Choice Hotels International, Inc.
Full Year Results
-- Adjusted diluted earnings per share ("EPS") for full year 2009 were
$1.71 compared to $1.77 for full year 2008. Diluted EPS were $1.63 for
full year 2009 compared to $1.59 for 2008. Adjusted diluted EPS for
full year 2009 and 2008 exclude special items, as described below,
totaling $0.08 and $0.18, respectively.
-- Excluding special items, adjusted earnings before interest, taxes and
depreciation ("EBITDA") were $163.7 million for the year ended
December 31, 2009, compared to $200.5 million for full year 2008.
Operating income for the year ended December 31, 2009 was $148.1
million compared to $174.6 million for the same period of 2008.
-- Franchising revenues declined $45.6 million or 15% from $300.3 million
for the year ended December 31, 2008 to $254.7 million for the same
period of the current year. Total revenues declined $77.5 million or
12% to $564.2 million for the year ended December 31, 2009 compared to
the same period of the prior year.
-- Adjusted selling, general and administrative ("SG&A") costs for full
year 2009 totaled $91.9 million which represented a 9% decline from
the same period of the prior year. Adjusted SG&A costs exclude
special items totaling $7.3 million and $17.7 million for the year
ended December 31, 2009 and 2008, respectively.
-- Interest and other investment income for the year ended December 31,
2009 improved by approximately $13.6 million from the same period of
the prior year primarily due to the appreciation in the fair value of
investments held in the company's non-qualified employee benefit plans
during the current period compared to a decline in the fair value of
these investments in the prior year.
-- Domestic unit and room growth increased 4.0 percent and 3.9 percent,
respectively, from December 31, 2008.
-- Domestic system-wide revenue per available room ("RevPAR") declined
14.4% for full year 2009 compared to full year 2008.
-- The effective royalty rate increased 6 basis points to 4.26% for the
year ended December 31, 2009 compared to 4.20% for the same period of
the prior year.
-- The company executed 369 new domestic hotel franchise contracts for
the year ended December 31, 2009, a decline of 47% compared to the 698
contracts executed in the same period of the prior year.
-- The number of domestic hotels under construction, awaiting conversion
or approved for development declined 26% from December 31, 2008 to 727
hotels representing 57,140 rooms; the worldwide pipeline declined 24%
from December 31, 2008 to 843 hotels representing 66,585 rooms.
Fourth Quarter Results
-- Adjusted EPS for fourth quarter 2009 were $0.43 compared to $0.41 for
the same period of the prior year. Diluted EPS were $0.40 for fourth
quarter 2009 compared to $0.30 for fourth quarter 2008. Adjusted
diluted EPS for fourth quarter 2009 and 2008 exclude certain special
items, as described below, totaling $0.03 and $0.11, respectively.
-- Excluding special items, adjusted EBITDA were $39.7 million for the
three months ended December 31, 2009, compared to $46.9 million for
the same period of 2008. Operating income for both the three months
ended December 31, 2009 and 2008 were $34.1 million.
-- Franchising revenues declined 13% from $71.3 million for the three
months ended December 31, 2008 to $62.2 million for the same period of
2009. Total revenues for the three months ended December 31, 2009
declined 9% compared to the same period of 2008.
-- Adjusted SG&A costs for the fourth quarter of 2009 totaled $22.6
million which represented a 9% decline from the same period of the
prior year. Adjusted SG&A costs exclude special items totaling $3.5
million and $10.8 million for the three months ended December 31, 2009
and 2008, respectively.
-- Interest and other investment income for the three months ended
December 31, 2009 improved by approximately $5.0 million from the same
period of the prior year primarily due to the appreciation in the fair
value of investments held in the company's non-qualified employee
benefit plans during the current period compared to a decline in the
fair value of these investments in the same period of the prior year.
-- Domestic system-wide revenue per available room ("RevPAR") declined
14.4% for the fourth quarter of 2009 compared to the same period of
2008.
-- The effective royalty rate increased 7 basis points to 4.30% for the
three months ended December 31, 2009 compared to 4.23% for the same
period of the prior year.
-- The company executed 112 new domestic hotel franchise contracts for
the three months ended December 31, 2009, a decline of 46% compared to
the 207 contracts executed in the same period of the prior year.
"Despite operating in the midst of an incredibly difficult environment, which has resulted in industry-wide RevPAR declines and a significant decrease in domestic hotel transactions, the company has remained focused on returning value to our shareholders," said Stephen P. Joyce, president and chief executive officer. "During 2009, we returned more than $100 million to our shareholders through a combination of share repurchases and dividends at a time when many other companies have reduced or eliminated their dividend and share repurchase programs. Additionally, we continued to build on our strong track record of domestic system growth on account of our well-known family of value-oriented brands. While the near-term domestic RevPAR and franchise sales environments remain challenging, we believe that our franchise business model, strong brands and strong balance sheet position us for long-term profitable growth and a continued ability to return value to our shareholders."
Special Items
During the three months and year ended December 31, 2009, the company recorded employee termination benefits of approximately $2.3 million and $4.6 million, respectively. The company also incurred a curtailment loss related to freezing the benefits payable under its Supplemental Executive Retirement Plan totaling $1.2 million for the three months and year ended December 31, 2009. In addition, during the year ended December 31, 2009, the company recorded a $1.5 million charge related to the sublease of a portion of its office space. These special items represent diluted EPS of $0.03 and $0.08 for the three months and year ended December 31, 2009, respectively.
During the three months and year ended December 31, 2008, the company recorded employee termination benefits of approximately $2.7 million and $3.5 million, respectively. The company also incurred benefit costs resulting from the acceleration of the company's management succession plan of $0.5 million and $6.6 million during the three months and year ended December 31, 2008. Furthermore, during the three months and year ended December 31, 2008, the company recognized $7.6 million related to an increase in reserves on impaired notes receivable. These special items represented diluted EPS of $0.11 and $0.18 for the three months and year ended December 31, 2008, respectively.
Outlook for 2010
The uncertainty around the current economic environment and credit market conditions and their impact on travel patterns and hotel development activities makes it difficult to predict future results, particularly as they relate to underlying assumptions for RevPAR, new hotel franchise and relicensing sales and interest and investment income and expense.
The company's first quarter 2010 diluted EPS is expected to be $0.25. The company expects full-year 2010 diluted EPS to be between $1.65 and $1.70. EBITDA for full-year 2010 are expected to be between $166 million and $170 million. These estimates include the following assumptions:
-- The company expects net domestic unit growth of approximately 2% in
2010;
-- RevPAR is expected to decline approximately 12% for first quarter of
2010 and decline between 2% and 4% for full-year 2010;
-- The effective royalty rate is expected to increase 6 basis points for
full-year 2010;
-- All figures assume the existing share count and an effective tax rate
of 36.5% for the first quarter and full-year 2010;
-- Projections assume that the company's existing credit facility remains
in place for full-year 2010.
Use of Free Cash Flow
The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.
For the year ended December 31, 2009 the company paid $44.3 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.
During the three months ended December 31, 2009, the company purchased approximately 0.1 million shares of its common stock at an average price of $31.06 for a total cost of $2.1 million under the share repurchase program. During the year ended December 31, 2009, the company purchased approximately 2.1 million shares of its common stock at an average price of $27.03 for a total cost of $57.4 million. Subsequent to December 31, 2009 and through February 11, 2010, the company repurchased an additional 0.2 million shares at a total cost of $5.0 million at an average price of $31.85 and has authorization to purchase up to an additional 3.7 million shares under this program. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 42.9 million shares of its common stock for a total cost of $1 billion through December 31, 2009. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 75.9 million shares through December 31, 2009 under the share repurchase program at an average price of $13.28 per share.
Our Board has authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees to incent multi-unit franchise development in top markets. We expect to opportunistically deploy this capital over the next several years. Our annual investment in these programs is dependent on market and other conditions. Notwithstanding these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.
Impact of the Adoption of New Accounting Pronouncements on Earnings Per Share
In June 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position Emerging Issues Task Force No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" ("FSP EITF 03-6-1"). FSP EITF 03-6-1 clarified that all share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common shareholders. Therefore, awards of this nature are considered participating securities and the two-class method of computing basic and diluted earnings per share must be applied rather than the treasury stock method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. In addition, once effective, all prior period earnings per share data presented must be adjusted retrospectively to conform to the provisions of FSP EITF 03-6-1.
The company's outstanding unvested restricted stock awards contain rights to non-forfeitable dividends and as a result, the company applied this guidance in the first quarter of 2009. The two-class method of calculating earnings per share is more dilutive to both basic and diluted shares outstanding than the previously utilized treasury stock method. In accordance with FSP EITF 03-6-1, the company has retrospectively adjusted its basic and diluted shares outstanding for the three months and year ended December 31, 2008 under the two-class method which resulted in a reduction of the company's basic and diluted earnings per share for the year ended December 31, 2008 from $1.62 to $1.61 and $1.60 to $1.59 per share, respectively. In addition, basic earnings per share for the three months ended December 31, 2008 have been revised from $0.31 to $0.30 per share.
Conference Call
Choice will conduct a conference call on Friday, February 12, 2010 at 10:00 a.m. EST to discuss the company's fourth quarter and full-year 2009 results. The dial-in number to listen to the call is 1-866-383-7989, and the access code is 25293408. International callers should dial 1-617-597-5328 and enter the access code 25293408. The conference call also will be Webcast simultaneously via the company's Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.
The call will be recorded and available for replay beginning at 1:00 p.m. EST on February 12, 2010 through March 12, 2010 by calling 1-888-286-8010 and entering access code 35986582. The international dial-in number for the replay is 617-801-6888, access code 35986582. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.
About Choice Hotels
Choice Hotels International, Inc. franchises more than 6,000 hotels, representing more than 485,000 rooms, in the United States and more than 35 other countries and territories. As of December 31, 2009, more than 700 hotels are under construction, awaiting conversion or approved for development in the United States, representing more than 57,000 rooms, and more than 100 hotels, representing approximately 9,400 rooms, are under construction, awaiting conversion or approved for development in more than 20 other countries and territories. The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels.
Additional corporate information may be found on the Choice Hotels International, Inc. Web site, which may be accessed at www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.
Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on March 2, 2009. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Statement Concerning Non-GAAP Financial Measurements
Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States (GAAP), such as diluted earnings per share, operating income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.
Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.
Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the company's financial statements. In addition, the company has the contractual authority to require that the franchisees in the system at any given point repay the company for any deficits related to marketing and reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.
Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company's management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits, a pension plan curtailment loss and a loss on the sublease of a portion of the company's office space for 2009 and the impact of the acceleration of the company's management succession plan, increased loan reserves on impaired loans and employee termination benefits for the periods ended December 31, 2008. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.
Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.
(C) 2010 Choice Hotels International, Inc. All rights reserved.
Choice Hotels International, Inc. Exhibit 1
Consolidated Statements of Income
(Unaudited)
Three Months Ended December 31,
-------------------------------
Variance
2009 2008 $ %
---- ---- --- ---
(In thousands, except
per share amounts)
REVENUES:
Royalty fees $53,213 $59,284 $(6,071) (10%)
Initial franchise
and relicensing
fees 3,317 6,729 (3,412) (51%)
Procurement
services 3,514 3,498 16 0%
Marketing and
reservation 77,576 81,904 (4,328) (5%)
Hotel operations 909 1,253 (344) (27%)
Other 2,172 1,826 346 19%
----- ----- --- --
Total revenues 140,701 154,494 (13,793) (9%)
OPERATING EXPENSES:
Selling, general
and administrative 26,183 35,580 (9,397) (26%)
Depreciation and
amortization 2,084 2,019 65 3%
Marketing and
reservation 77,576 81,904 (4,328) (5%)
Hotel operations 775 894 (119) (13%)
--- --- ---- ---
Total operating
expenses 106,618 120,397 (13,779) (11%)
Operating income 34,083 34,097 (14) 0%
OTHER INCOME AND
EXPENSES:
Interest expense 683 2,245 (1,562) (70%)
Interest and
other investment
(income) loss (560) 4,431 (4,991) (113%)
Equity in net
income of
affiliates (334) (476) 142 (30%)
---- ---- --- ---
Total other
income and
expenses, net (211) 6,200 (6,411) (103%)
---- ----- ------ ----
Income before
income taxes 34,294 27,897 6,397 23%
Income taxes 10,663 9,186 1,477 16%
------ ----- ----- --
Net income $23,631 $18,711 $4,920 26%
======= ======= ====== ==
Weighted average
shares outstanding
- basic* 59,553 61,685
====== ======
Weighted average
shares outstanding
- diluted* 59,658 62,157
====== ======
Basic earnings per
share* $0.40 $0.30 $0.10 33%
===== ===== ===== ==
Diluted earnings
per share* $0.40 $0.30 $0.10 33%
===== ===== ===== ==
Year Ended December 31,
-----------------------
Variance
2009 2008 $ %
---- ---- --- ---
(In thousands, except
per share amounts)
REVENUES:
Royalty fees $217,984 $247,435 $(29,451) (12%)
Initial franchise
and relicensing
fees 12,916 27,931 (15,015) (54%)
Procurement
services 17,598 17,148 450 3%
Marketing and
reservation 305,379 336,477 (31,098) (9%)
Hotel operations 4,140 4,936 (796) (16%)
Other 6,161 7,753 (1,592) (21%)
----- ----- ------ ---
Total revenues 564,178 641,680 (77,502) (12%)
OPERATING EXPENSES:
Selling, general
and administrative 99,237 118,989 (19,752) (17%)
Depreciation and
amortization 8,336 8,184 152 2%
Marketing and
reservation 305,379 336,477 (31,098) (9%)
Hotel operations 3,153 3,434 (281) (8%)
----- ----- ---- --
Total operating
expenses 416,105 467,084 (50,979) (11%)
Operating income 148,073 174,596 (26,523) (15%)
OTHER INCOME AND
EXPENSES:
Interest expense 4,414 10,932 (6,518) (60%)
Interest and
other investment
(income) loss (5,862) 7,760 (13,622) (176%)
Equity in net
income of
affiliates (1,113) (1,414) 301 (21%)
------ ------ --- ----
Total other
income and
expenses, net (2,561) 17,278 (19,839) (115%)
------ ------ ------- -----
Income before
income taxes 150,634 157,318 (6,684) (4%)
Income taxes 52,384 57,107 (4,723) (8%)
------ ------ ------- ----
Net income $98,250 $100,211 $(1,961) (2%)
======= ======== ======== ==
Weighted average
shares outstanding
- basic* 60,068 62,374
====== ======
Weighted average
shares outstanding
- diluted* 60,224 62,994
====== ======
Basic earnings per
share* $1.64 $1.61 $0.03 2%
===== ===== ===== ==
Diluted earnings
per share* $1.63 $1.59 $0.04 3%
===== ===== ===== ==
* The Company's weighted average shares outstanding for the three months
and year ended December 31, 2008 have been retrospectively adjusted due
to the application of EITF Issue 03-6-1 "Determining Whether Instruments
Granted in Share Based Payment Transactions are Participating
Securities" which became effective for the Company in 2009. The
application of this guidance has resulted in the revision of basic and
diluted earnings per share for the year ended December 31, 2008 from
$1.62 to $1.61 and $1.60 to $1.59 per share, respectively. In addition,
basic earnings per share for the three months ended December 31, 2008
has been revised from $0.31 to $0.30 per share.
Choice Hotels International, Inc. Exhibit 2
Consolidated Balance Sheets
(In thousands, except per
share amounts) December 31, December 31,
2009 2008
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $67,870 $52,680
Accounts receivable, net 41,898 43,141
Deferred income taxes 7,980 8,223
Other current assets 10,114 16,172
------ ------
Total current assets 127,862 120,216
Fixed assets and
intangibles, net 133,999 138,867
Receivable -- marketing and
reservation fees 33,872 13,527
Investments, employee
benefit plans, at fair
value 20,931 25,360
Other assets 23,373 30,249
------ ------
Total assets $340,037 $328,219
-------- --------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable and
accrued expenses $70,933 $79,897
Deferred revenue 51,765 47,004
Deferred compensation &
retirement plan obligations 2,798 6,960
Other current liabilities 6,310 1,206
----- -----
Total current liabilities 131,806 135,067
Long-term debt 277,700 284,400
Deferred compensation &
retirement plan
obligations 34,956 33,462
Other liabilities 9,787 12,960
----- ------
Total liabilities 454,249 465,889
------- -------
Common stock, $0.01 par value 595 607
Additional paid-in-capital 90,731 90,141
Accumulated other
comprehensive income (loss) 333 (3,472)
Treasury stock, at cost (870,302) (835,186)
Retained earnings 664,431 610,240
------- -------
Total shareholders' deficit (114,212) (137,670)
-------- --------
Total liabilities and
shareholders' deficit $340,037 $328,219
-------- --------
Choice Hotels International, Inc. Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)
Year Ended
(In thousands) December 31,
------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $98,250 $100,211
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 8,336 8,184
Provision for bad debts 2,578 9,433
Non-cash stock compensation and other charges 13,761 10,914
Non-cash interest and other (income) loss (5,403) 9,300
Dividends received from equity method investments 1,337 1,180
Equity in net income of affiliates (1,113) (1,414)
Changes in assets and liabilities:
Receivables (796) (4,358)
Receivable - marketing and reservation fees, net (12,232) (7,578)
Accounts payable (8,279) (13,138)
Accrued expenses (1,289) (3,206)
Income taxes payable/receivable 8,163 (1,870)
Deferred income taxes 5,553 3,073
Deferred revenue 4,650 (1,549)
Other assets 3,041 (1,046)
Other liabilities (4,341) (3,737)
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 112,216 104,399
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property and equipment (11,135) (12,611)
Issuance of notes receivable (1,995) (7,410)
Collections of notes receivable 324 434
Purchases of investments, employee benefit plans (3,854) (7,802)
Proceeds from sales of investments, employee
benefit plans 13,895 7,819
Other items, net (584) (695)
---- ----
NET CASH USED IN INVESTING ACTIVITIES (3,349) (20,265)
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of long-term debt - (100,000)
Net borrowings (repayments) pursuant to revolving
credit facility (6,700) 112,000
Purchase of treasury stock (59,128) (63,732)
Excess tax benefits from stock-based compensation 5,834 10,135
Dividends paid (44,274) (43,142)
Proceeds from exercise of stock options 9,158 9,026
----- -----
NET CASH USED IN FINANCING ACTIVITIES (95,110) (75,713)
------- -------
Net change in cash and cash equivalents 13,757 8,421
Effect of foreign exchange rate changes on cash
and cash equivalents 1,433 (2,118)
Cash and cash equivalents at beginning of period 52,680 46,377
------ ------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $67,870 $52,680
======= =======
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 4
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
For the Year Ended December 31, 2009*
-------------------------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $77.10 54.1% $41.74
Comfort Suites 84.79 53.3% 45.17
Sleep 69.64 51.5% 35.86
----- ---- -----
Midscale without Food & Beverage 77.89 53.5% 41.69
----- ---- -----
Quality 68.00 46.0% 31.31
Clarion 77.79 42.2% 32.86
----- ---- -----
Midscale with Food & Beverage 69.92 45.2% 31.63
----- ---- -----
Econo Lodge 54.66 43.5% 23.78
Rodeway 52.48 43.0% 22.54
----- ---- -----
Economy 54.02 43.3% 23.41
----- ---- -----
MainStay 70.55 57.9% 40.82
Suburban 41.51 56.3% 23.35
----- ---- -----
Extended Stay 49.81 56.7% 28.24
----- ---- -----
Total $71.06 49.4% $35.09
====== ==== ======
For the Year Ended December 31, 2008*
-------------------------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $79.84 60.1% $48.01
Comfort Suites 89.49 61.3% 54.82
Sleep 71.91 58.5% 42.10
----- ---- -----
Midscale without Food & Beverage 80.90 60.2% 48.66
----- ---- -----
Quality 71.42 52.0% 37.15
Clarion 84.48 50.0% 42.21
----- ---- -----
Midscale with Food & Beverage 74.18 51.6% 38.26
----- ---- -----
Econo Lodge 55.58 46.9% 26.05
Rodeway 55.04 47.5% 26.16
----- ---- -----
Economy 55.44 47.0% 26.08
----- ---- -----
MainStay 73.72 64.2% 47.34
Suburban 42.93 62.4% 26.80
----- ---- -----
Extended Stay 51.14 62.9% 32.17
----- ---- -----
Total $74.11 55.3% $40.98
====== ==== ======
Change
------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn (3.4%) (600) bps (13.1%)
Comfort Suites (5.3%) (800) bps (17.6%)
Sleep (3.2%) (700) bps (14.8%)
---- ---- --- -----
Midscale without Food &
Beverage (3.7%) (670) bps (14.3%)
---- ---- --- -----
Quality (4.8%) (600) bps (15.7%)
Clarion (7.9%) (780) bps (22.2%)
---- ---- --- -----
Midscale with Food &
Beverage (5.7%) (640) bps (17.3%)
---- ---- --- -----
Econo Lodge (1.7%) (340) bps (8.7%)
Rodeway (4.7%) (450) bps (13.8%)
---- ---- --- -----
Economy (2.6%) (370) bps (10.2%)
---- ---- --- -----
MainStay (4.3%) (630) bps (13.8%)
Suburban (3.3%) (610) bps (12.9%)
---- ---- --- -----
Extended Stay (2.6%) (620) bps (12.2%)
---- ---- --- -----
Total (4.1%) (590) bps (14.4%)
==== ==== === =====
* Operating statistics represent hotel operations from December through
November
For the Three Months Ended
December 31, 2009*
------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $75.92 52.5% $39.86
Comfort Suites 81.94 50.5% 41.40
Sleep 68.03 48.7% 33.12
----- ---- -----
Midscale without Food & Beverage 76.27 51.4% 39.23
----- ---- -----
Quality 65.71 43.7% 28.68
Clarion 77.29 39.9% 30.84
----- ---- -----
Midscale with Food & Beverage 67.98 42.9% 29.14
----- ---- -----
Econo Lodge 53.67 42.1% 22.62
Rodeway 50.11 40.4% 20.24
----- ---- -----
Economy 52.62 41.6% 21.89
----- ---- -----
MainStay 67.07 57.2% 38.33
Suburban 38.91 57.1% 22.21
----- ---- -----
Extended Stay 46.92 57.1% 26.79
----- ---- -----
Total $69.38 47.3% $32.84
====== ==== ======
For the Three Months Ended
December 31, 2008*
------------------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn $78.95 57.8% $45.59
Comfort Suites 88.09 57.6% 50.73
Sleep 71.48 55.1% 39.37
----- ---- -----
Midscale without Food & Beverage 80.00 57.3% 45.85
----- ---- -----
Quality 69.34 49.2% 34.08
Clarion 82.53 46.7% 38.51
----- ---- -----
Midscale with Food & Beverage 71.97 48.6% 35.00
----- ---- -----
Econo Lodge 55.36 45.5% 25.19
Rodeway 53.68 44.4% 23.81
----- ---- -----
Economy 54.90 45.2% 24.80
----- ---- -----
MainStay 74.71 61.4% 45.88
Suburban 44.08 57.1% 25.17
----- ---- -----
Extended Stay 52.65 58.2% 30.67
----- ---- -----
Total $72.97 52.6% $38.38
====== ==== ======
Change
------
Average Daily
Rate Occupancy RevPAR
---- --------- ------
Comfort Inn (3.8%) (530) bps (12.6%)
Comfort Suites (7.0%) (710) bps (18.4%)
Sleep (4.8%) (640) bps (15.9%)
---- ---- --- -----
Midscale without Food &
Beverage (4.7%) (590) bps (14.4%)
---- ---- --- -----
Quality (5.2%) (550) bps (15.8%)
Clarion (6.3%) (680) bps (19.9%)
---- ---- --- -----
Midscale with Food &
Beverage (5.5%) (570) bps (16.7%)
---- ---- --- -----
Econo Lodge (3.1%) (340) bps (10.2%)
Rodeway (6.7%) (400) bps (15.0%)
---- ---- --- -----
Economy (4.2%) (360) bps (11.7%)
---- ---- --- -----
MainStay (10.2%) (420) bps (16.5%)
Suburban (11.7%) - bps (11.8%)
----- --- --- -----
Extended Stay (10.9%) (110) bps (12.7%)
----- ---- --- -----
Total (4.9%) (530) bps (14.4%)
==== ==== === =====
* Operating statistics represent hotel operations from September through
November
For the Quarter Ended For the Year Ended
--------------------- ------------------
12/31/2009 12/31/2008 12/31/2009 12/31/2008
System-wide effective
royalty rate 4.30% 4.23% 4.26% 4.20%
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 5
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
December 31, December 31,
2009 2008
------------ ------------
Hotels Rooms Hotels Rooms
------ ----- ------ -----
Comfort Inn 1,447 113,633 1,462 114,573
Comfort Suites 608 47,301 541 42,152
Sleep 392 28,599 365 26,867
--- ------ --- ------
Midscale without Food & Beverage 2,447 189,533 2,368 183,592
----- ------- ----- -------
Quality 979 89,336 908 85,055
Clarion 172 24,636 150 21,497
--- ------ --- ------
Midscale with Food & Beverage 1,151 113,972 1,058 106,552
----- ------- ----- -------
Econo Lodge 792 48,996 816 50,812
Rodeway 372 21,392 346 20,302
--- ------ --- ------
Economy 1,164 70,388 1,162 71,114
----- ------ ----- ------
MainStay 37 2,866 35 2,694
Suburban 61 7,416 60 7,256
-- ----- -- -----
Extended Stay 98 10,282 95 9,950
-- ------ -- -----
Ascend Collection 28 2,346 21 1,353
Cambria Suites 18 2,073 12 1,323
-- ----- -- -----
Domestic Franchises 4,906 388,594 4,716 373,884
International Franchises 1,115 98,816 1,111 98,642
----- ------ ----- ------
Total Franchises 6,021 487,410 5,827 472,526
===== ======= ===== =======
Variance
--------
Hotels Rooms % %
------ ----- --- ---
Comfort Inn (15) (940) (1.0%) (0.8%)
Comfort Suites 67 5,149 12.4% 12.2%
Sleep 27 1,732 7.4% 6.4%
-- ----- --- ---
Midscale without Food & Beverage 79 5,941 3.3% 3.2%
-- ----- --- ---
Quality 71 4,281 7.8% 5.0%
Clarion 22 3,139 14.7% 14.6%
-- ----- ---- ----
Midscale with Food & Beverage 93 7,420 8.8% 7.0%
-- ----- --- ---
Econo Lodge (24) (1,816) (2.9%) (3.6%)
Rodeway 26 1,090 7.5% 5.4%
-- ----- --- ---
Economy 2 (726) 0.2% (1.0%)
-- ---- --- ----
MainStay 2 172 5.7% 6.4%
Suburban 1 160 1.7% 2.2%
-- --- --- ---
Extended Stay 3 332 3.2% 3.3%
-- --- --- ---
Ascend Collection 7 993 33.3% 73.4%
Cambria Suites 6 750 50.0% 56.7%
-- --- ---- ----
Domestic Franchises 190 14,710 4.0% 3.9%
International Franchises 4 174 0.4% 0.2%
-- --- --- ---
Total Franchises 194 14,884 3.3% 3.1%
=== ====== === ===
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 6
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
(UNAUDITED)
For the Year Ended
December 31, 2009
------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 9 39 48
Comfort Suites 16 1 17
Sleep 12 2 14
-- -- --
Midscale without Food & Beverage 37 42 79
-- -- --
Quality 4 111 115
Clarion 1 31 32
-- -- --
Midscale with Food & Beverage 5 142 147
-- --- ---
Econo Lodge - 68 68
Rodeway 1 48 49
-- -- --
Economy 1 116 117
-- --- ---
MainStay 5 2 7
Suburban 3 2 5
-- -- --
Extended Stay 8 4 12
-- -- --
Ascend Collection 3 9 12
Cambria Suites 2 - 2
-- -- --
Total Domestic System 56 313 369
== === ===
For the Year Ended
December 31, 2008
------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 48 58 106
Comfort Suites 85 3 88
Sleep 72 4 76
-- - --
Midscale without Food & Beverage 205 65 270
--- -- ---
Quality 5 147 152
Clarion 7 42 49
-- -- --
Midscale with Food & Beverage 12 189 201
-- --- ---
Econo Lodge 4 83 87
Rodeway 3 99 102
-- -- ---
Economy 7 182 189
-- --- ---
MainStay 12 - 12
Suburban 8 - 8
-- -- --
Extended Stay 20 - 20
-- -- --
Ascend Collection 1 1 2
Cambria Suites 16 - 16
-- -- --
Total Domestic System 261 437 698
=== === ===
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn (81%) (33%) (55%)
Comfort Suites (81%) (67%) (81%)
Sleep (83%) (50%) (82%)
--- --- ---
Midscale without Food & Beverage (82%) (35%) (71%)
--- --- ---
Quality (20%) (24%) (24%)
Clarion (86%) (26%) (35%)
--- --- ---
Midscale with Food & Beverage (58%) (25%) (27%)
--- --- ---
Econo Lodge (100%) (18%) (22%)
Rodeway (67%) (52%) (52%)
--- --- ---
Economy (86%) (36%) (38%)
--- --- ---
MainStay (58%) NM (42%)
Suburban (63%) NM (38%)
--- -- ---
Extended Stay (60%) NM (40%)
--- -- ---
Ascend Collection 200% 800% 500%
Cambria Suites (88%) NM (88%)
--- -- ---
Total Domestic System (79%) (28%) (47%)
=== === ===
For the Three Months Ended
December 31, 2009
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 5 17 22
Comfort Suites 7 - 7
Sleep 1 - 1
-- -- --
Midscale without Food & Beverage 13 17 30
-- -- --
Quality 1 24 25
Clarion - 8 8
-- -- --
Midscale with Food & Beverage 1 32 33
-- -- --
Econo Lodge - 23 23
Rodeway - 12 12
-- -- --
Economy - 35 35
-- -- --
MainStay 4 1 5
Suburban 1 2 3
-- -- --
Extended Stay 5 3 8
-- -- --
Ascend Collection 2 4 6
Cambria Suites - - -
-- -- --
Total Domestic System 21 91 112
== == ===
For the Three Months Ended
December 31, 2008
--------------------------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn 15 17 32
Comfort Suites 20 - 20
Sleep 25 1 26
-- -- --
Midscale without Food & Beverage 60 18 78
-- -- --
Quality 1 39 40
Clarion 1 14 15
-- -- --
Midscale with Food & Beverage 2 53 55
-- -- --
Econo Lodge 1 28 29
Rodeway 1 34 35
-- -- --
Economy 2 62 64
-- -- --
MainStay 5 - 5
Suburban - - -
-- -- --
Extended Stay 5 - 5
-- -- --
Ascend Collection 1 - 1
Cambria Suites 4 - 4
-- -- --
Total Domestic System 74 133 207
== === ===
% Change
--------
New
Construction Conversion Total
------------ ---------- -----
Comfort Inn (67%) 0% (31%)
Comfort Suites (65%) NM (65%)
Sleep (96%) (100%) (96%)
--- ---- ---
Midscale without Food & Beverage (78%) (6%) (62%)
--- -- ---
Quality 0% (38%) (38%)
Clarion (100%) (43%) (47%)
---- --- ---
Midscale with Food & Beverage (50%) (40%) (40%)
--- --- ---
Econo Lodge (100%) (18%) (21%)
Rodeway (100%) (65%) (66%)
---- --- ---
Economy (100%) (44%) (45%)
---- --- ---
MainStay (20%) NM 0%
Suburban NM NM NM
-- -- --
Extended Stay 0% NM 60%
-- -- --
Ascend Collection 100% NM 500%
Cambria Suites (100%) NM (100%)
---- -- ----
Total Domestic System (72%) (32%) (46%)
=== === ===
CHOICE HOTELS INTERNATIONAL, INC.
DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING
CONVERSION OR APPROVED FOR DEVELOPMENT
(UNAUDITED)
A hotel in the domestic pipeline does not always result in an
open and operating hotel due to various factors.
December 31, 2009
Units
-----
New
Conversion Construction Total
---------- ------------ -----
Comfort Inn 43 91 134
Comfort Suites - 181 181
Sleep Inn 1 122 123
-- --- ---
Midscale without Food &
Beverage 44 394 438
-- --- ---
Quality 48 15 63
Clarion 19 6 25
-- -- --
Midscale with Food & Beverage 67 21 88
-- -- --
Econo Lodge 43 4 47
Rodeway 36 2 38
-- -- --
Economy 79 6 85
-- -- --
MainStay - 37 37
Suburban 2 30 32
-- -- --
Extended Stay 2 67 69
-- -- --
Ascend Collection 2 4 6
Cambria Suites - 41 41
-- -- --
194 533 727
=== === ===
December 31, 2008
Units
-----
New
Conversion Construction Total
---------- ------------ -----
Comfort Inn 51 125 176
Comfort Suites 3 279 282
Sleep Inn 2 157 159
-- --- ---
Midscale without Food &
Beverage 56 561 617
-- --- ---
Quality 69 14 83
Clarion 36 9 45
-- -- --
Midscale with Food & Beverage 105 23 128
--- -- ---
Econo Lodge 45 5 50
Rodeway 58 2 60
-- -- --
Economy 103 7 110
--- -- ---
MainStay - 38 38
Suburban - 34 34
-- -- --
Extended Stay - 72 72
-- -- --
Ascend Collection - 1 1
Cambria Suites - 59 59
-- -- --
264 723 987
=== === ===
Variance
--------
Conversion New Construction Total
---------- ---------------- -----
Units % Units % Units %
----- --- ----- --- ----- ---
Comfort Inn (8) (16%) (34) (27%) (42) (24%)
Comfort Suites (3) (100%) (98) (35%) (101) (36%)
Sleep Inn (1) (50%) (35) (22%) (36) (23%)
-- --- --- --- --- ---
Midscale without Food
& Beverage (12) (21%) (167) (30%) (179) (29%)
--- --- ---- --- ---- ---
Quality (21) (30%) 1 7% (20) (24%)
Clarion (17) (47%) (3) (33%) (20) (44%)
--- --- -- --- --- ---
Midscale with Food
& Beverage (38) (36%) (2) (9%) (40) (31%)
--- --- -- -- --- ---
Econo Lodge (2) (4%) (1) (20%) (3) (6%)
Rodeway (22) (38%) - 0% (22) (37%)
--- --- -- -- --- ---
Economy (24) (23%) (1) (14%) (25) (23%)
--- --- -- --- --- ---
MainStay - NM (1) (3%) (1) (3%)
Suburban 2 NM (4) (12%) (2) (6%)
-- -- -- --- -- --
Extended Stay 2 NM (5) (7%) (3) (4%)
-- -- -- -- -- --
Ascend Collection 2 NM 3 300% 5 500%
Cambria Suites - NM (18) (31%) (18) (31%)
-- -- --- --- --- ---
(70) (27%) (190) (26%) (260) (26%)
=== === ==== === ==== ===
CHOICE HOTELS INTERNATIONAL, INC. Exhibit 8
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS
Three Months Ended Year Ended
(dollar amounts in thousands) December 31, December 31,
------------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Franchising Revenues:
Total Revenues $140,701 $154,494 $564,178 $641,680
Adjustments:
Marketing and reservation
revenues (77,576) (81,904) (305,379) (336,477)
Hotel operations (909) (1,253) (4,140) (4,936)
---- ------ ------ ------
Franchising Revenues $62,216 $71,337 $254,659 $300,267
------- ------- -------- --------
Franchising Margins:
Operating Margin:
Total Revenues $140,701 $154,494 $564,178 $641,680
Operating Income $34,083 $34,097 $148,073 $174,596
------- ------- -------- --------
Operating Margin 24.2% 22.1% 26.2% 27.2%
---- ---- ---- ----
Adjusted Franchising Margin:
Franchising Revenues $62,216 $71,337 $254,659 $300,267
Operating Income $34,083 $34,097 $148,073 $174,596
Acceleration of management
succession plan benefits - 500 - 6,605
Employee termination benefits 2,334 2,731 4,604 3,537
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan 1,209 - 1,209 -
Loss on sublease of office space - - 1,503 -
Loan reserves related to impaired
notes receivable - 7,555 - 7,555
Hotel operations (134) (359) (987) (1,502)
---- ---- ---- ------
$37,492 $44,524 $154,402 $190,791
------- ------- -------- --------
---- ---- ---- ----
Adjusted Franchising Margins 60.3% 62.4% 60.6% 63.5%
---- ---- ---- ----
CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS
Three Months Ended Year Ended
(dollar amounts in thousands) December 31, December 31,
------------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Selling, general and
administrative costs $26,183 $35,580 $99,237 $118,989
Acceleration of management
succession plan benefits - (500) - (6,605)
Employee termination benefits (2,334) (2,731) (4,604) (3,537)
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan (1,209) - (1,209) -
Loss on sublease of office space - - (1,503) -
Loan reserves related to impaired
notes receivable - (7,555) - (7,555)
--- ------ --- ------
Adjusted Selling, General and
Administrative Costs $22,640 $24,794 $91,921 $101,292
======= ======= ======= ========
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS
PER SHARE (EPS)
(In thousands, except per Three Months Ended Year Ended
share amounts) December 31, December 31,
------------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Net Income $23,631 $18,711 $98,250 $100,211
Adjustments:
Acceleration of management
succession plan benefits - 313 - 4,135
Employee termination benefits 1,461 1,709 2,882 2,214
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan 757 - 757 -
Loss on sublease of office space - - 941 -
Loan reserves related to impaired
notes receivable - 4,729 - 4,729
--- ----- --- -----
Adjusted Net Income $25,849 $25,462 $102,830 $111,289
------- ------- -------- --------
Weighted average shares
outstanding-diluted 59,658 62,157 60,224 62,994
Diluted Earnings Per Share $0.40 $0.30 $1.63 $1.59
Adjustments:
Acceleration of management
succession plan - - - 0.07
Employee termination benefits 0.02 0.03 0.05 0.03
Curtailment loss related to the
freezing of benefits under the
Company's Supplemental Executive
Retirement Plan 0.01 - 0.01 -
Loss on sublease of office space - - 0.02 -
Loan reserves related to impaired
notes receivable - 0.08 - 0.08
--- ---- --- ----
Adjusted Diluted Earnings Per
Share (EPS) $0.43 $0.41 $1.71 $1.77
----- ----- ----- -----
Adjusted EBITDA Reconciliation
(in millions)
Year Ended Year Ended
December 31, December 31, Full-Year
Q4 2009 Q4 2008 2009 2008 2010
Actuals Actuals Actuals Actuals Outlook
Operating Income
(per GAAP) $34.1 $34.1 $148.1 $174.6 $158 - $162
Acceleration of
management
succession plan - 0.5 - 6.6 -
Employee
termination
benefits 2.3 2.7 4.6 3.5 -
Curtailment loss
related to the
freezing of
benefits under
the Company's
Supplemental
Executive
Retirement Plan 1.2 - 1.2 - -
Loss on sublease
of office space - - 1.5 - -
Loan reserves
related to
impaired notes
receivable - 7.6 - 7.6 8.0
Depreciation and
amortization 2.1 2.0 8.3 8.2 -
--- --- --- --- ---
Adjusted Earnings
before interest,
taxes,
depreciation &
amortization
(non-GAAP) $39.7 $46.9 $163.7 $200.5 $166 -$170
===== ===== ====== ====== ==========
First Call Analyst:
FCMN Contact:
SOURCE: Choice Hotels International, Inc.
CONTACT: David White, Senior Vice President, Chief Financial Officer &
Treasurer, +1-301-592-5117, or David Peikin, Senior Director, Corporate
Communications, +1-301-592-6361, both of Choice Hotels International, Inc.
Web Site: http://www.choicehotels.com/
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