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Choice Hotels' News

Choice Hotels International Reports Third Quarter 2013 Diluted EPS Of $0.70 Per Share
New Domestic Hotel Franchise Contracts Rise 45%
Franchising Operating Income Increases 6%
PR Newswire
ROCKVILLE, Md.

ROCKVILLE, Md., Oct. 24, 2013 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the third quarter of 2013:

    --  Franchising revenues increased 6% to $95.5 million for the three months
        ending September 30, 2013 from $90.1 million for the same period in
        2012.  Total revenues increased 6% to $223.2 million for the three
        months ending September 30, 2013 compared to the same period in 2012.
    --  Operating income from franchising activities totaled $69.5 million for
        the three months ending September 30, 2013, a 6% increase compared to
        the same period in 2012.  Total operating income increased 2% to $66.5
        million for the three months ending September 30, 2013 compared to the
        same period in 2012.
    --  Domestic system-wide revenue per available room ("RevPAR") increased
        3.0% for the three months ending September 30, 2013 compared to the same
        period in 2012 as occupancy and average daily rates increased 70 basis
        points and 1.9%, respectively.
    --  Domestic unit and room growth increased 2.0% and 0.7% from September 30,
        2012, respectively.
    --  Domestic royalty fees for the three months ending September 30, 2013
        increased 3% to $76.7 million from $74.3 million for the three months
        ending September 30, 2012.
    --  Initial and relicensing fees for the three months ending September 30,
        2013 increased $1.4 million or 43% to $4.7 million from the same period
        in 2012.
    --  The company executed 129 new domestic hotel franchise contracts for the
        three months ending September 30, 2013 compared to 89 new domestic hotel
        franchise contracts for the same period in 2012, a 45% increase.
    --  Domestic relicensing and contract renewal transactions increased from 62
        contracts during the three months ending September 30, 2012 to 72 in the
        current period, a 16% increase.
    --  The number of worldwide hotels under construction, awaiting conversion
        or approved for development as of September 30, 2013 was 455 hotels
        representing 37,077 rooms, an increase of 4.6% and 2.6%, respectively,
        from September 30, 2012.
    --  Franchising SG&A expenses increased 6% from $22.5 million for the three
        months ending September 30, 2012 to $23.8 million for the same period in
        2012. Excluding variable expenses related to the company's non-qualified
        retirement plan deferred compensation, franchising SG&A expense
        increased 3.6% from $22.2 million in the prior year quarter to $23.0
        million in the three months ending September 30, 2013. Selling, general
        and administrative ("SG&A") expenses increased $3.8 million to $27.0
        million for the three months ended September 30, 2013 compared to the
        same period in 2012.

(Logo: http://photos.prnewswire.com/prnh/20131015/NE98133LOGO-l)

"Our franchising business continues to outperform our expectations. We are particularly pleased with recent activities on the development side of the business highlighted by a 45% increase in new domestic franchise contracts. The increase was driven by a 130% improvement in contracts for our flagship Comfort brands," said Stephen P. Joyce, president and chief executive officer, Choice Hotels International. "The Ascend Hotel Collection continues its rapid growth. This quarter we expanded in Europe and added another Ascend hotel in Australia. The Ascend Hotel Collection now has more than 115 worldwide locations, and we are excited about the future growth prospects of this brand as well as our family of brands."

Use of Free Cash Flow

The company has historically used its free cash flow (cash flow from operations less cash flow from investing activities) to return value to shareholders, primarily through share repurchases and dividends.

Dividends

The company's current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors. During the nine months ending September 30, 2013 and 2012, the company paid $22.0 million and $632.8 million in cash dividends to shareholders, respectively. The cash dividends paid during the nine months ending September 2013 reflect the company's decision to pay the first quarter of 2013 quarterly cash dividend in December 2012. In addition, cash dividends paid during the nine months ending September 30, 2012 include a special cash dividend in the amount of $10.41 per share or approximately $600.7 million paid on August 23, 2012.

As a result of the payment of the special cash dividend, earnings per share for the nine months ending September 30, 2013 include $15.5 million of additional interest expense compared to the prior year reflecting the financing transactions entered into during the second and third quarters of 2012.

Share Repurchases

The company did not repurchase any shares of common stock under the share repurchase program during the three and nine months ending September 30, 2013 but has authorization to purchase up to an additional 1.4 million shares under this program. We expect we will make repurchases from time to time under our share repurchase program in the open market and through privately negotiated transactions, subject to market and other conditions. There is no time limit on this authorization and no minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998 through September 30, 2013, the company has repurchased 45.3 million shares of its common stock for a total cost of $1.1 billion. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 78.3 million shares through September 30, 2013 under the share repurchase program at an average price of $13.89 per share.

Other

Our board of directors previously authorized us to enter into a program which permits us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in strategic markets. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to this program to promote growth of our emerging brands. Our current expectation is that our annual investment in this program will range between $20 million and $40 million per year and we generally expect to recycle these investments over a 5 year period. However, the amount and timing of the investment in this program will be dependent on market and other conditions. Notwithstanding this program, 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.

Balance Sheet

As of September 30, 2013, the company had total debt (long-term plus current portion) of $825 million and cash and cash equivalents totaling $161 million resulting in net debt of $664 million. At December 31, 2012, the company had total debt of $855 million and cash equivalents totaling $134 million resulting in net debt of $721 million.

As of September 30, 2013 and December 31, 2012, the company had outstanding mezzanine financing, real estate investments and sliver equity investments totaling $71 million and $68 million, respectively, pursuant to its program to offer financing and investment support to incent franchise development for emerging brands in strategic markets. These investments are reported in other current assets and other assets on the company's consolidated balance sheet.

Outlook

The company's fourth quarter 2013 diluted EPS is expected to range between $0.44 and $0.46. The company expects full-year 2013 diluted EPS to range between $1.89 and $1.91. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for full-year 2013 are expected to range between $203.5 million and $205.5 million. These estimates include the following assumptions:

 

    --  The company expects net domestic unit growth to increase by
        approximately 2% in 2013;
    --  RevPAR is expected to increase approximately 2% and 3.25% for the fourth
        quarter and full-year of 2013, respectively;
    --  The effective royalty rate is expected to increase 1 basis point for
        full-year 2013;
    --  All figures assume the existing share count;
    --  The effective tax rate is expected to be 29.0% and 28.5% for the fourth
        quarter and full-year 2013, respectively; and
    --  Our EBITDA outlook for the full year includes expenses related to the
        company's SkyTouch Technology division ranging between $12 million and
        $14 million for investment in the infrastructure of this division
        including business development, sales and marketing and other costs as
        well as continued software development expenditures related to the
        division's technology related products and services.

Conference Call

Choice will conduct a conference call on Thursday, October 24, 2013 at 9:30 a.m. EDT to discuss the company's third quarter 2013 results. The dial-in number to listen to the call is 1-800-901-5213, and the access code is 73582897. International callers should dial 1-617-786-2962 and enter the access code 73582897. 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 1:30 p.m. EDT on Thursday October 24, 2013 through Thursday, October 31, 2013 by calling 1-888-286-8010 and entering access code 43130503. The international dial-in number for the replay is 1-617-801-6888, access code 43130503. In addition, the call will be archived for approximately one-year and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc. franchises more than 6,300 hotels, representing more than 500,000 rooms, in the United States and more than 30 other countries and territories. As of September 30, 2013, 371 hotels, representing more than 29,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 84 hotels, representing approximately 7,200 rooms, were under construction, awaiting conversion or approved for development in more than 15 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, as well as its Ascend Hotel Collection membership program, serve guests worldwide.

SkyTouch Technology is an initiative of Choice Hotels International, Inc. that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability.

Additional corporate information can be found on the Choice Hotels International, Inc. web site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify such forward-looking statements. These 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, ability to repay outstanding indebtedness, payment of 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, 2012, filed with the Securities and Exchange Commission on February 28, 2013 and our quarterly reports filed on Form 10-Q. 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 Presented in this Press Release

EBITDA, franchising revenues, franchising SG&A, franchising margins and net debt are non-GAAP financial measurements. These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized by generally accepted accounting principles in the United States ("GAAP"), such as operating income, total revenues, operating margins and long-term debt. 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 EBITDA, franchising revenues, franchising SG&A and franchising margins to the most comparable GAAP financial measures. 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, loss on extinguishment of debt, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income (loss) of unconsolidated affiliates. We consider EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Franchising Revenues, Operating Income, SG&A and Margins: The company reports franchising revenues, operating income, SG&A and margins which exclude marketing and reservation revenues, SkyTouch Technology and hotel operations. Marketing and reservation activities are excluded from franchising revenues and operating margins since the company is required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing system fees not expended are recorded as a liability on the company's financial statements and are carried over to the next year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of system 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 reflect the company's ownership of three MainStay Suites hotels. SkyTouch Technology is a division of the company that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability. Hotel and SkyTouch Technology operations are excluded from franchising revenue and margins since they do not reflect the company's core franchising business but are adjacent, complimentary lines of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Net Debt: Net debt is long-term debt plus the current portion of long-term debt (i.e., long-term debt due within one year) less cash and cash equivalents. The company believes that net debt is an important measurement as many investors use net debt in making investment decisions, as it gives them an idea of a company's financial health and its level of leverage compared to liquid assets. Some industries may have more net debt than others; therefore, investors often compare a company's net debt to others in the same business.

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, Ascend Hotel Collection and SkyTouch Technologyare proprietary trademarks and service marks of Choice Hotels International.

© 2013 Choice Hotels International, Inc. All rights reserved.

 


    Choice Hotels International, Inc.                                                                                                                                             Exhibit 1

    Consolidated Statements of Income

    (Unaudited)




                                                Three Months Ended September 30,                Nine Months Ended September 30,
                                              --------------------------------             -------------------------------

                                                                                             Variance                                                          Variance

                                                                            2013     2012                      $                 %             2013      2012                  $            %
                                                                            ----     ----                    ---                ---            ----      ----                ---           ---

    (In thousands, except per share amounts)


    REVENUES:


    Royalty fees                                                         $83,107  $80,845                 $2,262                        3% $201,222  $194,762             $6,460                    3%

    Initial franchise and relicensing fees                                 4,650    3,247                  1,403                       43%   12,843     8,953              3,890                   43%

    Procurement services                                                   4,708    3,839                    869                       23%   16,204    13,990              2,214                   16%

    Marketing and reservation                                            126,296  119,062                  7,234                        6%  302,381   284,624             17,757                    6%

    Hotel operations                                                       1,310    1,238                     72                        6%    3,600     3,440                160                    5%

    Other                                                                  3,091    2,182                    909                       42%    7,362     7,434                (72)                 (1%)
                                                                           -----    -----                    ---                      ---     -----     -----                ---                  ---

          Total revenues                                                 223,162  210,413                 12,749                        6%  543,612   513,203             30,409                    6%


    OPERATING EXPENSES:


    Selling, general and administrative                                   26,982   23,170                  3,812                       16%   84,078    72,073             12,005                   17%

    Depreciation and amortization                                          2,379    1,995                    384                       19%    7,074     5,989              1,085                   18%

    Marketing and reservation                                            126,296  119,062                  7,234                        6%  302,381   284,624             17,757                    6%

    Hotel operations                                                         956      933                     23                        2%    2,742     2,609                133                    5%
                                                                             ---      ---                    ---                      ---     -----     -----                ---                  ---

    Total operating expenses                                             156,613  145,160                 11,453                        8%  396,275   365,295             30,980                    8%


    Operating income                                                      66,549   65,253                  1,296                        2%  147,337   147,908               (571)                 (0%)


    OTHER INCOME AND EXPENSES, NET:

    Interest expense                                                      10,757   10,166                    591                        6%   32,334    16,823             15,511                   92%

    Interest income                                                         (676)    (425)                  (251)                      59%   (1,979)   (1,156)              (823)                  71%

    Loss on extinguishment of debt                                             -      526                   (526)                   (100%)        -       526               (526)               (100%)

    Other (gains) and losses                                                (703)    (511)                  (192)                      38%   (1,266)   (2,137)               871                 (41%)

    Equity in net (income) loss of affiliates                               (421)    (171)                  (250)                     146%     (340)       12               (352)              (2933%)

    Total other income and expenses, net                                   8,957    9,585                   (628)                     (7%)   28,749    14,068             14,681                  104%
                                                                           -----    -----                   ----                      ---    ------    ------             ------                  ---


    Income before income taxes                                            57,592   55,668                  1,924                        3%  118,588   133,840            (15,252)                (11%)

    Income taxes                                                          16,080   11,291                  4,789                       42%   33,319    37,604             (4,285)                (11%)
                                                                          ------   ------                  -----                      ---    ------    ------             ------

    Net income                                                           $41,512  $44,377                $(2,865)                     (6%)  $85,269   $96,236           $(10,967)                (11%)
                                                                         =======  =======                =======                      ===   =======   =======           ========                 ====



    Basic earnings per share                                               $0.71    $0.77                 $(0.06)                     (8%)    $1.46     $1.66             $(0.20)                (12%)
                                                                           =====    =====                 ======                      ===     =====     =====             ======                 ====


    Diluted earnings per share                                             $0.70    $0.76                 $(0.06)                     (8%)    $1.45     $1.65             $(0.20)                (12%)
                                                                           =====    =====                 ======                      ===     =====     =====             ======                 ====

 

                                                                                                                                                        
    Choice Hotels International, Inc.                                                                                     Exhibit 2
                                                                                                                                                        
    Consolidated Balance Sheets
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                        
    (In thousands, except per share amounts)                                           September 30,                               December 31,
                                                                                                                                                      
                                                                                                       2013                                     2012
                                                                                                       ----                                     ----
                                                                                                                                                      
                                                                                     (Unaudited)
                                                                                                                                                      
                                                                                                                                                      
    ASSETS
                                                                                                                                                      
                                                                                                                                                      
    Cash and cash equivalents                                                                      $161,138                                 $134,177
                                                                                                                                                      
    Accounts receivable, net                                                                         62,605                                   52,270
                                                                                                                                                      
    Investments, employee benefit plans, at fair value                                                  386                                    3,486
                                                                                                                                                      
    Other current assets                                                                             34,138                                   43,537
                                                                                                     ------                                   ------
                                                                                                                        
                               Total
                               current
                               assets                                                               258,267                                  233,470
                                                                                                                                                      
                                                                                                                                                      
    Fixed assets and intangibles, net                                                               142,228                                  130,937
                                                                                                                                                      
    Receivable -- marketing and reservation fees                                                     32,564                                   42,179
                                                                                                                                                      
    Investments, employee benefit plans, at fair value                                               14,950                                   12,755
                                                                                                                                                      
    Other assets                                                                                    107,700                                   91,431
                                                                                                    -------                                   ------
                                                                                                                                                      
                                                                                                                        
                               Total
                               assets                           $555,709                                      $510,772
                                                                --------                                      --------
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                      
                                                                                                                                                      
    LIABILITIES AND SHAREHOLDERS' DEFICIT
                                                                                                                                                      
                                                                                                                                                      
    Accounts payable and accrued expenses                                                           $84,233                                  $94,266
                                                                                                                                                      
    Deferred revenue                                                                                 61,401                                   71,154
                                                                                                                                                      
    Deferred compensation & retirement plan obligations                                               2,439                                    2,522
                                                                                                                                                      
    Current portion of long-term debt                                                                 9,132                                    8,195
                                                                                                                                                      
    Other current liabilities                                                                        21,906                                        -
                                                                                                     ------                                      ---
                                                                                                             
                               Total current
                               liabilities                       179,111                                       176,137
                                                                                                                                                      
                                                                                                                                                      
    Long-term debt                                                                                  815,957                                  847,150
                                                                                                                                                      
    Deferred compensation & retirement plan obligations                                              21,219                                   20,399
                                                                                                                                                      
    Other liabilities                                                                                24,146                                   15,990
                                                                                                     ------                                   ------
                                                                                                                                                      
                                                                                                                        
                               Total
                               liabilities                                                        1,040,433                                1,059,676
                                                                                                                        
                                                                                                                                                      
                                                                                                                                                      
    Common stock, $0.01 par value                                                                       586                                      582
                                                                                                                                                      
    Additional paid-in-capital                                                                      114,571                                  110,246
                                                                                                                                                      
    Accumulated other comprehensive loss                                                             (5,370)                                  (4,216)
                                                                                                                                                      
    Treasury stock, at cost                                                                        (919,516)                                (927,776)
                                                                                                                                                      
    Retained earnings                                                                               325,005                                  272,260
                                                                                                    -------                                  -------
                                                                                                             
                               Total
                               shareholders'
                               deficit                          (484,724)                                    (548,904)
                                                                                                             
                                                                                                                                                      
                                                                                                                       
                               Total
                               liabilities
                               and
                               shareholders'
                               deficit                          $555,709                                      $510,772
                                                                --------                                      --------

 

 


    Choice Hotels International, Inc.                                              Exhibit 3

    Consolidated Statements of Cash Flows

    (Unaudited)




    (In thousands)                                            Nine Months Ended September 30,
                                                              -------------------------------

                                                                                   Revised (1)

                                                                             2013                     2012
                                                                             ----                     ----

    CASH FLOWS FROM OPERATING ACTIVITIES:


    Net income                                                            $85,269                  $96,236


    Adjustments to reconcile net income to net cash provided

     by operating activities:

      Depreciation and amortization                                         7,074                    5,989

      Provision for bad debts, net                                          2,054                    1,802

      Non-cash stock compensation
       and other charges                                                    8,638                    7,306

      Non-cash interest and other
       (income) loss                                                        1,057                     (633)

      Loss on extinguishment of
       debt                                                                     -                      526

      Deferred income taxes                                                (4,118)                  (1,627)

      Dividends received from
       equity method investments                                            1,109                      855

      Equity in net (income) loss
       of affiliates                                                         (340)                      12


    Changes in assets and liabilities:

      Receivables                                                         (13,699)                 (17,405)

      Receivable -marketing and
       reservation fees, net                                               23,756                   20,811

      Forgivable notes receivable,
       net                                                                 (5,722)                  (2,853)

      Accounts payable                                                      1,280                    5,980

      Accrued expenses                                                    (22,757)                 (10,309)

      Income taxes payable/
       receivable                                                          24,638                   12,786

      Deferred revenue                                                     (9,686)                   8,018

      Other assets                                                         (2,395)                  (7,458)

      Other liabilities                                                     8,851                   (1,613)
                                                                            -----                   ------


     NET CASH PROVIDED BY
      OPERATING ACTIVITIES                                                105,009                  118,423
                                                                          -------                  -------


    CASH FLOWS FROM INVESTING ACTIVITIES:


    Investment in property and
     equipment                                                            (26,442)                 (12,525)

    Equity method investments                                              (3,761)                  (9,454)

    Purchases of investments,
     employee benefit plans                                                (1,845)                  (1,191)

    Proceeds from sales of
     investments, employee
     benefit plans                                                          4,052                   10,909

    Issuance of mezzanine and
     other notes receivable                                                     -                   (4,236)

    Collections of mezzanine and
     other notes receivable                                                   224                      110

    Other items, net                                                         (578)                    (322)
                                                                             ----                     ----


     NET CASH USED IN INVESTING
      ACTIVITIES                                                          (28,350)                 (16,709)
                                                                          -------                  -------


    CASH FLOWS FROM FINANCING ACTIVITIES:


    Net borrowings (repayments)
     pursuant to revolving credit
     facilities                                                           (27,500)                  16,725

    Principal payments on long-
     term debt                                                             (6,158)                    (502)

    Proceeds from issuance of
     long-term debt                                                         3,360                  543,500

    Purchase of treasury stock                                             (3,684)                 (22,227)

    Dividends paid                                                        (22,026)                (632,751)

    Excess tax benefits from
     stock-based compensation                                               1,216                      793

    Debt issuance costs                                                         -                   (4,753)

    Proceeds from exercise of
     stock options                                                          6,677                    4,695
                                                                            -----                    -----


     NET CASH USED IN FINANCING
      ACTIVITIES                                                          (48,115)                 (94,520)
                                                                          -------                  -------


    Net change in cash and cash
     equivalents                                                           28,544                    7,194

    Effect of foreign exchange
     rate changes on cash and
     cash equivalents                                                      (1,583)                     813

    Cash and cash equivalents at
     beginning of period                                                  134,177                  107,057
                                                                          -------                  -------


    CASH AND CASH EQUIVALENTS AT
     END OF PERIOD                                                       $161,138                 $115,064
                                                                         ========                 ========


    (1) The presentation of the Company's forgivable notes receivable for the nine months ended September 30, 2012 has
     been revised

          from prior year disclosures. See Note 1 to the Company's Form 10-Q filed with the SEC on August 9, 2013 for
           additional information.

 

 


                                                                                                                                                                                                          CHOICE HOTELS INTERNATIONAL, INC.                                                                                                Exhibit 4

                                                                                                                                                                                                         SUPPLEMENTAL OPERATING INFORMATION

                                                                                                                                                                                                                DOMESTIC HOTEL SYSTEM

                                                                                                                                                                                                                     (UNAUDITED)





                                                                                   For the Nine Months Ended September 30, 2013*                       For the Nine Months Ended September 30, 2012*                    Change
                                                                                    --------------------------------------------                        --------------------------------------------                    ------


                                                                                              Average Daily                                                                                                            Average Daily                                                  Average Daily

                                                                                                  Rate                            Occupancy                                        RevPAR                                  Rate                    Occupancy            RevPAR             Rate          Occupancy           RevPAR
                                                                                                  ----                            ---------                                        ------                                  ----                    ---------            ------             ----          ---------           ------


    Comfort Inn                                                                                                   $83.44                         59.8%                                            $49.92                                   $81.52                 59.2%        $48.24               2.4%             60  bps          3.5%

    Comfort Suites                                                                                                 87.41                         63.0%                                             55.05                                    85.62                 61.8%         52.92               2.1%            120  bps          4.0%

    Sleep                                                                                                          74.51                         58.7%                                             43.70                                    72.29                 56.3%         40.68               3.1%            240  bps          7.4%

    Quality                                                                                                        70.61                         53.2%                                             37.54                                    69.84                 51.8%         36.14               1.1%            140  bps          3.9%

    Clarion                                                                                                        75.66                         51.1%                                             38.64                                    74.98                 49.4%         37.00               0.9%            170  bps          4.4%

    Econo Lodge                                                                                                    56.94                         48.9%                                             27.86                                    55.76                 48.7%         27.13               2.1%             20  bps          2.7%

    Rodeway                                                                                                        54.63                         51.8%                                             28.29                                    53.59                 51.3%         27.48               1.9%             50  bps          2.9%

    MainStay                                                                                                       72.87                         67.6%                                             49.29                                    69.27                 70.4%         48.79               5.2%           (280) bps          1.0%

    Suburban                                                                                                       42.71                         70.3%                                             30.01                                    41.24                 69.9%         28.82               3.6%             40  bps          4.1%

    Ascend Hotel Collection                                                                                       122.40                         64.5%                                             78.96                                   112.27                 63.5%         71.25               9.0%            100  bps         10.8%
                                                                                                                  ------                         ----                                              -----                                   ------                 ----          -----               ---             ---  ---         ----


    Total                                                                                                         $75.10                         56.4%                                            $42.37                                   $73.65                 55.5%        $40.89               2.0%             90  bps          3.6%
                                                                                                                  ======                         ====                                             ======                                   ======                 ====         ======               ===             ===  ===          ===


    * Operating statistics represent hotel operations from December through August



                                                                                   For the Three Months Ended September 30, 2013*                     For the Three Months Ended September 30, 2012*                    Change
                                                                                   ---------------------------------------------                       ---------------------------------------------                    ------


                                                                                              Average Daily                                                                                                            Average Daily                                                  Average Daily

                                                                                                  Rate                            Occupancy                                        RevPAR                                  Rate                    Occupancy            RevPAR             Rate          Occupancy           RevPAR
                                                                                                  ----                            ---------                                        ------                                  ----                    ---------            ------             ----          ---------           ------


    Comfort Inn                                                                                                   $89.49                         70.8%                                            $63.35                                   $87.58                 70.2%        $61.46               2.2%             60  bps          3.1%

    Comfort Suites                                                                                                 91.36                         71.2%                                             65.05                                    89.69                 70.2%         62.93               1.9%            100  bps          3.4%

    Sleep                                                                                                          78.45                         66.8%                                             52.38                                    76.09                 64.8%         49.32               3.1%            200  bps          6.2%

    Quality                                                                                                        75.81                         62.5%                                             47.36                                    75.02                 61.2%         45.88               1.1%            130  bps          3.2%

    Clarion                                                                                                        81.27                         59.7%                                             48.50                                    79.73                 58.7%         46.82               1.9%            100  bps          3.6%

    Econo Lodge                                                                                                    61.76                         58.1%                                             35.88                                    60.60                 57.7%         34.97               1.9%             40  bps          2.6%

    Rodeway                                                                                                        60.78                         60.8%                                             36.97                                    59.62                 60.8%         36.23               1.9%              -  bps          2.0%

    MainStay                                                                                                       76.91                         75.2%                                             57.82                                    73.17                 76.5%         55.96               5.1%           (130) bps          3.3%

    Suburban                                                                                                       43.79                         73.1%                                             32.02                                    42.62                 75.1%         32.03               2.7%           (200) bps        (0.0%)

    Ascend Hotel Collection                                                                                       125.54                         71.6%                                             89.86                                   115.98                 71.4%         82.77               8.2%             20  bps          8.6%
                                                                                                                  ------                         ----                                              -----                                   ------                 ----          -----               ---             ---  ---          ---


    Total                                                                                                         $80.14                         65.7%                                            $52.63                                   $78.63                 65.0%        $51.09               1.9%             70  bps          3.0%
                                                                                                                  ======                         ====                                             ======                                   ======                 ====         ======               ===             ===  ===          ===



    * Operating statistics represent hotel operations from June through August




                                                                                          For the Quarter Ended                                                           For the Nine Months Ended
                                                                                          ---------------------                                                           -------------------------

                                                                                                               9/30/2013                    9/30/2012                                                                                   9/30/2013            9/30/2012


    System-wide effective royalty rate                                                                              4.30%                        4.29%                                                                                       4.34%                4.31%

 

 

 



                                                                                     CHOICE HOTELS INTERNATIONAL, INC.                                                        Exhibit 5

                                                                                  SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

                                                                                                (UNAUDITED)




                             September 30, 2013  September 30, 2012         Variance
                             ------------------  ------------------         --------


                                   Hotels               Rooms           Hotels                                Rooms           Hotels      Rooms          %          %
                                   ------               -----           ------                                -----           ------      -----         ---        ---


    Comfort Inn                            1,312                102,586         1,367                                 106,970        (55)       (4,384)     (4.0%)     (4.1%)

    Comfort Suites                           590                 45,519           603                                  46,647        (13)       (1,128)     (2.2%)     (2.4%)

    Sleep                                    378                 27,351           390                                  28,232        (12)         (881)     (3.1%)     (3.1%)

    Quality                                1,193                 98,788         1,101                                  95,469         92         3,319        8.4%       3.5%

    Clarion                                  188                 26,885           187                                  26,943          1           (58)       0.5%     (0.2%)

    Econo Lodge                              821                 50,230           803                                  49,248         18           982        2.2%       2.0%

    Rodeway                                  434                 24,660           409                                  23,336         25         1,324        6.1%       5.7%

    MainStay                                  43                  3,331            39                                   2,997          4           334       10.3%      11.1%

    Suburban                                  63                  7,213            60                                   6,978          3           235        5.0%       3.4%

    Ascend Hotel Collection                   94                  8,006            56                                   4,946         38         3,060       67.9%      61.9%

    Cambria Suites                            18                  2,094            19                                   2,221         (1)         (127)     (5.3%)     (5.7%)
                                             ---                  -----           ---                                   -----        ---          ----      -----      -----


    Domestic Franchises                    5,134                396,663         5,034                                 393,987        100         2,676        2.0%       0.7%


    International Franchises               1,169                106,000         1,165                                 102,942          4         3,058        0.3%       3.0%
                                           -----                -------         -----                                 -------        ---         -----        ---        ---


    Total Franchises                       6,303                502,663         6,199                                 496,929        104         5,734        1.7%       1.2%
                                           =====                =======         =====                                 =======        ===         =====        ===        ===

 

 


                                                                                                                                                                                                                                              Exhibit 6

                                                                                                                                     CHOICE HOTELS INTERNATIONAL, INC.

                                                                                                                                     SUPPLEMENTAL INFORMATION BY BRAND

                                                                                                                            DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

                                                                                                                                                (UNAUDITED)





                            For the Nine Months Ended September 30, 2013   For the Nine Months Ended September 30,
                                                                                             2012                      % Change
                             -------------------------------------------- ----------------------------------------     --------


                                                 New                                                                                                        New                                               New

                                             Construction                                 Conversion                Total                               Construction            Conversion     Total     Construction       Conversion                  Total
                                             ------------                                 ----------                -----                               ------------            ----------     -----     ------------       ----------                  -----


    Comfort Inn                                                        12                                        35          47                                             10              17        27                20%              106%                   74%

    Comfort Suites                                                      7                                         6          13                                             11               4        15              (36%)               50%                 (13%)

    Sleep                                                               9                                         1          10                                             17               1        18              (47%)                0%                 (44%)

    Quality                                                             1                                        76          77                                              -              88        88                NM              (14%)                 (13%)

    Clarion                                                             1                                        12          13                                              -              14        14                NM              (14%)                  (7%)

    Econo Lodge                                                         -                                        61          61                                              -              33        33                NM                85%                   85%

    Rodeway                                                             1                                        39          40                                              -              46        46                NM              (15%)                 (13%)

    MainStay                                                            5                                         -           5                                              2               1         3               150%            (100%)                   67%

    Suburban                                                            1                                         1           2                                              1               1         2                 0%                0%                    0%

    Ascend Hotel Collection                                             5                                        40          45                                              1               8         9               400%              400%                  400%

    Cambria Suites                                                      2                                         -           2                                              4               -         4              (50%)     NM                            (50%)
                                                                      ---                                       ---         ---                                            ---             ---       ---              ----     ---                            ----


    Total Domestic System                                              44                                       271         315                                             46             213       259               (4%)               27%                   22%
                                                                      ===                                       ===         ===                                            ===             ===       ===               ===               ===                   ===






                            For the Three Months Ended September 30, 2013  For the Three Months Ended September 30,
                                                                                             2012                      % Change
                            --------------------------------------------- -----------------------------------------    --------


                                                 New                                                                                                        New                                               New

                                             Construction                                 Conversion                Total                               Construction            Conversion     Total     Construction       Conversion                  Total
                                             ------------                                 ----------                -----                               ------------            ----------     -----     ------------       ----------                  -----


    Comfort Inn                                                         7                                        17          24                                              4               5         9                75%              240%                  167%

    Comfort Suites                                                      2                                         4           6                                              4               -         4              (50%)               NM                    50%

    Sleep                                                               4                                         1           5                                              6               -         6              (33%)               NM                  (17%)

    Quality                                                             -                                        32          32                                              -              25        25                NM                28%                   28%

    Clarion                                                             1                                         5           6                                              -               7         7                NM              (29%)                 (14%)

    Econo Lodge                                                         -                                        31          31                                              -              15        15                NM               107%                  107%

    Rodeway                                                             1                                        15          16                                              -              15        15                NM                 0%                    7%

    MainStay                                                            1                                         -           1                                              1               -         1                 0%               NM                     0%

    Suburban                                                            1                                         -           1                                              1               -         1                 0%               NM                     0%

    Ascend Hotel Collection                                             2                                         4           6                                              -               4         4                NM                 0%                   50%

    Cambria Suites                                                      1                                         -           1                                              2               -         2              (50%)               NM                  (50%)
                                                                      ---                                       ---         ---                                            ---             ---       ---              ----               ---                  ----


    Total Domestic System                                              20                                       109         129                                             18              71        89                11%               54%                   45%
                                                                      ===                                       ===         ===                                            ===             ===       ===               ===               ===                   ===

 

 


                                                                                                                                                                                                                                                                                                                         Exhibit 7

                                                                                                                                                                                          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.



                                                                                                                                                                                                                                                                            Variance
                                                                                                                                                                                                                                                                            --------

                                                                                     September 30, 2013            September 30, 2012

                                                                                           Units                          Units           Conversion         New Construction                                  Total
                                                                                           -----                          -----           ----------         ----------------                                  -----

                                                                                         Conversion                 New Construction        Total               Conversion                               New Construction                            Total       Units          %               Units      %                       Units      %
                                                                                         ----------                 ----------------        -----               ----------                               ----------------                            -----       -----          ---             -----      ---                     -----      ---


    Comfort Inn                                                                                             36                         50            86                          23                                            39                             62        13                  57%        11            28%                  24        39%

    Comfort Suites                                                                                           4                         47            51                           1                                            77                             78         3                 300%       (30)         (39%)                 (27)     (35%)

    Sleep Inn                                                                                                1                         45            46                           1                                            38                             39         -                   0%         7            18%                   7        18%

    Quality                                                                                                 33                          3            36                          37                                             3                             40        (4)               (11%)         -             0%                  (4)     (10%)

    Clarion                                                                                                  7                          2             9                          18                                             1                             19       (11)               (61%)         1           100%                 (10)     (53%)

    Econo Lodge                                                                                             33                          -            33                          23                                             1                             24        10                  43%        (1)        (100%)                   9        38%

    Rodeway                                                                                                 24                          1            25                          25                                             -                             25        (1)                (4%)         1      NM                          -         0%

    MainStay                                                                                                 -                         26            26                           1                                            18                             19        (1)              (100%)         8            44%                   7        37%

    Suburban                                                                                                 3                         12            15                           2                                            14                             16         1                  50%        (2)         (14%)                  (1)      (6%)

    Ascend Hotel Collection                                                                                 13                         10            23                           9                                             4                             13         4                  44%         6           150%                  10        77%

    Cambria Suites                                                                                           -                         21            21                           -                                            25                             25         -           NM                (4)         (16%)                  (4)     (16%)
                                                                                                           ---                        ---           ---                         ---                                           ---                            ---       ---           ---              ---          ----                  ---      ----


                                                                                                           154                        217           371                         140                                           220                            360        14                  10%        (3)          (1%)                  11         3%
                                                                                                           ===                        ===           ===                         ===                                           ===                            ===       ===                 ===        ===           ===                  ===       ===

 

 


                                                                                                            CHOICE HOTELS INTERNATIONAL, INC.                                                                                                Exhibit 8

                                                                                                       SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

                                                                                                                       (UNAUDITED)


    CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS


    (dollar amounts in thousands)                                           Three Months Ended September 30,                              Nine Months Ended September 30,
                                                                            --------------------------------                              -------------------------------


                                                                                                               2013                                                          2012                         2013                         2012
                                                                                                               ----                                                          ----                         ----                         ----

    Franchising Revenues:


    Total Revenues                                                                                         $223,162                                                      $210,413                     $543,612                     $513,203

    Adjustments:

         Marketing and reservation revenues                                                                (126,296)                                                     (119,062)                    (302,381)                    (284,624)

         SkyTouch Division                                                                                      (13)                                                            -                          (13)                           -

         Hotel operations                                                                                    (1,310)                                                       (1,238)                      (3,600)                      (3,440)

    Franchising Revenues                                                                                    $95,543                                                       $90,113                     $237,618                     $225,139
                                                                                                            -------                                                       -------                     --------                     --------


    Franchising Margins:


    Operating Margin:


    Total Revenues                                                                                         $223,162                                                      $210,413                     $543,612                     $513,203

    Operating Income                                                                                        $66,549                                                       $65,253                     $147,337                     $147,908

         Operating Margin                                                                                      29.8%                                                         31.0%                        27.1%                        28.8%
                                                                                                               ----                                                          ----                         ----                         ----


     Franchising Margin:


    Franchising Revenues                                                                                    $95,543                                                       $90,113                     $237,618                     $225,139


    Operating Income                                                                                        $66,549                                                       $65,253                     $147,337                     $147,908

    SkyTouch Division operating loss                                                                          3,272                                                           720                        8,768                        2,074

    Hotel operations operating income                                                                          (354)                                                         (305)                        (858)                        (831)

    Operating Income - Franchising                                                                          $69,467                                                       $65,668                     $155,247                     $149,151
                                                                                                            -------                                                       -------                     --------                     --------


         Franchising Margins                                                                                   72.7%                                                         72.9%                        65.3%                        66.2%
                                                                                                               ----                                                          ----                         ----                         ----



    CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES


    (dollar amounts in thousands)


                                                                            Three Months Ended September 30,                              Nine Months Ended September 30,
                                                                            --------------------------------                              -------------------------------


                                                                                                               2013                                                          2012                         2013                         2012
                                                                                                               ----                                                          ----                         ----                         ----


    Total Selling, General and Administrative Expenses                                                      $26,982                                                       $23,170                      $84,078                      $72,073

    SkyTouch Division                                                                                        (3,189)                                                         (719)                      (8,590)                      (2,073)

    Franchising Selling, General and Administration Expenses                                                $23,793                                                       $22,451                      $75,488                      $70,000
                                                                                                            =======                                                       =======                      =======                      =======



    CALCULATION OF EBITDA


    (dollar amounts in thousands)


                                                                                     Q3 2013 Actuals                                              Q3 2012 Actuals                  Nine Months Ended             Nine Months Ended

                                                                                                                                                                                   September 30, 2013           September 30, 2012

                                                                                                                                                                                        Actuals                       Actuals
                                                                                                                                                                                        -------                       -------


    Net income                                                                                              $41,512                                                       $44,377                      $85,269                      $96,236

      Income taxes                                                                                           16,080                                                        11,291                       33,319                       37,604

      Interest expense                                                                                       10,757                                                        10,166                       32,334                       16,823

      Interest income                                                                                          (676)                                                         (425)                      (1,979)                      (1,156)

      Other (gains) and losses                                                                                 (703)                                                         (511)                      (1,266)                      (2,137)

      Loss on the extinguishment of debt                                                                          -                                                           526                            -                          526

      Equity in net (income) loss of affiliates                                                                (421)                                                         (171)                        (340)                          12

    Depreciation and amortization                                                                             2,379                                                         1,995                        7,074                        5,989

    EBITDA                                                                                                  $68,928                                                       $67,248                     $154,411                     $153,897
                                                                                                            =======                                                       =======                     ========                     ========

 

 

SOURCE Choice Hotels International, Inc.

Photo:http://photos.prnewswire.com/prnh/20131015/NE98133LOGO-l
http://photoarchive.ap.org/

 

SOURCE: Choice Hotels International, Inc.

 

Choice Hotels International Reports Third Quarter 2013 Diluted EPS Of $0.70 Per Share

New Domestic Hotel Franchise Contracts Rise 45%

Franchising Operating Income Increases 6%

PR Newswire

ROCKVILLE, Md., Oct. 24, 2013 /PRNewswire/ -- Choice Hotels International, Inc., (NYSE: CHH) today reported the following highlights for the third quarter of 2013:

  • Franchising revenues increased 6% to $95.5 million for the three months ending September 30, 2013 from $90.1 million for the same period in 2012.  Total revenues increased 6% to $223.2 million for the three months ending September 30, 2013 compared to the same period in 2012.
  • Operating income from franchising activities totaled $69.5 million for the three months ending September 30, 2013, a 6% increase compared to the same period in 2012.  Total operating income increased 2% to $66.5 million for the three months ending September 30, 2013 compared to the same period in 2012.
  • Domestic system-wide revenue per available room ("RevPAR") increased 3.0% for the three months ending September 30, 2013 compared to the same period in 2012 as occupancy and average daily rates increased 70 basis points and 1.9%, respectively.  
  • Domestic unit and room growth increased 2.0% and 0.7% from September 30, 2012, respectively. 
  • Domestic royalty fees for the three months ending September 30, 2013 increased 3% to $76.7 million from $74.3 million for the three months ending September 30, 2012.
  • Initial and relicensing fees for the three months ending September 30, 2013 increased $1.4 million or 43% to $4.7 million from the same period in 2012.
  • The company executed 129 new domestic hotel franchise contracts for the three months ending September 30, 2013 compared to 89 new domestic hotel franchise contracts for the same period in 2012, a 45% increase.
  • Domestic relicensing and contract renewal transactions increased from 62 contracts during the three months ending September 30, 2012 to 72 in the current period, a 16% increase.
  • The number of worldwide hotels under construction, awaiting conversion or approved for development as of September 30, 2013 was 455 hotels representing 37,077 rooms, an increase of 4.6% and 2.6%, respectively, from September 30, 2012.
  • Franchising SG&A expenses increased 6% from $22.5 million for the three months ending September 30, 2012 to $23.8 million for the same period in 2012. Excluding variable expenses related to the company's non-qualified retirement plan deferred compensation, franchising SG&A expense increased 3.6% from $22.2 million in the prior year quarter to $23.0 million in the three months ending September 30, 2013. Selling, general and administrative ("SG&A") expenses increased $3.8 million to $27.0 million for the three months ended September 30, 2013 compared to the same period in 2012.

(Logo:  http://photos.prnewswire.com/prnh/20131015/NE98133LOGO-l)

"Our franchising business continues to outperform our expectations. We are particularly pleased with recent activities on the development side of the business highlighted by a 45% increase in new domestic franchise contracts. The increase was driven by a 130% improvement in contracts for our flagship Comfort brands," said Stephen P. Joyce, president and chief executive officer, Choice Hotels International. "The Ascend Hotel Collection continues its rapid growth.  This quarter we expanded in Europe and added another Ascend hotel in Australia. The Ascend Hotel Collection now has more than 115 worldwide locations, and we are excited about the future growth prospects of this brand as well as our family of brands."

Use of Free Cash Flow

The company has historically used its free cash flow (cash flow from operations less cash flow from investing activities) to return value to shareholders, primarily through share repurchases and dividends.

Dividends

The company's current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors. During the nine months ending September 30, 2013 and 2012, the company paid $22.0 million and $632.8 million in cash dividends to shareholders, respectively.  The cash dividends paid during the nine months ending September 2013 reflect the company's decision to pay the first quarter of 2013 quarterly cash dividend in December 2012. In addition, cash dividends paid during the nine months ending September 30, 2012 include a special cash dividend in the amount of $10.41 per share or approximately $600.7 million paid on August 23, 2012.

As a result of the payment of the special cash dividend, earnings per share for the nine months ending September 30, 2013 include $15.5 million of additional interest expense compared to the prior year reflecting the financing transactions entered into during the second and third quarters of 2012.

Share Repurchases

The company did not repurchase any shares of common stock under the share repurchase program during the three and nine months ending  September 30, 2013 but has authorization to purchase up to an additional 1.4 million shares under this program.  We expect we will make repurchases from time to time under our share repurchase program in the open market and through privately negotiated transactions, subject to market and other conditions. There is no time limit on this authorization and no minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998 through September 30, 2013, the company has repurchased 45.3 million shares of its common stock for a total cost of $1.1 billion. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 78.3 million shares through September 30, 2013 under the share repurchase program at an average price of $13.89 per share.

Other

Our board of directors previously authorized us to enter into a program which permits us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in strategic markets. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to this program to promote growth of our emerging brands.  Our current expectation is that our annual investment in this program will range between $20 million and $40 million per year and we generally expect to recycle these investments over a 5 year period. However, the amount and timing of the investment in this program will be dependent on market and other conditions.  Notwithstanding this program, 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. 

Balance Sheet

As of September 30, 2013, the company had total debt (long-term plus current portion) of $825 million and cash and cash equivalents totaling $161 million resulting in net debt of $664 million.  At December 31, 2012, the company had total debt of $855 million and cash equivalents totaling $134 million resulting in net debt of $721 million.

As of September 30, 2013 and December 31, 2012, the company had outstanding mezzanine financing, real estate investments and sliver equity investments totaling $71 million and $68 million, respectively, pursuant to its program to offer financing and investment support to incent franchise development for emerging brands in strategic markets.  These investments are reported in other current assets and other assets on the company's consolidated balance sheet.

Outlook

The company's fourth quarter 2013 diluted EPS is expected to range between $0.44 and $0.46. The company expects full-year 2013 diluted EPS to range between $1.89 and $1.91.  Earnings before interest, taxes, depreciation and amortization ("EBITDA") for full-year 2013 are expected to range between $203.5 million and $205.5 million. These estimates include the following assumptions:

 

  • The company expects net domestic unit growth to increase by approximately 2% in 2013;
  • RevPAR is expected to increase approximately 2% and 3.25% for the fourth quarter and full-year of 2013, respectively;
  • The effective royalty rate is expected to increase 1 basis point for full-year 2013;
  • All figures assume the existing share count;
  • The effective tax rate is expected to be 29.0% and 28.5% for the fourth quarter and full-year 2013, respectively; and
  • Our EBITDA outlook for the full year includes expenses related to the company's SkyTouch Technology division ranging between $12 million and $14 million for investment in the infrastructure of this division including business development, sales and marketing and other costs as well as continued software development expenditures related to the division's technology related products and services.

Conference Call

Choice will conduct a conference call on Thursday, October 24, 2013 at 9:30 a.m. EDT to discuss the company's third quarter 2013 results. The dial-in number to listen to the call is 1-800-901-5213, and the access code is 73582897. International callers should dial 1-617-786-2962 and enter the access code 73582897.  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 1:30 p.m. EDT on Thursday October 24, 2013 through Thursday, October 31, 2013 by calling 1-888-286-8010 and entering access code 43130503. The international dial-in number for the replay is 1-617-801-6888, access code 43130503. In addition, the call will be archived for approximately one-year and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc. franchises more than 6,300 hotels, representing more than 500,000 rooms, in the United States and more than 30 other countries and territories.  As of September 30, 2013, 371 hotels, representing more than 29,000 rooms, were under construction, awaiting conversion or approved for development in the United States.  Additionally, 84 hotels, representing approximately 7,200 rooms, were under construction, awaiting conversion or approved for development in more than 15 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, as well as its Ascend Hotel Collection membership program, serve guests worldwide.

SkyTouch Technology is an initiative of Choice Hotels International, Inc. that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability.

Additional corporate information can be found on the Choice Hotels International, Inc. web site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan"," project," "assume" or similar words of futurity identify such forward-looking statements.  These 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, ability to repay outstanding indebtedness, payment of 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, 2012, filed with the Securities and Exchange Commission on February 28, 2013 and our quarterly reports filed on Form 10-Q.  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 Presented in this Press Release

EBITDA, franchising revenues, franchising SG&A, franchising margins and net debt are non-GAAP financial measurements.  These measures should not be considered as an alternative to any measure of performance or liquidity as promulgated under or authorized  by generally accepted accounting principles in the United States ("GAAP"), such as operating income, total revenues, operating margins and long-term debt.  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 EBITDA, franchising revenues, franchising SG&A and franchising margins to the most comparable GAAP financial measures. 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, loss on extinguishment of debt, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income (loss) of unconsolidated affiliates. We consider EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Franchising Revenues, Operating Income, SG&A and Margins:  The company reports franchising revenues, operating income, SG&A and margins which exclude marketing and reservation revenues, SkyTouch Technology and hotel operations.  Marketing and reservation activities are excluded from franchising revenues and operating margins since the company is required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing system fees not expended are recorded as a liability on the company's financial statements and are carried over to the next year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of system 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 reflect the company's ownership of three MainStay Suites hotels.  SkyTouch Technology is a division of the company that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability. Hotel and SkyTouch Technology operations are excluded from franchising revenue and margins since they do not reflect the company's core franchising business but are adjacent, complimentary lines of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Net Debt:  Net debt is long-term debt plus the current portion of long-term debt (i.e., long-term debt due within one year) less cash and cash equivalents.  The company believes that net debt is an important measurement as many investors use net debt in making investment decisions, as it gives them an idea of a company's financial health and its level of leverage compared to liquid assets. Some industries may have more net debt than others; therefore, investors often compare a company's net debt to others in the same business.

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, Ascend Hotel Collection and SkyTouch Technologyare proprietary trademarks and service marks of Choice Hotels International.

© 2013 Choice Hotels International, Inc.  All rights reserved.

 

Choice Hotels International, Inc.

                           

Exhibit 1

Consolidated Statements of Income

                             

(Unaudited)

                                   
                                       
                                       
                                   
         

Three Months Ended September 30,

 

Nine Months Ended September 30,

                 

Variance

         

Variance

         

2013

 

2012

 

$

 

%

 

2013

 

2012

 

$

 

%

(In thousands, except per share amounts)

                               
                                       

REVENUES:

                                   
                                       

Royalty fees

     

$                 83,107

 

$              80,845

 

$     2,262

 

3%

 

$              201,222

 

$               194,762

 

$       6,460

 

3%

Initial franchise and relicensing fees

 

4,650

 

3,247

 

1,403

 

43%

 

12,843

 

8,953

 

3,890

 

43%

Procurement services

   

4,708

 

3,839

 

869

 

23%

 

16,204

 

13,990

 

2,214

 

16%

Marketing and reservation 

   

126,296

 

119,062

 

7,234

 

6%

 

302,381

 

284,624

 

17,757

 

6%

Hotel operations

     

1,310

 

1,238

 

72

 

6%

 

3,600

 

3,440

 

160

 

5%

Other

       

3,091

 

2,182

 

909

 

42%

 

7,362

 

7,434

 

(72)

 

(1%)

      Total revenues

   

223,162

 

210,413

 

12,749

 

6%

 

543,612

 

513,203

 

30,409

 

6%

                                       

OPERATING EXPENSES:

                                 
                                       

Selling, general and administrative

 

26,982

 

23,170

 

3,812

 

16%

 

84,078

 

72,073

 

12,005

 

17%

Depreciation and amortization

   

2,379

 

1,995

 

384

 

19%

 

7,074

 

5,989

 

1,085

 

18%

Marketing and reservation

   

126,296

 

119,062

 

7,234

 

6%

 

302,381

 

284,624

 

17,757

 

6%

Hotel operations

     

956

 

933

 

23

 

2%

 

2,742

 

2,609

 

133

 

5%

Total operating expenses

   

156,613

 

145,160

 

11,453

 

8%

 

396,275

 

365,295

 

30,980

 

8%

                                       

Operating income

     

66,549

 

65,253

 

1,296

 

2%

 

147,337

 

147,908

 

(571)

 

(0%)

                                       

OTHER INCOME AND EXPENSES, NET:

                               

Interest expense

     

10,757

 

10,166

 

591

 

6%

 

32,334

 

16,823

 

15,511

 

92%

Interest income

     

(676)

 

(425)

 

(251)

 

59%

 

(1,979)

 

(1,156)

 

(823)

 

71%

Loss on extinguishment of debt

 

-

 

526

 

(526)

 

(100%)

 

-

 

526

 

(526)

 

(100%)

Other (gains) and losses

   

(703)

 

(511)

 

(192)

 

38%

 

(1,266)

 

(2,137)

 

871

 

(41%)

Equity in net (income) loss of affiliates

 

(421)

 

(171)

 

(250)

 

146%

 

(340)

 

12

 

(352)

 

(2933%)

Total other income and expenses, net

8,957

 

9,585

 

(628)

 

(7%)

 

28,749

 

14,068

 

14,681

 

104%

                                       

Income before income taxes

   

57,592

 

55,668

 

1,924

 

3%

 

118,588

 

133,840

 

(15,252)

 

(11%)

Income taxes

     

16,080

 

11,291

 

4,789

 

42%

 

33,319

 

37,604

 

(4,285)

 

(11%)

Net income

     

$                 41,512

 

$              44,377

 

$    (2,865)

 

(6%)

 

$                85,269

 

$                96,236

 

$    (10,967)

 

(11%)

                                       
                                       

Basic earnings per share

   

$                     0.71

 

$                  0.77

 

$     (0.06)

 

(8%)

 

$                   1.46

 

$                    1.66

 

$       (0.20)

 

(12%)

                                       

Diluted earnings per share

   

$                     0.70

 

$                  0.76

 

$     (0.06)

 

(8%)

 

$                   1.45

 

$                    1.65

 

$       (0.20)

 

(12%)

                                       

 

Choice Hotels International, Inc.

     

Exhibit 2

Consolidated Balance Sheets

       
               
               

(In thousands, except per share amounts)

 September 30, 

 

 December 31, 

         

2013

 

2012

         

(Unaudited)

   
               

ASSETS

           
               

Cash and cash equivalents

   

$           161,138

 

$         134,177

Accounts receivable, net

   

62,605

 

52,270

Investments, employee benefit plans, at fair value

386

 

3,486

Other current assets

   

34,138

 

43,537

 

Total current assets

   

258,267

 

233,470

               

Fixed assets and intangibles, net

 

142,228

 

130,937

Receivable -- marketing and reservation fees

32,564

 

42,179

Investments, employee benefit plans, at fair value

14,950

 

12,755

Other assets

     

107,700

 

91,431

               
   

Total assets

 

$           555,709

 

$         510,772

               
               
               

LIABILITIES AND SHAREHOLDERS' DEFICIT

     
               

Accounts payable and accrued expenses

$              84,233

 

$            94,266

Deferred revenue

   

61,401

 

71,154

Deferred compensation & retirement plan obligations

2,439

 

2,522

Current portion of long-term debt

 

9,132

 

8,195

Other current liabilities

   

21,906

 

-

 

Total current liabilities

 

179,111

 

176,137

               

Long-term debt

   

815,957

 

847,150

Deferred compensation & retirement plan obligations  

21,219

 

20,399

Other liabilities

     

24,146

 

15,990

               
 

Total liabilities

   

1,040,433

 

1,059,676

               

Common stock, $0.01 par value

 

586

 

582

Additional paid-in-capital

   

114,571

 

110,246

Accumulated other comprehensive loss

(5,370)

 

(4,216)

Treasury stock, at cost

   

(919,516)

 

(927,776)

Retained earnings

   

325,005

 

272,260

 

Total shareholders' deficit

 

(484,724)

 

(548,904)

               
   

Total liabilities and shareholders' deficit

$           555,709

 

$         510,772

               

 

 

Choice Hotels International, Inc.

   

Exhibit 3

Consolidated Statements of Cash Flows

     

(Unaudited)

     
       
       
   

(In thousands)

Nine Months Ended September 30,

     

Revised (1)

 

2013

 

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

     
       

Net income

$                    85,269

 

$              96,236

       

Adjustments to reconcile net income to net cash provided 

     

 by operating activities:

     

  Depreciation and amortization  

7,074

 

5,989

  Provision for bad debts, net

2,054

 

1,802

  Non-cash stock compensation and other charges

8,638

 

7,306

  Non-cash interest and other (income) loss

1,057

 

(633)

  Loss on extinguishment of debt

-

 

526

  Deferred income taxes

(4,118)

 

(1,627)

  Dividends received from equity method investments

1,109

 

855

  Equity in net (income) loss of affiliates

(340)

 

12

       

Changes in assets and liabilities:

     

  Receivables

(13,699)

 

(17,405)

  Receivable - marketing and reservation fees, net

23,756

 

20,811

  Forgivable notes receivable, net

(5,722)

 

(2,853)

  Accounts payable

1,280

 

5,980

  Accrued expenses

(22,757)

 

(10,309)

  Income taxes payable/receivable

24,638

 

12,786

  Deferred revenue

(9,686)

 

8,018

  Other assets

(2,395)

 

(7,458)

  Other liabilities

8,851

 

(1,613)

       

 NET CASH PROVIDED BY OPERATING ACTIVITIES 

105,009

 

118,423

       

CASH FLOWS FROM INVESTING ACTIVITIES:

     
       

Investment in property and equipment

(26,442)

 

(12,525)

Equity method investments

(3,761)

 

(9,454)

Purchases of investments, employee benefit plans

(1,845)

 

(1,191)

Proceeds from sales of investments, employee benefit plans

4,052

 

10,909

Issuance of mezzanine and other notes receivable

-

 

(4,236)

Collections of mezzanine and other notes receivable

224

 

110

Other items, net

(578)

 

(322)

       

 NET CASH USED IN INVESTING ACTIVITIES 

(28,350)

 

(16,709)

       

CASH FLOWS FROM FINANCING ACTIVITIES:

     
       

Net borrowings (repayments) pursuant to revolving credit facilities

(27,500)

 

16,725

Principal payments on long-term debt

(6,158)

 

(502)

Proceeds from issuance of long-term debt

3,360

 

543,500

Purchase of treasury stock

(3,684)

 

(22,227)

Dividends paid

(22,026)

 

(632,751)

Excess tax benefits from stock-based compensation

1,216

 

793

Debt issuance costs

-

 

(4,753)

Proceeds from exercise of stock options

6,677

 

4,695

       

 NET CASH USED IN FINANCING ACTIVITIES

(48,115)

 

(94,520)

       

Net change in cash and cash equivalents

28,544

 

7,194

Effect of foreign exchange rate changes on cash and cash equivalents

(1,583)

 

813

Cash and cash equivalents at beginning of period

134,177

 

107,057

       

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$                  161,138

 

$            115,064

       

(1) The presentation of the Company's forgivable notes receivable for the nine months ended September 30, 2012 has been revised 

      from prior year disclosures. See Note 1 to the Company's Form 10-Q filed with the SEC on August 9, 2013 for additional information.

       

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 4

SUPPLEMENTAL OPERATING INFORMATION 

 

DOMESTIC HOTEL SYSTEM

 

(UNAUDITED)

 
                                           
                                           
                                           
                                           
   

For the Nine Months Ended September 30, 2013*

 

For the Nine Months Ended September 30, 2012*

 

Change

   
                                           
   

Average Daily

         

Average Daily

         

Average Daily

             
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

   
                                           

Comfort Inn

 

$             83.44

 

59.8%

 

$          49.92

 

$             81.52

 

59.2%

 

$         48.24

 

2.4%

 

60

bps

 

3.5%

   

Comfort Suites

 

87.41

 

63.0%

 

55.05

 

85.62

 

61.8%

 

52.92

 

2.1%

 

120

bps

 

4.0%

   

Sleep

 

74.51

 

58.7%

 

43.70

 

72.29

 

56.3%

 

40.68

 

3.1%

 

240

bps

 

7.4%

   

Quality

 

70.61

 

53.2%

 

37.54

 

69.84

 

51.8%

 

36.14

 

1.1%

 

140

bps

 

3.9%

   

Clarion

 

75.66

 

51.1%

 

38.64

 

74.98

 

49.4%

 

37.00

 

0.9%

 

170

bps

 

4.4%

   

Econo Lodge

 

56.94

 

48.9%

 

27.86

 

55.76

 

48.7%

 

27.13

 

2.1%

 

20

bps

 

2.7%

   

Rodeway

 

54.63

 

51.8%

 

28.29

 

53.59

 

51.3%

 

27.48

 

1.9%

 

50

bps

 

2.9%

   

MainStay

 

72.87

 

67.6%

 

49.29

 

69.27

 

70.4%

 

48.79

 

5.2%

 

(280)

bps

 

1.0%

   

Suburban

 

42.71

 

70.3%

 

30.01

 

41.24

 

69.9%

 

28.82

 

3.6%

 

40

bps

 

4.1%

   

Ascend Hotel Collection

 

122.40

 

64.5%

 

78.96

 

112.27

 

63.5%

 

71.25

 

9.0%

 

100

bps

 

10.8%

   
                                           

Total 

 

$             75.10

 

56.4%

 

$          42.37

 

$             73.65

 

55.5%

 

$         40.89

 

2.0%

 

90

bps

 

3.6%

   
                                           

* Operating statistics represent hotel operations from December through August

                         
                                           
                                           
   

For the Three Months Ended September 30, 2013*

 

For the Three Months Ended September 30, 2012*

 

Change

   
                                           
   

Average Daily

         

Average Daily

         

Average Daily

             
   

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

 

Rate

 

Occupancy

 

RevPAR

   
                                           

Comfort Inn

 

$             89.49

 

70.8%

 

$          63.35

 

$             87.58

 

70.2%

 

$         61.46

 

2.2%

 

60

bps

 

3.1%

   

Comfort Suites

 

91.36

 

71.2%

 

65.05

 

89.69

 

70.2%

 

62.93

 

1.9%

 

100

bps

 

3.4%

   

Sleep

 

78.45

 

66.8%

 

52.38

 

76.09

 

64.8%

 

49.32

 

3.1%

 

200

bps

 

6.2%

   

Quality

 

75.81

 

62.5%

 

47.36

 

75.02

 

61.2%

 

45.88

 

1.1%

 

130

bps

 

3.2%

   

Clarion

 

81.27

 

59.7%

 

48.50

 

79.73

 

58.7%

 

46.82

 

1.9%

 

100

bps

 

3.6%

   

Econo Lodge

 

61.76

 

58.1%

 

35.88

 

60.60

 

57.7%

 

34.97

 

1.9%

 

40

bps

 

2.6%

   

Rodeway

 

60.78

 

60.8%

 

36.97

 

59.62

 

60.8%

 

36.23

 

1.9%

 

-

bps

 

2.0%

   

MainStay

 

76.91

 

75.2%

 

57.82

 

73.17

 

76.5%

 

55.96

 

5.1%

 

(130)

bps

 

3.3%

   

Suburban

 

43.79

 

73.1%

 

32.02

 

42.62

 

75.1%

 

32.03

 

2.7%

 

(200)

bps

 

(0.0%)

   

Ascend Hotel Collection

 

125.54

 

71.6%

 

89.86

 

115.98

 

71.4%

 

82.77

 

8.2%

 

20

bps

 

8.6%

   
                                           

Total 

 

$             80.14

 

65.7%

 

$          52.63

 

$             78.63

 

65.0%

 

$         51.09

 

1.9%

 

70

bps

 

3.0%

   
                                           
                                           

* Operating statistics represent hotel operations from June through August

                         
                                           
                                           
                                           
   

For the Quarter Ended

     

For the Nine Months Ended

                     
   

9/30/2013

 

9/30/2012

     

9/30/2013

 

9/30/2012

                     
                                           

System-wide effective royalty rate

 

4.30%

 

4.29%

     

4.34%

 

4.31%

                     

 

 

 

                                   

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 5

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

 

(UNAUDITED)

 
                                   
                                   
                                   
   

September 30, 2013

 

September 30, 2012

 

Variance

 
                                   
   

Hotels

 

Rooms

 

Hotels

 

Rooms

 

Hotels

 

Rooms

 

%

 

%

 
                                   

Comfort Inn

 

1,312

 

102,586

 

1,367

 

106,970

 

(55)

 

(4,384)

 

(4.0%)

 

(4.1%)

 

Comfort Suites

 

590

 

45,519

 

603

 

46,647

 

(13)

 

(1,128)

 

(2.2%)

 

(2.4%)

 

Sleep

 

378

 

27,351

 

390

 

28,232

 

(12)

 

(881)

 

(3.1%)

 

(3.1%)

 

Quality

 

1,193

 

98,788

 

1,101

 

95,469

 

92

 

3,319

 

8.4%

 

3.5%

 

Clarion

 

188

 

26,885

 

187

 

26,943

 

1

 

(58)

 

0.5%

 

(0.2%)

 

Econo Lodge

 

821

 

50,230

 

803

 

49,248

 

18

 

982

 

2.2%

 

2.0%

 

Rodeway

 

434

 

24,660

 

409

 

23,336

 

25

 

1,324

 

6.1%

 

5.7%

 

MainStay

 

43

 

3,331

 

39

 

2,997

 

4

 

334

 

10.3%

 

11.1%

 

Suburban

 

63

 

7,213

 

60

 

6,978

 

3

 

235

 

5.0%

 

3.4%

 

Ascend Hotel Collection

 

94

 

8,006

 

56

 

4,946

 

38

 

3,060

 

67.9%

 

61.9%

 

Cambria Suites

 

18

 

2,094

 

19

 

2,221

 

(1)

 

(127)

 

(5.3%)

 

(5.7%)

 
                                   

Domestic Franchises

 

5,134

 

396,663

 

5,034

 

393,987

 

100

 

2,676

 

2.0%

 

0.7%

 
                                   

International Franchises

 

1,169

 

106,000

 

1,165

 

102,942

 

4

 

3,058

 

0.3%

 

3.0%

 
                                   

Total Franchises

 

6,303

 

502,663

 

6,199

 

496,929

 

104

 

5,734

 

1.7%

 

1.2%

 
                                   

 

 

                                   

Exhibit 6

   

CHOICE HOTELS INTERNATIONAL, INC.

 

SUPPLEMENTAL INFORMATION BY BRAND

 

DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS

 

(UNAUDITED)

 
                                         
                                         
                                         
                                         
   

For the Nine Months Ended September 30, 2013

 

For the Nine Months Ended September 30, 2012

 

% Change

   
                                         
   

New

         

New

         

New

           
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

   
                                         

Comfort Inn

 

12

 

35

 

47

 

10

 

17

 

27

 

20%

 

106%

 

74%

   

Comfort Suites

 

7

 

6

 

13

 

11

 

4

 

15

 

(36%)

 

50%

 

(13%)

   

Sleep

 

9

 

1

 

10

 

17

 

1

 

18

 

(47%)

 

0%

 

(44%)

   

Quality

 

1

 

76

 

77

 

-

 

88

 

88

 

NM

 

(14%)

 

(13%)

   

Clarion

 

1

 

12

 

13

 

-

 

14

 

14

 

NM

 

(14%)

 

(7%)

   

Econo Lodge

 

-

 

61

 

61

 

-

 

33

 

33

 

NM

 

85%

 

85%

   

Rodeway

 

1

 

39

 

40

 

-

 

46

 

46

 

NM

 

(15%)

 

(13%)

   

MainStay

 

5

 

-

 

5

 

2

 

1

 

3

 

150%

 

(100%)

 

67%

   

Suburban

 

1

 

1

 

2

 

1

 

1

 

2

 

0%

 

0%

 

0%

   

Ascend Hotel Collection

 

5

 

40

 

45

 

1

 

8

 

9

 

400%

 

400%

 

400%

   

Cambria Suites

 

2

 

-

 

2

 

4

 

-

 

4

 

(50%)

 

NM

 

(50%)

   
                                         

Total Domestic System

 

44

 

271

 

315

 

46

 

213

 

259

 

(4%)

 

27%

 

22%

   
                                         
                                         
                                         
                                         
                                         
   

For the Three Months Ended September 30, 2013

 

For the Three Months Ended September 30, 2012

 

% Change

   
                                         
   

New

         

New

         

New

           
   

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

 

Construction

 

Conversion

 

Total

   
                                         

Comfort Inn

 

7

 

17

 

24

 

4

 

5

 

9

 

75%

 

240%

 

167%

   

Comfort Suites

 

2

 

4

 

6

 

4

 

-

 

4

 

(50%)

 

NM

 

50%

   

Sleep

 

4

 

1

 

5

 

6

 

-

 

6

 

(33%)

 

NM

 

(17%)

   

Quality

 

-

 

32

 

32

 

-

 

25

 

25

 

NM

 

28%

 

28%

   

Clarion

 

1

 

5

 

6

 

-

 

7

 

7

 

NM

 

(29%)

 

(14%)

   

Econo Lodge

 

-

 

31

 

31

 

-

 

15

 

15

 

NM

 

107%

 

107%

   

Rodeway

 

1

 

15

 

16

 

-

 

15

 

15

 

NM

 

0%

 

7%

   

MainStay

 

1

 

-

 

1

 

1

 

-

 

1

 

0%

 

NM

 

0%

   

Suburban

 

1

 

-

 

1

 

1

 

-

 

1

 

0%

 

NM

 

0%

   

Ascend Hotel Collection

 

2

 

4

 

6

 

-

 

4

 

4

 

NM

 

0%

 

50%

   

Cambria Suites

 

1

 

-

 

1

 

2

 

-

 

2

 

(50%)

 

NM

 

(50%)

   
                                         

Total Domestic System

 

20

 

109

 

129

 

18

 

71

 

89

 

11%

 

54%

 

45%

   

 

 

                                           

Exhibit 7

   

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.

                           
                                                 
                                     
                           

Variance

   

September 30, 2013

 

September 30, 2012

                       
   

Units

 

Units

 

Conversion

 

New Construction

 

Total

   

Conversion

 

New Construction

 

Total

 

Conversion

 

New Construction

 

Total

 

Units

 

%

 

Units

 

%

 

Units

 

%

                                                 

Comfort Inn

 

36

 

50

 

86

 

23

 

39

 

62

 

13

 

57%

 

11

 

28%

 

24

 

39%

Comfort Suites

 

4

 

47

 

51

 

1

 

77

 

78

 

3

 

300%

 

(30)

 

(39%)

 

(27)

 

(35%)

Sleep Inn

 

1

 

45

 

46

 

1

 

38

 

39

 

-

 

0%

 

7

 

18%

 

7

 

18%

Quality

 

33

 

3

 

36

 

37

 

3

 

40

 

(4)

 

(11%)

 

-

 

0%

 

(4)

 

(10%)

Clarion

 

7

 

2

 

9

 

18

 

1

 

19

 

(11)

 

(61%)

 

1

 

100%

 

(10)

 

(53%)

Econo Lodge

 

33

 

-

 

33

 

23

 

1

 

24

 

10

 

43%

 

(1)

 

(100%)

 

9

 

38%

Rodeway

 

24

 

1

 

25

 

25

 

-

 

25

 

(1)

 

(4%)

 

1

 

NM

 

-

 

0%

MainStay

 

-

 

26

 

26

 

1

 

18

 

19

 

(1)

 

(100%)

 

8

 

44%

 

7

 

37%

Suburban

 

3

 

12

 

15

 

2

 

14

 

16

 

1

 

50%

 

(2)

 

(14%)

 

(1)

 

(6%)

Ascend Hotel Collection

 

13

 

10

 

23

 

9

 

4

 

13

 

4

 

44%

 

6

 

150%

 

10

 

77%

Cambria Suites

 

-

 

21

 

21

 

-

 

25

 

25

 

-

 

NM

 

(4)

 

(16%)

 

(4)

 

(16%)

                                                 
   

154

 

217

 

371

 

140

 

220

 

360

 

14

 

10%

 

(3)

 

(1%)

 

11

 

3%

                                                 

 

 

CHOICE HOTELS INTERNATIONAL, INC.

Exhibit 8

   

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

       

(UNAUDITED)

       
                         

CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS

                   
                         

(dollar amounts in thousands)

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

       
                         
   

2013

 

2012

 

2013

 

2012

       

Franchising Revenues:

                       
                         

Total Revenues

 

$              223,162

 

$               210,413

 

$                  543,612

 

$                      513,203

       

Adjustments:

                       

     Marketing and reservation revenues

 

(126,296)

 

(119,062)

 

(302,381)

 

(284,624)

       

     SkyTouch Division

 

(13)

 

-

 

(13)

 

-

       

     Hotel operations

 

(1,310)

 

(1,238)

 

(3,600)

 

(3,440)

       

Franchising Revenues

 

$                95,543

 

$                 90,113

 

$                  237,618

 

$                      225,139

       
                         

Franchising Margins:

                       
                         

Operating Margin:

                       
                         

Total Revenues

 

$              223,162

 

$               210,413

 

$                  543,612

 

$                      513,203

       

Operating Income

 

$                66,549

 

$                 65,253

 

$                  147,337

 

$                      147,908

       

     Operating Margin

 

29.8%

 

31.0%

 

27.1%

 

28.8%

       
                         

 Franchising Margin:

                       
                         

Franchising Revenues

 

$                95,543

 

$                 90,113

 

$                  237,618

 

$                      225,139

       
                         

Operating Income

 

$                66,549

 

$                 65,253

 

$                  147,337

 

$                      147,908

       

SkyTouch Division operating loss

 

3,272

 

720

 

8,768

 

2,074

       

Hotel operations operating income

 

(354)

 

(305)

 

(858)

 

(831)

       

Operating Income - Franchising

 

$                69,467

 

$                 65,668

 

$                  155,247

 

$                      149,151

       
                         

     Franchising Margins

 

72.7%

 

72.9%

 

65.3%

 

66.2%

       
                         
                         

CALCULATION OF FRANCHISING SELLING, GENERAL AND ADMINISTRATION EXPENSES

                 
                         

(dollar amounts in thousands)

                       
                         
   

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

       
                         
   

2013

 

2012

 

2013

 

2012

       
                         

Total Selling, General and Administrative Expenses

 

$                26,982

 

$                 23,170

 

$                    84,078

 

$                       72,073

       

SkyTouch Division

 

(3,189)

 

(719)

 

(8,590)

 

(2,073)

       

Franchising Selling, General and Administration Expenses

 

$                23,793

 

$                 22,451

 

$                    75,488

 

$                       70,000

       
                         
                         

CALCULATION OF EBITDA

                       
                         

(dollar amounts in thousands)

                       
                         
   

Q3 2013 Actuals

 

Q3 2012 Actuals

 

Nine Months Ended

September 30, 2013

Actuals

 

Nine Months Ended

September 30, 2012

Actuals

       
                         

Net income

 

$                41,512

 

$                 44,377

 

$                    85,269

 

$                       96,236

       

  Income taxes

 

16,080

 

11,291

 

33,319

 

37,604

       

  Interest expense

 

10,757

 

10,166

 

32,334

 

16,823

       

  Interest income

 

(676)

 

(425)

 

(1,979)

 

(1,156)

       

  Other (gains) and losses

 

(703)

 

(511)

 

(1,266)

 

(2,137)

       

  Loss on the extinguishment of debt

 

-

 

526

 

-

 

526

       

  Equity in net (income) loss of affiliates

 

(421)

 

(171)

 

(340)

 

12

       

Depreciation and amortization

 

2,379

 

1,995

 

7,074

 

5,989

       

EBITDA

 

$                68,928

 

$                 67,248

 

$                  154,411

 

$                      153,897

       
                         
                         

 

 

SOURCE Choice Hotels International, Inc.

CONTACT: David White, Senior Vice President, Chief Financial Officer & Treasurer, (301) 592-5117, or Scott Carman, Director, Public Relations, (301) 592-6361

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The Radisson brands, including Park Plaza, Country Inn & Suites, and Park Inn by Radisson, are owned in the Americas regions by Choice Hotels.
Outside of the Americas, the brands are owned by Radisson Hotel Group, an unaffiliated company headquartered in Belgium.