Event Brief of Q3 2002 Four Seasons Hotels Earnings Conference Call - Final - Part 1.

Publication: The America's Intelligence Wire

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COPYRIGHT 2002 Financial Times Ltd.

(From Fair Disclosure Wire)

CORPORATE PARTICIPANTS . Douglas Ludwig, EVP & CFO . Barbara Henderson, VP, Taxation & IR OVERVIEW As a result of an asset impairment charge, FS has realized a net loss of Can$12.3m for 3Q02 vs. net earnings of Can$32m or Can$0.80 diluted EPS in 3Q01. Experienced unexpected decline in travel demand levels in the second half of September. Efforts are focused on maintaining and enhancing competitive position in all of the markets in which FS hotels and resorts are located, while keeping a close eye on costs and operating margins. Q&A focus: Market condition, outlook. FINANCIAL DATA A. Key Data From Call 1. Net loss for 3Q = Can$12.3m. 2. Loss per diluted share = Can$0.35. 3. Cash from operations = Can$18.3m. PRESENTATION SUMMARY S1. 3Q EARNINGS RESULTS (D.L.) 1. 3Q02 loss was Can$12.3m or Can$0.35 diluted loss per share vs. net earnings of Can$32m or Can$0.80 diluted EPS for 3Q01. 2. 3Q02 financial results include an asset impairment charge, net of applicable income taxes, of Can$17.5m or Can$0.50 diluted loss per share. 3. This relates to the co.'s investments in the FS Hotels in Caracas and Sydney. 4. Included in net income for 3Q01 was approx. Can$29m relating to the gains realized by FS, net of applicable income taxes on disposition of FS's interests in the FS Hotel Prague and The Regent Hong Kong. 5. For the nine months ended 9/30/2002, net earnings were Can$13.6m or Can$0.37 diluted EPS vs. net earnings of Can$77.2m or Can$1.92 diluted EPS for the comparable period in 2001. 6. Key contributors to the decline in net income were the impairment charge, reduced incentive in residential fees, additional hotel ownership losses from The Pierre in New York, and lower interest income. 7. The continued volatility of the equity markets and global economy combined with geopolitical concerns continue to cause unique disruption in travel on a global basis. 8. In addition to these factors, certain other specific events have caused major disruption in the normal operations of certain FS Hotels. 9. FS Hotels in Jakarta and Prague are closed due to severe flooding in those places. 10. The two FS Resorts in Bali are experiencing cancellations due to the recent terrorist attacks in Bali. 11. In addition, the FS Hotel in Caracas is closed until the ownership of the hotel can be restructured to provide sufficient working capital to allow the property to operate on the basis specified in the co.'s hotel mgt. agreement. 12. RevPAR, on US dollar basis for worldwide Core Hotels increased 2.1% during 3Q02 vs. 3Q01. 13. Overall occupancy levels of the hotels and resorts under FS mgt., although consistent with industry results, remain below normal levels in the current economic environment. 14. Achieved average rates were essentially flat for 3Q02 on a US dollar basis. 15. RevPAR on a local currency basis for worldwide Core Hotels increased 0.4% during 3Q02 vs. 3Q01. S2. OPERATING RESULTS (D.L.) 1. While the overall RevPAR, on a US dollar basis, results were within expected range, on a local currency basis, RevPAR was essentially flat, which was below expectations for 3Q02. 2. Similarly, while gross operating profit margins overall were in line with those realized in 3Q01, they were also below expectations the co. had set for 3Q02. 3. Experienced unexpected decline in travel demand levels in 2H of September. 4. Continuing weak business travel demand was compounded by the unexpected weakening of leisure demand in certain of the co.'s resorts and city center markets late in 3Q02. 5. During 3Q02, the US hotels underperformed the co.'s expectation both in RevPAR and gross operating profits. 6. In particular, New York City significantly underperformed expectations with very little improvement realized in the second half of September. 7. New York is important to FS both because of the significance of the fee income from the two hotels in that city and the fact that The Pierre is a 100% consolidated leasehold interest. 8. In 3Q02, the gross operating profits of the two hotels in New York were almost...

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