SILVER SPRING, Md., Feb. 11 /PRNewswire-FirstCall/ -- 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 million for 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 million and $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% from December 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
ended December 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, 2009 compared 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 million charge
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 through December 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, http://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, 2010 by 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 http://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 at
http://www.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 on March 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
===== ===== ====== ====== ========== DATASOURCE: Choice Hotels
International, Inc. CONTACT: David White, Senior Vice President,
Chief Financial Officer & Treasurer, +1-301-592-5117, or David
Peikin, Senior Director, Corporate Communications, +1-301-592-6361,
both of Choice Hotels International, Inc. Web Site:
http://www.choicehotels.com/
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