1997 Annual Report - Four Seasons Hotels and Resorts

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ANNUAL INFORMATION FORM(continued)Although Four Seasons will continue to make loans or minority investments to secure long-term management contracts,these investments will only be made in order to expand its management business and where the overall economic returnto Four Seasons justifies the investment and risk profile.Four Seasons works closely with the owners and investors in developing new properties and acquiring existing luxuryproperties to be managed by Four Seasons. To the extent required, Four Seasons makes capital investments to obtain longtermmanagement contracts for these hotels or resorts. However, Four Seasons generally limits its total capital exposureto no more than 20% of the total equity required for the new property and typically can choose to have its ownershipinterest diluted if additional capital is required. The Corporation structures its ownership interests separately from itsmanagement interests so as to enable it to dispose of an ownership interest as sale opportunities arise, without affectingits management interests.I N T E L L E C T U A LP ROPERTYIn the highly competitive service industry in which Four Seasons operates, trade names and trademarks are very importantin the sales and marketing of those services. Four Seasons has a significant number of trade names, trademarks and servicemarks, and significant time and effort are spent each year on surveillance, registration and protection of trade names,trademarks and service marks, which Four Seasons believes have become synonymous in the lodging industry with astandard of attention to detail and an unwavering dedication to excellence.Four Seasons and Carlson have entered into an arrangement pursuant to which Carlson has acquired rights to theRegent name for new development. Carlson now owns and has exclusive right to use the Regent name and relatedtrademarks, service marks and logos and has granted Four Seasons the right to use the Regent name and related marksand logos at Regent properties managed by Four Seasons. 15 The costs associated with the maintenance of the Regent brandand marks are the obligation of Carlson.S E L E C T E D C O N S O L I D A T E D F I N A N C I A L I N F O R M A T I O NTwo-Year Summary by Quarter(In millions of dollars4th Quarter 3rd Quarter 2nd Quarter 1st Quarterexcept per share amounts) 1997 (1) 1996 1997 (1) 1996 1997 (1) 1996 1997 (1) 1996Consolidated revenues $ 71.7 $ 35.2 $ 57.3 $ 29.6 $ 61.4 $ 29.1 $ 49.6 $ 26.8Earnings (loss) beforeother operating items:Hotel management 18.5 16.6 16.0 13.6 14.8 13.3 14.3 12.2Hotel ownership 7.6 2.8 2.7 1.6 5.5 2.4 (0.8) 1.9Net earnings:Total $ 20.3 $ 11.2 $ 1.1 (2) $ 6.5 $ 13.6 $ 7.1 $ 5.8 $ 5.0Basic and fully dilutedearnings per share $ 0.61 $ 0.39 $ 0.03 (2) $ 0.23 $ 0.41 $ 0.24 $ 0.19 $ 0.18(1) Includes the consolidation of the result of The Pierre in New York and the Four Seasons Hotel Vancouver.(2) The 3rd quarter 1997 amounts include the effect of an accounting loss of $12.0 million ($0.37 per share) relating to the Corporation’s repurchase ofUS$101.5 million of its 9-1/8% Notes. Excluding this loss, normalized net earnings would have been $13.1 million and normalized basic and fully dilutedearnings per share would have been $0.40 for the 3rd quarter 1997.15 See “Regent Joint Venture” on page 16.24Four Seasons Hotels Inc.
F I V E-Y E A RR E V I E W(In millions of dollars except per share amounts) 1997 1996 1995 1994 1993Statements of Operations Data:Consolidated revenues (1) $ 240.0 $ 120.7 $ 135.6 $ 128.5 $ 101.1Hotel Management OperationsFee revenues $ 106.0 94.7 $ 88.5 $ 79.9 $ 60.3Hotel management earnings before other operating items 63.7 55.7 51.8 45.9 27.9Hotel Ownership OperationsRevenues 135.3 17.6 42.5 43.1 38.0Distribution from hotel investments 6.0 9.2 6.0 6.8 3.9Hotel ownership earnings before other operating items 15.1 8.7 14.9 14.2 7.2Earnings before other operating items 78.7 64.3 66.7 60.0 35.1Depreciation and amortization (15.8) (14.0) (16.9) (16.9) (14.8)Loss on repurchase of debt (2) (12.0) — — — —Provision for loss (3) — — (95.0) — (127.0)Earnings (loss) from operations (4) 51.3 50.6 (45.0) 43.6 (101.9)Interest expense, net (8.9) (18.8) (25.7) (27.2) (17.9)Earnings (loss) before taxes (5) 42.4 31.8 (70.7) 9.6 (119.8)Income tax expense (1.6) (2.0) (3.9) (2.8) (1.0)Net earnings (loss) $ 40.8 $ 29.9 $ (74.6) $ 6.8 $ (120.8)Earnings (loss) per share:Basic and fully diluted $ 1.24 $ 1.04 $ (2.62) $ 0.24 $ (4.35)Weighted average number of shares (millions) (6) 32.8 28.7 28.4 27.9 27.8Changes in Financial Position:Cash provided by operations $ 64.8 $ 43.7 $ 38.7 $ 44.8 $ 12.5Long-term receivables (35.9) 0.4 (32.9) (10.4) (8.1)Disposal of long-term receivables — — 13.2 — —Investments (17.7) (21.1) (14.6) (11.8) (31.4)Disposal of hotel investments, net 13.0 4.3 65.7 51.7 —Capital expenditures (10.5) (1.3) (2.4) (1.6) (1.5)Dividends (3.2) (3.0) (3.1) (3.1) (3.1)Balance Sheet Data:Total assets $ 453.2 $ 385.3 $ 381.6 $ 491.5 $ 518.1Total debt 140.2 240.0 267.6 308.6 357.5Shareholders’ equity 254.5 88.1 57.2 137.2 124.725Four Seasons Hotels Inc.
Page 1 and 2: FOUR SEASONS HOTELS AND RESORTS FOU
Page 3 and 4: FINANCIAL HIGHLIGHTS(In millions of
Page 5 and 6: Growth through selective diversific
Page 7 and 8: FOUR SEASONS MANAGEMENT COMMITTEE R
Page 9 and 10: Barbara TalbottSenior Vice Presiden
Page 11 and 12: 18212317222019252428162627673548151
Page 13 and 14: ANNUAL INFORMATION FORMB U S I N E
Page 15 and 16: Superior Hotel Operating ResultsFou
Page 17 and 18: comparable data is available, was U
Page 19 and 20: I N D U S T R YA W A R D SFour Seas
Page 21 and 22: Properties Managed by Four Seasons
Page 23 and 24: H O T E L M A N A G E M E N T O P E
Page 25: and its hourly staff varies, based
Page 29 and 30: S U M M A R Y H O T E L O P E R A T
Page 31 and 32: December 31, 1996 to $115 million a
Page 33 and 34: Hotel Ownership OperationsHotel own
Page 35 and 36: Minority Hotel Ownership InterestsA
Page 37 and 38: primarily by the termination during
Page 39 and 40: Income Tax ExpenseThe Corporation
Page 41 and 42: L I Q U I D I T YFour Seasons gener
Page 43 and 44: During 1997, the Corporation invest
Page 45 and 46: conditions of an agreement could re
Page 47 and 48: Investments and AdvancesThe Corpora
Page 49 and 50: investment in The Regent Hong Kong
Page 51 and 52: Edmond M. Creed, Murray B. Koffler
Page 53 and 54: C O R P O R A T EC H A R TThe follo
Page 55 and 56: CONSOLIDATED STATEMENTS OF OPERATIO
Page 57 and 58: CONSOLIDATED STATEMENTS OF CASH PRO
Page 59 and 60: NOTES TO CONSOLIDATED FINANCIAL STA
Page 61 and 62: The recoverability of the unamortiz
Page 63 and 64: 4. L O N G- T E R M R E C E I V A B
Page 65 and 66: Current assets (including cash of $
Page 67 and 68: 10. L O N G- T E R M D E B T:1997 1
Page 69 and 70: UnlimitedUnlimitedUnlimitedThe VMVS
Page 71 and 72: 13. C O M M I T M E N T S A N D C O
Page 73 and 74: 14. F A I R V A L U E O F F I N A N
Page 75 and 76: which, in turn, are based on assump
Page 77 and 78:
of action that have been taken. The
Page 79 and 80:
CORPORATE DIRECTORYD IRECTORSEdmond
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1997 Annual Report - Four Seasons Hotels and Resorts

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