel ownership cost of
sales and expenses - (8,417) (8,417) Reimbursed costs (16,453) -
(16,453) ----------------------------------- (32,078) (8,417)
(40,495) ----------------------------------- Operating earnings
before other items $ 10,377 $ 1,332 $ 11,709
-----------------------------------
----------------------------------- Nine months ended September 30,
2006 ----------------------------------- Management Ownership
Operations Operations Total
-------------------------------------------------------------------------
Revenues: Hotel management fees $ 90,623 $ - $ 90,623 Other fees
13,305 - 13,305 ----------------------------------- 103,928 -
103,928 Hotel ownership revenues - 24,741 24,741 Reimbursed costs
54,990 - 54,990 ----------------------------------- 158,918 24,741
183,659 ----------------------------------- Expenses: General and
administrative expenses (44,067) - (44,067) Hotel ownership cost of
sales and expenses - (23,814) (23,814) Reimbursed costs (54,990) -
(54,990) ----------------------------------- (99,057) (23,814)
(122,871) ----------------------------------- Operating earnings
before other items $ 59,861 $ 927 $ 60,788
-----------------------------------
----------------------------------- Nine months ended September 30,
2005 ----------------------------------- Management Ownership
Operations Operations Total
-------------------------------------------------------------------------
Revenues: Hotel management fees $ 75,602 $ - $ 75,602 Other fees
9,991 - 9,991 ----------------------------------- 85,593 - 85,593
Hotel ownership revenues - 57,970 57,970 Reimbursed costs 46,277 -
46,277 ----------------------------------- 131,870 57,970 189,840
----------------------------------- Expenses: General and
administrative expenses (41,495) - (41,495) Hotel ownership cost of
sales and expenses - (58,189) (58,189) Reimbursed costs (46,277) -
(46,277) ----------------------------------- (87,772) (58,189)
(145,961) ----------------------------------- Operating earnings
(loss) before other items $ 44,098 $ (219) $ 43,879
-----------------------------------
----------------------------------- 9. Subsequent event: On
November 6, 2006, we announced that our Board of Directors had
received a proposal to pursue a transaction through which FSHI
would be taken private for $82.00 cash per LVS. The Board of
Directors has established a special committee of independent
directors that will consider the proposed transaction and make
recommendations to the Board. Although there is no certainty that
the transaction contemplated by the proposal, or any other
transaction, will be completed or the terms and conditions of any
such transaction, some of our arrangements and agreements may be
impacted by certain terms in those arrangements and agreements,
including the following: (a) Convertible senior notes: Our
convertible senior notes issued in 2004 are convertible into LVS
(although at our option, we may make a cash payment in lieu of all
or some of those LVS) in certain circumstances, including upon the
occurrence of a "fundamental change", as defined in the indenture
pursuant to which the notes were issued. The proposal, if
completed, would result in a fundamental change occurring, in which
case a holder of notes would be able to surrender notes for
conversion and would be entitled to receive on conversion: (i) If
notes are surrendered for conversion in connection with the
fundamental change within the time period prescribed in the
indenture, the number of our LVS into which the notes would be
convertible (currently 13.9581 LVS per each one thousand US dollar
principal amount of notes), plus a make whole premium, as defined
in the indenture (estimated to be in the range of $87.00 to $98.00
per each one thousand US dollar principal amount of notes based on
the proposed price of $82.00 per LVS pursuant to the proposal and
assuming that, if the proposal is implemented, the effective date
would be between January 1, 2007 and July 31, 2007), and an amount
equal to any accrued but unpaid interest to, but not including, the
conversion date; or (ii) If notes are surrendered for conversion
after the time period prescribed in the indenture and after the
fundamental change, the consideration that the holder would have
received if the holder had held the number of LVS into which the
converted notes were convertible immediately before the fundamental
change ($1,144.56 per each one thousand US dollar principal amount
of notes, based on the $82.00 per LVS in the transaction that has
been proposed). In this circumstance, no make whole premium would
be payable. The proposed transaction would constitute a "change in
control", as defined in the indenture, and as a result we would be
required to make an offer to repurchase the notes at a purchase
price equal to the principal amount of the notes plus a make whole
premium (as described above), and an amount equal to any accrued
and unpaid interest to, but not including, the date of repurchase.
We have the right to satisfy the obligations in respect of
conversion in the circumstances described in (i) above, and in
respect of a repurchase of notes as described above, with LVS (or
other "applicable stock", as defined in the indenture, in the case
of repurchase of notes) or at our option cash or a combination of
LVS and cash. Further information regarding the terms of our
convertible notes is set out in the indenture pursuant to which the
notes were issued. (b) Long-term incentive arrangement: Pursuant to
an agreement approved by the shareholders of FSHI at a special
meeting in 1989, FSHI and its principal operating subsidiary, Four
Seasons Hotels Limited, have agreed to make a cash payment to Mr.
Isadore Sharp, the Chief Executive Officer of FSHI, on an
arms-length sale of control of FSHI. If the proposed transaction is
completed, Mr. Sharp would be entitled to realize proceeds related
to the incentive arrangement estimated to be approximately $288,000
(based on a proposed price of $82.00 per LVS pursuant to the
proposal and assuming that at the time of the completion of the
proposed transaction approximately 41.1 million LVS and VMVS and
which includes LVS that may be issued upon the exercise of
previously granted stock options, were outstanding). (c) Other
arrangements and agreements: Certain other arrangements and
agreements are subject to "change of control" provisions. These
include the following: (i) Under the terms of our current $125,000
bank credit facility, a change of control triggers a default under
the bank credit facility, and if not waived, would require the
repayment of all amounts outstanding under this credit facility and
would also result in the termination of this credit facility. As at
September 30, 2006, no amounts were borrowed under this credit
facility, but approximately $1,600 of letters of credit were issued
under this credit facility. (ii) Pursuant to a cross default
provision, a default under the bank credit facility in turn causes
a default under our currency and interest rate swap agreement. In
such circumstances, the counterparty to the swap agreement may
demand that the swap be terminated. As at September 30, 2006, the
net amount that would be required to be paid by FSHI to the
counterparty on termination was approximately $34,900 (of which
approximately $29,100 is included in long-term obligations). We are
continuing to evaluate the potential impact, if any, of the
proposed transaction on our other agreements and arrangements. FOUR
SEASONS HOTELS INC. SUMMARY OF HOTEL OPERATING DATA - CORE
HOTELS(1) Three months ended September 30, (Unaudited) 2006 2005
Variance
-------------------------------------------------------------------------
Worldwide # of Properties 56 56 - # of Rooms 14,290 14,290 -
Occupancy(2) 68.6% 70.1% (1.5)pts. ADR(3) $366.88 $327.51 12.0%
RevPAR(4) $251.62 $229.44 9.7% Gross operating margin(5) 30.4%
29.2% 1.2pts. United States # of Properties 20 20 - # of Rooms
6,195 6,195 - Occupancy(2) 73.4% 74.1% (0.7)pts. ADR(3) $398.26
$364.32 9.3% RevPAR(4) $292.23 $269.92 8.3% Gross operating
margin(5) 28.5% 27.1% 1.4pts. Other Americas/Caribbean # of
Properties 10 10 - # of Rooms 2,165 2,165 - Occupancy(2) 62.0%
66.5% (4.5)pts. ADR(3) $303.77 $273.92 10.9% RevPAR(4) $188.38
$182.23 3.4% Gross operating margin(5) 14.1% 17.2% (3.1)pts. Europe
# of Properties 10 10 - # of Rooms 1,720 1,720 - Occupancy(2) 71.3%
68.9% 2.4pts. ADR(3) $642.32 $555.96 15.5% RevPAR(4) $458.03
$382.94 19.6% Gross operating margin(5) 38.1% 36.3% 1.8pts. Middle
East # of Properties 5 5 - # of Rooms 1,215 1,215 - Occupancy(2)
69.6% 69.0% 0.6pts. ADR(3) $249.41 $199.22 25.2% RevPAR(4) $173.65
$137.47 26.3% Gross operating margin(5) 49.5% 43.8% 5.7pts.
Asia/Pacific # of Properties 11 11 - # of Rooms 2,995 2,995 -
Occupancy(2) 61.4% 65.4% (4.0)pts. ADR(3) $210.24 $195.28 7.7%
RevPAR(4) $129.09 $127.75 1.0% Gross operating margin(5) 32.4%
32.8% (0.4)pts.
-------------------------------------------------------------------------
(1) The term "Core Hotels" means hotels and resorts under
management for the full year of both 2006 and 2005. 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 2005/2004 Core Hotels are
the additions of Four Seasons Resort Scottsdale at Troon North,
Four Seasons Resort Whistler, Four Seasons Resort Costa Rica at
Peninsula Papagayo, Four Seasons Hotel Gresham Palace Budapest,
Four Seasons Resort Provence at Terre Blanche and Four Seasons
Hotel Cairo at Nile Plaza, and the deletion of The Regent Kuala
Lumpur. All room numbers in this table are approximate. (2)
Occupancy percentage is defined as the total number of rooms
occupied divided by the total number of rooms available. (3) ADR is
defined as average daily room rate per room occupied, calculated as
the weighted average for each region. In 2004 and 2005, ADR was
calculated as a straight average for each region. (4) RevPAR is
defined as average room revenue per available room. It is a
non-GAAP financial measure and does not have any standardized
meaning prescribed by GAAP and is therefore unlikely to be
comparable to similar measures presented by other issuers. 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. (5) Gross
operating margin represents gross operating profit as a percentage
of gross operating revenue. FOUR SEASONS HOTELS INC. SUMMARY OF
HOTEL OPERATING DATA - CORE HOTELS(1) Nine months ended September
30, (Unaudited) 2006 2005 Variance
-------------------------------------------------------------------------
Worldwide # of Properties 56 56 - # of Rooms 14,290 14,290 -
Occupancy(2) 69.6% 69.0% 0.6pts. ADR(3) $368.54 $334.54 10.2%
RevPAR(4) $256.63 $230.88 11.2% Gross operating margin(5) 32.3%
30.5% 1.8pts. United States # of Properties 20 20 - # of Rooms
6,195 6,195 - Occupancy(2) 74.8% 74.1% 0.7pts. ADR(3) $400.44
$364.43 9.9% RevPAR(4) $299.46 $270.13 10.9% Gross operating
margin(5) 30.5% 28.7% 1.8pts. Other Americas/Caribbean # of
Properties 10 10 - # of Rooms 2,165 2,165 - Occupancy(2) 65.6%
65.8% (0.2)pts. ADR(3) $374.42 $333.52 12.3% RevPAR(4) $245.59
$219.32 12.0% Gross operating margin(5) 28.1% 27.6% 0.5pts. Europe
# of Properties 10 10 - # of Rooms 1,720 1,720 - Occupancy(2) 67.9%
63.1% 4.8pts. ADR(3) $595.27 $546.49 8.9% RevPAR(4) $403.89 $344.82
17.1% Gross operating margin(5) 34.3% 32.1% 2.2pts. Middle East #
of Properties 5 5 - # of Rooms 1,215 1,215 - Occupancy(2) 70.2%
68.5% 1.7pts. ADR(3) $248.59 $212.38 17.0% RevPAR(4) $174.52
$145.40 20.0% Gross operating margin(5) 50.4% 46.8% 3.6pts.
Asia/Pacific # of Properties 11 11 - # of Rooms 2,995 2,995 -
Occupancy(2) 62.7% 64.5% (1.8)pts. ADR(3) $206.97 $196.15 5.5%
RevPAR(4) $129.80 $126.61 2.5% Gross operating margin(5) 33.1%
31.9% 1.2pts.
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(1) The term "Core Hotels" means hotels and resorts under
management for the full year of both 2006 and 2005. 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 2005/2004 Core Hotels are
the additions of Four Seasons Resort Scottsdale at Troon North,
Four Seasons Resort Whistler, Four Seasons Resort Costa Rica at
Peninsula Papagayo, Four Seasons Hotel Gresham Palace Budapest,
Four Seasons Resort Provence at Terre Blanche and Four Seasons
Hotel Cairo at Nile Plaza, and the deletion of The Regent Kuala
Lumpur. All room numbers in this table are approximate. (2)
Occupancy percentage is defined as the total number of rooms
occupied divided by the total number of rooms available. (3) ADR is
defined as average daily room rate per room occupied, calculated as
the weighted average for each region. In 2004 and 2005, ADR was
calculated as a straight average for each region. (4) RevPAR is
defined as average room revenue per available room. It is a
non-GAAP financial measure and does not have any standardized
meaning prescribed by GAAP and is therefore unlikely to be
comparable to similar measures presented by other issuers. 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. (5) Gross
operating margin represents gross operating profit as a percentage
of gross operating revenue. FOUR SEASONS HOTELS INC. SUMMARY OF
HOTEL OPERATING DATA - ALL MANAGED HOTELS(1) As at September 30,
(Unaudited) 2006 2005 Variance
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Worldwide(2) # of Properties 70 67 3 # of Rooms 17,515 17,195 320
United States # of Properties 24 24 - # of Rooms 7,045 7,140 (95)
Other Americas/Caribbean # of Properties 10 10 - # of Rooms 2,165
2,165 - Europe # of Properties 12 11 1 # of Rooms 1,960 1,855 105
Middle East # of Properties 7 6 1 # of Rooms 1,740 1,445 295
Asia/Pacific(2) # of Properties 17 16 1 # of Rooms 4,605 4,590 15
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(1) All room numbers in this table are approximate. (2) Since
September 30, 2006, we commenced management of Four Seasons Resort
Maldives at Landaa Giraavaru, which has 100 rooms. The property is
not reflected in this table. FOUR SEASONS HOTELS INC. REVENUES
UNDER MANAGEMENT - ALL MANAGED HOTELS Three months ended Nine
months ended (Unaudited) September 30, September 30, (In thousands
of US dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
Revenues under management(3) $699,157 $603,838 $2,142,183
$1,883,084 --------------------------------------------
--------------------------------------------
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(3) Revenues under management consist of rooms, food and beverage,
telephone and other revenues of all the hotels and resorts that we
manage. Approximately 59% of the fee revenues (excluding reimbursed
costs) we earned represented a percentage of the total revenues
under management of all hotels and resorts. FOUR SEASONS HOTELS
INC. SCHEDULED OPENING OF PROPERTIES UNDER CONSTRUCTION OR IN
ADVANCED STAGES OF DEVELOPMENT Approximate Hotel/Resort/Residence
Club and Location(1) (2) Number of Rooms Scheduled 2006/2007
openings ---------------------------- Four Seasons Hotel
Alexandria, Egypt 125 Four Seasons Hotel Florence, Italy 120 Four
Seasons Hotel Istanbul at the Bosphorus, Turkey 170 Four Seasons
Resort Koh Samui, Thailand(x) 60 Four Seasons Resort Lana'i at
Koele, Hawaii, USA(3) 100 Four Seasons Hotel Mumbai, India(x) 230
Four Seasons Hotel Westlake Village, California, USA 270 Beyond
2007 ----------- Four Seasons Hotel Bahrain, Bahrain 270 Four
Seasons Hotel Baltimore, Maryland, USA(x) 200 Four Seasons Resort
Barbados, Barbados(x) 120 Four Seasons Hotel Beijing, People's
Republic of China 325 Four Seasons Hotel Beirut, Lebanon 235 Four
Seasons Resort Bora Bora, French Polynesia 105 Four Seasons Resort
Cham Island, Vietnam 100 Four Seasons Hotel Doha at the Pearl,
Qatar(x) 250 Four Seasons Hotel Dubai, United Arab Emirates(x) 375
Four Seasons Hotel Hangzhou, People's Republic of China(x) 100 Four
Seasons Hotel Kuala Lumpur, Malaysia(x) 140 Four Seasons Hotel
Kuwait, Kuwait 300 Four Seasons Hotel Macau, Special Administrative
Region of the People's Republic of China(x) 370 Four Seasons Hotel
Marrakech, Morocco(x) 140 Four Seasons Resort Mauritius, Republic
of Mauritius(x) 120 Four Seasons Hotel Moscow, Russia(x) 185 Four
Seasons Hotel Moscow Kamenny Island, Russia(x) 80 Four Seasons
Hotel New Orleans, Louisiana, USA(x) 240 Four Seasons Resort Puerto
Rico, Puerto Rico(x) 250 Four Seasons Hotel Seattle, Washington,
USA(x) 150 Four Seasons Resort Seychelles, Seychelles(x) 65 Four
Seasons Hotel Shanghai at Pudong, People's Republic of China(x) 190
Four Seasons Hotel St. Petersburg, Russia 200 Four Seasons Hotel
Taipei, Taiwan(x) 275 Four Seasons Hotel Toronto, Ontario,
Canada(x) 265 Four Seasons Resort Vail, Colorado, USA(x) 120 (x)
Expected to include a residential component.
------------------------------------------------- (1) Information
concerning hotels, resorts and residential projects under
construction or under development is based upon agreements and
letters of intent and may be subject to change prior to the
completion of the project. The dates of scheduled openings have
been estimated by management based upon information provided by the
various developers. There can be no assurance that the date of
scheduled opening will be achieved or that these projects will be
completed. In particular, in the case where a property is scheduled
to open near the end of a year, there is a greater possibility that
the year of opening could be changed. The process and risks
associated with the management of new properties are dealt with in
greater detail in our 2005 Annual Report. (2) We have made an
investment in Orlando, in which we expect to include a Four Seasons
Residence Club and/or a Four Seasons branded residential component.
The financing for this project has not yet been completed and
therefore a scheduled opening date cannot be established at this
time. (3) The Lodge at Koele is currently managed by Four Seasons
and is expected to be rebranded as Four Seasons Resort Lana'i at
Koele in 2006 when the necessary renovations are completed.
DATASOURCE: Four Seasons Hotels and Resorts CONTACT: PRNewswire - -
11/09/2006
Copyright