Choice Hotels Reports Record Diluted EPS of $1.32 for Full-Year 2005; Adjusted Diluted EPS of $1.26 up 18%; Domestic Unit Growth Rises 5.6%; New Domestic Hotel Franchise Contracts Exceed 630 For Full-Year, Up 16%.SILVER SPRING, Md. -- Choice Hotels International, Inc., (NYSE NYSE See: New York Stock Exchange :CHH CHH Cartilage Hair Hypoplasia CHH Crustacean Hyperglycemic Hormone CHH Carter Holt Harvey Limited (Australia & New Zealand) CHH Chuan Hup Holdings Limited (Singapore) CHH Certified Hardware Hosineer ) today reported the following highlights for the fourth quarter and full-year 2005, including records for full-year and fourth-quarter earnings per share, revenues and domestic hotel franchise contracts: --Diluted earnings per share (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) for full-year 2005 were $1.32 compared to $1.08 for 2004; Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for fourth quarter 2005 were $0.32 compared to $0.30 for fourth quarter 2004; --Adjusted diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (on a non-GAAP basis, excluding specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. items) for full-year 2005 were $1.26, up 18% from $1.07 for the same period in 2004; Adjusted diluted EPS for fourth quarter 2005 were $0.32, up 14% from $0.28 for the fourth quarter of 2004; --Earnings before interest taxes and depreciation expense ("EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ") for full-year 2005 increased 13% to $153 million from $135 million in 2004. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased more than 15% for both full-year and fourth quarter 2005 compared to the same periods in the prior year, to $143.8 million and $36.2 million, respectively; --Domestic unit growth increased 5.6%; excluding the acquisition of Suburban, domestic unit growth increased 3.9%; --Domestic system-wide revenue per available room (RevPAR RevPAR A performance metric in the hotel industry which stands for "revenue per available room." RevPAR is typically calculated by multiplying a hotel's average daily room rate (ADR) by its occupancy rate. ) increased 7.3% for fourth-quarter 2005 and 6.1% for full-year 2005 compared to prior year results; --Full year 2005 new domestic hotel franchise contracts up 16% to a record 639; --Franchising revenues up 16% and 13% for fourth quarter and full-year 2005, respectively; Total revenues up 14% and 11% for fourth quarter and full-year, respectively; --The domestic hotel pipeline of hotels under construction, awaiting conversion or approved for development increased more than 30% to 603 hotels representing 46,464 rooms; the worldwide pipeline increased 21% to 687 hotels, representing 54,075 rooms; --According to Smith Travel Research ("STR STR abbr. synchronous transmitter receiver ") Choice branded system-wide market share in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. has increased 89 basis points to 7.35% of total industry rooms since 2002. The total number of domestic hotel rooms has increased at an annual rate of less than 1% per annum Per annum Yearly. during these same 3 years. "We are very pleased with our performance for the fourth quarter and for the full-year 2005. We achieved record results, including record franchise sales and our highest year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. domestic hotel pipeline. These results provide solid momentum heading into 2006 and reflect the strength and sustainability of our business model," said Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by A. Ledsinger, Jr., president and chief executive officer. "While continuing to invest in the business, we also returned nearly $80 million to our shareholders through share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. and dividends during the year." He added, "We continue to be encouraged by our strong pipeline, the healthy operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. for the lodging Lodging or holiday accommodation is a type of accommodation. People who travel and stay away from home for more than a day need lodging mainly for sleeping. Other purposes are safety, shelter from cold and rain, having a place to store luggage and being able to take a industry and the development potential for the two brands we added to our portfolio in 2005, the upscale Cambria Cambria (kăm`brēə) [Latinized form of Welsh Cymry=Welshmen], ancient name of Wales. Suites brand and Suburban Extended Stay Hotels Extended Stay Hotels (ESH) is a hotel brand that is the culmination of a rapid expansion in the extended stay hotel extended stay lodging market. Extended Stay Hotels is now one of the most recognized brands in the extended stay industry. ." During 2005, the company acquired Suburban Franchise Holding Company, Inc., which included 67 Suburban Extended Stay Hotels units open and operating in the United States. The results of operations for Suburban have been included in the company's results of operations since September September: see month. 28, 2005. Diluted earnings per share for each of the full-year and fourth quarter periods ended December December: see month. 31, 2005 and 2004 include reductions of income tax expense related to the resolution of certain tax contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. . Diluted earnings per share for full-year 2005 include additional income tax expense related to the company's repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of foreign earnings pursuant to the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act. Diluted earnings per share for full-year 2004 include certain costs related to the extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. To present results on a comparable basis the company has provided adjusted diluted earnings per share amounts that exclude these items. Use of Free Cash Flow The company has consistently used its free cash flow (cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses less capital expenditures) generated from operations to return value to shareholders. This is primarily achieved through share repurchases and dividends. During the year ended December 31, 2005, the company repurchased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 1.1 million shares (including 0.5 million prior to the 2 for 1 stock split effected in October October: see month. 2005) of its common stock for a total cost of $48.6 million. The company has remaining authorization The right or permission to use a system resource; the process of granting access. See access control. to purchase up to 5.1 million shares. No minimum number of shares has been fixed. Since Choice announced its stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program on June June: see month. 25, 1998 and through February February: see month. 14, 2006, the company has repurchased 33.6 million shares (including 33.0 million prior to the 2 for 1 stock split effected in October 2005) of its common stock at an average price of $21.16 per share and for a total cost of $711.9 million. For the year ended December 31, 2005, the company paid $30.2 million of cash dividends to shareholders. The annual dividend rate per common share is $0.52. The company expects to continue to return value to its shareholders through a combination of dividends and share repurchases, subject to market and other conditions. Outlook for 2006 The company's first quarter 2006 diluted EPS is expected to be $0.19 to $0.21. Full-year 2006 diluted EPS is expected to be $1.38 to $1.41. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
--The company expects net domestic unit growth of approximately 4% in 2006; --RevPAR is expected to increase 6.5% to 8% for first quarter 2006 and 5% to 6% for full-year 2006; --The effective royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. rate is expected to increase 3 basis points for full-year 2006; --All figures assume the existing share count, include stock-based compensation expense and assume an effective tax rate of 37.5%. Conference Call Choice will conduct a conference call on Wednesday Wednesday: see week. , February 15, 2006 at 9 a.m. Eastern time to discuss the company's fourth quarter and full-year 2005 results. The call-in call-in adj. Being in a format such that listeners or viewers are invited to have their telephone conversations with the host or guests on a show broadcast to other listeners: a call-in radio show. n. number to listen to the call is 1-800-230-1059. The conference call also will be Webcast simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics via the company's Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call on the Web should go to the Web site and click on the Investor Info INFO Information INFO Information (logging abbreviation) INFO Inform(ed/ation) INFO Ionic Difluoroamino Oxidizer link. The Investor Information page will feature a conference call microphone microphone, device for converting sound into electrical energy, used in radio broadcasting, recording, and sound amplifying systems. Its basic component is a diaphragm that responds to the pressure or particle velocity of sound waves. icon to access the call. The audio of the call will be archived and available on www.choicehotels.com for those unable to listen to the call on February 15. The call will also be available for replay until March 15, 2006 by calling 1-800-475-6701. The access code for the replay is: 814000. Two-For-One Stock Split The company effected a two-for-one stock split of its outstanding shares of common stock, par value $.01 per share, effective on October 21, 2005. All share information in this release and in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. exhibits, including per share amounts, have been proportionally pro·por·tion·al adj. 1. Forming a relationship with other parts or quantities; being in proportion. 2. Properly related in size, degree, or other measurable characteristics; corresponding: adjusted as if the two-for-one stock split had been effective as of the date or period presented (unless otherwise noted). About Choice Hotels Choice Hotels International franchises more than 5,200 hotels, representing more than 425,000 rooms, in the United States and more than 40 countries and territories. As of December 31, 2005, 603 hotels are under development in the United States, representing 46,464 rooms, and an additional 84 hotels, representing 7,611 rooms, are under development in more than 20 countries and territories. The company's Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion A family of application development systems for Windows from SoftVelocity, Inc., Pompano Beach, FL (www.softvelocity.com). Clarion provides a comprehensive set of tools for development, including a screen builder, 4GL and application generator. , Sleep Inn, Econo Lodge Econo Lodge is an economy motel chain based in the United States. Econo Lodge is the second largest brand in the Choice Hotels system. It is one of the best known names of its category and provides affordable rooms to budget travelers. , Rodeway Inn Rodeway Inn is an upper-priced economy chain of motels in the United States and Canada. Rodeway Inn is a brand of the Choice Hotels group. There are over 150 locations in North America. , MainStay Suites Mainstay Suites is a brand of mid-priced extended stay hotels franchised by Choice Hotels International. Mainstay Suites hotels provide comfortable and affordable accommodations to extended stay travelers as well as provide many amenities to its guests. and Suburban Extended Stay Hotels brands serve guests worldwide. Additional corporate information may be found on Choice Hotels' Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site, which may be accessed at www.choicehotels.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law. Such statements are based on management's beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice's ability to predict or control. For further information on factors that could impact Choice the statements contained therein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the period ended December 31, 2004. Statement Concerning Non-GAAP Financial Measurements Adjusted diluted earnings per share, franchising revenues, franchising margins, free cash flows and earnings before interest, taxes, depreciation and amortization ("EBITDA") are non-GAAP financial measurements. These financial measurements are presented as supplemental disclosures because they are used by management in reviewing and analyzing the company's performance. This information should not be considered as an alternative to any measure of performance as promulgated prom·ul·gate tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates 1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce. 2. under accounting principles generally accepted in the United States (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), such as diluted earnings per share, total revenues, operating income margins, cash flows from operations and operating income. The company's calculation of these measurements may be different from the calculation used by other companies and therefore comparability may be limited. The company has included exhibits accompanying this release that reconcile these measures to the comparable GAAP measurement. Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, MainStay Suites, Suburban Extended Stay Hotels, Econo Lodge, and Rodeway Inn are proprietary trademarks and service marks of Choice Hotels International, Inc.. (C) 2006 Choice Hotels International, Inc. All rights reserved.
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
========= ========= ==========
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