Four Seasons Hotels (FS) 6-K Current report (foreign)

EXHIBIT 99.2

Schedule A⁽¹⁾

FOUR SEASONS HOTELS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	2005
(Unaudited) (In thousands of US dollars except per share amounts)	First Quarter(2)			Second Quarter(2)			Third Quarter(2)			Fourth Quarter(2)			Total(2)
Revenues:
Hotel management fees	$	24,689		$	28,382		$	22,531		$	25,239		$	100,841
Other fees		3,680			2,840			3,471			4,057			14,048
Hotel ownership revenues		20,517			27,704			9,749			7,505			65,475
Reimbursed costs		14,211			15,613			16,453			21,697			67,974
		63,097			74,539			52,204			58,498			248,338
Expenses:
General and administrative expenses		(12,720	)		(13,150	)		(15,625	)		(16,653	)		(58,148	)
Hotel ownership cost of sales and expenses		(24,087	)		(25,685	)		(8,417	)		(7,897	)		(66,086	)
Reimbursed costs		(14,211	)		(15,613	)		(16,453	)		(21,697	)		(67,974	)
		(51,018	)		(54,448	)		(40,495	)		(46,247	)		(192,208	)
Operating earnings before other items		12,079			20,091			11,709			12,251			56,130
Depreciation and amortization		(3,029	)		(2,908	)		(2,575	)		(2,675	)		(11,187	)
Other expenses, net		(2,710	)		(8,645	)		(21,064	)		(56,789	)		(89,208	)
Interest income		3,876			3,740			3,974			5,156			16,746
Interest expense		(3,105	)		(2,530	)		(2,766	)		(3,144	)		(11,545	)
Earnings (loss) before income taxes		7,111			9,748			(10,722	)		(45,201	)		(39,064	)
Income tax recovery (expense):
Current		(1,924	)		(1,390	)		2,925			(1,523	)		(1,912	)
Future		15			7,428			(3,644	)		8,954			12,753
		(1,909	)		6,038			(719	)		7,431			10,841
Net earnings (loss)	$	5,202		$	15,786		$	(11,441	)	$	(37,770	)	$	(28,223	)
Basic earnings (loss) per share	$	0.14		$	0.43		$	(0.31	)	$	(1.03	)	$	(0.77	)
Diluted earnings (loss) per share	$	0.14		$	0.42		$	(0.31	)	$	(1.03	)	$	(0.77	)

______________

1 These consolidated financial statement schedules should be read in conjunction with our consolidated financial statements for that period.

2 Our strategy has been to focus on hotel management rather than hotel ownership. Over the past few years, we have reduced our ownership interests such that Four Seasons Hotel Vancouver is our only remaining hotel whose results we currently consolidate. As a result, commencing January 1, 2006, we have changed the presentation of our consolidated statements of operations and no longer segregate our Ownership Operations segment from our Management Operations segment. Corporate expenses that were previously included in our Ownership Operations segment have been reclassified and included in general and administrative expenses. The presentation of our 2005 consolidated statements of operations have been changed to conform with the financial statement presentation adopted for 2006.

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Schedule B⁽¹⁾

FOUR SEASONS HOTELS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	2004
(Unaudited) (In thousands of US dollars except per share amounts)	First Quarter(2)			Second Quarter(2)			Third Quarter(2)			Fourth Quarter(2)			Total(2)
Revenues:
Hotel management fees	$	20,140		$	22,939		$	18,278		$	22,026		$	83,383
Other fees		1,967			4,084			6,438			2,093			14,582
Foreign exchange forward contracts		2,720			2,798			2,625			3,058			11,201
Hotel ownership revenues		20,332			28,399			22,383			26,615			97,729
Reimbursed costs		11,962			13,143			13,535			15,732			54,372
		57,121			71,363			63,259			69,524			261,267
Expenses:
General and administrative expenses		(11,184	)		(11,416	)		(10,981	)		(14,018	)		(47,599	)
Hotel ownership cost of sales and expenses		(24,628	)		(26,299	)		(23,859	)		(25,116	)		(99,902	)
Reimbursed costs		(11,962	)		(13,143	)		(13,535	)		(15,732	)		(54,372	)
		(47,774	)		(50,858	)		(48,375	)		(54,866	)		(201,873	)
Operating earnings before other items		9,347			20,505			14,884			14,658			59,394
Depreciation and amortization		(2,751	)		(2,664	)		(3,102	)		(3,262	)		(11,779	)
Other income (expenses), net		3,279			(2,216	)		(18,089	)		5,120			(11,906	)
Interest income		3,106			2,836			3,706			3,375			13,023
Interest expense		(1,873	)		(1,995	)		(3,455	)		(3,138	)		(10,461	)
Earnings (loss) before income taxes		11,108			16,466			(6,056	)		16,753			38,271
Income tax recovery (expense):
Current		(2,116	)		(3,214	)		364			(4,099	)		(9,065	)
Future		(288	)		(493	)		(2,830	)		103			(3,508	)
		(2,404	)		(3,707	)		(2,466	)		(3,996	)		(12,573	)
Net earnings (loss)	$	8,704		$	12,759		$	(8,522	)	$	12,757		$	25,698
Basic earnings (loss) per share	$	0.25		$	0.36		$	(0.24	)	$	0.35		$	0.72
Diluted earnings (loss) per share	$	0.24		$	0.34		$	(0.24	)	$	0.34		$	0.69

______________

1 These consolidated financial statement schedules should be read in conjunction with our consolidated financial statements for that period.

2 Our strategy has been to focus on hotel management rather than hotel ownership. Over the past few years, we have reduced our ownership interests such that Four Seasons Hotel Vancouver is our only remaining hotel whose results we currently consolidate. As a result, commencing January 1, 2006, we have changed the presentation of our consolidated statements of operations and no longer segregate our Ownership Operations segment from our Management Operations segment. Corporate expenses that were previously included in our Ownership Operations segment have been reclassified and included in general and administrative expenses. The presentation of our 2004 consolidated statements of operations have been changed to conform with the financial statement presentation adopted for 2006.

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FOUR SEASONS HOTELS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)	Three months ended March 31,
(In thousands of US dollars except per share amounts)	2006			2005
Revenues:
Hotel management fees	$	30,384		$	24,689
Other fees		5,326			3,680
Hotel ownership revenues		5,479			20,517
Reimbursed costs		16,435			14,211
		57,624			63,097
Expenses:
General and administrative expenses		(14,240	)		(12,720	)
Hotel ownership cost of sales and expenses		(6,493	)		(24,087	)
Reimbursed costs		(16,435	)		(14,211	)
		(37,168	)		(51,018	)
Operating earnings before other items		20,456			12,079
Depreciation and amortization		(2,643	)		(3,029	)
Other expenses, net (note 4)		(833	)		(2,710	)
Interest income		4,461			3,876
Interest expense		(3,710	)		(3,105	)
Earnings before income taxes		17,731			7,111
Income tax recovery (expense):
Current		(3,129	)		(1,924	)
Future		(1,219	)		15
		(4,348	)		(1,909	)
Net earnings	$	13,383		$	5,202
Basic earnings per share (note 3(a))	$	0.36		$	0.14
Diluted earnings per share (note 3(a))	$	0.36		$	0.14

See accompanying notes to consolidated financial statements.

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FOUR SEASONS HOTELS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of US dollars)	As at March 31, 2006		As at December 31, 2005
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	245,254	$	242,178
Receivables		70,048		69,690
Inventory		7,602		7,326
Prepaid expenses		5,440		2,950
		328,344		322,144
Long-term receivables		177,032		175,374
Investments in hotel partnerships and corporations (note 2)		83,990		99,928
Fixed assets		69,354		64,850
Investment in management contracts (note 2)		181,358		164,932
Investment in trademarks and trade names		4,225		4,210
Future income tax assets		13,220		14,439
Other assets		34,890		34,324
	$	892,413	$	880,201
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	47,097	$	54,797
Long-term obligations due within one year		3,324		4,853
		50,421		59,650
Long-term obligations		275,308		273,825
Shareholders’ equity (note 3):
Capital stock		254,884		250,430
Convertible notes		36,920		36,920
Contributed surplus		11,339		10,861
Retained earnings		174,124		160,741
Equity adjustment from foreign currency translation		89,417		87,774
		566,684		546,726
	$	892,413	$	880,201

See accompanying notes to consolidated financial statements.

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FOUR SEASONS HOTELS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)	Three months ended March 31,
(In thousands of US dollars)	2006			2005
Operating activities:
Net earnings	$	13,383		$	5,202
Items not affecting cash:
Stock-based compensation expense		522			494
Depreciation and amortization		2,643			3,029
Other expenses, net		833			2,710
Future income tax expense (recovery)		1,219			(15	)
Other		541			254
Changes in non-cash working capital		(13,527	)		(16,310	)
Cash provided by (used in) operating activities		5,614			(4,636	)
Investing activities:
Advances of long-term receivables		(2,261	)		(20,813	)
Receipt of long-term receivables		7,910			348
Investments in hotel partnerships and corporations		1,797			(7,180	)
Disposal of hotel partnerships and corporations		-			5,346
Purchase of fixed assets		(5,606	)		(3,607	)
Investments in trademarks, trade names and management contracts		(3,952	)		(131	)
Other assets		(1,481	)		(51	)
Cash used in investing activities		(3,593	)		(26,088	)
Financing activities:
Long-term obligations including current portion		(1,968	)		132
Issuance of shares		4,406			5,617
Dividends paid		(1,657	)		(1,558	)
Cash provided by financing activities		781			4,191
Increase (decrease) in cash and cash equivalents		2,802			(26,533	)
Increase (decrease) in cash and cash equivalents due to unrealized foreign exchange gain (loss)		274			(1,680	)
Cash and cash equivalents, beginning of period		242,178			226,377
Cash and cash equivalents, end of period	$	245,254		$	198,164
Supplementary information:
Interest received	$	4,659		$	4,667
Interest paid		(2,596	)		(3,000	)
Income taxes paid		(1,774	)		(3,106	)

See accompanying notes to consolidated financial statements.

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FOUR SEASONS HOTELS INC.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

(Unaudited)	Three months ended March 31,
(In thousands of US dollars)	2006		2005
Retained earnings, beginning of period	$	160,741	$	192,129
Net earnings		13,383		5,202
Retained earnings, end of period	$	174,124	$	197,331

See accompanying notes to consolidated financial statements.

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FOUR SEASONS HOTELS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands of US dollars except per share amounts)

In these interim consolidated financial statements, the words “we”, “us”, “our”, and other similar words are references to Four Seasons Hotels Inc. and its consolidated subsidiaries. These interim consolidated financial statements do not include all disclosures required by Canadian generally accepted accounting principles (“GAAP”) for annual financial statements and should be read in conjunction with our most recently prepared annual consolidated financial statements for the year ended December 31, 2005.

1. Significant accounting policies:

The significant accounting policies used in preparing these interim consolidated financial statements are consistent with those used in preparing our annual consolidated financial statements for the year ended December 31, 2005, except as disclosed below:

(a) Non-monetary transactions:

In June 2005, The Canadian Institute of Chartered Accountants (“CICA”) issued Section 3831, “Non- Monetary Transactions”, which introduces new requirements for non-monetary transactions initiated on or after January 1, 2006. The amended requirements will result in non-monetary transactions being measured at fair values unless certain criteria are met, in which case, the transaction is measured at carrying value. The implementation of Section 3831, on a prospective basis for transactions initiated on or after January 1, 2006, did not have an impact on our consolidated financial statements for the three months ended March 31, 2006.

(b) Financial instruments:

In January 2005, the CICA issued Section 1530 “Comprehensive Income”, Section 3855 “Financial Instruments – Recognition and Measurement”, and Section 3865 “Hedges”. These standards are effective for fiscal years beginning on or after October 1, 2006. The impact of adoption of these standards is not yet determinable, as it will be dependent on our unsettled positions, hedging strategies, and market volatility at the time of transition.

(c) Comparative figures:

Certain 2005 comparative figures have been reclassified to conform with the financial statement presentation adopted for 2006.

2. Hotel investment transaction:

During the three months ended March 31, 2006, we contributed our equity interest in a property under our management in exchange for a management contract enhancement of approximately the same fair value. No gain or loss was recorded in connection with this transaction.

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3. Shareholders’ equity:

As at March 31, 2006, we have 3,725,698 outstanding Variable Multiple Voting Shares (“VMVS”), 33,029,478 outstanding Limited Voting Shares (“LVS”), and 4,394,243 outstanding stock options (weighted average exercise price of C$59.65 ($51.11)).

(a) Earnings per share:

A reconciliation of the net earnings and weighted average number of VMVS and LVS used to calculate basic and diluted earnings per share is as follows:

	Three months ended March 31,
	2006			2005
		Net earnings	Shares		Net earnings	Shares
Basic earnings per share amounts	$	13,383	36,685,329	$	5,202	36,608,763
Effect of assumed dilutive conversions:
Stock option plan		-	583,483		-	1,535,543
Diluted earnings per share amounts	$	13,383	37,268,812	$	5,202	38,144,306

The diluted earnings per share calculation excluded the effect of the assumed conversions of 1,535,776 stock options to LVS, under our stock option plan, during the three months ended March 31, 2006 (2005 – 9,000 stock options), as the inclusion of these options would have resulted in an anti-dilutive effect. There was no dilution in 2006 and 2005 relating to our convertible senior notes.

(b) Stock-based compensation:

We use the fair value-based method to account for all employee stock options granted or modified on or after January 1, 2003. Accordingly, options granted prior to that date continue to be accounted for using the settlement method.

There were 41,650 stock options granted in the three months ended March 31, 2006 at a weighted average exercise price of C$62.61 ($53.65). The fair value of stock options granted in the three months ended March 31, 2006 was estimated using the Black-Scholes option pricing model with the following assumptions: risk-free interest rates ranging from 4.09% to 4.17%; semi-annual dividend per LVS of C$0.055; volatility factor of the expected market price of our LVS of 27%; and expected lives of the options ranging between four and seven years, depending on the level of the employee who was granted stock options. For the options granted in the three months ended March 31, 2006, the weighted average fair value of the options at the grant dates was C$21.49 ($18.41). For purposes of stock option expense and pro forma disclosures, the estimated fair value of the options is amortized to compensation expense over the options’ vesting period. There were no stock options granted in the three months ended March 31, 2005.

Pro forma disclosure is required to show the effect of the application of the fair value-based method to employee stock options granted during 2002, which were not accounted for using the fair value-based method. For the three months ended March 31, 2006 and 2005, if we had applied the fair value-based method to options granted during 2002, our net earnings and basic and diluted earnings per share would have been adjusted to the pro forma amounts indicated below:

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	Three months ended   March 31,
	2006			2005
Stock-based compensation expense	$	(522	)	$	(494	)
Net earnings, as reported	$	13,383		$	5,202
Increase in stock-based compensation expense that would have been recorded if all outstanding stock options granted during 2002 had been expensed		(646	)		(691	)
Pro forma net earnings	$	12,737		$	4,511
Earnings per share:
Basic, as reported	$	0.36		$	0.14
Basic, pro forma		0.35			0.12
Diluted, as reported		0.36			0.14
Diluted, pro forma		0.34			0.12

4. Other expenses, net:

	Three months ended March 31,
	2006			2005
Foreign exchange loss	$	(528	)	$	(393	)
Asset provisions and write downs		(305	)		(1,931	)
Loss on disposition of assets		-			(386	)
	$	(833	)	$	(2,710	)

The net foreign exchange loss in 2006 and 2005 related primarily to the foreign currency translation gains and losses on unhedged net asset and liability positions, primarily in US dollars, euros, pounds sterling and Australian dollars, and local currency foreign exchange gains and losses on net monetary assets incurred by our designated foreign self-sustaining subsidiaries.

As at March 31, 2006, we have foreign exchange forward contracts in place to sell forward $24,579 of US dollars to receive Canadian dollars at a weighted average forward exchange rate of 1.156 maturing over the period to June 2006. These contracts are being marked-to-market on a monthly basis with the resulting changes in fair values being recorded as a foreign exchange gain or loss. This resulted in a $67 foreign exchange loss being recorded in the three months ended March 31, 2006.

Subsequent to March 31, 2006, we have sold forward an additional $28,784 of US dollars to receive Canadian dollars at a weighted average forward exchange rate of 1.137 maturing over the period to October 2007.

5. Pension benefit expense:

The pension benefit expense for the three months ended March 31, 2006 was $ 944 (2005 - $621).

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6. Segmented information:

Our strategy has been to focus on hotel management rather than hotel ownership. Over the past few years, we have reduced our ownership interests such that Four Seasons Hotel Vancouver is our only remaining hotel whose results we currently consolidate. As a result, commencing January 1, 2006, corporate expenses have been included in general and administrative expenses in the consolidated statements of operations for the three months ended March 31, 2006. Corporate expenses for the three months ended March 31, 2005 that previously were included in our Ownership Operations segment have been reclassified to the Management Operations segment and included in general and administrative expenses in the consolidated statements of operations.

	Three Months Ended March 31, 2006
	Management Operations			Ownership Operations			Total
Revenues:
Hotel management fees	$	30,384		$	-		$	30,384
Other fees		5,326			-			5,326
		35,710			-			35,710
Hotel ownership revenues		-			5,479			5,479
Reimbursed costs		16,435			-			16,435
		52,145			5,479			57,624
Expenses:
General and administrative expenses		(14,240	)		-			(14,240	)
Hotel ownership cost of sales and expenses		-			(6,493	)		(6,493	)
Reimbursed costs		(16,435	)		-			(16,435	)
		(30,675	)		(6,493	)		(37,168	)
Operating earnings (loss) before other items	$	21,470		$	(1,014	)	$	20,456

	Three Months Ended March 31, 2005
	Management Operations			Ownership Operations			Total
Revenues:
Hotel management fees	$	24,689		$	-		$	24,689
Other fees		3,680			-			3,680
		28,369			-			28,369
Hotel ownership revenues		-			20,517			20,517
Reimbursed costs		14,211			-			14,211
		42,580			20,517			63,097
Expenses:
General and administrative expenses		(12,720	)		-			(12,720	)
Hotel ownership cost of sales and expenses		-			(24,087	)		(24,087	)
Reimbursed costs		(14,211	)		-			(14,211	)
		(26,931	)		(24,087	)		(51,018	)
Operating earnings (loss) before other items	$	15,649		$	(3,570	)	$	12,079

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