-------------------------------------------------------------------------
Three months ended
Six months ended
June 30
June 30
-------------------------------------------------------------------------
2004 2003 Variance
2004 2003 Variance
-------------------------------------------------------------------------
OWNED HOTELS
-------------------------------------------------------------------------
Worldwide
15 properties/6,882 rooms
-------------------------------------------------------------------------
RevPAR
132.41 107.87 22.7%
135.86 115.58 17.5%
-------------------------------------------------------------------------
ADR
204.36 199.29 2.5%
209.77 201.26 4.2%
-------------------------------------------------------------------------
Occupancy
64.8% 54.1% 10.7
64.8% 57.4%
7.4
points
points
-------------------------------------------------------------------------
Canada
7 properties/3,336 rooms
-------------------------------------------------------------------------
RevPAR
106.23 85.97 23.6%
100.08 86.12 16.2%
-------------------------------------------------------------------------
ADR
156.93 154.61 1.5%
155.72 147.65 5.5%
-------------------------------------------------------------------------
Occupancy
67.7% 55.6% 12.1
64.3% 58.3%
6.0
points
points
-------------------------------------------------------------------------
U.S. and International
8 properties/3,546 rooms
-------------------------------------------------------------------------
RevPAR
156.64 127.90 22.5%
168.82 142.53 18.4%
-------------------------------------------------------------------------
ADR
252.23 242.37 4.1%
258.82 251.79 2.8%
-------------------------------------------------------------------------
Occupancy
62.1% 52.8%
9.3 65.2% 56.6%
8.6
points
points
-------------------------------------------------------------------------
FAIRMONT MANAGED HOTELS
-------------------------------------------------------------------------
Worldwide
40 hotels/19,885 rooms
-------------------------------------------------------------------------
RevPAR
123.59 104.76 18.0%
115.29 100.01 15.3%
-------------------------------------------------------------------------
ADR
181.49 172.08 5.5%
178.33 169.28 5.3%
-------------------------------------------------------------------------
Occupancy
68.1% 60.9%
7.2 64.6% 59.1%
5.5
points
points
-------------------------------------------------------------------------
Canada
20 properties/10,099 rooms
-------------------------------------------------------------------------
RevPAR
101.20 82.62 22.5%
88.29 74.62 18.3%
-------------------------------------------------------------------------
ADR
146.22 137.95 6.0%
139.05 129.11 7.7%
-------------------------------------------------------------------------
Occupancy
69.2% 59.9%
9.3 63.5% 57.8%
5.7
points
points
-------------------------------------------------------------------------
U.S. and International
20 properties/9,786 rooms
-------------------------------------------------------------------------
RevPAR
146.19 127.03 15.1%
142.34 125.38 13.5%
-------------------------------------------------------------------------
ADR
218.29 205.29 6.3%
216.31 207.72 4.1%
-------------------------------------------------------------------------
Occupancy
67.0% 61.9%
5.1 65.8% 60.4%
5.4
points
points
-------------------------------------------------------------------------
DELTA MANAGED HOTELS
-------------------------------------------------------------------------
Worldwide
28 properties/8,296 rooms
-------------------------------------------------------------------------
RevPAR
64.86 53.88 20.4%
59.12 50.40 17.3%
-------------------------------------------------------------------------
ADR
96.11 93.22 3.1%
94.35 88.20 7.0%
-------------------------------------------------------------------------
Occupancy
67.5% 57.8%
9.7 62.7% 57.1%
5.6
points
points
-------------------------------------------------------------------------
Comparable hotels and resorts are considered to be properties
that were fully open under FHR management for at least the entire current
and prior period. Comparable hotels and resorts statistics exclude properties
under major renovation that would have a significant adverse effect on
the properties' primary operations. The following properties were excluded:
Owned:
The Fairmont Southampton; The Fairmont Copley Plaza Boston
Fairmont
Managed:
The Fairmont Southampton; The Fairmont Olympic Hotel,
Seattle; The Fairmont Turnberry Isle Resort & Club, Miami
Delta Managed: None
FHR's 2003 quarterly operating statistics for its 2004
comparable hotel portfolios as at June 30, 2004 are available on the Company's
website (www.fairmont.com/investor).
1. Operating revenues excludes
other revenues from managed and
franchised
properties (consists of direct and indirect costs relating
primarily
to marketing and reservation services that are reimbursed
by hotel owners
on a cost recovery basis). Management considers that
the exclusion
of such revenues provides a meaningful measure of
operating
performance, however, it is not a defined measure of
operating
performance under Canadian GAAP. It is likely that FHR's
calculation
of operating revenues is different than the calculation
used by other
entities.
2. EBITDA is defined as earnings
before interest, taxes and
amortization.
Income from investments and other is included in
EBITDA. Management
considers EBITDA to be a meaningful indicator of
hotel operations
and uses it as the primary measurement of operating
segment profit
and loss. However, it is not a defined measure of
operating
performance under Canadian generally accepted accounting
principles
("Canadian GAAP"). It is likely that FHR's calculation of
EBITDA is
different than the calculations used by other entities.
EBITDA is
represented on the consolidated statements of income as
"operating
income before undernoted items".
Reconciliation of EBITDA to net income:
Three months ended Six months ended
June 30
June 30
In millions of dollars
2004 2003
2004 2003
-------------------------------------------------------------------------
EBITDA
$ 62.5 $ 43.4
$ 96.6 $ 85.6
Deduct:
Amortization
18.0 17.2
37.5 33.5
Interest expense, net
9.0 8.3
19.0 14.2
Income tax expense
(recovery)
6.5 (22.2)
11.7 (14.7)
-------------------------------------------------------------------------
Net income
$ 29.0 $ 40.1
$ 28.4 $ 52.6
-------------------------------------------------------------------------
Summary of Hotel Portfolios
---------------------------------------------------
At June 30
---------------------------------------------------
2004 2003
---------------------------------------------------
OWNED HOTELS
---------------------------------------------------
Worldwide
---------------------------------------------------
No. of Properties
17 17
---------------------------------------------------
No. of Rooms
7,861 7,787
---------------------------------------------------
Canada
---------------------------------------------------
No. of Properties
7
7
---------------------------------------------------
No. of Rooms
3,336 3,268
---------------------------------------------------
U.S. and International
---------------------------------------------------
No. of Properties
10 10
---------------------------------------------------
No. of Rooms
4,525 4,519
---------------------------------------------------
---------------------------------------------------
FAIRMONT MANAGED HOTELS
---------------------------------------------------
Worldwide
---------------------------------------------------
No. of Properties
44 42
---------------------------------------------------
No. of Rooms
21,643 20,732
---------------------------------------------------
Canada
---------------------------------------------------
No. of Properties
21 21
---------------------------------------------------
No. of Rooms
10,422 10,361
---------------------------------------------------
U.S. and International
---------------------------------------------------
No. of Properties
23 21
---------------------------------------------------
No. of Rooms
11,221 10,371
---------------------------------------------------
DELTA MANAGED HOTELS
---------------------------------------------------
Worldwide
---------------------------------------------------
No of Properties
38 39
---------------------------------------------------
No. of Rooms
11,163 11,677
---------------------------------------------------
Fairmont Hotels & Resorts Inc.
Consolidated Balance Sheets
(Stated in millions of U.S. dollars)
ASSETS
June 30 December 31
2004 2003
------------ -----------
(Unaudited)
Current assets
Cash and cash equivalents
$ 47.8 $ 31.7
Accounts receivable
83.6 64.1
Inventory
14.5 14.2
Prepaid expenses and other
20.7 24.6
Assets held for sale (note
3)
271.1
-
------------ -----------
437.7 134.6
Investments in partnerships
and corporations
(note 5)
69.0 53.1
Investment in Legacy Hotels Real
Estate
Investment Trust
96.9 105.9
Non-hotel real estate
91.4 95.1
Property and equipment
1,381.9 1,656.2
Goodwill
140.5 132.0
Intangible assets
214.3 216.7
Other assets and deferred charges
(note 5) 102.0
109.4
------------ -----------
$ 2,533.7 $ 2,503.0
------------ -----------
------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
and accrued liabilities $
111.8 $ 124.0
Dividends payable
3.2 3.2
Current portion
of long-term debt (note 3)
201.5 117.8
Liabilities related
to assets held for sale
(note 3)
10.6
-
------------ -----------
327.1 245.0
Long-term debt (note 4)
471.7 539.8
Other liabilities
88.7 91.4
Future income taxes
97.7 80.9
------------ -----------
985.2 957.1
------------ -----------
Shareholders' Equity (note 6)
1,548.5 1,545.9
------------ -----------
$ 2,533.7 $ 2,503.0
------------ -----------
------------ -----------
Fairmont Hotels & Resorts Inc.
Consolidated Statements of Income
(Stated in millions
of U.S. dollars, except per share amounts)
(Unaudited)
Three months Six months
ended June 30 ended June 30
2004 2003 2004
2003
--------- -------- -------- ---------
Revenues
Hotel ownership operations
$ 180.6 $ 153.5 $ 336.0 $ 293.9
Management operations
11.6 8.6
21.1 17.2
Real estate activities
18.1 12.3 21.4
31.2
--------- -------- -------- ---------
Operating revenues
210.3 174.4 378.5
342.3
Other revenues from managed
and franchised properties
8.9 7.5
17.8 14.5
--------- -------- -------- ---------
219.2 181.9 396.3
356.8
Expenses
Hotel ownership operations
135.3 118.2 252.0
223.7
Management operations
6.3 7.0
12.9 11.0
Real estate activities
9.7 5.7
12.6 15.3
--------- -------- -------- ---------
Operating expenses
151.3 130.9 277.5
250.0
Other expenses from managed
and franchised properties
9.1 8.0
18.2 14.9
--------- -------- -------- ---------
160.4 138.9 295.7
264.9
Income (loss) from equity
investments and other
3.7 0.4
(4.0) (6.3)
--------- -------- -------- ---------
Operating income before
undernoted items
62.5 43.4 96.6
85.6
Amortization
18.0 17.2 37.5
33.5
Interest expense, net
9.0 8.3
19.0 14.2
--------- -------- -------- ---------
Income before income tax expense
35.5 17.9 40.1
37.9
--------- -------- -------- ---------
Income tax expense (recovery)
Current
2.6 1.2
5.5 6.5
Future
3.9 (23.4) 6.2
(21.2)
--------- -------- -------- ---------
6.5 (22.2) 11.7
(14.7)
--------- -------- -------- ---------
Net income
$ 29.0 $ 40.1 $ 28.4
$ 52.6
--------- -------- -------- ---------
--------- -------- -------- ---------
Weighted average number of
common shares outstanding
(in millions) (note 6)
Basic
79.1 79.4 79.1
79.3
Diluted
79.9 80.1 79.9
80.0
Basic earnings per common share
$ 0.37 $ 0.51 $ 0.36
$ 0.66
Diluted earnings per common share
$ 0.36 $ 0.50 $ 0.36
$ 0.66
Fairmont Hotels & Resorts Inc.
Consolidated Statements of Cash Flows
(Stated in millions of U.S. dollars)
(Unaudited)
Three months Six months
ended June 30 ended June 30
2004 2003 2004
2003
--------- -------- -------- ---------
Cash provided by (used in)
Operating activities
Net Income
$ 29.0 $ 40.1 $ 28.4
$ 52.6
Items not affecting cash
Amortization of property
and equipment
17.3 16.6 36.1
32.2
Amortization of intangible
assets
0.7 0.6
1.4 1.3
(Income) loss from equity
investments and
other
(3.7) (0.4) 4.0
6.3
Future income taxes
3.9 (23.4) 6.2
(21.2)
Unrealized foreign exchange
loss 10.2
- 10.2
-
Distributions from investments
- 4.4
- 4.4
Other
(3.5) (10.4) (1.0)
(7.7)
Changes in non-hotel real estate
0.5 2.7
0.3 10.1
Changes in non-cash working
capital items (note 7)
(45.3) (22.9) (36.3)
(34.6)
--------- -------- -------- ---------
9.1 7.3
49.3 43.4
--------- -------- -------- ---------
Investing activities
Additions to property
and equipment
(24.2) (19.8) (44.0)
(35.6)
Acquisitions, net of cash acquired
- -
- 6.0
Investments in partnerships
and corporations
- (0.6)
- (0.7)
Collection of loans receivable
0.1 -
8.9 -
Issuance of loans receivable
(2.0) -
(7.0) -
--------- -------- -------- ---------
(26.1) (20.4) (42.1)
(30.3)
--------- -------- -------- ---------
Financing activities
Issuance of long-term debt
2.8 23.2 82.7
146.7
Repayment of long-term debt
(2.0) (1.0) (65.6)
(143.5)
Issuance of common shares
0.3 0.1
0.6 0.1
Repurchase of common shares
(5.4) (11.8) (5.4)
(16.8)
Dividends paid
- -
(3.2) (2.4)
--------- -------- -------- ---------
(4.3) 10.5
9.1 (15.9)
--------- -------- -------- ---------
Effect of exchange rate changes
on cash
(0.1) 2.0 (0.2)
3.5
--------- -------- -------- ---------
Increase (decrease) in cash
(21.4) (0.6) 16.1
0.7
Cash and cash equivalents -
beginning of period
69.2 50.3 31.7
49.0
--------- -------- -------- ---------
Cash and cash equivalents -
end of period
$ 47.8 $ 49.7 $ 47.8
$ 49.7
--------- -------- -------- ---------
--------- -------- -------- ---------
Fairmont Hotels & Resorts Inc.
Consolidated Statements of Retained Earnings
(Stated in millions of U.S. dollars)
(Unaudited)
Three months Six months
ended June 30 ended June 30
2004 2003 2004
2003
--------- -------- -------- ---------
Balance - Beginning of period
$ 77.5 $ 49.8 $ 78.1
$ 38.5
Net income
29.0 40.1 28.4
52.6
--------- -------- -------- ---------
106.5 89.9 106.5
91.1
Repurchase of common shares
(note 6)
(2.2) (4.3) (2.2)
(5.5)
Dividends
(3.2) (2.4) (3.2)
(2.4)
--------- -------- -------- ---------
Balance - End of period
$ 101.1 $ 83.2 $ 101.1 $
83.2
--------- -------- -------- ---------
--------- -------- -------- ---------
Fairmont Hotels & Resorts Inc.
Notes to Consolidated Financial Statements
(Stated in millions of U.S. dollars)
(Unaudited)
1. Fairmont Hotels & Resorts
Inc. ("FHR") has operated and owned hotels
and resorts
for over 116 years and currently manages properties
principally
under the Fairmont and Delta brands. At June 30, 2004,
FHR managed
or franchised 82 luxury and first-class hotels. FHR owns
83.5% of Fairmont
Hotels Inc. ("Fairmont"), which at June 30, 2004,
managed 44
properties in major city centers and key resort
destinations
throughout Canada, the United States, Mexico, Bermuda,
Barbados and
the United Arab Emirates. Delta Hotels Limited
("Delta"),
a wholly owned subsidiary of FHR, managed or franchised 38
Canadian hotels
and resorts at June 30, 2004.
In addition
to hotel and resort management, as at June 30, 2004, FHR
had hotel
ownership interests ranging from approximately 15% to 100%
in 24 properties,
located in Canada, the United States, Mexico,
Bermuda, Barbados
and the United Arab Emirates. FHR also has an
approximate
35% equity interest in Legacy Hotels Real Estate
Investment
Trust ("Legacy"), which owns 24 hotels and resorts across
Canada and
the United States. FHR also owns real estate properties
that are suitable
for either commercial or residential development,
and has a
vacation ownership product.
Results for
the three and six months ended June 30, 2004 are not
necessarily
indicative of the results that may be expected for the
full year
due to seasonal and short-term variations. Revenues are
typically
higher in the second and third quarters versus the first
and fourth
quarters of the year.
2. These interim consolidated
financial statements do not include all
disclosures
as required by Canadian generally accepted accounting
principles
("GAAP") for annual consolidated financial statements and
should be
read in conjunction with the audited consolidated financial
statements
for the year ended December 31, 2003 presented in the
annual report.
The accounting policies used in the preparation of
these interim
consolidated financial statements are consistent with
the accounting
policies used in the December 31, 2003 audited
consolidated
financial statements, except as discussed below.
Hedging Relationships
Effective
January 1, 2004, FHR implemented new guidance on accounting
for hedging
relationships. The new guidelines specify the
circumstances
in which hedge accounting is appropriate, including the
identification,
documentation, designation and effectiveness of
hedges and
also the discontinuance of hedge accounting. The adoption
of this accounting
guidance did not have an impact on the Company's
financial
statements.
Generally Accepted
Accounting Principles and General Standards of
Financial
Statement Presentation
The Canadian
Institute of Chartered Accountants has issued new
accounting
standards surrounding GAAP and financial statement
presentation.
These standards lay out a framework for the application
of GAAP and
the fair presentation of financial standards in
accordance
with GAAP and are effective for years beginning January 1,
2004. No changes
to accounting principles or financial statement
presentation
were required as FHR was already in full compliance with
these new
standards.
Assets Held
for Sale
Long-lived
assets are classified as held for sale when specific GAAP
criteria are
met. Assets held for sale are measured at the lower of
their carrying
amounts and fair values less costs to dispose and are
no longer
amortized. Assets classified as held for sale and
liabilities
related to these assets are reported separately on the
balance sheet.
A component of FHR that is held for sale is reported
as a discontinued
operation if the operations and cash flows of the
component
will be eliminated from ongoing operations as a result of
the sale and
FHR will not have a significant continuing involvement
in the operations
of the component after the sale.
3. In June 2004, FHR finalized an agreement
with Host Marriott
Corporation
to sell The Fairmont Kea Lani Maui for cash proceeds of
$355.0. As
such, the assets and the liabilities of The Fairmont Kea
Lani Maui
have been reclassified to "Assets held for sale" and
"Liabilities
related to assets held for sale", respectively. As at
June 30, 2004,
The Fairmont Kea Lani Maui had property and equipment
with a carrying
value of $242.4 and a working capital deficit of
$2.5. The
transaction closed on July 15, 2004 and the mortgage of
$120.0 on
this property was repaid. As of June 30, 2004, the mortgage
was classified
on the balance sheet as current portion of long-term
debt. The
after-tax gain on the sale of approximately $68.0 will be
recognized
in the third quarter. The resort will continue to be
managed by
Fairmont under a long-term management contract. The assets
and liabilities
of this property are currently included in the hotel
ownership
segment (note 8).
In June 2004,
FHR finalized an agreement to sell The Fairmont Glitter
Bay for cash
proceeds of approximately $31.0. As such, the assets and
the liabilities
of The Fairmont Glitter Bay have been reclassified to
"Assets held
for sale" and "Liabilities related to assets held for
sale" respectively.
As at June 30, 2004, The Fairmont Glitter Bay had
property and
equipment with a carrying value of $20.6. The
transaction
closed on July 9, 2004 and the mortgage of $5.2 on this
property was
repaid. The after-tax gain on the sale of approximately
$8.0 will
be recognized in the third quarter. As of June 30, 2004,
the mortgage
was classified on the balance sheet as current portion
of long-term
debt. The resort will continue to be managed by Fairmont
under a long-term
management contract. The assets and liabilities of
this property
are currently included in the hotel ownership segment
(note 8).
4. In March 2004, FHR entered
into a new $400 unsecured credit facility
due March
2007. The interest rate is floating and is calculated based
on the borrower's
choice of prime rate, bankers acceptance or LIBOR
plus a spread.
5. In April 2004, FHR finalized
an agreement to invest $15.6 for a 14.5%
interest in
The Fairmont Dubai. This investment is accounted for
using the
equity method. In the quarter, $15.6 was reclassified from
"Other assets
and deferred charges" to "Investments in partnerships
and corporations".
6. Shareholders' equity
June 30, December 31,
2004 2003
------------- -------------
Common shares
$ 1,199.6 $ 1,202.2
Other equity
19.2 19.2
Contributed
surplus
142.3 142.3
Foreign currency
translation adjustments
86.3 104.1
Retained earnings
101.1 78.1
------------- -------------
$ 1,548.5 $ 1,545.9
------------- -------------
The diluted
weighted-average number of common shares outstanding is
calculated
as follows:
Three months ended Six months ended
June 30
June 30
2004 2003
2004 2003
----------- ----------- ----------- -----------
(in millions)
(in millions)
Weighted-average
number
of common
shares
outstanding
- basic 79.1
79.4 79.1
79.3
Stock options
0.8 0.7
0.8 0.7
----------- ----------- ----------- -----------
Weighted-average
number
of common
shares
outstanding
- diluted 79.9
80.1 79.9
80.0
----------- ----------- ----------- -----------
Under a normal
course issuer bid, FHR may repurchase for cancellation
up to approximately
3.9 million, or approximately 5% of its
outstanding
common shares. During the six months ended June 30, 2004,
FHR repurchased
208,400 shares (208,400 during the second quarter)
for total
consideration of $5.4 ($5.4 for the second quarter), of
which, $3.2
was charged to common shares and $2.2 was charged to
retained earnings.
During the six months ended June 30, 2004, FHR
issued 38,568
shares (21,378 shares for the second quarter) pursuant
to the Key
Employee Stock Option Plan. $0.6 was credited to common
shares ($0.3
for the second quarter) for proceeds from options
exercised.
At June 30, 2004, 78,944,445 common shares were
outstanding
(2003 - 79,046,316).
During the
six months ended June 30, 2004, 10,000 stock options were
granted (nil
in the second quarter). Assuming FHR elected to
recognize
the cost of its stock-based compensation based on the
estimated
fair value of stock options granted after January 1, 2002
but before
January 1, 2003, net income and basic and diluted earnings
per share
would have been:
Three months ended Six months ended
June 30
June 30
2004 2003
2004 2003
----------- ----------- ----------- -----------
Reported net
income $ 29.0 $
40.1 $ 28.4 $
52.6
Net income
assuming
fair
value
method used $ 28.9 $
39.6 $ 28.2 $
51.9
Basic earnings
per
share
$ 0.37 $ 0.50
$ 0.36 $ 0.65
Diluted earnings
per
share
$ 0.36 $ 0.49
$ 0.35 $ 0.65
----------- ----------- ----------- -----------
7. Changes in non-cash working
capital:
Three months ended Six months ended
June 30
June 30
2004 2003
2004 2003
----------- ----------- ----------- -----------
Decrease (increase)
in current
assets
Accounts receivable
$ (25.9) $ (0.2) $
(25.2) $ (9.9)
Inventory
(0.9) 0.3
(1.3) (0.5)
Prepaid expenses
and
other
(8.9) (9.1)
(7.9) (10.0)
Increase (decrease)
in current
liabilities
Accounts payable
and
accrued
liabilities (9.6)
(13.9) (1.9)
(14.2)
----------- ------------ ----------- ----------
$ (45.3) $ (22.9) $
(36.3) $ (34.6)
----------- ----------- ----------- -----------
8. Segmented Information
FHR has five
reportable operating segments in two core business
activities,
ownership and management operations. The segments are
hotel ownership,
investment in Legacy, real estate activities,
Fairmont and
Delta. Hotel ownership consists of real estate interests
ranging from
approximately 15% to 100% in 24 properties. The
investment
in Legacy consists of an approximate 35% equity interest
in Legacy,
which owns 24 hotels and resorts across Canada and the
United States.
Real estate activities consists primarily of two large
undeveloped
land blocks in Toronto and Vancouver and a vacation
ownership
product. Fairmont is a North American luxury hotel and
resort management
company and Delta is a Canadian first-class hotel
and resort
management company.
The performance
of all segments is evaluated primarily on earnings
before interest,
taxes and amortization ("EBITDA"), which is
defined as
income before interest, income taxes and amortization.
EBITDA includes
income from investments and other. Amortization,
interest and
income taxes are not allocated to the individual
segments.
All transactions among operating segments are conducted at
fair market
value.
The following
tables present revenues, EBITDA, total assets and
capital expenditures
for FHR's reportable segments:
Three months ended June 30, 2004
------------------------------------------------------------
Ownership Management
--------------------------- -------------
Inter-
Real
segment
Hotel
estate Fair-
elimina-
Ownership Legacy activities mont Delta tion(a)
Total
--------- ------- --------- ------ ------- ------- ---------
Operating
revenues $
180.6 $ - $ 18.1
$ 13.7 $ 3.6 $ (5.7) $ 210.3
Other
revenues
from
managed and
franchised
properties
- -
- 6.2 2.7
- 8.9
--------
219.2
Income (loss)
from equity
investments
and other
0.9 2.8
- -
- -
3.7
EBITDA(b)
40.5 2.8 8.4
8.4 2.6 (0.2)
62.5
Total
assets(c) 1,925.2
96.9 95.9 363.6 73.2
(21.1) 2,533.7
Capital
expenditures 23.9
- -
0.3 -
24.2
Three months ended June 30, 2003
------------------------------------------------------------
Ownership Management
--------------------------- -------------
Inter-
Real
segment
Hotel
estate Fair-
elimina-
Ownership Legacy activities mont Delta tion(a)
Total
--------- ------- --------- ------ ------- ------- ---------
Operating
revenues $
153.5 $ - $ 12.3
$ 10.5 $ 2.6 $ (4.5) $ 174.4
Other
revenues
from
managed and
franchised
properties
- -
- 5.8 1.7
- 7.5
--------
181.9
Income (loss)
from equity
investments
and other
0.9 (0.5) -
- -
- 0.4
EBITDA(b)
31.7 (0.5) 6.6
4.2 1.9 (0.5)
43.4
Total
assets(c) 2,087.3
102.1 105.6 348.0 77.0
(265.4) 2,454.6
Capital
expenditures 19.4
- -
0.4 -
- 19.8
Six months ended June 30, 2004
------------------------------------------------------------
Ownership Management
--------------------------- -------------
Inter-
Real
segment
Hotel
estate Fair-
elimina-
Ownership Legacy activities mont Delta tion(a)
Total
--------- ------- --------- ------ ------- ------- ---------
Operating
revenues $
336.0 $ - $ 21.4
$ 26.2 $ 6.1 $ (11.2) $ 378.5
Other
revenues
from
managed and
franchised
properties
- -
- 12.7 5.1
- 17.8
--------
396.3
Income (loss)
from equity
investments
and other
0.5 (4.5) -
- -
- (4.0)
EBITDA(b)
73.3 (4.5) 8.8
15.3 4.1 (0.4)
96.6
Total
assets(c) 1,925.2
96.9 95.9 363.6
73.2 (21.1) 2,533.7
Capital
expenditures 43.5
- -
0.5 -
44.0
Six months ended June 30, 2003
------------------------------------------------------------
Ownership Management
--------------------------- -------------
Inter-
Real
segment
Hotel
estate Fair-
elimina-
Ownership Legacy activities mont Delta tion(a)
Total
--------- ------- --------- ------ ------- ------- ---------
Operating
revenues $
293.9 $ - $ 31.2
$ 20.9 $ 5.7 $ (9.4) $ 342.3
Other
revenues
from
managed and
franchised
properties
- -
- 10.6 3.9
- 14.5
--------
356.8
Income (loss)
from equity
investments
and other
0.5 (6.8) -
- -
- (6.3)
EBITDA(b)
61.3 (6.8) 15.9
11.2 4.4 (0.4)
85.6
Total
assets(c) 2,087.3
102.1 105.6 348.0 77.0
(265.4) 2,454.6
Capital
expenditures 35.0
- - 0.6
- - 35.6
(a) Revenues represent management fees
that are charged by Fairmont of
$5.6 (2003
- $4.4) and $11.1 (2003-$9.3) for the three and six months
ended June
30, 2004 respectively, and Delta of $0.1 (2003 - $0.1) and
$0.1 (2003-$0.1)
for the three and six months ended June 30, 2004
respectively,
to the hotel ownership operations, which are eliminated
on consolidation.
EBITDA represents expenses not reimbursed relating
to marketing
and reservation services performed by FHR under the
terms of its
hotel management and franchise agreements. Total assets
represent
the elimination of inter-segment loans net of corporate
assets.
(b) The following costs are not allocated
to the individual segments in
evaluating
net income:
Three months ended Six months ended
June 30
June 30
2004 2003
2004 2003
----------- ----------- ----------- -----------
Amortization
$ 18.0 $ 17.2
$ 37.5 $ 33.5
Interest expense,
net 9.0
8.3 19.0
14.2
Income tax
expense
(recovery)
6.5 (22.2)
11.7 (14.7)
9. As required under the terms
and conditions of the 3.75% convertible
senior notes
due 2023, the debt and the common shares issuable upon
conversion
of the shares were registered on Form F-10 with the United
States Securities
and Exchange Commission on April 6, 2004.
10. At June 30, 2004, FHR has a payable
to Legacy of $7.0 in connection
with various
management contracts, and reciprocal loan agreements
with Legacy
for $86.6.
A subsidiary
of FHR has a 25% participation amounting to $10.7 in the
first mortgage
on The Fairmont Olympic Hotel, Seattle.
11. FHR has recorded pension and other
post employment benefit expenses
as follows:
Three months
Six months
ended June 30
ended June 30
2004 2003
2004 2003
-------- -------- --------
--------
(in millions)
(in millions)
Pension
$ 0.5 $ 0.1
$ 1.0 $ 0.1
Other post-employment
benefits
0.1 -
0.2 -
-------- -------- --------
--------
$ 0.6 $ 0.1
$ 1.2 $ 0.1
-------- -------- --------
--------
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