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Choice Hotels International, Inc. Reports 1st Qtr 2003
Net Income of $9.7 million; Grows Number of
Hotels 3.0% to 4,678
9
 
SILVER SPRING, Md. (April 22, 2003) � Choice Hotels International, Inc. (NYSE:CHH) today reported first quarter 2003 net income of $9.7 million, or $0.26 diluted earnings per share (EPS), a 30% increase in EPS over the same period of a year ago.  These results exceeded consensus estimates by $0.02 per share.  At the end of first quarter 2002, the company reported net income of $8.6 million, or $0.20 diluted EPS. 

The company also announced that its operating income increased to $17.2 million for first quarter 2003, a 7.4% gain over the $16.0 million reported at the end of first quarter 2002.

�First quarter results were especially gratifying, given the sluggish economy and uncertainty in travel markets,� said Charles A.  Ledsinger, Jr., president and chief executive officer.  �Choice continues to enjoy very strong unit growth, with this quarter topping 5%.  This development pace speaks to the inherent value in our brands and the ongoing demand for them by both hotel owners and consumers.�

First Quarter Performance

The company reported royalty revenues of $27.3 million for first quarter 2003, compared to $26.0 million for the same period in 2002, an increase of 5.0%.  Royalty revenues in the first quarter of 2003 include $0.9 million attributable to Flag Choice Hotels, which the company began consolidating in July of 2002. 
System-wide domestic revenue per available room (RevPAR) was $25.78 in first quarter 2003, compared to $26.16 for the first quarter of 2002. 

The company adopted Statement of Financial Accounting Standards No. 148, �Accounting for Stock-Based Compensation � Transition and Disclosure,� and began expensing the cost of stock options based on their estimated fair value for all awards granted after January 1, 2003. During the first quarter 2003, the company�s net income includes approximately $0.1 million of expense related to stock options. For all of 2003, the expense associated with stock options is expected to be $0.7 million.

2003 Unit Growth

The total number of domestic Choice hotels on-line grew by 5.1% to 3,516 as of March 31, 2003 from 3,344 as of the same period a year ago.  Net domestic property additions in the first quarter of 2003 were 34, compared to 17 net domestic additions in the same period of 2002. Choice executed 71 new domestic hotel franchise contracts representing 7,607 rooms in first quarter 2003, compared to 59 new contracts representing 5,208 rooms for the same period a year ago. 

In the first quarter 2003, 20 contracts for new construction hotels, representing 1,444 rooms were executed, compared to 10 contracts, representing 639 rooms for the same period a year ago.  At the end of first quarter 2003, Choice had 297 hotels under development in its domestic hotel system, representing 24,719 rooms.

As of March 31, 2003, the total number of Choice hotels worldwide grew 3.0% to 4,678 from 4,541 as of the same date a year ago.  This growth represents an increase of 3.5% in the number of rooms open to 375,859 from 363,074.  At the end of first quarter 2003, Choice had 385 hotels under development worldwide, representing 35,018 rooms.

Second  Quarter & Year 2003 Estimates

The company�s second quarter 2003 earnings, which more fully reflect the effect of the war in Iraq, are expected to be in the range of $0.39 to $0.41.  Full year 2003 diluted EPS are expected to be between $1.65 and $1.68.

Notable Events

Among the notable company events occurring since the previous earnings report:

  • Since Choice announced its stock repurchase program on June 25, 1998, the company has purchased 27.8 million shares of common stock at an average price of $16.75 per share and a total cost of $465.2 million, as of April 22, 2003.  During the first quarter of this year, the company purchased 1.3 million shares of common stock. The Company has remaining authorization to purchase up to 3.6 million shares. Total shares outstanding as of March 31, 2003, are 36.0 million. 
  • The company acquired the remaining 45% interest in Melbourne-based Flag Choice Hotels in Australia, giving it 100% ownership of the subsidiary. 
  • A Best Choice e-Rate Guarantee was launched on the company�s proprietary Web site, Choicehotels.com, to guarantee consumers the best online rates for stays at Choice brand hotels throughout the United States and the Caribbean.
Choice Hotels International is the second-largest hotel franchisor in the world with 4,678 hotels open, representing 375,859 rooms, in the United States and 42 other countries and territories.  As of March 31, 2003, 297 hotels are under development in the United States, representing 24,719 rooms, and an additional 88 hotels, representing 10,299 rooms, are under development in 18 other countries and territories.  Its Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide.

Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law. 

 

 
Contact:
John Hawkins
Vice President, Corporate Communications
Tel: (301) 592-5075
[email protected]
www.choicehotels.com


 
Also See: Choice Hotels International Inc. Acquires 55% Controlling Interest in Flag Choice Hotels, its Franchising Partner in Australia / June 2002
Choice Hotels Names Brent Russell President & CEO of Flag Choice Hotels Of Australia / Nov 2002


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