Finance Report Example

Four Seasons Hotels Inc. first quarter 2004 results

Answer 1)
Officially called, 10-Q report, the quarterly reports are filed by the public listed companies through which they provide updated financial statements over a period of a quarter. However, unlike annual filings, the financial statements included in the quarterly report are not necessarily audited. Included in the quarterly reports are the income statement, balance sheet, cash flow statement, management discussion and analysis section along with disclosures related to other events such as significant legal proceedings and change in the accounting policy over the quarter. Important to note, issuing a quarterly report has its own set of benefit to offer to the company, and the investors.
For Instance, the primary objective of the company behind issue of 10-Q report is to adhere to SEC regulations, improve communication with the financial markets and investors, lower share price volatility and rationale valuations. In other words, by providing regular quarterly financial information to the investors and the financial markets, the company receives an efficient placing in terms of stock valuation.
On the other hand, primarily short-term investors are most interested users of the quarterly earnings reports, as through these reports, they come to know how the company has performed over last period, and then they decide their future actions over stock trading strategies. For example, with Four Season Hotel reporting significant growth in net income earnings and decline ownership loss in its first quarter report of 2004, the short-term investors would have gained significant profits in their intra-day trading.

Answer 2)

Referring to the financial disclosures by the company in their quarterly report, Four Season reported an increase of 88.9% in gross operating figures for Middle East and Europe areas. The company in the accompanying notes declared that the major growth in the operating figures was sourced from Middle East properties that saw increased guest appearances after the end of Iraq and SRAS war in 2003. In addition, the low labor cost in this region was also an important factor behind significant growth in operating figures.
On the other hand, growth in operating margins from European properties was sourced from improved demand during the quarter after the company opened their first resort in the region in Terre Blanche.

Answer 3)

The company in the accompanying notes to the financial statements declared that during the first quarter, the demand for group meetings and travel was sluggish except for Las Vegas market. In our opinion, the primary reason behind the growth in the Las Vegas market is the around the year tourist attraction worldwide because of the casino culture there. Moreover, during 2004, the US economy was booming and we expect that the companies might had preferred Las Vegas culture for their group meetings at that time over other areas.

Answer 4)

Referring to the accompanying notes to the financial statements, we found that the incentive fees had increased by 25% during the first quarter of 2004. The increase in the incentive fee is attributed to improvement in gross operating profits at the properties under management in each of the geographic regions in which the company operates. Important to note, the incentive fee was paid to the hotels under management only, i.e. of the total properties owned by the company, only 31 hotels and resorts were under management accruing incentive fee. Hence, we believe that while all the hotels are not under such contract, the incentive fee did this not helped the bottom line for all Four Seasons hotels.

Answer 5)

‘’Other income’’, a term usually used in the earnings report of the company, refers to any income generated by an entity from activities other than the normal business operations. Some of the source of other income for a company includes; investment income, foreign exchange gains, profit and sale from non-inventory assets.
Referring to the financial statement of the company, we found that the first quarter report of 2004 included other income from net foreign exchange gain of $4.6 million resulting from foreign currency translation gains and losses on the unhedged net monetary asset and liability positions of the company in multiple currencies such as US dollars, euros, pounds sterling and Australian dollars. Primarily the gains were sourced from the ‘’translation to Canadian dollars at current exchange rates at the end of each month of the non-Canadian dollar-denominated net monetary assets that are not included in the company’s designated self-sustaining subsidiaries.’’
Considering the previous quarter results for same period, where the company reported net loss of $8.3 million in foreign exchange translation, we believe that during this quarter the company was successful with reported gain of $4.6 million on similar transaction.

Works Cited

Four Seasons Hotels Inc. reports first quarter 2004 results. n.d. 21 March 2015 <http://www.prnewswire.com/news-releases/four-seasons-hotels-inc-reports-first-quarter-2004-results-73850367.html>.
Other Income. n.d. 21 March 2015 <http://www.investorwords.com/3522/other_income.html>.
Radcliffe, Brent. How To Decode A Company's Earnings Reports. n.d. 21 March 2015 <http://www.investopedia.com/articles/fundamental-analysis/10/decoding-earnings-reports.asp>.
The misguided practice of earnings guidance. n.d. 21 March 2015 <http://www.mckinsey.com/insights/corporate_finance/the_misguided_practice_of_earnings_guidance>.