UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 2003
or
|_| TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to ____________________
Commission file number: 1-14572
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below: Four Seasons Hotels Retirement Benefit Plan
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Four Seasons Hotels Inc.
1165 Leslie Street
Toronto, ON M3C 2K8
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
(a) Financial Statements and Supplementary Information
(b) Exhibits
Exhibit No. Title
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23.1 Consent of KPMG LLP
Financial Statements and Supplementary Information
(Stated in U.S. dollars)
FOUR SEASONS HOTELS
RETIREMENT BENEFIT PLAN
Year ended December 31, 2003
INDEX
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Page
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Report of Independent Registered Public Accounting Firm
Statements of Net Assets Available for Plan Benefits
as of December 31, 2003 and 2002 1
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 2003 2
Notes to Financial Statements 3 - 7
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
as of December 31, 2003 8
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Pension and Profit-Sharing Committee of
Four Seasons Hotels Limited
We have audited the accompanying statements of net assets available for plan
benefits of the Four Seasons Hotels Retirement Benefit Plan (the "Plan") as of
December 31, 2003 and 2002 and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2003. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2003 and 2002 and the changes in net assets available for plan
benefits for the year ended December 31, 2003 in conformity with U.S. generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying supplemental schedule H, line 4i -
schedule of assets (held at end of year) as of December 31, 2003 is presented
for purposes of additional analysis and is not a required part of the basic
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
/s/ KPMG LLP
New York, New York
June 17, 2004
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
Statements of Net Assets Available for Plan Benefits
(Stated in U.S. dollars)
December 31, 2003 and 2002
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2003 2002
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ASSETS
Cash and cash equivalents $ 106,195 $ 30,478
Investments:
Four Seasons Stock Fund 1,440,640 394,992
Mutual funds 161,043,913 122,601,982
Pooled investment fund 12,409,048 10,771,453
Loans to participants 6,215,902 6,112,757
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181,109,503 139,881,184
Employers' contributions receivable 9,293,702 9,158,221
Participants' contributions receivable 1,474,837 1,247,442
Investment interest receivable 13,470 -
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10,782,009 10,405,663
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191,997,707 150,317,325
LIABILITIES
Accrued liabilities 32,609 30,179
Net amounts payable for pending trades 106,020 60,128
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138,629 90,307
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Net assets available for plan benefits $ 191,859,078 $ 150,227,018
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See accompanying notes to financial statements.
1
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
Statement of Changes in Net Assets Available for Plan Benefits
(Stated in U.S. dollars)
Year ended December 31, 2003
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Additions to net assets attributable to:
Investment income
Net appreciation in fair value of investments $ 30,939,686
Interest and dividends 3,035,405
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33,975,091
Employers' contributions 9,499,045
Participants' contributions 17,270,028
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Total additions 60,744,164
Deductions from net assets attributable to:
Benefits paid to participants (11,682,755)
Expenses (294,238)
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(11,976,993)
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Increase before transfer 48,767,171
Transfer of assets to unrelated plan (note 6) 7,135,111
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Net increase 41,632,060
Net assets available for plan benefits, beginning of year 150,227,018
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Net assets available for plan benefits, end of year $ 191,859,078
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See accompanying notes to financial statements.
2
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
Notes to Financial Statements
(Stated in U.S. dollars)
Year ended December 31, 2003
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1. DESCRIPTION OF THE PLAN:
The following brief description of the Four Seasons Hotels Retirement
Benefit Plan (the "Plan") is provided for general information purposes
only. Participants should refer to the Plan document for a complete
description of the Plan's provisions.
GENERAL:
The Plan is a multiple employer defined contribution plan sponsored by the
Pension and Profit-Sharing Committee of Four Seasons Hotels Limited
(hereinafter referred to as "Sponsor" or "Company"). The Sponsor does not
guarantee any pensions or underwrite any investment returns. Participation
in the Plan is voluntary. Any employee, as defined by the Plan, who works
the required minimum 250 hours (1,000 hours for eligibility for employer
contributions) is eligible to participate in the Plan. Participation in the
employer base and profit sharing plans is automatic following the
appropriate waiting period, as defined by the Plan.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
CONTRIBUTIONS:
The Plan provides for the following contributions by eligible participants
and the employers:
(a) Elective (401(K)) salary deferrals by eligible participants of between
0% and 30% of the participant's compensation. The Internal Revenue
Service ("IRS") has limited participant's annual tax-deferred
contributions to $12,000 for 2003. Other IRS limits exist for certain
highly compensated employees participating in the Plan.
(b) Employer contributions of 3% of each eligible participant's
compensation.
(c) Discretionary employer profit-sharing contributions of a uniform
percentage of each eligible participant's compensation. The
profit-sharing contribution (if any) made by each employer may vary,
depending upon the profits of the employer. The 2003 profit-sharing
contribution was $3,141,594.
3
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
Notes to Financial Statements (continued)
(Stated in U.S. dollars)
Year ended December 31, 2003
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1. DESCRIPTION OF THE PLAN (CONTINUED):
PARTICIPANT ACCOUNTS:
Each participant's account is credited with the participant's
contributions, and allocations of employer's contributions and allocations
of the Plan's earnings or losses. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that will be provided from the
participant's vested account.
Participants may direct the investment of their elective deferrals, as well
as any profit-sharing contributions made on their behalf among various
investment funds. Matching contributions are credited to the Wells Fargo
Growth Balanced Fund. Effective January 1, 2003, participants may re-direct
balances out of that fund.
VESTING:
Participants are immediately 100% vested in their salary contributions,
employer contributions, rollover contributions and any earnings thereon.
PAYMENT OF BENEFITS:
On termination of service due to death, disability, termination of
employment, or retirement, a participant or his or her beneficiary receives
a lump sum amount equal to the value of the assets in his or her account.
PARTICIPANT LOANS:
Participants may borrow funds against contributions made by the employee
and employer profit-sharing contributions. The maximum amount that a
participant can borrow from the Plan is $50,000 or 50% of their account
balance, whichever is less. The interest rate charged on the loan is fixed
over the loan term and is calculated at the Index Rate, as defined in the
Plan document, on the first banking day of the previous month plus 2%. Loan
terms are from six months to five years.
PLAN TERMINATION:
Although the employers have not expressed any intent to terminate the Plan,
they may do so at any time. In the event of termination of the Plan, all
Plan assets will be distributed to participants based on their account
balance.
4
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
Notes to Financial Statements (continued)
(Stated in U.S. dollars)
Year ended December 31, 2003
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1. DESCRIPTION OF THE PLAN (CONTINUED):
ADMINISTRATIVE EXPENSES:
Administrative expenses are incurred by the Plan and allocated to the
participant accounts.
2. SIGNIFICANT ACCOUNTING POLICIES:
The accompanying financial statements have been prepared on an accrual
basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION:
The investments are stated at fair value. All shares of registered
investment companies are valued at quoted market prices from national
exchanges. Shares of the collective trust fund are stated at fair value,
which represents the net asset values of shares held by the Plan, as
reported by the Investment Manager of the fund. Common stock of Four
Seasons Hotels Inc. ("FSHI"), the parent company of the Company, is traded
on The Toronto Stock Exchange and the New York Stock Exchange and is valued
at the current market price of FSHI's common stock on the last business day
of the Plan's year end.
Participants loans are valued at cost, which approximates fair value.
Purchases and sales of investments are recorded on a trade date basis.
Interest income is recorded on an accrual basis. Dividend income is
recorded on the ex-dividend date.
PAYMENT OF BENEFITS:
Benefits are recorded when paid.
USE OF ESTIMATES:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and changes therein, and disclosure of
contingent assets and liabilities at the date of the financial statements.
Actual results could differ from those estimates.
5
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
Notes to Financial Statements (continued)
(Stated in U.S. dollars)
Year ended December 31, 2003
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3. INVESTMENTS:
The following investments represent 5% or more of the Plan's net assets:
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2003 2002
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Mutual funds:
Wells Fargo Bank Growth Balanced Fund $ 84,926,677 $ 70,433,266
Wells Fargo Bank Growth Equity Fund 30,226,211 21,074,191
Vanguard Index 500 Fund 14,850,433 9,421,090
Collective trust fund:
Wells Fargo Bank Stable Return Fund 12,409,048 10,771,453
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The Plan offers a number of investment options, including FSHI common
stock and a variety of investment funds, including mutual funds and a
collective trust fund. The funds invest in U.S. equities, international
equities and fixed income securities. Investment securities, in general,
are exposed to various risks, such as interest rate, credit and overall
market volatility risk. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the statement of
net assets available for plan benefits and participant account balances.
The Plan's exposure to a concentration of credit risk is limited by the
diversification of investments across nine participant-directed fund
elections. Additionally, the investments within each participant-directed
fund are further diversified into varied financial instruments, with the
exception of the Four Seasons Stock Fund, which invests in a single
security.
During 2003, the Plan's investments (including investments bought, sold
and held during the year) appreciated in value as follows:
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Four Seasons Stock Fund $ 262,498
Mutual funds 29,251,906
Collective trust fund 1,425,282
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$ 30,939,686
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6
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
Notes to Financial Statements (continued)
(Stated in U.S. dollars)
Year ended December 31, 2003
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4. FEDERAL INCOME TAXES:
The Plan has received a favorable determination letter from the Internal
Revenue Service, dated August 7, 2002, indicating that it is qualified
under Section 401(a) of the Internal Revenue Code ("IRC") and, therefore,
the related trust is exempt from taxes under Section 501(a) of the Code.
Although the Plan has been amended since receiving the determination
letter, the Plan administrator and the Plan's tax counsel believe that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC.
5. RELATED PARTY TRANSACTIONS (PARTIES IN INTEREST):
Certain investments of the Plan are shares of mutual funds and a collective
trust fund sponsored by Wells Fargo Bank Minnesota, N.A., a subsidiary of
Wells Fargo. Wells Fargo provides investment advisory services for certain
investments in the Plan and is the administrator of the Plan. Another
investment in the Plan is an investment fund comprised primarily of shares
of common stock issued by FSHI. FSHI is the ultimate parent of the Plan
Sponsor, as defined by the Plan.
Fees paid to related parties for services to the Plan are paid out of a
fund's assets. Mutual fund and pooled investment fund operation expenses
come out of a fund's assets and are reflected in the fund's share/unit
price.
6. TRANSFER OF ASSETS TO UNRELATED PLAN:
Effective August 1, 2003, Four Seasons Hotels Limited ceased management of
Four Seasons Olympic Hotel Seattle. Accordingly, assets of $7,135,111 were
transferred out of the Plan to the successor employer's plan on behalf of
all active participants.
7
FOUR SEASONS HOTELS RETIREMENT BENEFIT PLAN
(EIN 98 0057100)
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2003
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Number Market
Issuer Description of units value
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*Wells Fargo Bank Minnesota, N.A.:
Stable Return Fund Collective trust fund 347,126 $ 12,409,048
Strategic Income Fund Mutual fund 444,308 8,539,598
Growth Balanced Fund Mutual fund 2,995,650 84,926,677
Growth Equity Fund Mutual fund 1,078,737 30,226,211
PIMCO Total Return Fund Mutual fund 531,679 5,694,283
Vanguard Index 500 Fund Mutual fund 145,907 14,850,433
T. Rowe Price Small
Capital Stock Fund Mutual fund 327,550 9,164,846
Fidelity Diversified
International Fund Mutual fund 316,827 7,641,865
*Four Seasons Stock Fund Common stock 28,165 1,440,640
*Participant loans 1,864 loans to participants
at rates varying between
6.25% and 11.5% - 6,215,902
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Total investments $ 181,109,503
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* Parties in interest as defined in ERISA.
See accompanying report of Independent Registered Public Accounting Firm.
8
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
FOUR SEASONS HOTELS
RETIREMENT BENEFIT PLAN
By: The Pension and Profit Sharing Committee
of Four Seasons Hotels Limited
By: /s/ Nicholas Mutton
----------------------------------------------------
Nicholas Mutton, a Member of the Committee
Dated: June 28, 2004
EXHIBIT-INDEX
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Exhibit No. Description
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23.1 Consent of KPMG LLP