EXHIBIT5

March 8,2006

Reconciliation toUnited States Generally Accepted Accounting Principles(In USdollars)

**FOUR SEASONSHOTELS INC.**

Yearsended December  31,  2005 and2004

----

AUDITORS'REPORT ON SUPPLEMENTARY INFORMATION

Tothe Board of Directors of Four Seasons HotelsInc.

Under date of March  8,  2006,we reported on the consolidated balance sheets of Four Seasons HotelsInc. as at December  31,  2005 and 2004, and theconsolidated statements of operations, retained earnings, cash providedby operations and cash flows for the years then ended as contained inthis annual report on Form 40-F. In connection with our audits of theaforementioned consolidated financial statements, we also have auditedthe related supplemental note entitled ‘‘Reconciliationto United States Generally Accepted AccountingPrinciples’’ as set forth in this annual report onForm 40-F. This supplemental note is the responsibility of theCorporation's management. Our responsibility is to express anopinion on this supplemental note based on our audits.

Inour opinion, such supplemental note, when considered in relation to thebasic consolidated financial statements taken as a whole, presentsfairly, in all material respects, the information set forth therein asat December  31,  2005 and 2004 and for the years thenended.

/s/ KPMG LLPCharteredAccountants

Toronto, CanadaMarch8,  2006

----

FOUR SEASONSHOTELS INC.

Reconciliation to United StatesGenerally Accepted Accounting Principles

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

The consolidatedfinancial statements of the Corporation for the years endedDecember  31,  2005 and 2004 (the‘‘Consolidated Financial Statements’’) havebeen prepared in accordance with generally accepted accountingprinciples as applied in Canada (‘‘CanadianGAAP’’). In the following respects, generally acceptedaccounting principles as applied in the United States(‘‘US GAAP’’) differ from those applied inCanada.

If US GAAP were employed, net earnings would beadjusted asfollows:

|                                                  |  |        |            |         |  |        |            |         |  |  |
|--------------------------------------------------|--|--------|------------|---------|--|--------|------------|---------|--|--|
|                                             |  |   | 2005       |    |  |   | 2004       |    |
| Netearnings (loss) based on CanadianGAAP         |  | $      | (28,223    | )  |  | $      | 25,698     |    |
| Impact on netearnings of US GAAPadjustments:     |  |   |       |    |  |   |       |    |
| Hotelpartnerships and corporations(a)            |  |   | 5,984      |    |  |   | (6,905     | )  |
| Future incometaxes (c)                           |  |   | 1,642      |    |  |   | 5,244      |    |
| Convertiblenotes (d)                             |  |   | 3,806      |    |  |   | 13,071     |    |
| Deferredcharges (e)                              |  |   | 803        |    |  |   | (3,720     | )  |
| Foreignexchange translation (d)(ii) and(g)       |  |   | (5,700     | )  |  |   | (4,881     | )  |
| Pension plan(h)                                  |  |   | (1,229     | )  |  |   | (417       | )  |
| Stockcompensation expense(l)                     |  |   | (240       | )  |  |   | 1,624      |    |
| Netearnings (loss) based on US GAAP              |  | $      | (23,157    | )  |  | $      | 29,714     |    |
| Basicearnings (loss) per share based on USGAAP   |  | $      | (0.63      | )  |  | $      | 0.83       |    |
| Dilutedearnings (loss) per share based on USGAAP |  | $      | (0.63      | )  |  | $      | 0.79       |    |
| Weightedaverage shares –basic              |  |   | 36,628,206 |    |  |   | 35,647,986 |    |
| Weightedaverage shares –diluted            |  |   | 36,628,206 |    |  |   | 37,426,090 |    |
|                                                  |

1

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

The impactof the US GAAP differences discussed above on the Corporation'sconsolidated shareholders' equity is asfollows:

|                                                      |  |        |         |         |  |        |         |         |  |  |
|------------------------------------------------------|--|--------|---------|---------|--|--------|---------|---------|--|--|
|                                                 |  |   | 2005    |    |  |   | 2004    |    |
| Shareholders'equity based on CanadianGAAP            |  | $      | 546,726 |    |  | $      | 584,900 |    |
| Impact onshareholders' equity of US GAAPadjustments: |  |   |    |    |  |   |    |    |
| Hotelpartnerships and corporations(a)                |  |   | (70,493 | )  |  |   | (74,529 | )  |
| Hoteldisposition program(b)                          |  |   | 23,878  |    |  |   | 23,132  |    |
| Future incometaxes (c)                               |  |   | 10,843  |    |  |   | 8,849   |    |
| Convertiblenotes (d)                                 |  |   | (64,286 | )  |  |   | (66,117 | )  |
| Deferredcharges(e)                                   |  |   | (28,572 | )  |  |   | (29,662 | )  |
| Foreignexchange translation (d)(ii) and(g)           |  |   | 35,442  |    |  |   | 40,054  |    |
| Pensionplan(h)                                       |  |   | 1,884   |    |  |   | 3,064   |    |
| Shareholders'equity based on USGAAP                  |  | $      | 455,422 |    |  | $      | 489,691 |    |
|                                                      |

|           |                                                    |
|-----------|----------------------------------------------------|
| (a)  | Investmentsin hotel partnerships and corporations: |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (i)  | TheCorporation has minority interests (generally less than 20%) incertain hotel partnerships which, under Canadian GAAP, the Corporationaccounts for on a cost basis (see note 1(g) to the ConsolidatedFinancial Statements). Under US GAAP (AICPA Statement of Position 78-9,‘‘Accounting for Investments in Real EstateVentures’’), the Corporation is required to account forits investments in these hotel partnerships using the equity method ofaccounting, pursuant to which the Corporation records in income itsproportionate share of the investee's net earnings orloss. |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | During 2005, under Canadian GAAP,the Corporation recorded a write-down of, and a net gain on thedispositions of, certain investments in hotel partnerships andcorporations (see notes 13(b) and (c) to the Consolidated FinancialStatements). Under US GAAP, the amount of the write-down and the netgain on the dispositions differed as the application of equityaccounting to certain of these investments, under US GAAP, resulted indifferent net book values at the time of the transactions than underCanadian GAAP. |

2

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|  |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ii)  | In2004, under Canadian GAAP, the Corporation accounted for itsinvestments in hotel partnerships and corporations, which were acquiredprior to May  1,  2003 with the intention that they bedisposed of in the foreseeable future, by the cost method, irrespectiveof its percentage ownership interest (see note 1(g) to the ConsolidatedFinancial Statements). Effective January  1,  2005, underCanadian GAAP, the Corporation accounts for these temporary investmentsbased on its percentage ownership interest for each investment (seenote 1(n)(ii) to the Consolidated Financial Statements). UnderUS GAAP, effective January 1, 2002, the Corporation accounts forthese temporary investments based on its percentage ownership interestfor each investment, as the Financial Accounting Standards Board(‘‘FASB’’) Statement of FinancialAccounting Standards No. 144, ‘‘Accounting for theImpairment or Disposal of Long-Lived Assets’’, eliminatedthe exception to consolidate a temporary controlled subsidiary. As aresult, the Corporation has consolidated one temporary investment andhas equity accounted one temporary investment in 2004 under USGAAP. |

|  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (iii)  | During 2004, theCorporation entered into a multi-element arrangement whereby theCorporation (i) sold its interest in a hotel property, (ii) enteredinto a hotel management contract with the purchaser, and (iii) enteredinto a guarantee arrangement with the purchaser. Under Canadian GAAP,as all three elements were entered into with the same party at the sametime, the Corporation applied EIC-142. Pursuant to the requirements ofEIC-142, the Corporation determined that the sale of the hotel propertyshould be accounted for as a separate unit of accounting that should beaccounted for in 2004 as the disposal of the hotel property; and thatthe hotel management contract and the guarantee arrangement should beaccounted for as a combined unit of accounting, with the related costsand revenues being recognized over the term of the hotel managementcontract as management services are delivered. |

Under USGAAP, the Corporation determined that Statement of Financial AccountingStandards No. 66, ‘‘Accounting for Sales of RealEstate’’, overrides the US GAAP equivalent of EIC-142(Emerging Issues Task Force Abstract No. EITF 00-21,‘‘Revenue Arrangements with MultipleDeliverables’’) and requires the guarantee arrangement tobe accounted for as a part of the sale of the hotel property. As aresult, the Corporation's estimate of the fair value of thepayments it would likely be required to make under the guaranteearrangement was accounted for as a reduction of the proceeds receivedon the sale of the hotel property under US GAAP.

3

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|            |                                                                                                               |
|------------|---------------------------------------------------------------------------------------------------------------|
| (iv)  | Summarizedbalance sheet information of the equity method investments, presentedon a 100% basis, is asfollows: |

|                      |
|----------------------|
|                      |  |  |  |  |  |  |  |  |  |  |
|                 |  |   | 2005 |   |  |   | 2004 |   |
| Currentassets        |  | $ | 74,607 |   |  | $ | 92,523 |   |
| Long-termassets,net  |  |   | 242,356 |   |  |   | 359,899 |   |
|                 |  | $ | 316,963 |   |  | $ | 452,422 |   |
| Currentliabilities   |  | $ | 117,990 |   |  | $ | 95,221 |   |
| Long-termobligations |  |   | 172,154 |   |  |   | 292,419 |   |
| Equity               |  |   | 26,819 |   |  |   | 64,782 |   |
|                 |  | $ | 316,963 |   |  | $ | 452,422 |   |
|                      |

Summarizedresults of operations of the equity method investments, presented on a100% basis, are asfollows:

|          |
|----------|
|          |  |  |  |  |  |  |  |  |  |  |
|     |  |   | 2005 |   |  |   | 2004 |   |
| Revenues |  | $ | 182,649 |   |  | $ | 189,866 |   |
| Expenses |  |   | (190,308 | )  |  |   | (196,704 | )  |
| Netloss  |  | $ | (7,659 | )  |  | $ | (6,838 | )  |
|          |

Theproportionate taxable income or loss of all hotel partnerships isincluded in the taxable income of their respective partners.Accordingly, no provisions for income taxes on such entities areincluded in the above statements.

4

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|           |                           |
|-----------|---------------------------|
| (b)  | Hoteldisposition program: |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In November1993, the Corporation implemented a program to dispose of seven hotelproperties. Under Canadian GAAP, this hotel disposition programrepresented the disposition of a significant portion of theCorporation's Ownership Operations and Corporate Expensessegment; accordingly, in both 1993 and 1994, the Corporation made anestimate as to whether it would realize a net gain or loss on theprogram in total. As a result, in 1993, the Corporation recorded aprovision of C$127 million for the estimated probable loss on the saleof the hotels included in the hotel disposition program. The programended in 1996, and the total net proceeds received by the Corporation,resulting from the dispositions of the hotels included in the program,approximated the proceeds estimated in 1993; therefore, the programrequired no further gain or loss to berecorded. |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Under US GAAP, the Corporationwas required to account for the hotels remaining in the program asindividual assets held for sale. This resulted in the requirement underUS GAAP to record, in 1994, a further provision for loss on certain ofthe hotels remaining in the program, with the offsetting gains on otherhotels recorded when the gains were realized. On the sale by theCorporation of its equity interest in one of its hotels in 1995,C$27.8 million ($23,853) of the gain was deferred for US GAAPpurposes, and will be recognized in proportion to the cash paymentsreceived on the cash flow bond received as consideration on the sale(see note 3(a) to the Consolidated Financial Statements). TheCorporation did not recognize any of the deferred gain in 2005 and 2004as no principal payments were received on the cash flow bond. As atDecember 31, 2005, C$21.3 million ($18,306) of the gaincontinues to be deferred. |

|           |                                    |
|-----------|------------------------------------|
| (c)  | Accounting for futureincome taxes: |

|        |                                                                                                                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The income tax adjustmentfrom Canadian to US GAAP results from the differences betweenUS GAAP and Canadian GAAP in calculating earnings before incometaxes. |

5

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|           |                   |
|-----------|-------------------|
| (d)  | Convertiblenotes: |

|  |           |                                   |
|--|-----------|-----------------------------------|
|  | (i)  | Convertible notes, issuedin 2004: |

During 2004, FSHI issued $250,000 (principalamount) senior notes convertible into LVS of FSHI for net proceeds of$241,332 (see note 10(a) to the Consolidated Financial Statements).Under Canadian GAAP, the notes were bifurcated into a debt component(representing the principal value of a bond of $211,754, which wasestimated based on the present value of a $250,000 bond maturing in2009, yielding 5.33% per annum, compounded semi-annually, andpaying a coupon of 1.875% per annum) and an equity component(representing the value of the conversion feature of the notes).Accordingly, net proceeds were allocated $211,754 to long-termobligations and $36,920 to shareholders' equity. The offeringexpenses and underwriters' commission relating to the debtcomponent of the notes of $7,019 were recorded in ‘‘Otherassets’’.

Under US GAAP, gross proceeds of$250,000 were recorded as long-term obligations, yielding 1.875%per annum. The total offering expenses and underwriters'commission relating to the notes of $8,345 were recorded in‘‘Other assets’’. Accordingly, lowerinterest expense of $6,572 was recognized in 2005 (2004 - $3,427) underUS GAAP.

|  |            |                                           |
|--|------------|-------------------------------------------|
|  | (ii)  | Currency and interest rateswap agreement: |

In April  2005, FSHI entered intoa currency and interest rate swap agreement to July 30, 2009,pursuant to which the Corporation has agreed to receive interest at afixed rate of 5.33% per annum on an initial notional amount of$215,842 and pay interest at a floating rate of six-month Canadianbankers' acceptance, in arrears, plus 1.1% per annum on aninitial notional amount of C$269.2 million. On July  30,2009, FSHI will pay C$311.8 million and receive $250,000 under the swap(see note 10(a) to the Consolidated Financial Statements). UnderCanadian GAAP, FSHI has designated the swap as a fair value hedge ofthe convertible senior notes, which resulted in an effective accountinginterest rate on the hedged notes of six-month Canadian bankers'acceptances, in arrears, plus 1.1%. In addition, foreignexchange translation gains and losses on the notional amount of theswap are recognized on a monthly basis, offsetting the respectivemonthly translation losses and gains recognized on thenotes.

6

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | Under USGAAP, Statement of Financial Accounting Standards No. 133,‘‘Accounting for Derivative Instruments and HedgingActivities’’ (‘‘FAS 133’’)establishes accounting and reporting standards for derivatives andhedging. It requires that all derivatives be recognized as eitherassets or liabilities at fair value and establishes criteria for theuse of hedge accounting. |

|  |        |                                                                                                                                                                                                                                                                                                                       |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | Under US GAAP, thecurrency and interest rate swap did not meet the requirements of FAS133 in order to hedge the convertible senior notes and, as a result,was marked-to-market. Accordingly, additional interest expense of$1,188 and additional foreign exchange loss of $6,511 was recognized in2005 under US GAAP. |

|  |             |                              |
|--|-------------|------------------------------|
|  | (iii)  | Interest rate swapagreement: |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | In connection with theconvertible notes issued in 2004, FSHI entered into an interest rateswap agreement with an initial notional amount of $211,754, pursuant towhich FSHI had agreed to receive interest at a fixed rate of5.33% per annum and pay interest at six-month LIBOR, in arrears,plus 0.4904% (see note 10(a) to the Consolidated FinancialStatements). Under Canadian GAAP, FSHI had designated the interest rateswap as a fair value hedge of the notes, which resulted in an effectiveaccounting interest rate on the hedged notes to the date of terminationof the swap, of six-month LIBOR, in arrears, plus 0.4904%.Subsequently in 2004, FSHI terminated the interest rate swap agreementand received proceeds of $9,000. Under Canadian GAAP, the gain of C$9.3million ($7,383) was deferred and is being amortized over the period toJuly  30,  2009, which would have been the remaining swapterm, as a reduction to interestexpense. |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                  |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | Under US GAAP, the interest rateswap did not meet the requirements in order to hedge the convertiblenotes and, as a result, was being marked-to-market. Accordingly,additional interest expense of $1,578 was recognized in 2005 (2004 -$2,049) under US GAAP. In addition, a gain on the marked-to-marketadjustments and termination of the swap of $9,000 was recognized in2004 under US GAAP. |

7

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|  |            |                                   |
|--|------------|-----------------------------------|
|  | (iv)  | Convertiblenotes, issued in 1999: |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | During 1999, FSHIissued $655,519 principal amount at maturity (September 23, 2029) ofnotes convertible into LVS of FSHI for gross proceeds of $172,500 (seenote 10(b) to the Consolidated Financial Statements). Under CanadianGAAP, the notes were bifurcated into a debt component (representing thepresent value of a zero coupon bond of $655,519, maturing in 2029,yielding 9% per annum, compounding semi-annually) and an equitycomponent (representing the value of the conversion feature of thenotes). Accordingly, net proceeds were originally allocated $46,731 tolong-term obligations and $121,115 to shareholders' equity. Theoffering expenses and underwriters' commission relating to thedebt component of the notes of $1,729 were recorded in‘‘Otherassets’’. |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | During 2004, FSHIredeemed for cash all these convertible notes for $328.73 per each onethousand dollar principal amount at maturity (the redemption pricebeing the issue price plus interest that was accrued but unpaid) for anaggregate payment of $215,451 (see note 10(b) to theConsolidated Financial Statements). Under Canadian GAAP, theconsideration paid on the redemption was allocated to the liability andequity components of the convertible notes based on their relative fairvalues at the date of the redemption. Based on this allocation, apre-tax accounting loss of $11,174 was recognized, and recorded in‘‘Other expense, net’’, related to the debtcomponent of the convertible notes, and a pre-tax accounting gain of$6,241 was recognized, and recorded in contributed surplus, related tothe equity component of the convertiblenotes. |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | Under US GAAP, gross proceeds of$172,500 were recorded as long-term obligations, with a yield tomaturity of 4.5%, compounding semi-annually. The total offeringexpenses and underwriters' commission relating to the notes of$6,382 was recorded in ‘‘Other assets’’.Accordingly, additional interest expense of $2,526 was recognized in2004 under US GAAP. In addition, under US GAAP, a pre-tax accountingloss of $5,955 was recognized in 2004, and recorded in‘‘Other expense, net’’, on the redemptionof the convertible notes, instead of the amounts recognized above underCanadian GAAP. |

8

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|           |                  |
|-----------|------------------|
| (e)  | Deferredcharges: |

|        |                                                                                                                                                                                                                                                                                                                                                             |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The Corporation defersexpenditures directly related to the negotiation, structuring andexecution of new management contracts, and if the property is opened,amortizes these deferred costs on a straight-line basis generally overa 10-year period (see note 1(i) to the Consolidated FinancialStatements). Under US GAAP, such start-up costs areexpensed. |

|           |                                                                                |
|-----------|--------------------------------------------------------------------------------|
| (f)  | Investment in management contractsand investment in trademarks and tradenames: |

|        |                                                                                                                                                                                                                                                                                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | On a Canadian GAAP basis,amortization expense of approximately $6,700 related to intangibleassets with finite lives was recorded during the year endedDecember  31,  2005 (2004 - $6,000). Amortization expenserelating to these assets is expected to be $7,000 in each of the fiscalyears 2006 through 2010. |

|           |                              |
|-----------|------------------------------|
| (g)  | Foreign exchangetranslation: |

|  |           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (i)  | Under US GAAP, the impact on theCorporation in 2004 of applying FAS 133 to the accounting for theCorporation's US dollar forward contracts was themarked-to-market of these contracts in 2002 and 2003. For US GAAPpurposes, these forward exchange contracts were not accounted for ashedges in 2002 and 2003; therefore, the marked-to-market adjustmentswere recognized in income in 2002 and 2003. Under Canadian GAAP, theseforward exchange contracts were accounted for as hedges in 2002 and2003. |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | Effective January  1,2004, under Canadian GAAP, the Corporation ceased designating its USdollar forward contracts as hedges of its US dollar revenues and, as aresult, the US dollar forward contracts were marked-to-market as ofthat date (see note 12(a) to the Consolidated Financial Statements). In2004, this accounting treatment was the same as under US GAAP. All ofthese forward contracts matured during 2004. The difference inaccounting treatment in 2002 and 2003 resulted in a lower foreignexchange gain in 2004, under US GAAP, of$11,099. |

|  |            |                                                                                                                                                                                                                                                                                                                                   |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | (ii)  | Under US GAAP, the US dollar amountof convertible notes allocated to long-term obligations is higher thanunder Canadian GAAP ((d)(i) and (iv)). The US dollar monetaryliabilities are, therefore, higher under US GAAP, which resulted in anincrease in the foreign exchange gain in 2005, under US GAAP, of $811(2004 - $6,218). |

9

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|           |              |
|-----------|--------------|
| (h)  | Pensionplan: |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Under Canadian GAAP, the Corporation,effective January  1,  2000, changed its accounting policyrelating to the accounting for future employee benefits, includingpension benefits, to comply with the new Canadian GAAP standard foraccounting for pension plans. The Corporation adopted the new standardfor pension benefits retroactively, without restating the financialstatements of prior periods. This eliminated substantially all of thedifferences between US and Canadian GAAP relating to the accounting forpension benefits. |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The only remainingsignificant difference between US and Canadian GAAP relates to thetreatment of actuarial gains and losses. Under Canadian GAAP, thetransitional provisions relating to the new Canadian GAAP standard foraccounting for pension plans permitted the impact of the change of thenew standard to be accounted for retroactively, without restatement ofprior years' financial statements. As a result, the Corporationrecorded in 2000 a charge to retained earnings, representing thedifferences between the amount accrued by the Corporation under theprior accounting standard and the actuarial obligation as measuredunder the new standard, which included the net unamortized actuariallosses as at December  31,  1999. Under US GAAP, the netunamortized actuarial losses as at December  31,  1999 areamortized, on a straight-line basis, over the expected averageremaining service life of employees expected to receive benefits underthe plans. |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | During 2005, the Corporationtransitioned the majority of its senior executives and hotel and resortgeneral managers from an unfunded defined benefit retirement plan to afully funded retirement plan based on a defined contribution format(see note 15(b) to the Consolidated Financial Statements). Under USGAAP, the net unamortized actuarial losses as at December31,  1999, relating to the employees transitioned out of thedefined benefit retirement plan, which remained unamortized as at thedate of transition, were recognized as an expense in2005. |

10

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|           |                                                       |
|-----------|-------------------------------------------------------|
| (i)  | Recentaccounting standards issued but not yetadopted: |

|  |           |                     |
|--|-----------|---------------------|
|  | (i)  | Share-basedpayment: |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | In December  2004, theFASB issued Statement of Financial Accounting Standards No. 123(revised 2004), ‘‘Share-Based Payment’’(‘‘FAS 123R’’), which requires an entity torecognize in the income statement the grant-date fair value of stockoptions and other equity-based compensation issued to employees. FAS123R eliminates an entity's ability to account for share-basedcompensation transactions using the intrinsic value method ofaccounting in APB Opinion No. 25, ‘‘Accounting for StockIssued to Employees’’, which was permitted underStatement of Financial Accounting Standards No. 123(‘‘FAS 123’’), as originally issued.Entities that adopt the fair value-based method of accounting must useeither the modified prospective or modified retrospective transitionmethod. FAS 123R is similar to Section 3870 of the CICA Handbook (seenote 1(l) to the Consolidated Financial Statements), but is notrequired to be adopted by the Corporation, under US GAAP, untilJanuary  1,  2006. |

|  |            |                                       |
|--|------------|---------------------------------------|
|  | (ii)  | Realestate time-sharing transactions: |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | TheFASB issued Statement of Financial Accounting Standards No. 152,‘‘Accounting for Real Estate Time-Sharing Transactions:an Amendment of FASB Statements No. 66 and 67’’(‘‘FAS 152’’), which amends FASB StatementNo. 66, ‘‘Accounting for Sales of RealEstate’’, to reference accounting and reporting guidancefor real estate time-sharing transactions that is provided in AICPAStatement of Position 04-02, ‘‘Accounting for Real EstateTime-Sharing Transactions’’ (‘‘SOP04-02’’). FAS 152 also amends FASB Statement No. 67,‘‘Accounting for Costs and Initial Rental Operations ofReal Estate Projects’’ (‘‘FAS67’’), so that the guidance in FAS 67 about incidentaloperations and costs incurred to sell real estate projects does notapply to real estate time-sharing transactions. Both FAS 152 and SOP04-02 will be effective for the Corporation for fiscal years beginningafter June  15,  2005. |

11

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|        |       |                           |
|--------|-------|---------------------------|
|   | (iii) | Non-monetarytransactions: |

|  |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | In June  2005, theCICA issued Section 3831, ‘‘Non-MonetaryTransactions’’, which introduces new requirements fornon-monetary transactions entered into on or after January1,  2006. The amended requirements will result in non-monetarytransactions being measured at fair values unless certain criteria aremet, in which case, the transaction is measured at carrying value. Asthis standard is to be implemented for non-monetary transactionsentered into on or after January  1,  2006, the impact ofadoption of this standard will depend upon future non-monetarytransactions. |

|           |                                                          |
|-----------|----------------------------------------------------------|
| (j)  | Statements of cash provided byoperations and cash flows: |

|        |     |                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (i) | ForCanadian GAAP purposes, the Corporation's statements of cashprovided by operations show intermediate subtotals, and only show thetotal change in non-cash operating assets and liabilities. US GAAP doesnot permit intermediate subtotals in cash provided by operations, andrequires the statements to show the details of changes in non-cashoperating assets and liabilities. |

|  |        |                                                                                                                                                                                                                                                                                                             |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | Inaddition, the above adjustments to US GAAP earnings relating totemporary controlled subsidiaries ((a)(ii)), interest on convertiblenotes redeemed ((d)(iv)) and deferred charges (e) would also affectcash provided by operations, as well as cash used in financing and cashused in capital investments. |

|  |        |                                                                                                                                                                                                                           |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |   | UnderCanadian GAAP, the proceeds received on termination of the interestrate swap are recorded as cash provided by operations. Under US GAAP,the proceeds are recorded as cash provided by capital investments((d)(iii)). |

12

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

As a result, cashprovided by operations would be presented as follows on a US GAAPbasis:

|                                                               |
|---------------------------------------------------------------|
|                                                               |  |  |  |  |  |  |  |  |  |  |
|                                                          |  |   | 2005 |   |  |   | 2004 |   |
| Netearnings (loss) based on USGAAP                            |  | $ | (23,157 | )  |  | $ | 29,714 |   |
| Adjustments:                                                  |  |   |   |   |  |   |   |   |
| Stockcompensationexpense                                      |  |   | 2,564 |   |  |   | – |   |
| Depreciationandamortization                                   |  |   | 8,456 |   |  |   | 9,884 |   |
| Unrealizedforeign exchange loss                               |  |   | 30,332 |   |  |   | 1,708 |   |
| Provision forloss                                             |  |   | 31,119 |   |  |   | 1,582 |   |
| Loss (gain) ondisposal of hotelinvestments                    |  |   | (9,984 | )  |  |   | 6,045 |   |
| Gain ontermination of interest rateswap                       |  |   | – |   |  |   | (9,000 | )  |
| Loss onredemption of convertiblenotes                         |  |   | – |   |  |   | 5,954 |   |
| Loss onretirement benefit plantransition                      |  |   | 35,467 |   |  |   | – |   |
| Equity inlosses of and distributions from hotelinvestments    |  |   | 1,516 |   |  |   | 556 |   |
| Minorityinterest                                              |  |   | – |   |  |   | (329 | )  |
| Future incometaxes                                            |  |   | (14,395 | )  |  |   | (1,736 | )  |
| Other                                                         |  |   | 734 |   |  |   | 166 |   |
| Interestpaid on redemption of convertiblenotes                |  |   | – |   |  |   | (42,981 | )  |
| Amountpaid relating to retirement benefit plantransition      |  |   | (36,029 | )  |  |   | – |   |
| Changein non-cash workingcapital:                             |  |   |   |   |  |   |   |   |
| Accounts and notesreceivable                                  |  |   | (5,700 | )  |  |   | (3,356 | )  |
| Inventory                                                     |  |   | (212 | )  |  |   | 666 |   |
| Prepaidexpenses and otherassets                               |  |   | (426 | )  |  |   | 784 |   |
| Accounts payableand accruedliabilities                        |  |   | 6,755 |   |  |   | 16,171 |   |
| Foreigncurrency translation effect on non-cash workingcapital |  |   | (2,491 | )  |  |   | (3,054 | )  |
| Cashprovided by operations based on USGAAP                    |  | $ | 24,549 |   |  | $ | 12,774 |   |
|                                                               |

13

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|            |                                                                                                                                                                           |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  | Asa result of the above adjustments, the major captions on theCorporation's statements of cash flows on a Canadian GAAP basisare reconciled to a US GAAP basis asfollows: |

|                                                       |
|-------------------------------------------------------|
|                                                       |  |  |  |  |  |  |  |  |  |  |
|                                                  |  |   | 2005 |   |  |   | 2004 |   |
| Cashprovided by operations based on CanadianGAAP      |  | $ | 26,477 |   |  | $ | 44,394 |   |
| Temporarycontrolledsubsidiary                         |  |   | – |   |  |   | 1,162 |   |
| Terminationof interest rateswap                       |  |   | – |   |  |   | (9,000 | )  |
| Redemption ofconvertiblenotes                         |  |   | – |   |  |   | (17,141 | )  |
| Deferredcharges                                       |  |   | (1,928 | )  |  |   | (6,641 | )  |
| Cashprovided by operations based on USGAAP            |  | $ | 24,549 |   |  | $ | 12,774 |   |
| Cashprovided by financing based on CanadianGAAP       |  | $ | 3,943 |   |  | $ | 82,638 |   |
| Temporarycontrolledsubsidiary                         |  |   | – |   |  |   | (1,527 | )  |
| Redemptionof convertiblenotes                         |  |   | – |   |  |   | 17,141 |   |
| Cashprovided by financing based on USGAAP             |  | $ | 3,943 |   |  | $ | 98,252 |   |
| Cashused in capital investments based on CanadianGAAP |  | $ | (10,276 | )  |  | $ | (41,229 | )  |
| Terminationof interest rateswap                       |  |   | – |   |  |   | 9,000 |   |
| Deferredcharges                                       |  |   | 1,928 |   |  |   | 6,641 |   |
| Dispositionof temporary controlledsubsidiary          |  |   | (3,131 | )  |  |   | – |   |
| Cashused in capital investments based on USGAAP       |  | $ | (11,479 | )  |  | $ | (25,588 | )  |
| Increasein cash based on USGAAP                       |  | $ | 17,013 |   |  | $ | 85,438 |   |
|                                                       |

14

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|           |                      |
|-----------|----------------------|
| (k)  | Comprehensiveincome: |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Statement of Financial AccountingStandards No. 130 (‘‘FAS 130’’) establishesstandards under US GAAP for reporting and displaying comprehensiveincome and its components (revenues, expenses, gains and losses) in afull set of general-purpose financial statements. FAS 130 requires thatall items that are required to be recognized under accounting standardsas components of comprehensive income be reported in a financialstatement that is displayed with the same prominence as other financialstatements. |

|        |                                                                                                                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | FAS 130 requires companies to(i) classify items of other comprehensive income by their nature in afinancial statement, and (ii) display the accumulated balance of othercomprehensive income separately from capital stock, contributed surplusand retained earnings in the shareholders' equity section of thebalance sheet. |

|        |                                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|
|   | The statements ofcomprehensive income for the years ended December  31,2005 and 2004 would be presented as follows on a US GAAPbasis: |

|                                                     |
|-----------------------------------------------------|
|                                                     |  |  |  |  |  |  |  |  |  |  |
|                                                |  |   | 2005 |   |  |   | 2004 |   |
| Netearnings (loss) based on USGAAP                  |  | $ | (23,157 | )  |  | $ | 29,714 |   |
| Othercomprehensive gain (loss), net of incometaxes: |  |   |   |   |  |   |   |   |
| Foreigncurrency translation gain(loss)              |  |   | (12,411 | )  |  |   | 16,643 |   |
| Comprehensiveincome (loss) based on USGAAP          |  | $ | (35,568 | )  |  | $ | 46,357 |   |
|                                                     |

Theaccumulated other comprehensive income balances for the years endedDecember 31, 2005 and 2004 would be presented as follows on a USGAAPbasis:

|                                 |
|---------------------------------|
|                                 |  |  |  |  |  |  |
| Balance,December  31,2003       |  | $ | 56,416 |   |
| Foreigncurrency translationgain |  |   | 16,643 |   |
| Balance,December  31,2004       |  |   | 73,059 |   |
| Foreigncurrency translationloss |  |   | (12,411 | )  |
| Balance,December  31,2005       |  | $ | 60,648 |   |
|                                 |

15

----

FOUR SEASONS HOTELSINC.

Reconciliation to United States GenerallyAccepted Accounting Principles (continued)

Years endedDecember  31,  2005 and 2004(In thousands of USdollars (see note 1(a) to the Consolidated FinancialStatements)except per shareamounts)

|  |
|--|
|  |  |
|  |

|           |                               |
|-----------|-------------------------------|
| (l)  | Stock-basedcompensation plan: |

|        |                                                                                                                                                                                                                                                                                                 |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Under Canadian GAAP,employee stock options granted or modified on or after January1,  2003 are accounted for using the fair value-based method,whereas, prior to January  1,  2003, they were accountedfor using the settlement method (see note 1(l) to the ConsolidatedFinancial Statements). |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | FAS 123 providesguidance on the accounting for stock-based compensation plans under USGAAP, such as the Corporation's stock option plan (see note 11(b)to the Consolidated Financial Statements). As allowed byFAS 123, the Corporation has decided to continue to useAccounting Principles Board Opinion No. 25 (‘‘APB25’’), ‘‘Accounting for Stock Issued toEmployees’’, in accounting for its stock option plan and,as a result, higher stock option expense of $240 was recorded underUS GAAP. |

|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | For the years endedDecember  31,  2005 and 2004, had compensation expense forthe Corporation's stock-based compensation plan been determinedbased on the fair value at the grant dates for stock options issuedunder the plan after December  31,  1994, theCorporation's US GAAP net earnings (loss), US GAAP basic earnings(loss) per share and US GAAP diluted earnings (loss) per share wouldhave been adjusted to the pro forma amounts indicatedbelow: |

|                                                           |
|-----------------------------------------------------------|
|                                                           |  |  |  |  |  |  |  |  |  |  |
|                                                      |  |   | 2005 |   |  |   | 2004 |   |
| Netearnings (loss) in accordance with US GAAP, asreported |  | $ | (23,157 | )  |  | $ | 29,714 |   |
| Deductpro forma stock optionexpense                       |  |   | (11,415 | )  |  |   | (19,137 | )  |
| Proforma net earnings(loss)                               |  | $ | (34,572 | )  |  | $ | 10,577 |   |
| Earnings(loss) pershare:                                  |  |   |   |   |  |   |   |   |
| Basic, asreported                                         |  | $ | (0.63 | )  |  | $ | 0.83 |   |
| Basic, proforma                                           |  |   | (0.94 | )  |  |   | 0.30 |   |
| Diluted, asreported                                       |  |   | (0.63 | )  |  |   | 0.79 |   |
| Diluted,proforma                                          |  |   | (0.94 | )  |  |   | 0.29 |   |
|                                                           |

16

----