Choice Hotels International, Inc. Exhibit
1
Consolidated Statements of Income
(Unaudited)
Three Months Ended December 31,
----------------------------------
Variance
2005 2004
$ %
--------- --------- -------- -----
(In thousands, except per share
amounts)
REVENUES:
Royalty fees
$49,120 $42,904 $6,216 14%
Initial franchise and relicensing
fees
8,717 6,566 2,151
33%
Partner services
3,024 3,242 (218)
(7%)
Marketing and reservation
58,629 52,001 6,628
13%
Hotel operations
1,079 967
112 12%
Other
1,416 993
423 43%
--------- --------- -------- -----
Total revenues
121,985 106,673 15,312 14%
OPERATING EXPENSES:
Selling, general and
administrative
23,987 20,013 3,974
20%
Depreciation and amortization
2,282 2,422 (140)
(6%)
Marketing and reservation
58,629 52,001 6,628
13%
Hotel operations
840 771
69 9%
--------- --------- -------- -----
Total operating expenses
85,738 75,207 10,531 14%
Operating income
36,247 31,466 4,781
15%
OTHER INCOME AND EXPENSES:
Interest expense
4,031 3,328 703
21%
Interest and other investment
(income) loss
(134) (793) 659 (83%)
Equity in net income of affiliates
(182) (271) 89
(33%)
Loss on extinguishment of debt
- -
- ---
Other
(3) (4)
1 (25%)
--------- --------- -------- -----
Total other income and
expenses
3,712 2,260 1,452
64%
--------- --------- -------- -----
Income before income taxes
32,535 29,206 3,329
11%
Income taxes
10,983 8,874 2,109
24%
--------- --------- -------- -----
Net income
$21,552 $20,332 $1,220
6%
========= ========= ======== =====
Weighted average shares outstanding-
basic
64,360 64,700
========= =========
Weighted average shares outstanding-
diluted
66,360 67,432
========= =========
Basic earnings per share
$0.33 $0.31 $0.02
7%
========= ========= ======== =====
Diluted earnings per share
$0.32 $0.30 $0.02
8%
========= ========= ======== =====
Twelve Months Ended December 31,
----------------------------------
Variance
2005 2004
$ %
--------- --------- -------- -----
(In thousands, except per share
amounts)
REVENUES:
Royalty fees
$187,340 $167,135 $20,205 12%
Initial franchise and relicensing
fees
25,388 20,112 5,276
26%
Partner services
13,382 12,524 858
7%
Marketing and reservation
243,123 220,732 22,391 10%
Hotel operations
4,293 3,729 564
15%
Other
3,873 3,976 (103)
(3%)
--------- --------- -------- -----
Total revenues
477,399 428,208 49,191 11%
OPERATING EXPENSES:
Selling, general and
administrative
78,250 69,542 8,708
13%
Depreciation and amortization
9,051 9,947 (896)
(9%)
Marketing and reservation
243,123 220,732 22,391 10%
Hotel operations
3,225 3,004 221
7%
--------- --------- -------- -----
Total operating expenses
333,649 303,225 30,424 10%
Operating income
143,750 124,983 18,767 15%
OTHER INCOME AND EXPENSES:
Interest expense
15,325 11,605 3,720
32%
Interest and other investment
(income) loss
(1,094) (1,110) 16
(1%)
Equity in net income of affiliates
(803) (722) (81)
11%
Loss on extinguishment of debt
- 696 (696)
NM
Other
(420) (10) (410) 4100%
--------- --------- -------- -----
Total other income and
expenses
13,008 10,459 2,549
24%
--------- --------- -------- -----
Income before income taxes
130,742 114,524 16,218 14%
Income taxes
43,177 40,179 2,998
7%
--------- --------- -------- -----
Net income
$87,565 $74,345 $13,220 18%
========= ========= ======== =====
Weighted average shares outstanding-
basic
64,429 66,406
========= =========
Weighted average shares outstanding-
diluted
66,336 69,000
========= =========
Basic earnings per share
$1.36 $1.12 $0.24
21%
========= ========= ======== =====
Diluted earnings per share
$1.32 $1.08 $0.24
23%
========= ========= ======== =====
Choice Hotels International, Inc.
Exhibit 2
Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2005 2004
------------ ------------
(Unaudited)
ASSETS
Cash and cash equivalents
$16,921 $28,518
Accounts receivable, net
37,155 34,611
Deferred income taxes
2,616 2,252
Other current assets
6,308 4,212
------------ ------------
Total current assets
63,000 69,593
Fixed assets and intangibles, net
150,376 142,907
Receivable -- marketing and reservation fees
13,225 21,683
Other assets
38,499 29,169
------------ ------------
Total assets
265,100 263,352
------------ ------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current portion of long-term debt
146 10,146
Other current liabilities
119,999 91,909
------------ ------------
Total current liabilities
120,145 102,055
Long-term debt
273,972 318,557
Deferred income taxes
- 6,974
Other liabilities
38,159 38,819
------------ ------------
Total liabilities
432,276 466,405
------------ ------------
Total shareholders' deficit
(167,176) (203,053)
------------ ------------
Total liabilities and
shareholders' deficit
$265,100 $263,352
------------ ------------
Choice Hotels International, Inc.
Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Twelve Months Ended
December 31,
---------------------
2005 2004
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$87,565 $74,345
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
9,051 9,947
Gain on sale of assets
(386) -
Provision for bad debts
391 (157)
Non-cash stock compensation
5,288 4,019
Non-cash interest and other investment income
(294) (463)
Loss on extinguishment of debt
- 696
Equity in net income of affiliates
(803) (722)
Changes in assets and liabilities, net of
acquisitions:
Receivables
(2,415) (735)
Receivable - marketing and reservation fees,
net
19,393 19,743
Accounts payable
1,923 978
Accrued expenses and other
12,894 6,702
Income taxes payable
11,250 2,854
Deferred income taxes
(13,318) (14,883)
Deferred revenue
8,822 6,381
Other current assets
(2,040) (599)
Other liabilities
(4,414) (26)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES
132,907 108,080
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment
(11,504) (6,859)
Proceeds from disposition of assets
2,811 -
Issuance of notes receivable
(2,667) (2,264)
Proceeds from sales of investments
3,539 4,506
Purchases of investments
(8,929) (8,664)
Acquisition of Surburban, net of cash acquired
(7,314) -
Other items, net
214 (435)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES
(23,850) (13,716)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt
- 192,000
Principal payments of long-term debt
(150) (267,739)
Net (repayments) borrowings pursuant to revolving
credit facility
(55,129) 157,725
Debt issuance costs
(193) (1,010)
Purchase of treasury stock
(49,154) (148,273)
Dividends paid
(30,241) (27,690)
Proceeds from exercise of stock options
14,213 8,427
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES
(120,654) (86,560)
---------- ----------
Net change in cash and cash equivalents
(11,597) 7,804
Cash and cash equivalents at beginning of period
28,518 20,714
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$16,921 $28,518
========== ==========
CHOICE
HOTELS INTERNATIONAL, INC.
EXHIBIT 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Year Ended For the Year
Ended
December 31, 2005 December
31, 2004
------------------------- -------------------------
Average
Average
Daily
Daily
Rate Occupancy RevPAR Rate Occupancy
RevPAR
------- --------- ------- ------- --------- -------
COMFORT INN
$68.84 61.7% $42.45 $65.53
60.1% $39.37
COMFORT SUITES 77.51
66.3% 51.36 73.68 64.1%
47.26
QUALITY
64.86 54.6% 35.41 63.62
54.1% 34.41
CLARION
74.62 52.5% 39.15 72.37
51.1% 36.97
SLEEP
62.52 61.0% 38.16 59.50
59.5% 35.42
MAINSTAY
64.76 65.7% 42.54 61.09
62.2% 37.97
ECONO LODGE
50.95 48.2% 24.56 48.92
48.2% 23.57
RODEWAY
49.91 46.7% 23.31 52.33
48.7% 25.49
------- --------- ------- ------- --------- -------
TOTAL DOMESTIC
SYSTEM*
$66.24 57.6% $38.15 $63.56
56.6% $35.95
======= ========= ======= ======= ========= =======
Change
--------------------------
Average
Daily
Rate Occupancy RevPAR
------- --------- --------
COMFORT INN
5.1% 160 bps 7.8%
COMFORT SUITES
5.2% 220 bps 8.7%
QUALITY
1.9% 50 bps 2.9%
CLARION
3.1% 140 bps 5.9%
SLEEP
5.1% 150 bps 7.7%
MAINSTAY
6.0% 350 bps 12.0%
ECONO LODGE
4.1% 0 bps 4.2%
RODEWAY
(4.6%) -200 bps (8.6%)
------- --------- --------
TOTAL DOMESTIC
SYSTEM*
4.2% 100 bps 6.1%
======= ========= ========
For the Quarter Ended For the Quarter Ended
December 31, 2005 December
31, 2004
------------------------- -------------------------
Average
Average
Daily
Daily
Rate Occupancy RevPAR Rate Occupancy
RevPAR
------- --------- ------- ------- --------- -------
COMFORT INN
$68.81 63.4% $43.65 $65.70
61.3% $40.29
COMFORT SUITES 77.28
68.2% 52.70 72.90 64.1%
46.70
QUALITY
63.47 55.1% 34.95 61.85
53.8% 33.30
CLARION
75.70 53.9% 40.80 72.47
50.7% 36.71
SLEEP
62.68 62.0% 38.88 59.67
60.3% 35.99
MAINSTAY
65.55 68.1% 44.64 61.93
65.2% 40.36
ECONO LODGE
50.83 47.9% 24.35 48.75
47.9% 23.36
RODEWAY
48.01 44.7% 21.47 50.09
49.3% 24.67
------- --------- ------- ------- --------- -------
TOTAL DOMESTIC
SYSTEM*
$65.99 58.5% $38.60 $63.17
56.9% $35.96
======= ========= ======= ======= ========= =======
Change
--------------------------
Average
Daily
Rate Occupancy RevPAR
------- --------- --------
COMFORT INN
4.7% 210 bps 8.3%
COMFORT SUITES
6.0% 410 bps 12.8%
QUALITY
2.6% 130 bps 5.0%
CLARION
4.5% 320 bps 11.1%
SLEEP
5.0% 170 bps 8.0%
MAINSTAY
5.8% 290 bps 10.6%
ECONO LODGE
4.3% 0 bps 4.2%
RODEWAY
(4.2%) -460 bps (13.0%)
------- --------- --------
TOTAL DOMESTIC
SYSTEM*
4.5% 160 bps 7.3%
======= ========= ========
* Amounts exclude Suburban activity from October 1, 2005
through
December 31, 2005 because comparable pre-acquisition
data for Q4
2004 is not available
For the Quarter Ended For the Year Ended
---------------------- ----------------------
12/31/2005 12/31/2004 12/31/2005 12/31/2004
System-wide effective
royalty rate
4.08% 4.05%
4.08% 4.04%
CHOICE HOTELS INTERNATIONAL, INC.
EXHIBIT 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
December 31, December 31,
2005 2004
Variance
-------------- -------------- ----------------------------
Hotels Rooms Hotels Rooms Hotels Rooms
% %
------ ------- ------ ------- ------ ------- ------ ------
COMFORT INN 1,428 111,598 1,432 112,325
(4) (727) (0.3%) (0.6%)
COMFORT
SUITES
411 32,251 389 30,682 22
1,569 5.7% 5.1%
QUALITY 660
66,316 576 58,785 84
7,531 14.6% 12.8%
CLARION 153
23,554 158 23,652 (5)
(98) (3.2%) (0.4%)
SLEEP
319 24,205 311 23,766
8 439 2.6% 1.8%
MAINSTAY 27
2,047 27 2,150
- (103) 0.0% (4.8%)
SUBURBAN 65
8,568 -
- 65 8,568 NM
NM
ECONO LODGE 805 49,763
781 48,301 24 1,462
3.1% 3.0%
RODEWAY 180
11,051 160 9,925 20
1,126 12.5% 11.3%
------ ------- ------ ------- ------ ------- ------ ------
DOMESTIC
FRANCHISES 4,048 329,353 3,834 309,586
214 19,767 5.6% 6.4%
INTERNATIONAL
FRANCHISES 1,162 97,703 1,143
94,220 19 3,483 1.7%
3.7%
------ ------- ------ ------- ------ ------- ------ ------
TOTAL
FRANCHISES 5,210 427,056 4,977 403,806
233 23,250 4.7% 5.8%
====== ======= ====== ======= ====== ======= ====== ======
EXHIBIT 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- NEW HOTEL CONTRACTS
(UNAUDITED)
For the Year Ended
For the Year Ended
December 31, 2005
December 31, 2004
----------------------------- -----------------------------
New
New
Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- -----
COMFORT INN
53 56 109
38 71 109
COMFORT
SUITES
89 5
94 79
5 84
QUALITY
5 148 153
8 133 141
CLARION
4 31
35 2
28 30
SLEEP
55 2
57 33
-- 33
MAINSTAY
14 --
14 16
1 17
CAMBRIA
SUITES
13 --
13 --
-- --
ECONO LODGE
4 85
89 4
97 101
RODEWAY
-- 75
75 2
35 37
------------ ---------- ----- ------------ ---------- -----
TOTAL
DOMESTIC
SYSTEM
237 402 639
182 370 552
============ ========== ===== ============ ========== =====
% Change
-----------------------------
New
Construction Conversion Total
------------ ---------- -----
COMFORT INN
39% (21%) 0%
COMFORT
SUITES
13% 0% 12%
QUALITY
(38%) 11% 9%
CLARION
100% 11% 17%
SLEEP
67% NM 73%
MAINSTAY
(13%) (100%) (18%)
CAMBRIA
SUITES
NM NM
NM
ECONO LODGE
0% (12%) (12%)
RODEWAY
(100%) 114% 103%
------------ ---------- -----
TOTAL
DOMESTIC
SYSTEM
30% 9% 16%
============ ========== =====
For the Three Months Ended For the Three Months Ended
December 31, 2005
December 31, 2004
----------------------------- -----------------------------
New
New
Construction Conversion Total Construction Conversion Total
------------ ---------- ----- ------------ ---------- -----
COMFORT INN
18 16
34 20
26 46
COMFORT
SUITES
49 1
50 34
1 35
QUALITY
1 36
37 2
39 41
CLARION
2 16
18 --
7 7
SLEEP
19 1
20 13
-- 13
MAINSTAY
4 --
4 11
-- 11
CAMBRIA
5 --
5 --
-- --
ECONO LODGE
-- 24
24 1
29 30
RODEWAY
-- 28
28 1
14 15
------------ ---------- ----- ------------ ---------- -----
TOTAL
DOMESTIC
SYSTEM
98 122 220
82 116 198
============ ========== ===== ============ ========== =====
% Change
-----------------------------
New
Construction Conversion Total
------------ ---------- -----
COMFORT INN
(10%) (38%) (26%)
COMFORT
SUITES
44% 0% 43%
QUALITY
(50%) (8%) (10%)
CLARION
NM 129% 157%
SLEEP
46% NM 54%
MAINSTAY
(64%) NM (64%)
CAMBRIA
NM NM
NM
ECONO LODGE
(100%) (17%) (20%)
RODEWAY
(100%) 100% 87%
------------ ---------- -----
TOTAL
DOMESTIC
SYSTEM
20% 5% 11%
============ ========== =====
CHOICE HOTELS INTERNATIONAL, INC.
EXHIBIT 7
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING
REVENUES AND
FRANCHISING MARGINS
(dollar amounts in
Three Months Ended Twelve Months Ended
thousands)
December 31, December 31,
------------------- ---------------------
2005 2004
2005 2004
--------- --------- ---------- ----------
Franchising Revenues:
Total Revenues
$121,985 $106,673 $477,399 $428,208
Adjustments:
Marketing and
reservation revenues
(58,629) (52,001) (243,123) (220,732)
Hotel Operations
(1,079) (967) (4,293)
(3,729)
--------- --------- ---------- ----------
Franchising Revenues
$62,277 $53,705 $229,983 $203,747
--------- --------- ---------- ----------
Franchising Margins:
Operating Margin:
Total Revenues
$121,985 $106,673 $477,399 $428,208
Operating Income
$36,247 $31,466 $143,750 $124,983
--------- --------- ---------- ----------
Operating Margin
29.7% 29.5% 30.1%
29.2%
--------- --------- ---------- ----------
Franchising Margin:
Franchising Revenues
$62,277 $53,705 $229,983 $203,747
Operating Income
$36,247 $31,466 $143,750 $124,983
Less: Hotel Operations
239 196
1,068 725
--------- --------- ---------- ----------
$36,008 $31,270 $142,682 $124,258
--------- --------- ---------- ----------
--------- --------- ---------- ----------
Franchising Margins
57.8% 58.2% 62.0%
61.0%
--------- --------- ---------- ----------
CALCULATION OF ADJUSTED NET
INCOME AND ADJUSTED DILUTED
EARNINGS PER SHARE (EPS)
(In thousands, except per Three Months
Ended Twelve Months Ended
share amounts)
December 31, December 31,
------------------- ---------------------
2005 2004
2005 2004
--------- --------- ---------- ----------
Net Income
$21,552 $20,332 $87,565
$74,345
Adjustments:
Debt Extinguishment Costs
- -
- 433
Reversal of Provisions for
Income Tax Contingencies
(454) (1,153) (4,855) (1,182)
Income Tax Expense Incurred
Due to Foreign Earnings
Repatriation
- -
1,192 -
--------- --------- ---------- ----------
Adjusted Net Income
$21,098 $19,179 $83,902
$73,596
--------- --------- ---------- ----------
Weighted average shares
outstanding-diluted
66,360 67,432 66,336
69,000
Diluted Earnings Per Share
$0.32 $0.30 $1.32
$1.08
Adjustments:
Debt Extinguishment Costs
- -
- 0.01
Reversal of Provisions for
Income Tax Contingencies
(0.00) (0.02) (0.08)
(0.02)
Income Tax Expense Incurred
Due to Foreign Earnings
Repatriation
- -
0.02 -
--------- --------- ---------- ----------
Adjusted Diluted Earnings
Per Share (EPS)
$0.32 $0.28 $1.26
$1.07
--------- --------- ---------- ----------
EBITDA Reconciliation
(in millions)
Full-Year Full-Year Full-Year
2004 2005 2006
Actuals Actuals Outlook
--------- --------- ----------
Operating Income (per GAAP) $125
$144 $160-$163
Depreciation and
amortization
10 9
10
--------- --------- ----------
Earnings before interest,
taxes, depreciation &
amortization (non-GAAP)
$135 $153 $170-$173
========= ========= ========== |