SILVER SPRING, Md., Feb.
11, 2010 - Choice Hotels International, Inc. (NYSE: CHH)
today reported the following highlights for fourth quarter and full
year 2009:
Full
Year Results
- Adjusted
diluted earnings per share ("EPS") for full year 2009 were $1.71 compared to $1.77 for full year 2008. Diluted
EPS were $1.63 for full year 2009 compared
to $1.59 for 2008. Adjusted diluted
EPS for full year 2009 and 2008 exclude special items, as described
below, totaling $0.08 and $0.18,
respectively.
- Excluding
special items, adjusted earnings before interest, taxes and
depreciation ("EBITDA") were $163.7
million for the
year ended December
31, 2009, compared to $200.5
million for full
year 2008. Operating income for the year ended December 31, 2009 was $148.1 million compared to $174.6 million for the same period of 2008.
- Franchising
revenues declined $45.6
million or 15%
from $300.3
million for the
year ended December
31, 2008 to$254.7
million for the
same period of the current year. Total revenues declined $77.5 million or 12% to $564.2 millionfor
the year ended December
31, 2009 compared
to the same period of the prior year.
- Adjusted
selling, general and administrative ("SG&A") costs for full year
2009 totaled $91.9
million which
represented a 9% decline from the same period of the prior year.
Adjusted SG&A costs exclude special items totaling $7.3 millionand $17.7 million for the year ended December 31, 2009 and 2008, respectively.
- Interest
and other investment income for the year ended December 31, 2009 improved by approximately $13.6 million from the same period of the
prior year primarily due to the appreciation in the fair value of
investments held in the company's non-qualified employee benefit plans
during the current period compared to a decline in the fair value of
these investments in the prior year.
- Domestic
unit and room growth increased 4.0 percent and 3.9 percent,
respectively, from December
31, 2008.
- Domestic
system-wide revenue per available room ("RevPAR") declined 14.4% for
full year 2009 compared to full year 2008.
- The
effective royalty rate increased 6 basis points to 4.26% for the year
ended December
31, 2009 compared
to 4.20% for the same period of the prior year.
- The
company executed 369 new domestic hotel franchise contracts for the
year ended December
31, 2009, a decline of 47% compared to the 698 contracts
executed in the same period of the prior year.
- The
number of domestic hotels under construction, awaiting conversion or
approved for development declined 26% from December 31, 2008 to 727 hotels representing
57,140 rooms; the worldwide pipeline declined 24% fromDecember
31, 2008 to 843
hotels representing 66,585 rooms.
Fourth
Quarter Results
- Adjusted
EPS for fourth quarter 2009 were $0.43 compared to $0.41 for the same period of the
prior year. Diluted EPS were $0.40 for fourth quarter 2009
compared to $0.30 for fourth quarter 2008.
Adjusted diluted EPS for fourth quarter 2009 and 2008 exclude
certain special items, as described below, totaling $0.03 and $0.11,
respectively.
- Excluding
special items, adjusted EBITDA were $39.7
million for the
three months ended December
31, 2009, compared to $46.9
million for the
same period of 2008. Operating income for both the three months endedDecember
31, 2009 and
2008 were $34.1
million.
- Franchising
revenues declined 13% from $71.3
million for the
three months ended December
31, 2008 to $62.2 million for the same period of
2009. Total revenues for the three months ended December 31, 2009 declined 9% compared to the
same period of 2008.
- Adjusted
SG&A costs for the fourth quarter of 2009 totaled $22.6 million which represented a 9%
decline from the same period of the prior year. Adjusted SG&A
costs exclude special items totaling $3.5
million and $10.8 million for the three months ended December 31, 2009 and 2008, respectively.
- Interest
and other investment income for the three months ended December 31, 2009 improved by approximately$5.0
million from the
same period of the prior year primarily due to the appreciation in the
fair value of investments held in the company's non-qualified employee
benefit plans during the current period compared to a decline in the
fair value of these investments in the same period of the prior year.
- Domestic
system-wide revenue per available room ("RevPAR") declined 14.4% for
the fourth quarter of 2009 compared to the same period of 2008.
- The
effective royalty rate increased 7 basis points to 4.30% for the three
months ended December
31, 2009compared to 4.23% for the same period of the prior year.
- The
company executed 112 new domestic hotel franchise contracts for the
three months ended December
31, 2009, a decline of 46% compared to the 207 contracts
executed in the same period of the prior year.
"Despite
operating in the midst of an incredibly difficult environment, which
has resulted in industry-wide RevPAR declines and a significant
decrease in domestic hotel transactions, the company has remained
focused on returning value to our shareholders," said Stephen P. Joyce,
president and chief executive officer. "During 2009, we returned
more than $100
million to our
shareholders through a combination of share repurchases and dividends
at a time when many other companies have reduced or eliminated their
dividend and share repurchase programs. Additionally, we
continued to build on our strong track record of domestic system growth
on account of our well-known family of value-oriented brands.
While the near-term domestic RevPAR and franchise sales
environments remain challenging, we believe that our franchise business
model, strong brands and strong balance sheet position us for long-term
profitable growth and a continued ability to return value to our
shareholders."
Special
Items
During
the three months and year ended December
31, 2009, the company recorded employee termination benefits of
approximately $2.3
million and $4.6 million,
respectively. The company also incurred a curtailment loss related to
freezing the benefits payable under its Supplemental Executive
Retirement Plan totaling $1.2
million for the
three months and year ended December
31, 2009. In addition, during the year ended December 31, 2009,
the company recorded a $1.5
millioncharge related to the sublease of a portion of its office
space. These special items represent diluted EPS of $0.03 and$0.08 for the three months and
year ended December
31, 2009, respectively.
During
the three months and year ended December
31, 2008, the company recorded employee termination benefits of
approximately $2.7
million and $3.5 million,
respectively. The company also incurred benefit costs resulting from
the acceleration of the company's management succession plan of $0.5 million and $6.6 million during the three months and
year ended December
31, 2008. Furthermore, during the three months and year ended December 31, 2008,
the company recognized $7.6
million related
to an increase in reserves on impaired notes receivable. These special
items represented diluted EPS of $0.11 and $0.18 for the three months and
year ended December
31, 2008, respectively.
Outlook
for 2010
The
uncertainty around the current economic environment and credit market
conditions and their impact on travel patterns and hotel development
activities makes it difficult to predict future results, particularly
as they relate to underlying assumptions for RevPAR, new hotel
franchise and relicensing sales and interest and investment income and
expense.
The
company's first quarter 2010 diluted EPS is expected to be $0.25. The
company expects full-year 2010 diluted EPS to be between $1.65 and $1.70.
EBITDA for full-year 2010 are expected to be between $166 million and $170
million. These estimates include the following assumptions:
- The
company expects net domestic unit growth of approximately 2% in 2010;
- RevPAR
is expected to decline approximately 12% for first quarter of 2010 and
decline between 2% and 4% for full-year 2010;
- The
effective royalty rate is expected to increase 6 basis points for
full-year 2010;
- All
figures assume the existing share count and an effective tax rate of
36.5% for the first quarter and full-year 2010;
- Projections
assume that the company's existing credit facility remains in place for
full-year 2010.
Use
of Free Cash Flow
The
company has historically used its free cash flow (cash flow from
operations less capital expenditures) to return value to shareholders,
primarily through share repurchases and dividends.
For
the year ended December
31, 2009 the
company paid $44.3
million of cash
dividends to shareholders. The current quarterly dividend rate per
common share is $0.185,
subject to declaration by our board of directors.
During
the three months ended December
31, 2009, the company purchased approximately 0.1 million shares
of its common stock at an average price of $31.06 for a total cost of $2.1 million under the share repurchase
program. During the year ended December
31, 2009, the company purchased approximately 2.1 million shares
of its common stock at an average price of $27.03 for a total cost of $57.4 million.
Subsequent to December
31, 2009 and
through February
11, 2010, the company repurchased an additional 0.2 million
shares at a total cost of $5.0
million at an
average price of $31.85 and has authorization to
purchase up to an additional 3.7 million shares under this program.
We expect to continue making repurchases in the open market and
through privately negotiated transactions, subject to market and other
conditions. No minimum number of share repurchases has been fixed.
Since Choice announced its stock repurchase program on June 25, 1998,
the company has repurchased 42.9 million shares of its common stock for
a total cost of $1
billion throughDecember
31, 2009. Considering the effect of a two-for-one stock split in October 2005,
the company had repurchased 75.9 million shares through December 31, 2009 under the share repurchase
program at an average price of $13.28 per share.
Our
Board has authorized us to enter into programs which permit us to offer
financing, investment and guaranty support to qualified franchisees to
incent multi-unit franchise development in top markets. We expect
to opportunistically deploy this capital over the next several years.
Our annual investment in these programs is dependent on market
and other conditions. Notwithstanding these programs, the company
expects to continue to return value to its shareholders through a
combination of share repurchases and dividends, subject to market and
other conditions.
Impact
of the Adoption of New Accounting Pronouncements on Earnings Per
Share
In June 2008, the
Financial Accounting Standards Board ("FASB") issued FASB Staff
Position Emerging Issues Task Force No. 03-6-1, "Determining Whether
Instruments Granted in Share-Based Payment Transactions Are
Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1
clarified that all share-based payment awards that contain rights to
non-forfeitable dividends participate in undistributed earnings with
common shareholders. Therefore, awards of this nature are considered
participating securities and the two-class method of computing basic
and diluted earnings per share must be applied rather than the treasury
stock method. FSP EITF 03-6-1 is effective for fiscal years beginning
after December 15, 2008. In addition, once effective, all prior
period earnings per share data presented must be adjusted
retrospectively to conform to the provisions of FSP EITF 03-6-1.
The
company's outstanding unvested restricted stock awards contain rights
to non-forfeitable dividends and as a result, the company applied this
guidance in the first quarter of 2009. The two-class method of
calculating earnings per share is more dilutive to both basic and
diluted shares outstanding than the previously utilized treasury stock
method. In accordance with FSP EITF 03-6-1, the company has
retrospectively adjusted its basic and diluted shares outstanding for
the three months and year ended December
31, 2008 under
the two-class method which resulted in a reduction of the company's
basic and diluted earnings per share for the year ended December 31, 2008 from $1.62 to $1.61 and $1.60 to $1.59 per share, respectively. In
addition, basic earnings per share for the three months ended December 31, 2008 have been revised from $0.31 to $0.30 per share.
Conference
Call
Choice
will conduct a conference call on Friday,
February 12, 2010 at 10:00 a.m. EST to discuss the company's
fourth quarter and full-year 2009 results. The dial-in number to listen
to the call is 1-866-383-7989, and the access code is 25293408.
International callers should dial 1-617-597-5328 and enter the access
code 25293408. The conference call also will be Webcast
simultaneously via the company's Web site, www.choicehotels.com.
Interested investors and other parties wishing to access the call
via the Webcast should go to the Web site and click on the Investor
Info link. The Investor Information page will feature a
conference call microphone icon to access the call.
The
call will be recorded and available for replay beginning at 1:00 p.m. EST on February 12, 2010 through March 12, 2010by
calling 1-888-286-8010 and entering access code 35986582. The
international dial-in number for the replay is 617-801-6888, access
code 35986582. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.
About
Choice Hotels
Choice
Hotels International, Inc. franchises more than 6,000 hotels,
representing more than 485,000 rooms, in the United States and more than 35 other
countries and territories. As of December 31, 2009,
more than 700 hotels are under construction, awaiting conversion or
approved for development in the
United States, representing more than 57,000 rooms, and more
than 100 hotels, representing approximately 9,400 rooms, are under
construction, awaiting conversion or approved for development in more
than 20 other countries and territories. The company's Comfort
Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites,
MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway
Inn brands serve guests worldwide. In addition, via its Ascend
Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging
options at historic, boutique and unique hotels.
Additional
corporate information may be found on the Choice Hotels International,
Inc. Web site, which may be accessed atwww.choicehotels.com.
Forward-Looking
Statements
Certain
matters discussed in this press release constitute forward-looking
statements within the meaning of the federal securities law.
Generally, our use of words such as "expect," "estimate," "believe,"
"anticipate," "will," "forecast," "plan," project," "assume" or similar
words of futurity identify statements that are forward-looking and that
we intend to be included within the Safe Harbor protections provided by
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking
statements are based on management's current beliefs, assumptions and
expectations regarding future events, which in turn are based on
information currently available to management. Such statements
may relate to projections of the company's revenue, earnings and
other financial and operational measures, company debt levels, payment
of stock dividends, and future operations, among other
matters. We caution you not to place undue reliance on any
such forward-looking statements. Forward-looking statements do
not guarantee future performance and involve known and unknown risks,
uncertainties and other factors.
Several
factors could cause actual results, performance or achievements of the
company to differ materially from those expressed in or contemplated by
the forward-looking statements. Such risks include, but are
not limited to, changes to general, domestic and foreign economic
conditions; operating risks common in the lodging and franchising
industries; changes to the desirability of our brands as viewed by
hotel operators and customers; changes to the terms or termination of
our contracts with franchisees; our ability to keep pace with
improvements in technology utilized for reservations systems and other
operating systems; fluctuations in the supply and demand for hotels
rooms; and our ability to manage effectively our
indebtedness. These and other risk factors are discussed in
detail in the Risk Factors section of the company's Form 10-K for the
year ended December
31, 2008, filed with the Securities and Exchange Commission onMarch
2, 2009. We undertake no obligation to publicly
update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
Statement
Concerning Non-GAAP Financial Measurements
Adjusted
diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues
and adjusted franchising margins are non-GAAP financial measurements.
This information should not be considered as an alternative to
any measure of performance as promulgated under accounting principles
generally accepted in the
United States (GAAP),
such as diluted earnings per share, operating income, total revenues
and operating margins. The company's calculation of these
measurements may be different from the calculations used by other
companies and therefore comparability may be limited. The company
has included an exhibit accompanying this release that reconciles these
measures to the comparable GAAP measurement. We discuss management's
reasons for reporting these non-GAAP measures below.
Earnings
Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings
excluding the impact of interest expense, tax expense, depreciation and
amortization. Our management considers EBITDA to be an indicator of
operating performance because it can be used to measure our ability to
service debt, fund capital expenditures, and expand our business.
EBITDA is a commonly used measure of performance in our industry. In
addition, it is used by analysts, lenders, investors and others, as
well as by us, to facilitate comparisons between the company and its
competitors because it excludes certain items that can vary widely
across different industries or among companies within the same industry.
Franchising
Revenues and Margins: The
company reports franchising revenues and margins which exclude
marketing and reservation revenues and hotel operations.
Marketing and reservation activities are excluded from revenues
and operating margins since the company is contractually required by
its franchise agreements to use these fees collected for marketing and
reservation activities. Cumulative reservation and marketing fees not
expended are recorded as a payable on the company's financial
statements and are carried over to the next fiscal year and expended in
accordance with the franchise agreements. Cumulative marketing and
reservation expenditures in excess of fees collected for marketing and
reservation activities are recorded as a receivable on the company's
financial statements. In addition, the company has the contractual
authority to require that the franchisees in the system at any given
point repay the company for any deficits related to marketing and
reservation activities. Hotel operations are excluded since they
do not reflect the most accurate measure of the company's core
franchising business. These non-GAAP measures are a commonly used
measure of performance in our industry and facilitate comparisons
between the company and its competitors.
Adjusted
Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted
Franchising Margins: The
company's management also uses adjusted diluted EPS, adjusted EBITDA,
adjusted SG&A and adjusted franchising margins which exclude
employee termination benefits, a pension plan curtailment loss and a
loss on the sublease of a portion of the company's office space for
2009 and the impact of the acceleration of the company's management
succession plan, increased loan reserves on impaired loans and employee
termination benefits for the periods ended December 31, 2008.
The company utilizes these non-GAAP measures to enable investors
to perform meaningful comparisons of past, present and future operating
results and as a means to emphasize the results of on-going operations.
Choice
Hotels, Choice Hotels International, Comfort Inn, Comfort Suites,
Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban
Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary
trademarks and service marks of Choice Hotels International.
(C)
2010 Choice Hotels International, Inc. All rights reserved.
Choice Hotels International, Inc. Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended December 31,
-------------------------------
Variance
2009 2008 $ %
---- ---- --- ---
(In thousands, except
per share amounts)
REVENUES:
Royalty fees $53,213 $59,284 $(6,071) (10%)
Initial franchise
and relicensing
fees 3,317 6,729 (3,412) (51%)
Procurement
services 3,514 3,498 16 0%
Marketing and
reservation 77,576 81,904 (4,328) (5%)
Hotel operations 909 1,253 (344) (27%)
Other 2,172 1,826 346 19%
----- ----- --- --
Total revenues 140,701 154,494 (13,793) (9%)
OPERATING EXPENSES:
Selling, general
and administrative 26,183 35,580 (9,397) (26%)
Depreciation and
amortization 2,084 2,019 65 3%
Marketing and
reservation 77,576 81,904 (4,328) (5%)
Hotel operations 775 894 (119) (13%)
--- --- ---- ---
Total operating
expenses 106,618 120,397 (13,779) (11%)
Operating income 34,083 34,097 (14) 0%
OTHER INCOME AND
EXPENSES:
Interest expense 683 2,245 (1,562) (70%)
Interest and
other investment
(income) loss (560) 4,431 (4,991) (113%)
Equity in net
income of
affiliates (334) (476) 142 (30%)
---- ---- --- ---
Total other
income and
expenses, net (211) 6,200 (6,411) (103%)
---- ----- ------ ----
Income before
income taxes 34,294 27,897 6,397 23%
Income taxes 10,663 9,186 1,477 16%
------ ----- ----- --
Net income $23,631 $18,711 $4,920 26%
======= ======= ====== ==
Weighted average
shares outstanding
- basic* 59,553 61,685
====== ======
Weighted average
shares outstanding
- diluted* 59,658 62,157
====== ======
Basic earnings per
share* $0.40 $0.30 $0.10 33%
===== ===== ===== ==
Diluted earnings
per share* $0.40 $0.30 $0.10 33%
===== ===== ===== ==
Year Ended December 31,
-----------------------
Variance
2009 2008 $ %
---- ---- --- ---
(In thousands, except
per share amounts)
REVENUES:
Royalty fees $217,984 $247,435 $(29,451) (12%)
Initial franchise
and relicensing
fees 12,916 27,931 (15,015) (54%)
Procurement
services 17,598 17,148 450 3%
Marketing and
reservation 305,379 336,477 (31,098) (9%)
Hotel operations 4,140 4,936 (796) (16%)
Other 6,161 7,753 (1,592) (21%)
----- ----- ------ ---
Total revenues 564,178 641,680 (77,502) (12%)
OPERATING EXPENSES:
Selling, general
and administrative 99,237 118,989 (19,752) (17%)
Depreciation and
amortization 8,336 8,184 152 2%
Marketing and
reservation 305,379 336,477 (31,098) (9%)
Hotel operations 3,153 3,434 (281) (8%)
----- ----- ---- --
Total operating
expenses 416,105 467,084 (50,979) (11%)
Operating income 148,073 174,596 (26,523) (15%)
OTHER INCOME AND
EXPENSES:
Interest expense 4,414 10,932 (6,518) (60%)
Interest and
other investment
(income) loss (5,862) 7,760 (13,622) (176%)
Equity in net
income of
affiliates (1,113) (1,414) 301 (21%)
------ ------ --- ----
Total other
income and
expenses, net (2,561) 17,278 (19,839) (115%)
------ ------ ------- -----
Income before
income taxes 150,634 157,318 (6,684) (4%)
Income taxes 52,384 57,107 (4,723) (8%)
------ ------ ------- ----
Net income $98,250 $100,211 $(1,961) (2%)
======= ======== ======== ==
Weighted average
shares outstanding
- basic* 60,068 62,374
====== ======
Weighted average
shares outstanding
- diluted* 60,224 62,994
====== ======
Basic earnings per
share* $1.64 $1.61 $0.03 2%
===== ===== ===== ==
Diluted earnings
per share* $1.63 $1.59 $0.04 3%
===== ===== ===== ==
* The Company's weighted average shares outstanding for the three months
and year ended December 31, 2008 have been retrospectively adjusted due
to the application of EITF Issue 03-6-1 "Determining Whether Instruments
Granted in Share Based Payment Transactions are Participating
Securities" which became effective for the Company in 2009. The
application of this guidance has resulted in the revision of basic and
diluted earnings per share for the year ended December 31, 2008 from
$1.62 to $1.61 and $1.60 to $1.59 per share, respectively. In addition,
basic earnings per share for the three months ended December 31, 2008
has been revised from $0.31 to $0.30 per share.
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per
share amounts) December 31, December 31,
2009 2008
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $67,870 $52,680
Accounts receivable, net 41,898 43,141
Deferred income taxes 7,980 8,223
Other current assets 10,114 16,172
------ ------
Total current assets 127,862 120,216
Fixed assets and
intangibles, net 133,999 138,867
Receivable -- marketing and
reservation fees 33,872 13,527
Investments, employee
benefit plans, at fair
value 20,931 25,360
Other assets 23,373 30,249
------ ------
Total assets $340,037 $328,219
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and
accrued expenses $70,933 $79,897
Deferred revenue 51,765 47,004
Deferred compensation &
retirement plan obligations 2,798 6,960
Other current liabilities 6,310 1,206
----- -----
Total current liabilities 131,806 135,067
Long-term debt 277,700 284,400
Deferred compensation &
retirement plan
obligations 34,956 33,462
Other liabilities 9,787 12,960
----- ------
Total liabilities 454,249 465,889
------- -------
Common stock, $0.01 par value 595 607
Additional paid-in-capital 90,731 90,141
Accumulated other
comprehensive income (loss) 333 (3,472)
Treasury stock, at cost (870,302) (835,186)
Retained earnings 664,431 610,240
------- -------
Total shareholders' deficit (114,212) (137,670)
-------- --------
Total liabilities and
shareholders' deficit $340,037 $328,219
-------- --------
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
Year Ended
(In thousands) December 31,
------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $98,250 $100,211
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,336 8,184
Provision for bad debts 2,578 9,433
Non-cash stock compensation and other charges 13,761 10,914
Non-cash interest and other (income) loss (5,403) 9,300
Dividends received from equity method investments 1,337 1,180
Equity in net income of affiliates (1,113) (1,414)
Changes in assets and liabilities:
Receivables (796) (4,358)
Receivable - marketing and reservation fees, net (12,232) (7,578)
Accounts payable (8,279) (13,138)
Accrued expenses (1,289) (3,206)
Income taxes payable/receivable 8,163 (1,870)
Deferred income taxes 5,553 3,073
Deferred revenue 4,650 (1,549)
Other assets 3,041 (1,046)
Other liabilities (4,341) (3,737)
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 112,216 104,399
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (11,135) (12,611)
Issuance of notes receivable (1,995) (7,410)
Collections of notes receivable 324 434
Purchases of investments, employee benefit plans (3,854) (7,802)
Proceeds from sales of investments, employee
benefit plans 13,895 7,819
Other items, net (584) (695)
---- ----
NET CASH USED IN INVESTING ACTIVITIES (3,349) (20,265)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt - (100,000)
Net borrowings (repayments) pursuant to revolving
credit facility (6,700) 112,000
Purchase of treasury stock (59,128) (63,732)
Excess tax benefits from stock-based compensation 5,834 10,135
Dividends paid (44,274) (43,142)
Proceeds from exercise of stock options 9,158 9,026
----- -----
NET CASH USED IN FINANCING ACTIVITIES (95,110) (75,713)
------- -------
Net change in cash and cash equivalents 13,757 8,421
Effect of foreign exchange rate changes on cash
and cash equivalents 1,433 (2,118)
Cash and cash equivalents at beginning of period 52,680 46,377
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $67,870 $52,680
======= =======
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Year Ended December 31, 2009*
-------------------------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $77.10 54.1% $41.74
Comfort Suites 84.79 53.3% 45.17
Sleep 69.64 51.5% 35.86
----- ---- -----
Midscale without Food & Beverage 77.89 53.5% 41.69
----- ---- -----
Quality 68.00 46.0% 31.31
Clarion 77.79 42.2% 32.86
----- ---- -----
Midscale with Food & Beverage 69.92 45.2% 31.63
----- ---- -----
Econo Lodge 54.66 43.5% 23.78
Rodeway 52.48 43.0% 22.54
----- ---- -----
Economy 54.02 43.3% 23.41
----- ---- -----
MainStay 70.55 57.9% 40.82
Suburban 41.51 56.3% 23.35
----- ---- -----
Extended Stay 49.81 56.7% 28.24
----- ---- -----
Total $71.06 49.4% $35.09
====== ==== ======
For the Year Ended December 31, 2008*
-------------------------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $79.84 60.1% $48.01
Comfort Suites 89.49 61.3% 54.82
Sleep 71.91 58.5% 42.10
----- ---- -----
Midscale without Food & Beverage 80.90 60.2% 48.66
----- ---- -----
Quality 71.42 52.0% 37.15
Clarion 84.48 50.0% 42.21
----- ---- -----
Midscale with Food & Beverage 74.18 51.6% 38.26
----- ---- -----
Econo Lodge 55.58 46.9% 26.05
Rodeway 55.04 47.5% 26.16
----- ---- -----
Economy 55.44 47.0% 26.08
----- ---- -----
MainStay 73.72 64.2% 47.34
Suburban 42.93 62.4% 26.80
----- ---- -----
Extended Stay 51.14 62.9% 32.17
----- ---- -----
Total $74.11 55.3% $40.98
====== ==== ======
Change
------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn (3.4%) (600) bps (13.1%)
Comfort Suites (5.3%) (800) bps (17.6%)
Sleep (3.2%) (700) bps (14.8%)
---- ---- --- -----
Midscale without Food &
Beverage (3.7%) (670) bps (14.3%)
---- ---- --- -----
Quality (4.8%) (600) bps (15.7%)
Clarion (7.9%) (780) bps (22.2%)
---- ---- --- -----
Midscale with Food &
Beverage (5.7%) (640) bps (17.3%)
---- ---- --- -----
Econo Lodge (1.7%) (340) bps (8.7%)
Rodeway (4.7%) (450) bps (13.8%)
---- ---- --- -----
Economy (2.6%) (370) bps (10.2%)
---- ---- --- -----
MainStay (4.3%) (630) bps (13.8%)
Suburban (3.3%) (610) bps (12.9%)
---- ---- --- -----
Extended Stay (2.6%) (620) bps (12.2%)
---- ---- --- -----
Total (4.1%) (590) bps (14.4%)
==== ==== === =====
* Operating statistics represent hotel operations from December through
November
For the Three Months Ended
December 31, 2009*
------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $75.92 52.5% $39.86
Comfort Suites 81.94 50.5% 41.40
Sleep 68.03 48.7% 33.12
----- ---- -----
Midscale without Food & Beverage 76.27 51.4% 39.23
----- ---- -----
Quality 65.71 43.7% 28.68
Clarion 77.29 39.9% 30.84
----- ---- -----
Midscale with Food & Beverage 67.98 42.9% 29.14
----- ---- -----
Econo Lodge 53.67 42.1% 22.62
Rodeway 50.11 40.4% 20.24
----- ---- -----
Economy 52.62 41.6% 21.89
----- ---- -----
MainStay 67.07 57.2% 38.33
Suburban 38.91 57.1% 22.21
----- ---- -----
Extended Stay 46.92 57.1% 26.79
----- ---- -----
Total $69.38 47.3% $32.84
====== ==== ======
For the Three Months Ended
December 31, 2008*
------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $78.95 57.8% $45.59
Comfort Suites 88.09 57.6% 50.73
Sleep 71.48 55.1% 39.37
----- ---- -----
Midscale without Food & Beverage 80.00 57.3% 45.85
----- ---- -----
Quality 69.34 49.2% 34.08
Clarion 82.53 46.7% 38.51
----- ---- -----
Midscale with Food & Beverage 71.97 48.6% 35.00
----- ---- -----
Econo Lodge 55.36 45.5% 25.19
Rodeway 53.68 44.4% 23.81
----- ---- -----
Economy 54.90 45.2% 24.80
----- ---- -----
MainStay 74.71 61.4% 45.88
Suburban 44.08 57.1% 25.17
----- ---- -----
Extended Stay 52.65 58.2% 30.67
----- ---- -----
Total $72.97 52.6% $38.38
====== ==== ======
Change
------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn (3.8%) (530) bps (12.6%)
Comfort Suites (7.0%) (710) bps (18.4%)
Sleep (4.8%) (640) bps (15.9%)
---- ---- --- -----
Midscale without Food &
Beverage (4.7%) (590) bps (14.4%)
---- ---- --- -----
Quality (5.2%) (550) bps (15.8%)
Clarion (6.3%) (680) bps (19.9%)
---- ---- --- -----
Midscale with Food &
Beverage (5.5%) (570) bps (16.7%)
---- ---- --- -----
Econo Lodge (3.1%) (340) bps (10.2%)
Rodeway (6.7%) (400) bps (15.0%)
---- ---- --- -----
Economy (4.2%) (360) bps (11.7%)
---- ---- --- -----
MainStay (10.2%) (420) bps (16.5%)
Suburban (11.7%) - bps (11.8%)
----- --- --- -----
Extended Stay (10.9%) (110) bps (12.7%)
----- ---- --- -----
Total (4.9%) (530) bps (14.4%)
==== ==== === =====
* Operating statistics represent hotel operations from September through
November
For the Quarter Ended For the Year Ended
--------------------- ------------------
12/31/2009 12/31/2008 12/31/2009 12/31/2008
System-wide effective
royalty rate 4.30% 4.23% 4.26% 4.20%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
December 31, December 31,
2009 2008
------------ ------------
Hotels Rooms Hotels Rooms
------ ----- ------ -----
Comfort Inn 1,447 113,633 1,462 114,573
Comfort Suites 608 47,301 541 42,152
Sleep 392 28,599 365 26,867
--- ------ --- ------
Midscale without Food & Beverage 2,447 189,533 2,368 183,592
----- ------- ----- -------
Quality 979 89,336 908 85,055
Clarion 172 24,636 150 21,497
--- ------ --- ------
Midscale with Food & Beverage 1,151 113,972 1,058 106,552
----- ------- ----- -------
Econo Lodge 792 48,996 816 50,812
Rodeway 372 21,392 346 20,302
--- ------ --- ------
Economy 1,164 70,388 1,162 71,114
----- ------ ----- ------
MainStay 37 2,866 35 2,694
Suburban 61 7,416 60 7,256
-- ----- -- -----
Extended Stay 98 10,282 95 9,950
-- ------ -- -----
Ascend Collection 28 2,346 21 1,353
Cambria Suites 18 2,073 12 1,323
-- ----- -- -----
Domestic Franchises 4,906 388,594 4,716 373,884
International Franchises 1,115 98,816 1,111 98,642
----- ------ ----- ------
Total Franchises 6,021 487,410 5,827 472,526
===== ======= ===== =======
Variance
--------
Hotels Rooms % %
------ ----- --- ---
Comfort Inn (15) (940) (1.0%) (0.8%)
Comfort Suites 67 5,149 12.4% 12.2%
Sleep 27 1,732 7.4% 6.4%
-- ----- --- ---
Midscale without Food & Beverage 79 5,941 3.3% 3.2%
-- ----- --- ---
Quality 71 4,281 7.8% 5.0%
Clarion 22 3,139 14.7% 14.6%
-- ----- ---- ----
Midscale with Food & Beverage 93 7,420 8.8% 7.0%
-- ----- --- ---
Econo Lodge (24) (1,816) (2.9%) (3.6%)
Rodeway 26 1,090 7.5% 5.4%
-- ----- --- ---
Economy 2 (726) 0.2% (1.0%)
-- ---- --- ----
MainStay 2 172 5.7% 6.4%
Suburban 1 160 1.7% 2.2%
-- --- --- ---
Extended Stay 3 332 3.2% 3.3%
-- --- --- ---
Ascend Collection 7 993 33.3% 73.4%
Cambria Suites 6 750 50.0% 56.7%
-- --- ---- ----
Domestic Franchises 190 14,710 4.0% 3.9%
International Franchises 4 174 0.4% 0.2%
-- --- --- ---
Total Franchises 194 14,884 3.3% 3.1%
=== ====== === ===
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 6
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Year Ended
December 31, 2009
------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 9 39 48
Comfort Suites 16 1 17
Sleep 12 2 14
-- -- --
Midscale without Food & Beverage 37 42 79
-- -- --
Quality 4 111 115
Clarion 1 31 32
-- -- --
Midscale with Food & Beverage 5 142 147
-- --- ---
Econo Lodge - 68 68
Rodeway 1 48 49
-- -- --
Economy 1 116 117
-- --- ---
MainStay 5 2 7
Suburban 3 2 5
-- -- --
Extended Stay 8 4 12
-- -- --
Ascend Collection 3 9 12
Cambria Suites 2 - 2
-- -- --
Total Domestic System 56 313 369
== === ===
For the Year Ended
December 31, 2008
------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 48 58 106
Comfort Suites 85 3 88
Sleep 72 4 76
-- - --
Midscale without Food & Beverage 205 65 270
--- -- ---
Quality 5 147 152
Clarion 7 42 49
-- -- --
Midscale with Food & Beverage 12 189 201
-- --- ---
Econo Lodge 4 83 87
Rodeway 3 99 102
-- -- ---
Economy 7 182 189
-- --- ---
MainStay 12 - 12
Suburban 8 - 8
-- -- --
Extended Stay 20 - 20
-- -- --
Ascend Collection 1 1 2
Cambria Suites 16 - 16
-- -- --
Total Domestic System 261 437 698
=== === ===
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn (81%) (33%) (55%)
Comfort Suites (81%) (67%) (81%)
Sleep (83%) (50%) (82%)
--- --- ---
Midscale without Food & Beverage (82%) (35%) (71%)
--- --- ---
Quality (20%) (24%) (24%)
Clarion (86%) (26%) (35%)
--- --- ---
Midscale with Food & Beverage (58%) (25%) (27%)
--- --- ---
Econo Lodge (100%) (18%) (22%)
Rodeway (67%) (52%) (52%)
--- --- ---
Economy (86%) (36%) (38%)
--- --- ---
MainStay (58%) NM (42%)
Suburban (63%) NM (38%)
--- -- ---
Extended Stay (60%) NM (40%)
--- -- ---
Ascend Collection 200% 800% 500%
Cambria Suites (88%) NM (88%)
--- -- ---
Total Domestic System (79%) (28%) (47%)
=== === ===
For the Three Months Ended
December 31, 2009
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 5 17 22
Comfort Suites 7 - 7
Sleep 1 - 1
-- -- --
Midscale without Food & Beverage 13 17 30
-- -- --
Quality 1 24 25
Clarion - 8 8
-- -- --
Midscale with Food & Beverage 1 32 33
-- -- --
Econo Lodge - 23 23
Rodeway - 12 12
-- -- --
Economy - 35 35
-- -- --
MainStay 4 1 5
Suburban 1 2 3
-- -- --
Extended Stay 5 3 8
-- -- --
Ascend Collection 2 4 6
Cambria Suites - - -
-- -- --
Total Domestic System 21 91 112
== == ===
For the Three Months Ended
December 31, 2008
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 15 17 32
Comfort Suites 20 - 20
Sleep 25 1 26
-- -- --
Midscale without Food & Beverage 60 18 78
-- -- --
Quality 1 39 40
Clarion 1 14 15
-- -- --
Midscale with Food & Beverage 2 53 55
-- -- --
Econo Lodge 1 28 29
Rodeway 1 34 35
-- -- --
Economy 2 62 64
-- -- --
MainStay 5 - 5
Suburban - - -
-- -- --
Extended Stay 5 - 5
-- -- --
Ascend Collection 1 - 1
Cambria Suites 4 - 4
-- -- --
Total Domestic System 74 133 207
== === ===
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn (67%) 0% (31%)
Comfort Suites (65%) NM (65%)
Sleep (96%) (100%) (96%)
--- ---- ---
Midscale without Food & Beverage (78%) (6%) (62%)
--- -- ---
Quality 0% (38%) (38%)
Clarion (100%) (43%) (47%)
---- --- ---
Midscale with Food & Beverage (50%) (40%) (40%)
--- --- ---
Econo Lodge (100%) (18%) (21%)
Rodeway (100%) (65%) (66%)
---- --- ---
Economy (100%) (44%) (45%)
---- --- ---
MainStay (20%) NM 0%
Suburban NM NM NM
-- -- --
Extended Stay 0% NM 60%
-- -- --
Ascend Collection 100% NM 500%
Cambria Suites (100%) NM (100%)
---- -- ----
Total Domestic System (72%) (32%) (46%)
=== === ===
CHOICE HOTELS INTERNATIONAL, INC.
DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING
CONVERSION OR APPROVED FOR DEVELOPMENT
(UNAUDITED)
A hotel in the domestic pipeline does not always result in an
open and operating hotel due to various factors.
December 31, 2009
Units
-----
New
Conversion Construction Total
---------- ------------ -----
Comfort Inn 43 91 134
Comfort Suites - 181 181
Sleep Inn 1 122 123
-- --- ---
Midscale without Food &
Beverage 44 394 438
-- --- ---
Quality 48 15 63
Clarion 19 6 25
-- -- --
Midscale with Food & Beverage 67 21 88
-- -- --
Econo Lodge 43 4 47
Rodeway 36 2 38
-- -- --
Economy 79 6 85
-- -- --
MainStay - 37 37
Suburban 2 30 32
-- -- --
Extended Stay 2 67 69
-- -- --
Ascend Collection 2 4 6
Cambria Suites - 41 41
-- -- --
194 533 727
=== === ===
December 31, 2008
Units
-----
New
Conversion Construction Total
---------- ------------ -----
Comfort Inn 51 125 176
Comfort Suites 3 279 282
Sleep Inn 2 157 159
-- --- ---
Midscale without Food &
Beverage 56 561 617
-- --- ---
Quality 69 14 83
Clarion 36 9 45
-- -- --
Midscale with Food & Beverage 105 23 128
--- -- ---
Econo Lodge 45 5 50
Rodeway 58 2 60
-- -- --
Economy 103 7 110
--- -- ---
MainStay - 38 38
Suburban - 34 34
-- -- --
Extended Stay - 72 72
-- -- --
Ascend Collection - 1 1
Cambria Suites - 59 59
-- -- --
264 723 987
=== === ===
Variance
--------
Conversion New Construction Total
---------- ---------------- -----
Units % Units % Units %
----- --- ----- --- ----- ---
Comfort Inn (8) (16%) (34) (27%) (42) (24%)
Comfort Suites (3) (100%) (98) (35%) (101) (36%)
Sleep Inn (1) (50%) (35) (22%) (36) (23%)
-- --- --- --- --- ---
Midscale without Food
& Beverage (12) (21%) (167) (30%) (179) (29%)
--- --- ---- --- ---- ---
Quality (21) (30%) 1 7% (20) (24%)
Clarion (17) (47%) (3) (33%) (20) (44%)
--- --- -- --- --- ---
Midscale with Food
& Beverage (38) (36%) (2) (9%) (40) (31%)
--- --- -- -- --- ---
Econo Lodge (2) (4%) (1) (20%) (3) (6%)
Rodeway (22) (38%) - 0% (22) (37%)
--- --- -- -- --- ---
Economy (24) (23%) (1) (14%) (25) (23%)
--- --- -- --- --- ---
MainStay - NM (1) (3%) (1) (3%)
Suburban 2 NM (4) (12%) (2) (6%)
-- -- -- --- -- --
Extended Stay 2 NM (5) (7%) (3) (4%)
-- -- -- -- -- --
Ascend Collection 2 NM 3 300% 5 500%
Cambria Suites - NM (18) (31%) (18) (31%)
-- -- --- --- --- ---
(70) (27%) (190) (26%) (260) (26%)
=== === ==== === ==== ===
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS
Three Months Ended Year Ended
(dollar amounts in thousands) December 31, December 31,
------------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Franchising Revenues:
Total Revenues $140,701 $154,494 $564,178 $641,680
Adjustments:
Marketing and reservation
revenues (77,576) (81,904) (305,379) (336,477)
Hotel operations (909) (1,253) (4,140) (4,936)
---- ------ ------ ------
Franchising Revenues $62,216 $71,337 $254,659 $300,267
------- ------- -------- --------
Franchising Margins:
Operating Margin:
Total Revenues $140,701 $154,494 $564,178 $641,680
Operating Income $34,083 $34,097 $148,073 $174,596
------- ------- -------- --------
Operating Margin 24.2% 22.1% 26.2% 27.2%
---- ---- ---- ----
Adjusted Franchising Margin:
Franchising Revenues $62,216 $71,337 $254,659 $300,267
Operating Income $34,083 $34,097 $148,073 $174,596
Acceleration of management
succession plan benefits - 500 - 6,605
Employee termination benefits 2,334 2,731 4,604 3,537
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan 1,209 - 1,209 -
Loss on sublease of office space - - 1,503 -
Loan reserves related to impaired
notes receivable - 7,555 - 7,555
Hotel operations (134) (359) (987) (1,502)
---- ---- ---- ------
$37,492 $44,524 $154,402 $190,791
------- ------- -------- --------
---- ---- ---- ----
Adjusted Franchising Margins 60.3% 62.4% 60.6% 63.5%
---- ---- ---- ----
CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS
Three Months Ended Year Ended
(dollar amounts in thousands) December 31, December 31,
------------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Selling, general and
administrative costs $26,183 $35,580 $99,237 $118,989
Acceleration of management
succession plan benefits - (500) - (6,605)
Employee termination benefits (2,334) (2,731) (4,604) (3,537)
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan (1,209) - (1,209) -
Loss on sublease of office space - - (1,503) -
Loan reserves related to impaired
notes receivable - (7,555) - (7,555)
--- ------ --- ------
Adjusted Selling, General and
Administrative Costs $22,640 $24,794 $91,921 $101,292
======= ======= ======= ========
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS
PER SHARE (EPS)
(In thousands, except per Three Months Ended Year Ended
share amounts) December 31, December 31,
------------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Net Income $23,631 $18,711 $98,250 $100,211
Adjustments:
Acceleration of management
succession plan benefits - 313 - 4,135
Employee termination benefits 1,461 1,709 2,882 2,214
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan 757 - 757 -
Loss on sublease of office space - - 941 -
Loan reserves related to impaired
notes receivable - 4,729 - 4,729
--- ----- --- -----
Adjusted Net Income $25,849 $25,462 $102,830 $111,289
------- ------- -------- --------
Weighted average shares
outstanding-diluted 59,658 62,157 60,224 62,994
Diluted Earnings Per Share $0.40 $0.30 $1.63 $1.59
Adjustments:
Acceleration of management
succession plan - - - 0.07
Employee termination benefits 0.02 0.03 0.05 0.03
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan 0.01 - 0.01 -
Loss on sublease of office space - - 0.02 -
Loan reserves related to impaired
notes receivable - 0.08 - 0.08
--- ---- --- ----
Adjusted Diluted Earnings Per
Share (EPS) $0.43 $0.41 $1.71 $1.77
----- ----- ----- -----
Adjusted EBITDA Reconciliation
(in millions)
Year Ended Year Ended
December 31, December 31, Full-Year
Q4 2009 Q4 2008 2009 2008 2010
Actuals Actuals Actuals Actuals Outlook
Operating Income
(per GAAP) $34.1 $34.1 $148.1 $174.6 $158 - $162
Acceleration of
management
succession plan - 0.5 - 6.6 -
Employee
termination
benefits 2.3 2.7 4.6 3.5 -
Curtailment loss
related to the
freezing of
benefits under
the Company's
Supplemental
Executive
Retirement Plan 1.2 - 1.2 - -
Loss on sublease
of office space - - 1.5 - -
Loan reserves
related to
impaired notes
receivable - 7.6 - 7.6 8.0
Depreciation and
amortization 2.1 2.0 8.3 8.2 -
--- --- --- --- ---
Adjusted Earnings
before interest,
taxes,
depreciation &
amortization
(non-GAAP) $39.7 $46.9 $163.7 $200.5 $166 -$170
===== ===== ====== ====== ==========
