Our Business Model We have two operating segments: (i) management
operations, and (ii) ownership operations. Management Operations
Our strategy has been to focus on hotel management rather than
ownership, and we are principally a management company. We
generally manage our hotels and resorts on behalf of our property
owners pursuant to separate management agreements for each
property. Under our management agreements, we generally oversee, as
agent for the property owner, all aspects of the day-to-day
operations of the hotels and resorts, including sales and
marketing, advertising, reservations, accounting, purchasing,
budgeting and the hiring, training and supervising of staff. In
addition, we generally provide owners with advice with respect to
information technology systems and development of certain database
applications, as well as, advice with respect to the design,
construction and furnishing of new or renovated hotels, resorts and
residences. We also provide a centralized purchasing system for
goods. We generally perform these services within the guidelines
contained in annual hotel operating and capital plans that are
submitted to the owners of the hotels and resorts during the last
quarter of the preceding year for their review and approval. For
providing these services, we generally receive a variety of fees,
including hotel management fees (comprised of a base fee and an
incentive fee); we also receive other fees (including royalty and
management fees from our residential business, fees we earn during
the development of our hotels and resorts and other miscellaneous
fees) and reimbursed costs(2) (including a sales and marketing
charge, an advertising charge and a reservation charge). Our base
fees are dependent on total revenues of all managed hotels and
resorts, which consist of rooms, food and beverage, and other
revenues. Our base fees are typically earned as a percentage of
total revenues for each property under management. RevPAR, which
relates to room revenues and does not represent total revenue of a
property, provides a strong indication of changes in revenues from
properties under management and is a commonly used indicator of
market performance for hotels and resorts. Our incentive fees are
typically earned based on the profitability of each property that
we manage, but may vary depending on the specific terms of the
relevant management agreement. Gross operating profit(3) changes at
the hotels and resorts provide an indication of the change in each
property's profitability. However, due to the variations in the
calculation of incentive fees in our management agreements, there
is not always a direct link between changes in gross operating
profit and changes in incentive fees. We receive royalty fees for
the use of our name in association with the sale of Four Seasons
branded real estate. These royalties are typically based on the
sales proceeds of the residences sold. We also manage Four Seasons
branded and serviced residential projects pursuant to management
agreements under which we oversee the management of the day-to-day
operations of the completed projects in return for ongoing
management fees from the owners of interests in these projects. In
order to expand our portfolio of properties under management, we
make investments in the form of long-term receivables, minority
equity investments and investments in management contracts. In
determining whether to make these investments, we consider the
overall expected returns to us, including the expected management
operations revenue. These investments must meet our financial
criteria and have a manageable risk profile. We consider whether
the structure should be in the form of an investment or an advance,
and, among other things, the relative risk and returns of the
investment or advance, including interest, dividends and fee
income. We generally seek to limit our total long-term capital
exposure to no more than 20% of the total equity required for a
property. We generally structure our equity investments to be able
to have our equity interest diluted if additional capital is
required. Depending on the nature of the investment or advance, it
will be classified on our consolidated balance sheet as "Long-term
receivables", "Investments in hotel partnerships and corporations",
or "Investment in management contracts". General and administrative
expenses are incurred by us to provide management services,
together with those items normally associated with corporate
overhead, such as operations, finance, information technology,
accounting, legal, development and other costs of maintaining the
corporate offices. Reimbursed costs, representing the sales,
marketing, advertising and central reservation expenses, are
generally incurred on a cost-recovery basis to us and are a
function of the number of hotels and resorts we manage. Ownership
Operations As a result of our strategy to focus on hotel
management, the ownership operating segment represents our
remaining (and primarily minority) interests in hotels and resorts.
Our earnings from ownership operations include the consolidated
results of our 100% leasehold interest(4) in Four Seasons Hotel
Vancouver and results for The Pierre for the first six months of
2005. In June 2005, we disposed of our interest in The Pierre and
ceased managing the property on June 30, 2005, leaving Four Seasons
Hotel Vancouver as our one remaining leasehold interest and the
only remaining hotel whose results we consolidate. In addition, we
include in ownership operations profit distributions from our other
ownership interests relating to minority equity positions. Other
ownership interests are discussed under "Balance Sheet Review and
Analysis - Investments in Hotel Partnerships and Corporations". Our
investment strategy as a public company is not to hold any majority
investments in hotels and resorts. However, Four Seasons Hotel
Vancouver is a long-term leasehold interest that was established at
an earlier stage in our development. We currently believe that we
will operate the Vancouver hotel under the existing lease
agreement, until its expiry on January 31, 2020. Overview of 2006
During 2006, worldwide travel demand remained robust, and the
operating results at the hotels and resorts under our management
reflect this travel trend. We realized RevPAR growth, primarily as
a result of improvements in achieved room rates in each of the
regions in which we operate. Gross operating margins(5) at the
hotels and resorts under our management also improved in 2006 as a
result of revenue improvements at the hotels and resorts and
effective cost management programs. There was some variation in
performance among the regions in which we operate, with the
properties in Europe and Middle East/Africa achieving the strongest
performance. We are pleased with the growth in hotel management fee
revenues in 2006, which reflects the strong operating results
achieved at our Core Hotels(6) and improvements at the recently
opened hotels (which are excluded from our Core Hotel statistics).
Base fees increased generally in line with RevPAR improvements, and
the strong growth in incentive fees is consistent with the
improvement in gross operating profits at the hotels and resorts
under our management. Royalty fees from our residential business
increased in 2006, primarily as a result of increased revenues from
the sale of residential units in Miami, Punta Mita and Costa Rica.
Royalty fees are earned on the sale of residences and, as a result,
vary based on the number and nature of residences sold in a given
period. Our cost base is relatively small. We directly employ
approximately 515 employees, the majority of whom are located in
Toronto. We also have corporate offices in Geneva and Singapore and
have 15 sales offices around the world. Of these corporate
employees, almost half are devoted to sales and marketing
activities (including our worldwide reservations service), the cost
of which is reimbursed by the hotels and resorts that we manage.
During 2006, we substantially completed an addition to our Toronto
corporate office, which allowed us to centralize our Toronto-based
staff in one location from three facilities. In addition to
improving communication and efficiency, we believe this
centralization should allow us to realize certain cost reducing
synergies over time. On a Canadian dollar basis, during 2006, our
general and administrative expenses, which are incurred primarily
in Canadian dollars, increased modestly. Our costs increased on a
US dollar basis due to the US dollar having declined relative to
the Canadian dollar on a year-over-year basis. During late 2005 and
through 2006, we purchased foreign exchange forward contracts to
moderate the impact of changes in foreign currency rates over time.
However, the impact of foreign currency rate movements cannot be
completely eliminated. Revenues from hotel ownership declined,
primarily as a result of the disposition of The Pierre mid-year
2005. With the disposition of The Pierre, we achieved a significant
milestone in our long-term strategic objective as a public company
of reducing exposure to hotel ownership and the associated
potentially volatile impact on earnings caused by, among other
things, business cycles, seasonality and event risk. In November
2006, we announced that our Board of Directors had received a
proposal to pursue a transaction through which FSHI would be taken
private. The Board of Directors established a special committee of
independent directors to consider the proposed transaction and make
recommendations to the Board. In connection with this proposal, and
the resulting process leading to the execution of the acquisition
agreement, we incurred in 2006 certain costs primarily relating to
legal fees, financial advisory and consulting services, and certain
filing fees (during the three months ended December 31, 2006, we
incurred $3.4 million of expenses). Please see the "Subsequent
Event" section. In 2006, as the result of the sales of our
ownership interests in the Four Seasons hotels in London, Sydney
and Aviara, we were repaid loans, accrued interest and investments,
and after deducting transaction costs, received cash and promissory
notes totalling $100.6 million. In each case we retained long-term
management of these properties. In addition, during 2006 we opened
new properties in the Golden Triangle (Thailand), Silicon Valley,
Maldives, Lana'i and Westlake Village. Since the beginning of 2006,
we added 11 new Four Seasons projects to our list of properties
under construction or advanced stages of development, including new
projects in Shanghai, Macau and Barbados. Operational and Financial
Review and Analysis Hotel and Resort Operating Results Consistent
with industry practices, we track RevPAR on a US dollar basis, and
all numbers noted below reflect that practice unless otherwise
noted. For the full year 2006, RevPAR of our worldwide Core Hotels
increased 11.8%, as compared to 2005, reflecting improvements in
each of the regions in which we manage hotels and resorts. The
increase in RevPAR was attributable to a 10.6% improvement in
achieved room rates and a 70 basis point increase in occupancy. For
the three months ended December 31, 2006, RevPAR for our worldwide
Core Hotels increased 13.9%, as compared to the same period in
2005. This increase was primarily attributable to an 11.9%
improvement in achieved room rates and a 110 basis point increase
in occupancy. Gross operating revenues of our worldwide Core Hotels
increased 10.5% and 14.0% for the full year and fourth quarter of
2006, respectively, as compared to the same periods in 2005. The
improvements in revenue, combined with continued cost management
efforts at the properties under our management, resulted in an
18.2% and 220 basis point increase in gross operating profits and
gross operating margins, respectively, for the full year ended
December 31, 2006. For the three months ended December 31, 2006,
gross operating margins of our worldwide Core Hotels increased 310
basis points to 32.5%, as compared to 29.4% in the same period in
2005. With respect to our Core Hotels, the United States represents
the most significant geographic area to us, with 49.6% of revenues
under management for the full year 2006, followed by Europe
(16.7%), Other Americas/Caribbean (14.7%), Asia/Pacific (12.8%),
and the Middle East (6.2%). The following tables highlight our
results of operations for our Core Hotels in each of these regions.
United States Region
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Results for periods in 2006, as compared to periods in 2005
-------------------------------------------------------------------------
Gross Gross Operating Operating Gross Operating RevPAR Revenue
(GOR) Profit (GOP) Margin
---------------------------------------------------------------
Percentage Percentage Percentage Basis Point $ Increase Increase
Increase Margin Improvement
-------------------------------------------------------------------------
Fourth Quarter 298 8.4% 10.2% 17.9% 30.2% 190
-------------------------------------------------------------------------
Full Year 299 10.2% 9.8% 16.8% 30.4% 180
-------------------------------------------------------------------------
In the fourth quarter of 2006, RevPAR increased 8.4%, which was
primarily attributable to increases in achieved room rates at the
majority of the Core Hotels in the region. In addition, certain of
the Core Hotels, including properties in Jackson Hole, Miami, Palm
Beach and Philadelphia, experienced strong improvements in
occupancy. The only Core Hotel in the region that had a significant
decline in occupancy and RevPAR was our property in Maui, which is
undergoing a renovation. As a result of improvements in RevPAR,
gross operating profits and gross operating margins increased 17.9%
and 190 basis points, respectively, during the fourth quarter of
2006. Excluding the results from the resort under management in
Maui, RevPAR would have increased 12.2% and gross operating profits
and gross operating margins would have increased 25.8% and 310
basis points, respectively, during the fourth quarter of 2006 as
compared to the same period in 2005. For the full year 2006,
virtually all of the properties under management in the region
realized RevPAR improvements. The increases in RevPAR for 2006 were
attributable to a 9.3% increase in achieved room rates as overall
occupancy levels were essentially unchanged in this region.
Properties under management in Austin, Los Angeles (Beverly
Wilshire), New York, Philadelphia, Houston and Palm Beach realized
particularly strong improvements in RevPAR, relative to the average
for the region. RevPAR for the full year 2006 for the region
increased 10.2% over 2005. In addition, for the full year 2006,
gross operating profits and gross operating margins improved 16.8%
and 180 basis points, respectively, as compared to 2005. This
improvement was primarily attributable to a 9.8% increase in gross
operating revenues mostly resulting from the RevPAR increase in the
region. Excluding the results from our resort under management in
Maui, RevPAR would have increased 11.1% and gross operating margins
would have increased 220 basis points during the full year 2006.
-------------------------------------------------------------------------
Other Americas/Caribbean Region
-------------------------------------------------------------------------
Results for periods in 2006, as compared to periods in 2005
-------------------------------------------------------------------------
Gross Gross Operating Operating Gross Operating RevPAR Revenue
(GOR) Profit (GOP) Margin
---------------------------------------------------------------
Percentage Percentage Percentage Basis Point $ Increase Increase
Increase Margin Improvement
-------------------------------------------------------------------------
Fourth Quarter 237 14.6% 17.0% 36.3% 26.7% 380
-------------------------------------------------------------------------
Full Year 243 12.6% 12.0% 17.5% 27.8% 140
-------------------------------------------------------------------------
In the fourth quarter of 2006, all of the properties under
management in the region experienced increases in RevPAR with the
exception of Four Seasons Hotel Buenos Aires, which had essentially
unchanged occupancy and achieved room rates. On a local currency
basis RevPAR increased 13.1%. Properties under management in Costa
Rica, Mexico City and Punta Mita had particularly strong
improvements relative to the average for the region. As a result of
improvements in RevPAR, gross operating profits and gross operating
margins increased 36.3% and 380 basis points, respectively, in the
fourth quarter of 2006, as compared to the same period in 2005. For
the full year 2006, the 10.7% improvement in RevPAR, on a local
currency basis, was primarily attributable to a 10.3% increase, on
a local currency basis, in achieved room rates. For the full year
2006, all of the properties under management in the region
experienced improvements in RevPAR with the exception of Four
Seasons Resort Nevis, which experienced a decline in occupancy from
late in the second quarter of 2006 through to early in the fourth
quarter of 2006, due to travel concerns related to weather.
Overall, the improvements in RevPAR led to increases in gross
operating profits and gross operating margins of 17.5% and 140
basis points, respectively, as compared to 2005. Properties under
management in Costa Rica and Punta Mita had particularly strong
improvements in RevPAR and gross operating profits, as compared to
the averages for the region.
-------------------------------------------------------------------------
Europe Region
-------------------------------------------------------------------------
Results for periods in 2006, as compared to periods in 2005
-------------------------------------------------------------------------
Gross Gross Operating Operating Gross Operating RevPAR Revenue
(GOR) Profit (GOP) Margin
---------------------------------------------------------------
Percentage Percentage Percentage Basis Point $ Increase Increase
Increase Margin Improvement
-------------------------------------------------------------------------
Fourth Quarter 381 24.9% 18.1% 27.1% 31.9% 230
-----------------------------------------------------------------------
Full Year 398 18.9% 10.5% 18.1% 33.7% 220
-------------------------------------------------------------------------
All of the Core Hotels in the region experienced RevPAR improvement
in the fourth quarter of 2006, with the exception of Four Seasons
Resort Provence at Terre Blanche, which had strong achieved room
rate improvement that was offset by a reduction in occupancy. On a
local currency basis, RevPAR increased 16.0%, reflecting an 11.8%
increase in achieved room rates in local currency and a 20.4%
increase in achieved room rates on a US dollar basis. Gross
operating profits and gross operating margins increased 27.1% and
230 basis points, respectively, in the fourth quarter of 2006, as
compared to the same period in 2005. This increase was primarily a
result of strong RevPAR, revenue and operational improvements at
the Four Seasons properties in Paris, London, Prague, Dublin and
Milan. All of the Core Hotels in the region experienced RevPAR
improvements for the full year 2006. The properties in Lisbon,
London and Terre Blanche had particularly strong RevPAR results
relative to the regional average. On a local currency basis, RevPAR
increased 17.5%, reflecting a 10.2% increase in achieved room rates
on a local currency basis and an 11.6% increase in achieved room
rates on a US dollar basis. Gross operating profits and gross
operating margins increased 18.1% and 220 basis points,
respectively, for the full year 2006, as compared to the same
period in 2005. Many of the properties in the region had strong
improvement in gross operating margins, including properties in
Budapest, Istanbul, Lisbon and Paris. The improvements in gross
operating profits and gross operating margins for the region were
offset in part by the impact on the profitability performance at
the Four Seasons Hotel Dublin, which was undergoing a conversion of
62 hotel rooms into residential units that is now complete.
-------------------------------------------------------------------------
Middle East Region
-------------------------------------------------------------------------
Results for periods in 2006, as compared to periods in 2005
-------------------------------------------------------------------------
Gross Gross Operating Operating Gross Operating RevPAR Revenue
(GOR) Profit (GOP) Margin
---------------------------------------------------------------
Percentage Percentage Percentage Basis Point $ Increase Increase
Increase Margin Improvement
-------------------------------------------------------------------------
Fourth Quarter 191 41.7% 34.8% 81.2% 50.9% 1,300
-----------------------------------------------------------------------
Full Year 179 25.3% 24.5% 41.3% 50.5% 600
-------------------------------------------------------------------------
In the Middle East region, all of the properties under management
had improvements in RevPAR in the fourth quarter of 2006, which
were driven primarily by a 36.4% increase in achieved room rates,
as compared to the same period in 2005. Four Seasons Hotel Riyadh
and Four Seasons Hotel Cairo at Nile Plaza had particularly strong
improvements in RevPAR, as compared to the average for the region.
On a local currency basis, RevPAR and achieved room rates improved
40.4% and 35.1%, respectively, in the fourth quarter of 2006, as
compared to the same period in 2005. Gross operating profits and
gross operating margins increased significantly in the fourth
quarter of 2006, reflecting the strong operational performance in
the region. For the full year 2006, the 25.3% improvement in RevPAR
was attributable to a 21.8% increase in achieved room rates and a
200 basis point improvement in occupancy, as compared to 2005.
During the full year 2006, all of the properties under management
in the region had RevPAR improvements, with the exception of Four
Seasons Resort Sharm el Sheikh. In Sharm el Sheikh, RevPAR was
essentially unchanged as a result of a decline in occupancy, as
demand was adversely affected during the early part of 2006 as
business continued to recover from three terrorist bombings in the
prior 18 months. On a local currency basis, RevPAR and achieved
room rates for the region improved 23.8% and 20.3%, respectively,
for the full year 2006 as compared to the same period in 2005. Also
for the full year 2006, gross operating profits and gross operating
margins improved 41.3% and 600 basis points, respectively, from
2005, as all of the properties under management in the region had
stronger operating results, with the exception of the resort in
Sharm el Sheikh, where profitability was essentially unchanged for
the reason noted above.
-------------------------------------------------------------------------
Asia/Pacific Region
-------------------------------------------------------------------------
Results for periods in 2006, as compared to periods in 2005
-------------------------------------------------------------------------
Gross Gross Operating Operating Gross Operating RevPAR Revenue
(GOR) Profit (GOP) Margin
---------------------------------------------------------------
Percentage Percentage Percentage Basis Point $ Increase Increase
Increase Margin Improvement
-------------------------------------------------------------------------
Fourth Quarter 150 11.9% 12.0% 19.9% 38.8% 250
-----------------------------------------------------------------------
Full Year 135 5.0% 5.5% 10.9% 34.8% 170
-------------------------------------------------------------------------
In the Asia/Pacific region, RevPAR increased 11.9% in the fourth
quarter of 2006, as compared to the same period in 2005. On a local
currency basis, RevPAR improved 7.0% for the fourth quarter of
2006. Achieved room rates in the fourth quarter of 2006 improved
10.6% (5.8% on a local currency basis), as compared to the same
period in 2005. Virtually all of the properties in the region
experienced RevPAR improvements, with the exception of the
properties in Bangkok and Chiang Mai, where occupancy levels
declined due to political unrest. In particular, the properties
under management in Bali, Singapore and Sydney had strong RevPAR
improvements relative to the other properties in the region. The
Bali properties showed strong occupancy improvements in the fourth
quarter of 2006, compared to the results earlier in the year, and
increased significantly over the same period last year. During the
fourth quarter of 2006, gross operating profits and gross operating
margins improved 19.9% and 250 basis points, respectively.
Excluding the impact of the properties in Bangkok and Chiang Mai,
which had reduced profitability related to the decline in RevPAR,
gross operating profits and gross operating margins would have
increased 26.3% and 380 basis points, respectively. For the full
year 2006, RevPAR improved 5.0% on a US dollar basis and 3.6% on a
local currency basis, as compared to 2005. This improvement was
attributable to a 6.9% increase in achieved room rates (5.5% on a
local currency basis). The majority of the properties in the region
had RevPAR improvements for the full year. The most notable
exceptions were the properties under management in Bali, where the
market was continuing a gradual recovery from the impact of
terrorist bombings and did not show strong occupancy improvements
until the fourth quarter of 2006. For the full year 2006, gross
operating profits and gross operating margins for the region
improved 10.9% and 170 basis points, respectively, as compared to
2005 mainly due to strong profitability improvements at the
properties under management in Singapore and Shanghai.
-------------------------------------------------------------------------
For our 2006 to 2005 comparisons, 56 of our 73 properties were
considered Core Hotels, as compared to 51 of 68 properties for our
2005 to 2004 comparisons. Of the properties not considered Core
Hotels for 2006 to 2005, three properties, Four Seasons Resort
Maldives at Kuda Huraa, Four Seasons Biltmore Resort Santa Barbara
and Four Seasons Hotel Washington, were not included as they were
undergoing extensive renovations. We have opened 12 new properties
over the course of 2005 and 2006 (Four Seasons Hotel Hampshire,
Four Seasons Resort Langkawi, Four Seasons Hotel Doha, Four Seasons
Hotel Hong Kong, Four Seasons Resort Lana'i at Manele Bay, Four
Seasons Hotel Geneva, Four Seasons Hotel Damascus, Four Seasons
Tented Camp Golden Triangle, Four Seasons Hotel Silicon Valley,
Four Seasons Resort Maldives at Landaa Giraavaru, Four Seasons
Resort Lana'i the Lodge at Koele and Four Seasons Hotel Westlake
Village). The results from these properties are not included in the
comparison of Core Hotels from 2006 to 2005 because they were not
open during both 2005 and 2006. In addition, Regent Taipei and
Regent Kuala Lumpur are excluded from the comparisons in both
years. For our 2005 to 2004 comparisons, four properties (Four
Seasons Resort Maldives at Kuda Huraa, Four Seasons Biltmore Resort
Santa Barbara, Four Seasons Resort Scottsdale at Troon North and
Four Seasons Hotel Washington) were undergoing extensive
renovations during 2005, and 11 properties had not been under
management during both 2005 and 2004 and thus were not included as
Core Hotels. At December 31, 2006, we had approximately 18,025
total rooms under management, as compared to approximately 17,300
rooms as at December 31, 2005.
-------------------------------------------------------------------------
Approximate number of rooms under management As at December 31,
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
United States 7,445 6,845
-------------------------------------------------------------------------
Other Americas/Caribbean 2,165 2,165
-------------------------------------------------------------------------
Europe 1,960 1,960
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Middle East 1,735 1,740
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Asia/Pacific 4,720 4,590
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18,025(i) 17,300
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--------------------------- (i) Since December 31, 2006, we have
commenced management of Four Seasons Resort Koh Samui, Thailand,
which has approximately 65 rooms. This property is not reflected in
this table. For the full year 2006, total revenues of all managed
hotels and resorts were approximately $2.9 billion, as compared to
$2.6 billion in 2005, representing an increase of 15.0%. In the
three months ended December 31, 2006, hotel and resort total
revenues increased 18.5% to $801.6 million, as compared to $676.7
million for the same period in 2005. The increases in total
revenues of all managed hotels and resorts were due to increased
revenues at existing hotels as a result of general improvements in
travel trends and due to an increase in revenues from recently
opened hotels and resorts. Company Operating Results Revenues
-------------------------------------------------------------------------
Years ended Dollar Percentage (in millions of dollars) December 31,
Change Change
-------------------------------------------------------------------------
2006 over 2006 over 2006 2005 2005 2005
-------------------------------------------------------------------------
Hotel management fees Base $ 83.8 $ 73.7 $ 10.1 13.7% Incentive
40.0 27.1 12.9 47.7%
-------------------------------------------------------------------------
Subtotal 123.8 100.8 23.0 22.8%
-------------------------------------------------------------------------
Other fees 17.5 14.0 3.5 24.7%
-------------------------------------------------------------------------
Subtotal 141.3 114.8 26.5 23.1%
-------------------------------------------------------------------------
Hotel ownership revenues 33.4 65.5 (32.1) (49.0)%
-------------------------------------------------------------------------
Reimbursed costs 78.7 68.0 10.7 15.7%
-------------------------------------------------------------------------
Total revenues $ 253.4 $ 248.3 $ 5.1 2.0%
-------------------------------------------------------------------------
--------------------------------------------
-------------------------------------------------------------------------
Three months ended Dollar Percentage (in millions of dollars)
December 31, Change Change
-------------------------------------------------------------------------
2006 over 2006 over 2006 2005 2005 2005
-------------------------------------------------------------------------
Hotel management fees Base $ 22.4 $ 19.2 $ 3.2 16.6% Incentive 10.8
6.0 4.8 79.9%
-------------------------------------------------------------------------
Subtotal 33.2 25.2 8.0 31.7%
-------------------------------------------------------------------------
Other fees 4.2 4.1 0.1 3.9%
-------------------------------------------------------------------------
Subtotal 37.4 29.3 8.1 27.9%
-------------------------------------------------------------------------
Hotel ownership revenues 8.6 7.5 1.1 15.0%
-------------------------------------------------------------------------
Reimbursed costs 23.7 21.7 2.0 9.1%
-------------------------------------------------------------------------
Total revenues $ 69.7 $ 58.5 $ 11.2 19.3%
-------------------------------------------------------------------------
-------------------------------------------- Hotel Management Fees
The increases in hotel management fees for the year ended and three
months ended December 31, 2006 were the result of the improvements
in revenues and gross operating profits at the worldwide Core
Hotels, resulting primarily from RevPAR and other revenue
increases, as well as fees from new properties and increases in
reimbursed costs. Base Fees Base fees increased $10.1 million (from
$73.7 million to $83.8 million) for the year ended December 31,
2006, as compared to 2005. Of this increase, base fees from Core
Hotels contributed $6.5 million or 64.4% of the increase. The
increase in base fees from Core Hotels in 2006 represented a 9.7%
increase over the base fees generated from Core Hotels in 2005.
Properties that opened in 2005 and 2006 contributed base fees of
$6.3 million and $1.7 million in 2006 and 2005, respectively. The
$10.1 million increase in base fees in 2006 reflects a $1.8 million
reduction in base fees as a result of properties that we managed in
2005 no longer being under management in 2006. Base fees increased
$3.2 million (from $19.2 million to $22.4 million) for the three
months ended December 31, 2006, as compared to the three months
ended December 31, 2005. Of the $3.2 million increase in base fees,
base fees from Core Hotels contributed $2.0 million or 63.6% of the
increase. The increase in base fees from Core Hotels in the three
months ended December 31, 2006 represented an 11.8% increase over
the fees generated from Core Hotels in the same period in 2005.
Properties that opened in 2005 and 2006 contributed base fees of
$1.8 million and $1.1 million in the three months ended December
31, 2006 and 2005, respectively. The $3.2 million increase in base
fees in the three months ended December 31, 2006 reflects a $0.2
million reduction in base fees as a result of properties that we
managed in 2005 that we no longer managed in 2006. Incentive Fees
For the full year 2006, incentive fees increased $12.9 million, as
compared to 2005. Incentive fees contributed 32.4% of the total
hotel management fee revenues for the full year 2006, as compared
to 26.9% for the full year 2005. The increase was attributable to
improvements in each of the regions we operate, with the strongest
improvement being in the Middle East. The incentive fees earned
from properties that opened in 2005 and 2006 represented $4.3
million of the increase in incentive fees. Due to a one-time charge
at the properties under our management related to the transition of
the retirement benefit plan (see "Other Income (Expenses), Net" -
"Retirement Benefit Plan" below) during the three months ended
December 31, 2005, incentive fees that year were reduced by
approximately $1.0 million. We have the ability to earn incentive
fees in virtually all(7) of the hotels and resorts that we manage.
In 2006, incentive fees were earned under 49 of our 73 management
agreements, as compared to 45(8) of our 68 management agreements in
2005. For the three months ended December 31, 2006, incentive fees
increased $4.8 million, as compared to the same period in 2005. As
mentioned above, due to a one-time charge at the properties under
our management related to the transition of the retirement benefit
plan in the three months ended December 31, 2005, incentive fees in
the three months ended December 31, 2005 were reduced by $1.0
million. The incentive fees earned from properties that opened in
2005 and 2006 represented $1.1 million of the increase. Incentive
fees were earned from 47 of the 73 hotels and resorts under
management for the three months ended December 31, 2006, as
compared to 37 of the 68 hotels and resorts under management in
2005. Other Fees For the year ended December 31, 2006, other fees
increased 24.7% ($3.5 million), to $17.5 million, as compared to
2005. The increase was attributable to a $2.6 million increase in
residential fees primarily related to an increase in royalty fees
as a result of a larger number of residential sales closing and a
$0.9 million increase in other miscellaneous fees. For the three
months ended December 31, 2006, other fees increased 3.9% ($0.1
million), to $4.2 million. Hotel Ownership Revenues We have a 100%
leasehold interest in the Four Seasons Hotel Vancouver and, as a
result, we consolidate the results of that hotel. During the first
half of 2005, we also had a 100% leasehold interest in The Pierre
and consolidated the results of that property. We assigned the
lease of The Pierre to a third party at the end of June 2005 and,
as a result, we ceased to consolidate that property at that time.
Our investment strategy as a public company is not to hold any
majority interests in properties. However, Four Seasons Hotel
Vancouver is a long-term leasehold interest that was established at
an earlier stage in our development and we expect that we will
continue to operate this property under the terms of the current
lease, which expires January 31, 2020. We have seven units of
residential inventory at two resorts, which we acquired with the
intent to resell at our book value cost during the next several
years as a combination of fractional and whole home ownership
residences. We do not intend for this ownership to be an ongoing
business activity and expect, over time, the costs related to the
sales process to be approximately equal to the proceeds from the
sale of these units. The revenue associated with the sales of these
units is included in hotel ownership revenues, and the cost of the
sales is included in hotel ownership cost of sales and expenses.
During the year ended and the three months ended December 31, 2006,
we sold residential inventory for gross proceeds of $2.2 million
and $0.8 million, respectively (nil proceeds for both periods in
2005). For the full year 2006, the decline in hotel ownership
revenue was primarily related to our owning and consolidating 100%
of The Pierre during the first six months of 2005 and our not
owning and not consolidating it during any part of 2006. Hotel
ownership revenue for full year 2006 relates primarily to the Four
Seasons Hotel Vancouver. Revenue at that property increased 19.2%
during 2006 compared to 2005, as the result of strong occupancy and
rate increases at that property and the decline in the US dollar
relative to the Canadian dollar, as Canadian dollar revenue from
the property was translated into US dollars (on a Canadian dollar
basis, revenue increased 11.4%). In the three months ended December
31, 2006, the increase in hotel ownership revenue was primarily
related to a 13.9% increase in revenue from the Four Seasons Hotel
Vancouver due to improved operating results at that property and
the decline in the US dollar relative to the Canadian dollar, as
Canadian dollar revenue from the property was translated into US
dollars (on a Canadian dollar basis, revenue increased 10.2%).
Reimbursed Costs As described above under "Our Business Model",
reimbursed costs are incurred on a cost recovery basis to us and,
as a result, we analyze our management operations excluding
reimbursed costs. For the year ended and the three months ended
December 31, 2006, reimbursed costs increased $10.7 million and
$2.0 million, respectively, as compared to the corresponding
periods in 2005. The increase in both the year ended and the three
months ended December 31, 2006 was due primarily to an increase in
the number of properties in the portfolio and increased costs
related to increased activity, as compared to the same periods in
2005. Expenses General and Administrative Expenses The majority of
our general and administrative expenses are incurred in Canadian
dollars. For the year ended and the three months ended December 31,
2006, general and administrative expenses (excluding reimbursed
costs) increased by 0.6% and 6.6%, respectively, on a Canadian
dollar basis, as compared to the same period in 2005. As reported
in US dollars, for the year ended December 31, 2006, general and
administrative expenses increased 7.4% to $62.4 million, from $58.1
million in the same period of 2005. As reported in US dollars, for
the three months ended December 31, 2006, general and
administrative expenses increased 10.3% to $18.4 million, from
$16.7 million in the same period of 2005. The greater increase on a
US dollar basis was attributable to the US dollar having declined
relative to the Canadian dollar. Included in general and
administrative expense is $2.3 million of stock option compensation
expense for each of 2006 and 2005. In addition, compensation
expense of $3.0 million relating to share appreciation rights
issued pursuant to phantom equity agreements was included for the
full year 2006 (nil for 2005). As noted, the majority of our
general and administrative expenses are incurred in Canadian
dollars, while the majority of hotel management fee revenues and
cash balances are in US dollars. We also incur Canadian dollar
capital funding requirements, which are primarily attributable to
our corporate office expansion. Accordingly, in December 2005, we
began selling forward US dollars for conversion to Canadian
dollars, to help fix the cost of our Canadian dollar expenditures
in US dollars. The foreign exchange gains and losses arising from
both the forward contracts settled and the forward contracts
outstanding as at December 31, 2006, are included in "Other Income
(Expenses), Net" and are discussed below. Hotel Ownership Cost of
Sales and Expenses As discussed above, we consolidate 100% of the
operations of Four Seasons Hotel Vancouver and, until June 30,
2005, we also consolidated the operations of The Pierre. Also as
noted above, costs relating to the sale of residential units are
included in hotel ownership cost of sales and expenses. Hotel
ownership cost of sales and expenses declined 51.3% to $32.2
million in the year ended December 31, 2006, from $66.1 million in
the same period of 2005, primarily as a result of the operations of
The Pierre being consolidated until June 30, 2005, and not being
consolidated in the same period of 2006. Expenses at Four Seasons
Hotel Vancouver increased 9.7% in the year ended December 31, 2006,
primarily as a result of the decline in the US dollar relative to
the Canadian dollar, as the Canadian dollar costs are translated
into US dollars for reporting purposes. On a Canadian dollar basis,
expenses at Four Seasons Hotel Vancouver increased 2.5% in the year
ended December 31, 2006. For the year ended December 31, 2006,
costs relating to the sale of the residential units were $3.0
million. Hotel ownership cost of sales and expenses increased 6.3%
to $8.4 million for the three months ended December 31, 2006, from
$7.9 million in the same period of 2005, as a result of increased
expenses at Four Seasons Hotel Vancouver (primarily as a result of
the decline in the US dollar relative to the Canadian dollar, as
the Canadian dollar costs are translated into US dollars for
reporting purposes) and costs relating to the sale of the
residential units. On a Canadian dollar basis, hotel ownership cost
of sales and expenses increased 2.8% in the three months ended
December 31, 2006. Operating Earnings Before Other Items(9) For the
year ended December 31, 2006, operating earnings before other items
increased 42.7% to $80.1 million, as compared to $56.1 million in
the same period in 2005. As a result of the items described above,
operating earnings before other items increased 57.8% to $19.3
million in the three months ended December 31, 2006, as compared to
$12.3 million in the same period in 2005. Depreciation and
Amortization For the year ended December 31, 2006, depreciation and
amortization was $14.6 million, as compared to $11.2 million for
the year ended December 31, 2005. For the three months ended
December 31, 2006, depreciation and amortization was $4.7 million,
as compared to $2.7 million for the same period in 2005. The
increase in depreciation and amortization for the year ended and
three months ended December 31, 2006, as compared to the same
periods in 2005, was primarily attributable to an increase of $3.3
million and $1.6 million, respectively, in the amortization of our
investment in The Ritz-Carlton Chicago management contract. We have
reached an agreement with the owner of The Ritz-Carlton Chicago
relating to the possible sale of that property by the owner to a
third party, and the potential cessation of our management of that
property, as well as the significant refurbishment of Four Seasons
Hotel Chicago (which is owned by an affiliated owner). These
arrangements provide the owner of The Ritz-Carlton Chicago with the
option to terminate our management prior to a sale of the property,
and the obligation to terminate our management upon a sale of the
property. Under this arrangement we are entitled to payments in
connection with both a termination of our management of the
property and the owner's sale of the property. Although there is no
certainty as to the sale of the property or the date of termination
of our management, given the possibility it could occur in the near
term, we amortized the $3.3 million difference between the expected
value of the payment to be made on termination of our management
and the book value of our investment in this management contract,
over the last half of 2006. We may subsequently record a gain
following a future sale of the property, depending on the payments
we actually receive. Other Income (Expenses), Net For the year
ended December 31, 2006, other expenses, net was $3.8 million, as
compared to other expenses, net of $89.2 million for the same
period in 2005.
-------------------------------------------------------------------------
(in millions of dollars) Years ended December 31,
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Costs related to pending Arrangement Transaction $ (3.4) $ 0.0
-------------------------------------------------------------------------
Asset provisions and write-downs (3.1) (32.3)
-------------------------------------------------------------------------
Foreign exchange gain (loss) 1.3 (24.6)
-------------------------------------------------------------------------
Unrealized swap derivative gain 0.8 0.0
-------------------------------------------------------------------------
Gain on disposition of assets 0.6 3.2
-------------------------------------------------------------------------
Loss on retirement benefit plan transition 0.0 (35.5)
-------------------------------------------------------------------------
Other expenses, net $ (3.8) $ (89.2)
-------------------------------------------------------------------------
--------------------------- For the three months ended December 31,
2006, other income, net was $3.2 million, as compared to other
expenses, net of $56.8 million for the same period in 2005.
-------------------------------------------------------------------------
Three months ended (in millions of dollars) December 31,
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Costs related to pending Arrangement Transaction $ (3.4) $ 0.0
-------------------------------------------------------------------------
Asset provisions and write-downs (2.7) (25.5)
-------------------------------------------------------------------------
Foreign exchange gain (loss) 7.9 (4.8)
-------------------------------------------------------------------------
Unrealized swap derivative gain 0.8 0.0
-------------------------------------------------------------------------
Gain on disposition of assets 0.6 9.0
-------------------------------------------------------------------------
Loss on retirement benefit plan transition 0.0 (35.5)
-------------------------------------------------------------------------
Other income (expenses), net $ 3.2 $ (56.8)
-------------------------------------------------------------------------
--------------------------- Costs Related to Pending Arrangement
Transaction In November 2006, we announced that our Board of
Directors had received a proposal to pursue a transaction through
which FSHI would be taken private. The Board of Directors
established a special committee of independent directors to
consider the proposed transaction and make recommendations to the
Board. In connection with this proposal, and the resulting process
leading to the execution of the acquisition agreement, we incurred
in 2006 certain costs primarily relating to legal fees, financial
advisory and consulting services, and certain filing fees (during
the three months ended December 31, 2006, we incurred $3.4 million
of expenses). Please see the "Subsequent Event" section. Asset
Provisions and Write-Downs From time to time, we make investments
in hotels and resorts under our management in the form of loans,
equity and investments in management contracts in order to obtain
long-term management agreements in respect of these projects. In
making these investments, we assess the expected overall returns to
Four Seasons, including the value created through our long-term
management agreements. However, for financial reporting purposes,
each discrete investment or component of an investment must be
valued only in relation to the cash flow that the particular
investment or component of an investment generates to Four Seasons,
without regard to the ongoing value of the management agreement.
For the year ended December 31, 2006, other expenses, net, included
$3.1 million relating primarily to a write-down on investments in
hotel partnerships and corporations. For the year ended December
31, 2005, other expenses, net, included an expense of $32.3 million
relating to the provision for, and the write-down of, certain
assets, including a provision for loss of $8.8 million on long-term
receivables, a write-down of $17.9 million on investments in hotel
partnerships and corporations, a write-down of $5.1 million on
investment in management contracts and a provision for other assets
of $0.5 million. For the three months ended December 31, 2006,
other expenses included $2.7 million relating primarily to a
write-down on investments in hotel partnerships and corporations.
For the three months ended December 31, 2005, other expenses, net,
included an expense of $25.5 million relating to the provision for,
and the write-down of, certain assets, including a provision for
loss of $8.8 million on long-term receivables, a write-down of
$15.9 million on investments in hotel partnerships and
corporations, a write-down of $0.6 million related to investment in
management contracts and a provision for other assets of $0.2
million. Foreign Exchange Other expenses, net for the year ended
December 31, 2006 included a foreign exchange gain of $1.3 million,
as compared to a foreign exchange loss of $24.6 million for the
year ended December 31, 2005. Other income (expenses), net for the
three months ended December 31, 2006 included a foreign exchange
gain of $7.9 million, as compared to a foreign exchange loss of
$4.8 million for the same period in 2005. 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 in each currency,
and consist primarily of cash and cash equivalents, accounts
receivable, long-term receivables and short-term and long-term
liabilities, as determined under Canadian generally accepted
accounting principles. The foreign exchange gain during the year
ended and the three months ended December 31, 2006 and the foreign
exchange loss during the year ended and the three months ended
December 31, 2005 resulted primarily from the translation of our US
dollar and British pound sterling net monetary asset positions to
Canadian dollars using the current exchange rates at the end of
each quarter. Our US dollar net monetary asset position increased
significantly during the second quarter of 2005 as a result of
entering into a currency and interest rate swap agreement relating
to our convertible senior notes. The swap was designated as a fair
value hedge of our convertible senior notes. In December 2006, we
terminated 80% of the notional amount of the currency component of
the swap and ceased hedge accounting on the remaining portion of
the currency component of the swap and on the interest component of
the swap. This is described below under "Liquidity and Capital
Resources - Convertible Notes". As discussed above, we have entered
into a program to sell forward US dollars for Canadian dollars to
help us to predict the US dollar cost of our Canadian dollar
general and administrative expenses and Canadian dollar capital
funding requirements. All our forward contracts are being
marked-to-market with the resulting changes in fair values being
recorded as a foreign exchange gain or loss. Other expenses, net
included a foreign exchange loss of $0.5 million and $1.8 million
for the year ended and the three months ended December 31, 2006,
respectively, related to the forward contracts. In 2005, foreign
exchange loss of $0.1 million was included in other expenses, net
for the three months ended and year ended December 31, 2005. As at
December 31, 2006, we had forward contracts in place to sell
forward $39.1 million of US dollars and receive Canadian dollars at
a weighted average exchange rate of 1.11 Canadian dollars to a US
dollar at various maturities extending to April 2008. On these
outstanding forward contracts, the marked-to-market loss for the
three months ended December 31, 2006 was $1.6 million, and the
marked-to-market loss for the year ended December 31, 2006 was $1.5
million. These amounts are included in the $0.5 million foreign
exchange loss for the year ended December 31, 2006 and $1.8 million
foreign exchange loss for the three months ended December 31, 2006,
as noted above. While this program of selling forward US dollars
allows us to better predict the cost in US dollars of the majority
of our Canadian dollar general and administrative expenses and
capital funding requirements, it will not eliminate the impact of
foreign currency fluctuations related to our management fees in
currencies other than US dollars. It will also not eliminate
foreign currency gains and losses related to un-hedged net monetary
assets and liability positions. As such, our consolidated results
will continue to include gains and losses related to foreign
currency fluctuations. The impact of foreign currency gains and
losses has been material in the past and could continue to be
material in the future. The following table sets out the exchange
rates obtained from the Bank of Canada:
-------------------------------------------------------------------------
As at As at Average December 31, December 31, during 2005 2006 2006
-------------------------------------------------------------------------
US dollar to Canadian $1.00 0.8577 0.8581 0.8818
-------------------------------------------------------------------------
Pound sterling to Canadian $1.00 0.4991 0.4387 0.4788
-------------------------------------------------------------------------
Euro to Canadian $1.00 0.7244 0.6503 0.7024
-------------------------------------------------------------------------
Australian dollar to US $1.00 1.3630 1.2684 1.3275
-------------------------------------------------------------------------
Gain/Loss on Disposition of Assets Other expenses, net for the year
ended December 31, 2006 included a net gain on the disposition of
assets of $0.6 million. During the three months ended December 31,
2006, the ownership interests in three of the hotels under our
management were sold. As a result of the sales, we were repaid
loans, accrued interest and investments, and after deducting
transaction costs, received cash and promissory notes totalling
$100.6 million. In connection with these sales, we realized a $0.6
million gain. Included in other expenses, net for the year ended
December 31, 2005, was a net gain of $9.4 million related to the
disposition of certain investments in hotel partnerships and
corporations and the exit from certain management contracts, and a
loss of $6.2 million on the assignment of leases and the sale of
related assets in The Pierre. Other income, net for the three
months ended December 31, 2006 included a net gain on the
disposition of assets of $0.6 million, as discussed above. Other
expenses, net for the three months ended December 31, 2005 included
a net gain of $9.9 million related to the disposition of certain
investments in hotel partnerships and corporations and the exit
from certain management contracts, and a loss of $0.9 million on
the assignment of leases and the sale of related assets in The
Pierre. Retirement Benefit Plan During the three months ended
December 31, 2005, we transitioned the majority of our senior
executives and hotel and resort general managers from an unfunded
defined benefit retirement plan to a fully funded defined
contribution retirement plan. We made the change in the retirement
plan to improve the certainty and predictability related to the
cost of the retirement benefits. We do not expect that the change
will have a significant impact on our ongoing annual pension cost.
The transition to this defined contribution format resulted in a
funding requirement of $42.2 million, of which $36.0 million was
funded in 2005, and a one-time pre-tax loss of $35.5 million. In
addition, as a result of the costs incurred by our hotels and
resorts for the transition of general manager participants, our
incentive fees for 2005 were reduced by approximately $1.0 million
since the funding by the hotel owners was typically deducted in
calculating the amounts upon which our incentive fees are
determined. We continue to maintain the unfunded, multiemployer,
non-contributory, defined benefit plan on behalf of four active
executives and 14 retired executives and general managers, as well
as the owner of two of our managed properties. As at December 31,
2006, we had accrued $26.3 million in "Long-term obligations" in
respect of this plan. This accrued defined benefit liability
excludes the defined benefit obligation of the owner of the two
managed properties for their current general managers. Interest
Income / Interest Expense
-------------------------------------------------------------------------
Years ended Dollar (in millions of dollars) December 31, Change
-------------------------------------------------------------------------
2006 over 2006 2005 2005
-------------------------------------------------------------------------
Interest income $ 22.4 $ 16.8 $ 5.6
-------------------------------------------------------------------------
Interest expense $ (14.9) $ (11.5) $ (3.4)
-------------------------------------------------------------------------
The $5.6 million increase in interest income for the year ended
December 31, 2006, as compared to the same period in 2005, was
primarily attributable to higher deposits and higher deposit
interest rates. The $3.4 million increase in interest expense for
the year ended December 31, 2006, as compared to the same period in
2005, was primarily attributable to the increase in interest
expense accrued relating to the currency and interest rate swap
agreement we entered into in the second quarter of 2005, related to
our convertible senior notes. This currency and interest rate swap
agreement was designated as a fair value hedge of our convertible
senior notes. In December 2006, we terminated 80% of the notional
amount of the currency component of the swap, and ceased hedge
accounting on the remaining portion of the currency component of
the swap and on the interest component of the swap. This is
described below under "Liquidity and Capital Resources -
Convertible Notes". Taking into account the amortization of the
gain on the terminated interest rate swap in 2004, the 2005
currency and interest rate swap and the amortization of the loss on
the termination of hedge accounting on the interest component of
the 2005 currency and interest rate swap, the effective interest
rate on the convertible senior notes was approximately 5.2% and
5.3%, for the three months ended and year ended December 31, 2006,
respectively. This represents $2.9 million of interest expense for
the three months ended December 31, 2006 and $12.0 million of
interest expense for the full year 2006. Taking into account the
amortization of the gain on the terminated interest rate swap in
2004 and the 2005 currency and interest rate swap, the effective
interest rate on the convertible senior notes was approximately
4.5% and 4.2%, for the three months ended and year ended December
31, 2005, respectively. This represents $2.5 million of interest
expense for the three months ended December 31, 2005 and $9.2
million of interest expense for the full year 2005.
-------------------------------------------------------------------------
Three months ended Dollar (in millions of dollars) December 31,
Change
-------------------------------------------------------------------------
2006 over 2006 2005 2005
-------------------------------------------------------------------------
Interest income $ 6.5 $ 5.2 $ 1.3
-------------------------------------------------------------------------
Interest expense $ (3.6) $ (3.2) $ 0.4
-------------------------------------------------------------------------
The $1.3 million increase in interest income for the three months
ended December 31, 2006, as compared to the same period in 2005,
was primarily attributable to higher deposits and higher deposit
interest rates. The $0.4 million increase in interest expense for
the three months ended December 31, 2006, as compared to the same
period in 2005, was primarily attributable to the increase in
interest expense accrued relating to the currency and interest rate
swap agreement we entered into in the second quarter of 2005
related to our convertible senior notes. As noted above, a portion
of the currency and interest rate swap was terminated in December
2006. Income Tax Recovery (Expense) Our income tax expense during
the year ended and three months ended December 31, 2006 was $18.9
million and $3.8 million, respectively (effective tax rate of 27.3%
and 18.6%, respectively), as compared to income tax recovery of
$10.8 million and $7.4 million, respectively (effective tax rate of
27.8% and 16.4%, respectively), for the same periods in 2005.
During the three months ended and year ended December 31, 2006, we
did not record approximately $1.5 million and $3.4 million,
respectively, of a tax benefit related to the foreign exchange
losses, due to the uncertainty associated with the utilization of
those losses. In connection with the disposition of The Pierre in
2005, we recorded a tax benefit of approximately $9.4 million. Net
Earnings (Loss) and Earnings (Loss) per Share For the reasons
outlined above, net earnings for the year ended December 31, 2006
was $50.3 million ($1.36 basic earnings per share and $1.33 diluted
earnings per share), as compared to net loss of $28.2 million
($0.77 basic and diluted loss per share) for the year ended
December 31, 2005. For the reasons outlined above, net earnings for
the three months ended December 31, 2006 was $16.9 million ($0.45
basic earnings per share and $0.44 diluted earnings per share), as
compared to net loss of $37.8 million ($1.03 basic and diluted loss
per share) for the three months ended December 31, 2005. Adjusted
Net Earnings and Adjusted Earnings per Share(10) In the year ended
December 31, 2006, other expenses, net of $3.8 million related
primarily to the costs related to the pending Arrangement
Transaction and a write-down of investments in hotel partnerships
and corporations, offset by a foreign exchange gain, a gain on
disposition of assets and an unrealized swap derivative gain. In
the year ended December 31, 2005, other expenses, net of $89.2
million related primarily to a foreign exchange loss, a loss on
retirement benefit plan transition and asset provisions and
write-downs. Adjusting for other expenses, net and the applicable
income taxes, adjusted net earnings were as follows:
-------------------------------------------------------------------------
(in millions of dollars except per share amounts) Years ended
December 31,
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Net earnings (loss) $ 50.3 $ (28.2)
-------------------------------------------------------------------------
Adjustments - Other expenses, net 3.8 89.2
-------------------------------------------------------------------------
Tax effect related to foregoing adjustments 0.7 (24.6)(i)
-------------------------------------------------------------------------
Adjusted net earnings $ 54.8 $ 36.4
-------------------------------------------------------------------------
--------------------------- Adjusted basic earnings per share $
1.49 $ 0.99
-------------------------------------------------------------------------
--------------------------- Adjusted diluted earnings per share $
1.45 $ 0.96
-------------------------------------------------------------------------
--------------------------- (i) We recorded a tax benefit
associated with the loss on retirement benefit plan transition and
other items included as adjustments on this schedule. In addition,
in connection with the disposition of The Pierre in the second
quarter of 2005, we recorded a tax benefit of approximately $9.4
million in the year ended December 31, 2005. In the three months
ended December 31, 2006, other income, net of $3.2 million related
primarily to a foreign exchange gain, which was offset partially by
the costs related to the pending Arrangement Transaction and a
write-down of investments in hotel partnerships and corporations.
In the three months ended December 31, 2005, other expenses, net of
$56.8 million related primarily to a loss on retirement benefit
plan transition, a foreign exchange loss and asset provisions and
write-downs. Adjusting for other income (expenses), net and the
applicable income taxes, adjusted net earnings were as follows:
-------------------------------------------------------------------------
(in millions of dollars except Three months per share amounts)
ended December 31,
-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Net earnings (loss) $ 16.9 $ (37.8)
-------------------------------------------------------------------------
Adjustments - Other (income) expenses, net (3.2) 56.8
-------------------------------------------------------------------------
Tax effect related to foregoing adjustments (1.1) (12.0)
-------------------------------------------------------------------------
Adjusted net earnings $ 12.6 $ 7.0
-------------------------------------------------------------------------
--------------------------- Adjusted basic earnings per share $
0.34 $ 0.19
-------------------------------------------------------------------------
--------------------------- Adjusted diluted earnings per share $
0.33 $ 0.19
-------------------------------------------------------------------------
--------------------------- Eight Quarter Summary
-------------------------------------------------------------------------
(in millions of dollars except per share amounts) Fourth Quarter
Third Quarter
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
Total revenues $ 69.7 $ 58.5 $ 58.2 $ 52.2
-------------------------------------------------------------------------
Operating earnings before other items $ 19.3 $ 12.3 $ 16.6 $ 11.7
-------------------------------------------------------------------------
Net earnings (loss) $ 16.9 $ (37.8) $ 10.9 $ (11.4)
-------------------------------------------------------------------------
Basic earnings (loss) per share(11) $ 0.45 $ (1.03) $ 0.30 $ (0.31)
-------------------------------------------------------------------------
Diluted earnings (loss) per share $ 0.44 $ (1.03) $ 0.29 $ (0.31)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average Canadian/US dollar foreign exchange rate used for specified
quarter 1.13629 1.17478 1.12087 1.20687
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(in millions of dollars except per share amounts) Second Quarter
First Quarter
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
Total revenues $ 67.8 $ 74.5 $ 57.6 $ 63.1
-------------------------------------------------------------------------
Operating earnings before other items $ 23.7 $ 20.1 $ 20.5 $ 12.1
-------------------------------------------------------------------------
Net earnings (loss) $ 9.1 $ 15.8 $ 13.4 $ 5.2
-------------------------------------------------------------------------
Basic earnings (loss) per share(11) $ 0.25 $ 0.43 $ 0.36 $ 0.14
-------------------------------------------------------------------------
Diluted earnings (loss) per share $ 0.24 $ 0.42 $ 0.36 $ 0.14
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average Canadian/US dollar foreign exchange rate used for specified
quarter 1.12509 1.24401 1.15421 1.22652
-------------------------------------------------------------------------
The disposition of our interest in The Pierre during 2005 affects
the comparative amounts. Net earnings for each quarter were
impacted by, among other things, the fluctuation of the US dollar
against the Canadian dollar over the course of 2006 and 2005
(resulting in foreign exchange gains and losses upon the
translation to Canadian dollars of non-Canadian dollar-denominated
net monetary assets not included in our designated self-sustaining
operations) (See "Company Operating Results - Other Income
(Expenses), Net"). In addition, as discussed under "Other Income
(Expenses), Net", during the fourth quarter of 2005, we wrote down
certain of our investments and transitioned our retirement benefit
plan. The impact of certain of these items is highlighted in the
following table:
-------------------------------------------------------------------------
(in millions of dollars) Fourth Quarter Third Quarter
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
Costs related to pending Arrangement Transaction $ (3.4) $ - $ - $
-
-------------------------------------------------------------------------
Asset provisions and write-downs (2.7) (25.5) (0.7) (4.6)
-------------------------------------------------------------------------
Foreign exchange gain (loss) 7.9 (4.8) 1.3 (16.2)
-------------------------------------------------------------------------
Unrealized swap derivative gain 0.8 - - -
-------------------------------------------------------------------------
Gain (loss) on disposition of assets 0.6 9.0 - (0.3)
-------------------------------------------------------------------------
Loss on retirement benefit plan transition - (35.5) - -
-------------------------------------------------------------------------
Other income (expenses), net $ 3.2 $ (56.8) $ 0.6 $ (21.1)
-------------------------------------------------------------------------
-------------------------------------------
-------------------------------------------------------------------------
(in millions of dollars) Second Quarter First Quarter
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
Costs related to pending Arrangement Transaction $ - $ - $ - $ -
-------------------------------------------------------------------------
Asset provisions and write-downs 0.6 (0.1) (0.3) (1.9)
-------------------------------------------------------------------------
Foreign exchange gain (loss) (7.4) (3.3) (0.5) (0.4)
-------------------------------------------------------------------------
Unrealized swap derivative gain - - - -
-------------------------------------------------------------------------
Gain (loss) on disposition of assets - (5.2) - (0.4)
-------------------------------------------------------------------------
Loss on retirement benefit plan transition - - - -
-------------------------------------------------------------------------
Other income (expenses), net $ (6.8) $ (8.6) $ (0.8) $ (2.7)
-------------------------------------------------------------------------
------------------------------------------- Balance Sheet Review
and Analysis Corporate Strategy Relating to Investments An
important part of our overall objectives as a public company has
been and would continue to be to maintain the strength of our
balance sheet. Accordingly, we intend to continue to be disciplined
in the allocation of our capital. Our capital investment plans
remain focused on allocating the majority of our capital for
investment opportunities that are intended to establish new
long-term management contracts in key destinations or enhance
existing management arrangements. We make investments in, or
advances in respect of or to owners of, properties with a view to
obtaining management agreements or enhancing existing management
agreements where we believe the overall returns will justify the
investment or advance. These investments must meet our financial
criteria considering all sources of cash flow (including management
fees), certain minimum return hurdles and a manageable risk
profile. We consider whether the structure should be in the form of
an investment or an advance and, among other things, the relative
risk and returns of the investment or advance, including interest,
dividends and fee income. As a public company, we generally seek to
limit our total long-term capital exposure to no more than 20% of
the total equity required for a property and can typically choose
to have our equity interest diluted if additional capital is
required. We attempt to structure our equity interests separately
from our management interests to enable us to dispose of equity
interests as opportunities arise, without affecting our management
interests. Depending on the nature of the investment or advance, it
will be characterized on our consolidated balance sheet as
"Long-term receivables", "Investments in hotel partnerships and
corporations" or "Investment in management contracts". As part of
our ongoing balance sheet evaluation, we reviewed our significant
investments and advances at December 31, 2006 and 2005 and
determined that certain write-downs were required with respect to
certain of our investments. These charges are discussed under
"Company Operating Results - Other Income (Expenses), Net".
Long-Term Receivables Included on our balance sheet as at December
31, 2006 is $153.2 million (2005 - $175.4 million) of long-term
receivables relating primarily to advances in respect of, and to
owners of, properties that we manage, including secured and
unsecured long-term receivables relating to our managed properties
in Punta Mita, Hampshire, Sydney, Geneva, Prague, Toronto,
Scottsdale, Buenos Aires, Costa Rica and the Maldives. In addition,
the 2005 long-term receivables included advances in respect of our
managed property in London, which was repaid in 2006. Investments
in Hotel Partnerships and Corporations Included on our balance
sheet as at December 31, 2006 is $65.6 million (2005 - $99.9
million) related to investments in hotel partnerships and
corporations. For a listing of hotels and resorts under management
in which we have equity investments, see "Four Seasons Portfolio -
Description of Hotels and Resorts". We account for these equity
investments on a cost basis because either the percentage ownership
or the structure does not give us significant influence over these
investments. Each of our investments in hotel partnerships and
corporations individually represents less than 5% of our total
assets, and none of these investments individually is material to
us. We are not liable for any further obligations relating to these
investments, other than any commitment discussed under "Four
Seasons Portfolio - Properties under Construction or Development",
"Liquidity and Capital Resources", and "Off-Balance Sheet
Arrangements". Investment in Management Contracts Included in our
balance sheet as at December 31, 2006 is $187.9 million (2005 -
$164.9 million) relating to our investment in management contracts.
The largest component of these amounts relates to management
contracts acquired during the Regent transaction in 1992, including
the management contracts for the Four Seasons hotels in New York
and Milan and Four Seasons Resort Bali at Jimbaran Bay. The most
significant amounts advanced for individual management contracts
include amounts advanced in the context of obtaining or improving
the management contracts for Four Seasons properties in Paris,
Scottsdale, Hampshire, San Francisco, Jackson Hole, Nevis and
Chicago. Fixed Assets Included on our balance sheet as at December
31, 2006 is $81.5 million (2005 - $64.9 million) relating to our
fixed assets. A majority of this amount relates to the land,
building, and furniture, fixtures, and equipment for our corporate
office in Toronto. Also included in fixed assets at December 31,
2006 is $5.2 million (2005 - $6.2 million), representing a majority
of our investment in Four Seasons Hotel Vancouver. Liquidity and
Capital Resources As at December 31, 2006, our cash and cash
equivalents were $358.9 million, as compared to $242.2 million as
at December 31, 2005. Our investments in cash and cash equivalents
are highly liquid, with maturities of less than 90 days. These
investments include bank deposits, guaranteed investment
certificates and money market funds held with major financial
institutions. We have a committed bank credit facility of $125
million, which expires at the earlier of September 2007 or upon a
change of control, including one that would arise at the
consummation of our currently pending Arrangement Transaction.
Borrowings under this credit facility bear interest at LIBOR plus a
spread ranging between 0.875% and 2.25% in respect of LIBOR-based
borrowings (prime rate plus a spread ranging between nil and 1.25%
in respect of prime rate borrowings), depending upon certain
criteria specified in the loan agreement. As at December 31, 2006,
no amounts were borrowed under the credit facility. However,
approximately $1.6 million of letters of credit were issued under
the facility. No amounts have been drawn under these letters of
credit. We believe that, absent unusual opportunities, this bank
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
commitments include the contractual obligations and other
commitments described below in this "Liquidity and Capital
Resources" section as well as those described under "Off-Balance
Sheet Arrangements" and "Four Seasons Portfolio - Properties under
Construction or Development". Contractual Obligations
-------------------------------------------------------------------------
Payments Due by Period Contractual
------------------------------------------------- Obligations Less
(in millions than 1 - 3 4 - 5 After of dollars) Total 1 year years
years 5 years
-------------------------------------------------------------------------
Convertible Notes(i) $ 252.0 $ 2.0 $ 250.0 $ - $ -
-------------------------------------------------------------------------
Currency and Interest Rate Swap(ii) 6.8 1.0 5.8 - -
-------------------------------------------------------------------------
Operating Leases(iii) 37.9 4.8 7.0 5.8 20.3
-------------------------------------------------------------------------
Other Long-Term Obligations(iv) 9.1 9.1 - - -
-------------------------------------------------------------------------
Retirement Benefit Plan(v) 26.3 1.3 2.8 3.3 18.9
-------------------------------------------------------------------------
Total Contractual Obligations(vi) $ 332.1 $ 18.2 $ 265.6 $ 9.1 $
39.2
-------------------------------------------------------------------------
------------------------------------------------- (i) The amount
represents the principal amount plus accrued interest at December
31, 2006. See "Convertible Notes". (ii) The amount represents the
fair value of the swap as at December 31, 2006. (iii) This amount
excludes the future minimum lease payments in connection with Four
Seasons Hotel London and includes the future minimum lease payments
in connection with Four Seasons Hotel Vancouver. See note 14(a) to
our consolidated financial statements. (iv) This amount includes
our contractual obligations related to the expansion of our Toronto
corporate office, as well as other long- term obligations. (v) We
continue to maintain the unfunded multiemployer, non-contributory,
defined benefit plan on behalf of four active executives and 14
retired executives and general managers, as well as the owner of
two of our managed properties. As at December 31, 2006, we have
accrued a defined benefit liability of $26.3 million in "Long-term
obligations" in respect of this plan. This accrued defined benefit
liability excludes the defined benefit liability of the owner of
the two managed properties for their current general managers. (vi)
This does not include the amounts that are disclosed as capital
commitments in the chart under "Four Seasons Portfolio - Properties
under Construction or Development". Convertible Notes During the
second quarter of 2004, we issued $250 million principal amount of
convertible senior notes. We used a majority of the net proceeds
from the issuance of these convertible senior notes to repay
previously issued convertible notes. These notes bear interest at
the rate of 1.875% per annum (payable semi-annually in arrears on
January 30 and July 30 to holders of record on January 15 and July
15, beginning January 30, 2005) and will mature on July 30, 2024,
unless earlier redeemed or repurchased. The notes are convertible
into our Limited Voting Shares at an initial conversion rate of
13.9581 shares per $1,000 principal amount (equal to a conversion
price of approximately $71.64 per Limited Voting Share), subject to
adjustments in certain events, in circumstances in which (i) the
Limited Voting Shares have traded for more than 130% of the
conversion price for a specified period, (ii) the notes have a
trading price of less than 95% of the market price of the Limited
Voting Shares into which they may be converted for a specified
period, (iii) we call the notes for redemption, or (iv) specified
corporate transactions or a "fundamental change" occurs. We may
choose to settle conversion in our Limited Voting Shares, cash or a
combination of our Limited Voting Shares and cash. Holders of the
notes will have the right to require us to purchase the notes for
their principal amount plus accrued and unpaid interest on July 30,
2009, July 30, 2014 and July 30, 2019 and in connection with
certain events. Repurchases of notes made on July 30, 2014 and July
30, 2019 may be made (at our option) in cash, our Limited Voting
Shares or a combination of cash and our Limited Voting Shares.
Subject to conversion rights, we will have the right to redeem the
convertible senior notes for their principal amount, plus any
accrued and unpaid interest, beginning August 4, 2009. The
Arrangement Transaction, if completed, would result in a
"fundamental change". As a result, holders may convert the notes
during the period from and after the tenth day prior to the
anticipated closing date of the Arrangement Transaction until and
including the close of business on the later of the 10th day after
the actual closing date and the 30th business day after notice of
an offer to repurchase the notes has been mailed, as described
below. Upon such conversion, holders of the notes would be entitled
to receive, subject to our right to make a cash payment in lieu of
some or all of the Limited Voting Shares that otherwise would be
issued, 13.9581 Limited Voting Shares for each $1,000 principal
amount of notes and an additional number of Limited Voting Shares
equal to (a) the sum of a make whole premium and an amount equal to
any accrued but unpaid interest to, but not including, the
conversion date, divided by (b) the average of the closing sale
price (or, in certain circumstances, an average of bid and ask
prices) of the Limited Voting Shares on the NYSE for the ten
trading days before the conversion date. If the Arrangement
Transaction is completed, FSHI will 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. FSHI must make this offer by
providing a notice to the trustee and the holders of notes within
30 days of the completion of the Arrangement Transaction. In
accordance with Canadian GAAP, the convertible senior notes are
bifurcated on our consolidated financial statements into a debt
component (representing the principal value of a bond of $211.8
million, which was estimated based on the present value of a $250.0
million bond maturing in 2009, yielding 5.33% per annum, compounded
semi-annually, and paying a coupon of 1.875% per annum) and an
equity component of $36.9 million (representing the value of the
conversion feature of the convertible senior notes). For further
details, see note 10(a) to our consolidated financial statements.
In connection with the offering of the convertible senior notes, we
entered into a five-year interest rate swap 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 $9.0 million. The book value of the interest rate swap at the
date of termination was approximately $1.5 million. The recognition
of the resulting gain was deferred and is being amortized over the
period to July 30, 2009. In the second quarter of 2005, we entered
into a new currency and interest rate swap agreement until July 30,
2009, pursuant to which we had 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. Pursuant to this agreement, we had agreed that
on July 30, 2009, we would pay C$311.8 million and would receive
$250.0 million under the swap. We had designated the swap as a fair
value hedge of our convertible senior notes. In December 2006, we
terminated 80% of the notional amount of the currency component of
the currency and interest rate swap agreement relating to the final
exchange of principal by making a payment of $21.0 million. The
book value of the terminated portion of the swap at the date of
termination was C$19.5 million ($17.0 million). The loss of C$4.6
million ($4.0 million) was deferred for accounting purposes and
recorded in "Other assets", and is being amortized over the period
to July 30, 2009, which would have been the maturity date of the
swap agreement. The amortization of the deferred loss is being
recorded as a foreign exchange loss. Under the amended swap, we
will pay C$62.4 million and receive $50.0 million on July 30, 2009.
There were no other changes to the original swap, including the
notional amounts relating to the exchange of interest. In the event
the convertible senior notes are settled as a result of the pending
Arrangement Transaction, the revised currency and interest rate
swap will be terminated at the same time. As a result of the
partial termination of the swap, we no longer met all of the
conditions for designating the amended swap as a fair value hedge
of the convertible senior notes, and therefore ceased hedge
accounting as at that date. The unrealized loss relating to the
remaining notional amount of the currency component of the swap of
C$1.2 million ($1.0 million) and the unrealized loss relating to
the notional amount of the interest component of the swap of C$2.1
million ($1.8 million) were deferred for accounting purposes and
recorded in "Other assets". These deferred losses are being
amortized over the period to July 30, 2009. The amortization of the
deferred loss relating to the currency component of the swap is
being recorded as a foreign exchange loss and the amortization of
the deferred loss relating to the interest component of the swap is
being recorded as interest expense. The amended swap is being
marked-to-market on a monthly basis and accrued under "Long-term
obligations", with the resulting changes in fair values being
recognized in "Other expenses, net". Arrangement Transaction An
aggregate amount of approximately $3.8 billion will be required to
fund the transactions under the Arrangement Transaction. This
aggregate amount will be funded from the proceeds of $750.0 million
of acquisition debt financing, approximately $2.75 billion of
equity contributions, and a majority of cash balances of Four
Seasons. Cash Flows Cash Provided by Operations During the year
ended December 31, 2006, we generated cash from operating
activities of $78.0 million, as compared to $26.5 million in 2005.
During the three months ended December 31, 2006, we generated cash
of $20.4 million from operating activities, as compared to using
cash of $9.9 million for the same period in 2005. The increase in
cash from operating activities of $51.5 million in the year ended
December 31, 2006, as compared to 2005, resulted primarily from
higher earnings generated from our management business, a net
increase from 2005 of $25.1 million in non-cash working capital and
a reduction of taxes paid of $5.4 million as compared to 2005. In
addition, cash provided by operating activities in 2006 was reduced
by a cash payment of $21.0 million related to the partial
termination of our currency and interest rate swap, as compared to
a reduction in 2005 of $36.0 million for the cash payment related
to the retirement benefit plan transition from an unfunded defined
benefit plan to a fully funded defined contribution plan for a
substantial number of the participants. The increase in cash from
operating activities of $30.3 million in the three months ended
December 31, 2006, as compared to the same period in 2005, resulted
primarily from higher earnings generated from our management
business and a net increase from 2005 of $12.3 million in non-cash
working capital. In addition, cash provided by operating activities
in 2006 was reduced by a cash payment of $21.0 million related to
the partial termination of our currency and interest rate swap, as
compared to a reduction in 2005 of $36.0 million for the cash
payment related to the retirement benefit plan transition as
discussed above. Investing Activities Long-Term Receivables In the
year ended December 31, 2006, we advanced $25.6 million, in the
aggregate, as long-term receivables, including amounts to Four
Seasons properties in Geneva, Toronto, Punta Mita, and the
Maldives. Also in 2006, we were repaid $65.3 million, in the
aggregate, of our long-term receivables, including repayments from
Four Seasons properties in London, Washington, Cairo and Sydney. In
the year ended December 31, 2005, we advanced $44.9 million, in the
aggregate, as long-term receivables, including amounts to Four
Seasons properties in Geneva, Toronto, Washington, Buenos Aires,
and Exuma at Emerald Bay. Also in 2005, we were repaid $34.6
million, in the aggregate, of our long-term receivables, including
repayments from Four Seasons properties in Nevis, San Francisco,
and Scottsdale. During the three months ended December 31, 2006, we
advanced $3.8 million, in the aggregate, as long-term receivables,
including amounts to Four Seasons properties in Punta Mita and
Toronto. Also during the three months ended December 31, 2006, we
were repaid $50.9 million, in the aggregate, of which the largest
component related to our long-term receivables relating to the Four
Seasons Hotel London. During the three months ended December 31,
2005, we advanced $6.2 million, in the aggregate, as long-term
receivables, including amounts to Four Seasons properties in
Geneva, Bangkok and Buenos Aires. Also during the three months
ended December 31, 2005, we were repaid $15.2 million, in the
aggregate, of which the largest component related to our loan
receivable from Nevis. DATASOURCE: Four Seasons Hotels and Resorts
CONTACT: PRNewswire - - 03/12/2007
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