| TORONTO - Feb. 15, 2002 - Four Seasons Hotels Inc. (TSE:FSH) (NYSE:FS)
today reported its results for the fourth quarter of 2001 and for the year
ended December 31, 2001.
In a period marked by significant economic and travel disruptions, net
earnings for the quarter ended December 31, 2001 were $9.3 million ($0.27
basic and diluted earnings per share(1)), as compared to $38.5 million
($1.11 basic earnings per share and $0.97 diluted earnings per share) for
the quarter ended December 31, 2000. During the fourth quarter, the Company
incurred $1.2 million of corporate restructuring costs and recognized a
$2.4 million loss on redemption of its $100 million 6% debentures due July
2, 2002 (the "Canadian Debentures"), together with other non-recurring
items. On a normalized(2) basis, net earnings decreased to $11.3 million
($0.32 basic and diluted earnings per share), as compared to $34.8 million
($1.00 basic earnings per share and $0.88 diluted earnings per share) for
the quarter ended December 31, 2000.
For the year ended December 31, 2001, net earnings were $86.5 million
($2.48 basic earnings per share and $2.27 diluted earnings per share),
as compared to $103.1 million ($2.98 basic earnings per share and $2.63
diluted earnings per share) for the year ended December 31, 2000. During
2001, the Company recognized non-recurring items, including gains on asset
dispositions of $30.4 million and a recovery of a loss provision of $4.8
million, incurred $2.2 million of corporate restructuring costs, and recognized
a $2.4 million loss on redemption of the Canadian Debentures. On a normalized
basis, net earnings decreased to $56.4 million ($1.61 basic earnings per
share and $1.52 diluted earnings per share), as compared to $96.3 million
($2.78 basic earnings per share and $2.46 diluted earnings per share) for
the year ended December 31, 2000.
"After the tragic events of September 11th the global travel industry
experienced an unprecedented slowdown, resulting in a significant decline
in our earnings during 2001," said Isadore Sharp, Chairman and Chief Executive
Officer. "During these difficult times, our business model has been stress
tested well beyond the limits of any prior economic cycle, and we maintained
sound profitability levels, both at a corporate level and for our hotel
owners. Our business model has demonstrated its strength and fundamental
profitability, and we are entering 2002 with the strongest balance sheet
in the Company's history. We look to the future with great confidence as
we expect to add five new Four Seasons hotels and resorts to our portfolio
in 2002, with nine additional new projects scheduled to open in 2003. We
also expect the gradual recovery of demand levels in our existing properties
to begin in the latter part of 2002."
Consolidated revenues decreased 26% to $76.9 million for the quarter
ended December 31, 2001, as compared to $104.1 million for the quarter
ended December 31, 2000. Consolidated revenues decreased 13% to $303.1
million for the year ended December 31, 2001, as compared to $347.5 million
in 2000.
OPERATING RESULTS
Following the events of September 11th and the unprecedented decline
in travel, RevPAR(3) of the Company's worldwide Core Hotels(4), on a US
dollar basis, declined 23.6% and gross operating profits declined 33.3%
during the fourth quarter of 2001, as compared to the fourth quarter of
2000, during which record levels of business were attained. For the full
year of 2001, RevPAR of the Company's worldwide Core Hotels, on a US dollar
basis, decreased 10%, while gross operating profits decreased 16.5%, as
compared to the same period in 2000.
Historically, the period from early September to the year end is one
of high hotel occupancies, both from business and leisure travel. The September
events, along with slowing economic conditions, combined to severely constrain
travel over the latter part of 2001.
The decline in RevPAR of the Company's worldwide Core Hotels, on a US
dollar basis, when compared to the comparable periods for the previous
year, decreased as the quarter progressed, with October declining by 28.8%,
November declining by 24.3% and December declining by 16.3%. The majority
of the RevPAR decline was caused by lower occupancy levels on a worldwide
basis.
The RevPAR of the US Core Hotels, on a US dollar basis, declined 24.4%
and gross operating profits declined 38% during the fourth quarter of 2001,
as compared to the fourth quarter of 2000. For the full year of 2001, RevPAR
of the US Core Hotels, on a US dollar basis, decreased 12.5%, while gross
operating profits decreased 23.3%, as compared to the same period in 2000.
The most severe operating conditions were experienced in the northeast
United States, including New York, Boston and Washington, D.C. In that
region, RevPAR declined 32.5% in the fourth quarter of 2001 and almost
20% for the full year of 2001.
In the fourth quarter of 2001, RevPAR of the Canada/Mexico Core Hotels,
on a US dollar basis, declined 15.2%, while gross operating profits decreased
11.8%, as compared to the fourth quarter of 2000. For the full year of
2001, the Canada/Mexico Core Hotels experienced a 1.2% decrease in RevPAR,
on a US dollar basis, and a 4.8% increase in gross operating profits, as
compared to the same period in 2000.
The RevPAR of the European Core Hotels, on a US dollar basis, decreased
16.4%, and gross operating profits decreased 15.3% in the fourth quarter
of 2001, as compared to the same period in 2000. This decline was caused
by lower occupancy levels that were partially offset by a 5.7% increase
in achieved room rates during the quarter. For the full year of 2001, RevPAR
of the European Core Hotels, on a US dollar basis, increased 1.2%, as compared
to the same period in 2000. Lower occupancy levels of the European properties
were more than offset by higher achieved room rates in substantially all
of the hotels in the region. Gross operating profits increased 13.2% for
the full year of 2001, as compared to 2000. On a Euro basis, RevPAR increased
3.8% and gross operating profits increased 15.8% for the full year of 2001,
as compared to 2000, for the European Core Hotels.
During the fourth quarter of 2001, RevPAR of the Asia/Pacific Core Hotels,
on a US dollar basis, decreased 29.5%, while gross operating profits decreased
30.1%, as compared to the fourth quarter of 2000. On a local currency basis,
RevPAR in the Company's Asia/Pacific Core Hotels declined 25.2%, while
gross operating profit declined 25%, in the fourth quarter of 2001, as
compared to the same period in 2000. RevPAR, on a US dollar basis, for
the full year of 2001, for the Asia/Pacific Core Hotels decreased 11.3%
and gross operating profits decreased 11.7%, as compared to the same period
in 2000. On a local currency basis, RevPAR of the Asia/Pacific Core Hotels
declined 2.7%, while gross operating profit declined 2.8%, for the full
year of 2001, as compared to the same period in 2000. Virtually all of
the Company's hotels in the Asia/Pacific region were significantly affected
by the world events as occupancy levels declined from 71.2% in the fourth
quarter of 2000 to 52.3% in the fourth quarter of 2001.
"Given the severity of the market conditions during 2001, we carefully
reassessed the operating costs at all levels in our properties and at our
corporate office. Without compromising customer service standards, we took
aggressive but prudent measures to control our costs," said Wolf Hengst,
President Worldwide Hotel Operations. "This focus on maintaining our product
integrity allowed us to realize achieved room rates on a worldwide basis
comparable to the record rates established in 2000, while also achieving
an average gross operating profit margin of 32% for our hotel owners. We
expect that the first half of 2002 will continue to be a challenging environment,
but we are now more optimistic about longer-term travel recovery than we
were two months ago. The second half of 2002 should benefit from the combination
of improved demand and slower supply growth in the majority of the markets
in which we operate."
MANAGEMENT OPERATIONS
Revenues under management for the quarter ended December 31, 2001 decreased
14.8% to $659.6 million, as compared to $773.8 million for the quarter
ended December 31, 2000. Revenues under management for the year ended December
31, 2001 were flat at $2.8 billion, as compared to the year ended December
31, 2000.
Fee revenues decreased 28.1% to $38.7 million for the quarter ended
December 31, 2001, as compared to $53.8 million for the same period in
2000. Fee revenues decreased 13.3% to $160.7 million for the year ended
December 31, 2001, as compared to $185.3 million for the same period in
2000. The Company's management incentive fees, which are typically calculated
based on the adjusted gross operating profits of the hotels and resorts
under management, decreased to $8.5 million for the quarter ended December
31, 2001, as compared to $14.5 million for the quarter ended December 31,
2000. The Company's management incentive fees decreased to $30 million
for the year ended December 31, 2001, as compared to $49.8 million in 2000.
The Company earned incentive fees on 37 of its properties during 2001,
as compared to 38 of its properties in 2000. Incentive fees declined primarily
due to the lower levels of profitability of the properties under management.
A portion of the decline in fee revenues was caused by the cessation
of the Company's management of The Regent Hong Kong during the second quarter
of 2001. For the full year of 2001, the fee revenues from The Regent Hong
Kong were $2.3 million, as compared to $5.1 million in 2000. In the fourth
quarter of 2000 the fee revenues from The Regent Hong Kong were $1.9 million.
General and administrative expenses increased by 26.7% to $18.6 million
for the fourth quarter of 2001 and by 9.9% to $65.4 million for the year
ended December 31, 2001, both as compared to the comparable periods in
2000. These increases reflect, in part, an additional $4.4 million of reservations
and marketing expenses, primarily contributed by new properties, for the
year ended December 31, 2001, as compared to 2000. Total non-marketing
and reservations expenses increased by 4.2% or $1.5 million for the year
ended December 31, 2001, as compared to 2000.
Management earnings before other operating items decreased to $95.3
million for the year ended December 31, 2001, as compared to $125.8 million
in 2000. Management earnings before other operating items decreased to
$20.1 million in the fourth quarter of 2001, as compared to $39.1 million
in the fourth quarter of 2000.
For the quarter ended December 31, 2001, the profit margin on the Company's
management operations was 51.9%, as compared to 72.7% for the same period
in 2000. For the full year of 2001, the Company's profit margin on its
management operations was 59.3%, as compared to 67.9% in 2000.
OWNERSHIP OPERATIONS
Included in ownership earnings are the consolidated revenues and expenses
from the Company's 100% interest in The Pierre hotel in New York, Four
Seasons Hotel Vancouver, Four Seasons Hotel Berlin, and dividend distributions
from minority ownership interests in properties which the Company manages.
During 2000, dividend distributions were also received from the Company's
25% interest in The Regent Hong Kong.
In the fourth quarter of 2001, ownership earnings before other operating
items decreased to $252,000, as compared to $8.6 million in the fourth
quarter of 2000. This decline was caused by the severe disruption in travel
as a result of the events of September 11th, continued weakening in global
economic conditions, and the loss of dividend income from The Regent Hong
Kong following the sale of the Company's interest in the hotel during the
year.
During the fourth quarter of 2001, the occupancy levels at The Pierre
were 62.5%, as compared to 85.3% for the same period in 2000. This significant
decline in occupancy caused the hotel's operating earnings to decline from
$8.1 million in the fourth quarter of 2000 to $2.1 million in the fourth
quarter of 2001. The Pierre's earnings from operations for the full year
of 2001 declined from $14.1 million in 2000 to a loss of $707,000.
During the second quarter of 2001, the Company ceased managing The Regent
Hong Kong after the Company's management agreement reached the end of its
term. During the third quarter of 2001, the Company sold its 25% ownership
interest in the entity which leases the hotel property and recognized a
one-time gain of $24 million. The Company earned $2.7 million of dividends
from The Regent Hong Kong during the fourth quarter of 2000 and $7.4 million
for the year ended December 31, 2000, as compared to no dividend income
from the property for the same periods in 2001.
Ownership losses before other operating items were $10.2 million for
the year ended December 31, 2001, as compared to operating earnings of
$13.6 million for the year ended December 31, 2000.
OTHER OPERATING ITEMS
Total other operating items for the fourth quarter of 2001 resulted
in net expenses of $8.3 million as compared to net income of $2.5 million
for the same period in 2000.
During the fourth quarter of 2001, the Company redeemed all of its Canadian
Debentures in accordance with their terms for an aggregate redemption price
of $102,118,820 plus accrued and unpaid interest. The redemption of the
debentures was funded from existing cash balances. As disclosed in the
Company's third quarter report, the Company recognized a loss on redemption
of $2.4 million in the fourth quarter of 2001.
During the fourth quarter of 2001, the Company incurred a charge of
$1.2 million in connection with the restructuring of certain corporate
departments. For the full year of 2001, the Company incurred $2.2 million
of corporate restructuring charges, while no corporate restructuring charges
were incurred for the year 2000.
The Company has incurred a net non-recurring foreign exchange loss
of $1.4 million during the fourth quarter of 2001.
For the full year of 2001, other operating items included the items
noted above, a recovery of a loss provision of $4.8 million in the second
quarter and a $30.4 million gain on sale of the Company's interests in
The Regent Hong Kong and Four Seasons Hotel Prague.
During the fourth quarter of 2000, the Company had a $4.9 million (full
year of 2000, $8.9 million) recovery of loss provisions set up in previous
years for possible impairment of certain assets.
NET INTEREST INCOME
For the full year of 2001, the Company had net interest income of $6.7
million, as compared to net interest income of $4.2 million for the comparable
period of 2000. The full year increase was the result of increased interest
income from greater cash reserves during the year and additional investments
made in notes receivable in connection with certain of its new projects,
partially offset by lower interest rates on cash reserves.
BALANCE SHEET
As at December 31, 2001, the Company's cash reserves were $210.4 million,
as compared to total cash reserve of $218.1 million as at December 31,
2000. Long-term obligations declined from $204.9 million as at December
31, 2000 to $119.4 million as at December 31, 2001. This reduction was
primarily caused by the early redemption of the Canadian Debentures. The
Company's remaining debt position primarily consists of its zero coupon
convertible debt that matures in 2029 and is redeemable by the Company
at anytime after September of 2004. The convertible debt can be put to
the Company at three different times beginning in September of 2004. In
all cases, the Company can satisfy the put or call by the payment of cash
or the issuance of Limited Voting Shares.
Included on the Company's balance sheet are "Long Term Receivables",
"Investments in hotel partnerships and corporations" or "Investment in
Management Contract". A part of the Company's business strategy is to invest
a portion of available cash to obtain new management agreements or enhance
existing management agreements. These investments must meet strict financial
criteria including certain return hurdles. The Company assesses the relative
risk and returns of such investments when determining whether to make them
or whether the structure of the investments should be in the form of a
loan or a minority equity investment. The returns associated with such
investments are significantly augmented by the management fees from the
properties in which the investments were made. As part of its on-going
balance sheet evaluation, the Company has reviewed each asset and has determined
that no reserve is necessary as at December 31, 2001 relating to impairment
of any of these assets.
CASH FLOW
Notwithstanding the unusually challenging operating environment, the
Company generated $75.5 million of cash from operations and a further $88.6
million from the disposition of its equity investments in Four Seasons
Hotel Prague, Four Seasons Resort Punta Mita and The Regent Hong Kong during
2001.
Total capital investment for 2001 totalled $69.6 million. This level
of investment was consistent with the Company's business plan, with the
majority of the investments made to secure new long-term management agreements
or to enhance existing management agreements.
Included in total capital investments of $69.6 million is approximately
$56.7 million of investments made during 2001 to obtain new long-term management
contracts, including Four Seasons hotels in Miami, San Francisco, Dublin
and Budapest, and to improve the terms of the existing management agreement
at The Regent Bangkok. No additional funds are required to be invested
in these five properties. Total fixed asset expenditures were $9.6 million
relating to the Company's ownership interests in The Pierre, Four Seasons
hotels in Vancouver and Berlin and its corporate fixed asset expenditures.
LEASE COMMITMENTS
In addition to the obligations identified on the Company's balance sheet
as at December 31, 2001, the Company's three consolidated hotels are leasehold
interests subject to individual property leases. The Company's obligations
in respect of two of these leases are supported by letters of credit aggregating
$18.2 million. The total annual lease obligations for these three assets
represent annual payments of approximately $11 million in 2001 and 2002,
funded by each hotel's operating cash flow. These lease expenses are treated
as an expense of the Company's Ownership Operations and the future obligations
are disclosed in the Company's 2000 Annual Report.
CONTINGENT COMMITMENTS
In connection with certain of its hotel management agreements the Company
provides limited and contingent commitments in lieu of additional equity
or loan commitments. The Company has eight contingent commitments which
represent a maximum annual contingent commitment of $39 million for the
year ended December 31, 2001. To the extent it is called upon under these
contingent commitments, the Company has recourse to the property. The Company
does not anticipate funding any amount pursuant to these commitments during
2002.
INCOME TAX EXPENSE
The Company's effective tax rate for the quarter ended December 31,
2001 was 24.1%, as compared to 25.6% for the same period in 2000. The Company's
effective tax rate for the year ended December 31, 2001 was 18.6%, as compared
to 25.4% in 2000.
The reduction in the effective tax rate for the full year of 2001 is
a result of the gain realized during the third quarter of 2001 relating
to the sale of The Regent Hong Kong not being subject to tax.
Also included in the fourth quarter of 2001 was a $939,000 income tax
expense relating to scheduled reductions in Canadian provincial tax rates
which were announced during 2001 and will be implemented over the next
several years. Included in the fourth quarter of 2000 tax expense was a
$3.2 million additional expense related to the scheduled reductions in
the Canadian federal income tax rates announced in the fourth quarter of
2000 and will be implemented over the next several years. These expenses
("Reduction of future income tax assets") result from the decreased income
tax rates being applied to the ongoing benefit of the Company's future
income tax assets. The reduced tax rates should allow the Company to achieve
lower overall income tax rates on its income in future years.
DEVELOPMENT UPDATE
During 2002, the Company is scheduled to open five new Four Seasons
hotels and resorts including Four Seasons Hotel Shanghai, which recently
opened, and Four Seasons properties in Tokyo, Amman, Sharm el Sheik, and
Riyadh which are expected to open later this year. In 2003, the Company
expects to open seven new hotels and resorts, including Four Seasons in
Budapest, Exuma, Hampshire, Miami, Terre Blanche, Jackson Hole and Sao
Paulo. Consistent with the Company's business strategy, the Company has
made and will be making investments in certain of these properties by way
of loans or minority equity investments.
The Company also expects to commence sale of interests in the Four
Seasons Residence Clubs in Punta Mita and Sedona. Four Seasons typically
receives fees from the Four Seasons residential projects for use of the
Four Seasons brand in connection with the project, for its oversight of
the sales and marketing process, and on an on-going basis for its management
of the projects.
"The pipeline of new projects for Four Seasons remains robust, and we
are fortunate to work with so many development partners who are committed
to bringing their projects to successful completion. As importantly, the
combination of solid equity sponsorship and the Four Seasons brand and
management expertise has allowed these projects to continue to obtain financing,"
said Kathleen Taylor, President Worldwide Business Operations. "Looking
forward, the extreme economic pressures experienced in 2001 should result
in a more constrained global growth environment for luxury hotels. With
the strength of our project pipeline, Four Seasons is now well positioned
for both new unit growth and longer-term RevPAR expansion, as demand levels
return to normal patterns."
LOOKING AHEAD
The Company expects that 2002, particularly the first half, will continue
to be a challenging operating environment. Limited new supply additions
are anticipated in the vast majority of the Company's markets over the
next few years. This, combined with real demand growth expected in the
latter part of 2002, should allow the Company the opportunity to improve
its RevPAR during 2002, as compared to 2001 levels.
The Company's business plan assumes that US GDP growth will increase
by 1.0% to 1.5% during 2002, with the growth predominately in the latter
half of 2002. The plan also assumes that there will be no severe disruptions
in travel as a result of further global conflict. Based on these assumptions,
the Company expects that RevPAR of its worldwide Core Hotels should increase
by 2% to 3% for the full year of 2002 over the 2001 levels.
This internal growth, combined with new unit additions and improved
residential royalty fees, should allow the Company to increase its earnings
before other operating items by 8% to 10% for the full year of 2002 over
2001. However, consistent with the results of the fourth quarter of 2001,
it is expected that first quarter earnings before other operating items
will decline by
approximately 60%, as compared to the first quarter of 2001.
The following table provides quarterly earnings guidance:
Change in RevPAR Fully Diluted
versus prior year Earnings Per
Share
-----------------
------------------
First Quarter
(12%) to (15%)
$0.19 - $0.21
Second Quarter
(2%) to (5%)
$0.64 - $0.65
Third Quarter
8% to 12%
$0.35 - $0.36
Fourth Quarter
15% to 20%
$0.51 - $0.52
Full Year of 2002
2% to 3%
$1.69 - $1.74
|
The Company expects that its investment spending levels in 2002 will
be similar to those realized in 2001. The majority of the investments made
by the Company will be for loans receivable or minority interests in new
hotel and residential projects which it will brand and manage under long-term
management agreements. Four Seasons projects that are expected to be funded
by the Company in 2002 include Buenos Aires, Jackson Hole, Costa Rica,
Sao Paulo and the Residence Club in Punta Mita.
CONCLUSION
"Although 2001 began with a moderately slowing US economy, we were
ultimately confronted with some of the most difficult conditions our
industry has ever experienced," said Douglas Ludwig, Executive Vice President
and Chief Financial Officer. "These circumstances reduced our profitability
for this period, but showed that our business model is fundamentally sound
with the overall profit margins on our management business remaining at
nearly 60%. We took steps in this difficult environment to improve our
balance sheet by redeeming our Canadian Debentures and maintaining our
cash reserves by disposing of a number of our investments as opportunities
arose during the year. The strength of our balance sheet, combined with
our significant
global management expertise, positions us extremely well for the
anticipated improvement in economic conditions this year and next."
(1.) Included in the calculation of the Company's
diluted earnings per
share is the dilution
related to the Company's stock options and
convertible notes. Please
see footnote one to the financial
statements.
(2.) Normalized net earnings is equal to net earnings
plus (i)
restructuring costs, plus
(ii) loss on redemption of debt, less
(iii) recovery of losses,
less (iv) gain on sale of investments,
less (v) certain net foreign
exchange gains, each tax-affected as
applicable.
A reconciliation of net earnings to normalized
net earnings is as follows:
Three months ended Years ended
(Unaudited)
December 31, December 31,
(In thousands of dollars)
2001 2000 2001
2000
Net earnings
$ 9,317 $ 38,523 $ 86,486 $ 103,074
Normalized adjustments:
Gain on sale of
hotel investments
254 - (30,398)
-
Non-recurring
foreign exchange
(1,365) - (1,365)
-
Recovery of loss
139 (4,897) (4,778) (8,922)
Loss on redemption of debt
2,350 6
2,350 6
Restructuring costs
1,173 -
2,172 -
Tax effect of
normalized adjustments
(597) 1,174 1,928
2,140
Normalized net earnings
$ 11,271 $ 34,806 $ 56,395 $ 96,298
Normalized basic
earnings per share
$ 0.32 $ 1.00 $ 1.61
$ 2.78
Normalized diluted
earnings per share
$ 0.32 $ 0.88 $ 1.52
$ 2.46
(3.) RevPAR is defined as average room revenue
per available room.
RevPAR is a commonly used
indicator of market performance for
hotels and represents
the combination of average daily room rate
and the average occupancy
rate achieved during the period. RevPAR
does not include food
and beverage or other ancillary revenues
generated by a hotel.
(4.) The term "Core Hotels" means hotels and resorts
under management
for the full year of both
2001 and 2000. Changes from the
2000/1999 Core Hotels
are the additions of Four Seasons Hotel Las
Vegas, Four Seasons Resort
Scottsdale at Troon North, Four
Seasons Resort Punta Mita,
Four Seasons Hotel Canary Wharf, Four
Seasons Hotel George V
Paris and The Regent Sydney, and the
deletion of The Regent
Hong Kong. |
FOUR SEASONS HOTELS INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three months ended Years
ended
(In thousands of dollars
December 31, December
31,
except per share amounts)
2001 2000
2001 2000
Consolidated revenues
(note 2)
$ 76,934 $ 104,117 $ 303,106 $ 347,507
MANAGEMENT OPERATIONS
Revenues (note 3)
$ 38,698 $ 53,812 $ 160,672 $ 185,294
G and A expenses (18,627) (14,700)
(65,416) (59,532)
20,071 39,112 95,256
125,762
OWNERSHIP OPERATIONS
Revenues
39,245 49,685 147,500
161,061
Distributions from hotel
investments
955 3,291 1,510
9,047
Expenses:
Cost of sales and
expenses
(37,984) (41,662) (152,663) (148,590)
Fees to Management
Operations
(1,964) (2,671) (6,576)
(7,895)
252 8,643 (10,229)
13,623
Earnings before other
operating items
20,323 47,755 85,027
139,385
Depreciation and
amortization
(4,385) (3,393) (16,242) (14,028)
Other income (expense),
net (notes 4 and 5)
(3,869) 5,917 30,698
8,669
Earnings from operations
12,069 50,279 99,483
134,026
Interest income, net
211 1,493 6,740
4,190
Earnings before income taxes 12,280
51,772 106,223 138,216
Income tax expense:
Current
(2,080) (17,148) (15,711) (33,412)
Future
56 7,143 (3,087)
1,796
Reduction of future
income tax assets
(939) (3,244) (939)
(3,526)
(2,963) (13,249) (19,737) (35,142)
Net earnings
$ 9,317 $ 38,523 $ 86,486 $ 103,074
Basic earnings per share $
0.27 $ 1.11 $ 2.48
$ 2.98
Diluted earnings per share
(note 1)
$ 0.27 $ 0.97 $
2.27 $ 2.63
See accompanying notes to consolidated financial
statements.
FOUR SEASONS HOTELS INC.
CONSOLIDATED BALANCE SHEETS
As at As at
(Unaudited)
December 31, December 31,
(In thousands of dollars)
2001
2000
ASSETS
Current assets:
Cash and cash equivalents
$ 210,421 $ 218,100
Receivables
78,450 94,265
Inventory
3,074 2,806
Prepaid expenses
2,492 1,499
294,437 316,670
Long-term receivables
201,453 167,214
Investments in hotel partnerships and
corporations (note 4)
141,005 172,579
Fixed assets
50,715 46,342
Investment in management contracts
201,460 189,171
Investment in trademarks and trade names
33,784 34,829
Future income tax assets
17,745 21,771
Other assets
39,782 35,821
$ 980,381 $ 984,397
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$ 50,813 $
71,345
Long-term obligations due within
one year
1,188 1,152
52,001 72,497
Long-term obligations (note 5)
118,244 203,736
Shareholders' equity (note 6):
Capital stock
319,460 316,640
Convertible notes
178,543 178,543
Contributed surplus
4,784 4,784
Retained earnings
285,619 202,760
Equity adjustment from foreign
currency translation
21,730 5,437
810,136 708,164
$ 980,381 $ 984,397
See accompanying notes to consolidated financial statements.
FOUR SEASONS HOTELS INC.
CONSOLIDATED STATEMENTS OF
CASH PROVIDED BY OPERATIONS
Three months ended Years ended
(Unaudited)
December 31, December
31,
(In thousands of dollars)
2001 2000
2001 2000
Cash provided by (used in) operations:
MANAGEMENT OPERATIONS
Earnings before other
operating items
$ 20,071 $ 39,112 $ 95,256 $ 125,762
Items not requiring
(providing) an outlay
(inflow) of funds
432 152
1,430 (250)
Working capital provided by
Management Operations
20,503 39,264 96,686
125,512
OWNERSHIP OPERATIONS
Earnings (loss) before other operating items 252
8,643 (10,229) 13,623
Items not requiring (providing) an
outlay (inflow) of funds (53)
194 2,604 (749)
Working capital provided by
(used in) Ownership Operations 199
8,837 (7,625) 12,874
20,702 48,101 89,061
138,386
Interest received
3,789 4,322 17,898
16,752
Interest paid
(2,963) (1,287) (9,939)
(8,096)
Current income tax paid
(4,446) (1,509) (17,784) (15,711)
Change in non-cash working
capital
(17,015) (9,064) (6,183)
(33,789)
Other
90 968
2,457 5,091
Cash provided by operations $ 157
$ 41,531 $ 75,510 $ 102,633
See accompanying notes to consolidated financial
statements.
FOUR SEASONS HOTELS INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Three months ended Years
ended
(Unaudited)
December 31, December
31,
(In thousands of dollars)
2001 2000
2001 2000
Cash provided by (used in):
Operations:
$ 157 $ 41,531 $ 75,510
$ 102,633
Financing:
Long-term obligations,
including current
portion (note 5)
(102,327) (138) (102,858)
(426)
Issuance of shares
1,080 1,380
2,820 7,647
Dividends paid
- -
(3,625) (3,579)
Other
- (32)
- (71)
Cash provided by (used in)
financing
(101,247) 1,210 (103,663)
3,571
Capital investments:
Long-term receivables
193 (8,259) (23,348) (44,123)
Hotel investments
(16,702) 7,197 (22,088)
(43,262)
Disposal of hotel
investments (note 4)
(2,075) -
88,629 -
Purchase of fixed assets (2,780)
(2,744) (9,639) (11,137)
Investment in trademarks,
trade names and
management contracts
(805) 410 (8,212)
(6,938)
Other assets
245 (222) (6,319)
(6,537)
Cash provided by (used in)
capital investments
(21,924) (3,618) 19,023
(111,997)
Increase (decrease) in cash
and cash equivalents
(123,014) 39,123 (9,130)
(5,793)
Increase (decrease) in
cash and cash equivalents
due to unrealized foreign
exchange gain (loss)
(2,417) (294) 1,451
1,648
Cash and cash equivalents,
beginning of period
335,852 179,271 218,100
222,245
Cash and cash equivalents,
end of period
$ 210,421 $ 218,100 $ 210,421 $ 218,100
See accompanying notes to consolidated financial
statements.
FOUR SEASONS HOTELS INC.
CONSOLIDATED STATEMENTS OF
RETAINED EARNINGS
Years ended
(Unaudited)
December 31,
(In thousands of dollars)
2001
2000
Retained earnings, beginning of year
$ 202,760 $ 103,311
Net earnings
86,486 103,074
Dividends declared
(3,627) (3,605)
Loss on redemption of convertible notes
-
(20)
Retained earnings, end of year
$ 285,619 $ 202,760
See accompanying notes to consolidated financial
statements.
FOUR SEASONS HOTELS INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands of dollars except per share amounts)
These interim consolidated financial statements do not
include all
disclosures required by Canadian generally accepted accounting
principles for annual financial statements and should
be read in
conjunction with the Company's annual consolidated financial
statements for the year ended December 31, 2000.
1. Significant accounting policies:
The significant accounting policies used in preparing
these
interim consolidated financial statements are consistent
with those
used in preparing the Company's annual consolidated financial
statements for the year ended December 31, 2000, except
as disclosed
below:
Change in accounting policy
Effective January 1, 2001, the Canadian Institute of Chartered
Accountants changed the accounting standard relating
to the
calculation of diluted earnings per share. Under the
prior method,
diluted earnings per share was calculated on the basis
that the
proceeds to be received from the dilutive investments,
such as stock
options, were assumed to have been invested and to have
earned a rate
of return. The new provisions assume that these proceeds
are used to
purchase common shares at the average price for the period.
The new
standard did not change the calculation of the dilution
relating to
the assumed conversion of the Company's convertible notes.
The Company has adopted this new accounting
standard retroactively, resulting in the restatement of diluted earnings
per share for the three months and for the year ended December 31, 2000.
The diluted earnings per share for the three months ended December 31,
2001 and December 31, 2000 are more dilutive by approximately $0.01 and
$0.02, respectively, than they would have been under the previous standard.
The diluted earnings per share for the year ended December 31, 2001 and
December 31, 2000 are more dilutive by approximately $0.02 and $0.14, respectively,
than they would have been under the previous standard.
2. Consolidated revenues:
Consolidated revenues for Four Seasons Hotels Inc. are
comprised
of revenues from Management Operations, revenues from
Ownership
Operations, distributions from hotel investments, less
fees from
Ownership Operations to Management Operations.
3. Revenues under management:
Total revenues under management were $659,643 for the
fourth
quarter of 2001 ($773,785 for the fourth quarter of 2000),
and
$2,805,947 for the year ended December 31, 2001 ($2,820,743
for the
year ended December 31, 2000). Total revenues under management
consist of rooms, food and beverage, telephone and other revenues of all
the properties which the Company manages. Approximately 64% of the fee
revenues earned by the Company were calculated as a percentage
of the
total revenues under management of all properties.
4. Disposal of hotel investments:
In August of 2001, the Company sold its 25% ownership
interest in
the entity which leases The Regent Hong Kong for gross
proceeds of
HK$185,000 (approximately $36,400). The net proceeds
from the sale,
after deducting estimated selling costs, were $33,512
and the Company
realized a gain on sale of $23,985. The management contract
for the
hotel expired on May 31, 2001.
In July of 2001, the Company completed the sale of its
67% ownership interest in Four Seasons Hotel Prague for gross proceeds
of approximately $37,400. The net proceeds, after deducting estimated selling
costs, were $36,692 and the Company realized a gain on sale of $6,413.
In connection with the sale of the hotel, the Company, in 2001, also reversed
provisions of $4,676 previously recorded relating to this interest. The
Company continues to manage the hotel under a long-term management agreement.
In February of 2001, the Company disposed of its 30.8%
ownership interest in Four Seasons Resort Punta Mita for proceeds of $18,425,
which approximated book value. The Company continues to manage the resort
under a long-term management agreement.
5. Loss on redemption of debentures:
Unsecured debentures with a face value of $100,000, and
a maturity
date of July 2, 2002, were redeemed by the Company during
the fourth
quarter of 2001 for $102,219, which resulted in an accounting
loss of
$2,350.
6. Shareholders' equity:
As at December 31, 2001, the Company has outstanding Variable
Multiple Voting and Limited Voting Shares of 34,987,467
and
outstanding stock options of 5,530,302 (weighted average
exercise
price of $50.11). In addition, the Company has 655,404
convertible
notes outstanding, each of which may be converted into
5.284 Limited
Voting Shares of the Company. The Company, however, has
the right to
acquire for cash the notes that a holder has required
to be so
converted. Also, on or after September 23, 2004, the
Company may
redeem for cash all or a portion of the notes. |
FOUR SEASONS
HOTELS INC.
SUMMARY OF HOTEL OPERATING DATA
- CORE HOTELS(1)
Three months ended
December 31,
(Unaudited)
2001 2000
Variance
Worldwide
No. of Properties
44 44
-
No. of Rooms
12,473 12,473
-
Occupancy(2)
57.4% 71.4%
(14.0%)
ADR(3) - in
US dollars $280
$295 (5.0%)
- in equivalent
Canadian dollars $441
$448 (1.5%)
RevPAR(4) - in US dollars
$161 $210
(23.6%)
- in equivalent
Canadian dollars $253
$320 (20.9%)
Gross operating margin(5)
29.5% 35.5%
(6.0%)
United States
No. of Properties
22 22
-
No. of Rooms
6,971 6,971
-
Occupancy(2)
59.7% 72.6%
(12.9%)
ADR(3) - in
US dollars $321
$349 (8.0%)
- in equivalent
Canadian dollars $505
$530 (4.7%)
RevPAR(4) - in US dollars
$191 $253
(24.4%)
- in equivalent
Canadian dollars $302
$385 (21.7%)
Gross operating margin(5)
28.2% 36.1%
(7.9%)
Canada/Mexico
No. of Properties
4
4
-
No. of Rooms
1,145 1,145
-
Occupancy(2)
57.5% 63.8%
(6.3%)
ADR(3) - in
US dollars $206
$219 (6.0%)
- in equivalent
Canadian dollars $325
$334 (2.6%)
RevPAR(4) - in US dollars
$119 $140
(15.2%)
- in equivalent
Canadian dollars $187
$213 (12.1%)
Gross operating margin(5)
28.0% 29.4%
(1.4%)
Asia/Pacific
No. of Properties
11 11
-
No. of Rooms
3,080 3,080
-
Occupancy(2)
52.3% 71.2%
(18.9%)
ADR(3) - in
US dollars $163
$170 (4.0%)
- in equivalent
Canadian dollars $257
$259 (0.6%)
RevPAR(4) - in US dollars
$85 $121
(29.5%)
- in equivalent
Canadian dollars $135
$184 (27.0%)
Gross operating margin(5)
35.4% 38.1%
(2.7%)
Europe
No. of Properties
7
7
-
No. of Rooms
1,277 1,277
-
Occupancy(2)
56.9% 71.9%
(15.0%)
ADR(3) - in
US dollars $374
$354 5.7%
- in equivalent
Canadian dollars $590
$539 9.5%
RevPAR(4) - in US dollars
$213 $255
(16.4%)
- in equivalent
Canadian dollars $336
$388 (13.4%)
Gross operating margin(5)
30.3% 31.1%
(0.8%)
(1) The term "Core Hotels" means
hotels and resorts under management for the full year of both 2001 and
2000. Changes from the 2000/1999 Core Hotels are the additions of Four
Seasons Hotel Las Vegas, Four Seasons Resort Scottsdale at Troon North,
Four Seasons Resort Punta Mita, Four Seasons Hotel Canary Wharf, Four Seasons
Hotel George V Paris and The Regent Sydney, and the deletion of The Regent
Hong Kong.
(2) Occupancy percentage is defined
as the total number of rooms occupied divided by the total number of rooms
available.
(3) ADR is defined as average
daily room rate per room occupied.
(4) RevPAR is defined as average
room revenue per available room.
RevPAR is
a commonly used indicator of market performance for
hotels and
resorts and represents the combination of the
average daily
room rate and the average occupancy rate achieved
during the
period. RevPAR does not include food and beverage or
other ancillary
revenues generated by a hotel or resort.
(5) Gross operating margin represents
gross operating profit as a percent of gross operating revenue.
FOUR SEASONS HOTELS INC.
SUMMARY OF HOTEL OPERATING
DATA - CORE HOTELS(1)
Years ended
December 31,
(Unaudited)
2001 2000
Variance
Worldwide
No. of Properties
44 44
-
No. of Rooms
12,473 12,473
-
Occupancy(2)
65.3% 72.8%
(7.5%)
ADR(3) - in
US dollars $288
$287 0.3%
- in equivalent
Canadian dollars $445
$426 4.3%
RevPAR(4) - in US dollars
$188 $209
(10.0%)
- in equivalent
Canadian dollars $290
$310 (6.4%)
Gross operating margin(5)
32.1% 35.2%
(3.1%)
United States
No. of Properties
22 22
-
No. of Rooms
6,971 6,971
-
Occupancy(2)
67.1% 76.3%
(9.2%)
ADR(3) - in
US dollars $331
$333 (0.6%)
- in equivalent
Canadian dollars $511
$494 3.5%
RevPAR(4) - in US dollars
$222 $254
(12.5%)
- in equivalent
Canadian dollars $343
$377 (9.0%)
Gross operating margin(5)
30.8% 36.0%
(5.2%)
Canada/Mexico
No. of Properties
4
4
-
No. of Rooms
1,145 1,145
-
Occupancy(2)
64.3% 67.6%
(3.3%)
ADR(3) - in
US dollars $220
$212 3.9%
- in equivalent
Canadian dollars $339
$314 8.2%
RevPAR(4) - in US dollars
$141 $143
(1.2%)
- in equivalent
Canadian dollars $218
$212 2.8%
Gross operating margin(5)
30.5% 29.8%
0.7%
Asia/Pacific
No. of Properties
11 11
-
No. of Rooms
3,080 3,080
-
Occupancy(2)
61.3% 67.0%
(5.7%)
ADR(3) - in
US dollars $163
$168 (3.1%)
- in equivalent
Canadian dollars $251
$249 0.8%
RevPAR(4) - in US dollars
$100 $112
(11.3%)
- in equivalent
Canadian dollars $154
$167 (7.8%)
Gross operating margin(5)
35.5% 35.5%
-
Europe
No. of Properties
7
7
-
No. of Rooms
1,277 1,277
-
Occupancy(2)
65.7% 71.5%
(5.8%)
ADR(3) - in
US dollars $393
$357 10.1%
- in equivalent
Canadian dollars $606
$529 14.6%
RevPAR(4) - in US dollars
$258 $255
1.2%
- in equivalent
Canadian dollars $398
$378 5.3%
Gross Operating margin(5)
35.7% 32.7%
3.0%
(1) The term "Core Hotels" means
hotels and resorts under management for the full year of both 2001 and
2000. Changes from the 2000/1999 Core Hotels are the additions of Four
Seasons Hotel Las Vegas, Four Seasons Resort Scottsdale at Troon North,
Four Seasons Resort Punta Mita, Four Seasons Hotel Canary Wharf, Four Seasons
Hotel George V Paris and The Regent Sydney, and the deletion of The Regent
Hong Kong.
(2) Occupancy percentage is defined
as the total number of rooms occupied divided by the total number of rooms
available.
(3) ADR is defined as average
daily room rate per room occupied.
(4) RevPAR is defined as average
room revenue per available room.
RevPAR is
a commonly used indicator of market performance for
hotels and
resorts and represents the combination of the
average daily
room rate and the average occupancy rate achieved
during the
period. RevPAR does not include food and beverage or
other ancillary
revenues generated by a hotel or resort.
(5) Gross operating margin represents
gross operating profit as a percent of gross operating revenue.
FOUR SEASONS HOTELS INC.
SUMMARY OF HOTEL OPERATING
DATA - ALL MANAGED HOTELS
As at
December 31,
(Unaudited)
2001 2000
Variance
Worldwide
No. of Properties
53 48
5
No. of Rooms
14,598 14,081
517
United States
No. of Properties
23 22
1
No. of Rooms
7,248 6,971
277
Canada/Mexico/Caribbean/South
America
No. of Properties
8
5
3
No. of Rooms
1,762 1,341
421
Asia/Pacific
No. of Properties
12 13
(1)
No. of Rooms
3,619 4,221
(602)
Europe/Middle East
No. of Properties
10
8 2
No. of Rooms
1,969 1,548
421
FOUR SEASONS HOTELS INC.
SCHEDULED OPENING OF PROPERTIES
UNDER CONSTRUCTION OR
IN ADVANCED STAGES OF DEVELOPMENT
Hotel/Resort/Residence Club and Location(1)
Number of Rooms
Approximate
Scheduled Opening
Four Seasons Hotel Alexandria, Egypt(a)
120 2004
Four Seasons Hotel Amman, Jordan
195 2002
Four Seasons Hotel Beirut, Lebanon
287 2005
Four Seasons Hotel Budapest, Hungary
179 2003
Four Seasons Hotel Nile Plaza, Cairo, Egypt(a)
374 2004
Four Seasons Resort Costa Rica, Costa Rica(a)
179 2004
Four Seasons Hotel Doha, Qatar(a)
235 2004
Four Seasons Resort Exuma, The Bahamas(a)
180 2003
Four Seasons Hotel Florence, Italy
116 2004
Four Seasons Hotel Hampshire, England
134 2003
Four Seasons Hotel Hong Kong, Hong Kong(a)
400 2004
Four Seasons Hotel Istanbul at the Bosphorus, Turkey
180 2004
Four Seasons Resort Jackson Hole, WY, USA(a)
124 2003
Four Seasons Hotel Miami, FL, USA(a)
222 2003
Four Seasons Resort Provence at Terre Blanche,
France(a) 115 2003
Four Seasons Resort Puerto Rico, Puerto Rico(a)
250 2005
Four Seasons Residence Club Punta Mita, Mexico(a)
40 2003
Four Seasons Hotel Riyadh, Saudi Arabia(a)
234 2002
Four Seasons Hotel Sao Paulo, Brazil
125 2003
Four Seasons Resort Sharm el Sheikh, Egypt(a)
140 2002
Four Seasons Private Estates and Club Sedona at
Seven Canyons, AZ, USA(a)
76 2003
Four Seasons Hotel Tokyo at Marunouchi
58 2002
Four Seasons Resort Whistler, B.C., Canada(a)
271 2004
(a) Includes residential component
1. Information concerning hotels, resorts and Residence
Clubs under construction or under development is based upon agreements
and letters of intent and may be subject to change. The dates of scheduled
opening have been estimated by management based upon information provided
by the various developers. There can be no assurance that the date of scheduled
opening will be achieved or that these projects will be completed.
The process and risks associated with the management of
new
properties are dealt with in greater detail in the Company's
Annual
Report. |
All dollar amounts referred to in this press release are Canadian dollars
unless otherwise noted. The financial statements are prepared in accordance
with Canadian generally accepted accounting principles.
This press release contains "forward-looking statements" within the
meaning of federal securities laws, including RevPAR, profit margin and
earning trends; statements concerning the number of lodging properties
expected to be added in future years; expected investment spending; and
similar statements concerning anticipated future events and expectations
that are not historical facts.
Four Seasons Hotels and Resorts is the world's leading operator of luxury
hotels, currently managing 54 properties in 25 countries. |
