1998 Annual Report - Four Seasons Hotels and Resorts

More documents

Recommendations

Info

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued)5. I N V E S T M E N T S I N H O T E L P A R T N E R S H I P SA N D C O R P O R A T I O N S:1998 1997The Regent Hong Kong ((a) and note 2) $ 7,730 $ 15,270Four Seasons Hotel London (c) 10,581 —Four Seasons Hotel Prague (d) 8,782 —Four Seasons Resort Scottsdale (e) 4,027 2,866Other hotel partnerships and corporations 45,641 48,552$ 76,761 $ 66,688(a) Investment in The Regent Hong Kong:The Corporation has a 25% leasehold interest in The Regent Hong Kong. The initial term of the leasehold terminates inDecember 2000 with an option to renew for a further 10 years exercisable by the lessee. The Corporation amortizes thecost of its investment in The Regent Hong Kong on a straight-line basis over the remaining term of the initial leasehold.Amortization expense during the year was $2,766 (1997 – $2,586).(b) Disposition of investments in The Ritz-Carlton Hotel Chicago and the FourSeasons Hotel Chicago:Effective January 1, 1998, the Corporation reached an agreement to exchange its 25% ownership interest in The Ritz-CarltonHotel Chicago for the elimination of certain termination provisions contained in the management agreement of the hotel, andalso reached an agreement to exchange its 7.7% ownership interest in the Four Seasons Hotel Chicago for relief from certainlease funding obligations. In a separate transaction, the terms of the management agreement of The Ritz-Carlton Hotel Chicagowere improved. The net book value of the assets and liabilities disposed of were as follows:Current assets (net of cash of $2,593) $ 1,670Long-term assets 30,977Accounts payable and accrued liabilities (3,987)Long-term debt due within one year (322)Long-term debt (15,557)Net assets disposed of $ 12,781The Corporation has accounted for the disposition of its ownership interests in The Ritz-Carlton Hotel Chicago andthe Four Seasons Hotel Chicago as non-monetary exchanges of assets that do not represent the culmination of the earningsprocess. Accordingly, no gain was recognized on these transactions, and the excess of $15,374 of the net book value of theCorporation’s investments in these hotels over the cash proceeds received has been reclassified to “Investment in managementcontracts” (note 7). Management believes that the incremental fair value of the amended management contracts exceed theamounts reclassified.(c) Investment in the Four Seasons Hotel London:Effective January 1, 1998, the Corporation and an affiliate of Kingdom acquired the 50% ownership interest in the FourSeasons Hotel London that the affiliate did not already own. The Corporation acquired a 12.5% ownership interest in thehotel and the affiliate increased its ownership interest in the hotel from 50%, which it acquired from the Corporation in1995 (note 4(a)) to 87.5%. To facilitate the acquisition, the Corporation invested £16.3 million, which includes a loan of£12.2 million (note 4(c)) and an investment in preferred shares of £4.1 million.70Four Seasons Hotels Inc.
The preferred shares bear a cumulative annual dividend of 10%, and are redeemable at the option of the Corporation.Dividends on, and redemptions of, the preferred shares are funded from the newly acquired 50% portion of the availablecash flow (as defined in the shareholders agreement) from the hotel.(d) Investment in the Four Seasons Hotel Prague:The Corporation has a 66.67% equity interest in the company that owns and is constructing the Four Seasons HotelPrague. The Corporation is in discussions with potential purchasers for a portion or all of the Corporation’sinvestment in this hotel.(e) Investment in the Four Seasons Resort Scottsdale:The Corporation has a 4.65% equity interest and a 65.79% voting interest in the company that owns and is constructingthe Four Seasons Resort Scottsdale, and in the company that owns the related Resort Club. The equity interest isanticipated to increase up to 65.79% as additional capital contributions are made. The Corporation is in discussions withpotential purchasers for a portion or all of the Corporation’s investment in this project.(f) Investment in hotel joint venture:The Corporation’s proportionate interest in the assets and liabilities of The Ritz-Carlton Hotel Chicago, which wasproportionately consolidated in these financial statements as at December 31, 1997, is summarized as follows:Current assets $ 4,263Long-term assets 23,15427,417Current liabilities (4,309)Long-term debt (15,557)1997(19,866)$ 7,551The Corporation’s proportionate interest in the revenues and expenses of The Ritz-Carlton Hotel Chicago, which wasproportionately consolidated in these financial statements for the year ended December 31, 1997, is summarized as follows:Revenues $ 19,590Expenses (17,400)1997$ 2,19071Four Seasons Hotels Inc.
Page 5 and 6:
focus at all levels, including corp
Page 7 and 8:
FOUR SEASONS MANAGEMENT COMMITTEE R
Page 9 and 10:
We strongly believe in promotion fr
Page 11 and 12:
improve our returns on capital and
Page 13 and 14:
51485245545355475046 49575856616059
Page 16 and 17:
ANNUAL INFORMATION FORM(continued)I
Page 18 and 19:
ANNUAL INFORMATION FORM(continued)S
Page 20 and 21:
ANNUAL INFORMATION FORM(continued)A
Page 22 and 23: ANNUAL INFORMATION FORM(continued)A
Page 24 and 25: ANNUAL INFORMATION FORM(continued)F
Page 26 and 27: ANNUAL INFORMATION FORM(continued)V
Page 28 and 29: ANNUAL INFORMATION FORM(continued)A
Page 30 and 31: ANNUAL INFORMATION FORM(continued)F
Page 32 and 33: ANNUAL INFORMATION FORM(continued)M
Page 58 and 59: ANNUAL INFORMATION FORM(continued)C
Page 60 and 61: ANNUAL INFORMATION FORM(continued)C
Page 62 and 63: MANAGEMENT’S RESPONSIBILITY FOR F
Page 64 and 65: CONSOLIDATED BALANCE SHEETSDecember
Page 66 and 67: CONSOLIDATED STATEMENTS OF CHANGES
Page 68 and 69: NOTES TO CONSOLIDATED FINANCIAL STA
Page 84 and 85: CORPORATE GOVERNANCEG E N E R A LOn
Page 86 and 87: CORPORATE GOVERNANCE(continued)C O
Page 88: FOUR SEASONS HOTELS AND RESORTS FOU
show all

1998 Annual Report - Four Seasons Hotels and Resorts

Create successful ePaper yourself

Delete template?

Save as template?