Fairmont Hotels & Resorts Inc. Reports Fourth Quarter 2005 Results

Share Name	Share Symbol	Market	Type
Fabilia Group SpA	BIT:FHR	Italy	Ordinary Share

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- RevPAR Increased 11.8% Driven By Solid U.S. and International Performance - TORONTO, Feb. 24 /PRNewswire-FirstCall/ -- Fairmont Hotels & Resorts Inc. ("FHR" or the "Company") (TSX/NYSE: FHR) today announced its financial results for the three months and year ended December 31, 2005. These financial results have been prepared in accordance with Canadian generally accepted accounting principles. All amounts are expressed in U.S. dollars. Fourth Quarter 2005 Highlights - Diluted income per share ("diluted EPS") for the fourth quarter was $0.88 compared to a diluted loss per share of $0.06 for the same period in 2004. Excluding the effect of hotels sold in 2004 and 2005, gains on asset sales, a tax recovery and other non-operating items, diluted EPS rose to $0.12 from a diluted loss per share of $0.05 in the fourth quarter of 2004. - Revenues increased 40.9% to $232.4 million. Excluding the effect on revenues of hotels sold in 2004 and 2005 and the proceeds from land sales, revenues were up 16.8%. - Revenue per available room(1) ("RevPAR") for the comparable(2) Fairmont managed portfolio improved 11.8% driven by RevPAR growth of 15.4% at the comparable U.S. and International managed portfolios. - EBITDA(3) for the fourth quarter was $116.2 million compared to $20.4 million for the same period in 2004. Fourth quarter EBITDA included a gain on asset sales of $122.9 million in 2005 and a loss of $0.5 million in 2004. As a result of the sale of The Fairmont Orchid, Hawaii on December 23, EBITDA and Adjusted EBITDA in the fourth quarter were $2.0 million lower than previously expected due to lost real estate earnings from the resort during the holiday season. - Adjusted EBITDA(3) for the fourth quarter of 2005 was $31.6 million compared to $34.2 million for the same period in 2004. Adjusted EBITDA increased 9.9% when excluding the impact of the hotels sold in 2004 and 2005 and The Fairmont Southampton, which was closed for hurricane repairs during the first quarter of 2004 and therefore was excluded from FHR's comparable portfolio. - FHR sold its real estate interest in The Fairmont Orchid for a gain of $105.8 million while maintaining a long-term management contract. - The Company entered into six agreements for hotel and/or residential developments, all opening between 2007 and 2009. - FHR completed the sale of two blocks of land in Toronto's Southtown for gross proceeds of $42.8 million. - The Company announced an Acquisition Agreement with Kingdom Hotels International and Colony Capital for all of FHR's outstanding common shares at a price of $45.00 per share in cash (see Announcements and Corporate Activities). "Our U.S. properties continue to benefit from the robust U.S. lodging fundamentals. In the fourth quarter, our comparable U.S. managed and owned portfolios experienced RevPAR growth of 15.0% and 9.6%, respectively, primarily driven by strong occupancy gains across all markets," said William R. Fatt, FHR's Chief Executive Officer. "Our International portfolio also had significant gains, with RevPAR at the managed and owned portfolios up 17.0% and 11.3%, respectively." "Looking ahead to 2006, we expect current industry trends to continue with ongoing strength in our U.S. and International properties. As our Canadian portfolio earns such a significant portion of its annual earnings in the third quarter, it is too early to provide details on performance," said Mr. Fatt. "Going forward, we remain focused on enhancing the performance of our portfolio, building on the success of our brand and expanding into new key city center and resort destinations. We are excited about the opportunity to combine the Fairmont and Raffles portfolios to create a global luxury hotel leader. These two brands are an excellent strategic fit with rich histories, global brand recognition and complementary destinations." Three months ended Year ended Revenues December 31 December 31 (In millions of U.S. dollars) 2005 2004 2005 2004 ---- ---- ---- ---- Reported Revenues $ 232.4 $ 164.9 $ 857.5 $ 768.7 Less: Amounts attributable to hotels sold 13.3 14.0 63.9 106.5 Proceeds from sale of undeveloped land 42.8 - 60.7 15.4 ---------------------------------------------- Revenues adjusted for hotels sold and land sales $ 176.3 $ 150.9 $ 732.9 $ 646.8 ---------------------------------------------- Three months ended Year ended Diluted income December 31 December 31 (loss) per share 2005 2004 2005 2004 ---- ---- ---- ---- Diluted income (loss) per share $ 0.88 $ (0.06) $ 2.16 $ 1.92 Less: Amounts attributable to hotels sold (0.01) 0.00 (0.02) 0.10 Gains on asset sales 0.98 0.01 1.17 1.29 Other non-operating items(i) (0.24) - (0.40) - Tax recovery - - 0.49 - ---------------------------------------------- Diluted income (loss) per share adjusted for hotels sold, gains on asset sales, tax recovery and other non-operating items $ 0.12 $ (0.05) $ 0.87 $ 0.45 ---------------------------------------------- (i) 2005 results include a number of non-operating items: transactions costs (Q2); a legal provision (Q3); restructuring and lease termination costs (Q4); one-time pension costs (Q4); advisory fees relating to a strategic review undertaken by the Board of Directors (Q4); and a provision related to an impairment of long-term advances receivable (Q4). (ii) Totals may not add due to rounding and the exclusion of any anti-dilutive impact. Fourth Quarter Ownership Operations The Company's hotel ownership results are affected by the seasonal nature of the assets owned. The table below presents, by quarter, the comparable hotel ownership EBITDA contribution by region. ------------------------------------------------------------------------- Interna- 2005 Canada U.S. tional ------------------------------------------------------------------------- First quarter 21% 35% 44% ------------------------------------------------------------------------- Second quarter 50% 31% 19% ------------------------------------------------------------------------- Third quarter 88% 6% 6% ------------------------------------------------------------------------- Fourth quarter 14% 46% 40% ------------------------------------------------------------------------- Full-year 53% 24% 23% ------------------------------------------------------------------------- Comparable owned hotels revenues: -------------------------------- ------------------------------------------------------------------------- Comparable revenues Canada U.S. International Total ------------------------------------------------------------------------- Increase from fourth quarter 2004 4.6% 16.7% 14.5% 10.8% ------------------------------------------------------------------------- - Canadian Owned Hotels: Revenues for the Canadian owned hotels were impacted by the 3.8% appreciation of the Canadian dollar against the U.S. dollar when compared to the fourth quarter of 2004. The balance of the increase was primarily driven by The Fairmont Chateau Lake Louise, which experienced revenue growth of 9.3% and a 10.2% improvement in RevPAR. - U.S. Owned Hotels: This portfolio's revenue improvements were largely driven by The Fairmont Scottsdale Princess, which enjoyed RevPAR growth of 14.3%. - International Owned Hotels: Increased revenues for the International owned portfolio was the result of double-digit RevPAR growth at all properties in this portfolio. In Mexico, The Fairmont Acapulco Princess and The Fairmont Pierre Marques experienced RevPAR increases of 11.2% and 11.7%, respectively. Comparable owned hotels operating statistics: -------------------------------------------- ------------------------------------------------------------------------- Increase (decrease) from fourth quarter 2004 Canada U.S. International Total ------------------------------------------------------------------------- RevPAR 6.7% 9.6% 11.3% 8.8% ------------------------------------------------------------------------- Average daily rate ("ADR") 5.8% (3.5%) 4.2% 3.8% ------------------------------------------------------------------------- Occupancy 0.5 8.5 3.7 2.8 points points points points ------------------------------------------------------------------------- - Canadian Owned Hotels: The improvement in ADR is primarily a result of the appreciation of the Canadian dollar. Adjusting for the appreciation of the Canadian dollar, RevPAR for this portfolio was up 2.6%. - U.S. Owned Hotels: Solid occupancy growth continued to be the driver for the U.S. owned portfolio as a result of increased leisure and group demand. - International Owned Hotels: The International owned portfolio's performance was primarily impacted by a considerable increase in leisure demand in Acapulco compared to the same quarter last year. Comparable owned hotels EBITDA(3): ---------------------------------- ------------------------------------------------------------------------- Comparable EBITDA Canada U.S. International Total ------------------------------------------------------------------------- Increase (decrease) from fourth quarter 2004 (42.1%) 31.2% (0.2%) (2.1%) ------------------------------------------------------------------------- - Canadian Owned Hotels: EBITDA for the Canadian owned hotels decreased $2.4 million to $3.3 million as a result of recent restructuring costs across the portfolio and fewer U.S. leisure travelers over the holiday period. Excluding the restructuring costs, EBITDA was down approximately $2 million or 35%. - U.S. Owned Hotels: EBITDA for this portfolio, which excludes The Fairmont Orchid, was up $2.0 million to $8.4 million in the fourth quarter. The Fairmont Scottsdale Princess reported significant EBITDA growth as a result of a 10.1 percentage point occupancy improvement. - International Owned Hotels: EBITDA was essentially flat for this portfolio as all of these properties incurred restructuring costs in the quarter. Excluding these costs, EBITDA increased about $1.9 million or 26%. Comparable owned hotels EBITDA margin: -------------------------------------- ------------------------------------------------------------------------- Comparable EBITDA margin Canada U.S. International Total ------------------------------------------------------------------------- Increase (decrease) from fourth quarter 2004 (560bp) 270bp (320bp) (220bp) ------------------------------------------------------------------------- - Canadian Owned Hotels: EBITDA margins for the Canadian owned hotels decreased relative to the fourth quarter of 2004 due to softness in American leisure business as well as restructuring costs incurred during the quarter. Both of these factors had a considerable impact given that the fourth quarter is not a significant earnings period for the Canadian portfolio. Excluding the restructuring costs, the EBITDA margin was down 480 basis points. - U.S. Owned Hotels: Solid revenue growth of 16.7% was the key driver of EBITDA margin improvement for this portfolio. - International Owned Hotels: Like the Canadian portfolio, the International owned assets experienced a decline in EBITDA margins as a result of restructuring costs during the fourth quarter of 2005. Excluding these costs, margins increased by 240 basis points. Real estate activities: Real estate activities in the fourth quarter produced revenues of $49.4 million and a $16.9 million contribution to EBITDA. This was generated primarily by two land sales in Toronto, which yielded net proceeds and after-tax gains of $17.1 million. Real estate activities for the same period in 2004, primarily from Fairmont Heritage Place, generated $4.8 million in revenues and a $1.6 million loss to EBITDA. Fourth Quarter Management Operations ------------------------------------------------------------------------- Increase from fourth quarter 2004 Fairmont Delta ------------------------------------------------------------------------- Revenues under management 5.7% 7.5% ------------------------------------------------------------------------- Management fee revenues 42.4% 18.8% ------------------------------------------------------------------------- Comparable worldwide RevPAR 11.8% 13.3% ------------------------------------------------------------------------- Comparable worldwide ADR 6.8% 7.8% ------------------------------------------------------------------------- Comparable worldwide Occupancy 2.8 points 3.1 points ------------------------------------------------------------------------- Fairmont Management Operations - Revenues under management of $448 million increased 5.7% over 2004. The addition of The Savoy, A Fairmont Hotel, Fairmont Monte Carlo, Fairmont Newport Beach, five hotels in Kenya and improved operating results at the U.S. hotels, all contributed to this increase. - Management fee revenues were up 42.4% to $20.5 million, as a number of annual incentive thresholds were surpassed during the quarter. - EBITDA margin of 46.8% was down from 64.6% in the prior year primarily due to higher incentive compensation costs as a result of the Company's higher share price in the fourth quarter of 2005. - For the Fairmont comparable managed portfolio, RevPAR increased 11.8% to $118.70. The comparable International managed portfolio experienced solid RevPAR growth of 17.0%, driven by a 15.3% improvement in ADR. The comparable U.S. managed hotels also showed strong growth with RevPAR up 15.0%, resulting from a 4.2% increase in ADR combined with an occupancy gain of 6.2 percentage points. The comparable Canadian managed portfolio reported a 6.9% RevPAR improvement, driven primarily by an increase in ADR of 5.2%. Adjusting for the appreciation of the Canadian dollar, RevPAR for the Canadian portfolio was up 2.8% for the quarter. Delta Management Operations - Delta's revenues under management increased 7.5% to $108 million, primarily due to improved operating results and the appreciation of the Canadian dollar. - Management fee revenues for the fourth quarter were $3.8 million compared to $3.2 million for the same period in 2004. This 21.4% increase in management fee revenues relates primarily to a number of properties exceeding their annual incentive fee thresholds in the fourth quarter. - RevPAR increased 13.3% over the fourth quarter of 2004 resulting from a 7.8% increase in ADR and a 3.1 percentage point improvement in occupancy. Adjusting for the appreciation of the Canadian dollar, RevPAR was up approximately 8.9%. General and Administrative Expenses General and administrative expenses for the quarter were $14.7 million compared to $9.2 million for the same period in 2004. Increased incentive compensation costs as a result of the Company's higher share price and one-time pension plan costs were the primary drivers. Year-end Consolidated Results For the year ended December 31, 2005, EBITDA was $264.8 million compared to $324.7 million for the same period in 2004. EBITDA for both periods includes gains on asset sales of $140.8 million and $152.6 million, respectively. Adjusted EBITDA was $203.1 million compared to $216.0 million for the same period in 2004. Excluding the three hotels sold and The Fairmont Southampton, which was closed for hurricane repairs during the first quarter of 2004, Adjusted EBITDA increased 4.6% to $185.4 million. Net income for the year was $167.5 million (diluted EPS of $2.16), compared to the prior year's net income of $155.8 million (diluted EPS of $1.92). Excluding the impact of hotels sold, gains on asset sales, other non- operating items and the tax recovery, diluted EPS increased 93% to $0.87 from $0.45. Announcements and Corporate Activities On December 9, 2005, Icahn Partners LP and Icahn Partners Master Fund LP commenced a formal unsolicited partial takeover bid for approximately 41% of the outstanding common shares of the Company at a price of $40.00 per share. On December 22, 2005, Fairmont's Board of Directors issued its Circular recommending that the Icahn offer be rejected, as it was not in the best interest of its shareholders. At the same time, the Board of Directors disclosed that it was actively exploring strategic alternatives to maximize value for shareholders, which might include a possible transaction with one or more third parties. On January 30, 2006, Fairmont announced that it had entered into an Acquisition Agreement with a Canadian company owned by Kingdom Hotels International and Colony Capital, which is expected to acquire all of Fairmont's outstanding common shares at a price of $45.00 per share in cash. The total value of this transaction, including debt is $3.9 billion. The transaction was unanimously approved by Fairmont's Board of Directors following receipt of the recommendation of a Special Committee of the Board. Fairmont's Board has agreed to recommend to its shareholders that they vote in favor of the transaction. The closing of the transaction, which is expected to occur in May, is not subject to any financing condition. The closing is subject to certain other customary conditions, including regulatory approvals. The proposed transaction is expected to close in the second quarter of 2006, shortly after receipt of shareholder and court approvals. The transaction is to be carried out by way of a statutory plan of arrangement and, accordingly, will be subject to the approval of 66 2/3% of the votes cast by Fairmont's shareholders at a meeting of shareholders scheduled for April 18, 2006 as well as court approval. Fairmont has been advised by Kingdom and Colony of their intention to combine the Fairmont and Raffles portfolios following the completion of the transaction, transforming the companies into a global luxury hotel leader with 120 hotels in 24 countries. Fairmont will continue as a hotel management company headquartered in Canada and Raffles, based in Singapore, will also retain its separate brand identity. Raffles owns and manages a portfolio of 33 properties located primarily across Asia and Europe, including its flagship property built in 1887, the Raffles Hotel, Singapore. New Developments ---------------- The Company has entered into an agreement to manage a mixed-use luxury development in the Turks & Caicos Islands to be branded the "Fairmont Three Cays". The project will include 300 guestroom units, several Fairmont branded residential developments including Fairmont Heritage Place, a Willow Stream spa and a championship golf course, all of which will be managed by FHR. The Company will make an investment for a 19.9% equity interest in the resort when the property opens in 2009. We announced an agreement to manage a luxury mixed-use property within Tamarack Resort, an all-season mountain destination located 90 miles north of Boise, Idaho. When the property opens in 2008, it will include a 225-room condo hotel, a spa and several residential components. The Company has entered into an agreement to manage a mixed-use project located in South Africa's province of KwaZulu-Natal. Projected to open in 2009, the development will include a luxury resort, a championship golf course, a spa and vacation ownership products. We announced an agreement to manage Fairmont's first branded luxury condominium development. The 129 residences will be built in southern California on a 20-acre site in the exclusive community of Indian Wells and are expected to open in late 2007. We announced that the Company had entered into an agreement to once again manage The Plaza in New York City when it reopens in 2007. The Plaza is currently undergoing an extensive $350 million renovation, which will include 282 guestroom units. The restored Plaza will also contain elegant residential condominiums and high-end retail space. The Company has entered into a joint venture to develop and manage its first urban private residence club in San Francisco's historic Ghirardelli Square. As part of the agreement, FHR will make a minority equity investment in the development, which is expected to open in mid-2007. Dispositions ------------ We sold The Fairmont Orchid, Hawaii to Westbrook Partners for gross proceeds of $250 million and continue to manage the resort under a long-term management contract. The Company realized a pre-tax gain of $105.8 million on the sale of this property, which it purchased in December 2002 for $140 million. The Company completed the sale of two blocks of land in Toronto's Southtown for gross proceeds of $42.8 million, resulting in an after-tax gain of approximately $17.1 million. Other Activities ---------------- During the quarter, FHR entered into a mortgage loan for $75.0 million secured by The Fairmont Scottsdale Princess. The proceeds were used to repay a $59.9 million mortgage on The Fairmont Copley Plaza, Boston with the balance to be used for general corporate purposes. During the quarter, FHR repurchased 450,400 shares under its normal course issuer bid for a total cost of $14.9 million. During the year, FHR repurchased 4.4 million shares at a cost of $141.2 million. The Company ceased purchasing shares under its normal course issuer bid following the 13D filing of Mr. Carl Icahn on November 7, 2005. About Fairmont Hotels & Resorts Inc. FHR is a leading owner/operator of luxury hotels and resorts. FHR's managed portfolio consists of 87 luxury and first-class properties with approximately 34,000 guestrooms in the United States, Canada, Mexico, Bermuda, Barbados, United Kingdom, Monaco, Kenya and the United Arab Emirates as well as two vacation ownership properties managed by Fairmont Heritage Place. FHR owns Fairmont Hotels Inc., North America's largest luxury hotel management company, as measured by rooms under management, with 49 distinctive city center and resort hotels including The Fairmont San Francisco, The Fairmont Banff Springs and The Fairmont Scottsdale Princess. FHR also owns Delta Hotels, Canada's largest first-class hotel management company, which manages and franchises 38 city center and resort properties in Canada. In addition to hotel management, FHR holds real estate interests in 21 properties and an approximate 24% investment interest in Legacy Hotels Real Estate Investment Trust, which owns 24 properties. FHR owns FHP Management Company LLC, a private residence club management company that operates Fairmont Heritage Place, a vacation ownership business. This news release contains certain forward-looking statements relating, but not limited to, FHR's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "estimate", "guidance", "aim" or similar words suggesting future outcomes. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such factors include, but are not limited to economic, competitive and lodging industry conditions. These risks are further described in FHR's filings with Canadian securities regulatory authorities (http://www.sedar.com/) and with the U.S. Securities and Exchange Commission website (http://www.sec.gov/). All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this news release and except as required by applicable law, FHR disclaims any responsibility to update any such forward-looking statements, whether as a result of new information, future events or otherwise. 1. RevPAR is calculated as room revenue divided by the number of room nights available. Management considers RevPAR to be a meaningful indicator of hotel operations because it measures the period-over-period change in room revenues relative to the number of room nights available. Investors and analysts also use it as a measure of the Company's operating performance. However, RevPAR is not a defined measure of operating performance under Canadian Generally Accepted Accounting Principles ("GAAP"). It is likely that FHR's calculation of RevPAR is different than the calculations used by others. 2. Comparable information is considered to be information for properties that were wholly-owned or fully open under FHR management for at least the entire current and prior year. Comparable information also excludes properties under major renovation that would have a significant adverse effect on the properties' primary operations. We present these results on a comparable basis because we believe that doing so provides investors and management with useful information for evaluating the period-to-period performance of our hotels. When presenting comparable information for this quarter, the following properties have been excluded: Owned hotels ------------ - The Fairmont Orchid, Hawaii (sold December 2005) - The Fairmont Kea Lani, Maui (sold July 2004) - The Fairmont Glitter Bay (sold July 2004) - The Fairmont Southampton (reopened April 2004 after hurricane damage repairs) Fairmont Managed Hotels ----------------------- - The Fairmont Southampton (reopened April 2004 after hurricane damage repairs) - Fairmont Monte Carlo (assumed management December 2004) - The Savoy, A Fairmont Hotel (assumed management January 2005) - The Plaza (ceased management April 2005) - The Norfolk Hotel, Mount Kenya Safari Club, The Aberdare Country Club, The Ark and the Mara Safari Club (assumed management May 2005) - The Fairmont Glitter Bay (ceased management June 2005) - Fairmont Newport Beach (assumed management July 2005) - The Fairmont New Orleans (closed in September 2005 due to hurricane damage) Delta Managed Hotels -------------------- - Delta Meadowvale (assumed management September 2004) - Delta franchised properties 3. EBITDA is defined as earnings before interest, taxes and amortization. Management considers EBITDA to be a meaningful indicator of operations and uses it as the primary measure to assess the operating performance of the Company's business segments. EBITDA provides us with an understanding of the Company's operating results before the impact of investing and financing transactions and income taxes. It also facilitates comparisons between the Company and its competitors. Management adjusts EBITDA when evaluating operating performance because it believes that the inclusion or exclusion of certain items such as gains and losses on asset sales and other non-operating items, is necessary to provide a more accurate measure of our core business operating results. It is also a means to evaluate period-over-period results. We adjust our reported EBITDA, as set forth above, for certain items and refer to this measure as Adjusted EBITDA. The principal adjustments we make are to eliminate (i) gains and losses from asset sales; (ii) amortization, net interest expense and income taxes in calculating our earnings from equity investments and (iii) other non-operating items. We have chosen to provide this information to investors to enable them to perform more meaningful comparisons of past, present and future core business operating results. Adjusted EBITDA may also be used by investors and analysts in their valuation of the Company. EBITDA and Adjusted EBITDA are not defined measures of operating performance under Canadian GAAP. It is likely that FHR's calculations of EBITDA and Adjusted EBITDA are different than the calculations used by others. The table below provides a reconciliation of Adjusted EBITDA and EBITDA to net income: ------------------------------------------------------------------------- Three months ended Year ended December 30 December 31 ------------------------------------------------------------------------- (In millions of dollars) 2005 2004 2005 2004 ------------------------------------------------------------------------- Net income (loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8 Add (Deduct): Interest expense, net 3.2 7.4 22.4 33.1 Income tax expense (recovery) 24.2 (2.2) 4.4 61.9 Amortization 20.4 19.6 70.5 73.9 ------------------------------------------------------------------------- EBITDA 116.2 20.4 264.8 324.7 Add (Deduct): (Gains) losses on asset sales (122.9) 0.5 (140.8) (152.6) Proportional amortization, interest expense and income taxes included in the results of equity investments 10.2 11.0 36.9 41.4 Stock appreciation rights (0.4) 2.3 (0.9) 2.5 Other non-operating items(1) 28.5 - 43.1 - ------------------------------------------------------------------------- Adjusted EBITDA $ 31.6 $ 34.2 $ 203.1 $ 216.0 ------------------------------------------------------------------------- (1) Other non-operating items include: Fourth quarter - expenses relating to financial and legal advisory fees related to services provided to the Special Committee and Board of Directors during the review of shareholder value-creating strategic options; restructuring and lease termination costs; a one-time pension plan cost; and a provision related to an impairment of long-term advances receivable. Third quarter - a legal provision associated with a predecessor company of Fairmont. Second quarter - advisory and other expenses related to a major portfolio acquisition that FHR did not complete. Fairmont Hotels & Resorts Inc. Consolidated Balance Sheets (Stated in millions of U.S. dollars) ASSETS December 31 December 31 2005 2004 (Unaudited) ----------- ----------- Current assets Cash and cash equivalents $ 279.2 $ 99.1 Accounts receivable 91.7 90.2 Inventory 13.7 15.5 Prepaid expenses and other 14.6 11.2 ----------- ----------- 399.2 216.0 Investments in partnerships and corporations (note 4) 155.1 160.7 Non-hotel real estate (note 7) 100.2 100.3 Property and equipment (note 3) 1,308.8 1,435.5 Goodwill 164.8 162.8 Intangible assets (notes 4, 5 and 8) 284.8 245.0 Other assets and deferred charges (notes 4 and 5) 111.0 82.3 ----------- ----------- $ 2,523.9 $ 2,402.6 ----------- ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $ 156.6 $ 127.9 Income taxes payable (note 3) 57.8 31.3 Dividends payable 4.3 4.6 Current portion of long-term debt 2.8 4.1 ----------- ----------- 221.5 167.9 Long-term debt (note 15) 388.4 398.0 Other liabilities 123.5 95.7 Future income taxes 99.5 90.6 ----------- ----------- 832.9 752.2 ----------- ----------- Shareholders' Equity (note 9) 1,691.0 1,650.4 ----------- ----------- $ 2,523.9 $ 2,402.6 ----------- ----------- ----------- ----------- Fairmont Hotels & Resorts Inc. Consolidated Statements of Income (Stated in millions of U.S. dollars, except per share amounts) (Unaudited) Three months ended Year ended December 31 December 31 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Revenues Hotel ownership operations (note 11(d)) $ 150.8 $ 137.8 $ 670.2 $ 654.1 Management operations 19.7 13.2 62.0 46.3 Real estate activities (note 7) 49.4 4.8 78.2 31.0 ---------- ---------- ---------- ---------- 219.9 155.8 810.4 731.4 Other revenues from managed and franchised properties 12.5 9.1 47.1 37.3 ---------- ---------- ---------- ---------- 232.4 164.9 857.5 768.7 Expenses Hotel ownership operations 128.7 110.8 509.3 474.8 Management operations 11.8 6.3 26.3 19.4 Real estate activities 32.5 6.4 44.9 25.2 General and administrative 14.7 9.2 36.8 29.6 Other (notes 13 and 14) 19.6 - 34.1 - Amortization 20.4 19.6 70.5 73.9 ---------- ---------- ---------- ---------- 227.7 152.3 721.9 622.9 Other expenses from managed and franchised properties 12.9 9.9 47.1 38.5 ---------- ---------- ---------- ---------- 240.6 162.2 769.0 661.4 Loss from equity investments and other (1.8) (1.4) - (0.2) ---------- ---------- ---------- ---------- Operating (loss) income (10.0) 1.3 88.5 107.1 Interest expense, net 3.2 7.4 22.4 33.1 (Gain) loss on sales of investments and hotel assets (105.8) 0.5 (105.8) (143.7) ---------- ---------- ---------- ---------- Income (loss) before income tax expense (recovery) 92.6 (6.6) 171.9 217.7 Income tax expense (recovery) Current (note 6) 53.8 4.4 (4.2) 54.4 Future (29.6) (6.6) 8.6 7.5 ---------- ---------- ---------- ---------- 24.2 (2.2) 4.4 61.9 Net income (loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding (in millions) (note 9) Basic 72.2 76.8 74.3 78.4 Diluted 80.5 85.0 82.5 86.4 Basic earnings (loss) per common share $ 0.95 $ (0.06) $ 2.25 $ 1.99 Diluted earnings (loss) per common share $ 0.88 $ (0.06) $ 2.16 $ 1.92 Fairmont Hotels & Resorts Inc. Consolidated Statements of Cash Flows (Stated in millions of U.S. dollars) (Unaudited) Three months ended Year ended December 31 December 31 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Cash provided by (used in) Operating activities Net income (loss) $ 68.4 $ (4.4) $ 167.5 $ 155.8 Items not affecting cash Amortization of property and equipment 19.7 18.7 68.0 70.8 Amortization of intangible assets 0.7 0.9 2.5 3.1 Loss from equity investments 1.8 1.4 - 0.2 Future income taxes (29.6) (6.6) 8.6 7.5 Unrealized foreign exchange loss (gain) 0.8 (16.9) (6.8) (20.0) (Gain) loss on sales of investments and hotel assets (105.8) 0.5 (105.8) (143.7) Other 21.2 (1.9) 23.4 5.9 Distributions from investments 2.7 2.9 8.1 7.1 Changes in non-hotel real estate 19.2 2.0 16.7 1.6 Changes in non-cash working capital items (note 10) 100.4 (33.6) 54.6 (17.9) ---------- ---------- ---------- ---------- 99.5 (37.0) 236.8 70.4 ---------- ---------- ---------- ---------- Investing activities Additions to property and equipment (20.1) (16.1) (71.5) (74.3) Proceeds from sale of property and equipment - - 8.8 - Investments in partnerships and corporations - (29.7) (11.2) (34.6) Sales of investments and hotel assets 245.6 (0.9) 248.6 442.7 Collection of loans receivable - 15.2 - 24.2 Issuance of loans receivable (0.4) - (33.5) (7.0) Acquisitions of intangible assets (0.3) (3.2) (32.3) (3.2) ---------- ---------- ---------- ---------- 224.8 (34.7) 108.9 347.8 ---------- ---------- ---------- ---------- Financing activities Issuance of long-term debt 75.0 33.2 179.5 115.9 Repayment of long-term debt (195.1) (1.1) (200.9) (380.6) Issuance of common shares 3.7 2.0 6.6 2.9 Repurchase of common shares (14.9) (32.7) (141.2) (84.5) Dividends paid - - (9.1) (6.4) ---------- ---------- ---------- ---------- (131.3) 1.4 (165.1) (352.7) ---------- ---------- ---------- ---------- Effect of foreign exchange rate changes on cash and cash equivalents - 1.6 (0.5) 1.9 ---------- ---------- ---------- ---------- Increase (decrease) in cash and cash equivalents 193.0 (68.7) 180.1 67.4 Cash and cash equivalents - beginning of period 86.2 167.8 99.1 31.7 ---------- ---------- ---------- ---------- Cash and cash equivalents - end of period $ 279.2 $ 99.1 $ 279.2 $ 99.1 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Fairmont Hotels & Resorts Inc. Consolidated Statements of Retained Earnings (Stated in millions of U.S. dollars) (Unaudited) Three months ended Year ended December 31 December 31 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Balance - Beginning of period $ 213.5 $ 214.7 $ 189.2 $ 78.1 Net income (loss) 68.4 (4.4) 167.5 155.8 ---------- ---------- ---------- ---------- 281.9 210.3 356.7 233.9 Repurchase of common shares (note 9) (8.1) (16.5) (78.4) (36.9) Dividend (4.3) (4.6) (8.8) (7.8) ---------- ---------- ---------- ---------- Balance - End of period $ 269.5 $ 189.2 $ 269.5 $ 189.2 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- FIRST AND FINAL ADD TO FOLLOW DATASOURCE: Fairmont Hotels & Resorts Inc. CONTACT: Emma Thompson, Executive Director Investor Relations, Tel: (416) 874-2485, Email: , Website: http://www.fairmont.com/

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FHR Fabilia Group SpA