Choice Hotels International, Inc.
Exhibit 1
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31, March 31,
REVENUES:
2004 2003
--------- ---------
Royalty fees
$ 30,709 $ 27,251
Initial franchise and relicensing fees
3,388 2,607
Partner services
2,267 2,306
Marketing and reservation
49,311 47,353
Hotel operations
813 837
Other
747 1,202
--------- ---------
Total revenues
87,235 81,556
OPERATING EXPENSES:
Selling, general and administrative
15,801 13,486
Depreciation and amortization
2,534 2,759
Marketing and reservation
49,311 47,353
Hotel operations
690 726
--------- ---------
Total operating expenses
68,336 64,324
Operating income
18,899 17,232
OTHER INCOME AND EXPENSES:
Interest expense
2,548 3,024
Interest and other investment income
(312) (1,354)
Equity in net income of affiliates
(186) -
--------- ---------
Total other income and expenses
2,050 1,670
--------- ---------
Income before income taxes
16,849 15,562
Income taxes
6,255 5,875
--------- ---------
Net income
$ 10,594 $ 9,687
========= =========
Weighted average shares outstanding-basic
34,273 36,772
========= =========
Weighted average shares outstanding-diluted
35,639 37,513
========= =========
Basic earnings per share
$ 0.31 $ 0.26
========= =========
Diluted earnings per share
$ 0.30 $ 0.26
========= =========
Choice Hotels International, Inc.
Exhibit 2
Consolidated Balance Sheets
(Unaudited)
(In thousands)
March December
31, 31,
2004 2003
--------- ---------
ASSETS
Cash and cash equivalents
$ 19,656 $ 20,031
Accounts receivable, net
33,399 33,631
Deferred income taxes
2,256 1,957
Other current assets
3,710 3,613
--------- ---------
Total current assets
59,021 59,232
Fixed assets and intangibles, net
147,323 150,256
Receivable -- marketing and reservation fees
31,550 32,368
Other assets
28,049 25,416
--------- ---------
Total assets
265,943 267,272
--------- ---------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current portion of long-term debt
23,288 23,829
Other current liabilities
79,276 78,382
--------- ---------
Total current liabilities
102,564 102,211
Long-term debt
248,050 222,823
Deferred income taxes
22,019 21,562
Other liabilities
41,738 38,863
--------- ---------
Total liabilities
414,371 385,459
--------- ---------
Total shareholders' deficit
(148,428) (118,187)
--------- ---------
Total liabilities
and shareholders' deficit $265,943 $267,272
--------- ---------
Choice Hotels International, Inc.
Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31, March 31,
2004 2003
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$ 10,594 $ 9,687
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
2,534 2,759
Provision for bad debts
119 448
Non-cash stock compensation and other charges
873 402
Non-cash interest and other investment income
(285) (88)
Equity in net income of affiliates
(186) -
Changes in assets and liabilities:
Receivables
131 (675)
Receivable -- marketing and reservation fees,
net
3,366 (3,067)
Current liabilities
(1,803) 4,575
Income taxes payable/receivable and other
assets
4,035 (1,109)
Deferred income taxes and other liabilities
3,145 2,771
---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES
22,523 15,703
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment
(1,617) (2,515)
Acquisition of Flag
- (1,211)
Issuance of notes receivable
(612) (1,486)
(Purchases) sales of investments, net
(1,922) 477
Other items, net
(279) (524)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES
(4,430) (5,259)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt
53,200 43,200
Principal payments of long-term debt
(28,530) (22,260)
Purchase of treasury stock
(39,095) (30,362)
Dividends paid
(6,861) -
Proceeds from exercise of stock options
2,818 1,576
---------- ---------
NET CASH USED IN FINANCING ACTIVITIES
(18,468) (7,846)
---------- ---------
Net change in cash and cash equivalents
(375) 2,598
Cash and cash equivalents at beginning of period
20,031 12,227
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 19,656 $ 14,825
========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments during the period for:
Income taxes, net of refunds
$ 1,314 $ 7,005
Interest
$ 594 $ 1,567
Non-cash financing activities:
Declaration of dividend
$ 6,833 $ -
Non-cash financing activities related to
employee stock options exercised:
Income tax benefit realized
$ 1,407 $ 387
Treasury shares received
for employee tax
withholding obligations
$ - $
98
CHOICE HOTELS INTERNATIONAL
Exhibit 4 SUPPLEMENTAL OPERATING INFORMATION BY BRAND
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
Three Months Ended
March 31,
2004 2003
-------- --------
COMFORT INN
Hotels
1,413 1,373
Rooms
111,133 108,019
Avg. Daily Rate (ADR)
$60.25 $59.65
Occupancy %
48.3% 46.3%
RevPAR
$29.08 $27.59
COMFORT SUITES
Hotels
370 352
Rooms
29,208 28,019
Avg. Daily Rate (ADR)
$70.67 $70.71
Occupancy %
54.0% 51.7%
RevPAR
$38.17 $36.55
QUALITY
Hotels
526 469
Rooms
54,562 49,406
Avg. Daily Rate (ADR)
$58.54 $59.15
Occupancy %
43.6% 41.2%
RevPAR
$25.53 $24.35
CLARION
Hotels
147 134
Rooms
22,054 20,183
Avg. Daily Rate (ADR)
$68.27 $69.27
Occupancy %
41.1% 39.7%
RevPAR
$28.05 $27.53
SLEEP
Hotels
307 301
Rooms
23,573 23,052
Avg. Daily Rate (ADR)
$54.87 $54.70
Occupancy %
48.6% 45.8%
RevPAR
$26.68 $25.06
MAINSTAY
Hotels
26 39
Rooms
2,063 3,376
Avg. Daily Rate (ADR)
$57.24 $60.33
Occupancy %
53.1% 54.5%
RevPAR
$30.39 $32.90
ECONO LODGE
Hotels
742 715
Rooms
45,887 44,401
Avg. Daily Rate (ADR)
$44.12 $43.10
Occupancy %
39.3% 38.4%
RevPAR
$17.32 $16.57
RODEWAY
Hotels
157 133
Rooms
10,879 8,501
Avg. Daily Rate (ADR)
$46.91 $44.51
Occupancy %
37.8% 36.8%
RevPAR
$17.72 $16.37
TOTAL CHOICE - DOMESTIC
Hotels
3,688 3,516
Rooms
299,359 284,957
Avg. Daily Rate (ADR)
$58.87 $58.47
Occupancy %
45.9% 44.1%
RevPAR
$27.04 $25.78
Effective Royalty Rate
4.02% 3.96%
CHOICE HOTELS INTERNATIONAL
Exhibit 5
SUPPLEMENTAL INFORMATION
CALCULATION OF FRANCHISING REVENUES
(UNAUDITED)
(In thousands)
Three Months Ended
March March
31, 31,
2004 2003
-------- --------
Franchising Revenues:
Total Revenues
$87,235 $81,556
Adjustments:
Marketing and reservation revenues
(49,311) (47,353)
Hotel Operations
(813) (837)
-------- --------
Franchising Revenues
$37,111 $33,366
-------- --------
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