Exhibit 99.1
For Immediate Release
CHOICE HOTELS REPORTS RECORD RESULTS FOR SECOND QUARTER 2006;
DILUTED EPS UP 12.5%, NET INCOME UP 12% OVER PRIOR YEAR
SILVER SPRING, Md. (July 25, 2006) – Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for the second quarter of 2006:
| • | Diluted earnings per share (EPS) increased 12.5% to $0.36, compared to $0.32 for second quarter 2005. |
| • | Net income grew 12% from $21.5 million in second quarter 2005 to $24.1 million in the same period of this year. |
| • | Earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased 13% to $44.7 million from $39.7 million in second quarter 2005. |
| • | Operating income increased 13% to $42.1 million, compared to $37.4 million for the same period in 2005. |
| • | Total revenues increased 15% to $140.5 million compared to the second quarter of 2005. |
| • | Domestic system-wide revenue per available room (RevPAR) increased 7.7%, Average Daily Rate (ADR) increased 5.7% and occupancy rose 110 basis points compared to the second quarter of 2005. |
| • | Domestic unit growth increased 4.8% compared to the second quarter 2005 (excluding the 2005 acquisition of Suburban, domestic unit growth increased 3.2%). |
| • | Year-to-date contracts for new construction hotel franchises increased 14% to 106; overall year-to-date new domestic hotel franchise contracts were comparable to the second quarter 2005, with 275 contracts executed in 2006 as compared to 276 in the prior year’s first two quarters. |
| • | Executed five contracts for new upscale Cambria Suites brand during the quarter, with 15 signed year-to-date and 28 since the brand was introduced in 2005. First property in Boise, Idaho expected to open in December 2006. |
| • | The domestic hotel pipeline of hotels under construction, awaiting conversion or approved for development increased more than 45% from the prior year to 687 hotels, representing 53,765 rooms; an additional 65 hotels, representing 5,993 rooms, were in the worldwide pipeline at June 30, 2006. |
“We continue to focus on brand enhancements and are seeing strong growth in occupancy, average daily rate and RevPAR,” said Charles A. Ledsinger, Jr., president and chief executive officer. “We are pleased with the substantial increase in year-to-date sales of our new construction brands, most notably with our Cambria Suites and Comfort Suites offerings.”
“We believe that the inherent strength of our business model, the ongoing improvements to our core brands, and the expansion of our newest brands will enable us to drive top-line and bottom-line growth in a variety of economic cycles,” Ledsinger added. “We are very pleased with the 13 percent increase in EBITDA over the prior year’s second quarter and remain confident about the company’s long-term prospects.”
Outlook for 2006
The company’s third quarter 2006 diluted EPS is expected to be $0.46. Full-year 2006 diluted EPS is expected to be $1.45. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is expected to be $175 million. These estimates include the following assumptions.
| • | The company expects net domestic unit growth of approximately 4% in 2006; |
| • | RevPAR is expected to increase 5% for third quarter 2006 and 6% for full-year 2006; |
| • | The effective royalty rate is expected to increase 3 basis points for full-year 2006; |
| • | All figures assume the existing share count, include stock-based compensation expense and assume an effective tax rate of 36% for full year 2006. |
Use of Free Cash Flow
The company has consistently used its free cash flow (cash flow from operations less capital expenditures) generated from its operations to return value to shareholders. This is primarily achieved through share repurchases and dividends.
For the six months ended June 30, 2006, the company paid $16.9 million of cash dividends to shareholders. The annual dividend rate per common share is $0.52.
The company has remaining authorization to purchase up to 5.1 million shares under the share repurchase program. Repurchases will continue to be made in the open market and through privately negotiated transactions subject to market and other conditions. No minimum number of shares has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 33.6 million shares of its common stock for a total cost of $711.9 million through July 25, 2006. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 66.6 million shares at an average price of $10.69 per share.
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.
Conference Call
Choice will conduct a conference call on Wednesday, July 26, 2006, at 10 a.m. EDT to discuss the company’s second quarter 2006 results. The call-in number to listen to the call is 1-877-209-0397. The conference call also will be Web cast simultaneously via the company’s Web site,www.choicehotels.com. Interested investors and other parties wishing to access the call on the Web should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.
The audio of the call will be archived and available onwww.choicehotels.com for those unable to listen to the call on July 26. The call will also be available for replay until August 26, 2006, by calling 1-800-475-6701 (access code 832732).
Items Impacting Comparability
Acquisition of Suburban
During 2005, the company acquired Suburban Franchise Holding Company, Inc. (“Suburban”), which included 67 Suburban Extended Stay Hotel units open and operating in the United States. The results of operations for Suburban have been included in the company’s results of operations since September 28, 2005.
Two-for-One Stock Split
In October 2005, the company effected a two-for-one stock split of its outstanding shares of common stock, par value $.01 per share. Unless otherwise noted, all share information in this release and in the accompanying exhibits, including per share amounts, have been proportionally adjusted as if the two-for-one stock split had been effective as of the date or period presented.
About Choice Hotels
Choice Hotels International franchises more than 5,200 hotels, representing more than 430,000 rooms, in the United States and more than 40 countries and territories. As of June 30, 2006, 687 hotels are under development in the United States, representing 53,765 rooms, and an additional 65 hotels, representing 5,993 rooms, are under development in more than 20 countries and territories. The company’s Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites and Suburban Extended Stay Hotel brands serve guests worldwide.
Additional corporate information may be found on Choice Hotels’ Internet site, which may be accessed at www.choicehotels.com.
Forward-Looking Statements
Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law. Such statements are based on management’s beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice’s ability to predict or control. The company’s Form 10-K for the year ended December 31, 2005 details some of the important risk factors that you should review.
Statement Concerning Non-GAAP Financial Measurements
Franchising revenues, franchising margins, EBITDA, and free cash flows are non-GAAP financial measurements. These financial measurements are presented as supplemental disclosures because they are used by management in reviewing and analyzing the company’s performance. This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States (GAAP), such as total revenues, operating income, operating margins, and cash flows from operations. The company’s calculation of these measurements may be different from the calculation used by other companies and therefore comparability may be limited. The company has included exhibits accompanying this release that reconcile these measures to the comparable GAAP measurement.
Contacts
Joseph M. Squeri, Executive Vice President and Chief Financial Officer
(301) 592-5006
Anne Madison, Vice President, Corporate Communications
(301) 592-6723
Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, and Rodeway Inn are proprietary trademarks and service marks of Choice Hotels International, Inc.
© 2006 Choice Hotels International, Inc. All rights reserved.
Exhibit 1
Choice Hotels International, Inc.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2006 | 2005 | Variance | 2006 | 2005 | Variance | |||||||||||||||||||||||||
(In thousands, except per share amounts)
| $ | % | $ | % | ||||||||||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||||||||
Royalty fees | $ | 53,146 | $ | 46,515 | $ | 6,631 | 14 | % | $ | 93,010 | $ | 80,157 | $ | 12,853 | 16 | % | ||||||||||||||
Initial franchise and relicensing fees | 6,723 | 6,591 | 132 | 2 | % | 12,366 | 10,902 | 1,464 | 13 | % | ||||||||||||||||||||
Partner services | 4,900 | 4,596 | 304 | 7 | % | 7,682 | 7,236 | 446 | 6 | % | ||||||||||||||||||||
Marketing and reservation | 72,742 | 62,610 | 10,132 | 16 | % | 130,718 | 111,653 | 19,065 | 17 | % | ||||||||||||||||||||
Hotel operations | 1,180 | 1,141 | 39 | 3 | % | 2,160 | 2,061 | 99 | 5 | % | ||||||||||||||||||||
Other | 1,849 | 842 | 1,007 | 120 | % | 4,022 | 1,454 | 2,568 | 177 | % | ||||||||||||||||||||
Total revenues | 140,540 | 122,295 | 18,245 | 15 | % | 249,958 | 213,463 | 36,495 | 17 | % | ||||||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||||||||||||
Selling, general and administrative | 22,242 | 19,199 | 3,043 | 16 | % | 40,517 | 35,952 | 4,565 | 13 | % | ||||||||||||||||||||
Depreciation and amortization | 2,642 | 2,256 | 386 | 17 | % | 4,991 | 4,581 | 410 | 9 | % | ||||||||||||||||||||
Marketing and reservation | 72,742 | 62,610 | 10,132 | 16 | % | 130,718 | 111,653 | 19,065 | 17 | % | ||||||||||||||||||||
Hotel operations | 800 | 813 | (13 | ) | (2 | )% | 1,545 | 1,561 | (16 | ) | (1 | )% | ||||||||||||||||||
Total operating expenses | 98,426 | 84,878 | 13,548 | 16 | % | 177,771 | 153,747 | 24,024 | 16 | % | ||||||||||||||||||||
Operating income | 42,114 | 37,417 | 4,697 | 13 | % | 72,187 | 59,716 | 12,471 | 21 | % | ||||||||||||||||||||
OTHER INCOME AND EXPENSES: | ||||||||||||||||||||||||||||||
Interest expense | 4,044 | 3,872 | 172 | 4 | % | 8,084 | 7,479 | 605 | 8 | % | ||||||||||||||||||||
Interest and other investment (income) loss | 174 | (404 | ) | 578 | (143 | )% | (530 | ) | (273 | ) | (257 | ) | 94 | % | ||||||||||||||||
Equity in net income of affiliates | (130 | ) | (155 | ) | 25 | (16 | )% | (388 | ) | (354 | ) | (34 | ) | 10 | % | |||||||||||||||
Loss on extinguishment of debt | 342 | — | 342 | NM | 342 | — | 342 | NM | ||||||||||||||||||||||
Other | — | (53 | ) | 53 | (100 | )% | — | (186 | ) | 186 | (100 | )% | ||||||||||||||||||
Total other income and expenses, net | 4,430 | 3,260 | 1,170 | 36 | % | 7,508 | 6,666 | 842 | 13 | % | ||||||||||||||||||||
Income before income taxes | 37,684 | 34,157 | 3,527 | 10 | % | 64,679 | 53,050 | 11,629 | 22 | % | ||||||||||||||||||||
Income taxes | 13,548 | 12,609 | 939 | 7 | % | 22,878 | 19,503 | 3,375 | 17 | % | ||||||||||||||||||||
Net income | $ | 24,136 | $ | 21,548 | $ | 2,588 | 12 | % | $ | 41,801 | $ | 33,547 | $ | 8,254 | 25 | % | ||||||||||||||
Weighted average shares outstanding-basic | 65,356 | 64,452 | 65,070 | 64,297 | ||||||||||||||||||||||||||
Weighted average shares outstanding-diluted | 67,105 | 66,677 | 66,925 | 66,498 | ||||||||||||||||||||||||||
Basic earnings per share | $ | 0.37 | $ | 0.33 | $ | 0.04 | 12 | % | $ | 0.64 | $ | 0.52 | $ | 0.12 | 23 | % | ||||||||||||||
Diluted earnings per share | $ | 0.36 | $ | 0.32 | $ | 0.04 | 12.5 | % | $ | 0.62 | $ | 0.50 | $ | 0.12 | 24 | % | ||||||||||||||
Exhibit 2
Choice Hotels International, Inc.
Consolidated Balance Sheets
(In thousands)
| June 30, 2006 | December 31, 2005 | ||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 21,658 | $ | 16,921 | ||||
Accounts receivable, net | 40,724 | 37,155 | ||||||
Deferred income taxes | 2,620 | 2,616 | ||||||
Other current assets | 6,728 | 6,308 | ||||||
Total current assets | 71,730 | 63,000 | ||||||
Fixed assets and intangibles, net | 146,679 | 150,376 | ||||||
Receivable — marketing and reservation fees | 16,565 | 13,225 | ||||||
Investments, employee benefit plans, at fair value | 28,043 | 23,337 | ||||||
Other assets | 17,259 | 15,162 | ||||||
Total assets | 280,276 | 265,100 | ||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
Current portion of long-term debt | 146 | 146 | ||||||
Other current liabilities | 129,361 | 119,999 | ||||||
Total current liabilities | 129,507 | 120,145 | ||||||
Long-term debt | 224,331 | 273,972 | ||||||
Deferred compensation & retirement plan obligations | 35,147 | 28,987 | ||||||
Other liabilities | 9,314 | 9,172 | ||||||
Total liabilities | 398,299 | 432,276 | ||||||
Total shareholders’ deficit | (118,023 | ) | (167,176 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 280,276 | $ | 265,100 | ||||
Exhibit 3
Choice Hotels International, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30, | ||||||||
(In thousands)
| 2006 | 2005 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 41,801 | $ | 33,547 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 4,991 | 4,581 | ||||||
Gain on sale of assets | — | (186 | ) | |||||
Provision for bad debts | (127 | ) | 68 | |||||
Non-cash stock compensation | 5,550 | 2,561 | ||||||
Non-cash interest and other investment (income) loss | (107 | ) | 87 | |||||
Loss on extinguishment of debt | 342 | — | ||||||
Equity in net income of affiliates | (388 | ) | (354 | ) | ||||
Changes in assets and liabilities: | ||||||||
Receivables | (3,414 | ) | (2,778 | ) | ||||
Receivable - marketing and reservation fees, net | 670 | (5,754 | ) | |||||
Accounts payable | 8,404 | 10,109 | ||||||
Accrued expenses and other | (7,549 | ) | (2,240 | ) | ||||
Income taxes payable | 4,815 | 13,610 | ||||||
Deferred income taxes | (1,912 | ) | 309 | |||||
Deferred revenue | 3,603 | 4,255 | ||||||
Other current assets | (420 | ) | 449 | |||||
Other liabilities | 6,200 | 5,014 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES* | 62,459 | 63,278 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Investment in property and equipment | (4,045 | ) | (8,023 | ) | ||||
Proceeds from disposition of assets | — | 1,812 | ||||||
Issuance of notes receivable | (1,277 | ) | (449 | ) | ||||
Proceeds from sales of investments | 1,387 | 2,834 | ||||||
Purchases of investments | (5,784 | ) | (6,508 | ) | ||||
Other items, net | 232 | (441 | ) | |||||
NET CASH USED IN INVESTING ACTIVITIES | (9,487 | ) | (10,775 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Principal payments of long-term debt | (73 | ) | (73 | ) | ||||
Net repayments pursuant to revolving credit facility | (49,600 | ) | (23,704 | ) | ||||
Debt issuance costs | (472 | ) | (193 | ) | ||||
Excess tax benefits from stock-based compensation | 11,983 | — | ||||||
Purchase of treasury stock | (1,132 | ) | (18,843 | ) | ||||
Dividends paid | (16,925 | ) | (14,494 | ) | ||||
Proceeds from exercise of stock options | 7,984 | 9,255 | ||||||
NET CASH USED IN FINANCING ACTIVITIES | (48,235 | ) | (48,052 | ) | ||||
Net change in cash and cash equivalents | 4,737 | 4,451 | ||||||
Cash and cash equivalents at beginning of period | 16,921 | 28,518 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 21,658 | $ | 32,969 | ||||
| * | Net cash provided by operating activities for the six months ended June 30, 2005 includes approximately $6.0 million of excess tax benefits related to stock-based compensation. Effective January 1, 2006, the Company began reporting these excess tax benefits as cash flows from financing activities as a result of the adoption of Statement of Financial Accounting Standards No. 123R “Accounting for Stock-Based Compensation” |
EXHIBIT 4
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL OPERATING INFORMATION
DOMESTIC HOTEL SYSTEM
(UNAUDITED)
| For the Six Months Ended June 30, 2006 | For the Six Months Ended June 30, 2005 | Change | |||||||||||||||||||||||||
| Average Daily Rate | Occupancy | RevPAR | Average Daily Rate | Occupancy | RevPAR | Average Daily Rate | Occupancy | RevPAR | |||||||||||||||||||
COMFORT INN | $ | 69.76 | 57.9 | % | $ | 40.40 | $ | 65.58 | 55.7 | % | $ | 36.51 | 6.4 | % | 220 | bps | 10.7 | % | |||||||||
COMFORT SUITES | 81.30 | 64.3 | % | 52.24 | 75.65 | 61.5 | % | 46.52 | 7.5 | % | 280 | bps | 12.3 | % | |||||||||||||
QUALITY | 64.26 | 50.8 | % | 32.63 | 62.17 | 49.5 | % | 30.78 | 3.4 | % | 130 | bps | 6.0 | % | |||||||||||||
CLARION | 77.11 | 48.1 | % | 37.11 | 71.87 | 47.8 | % | 34.35 | 7.3 | % | 30 | bps | 8.0 | % | |||||||||||||
SLEEP | 64.64 | 58.6 | % | 37.87 | 60.39 | 56.4 | % | 34.06 | 7.0 | % | 220 | bps | 11.2 | % | |||||||||||||
MAINSTAY | 66.48 | 63.7 | % | 42.33 | 62.37 | 60.6 | % | 37.80 | 6.6 | % | 310 | bps | 12.0 | % | |||||||||||||
ECONO LODGE | 50.52 | 43.3 | % | 21.89 | 48.13 | 43.6 | % | 21.00 | 5.0 | % | -30 | bps | 4.2 | % | |||||||||||||
RODEWAY | 48.57 | 41.9 | % | 20.33 | 46.22 | 43.4 | % | 20.05 | 5.1 | % | -150 | bps | 1.4 | % | |||||||||||||
TOTAL DOMESTIC SYSTEM* | $ | 67.21 | 53.7 | % | $ | 36.12 | $ | 63.51 | 52.5 | % | $ | 33.32 | 5.8 | % | 120 | bps | 8.4 | % | |||||||||
| For the Three Months Ended June 30, 2006 | For the Three Months Ended June 30, 2005 | Change | |||||||||||||||||||||||||
| Average Daily Rate | Occupancy | RevPAR | Average Daily Rate | Occupancy | RevPAR | Average Daily Rate | Occupancy | RevPAR | |||||||||||||||||||
COMFORT INN | $ | 71.84 | 64.0 | % | $ | 45.97 | $ | 67.32 | 61.7 | % | $ | 41.51 | 6.7 | % | 230 | bps | 10.7 | % | |||||||||
COMFORT SUITES | 83.04 | 69.5 | % | 57.72 | 77.37 | 67.3 | % | 52.09 | 7.3 | % | 220 | bps | 10.8 | % | |||||||||||||
QUALITY | 66.18 | 56.5 | % | 37.36 | 64.39 | 55.0 | % | 35.44 | 2.8 | % | 150 | bps | 5.4 | % | |||||||||||||
CLARION | 77.77 | 53.5 | % | 41.63 | 73.33 | 53.8 | % | 39.46 | 6.1 | % | -30 | bps | 5.5 | % | |||||||||||||
SLEEP | 66.69 | 65.2 | % | 43.47 | 62.49 | 62.5 | % | 39.07 | 6.7 | % | 270 | bps | 11.3 | % | |||||||||||||
MAINSTAY | 67.43 | 70.3 | % | 47.39 | 63.75 | 66.7 | % | 42.55 | 5.8 | % | 360 | bps | 11.4 | % | |||||||||||||
ECONO LODGE | 52.09 | 47.5 | % | 24.75 | 49.68 | 48.4 | % | 24.05 | 4.9 | % | -90 | bps | 2.9 | % | |||||||||||||
RODEWAY | 49.98 | 44.5 | % | 22.23 | 46.93 | 47.2 | % | 22.15 | 6.5 | % | -270 | bps | 0.4 | % | |||||||||||||
TOTAL DOMESTIC SYSTEM* | $ | 69.01 | 59.2 | % | $ | 40.87 | $ | 65.30 | 58.1 | % | $ | 37.95 | 5.7 | % | 110 | bps | 7.7 | % | |||||||||
| * | Amounts exclude Suburban activity from January 1, 2006 through June 30, 2006 because comparable pre-acquisition data for Q2 2005 is not available |
| For the Quarter Ended | For the Six Months Ended | |||||||||||
| 6/30/2006 | 6/30/2005 | 6/30/2006 | 6/30/2005 | |||||||||
System-wide effective royalty rate | 4.12 | % | 4.09 | % | 4.10 | % | 4.08 | % | ||||
EXHIBIT 5
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
(UNAUDITED)
| June 30, 2006 | June 30, 2005 | Variance | ||||||||||||||||||
| Hotels | Rooms | Hotels | Rooms | Hotels | Rooms | % | % | |||||||||||||
COMFORT INN | 1,411 | 110,440 | 1,448 | 114,023 | (37 | ) | (3,583 | ) | (2.6 | )% | (3.1 | )% | ||||||||
COMFORT SUITES | 417 | 32,786 | 402 | 31,648 | 15 | 1,138 | 3.7 | % | 3.6 | % | ||||||||||
QUALITY | 692 | 68,407 | 612 | 61,783 | 80 | 6,624 | 13.1 | % | 10.7 | % | ||||||||||
CLARION | 157 | 23,262 | 155 | 23,543 | 2 | (281 | ) | 1.3 | % | (1.2 | )% | |||||||||
SLEEP | 320 | 24,133 | 317 | 24,169 | 3 | (36 | ) | 0.9 | % | (0.1 | )% | |||||||||
MAINSTAY | 27 | 2,047 | 28 | 2,189 | (1 | ) | (142 | ) | (3.6 | )% | (6.5 | )% | ||||||||
SUBURBAN | 64 | 8,439 | — | — | 64 | 8,439 | NM | NM | ||||||||||||
ECONO LODGE | 825 | 50,673 | 795 | 49,741 | 30 | 932 | 3.8 | % | 1.9 | % | ||||||||||
RODEWAY | 203 | 12,469 | 169 | 10,381 | 34 | 2,088 | 20.1 | % | 20.1 | % | ||||||||||
DOMESTIC FRANCHISES | 4,116 | 332,656 | 3,926 | 317,477 | 190 | 15,179 | 4.8 | % | 4.8 | % | ||||||||||
INTERNATIONAL FRANCHISES | 1,168 | 98,818 | 1,161 | 97,211 | 7 | 1,607 | 0.6 | % | 1.7 | % | ||||||||||
TOTAL FRANCHISES | 5,284 | 431,474 | 5,087 | 414,688 | 197 | 16,786 | 3.9 | % | 4.0 | % | ||||||||||
EXHIBIT 6
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL INFORMATION BY BRAND
DEVELOPMENT RESULTS — NEW HOTEL CONTRACTS
(UNAUDITED)
For the Six Months Ended June 30, 2006 | For the Six Months Ended June 30, 2005 | % Change | |||||||||||||||||||
| New Construction | Conversion | Total | New Construction | Conversion | Total | New Construction | Conversion | Total | |||||||||||||
COMFORT INN | 24 | 18 | 42 | 20 | 25 | 45 | 20 | % | (28 | )% | (7 | )% | |||||||||
COMFORT SUITES | 41 | 2 | 43 | 29 | 3 | 32 | 41 | % | (33 | )% | 34 | % | |||||||||
QUALITY | 5 | 57 | 62 | 2 | 72 | 74 | 150 | % | (21 | )% | (16 | )% | |||||||||
CLARION | 1 | 18 | 19 | 1 | 8 | 9 | 0 | % | 125 | % | 111 | % | |||||||||
SLEEP | 10 | — | 10 | 22 | 1 | 23 | (55 | )% | (100 | )% | (57 | )% | |||||||||
MAINSTAY | 3 | 1 | 4 | 9 | — | 9 | (67 | )% | NM | (56 | )% | ||||||||||
SUBURBAN | 6 | 2 | 8 | — | — | — | NM | NM | NM | ||||||||||||
CAMBRIA SUITES | 15 | — | 15 | 6 | — | 6 | 150 | % | NM | 150 | % | ||||||||||
ECONO LODGE | — | 23 | 23 | 4 | 49 | 53 | (100 | )% | (53 | )% | (57 | )% | |||||||||
RODEWAY | 1 | 48 | 49 | — | 25 | 25 | NM | 92 | % | 96 | % | ||||||||||
TOTAL DOMESTIC SYSTEM | 106 | 169 | 275 | 93 | 183 | 276 | 14 | % | (8 | )% | (0 | )% | |||||||||
For the Three Months Ended June 30, 2006 | For the Three Months Ended June 30, 2005 | % Change | |||||||||||||||||||
| New Construction | Conversion | Total | New Construction | Conversion | Total | New Construction | Conversion | Total | |||||||||||||
COMFORT INN | 9 | 5 | 14 | 12 | 15 | 27 | (25 | )% | (67 | )% | (48 | )% | |||||||||
COMFORT SUITES | 29 | 2 | 31 | 16 | 3 | 19 | 81 | % | (33 | )% | 63 | % | |||||||||
QUALITY | 3 | 32 | 35 | 1 | 42 | 43 | 200 | % | (24 | )% | (19 | )% | |||||||||
CLARION | — | 9 | 9 | — | 5 | 5 | NM | 80 | % | 80 | % | ||||||||||
SLEEP | 7 | — | 7 | 15 | — | 15 | (53 | )% | NM | (53 | )% | ||||||||||
MAINSTAY | 1 | — | 1 | 9 | — | 9 | (89 | )% | NM | (89 | )% | ||||||||||
SUBURBAN | 3 | 2 | 5 | — | — | — | NM | NM | NM | ||||||||||||
CAMBRIA | 5 | — | 5 | 5 | — | 5 | 0 | % | NM | 0 | % | ||||||||||
ECONO LODGE | — | 14 | 14 | 1 | 33 | 34 | (100 | )% | (58 | )% | (59 | )% | |||||||||
RODEWAY | 1 | 33 | 34 | — | 16 | 16 | NM | 106 | % | 113 | % | ||||||||||
TOTAL DOMESTIC SYSTEM | 58 | 97 | 155 | 59 | 114 | 173 | (2 | )% | (15 | )% | (10 | )% | |||||||||
EXHIBIT 7
CHOICE HOTELS INTERNATIONAL, INC.
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
(UNAUDITED)
CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(dollar amounts in thousands)
| 2006 | 2005 | 2006 | 2005 | ||||||||||||
Franchising Revenues: | ||||||||||||||||
Total Revenues | $ | 140,540 | $ | 122,295 | $ | 249,958 | $ | 213,463 | ||||||||
Adjustments: | ||||||||||||||||
Marketing and reservation revenues | (72,742 | ) | (62,610 | ) | (130,718 | ) | (111,653 | ) | ||||||||
Hotel Operations | (1,180 | ) | (1,141 | ) | (2,160 | ) | (2,061 | ) | ||||||||
Franchising Revenues | $ | 66,618 | $ | 58,544 | $ | 117,080 | $ | 99,749 | ||||||||
Franchising Margins: | ||||||||||||||||
Operating Margin: | ||||||||||||||||
Total Revenues | $ | 140,540 | $ | 122,295 | $ | 249,958 | $ | 213,463 | ||||||||
Operating Income | $ | 42,114 | $ | 37,417 | $ | 72,187 | $ | 59,716 | ||||||||
Operating Margin | 30.0 | % | 30.6 | % | 28.9 | % | 28.0 | % | ||||||||
Franchising Margin: | ||||||||||||||||
Franchising Revenues | $ | 66,618 | $ | 58,544 | $ | 117,080 | $ | 99,749 | ||||||||
Operating Income | $ | 42,114 | $ | 37,417 | $ | 72,187 | $ | 59,716 | ||||||||
Less: Hotel Operations | 380 | 328 | 615 | 500 | ||||||||||||
| $ | 41,734 | $ | 37,089 | $ | 71,572 | $ | 59,216 | |||||||||
Franchising Margins | 62.6 | % | 63.4 | % | 61.1 | % | 59.4 | % | ||||||||
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
(In thousands, except per share amounts)
| 2006 | 2005 | 2006 | 2005 | ||||||||
Net Income | $ | 24,136 | $ | 21,548 | $ | 41,801 | $ | 33,547 | ||||
Adjustments: | ||||||||||||
Loss on Debt Extinguishment Costs | 217 | — | 217 | — | ||||||||
Adjusted Net Income | $ | 24,353 | $ | 21,548 | $ | 42,018 | $ | 33,547 | ||||
Weighted average shares outstanding-diluted | 67,105 | 66,677 | 66,925 | 66,498 | ||||||||
Diluted Earnings Per Share | $ | 0.36 | $ | 0.32 | $ | 0.62 | $ | 0.50 | ||||
Adjustments: | ||||||||||||
Loss on Debt Extinguishment Costs | — | — | 0.01 | — | ||||||||
Adjusted Diluted Earnings Per Share (EPS) | $ | 0.36 | $ | 0.32 | $ | 0.63 | $ | 0.50 | ||||
EBITDA Reconciliation
(in millions)
| Q2 2006 Actuals | Q2 2005 Actuals | Full-Year 2006 Outlook | ||||||
Operating Income (per GAAP) | $ | 42.1 | $ | 37.4 | $ | 164.9 | |||
Depreciation and amortization | 2.6 | 2.3 | 10.1 | ||||||
Earnings before interest, taxes, depreciation & amortization (non-GAAP) | $ | 44.7 | $ | 39.7 | $ | 175.0 | |||