1997 Annual Report - Four Seasons Hotels and Resorts

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued)Changes in the allowance for doubtful long-term receivables consist of:1997 1996Balance, beginning of year $ 6,855 $ 6,813Foreign exchange 310 42$ 7,165 $ 6,855The only impaired long-term receivable identified by the Corporation at December 31, 1997 and 1996 is discussed initem (d) above. No interest income was recognized on impaired long-term receivables in 1997 or 1996.5. 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:1997 1996The Regent Hong Kong (a) $ 15,270 $ 17,170Other hotel partnerships and corporations (b) 51,418 45,554$ 66,688 $ 62,724(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 $2,586 (1996 – $2,585).(b) Other hotel partnerships and corporations:The Corporation has accounted for the disposition of its ownership interest in the Four Seasons Resort Nevis (note 2(b)) asa non-monetary exchange of assets that does not represent the culmination of the earnings process. Accordingly, no gainwas recognized on this transaction, and the excess of $7,601 of the net book value of the Corporation’s investment in thehotel over the cash proceeds received has been reclassified to “Investment in management contracts” (note 7). Managementbelieves that the incremental fair value of the amended management contract exceeds the amount reclassified.(c) Unwind of FRA Properties:In November 1996, FRA Properties entered into an agreement to sell its leasehold interest in the Four Seasons Hotel Toronto.The transaction closed in January 1997, at which time the Corporation received cash proceeds, net of costs of disposition,of $13,000.The Corporation has accounted for the exchange of its partnership interest in FRA Properties for a 100% partnershipinterest in FRC Properties (note 2(a)) as a non-monetary exchange of assets that does not represent the culmination of theearnings process. Accordingly, no gain or loss was recognized on this transaction, and the net book value of the Corporation’sinvestment in FRA Properties as at December 30, 1996 of $3,500 has been allocated to the assets and liabilities ofFRC Properties, which includes leasehold interests in the Four Seasons Hotel Vancouver and The Pierre New York,as follows:62Four Seasons Hotels Inc.
Current assets (including cash of $2,198) $ 14,265Long-term receivables 7,000Investment in residual interest in land 2,500Operating equipment 1,810Other assets 800Accounts payable and accrued liabilities (10,275)Long-term debt due within one year (12,600)Net assets assumed $ 3,500(d) Investment in hotel joint venture:The Corporation’s proportionate interest in the assets and liabilities of The Ritz-Carlton Hotel Chicago, which isproportionately consolidated in these financial statements as at December 31, 1997 and 1996, is summarized as follows:1997 1996Current assets $ 4,263 $ 4,205Long-term assets 23,154 21,95627,417 26,161Current liabilities (4,309) (3,532)Long-term debt (15,557) (10,283)(19,866) (13,815)$ 7,551 $ 12,346The Corporation’s proportionate interest in the revenues and expenses of The Ritz-Carlton Hotel Chicago, which isproportionately consolidated in these financial statements for the years ended December 31, 1997 and 1996, is summarizedas follows:1997 1996Revenues $ 19,590 $ 17,606Expenses (17,400) (15,892)$ 2,190 $ 1,7146. F I X E D A S S E T S:1997 1996Accumulateddepreciation/ Net book Net bookCost amortization value valueLand $ 4,402 $ — $ 4,402 $ 4,263Buildings 22,577 (3,316) 19,261 19,129Furniture, fixtures and equipment 26,921 (15,272) 11,649 5,688Leasehold interests and improvements 6,424 (3,193) 3,231 1,47360,324 (21,781) 38,543 30,553Operating equipment 4,873 — 4,873 2,597Depreciation and amortization expense for fixed assets was $3,464 (1996 – $2,265).$ 65,197 $ (21,781) $ 43,416 $ 33,15063Four Seasons Hotels Inc.
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FOUR SEASONS HOTELS AND RESORTS FOU
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FINANCIAL HIGHLIGHTS(In millions of
Page 5 and 6:
Growth through selective diversific
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FOUR SEASONS MANAGEMENT COMMITTEE R
Page 9 and 10:
Barbara TalbottSenior Vice Presiden
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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 26: and its hourly staff varies, based
Page 27 and 28: F I V E-Y E A RR E V I E W(In milli
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: 4. L O N G- T E R M R E C E I V A B
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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