FINANCIAL TABLE OF CONTENTSANNUAL INFORMATION FORM11 Business of <strong>Four</strong> <strong>Seasons</strong>17 Industry Awards18 Description of <strong>Hotels</strong> <strong>and</strong> <strong>Resorts</strong>21 Hotel Management Operations23 Hotel Ownership Operations24 Intellectual Property24 Selected Consolidated Financial Information25 Five-Year Review27 Summary Hotel Operating Data28 Management’s Discussion <strong>and</strong> Analysis28 Financial Objectives28 Overview of <strong>1997</strong>29 Operational <strong>and</strong> Financial Review <strong>and</strong> Analysis34 Results of Operations39 Liquidity42 Operating Risks48 Corporate InformationCONSOLIDATED FINANCIAL STATEMENTS52 Management’s Responsibility for Financial <strong>Report</strong>ing52 Auditors’ <strong>Report</strong> to the Shareholders53 Consolidated Statements of Operations54 Consolidated Balance Sheets55 Consolidated Statements of Cash Provided by Operations56 Consolidated Statements of Changes in Financial Position56 Consolidated Statements of Deficit57 Notes to Consolidated Financial Statements74 CORPORATE GOVERNANCEIBCCORPORATE DIRECTORY10<strong>Four</strong> <strong>Seasons</strong> <strong>Hotels</strong> Inc.
ANNUAL INFORMATION FORMB U S I N E S S O F F O U R S E A S O N S<strong>Four</strong> <strong>Seasons</strong> <strong>Hotels</strong> Inc. 1 was incorporated under the Business Corporations Act (Ontario) on January 6, 1978. 2 FSHI’sregistered <strong>and</strong> principal office is located at 1165 Leslie Street, Toronto, Ontario, Canada M3C 2K8. The Limited VotingShares of FSHI are listed on The Toronto Stock Exchange <strong>and</strong> the Montreal Exchange under the symbol FSH <strong>and</strong>the New York Stock Exchange under the symbol FS.<strong>Four</strong> <strong>Seasons</strong> is one of the world’s leading managers of luxury hotels <strong>and</strong> resorts. <strong>Four</strong> <strong>Seasons</strong> manages 41 luxuryhotel <strong>and</strong> resort properties containing approximately 12,500 guest rooms, primarily under the <strong>Four</strong> <strong>Seasons</strong> <strong>and</strong>Regent br<strong>and</strong> names, in principal cities <strong>and</strong> resort destinations in 17 countries in North America, Europe, Asia, Australia,<strong>and</strong> the Caribbean. In addition, 16 hotels <strong>and</strong> resorts are under construction or development. Nine of these projectsare in countries where <strong>Four</strong> <strong>Seasons</strong> does not currently manage a hotel. (A chart summarizing the hotels <strong>and</strong> resortsmanaged <strong>and</strong> under construction or development by <strong>Four</strong> <strong>Seasons</strong> is set out on pages 18 through 20.) The Corporation’sstrategy is to offer business <strong>and</strong> leisure travellers the finest hotel <strong>and</strong> resort accommodation in each destination it serves.<strong>Four</strong> <strong>Seasons</strong> earns revenue from both hotel management <strong>and</strong> hotel ownership operations. In early <strong>1997</strong>, the Corporationcompleted an asset disposition program initiated in 1993 <strong>and</strong> is now principally a hotel management company.In contrast to more volatile hotel ownership, hotel management operations tend to generate relatively stable earnings<strong>and</strong> cash flow for the Corporation <strong>and</strong> should provide a more solid platform for <strong>Four</strong> <strong>Seasons</strong>’ future growth. In <strong>1997</strong>,81% of the Corporation’s earnings before other operating items was generated by its hotel management business.Under its management agreements, <strong>Four</strong> <strong>Seasons</strong> generally supervises all aspects of hotel operations on behalf of the hotelowners, including hotel sales <strong>and</strong> marketing, hotel reservations, hotel accounting, purchasing, budgeting <strong>and</strong> the hiring, trainingF O R W A R D- L O O K I N GS T A T E M E N T SWhen used in this <strong>Annual</strong> Information Form, the Message to Our Shareholders, <strong>and</strong> the Management Committee Round Table,the words “believes,” “anticipates,” “expects” <strong>and</strong> similar expressions are intended to identify forward-looking statements. Thesestatements are subject to a number of risks <strong>and</strong> uncertainties that could cause actual results to differ materially from thoseanticipated, projected or implied, including, without limitation: competition within each of the Corporation’s business segments,the balance between supply of <strong>and</strong> dem<strong>and</strong> for hotel rooms <strong>and</strong> vacation ownership units, the Corporation’s continued ability toobtain new operating contracts on advantageous terms, the Corporation’s relations with current <strong>and</strong> potential hotel owners <strong>and</strong>clients, the effect of international, national <strong>and</strong> regional economic conditions <strong>and</strong> the availability of capital to fund furtherinvestments in the Corporation’s businesses. Given these uncertainties, readers are cautioned not to place undue relianceon these statements. The Corporation also undertakes no obligation to publicly release the result of any revisions to these forwardlookingstatements that may be made to reflect any future events or circumstances.All amounts referred to in this document are in Canadian dollars unless otherwise noted.1 “FSHI” means <strong>Four</strong> <strong>Seasons</strong> <strong>Hotels</strong> Inc. “<strong>Four</strong> <strong>Seasons</strong>” or the “Corporation” means, collectively, FSHI <strong>and</strong> all its subsidiaries, including <strong>Four</strong> <strong>Seasons</strong> <strong>Hotels</strong>Limited (“FSHL”) <strong>and</strong> Regent International <strong>Hotels</strong> Limited (“Regent”).2 The articles of FSHI were restated in 1986 to consolidate prior amendments <strong>and</strong> were amended in 1989 to subdivide each Subordinate Voting Share <strong>and</strong> eachMultiple Voting Share on a 2:1 basis <strong>and</strong> to create an unlimited number of special shares designated as First Preference Shares <strong>and</strong> Second Preference Shares. In1996 the articles were further amended to redesignate the Subordinate Voting Shares as Limited Voting Shares <strong>and</strong> to create 4,171,924 special shares designatedas Variable Multiple Voting Shares, which replaced <strong>and</strong> have substantially the same rights, privileges, restrictions <strong>and</strong> conditions as did the Multiple VotingShares, except that the number of votes per Variable Multiple Voting Share generally increases as Limited Voting Shares are issued <strong>and</strong> dividends on the VariableMultiple Voting Shares will be in an amount per share equal to 50% of the dividends per Limited Voting Share.11<strong>Four</strong> <strong>Seasons</strong> <strong>Hotels</strong> Inc.
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