1997 Annual Report - Four Seasons Hotels and Resorts

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(continued)7. I N V E S T M E N T I N M A N A G E M E N T C O N T R A C T S:1997 1996Management contracts, at cost $ 142,421 $ 127,527Less accumulated amortization (36,461) (29,090)Amortization expense for management contracts was $7,198 (1996 – $6,769).$ 105,960 $ 98,4378. I N V E S T M E N T I N T R A D E M A R K S A N D T R A D E N A M E S:1997 1996Trademarks and trade names, at cost $ 72,543 $ 68,742Less accumulated amortization (11,522) (8,743)$ 61,021 $ 59,999(a) Disposition of “Regent” trade name:In November 1997, the Corporation entered into an agreement with Carlson Hospitality Worldwide (“Carlson”) pursuantto which Carlson acquired the rights to the “Regent” name for new development. The Corporation will continue to operateand manage the existing Regent hotels. The Corporation will be entitled to receive payments from Carlson calculated asa percentage of the gross royalty revenue of the new development effort.The portion of the net book value of the Corporation’s investment in the “Regent” trade name that relates to royaltypayments that the Corporation will continue to receive from the existing “Regent” hotels will be reclassified as “Investmentin management contracts” and amortized over the terms of the related management contracts; and the portion of the netbook value that relates to the rights transferred to Carlson will be deferred and amortized over the shorter of the term ofthe Carlson agreement and 40 years.(b) Amortization expense:Amortization expense for trademarks and trade names was $2,346 (1996 – $2,094).9. O T H E R A S S E T S:1997 1996Bonds and debentures $ 2,868 $ 2,744Cash surrender value of life insurance policies (a) 13,312 10,152Deferred development costs 3,943 1,969Deferred financing costs 1,220 2,708Other deferred costs 1,657 2,115$ 23,000 $ 19,688(a) These policies insure the lives of senior executives and are designated to finance pension benefit obligations for theseindividuals (note 13(b)). These policies are held directly and indirectly by the Corporation.64Four Seasons Hotels Inc.