SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED AUGUST 31, 1997 COMMISSION FILE NO. 1-11915
CHOICE HOTELS INTERNATIONAL, INC.
10750 COLUMBIA PIKE
SILVER SPRING, MD. 20901
(301) 979-5000
Delaware 53-1985619
------------------------ -------------------------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
-------------------------------------------
(Former name, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
----- -----
SHARES OUTSTANDING
CLASS AT AUGUST 31, 1997
- ----------------------- ------------------------
Common Stock, $0.01
par value per share 59,672,784
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CHOICE HOTELS INTERNATIONAL, INC.
INDEX
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PAGE NO.
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PART I. FINANCIAL INFORMATION:
Consolidated Balance Sheets -
August 31, 1997 (Unaudited) and May 31, 1997 3
Consolidated Statements of Income -
Three months ended August 31, 1997 and August 31, 1996
(Unaudited) 5
Consolidated Statements of Cash Flows -
Three months ended August 31, 1997 and August 31, 1996 (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited) 7
Management's Discussion and Analysis of Results of
Operations and Financial Condition 10
PART II. OTHER INFORMATION AND SIGNATURE 14
2
PART I. FINANCIAL INFORMATION
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
AUGUST 31,
1997 MAY 31,
ASSETS (UNAUDITED) 1997
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 8,199 $ 7,033
Receivables (net of allowance
for doubtful accounts of
$637 and $341, respectively) 10,083 8,659
Inventories 581 600
Prepaid expenses 588 335
Current deferred income tax benefit - 1,219
Other 5,926 4,634
Net investment in discontinued
operations 56,892 59,372
-------- --------
Total current assets 82,269 81,852
PROPERTY AND EQUIPMENT, AT COST, NET OF
ACCUMULATED DEPRECIATION 351,528 338,419
OTHER ASSETS 5,272 5,978
-------- --------
Total assets $439,069 $426,249
======== ========
The accompanying notes are an integral part of these Consolidated Balance
Sheets.
3
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
AUGUST 31, MAY 31,
1997 1997
LIABILITIES & STOCKHOLDERS' EQUITY (UNAUDITED)
----------- ---------
CURRENT LIABILITIES
Current portion long-term debt $ 27,797 $ 27,919
Accounts payable 25,237 24,631
Accrued expenses 12,773 15,968
Income taxes payable 7,935 --
-------- --------
Total current liabilities 73,742 68,518
-------- --------
MORTGAGES AND OTHER LONG-TERM DEBT 198,733 195,540
NOTES PAYABLE TO MANOR CARE, INC. 37,022 37,022
DEFERRED INCOME TAXES AND OTHER 750 682
LIABILITIES
-------- --------
Total liabilities 310,247 301,762
-------- --------
STOCKHOLDERS' EQUITY
Common stock 640 639
Additional paid-in-capital 167,580 167,163
Retained earnings 33,190 17,075
Cumulative translation adjustment (8,662) (7,018)
Treasury stock, at cost (63,926) (53,372)
-------- --------
Total stockholders' equity 128,822 124,487
-------- --------
Total liabilities & stockholders'
equity $439,069 $426,249
======== ========
The accompanying notes are an integral part of these Consolidated Balance
Sheets.
4
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
----------------------
AUGUST 31, AUGUST 31,
1997 1996
(UNAUDITED)
---------- ----------
REVENUES
Rooms $48,039 $43,424
Food and Beverage 3,634 3,197
Other 2,425 3,032
------- -------
Total revenues 54,098 49,653
------- -------
OPERATING EXPENSES
Departmental Expenses
Rooms 15,327 14,971
Food and Beverage 2,970 2,678
Other 742 852
Undistributed Operating Expenses
Administrative and General 4,108 4,589
Marketing 3,679 3,673
Utility Costs 2,541 2,278
Property Operation and Maintenance 2,522 2,334
Property Taxes, Rent and Insurance 1,795 1,451
Depreciation and Amortization 5,387 4,388
Corporate 3,283 1,585
------- -------
Total operating expenses 42,354 38,799
------- -------
OPERATING INCOME 11,744 10,854
------- -------
INTEREST EXPENSE 4,500 3,380
------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 7,244 7,474
Income Taxes 2,982 3,077
------- -------
INCOME FROM CONTINUING OPERATIONS 4,262 4,397
DISCONTINUED OPERATIONS: Income from
operations of discontinued franchising
business (less applicable income taxes
of $8,295 and $7,562, respectively) 11,853 10,838
------- -------
NET INCOME $16,115 $15,235
======= =======
Pro forma weighted average common shares
outstanding 60,157 63,000
======= =======
Earnings per share from continuing operations $0.07 $0.07
======= =======
Earnings per share from discontinued operations $0.20 $0.17
======= =======
The accompanying notes are an integral part of these Consolidated Statements of
Income.
5
CHOICE HOTELS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
THREE MONTHS ENDED
----------------------
AUGUST 31, AUGUST 31,
1997 1996
(UNAUDITED)
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income from continuing operations $ 4,262 $ 4,397
Net income from discontinued operations 11,853 10,838
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and amortization 5,387 4,388
Provision for bad debts 116 93
Decrease in deferred taxes 1,219 -
Changes in assets and liabilities:
Change in receivables (1,540) (2,625)
Change in inventories and other current assets (1,526) 279
Change in current liabilities (2,589) 1,271
Change in income taxes payable 7,935 450
Change in other liabilities (1,575) (1,896)
Change in net investment in discontinued operations 2,480 (3,426)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 26,022 13,769
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Investment in property and equipment (18,496) (14,959)
Other items, net 706 (172)
-------- --------
NET CASH UTILIZED BY INVESTING ACTIVITIES (17,790) (15,131)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from mortgages and other long-term debt 13,500 850
Principal payments of debt (10,429) (590)
Issuance of common stock 417 -
Purchases of treasury stock (10,554) -
Cash transfers from Manor Care, Inc., net - 2,388
-------- --------
NET CASH (UTILIZED BY) PROVIDED BY
FINANCING ACTIVITIES (7,066) 2,648
-------- --------
Net change in cash and cash equivalents 1,166 1,286
Cash and cash equivalents, beginning of period 7,033 1,436
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,199 $ 2,722
======== ========
The accompanying notes are an integral part of these Consolidated Statements
of Cash Flows.
6
CHOICE HOTELS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying consolidated financial statements of Choice Hotels
International, Inc. and subsidiaries (the "Company") have been prepared by the
Company without audit. Certain information and footnote disclosures normally
included in financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes the
disclosures made are adequate to make the information presented not misleading.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements for the fiscal year ended May 31, 1997 and
notes thereto included in the Company's Form 10-K, dated August 15, 1997 and the
Notice of Annual Meeting and Proxy Statement dated August 15, 1997. Certain
reclassifications have been made to the prior year amounts to conform to current
period presentation.
In the opinion of the Company, the accompanying unaudited consolidated financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position of Choice Hotels
International, Inc. and subsidiaries as of August 31, 1997 and May 31, 1997, and
the results of operations for the three months ended August 31, 1997 and August
31, 1996, respectively, and cash flows for the three months ended August 31,
1997 and August 31, 1996, respectively. Interim results are not necessarily
indicative of fiscal year performance because of the impact of seasonal and
short-term variations.
2. On March 7, 1996, Manor Care, Inc. ("Manor Care") announced its intention to
proceed with the separation of its lodging business from its health care
business via a spin-off of its lodging business (the "Distribution"). On
September 30, 1996 the Board of Directors of Manor Care declared a special
dividend to its shareholders of one share of common stock of the Company for
each share of Manor Care Stock, and the Board set the Record Date and the
Distribution Date. The Stock Distribution was made on November 1, 1996 to
holders of record of Manor Care's Common Stock on October 10, 1996.
The Distribution separated the lodging and health care businesses of Manor Care
into two public corporations. The operations of the Company consist principally
of the hotel franchise operations and the owned and managed hotel operations
formerly conducted by Manor Care, Inc. directly or through its subsidiaries (the
"Lodging Business").
On November 1, 1996, concurrent with the Distribution, the Company changed its
name from Choice Hotels Holdings, Inc. to Choice Hotels International, Inc. and
the Company's franchising subsidiary, formerly named Choice Hotels
International, Inc., changed its name to Choice Hotels Franchising, Inc.
("Franchising").
3. On April 29, 1997, the Company's Board of Directors announced its intention
to separate the Company's franchising business from its owned hotel business.
On September 16, 1997 the Board of Directors and shareholders of the Company
approved the separation of the business via a spin-off of the franchising
business, along with the Company's European hotel and franchising operations, to
its shareholders. The Board set October 15, 1997 as the date of distribution
and on that date, Company shareholders will receive one share in Franchising (to
be renamed "Choice Hotels International, Inc.") for every share of Company stock
held on October 7, 1997 (the date of record). Concurrent with the October 15,
1997 distribution date, the Company (to be renamed "Sunburst Hospitality
Corporation") will effect a one-for-three reverse stock split of its common
stock.
In connection with the spin-off, the Company has presented the franchising
business as a discontinued operation in the condensed consolidated financial
statements. Although the Company's European hotel operations are being
distributed to shareholders along with the franchising business, generally
accepted accounting principles do not permit presenting this operation as
discontinued. The total European hotel operations earnings before interest,
depreciation, and amortization for the periods ending August 31, 1997 and August
31, 1996 are $114,000 and $551,000, respectively.
7
4. Earnings per share for the period ended August 31, 1996 is calculated on a
pro forma basis using the weighted average number of outstanding common shares
for Manor Care as the Company was a subsidiary of Manor Care at that time.
5. As of August 31, 1997, the Company had franchise agreements with hotels with
292,629 rooms operating in 34 countries principally under the following brand
names: Comfort, Clarion, Sleep, Quality, MainStay, Rodeway and Econo Lodge.
The Company owns and manages, under its seven principal brand names, 85 hotels
with rooms in 25 states, as well as in Germany, France and England.
6. Income statement activity for the discontinued franchise business is as
follows (in thousands):
August 31, 1997 August 31, 1996
--------------- ---------------
Royalty fees $30,686 $27,288
Marketing and reservation fees 31,275 29,115
Product sales 5,843 8,093
Initial fees 2,097 3,357
Other revenue 1,851 2,378
------- -------
Total revenues 71,752 70,231
Marketing and reservation costs 30,252 28,792
Selling, general and administrative 10,494 10,561
Product cost of sales 5,463 7,439
Depreciation and amortization 3,079 2,552
------- -------
Total operating costs 49,288 49,344
Income before interest and taxes 22,464 20,887
Interest expense, net 2,316 2,487
------- -------
Pretax income 20,148 18,400
Income taxes 8,295 7,562
------- -------
Net income of discontinued operations 11,853 10,838
======= =======
8
7. Net investment in discontinued operations is composed of the following:
August 31, 1997 May 31, 1997
--------------- ------------
Cash $ 3,540 $ 3,791
Accounts receivable and other 36,193 28,333
Property, plant and equipment 32,541 31,825
Goodwill, net 69,464 69,939
Franchise rights, net 49,779 50,504
Investment in Friendly, PLC 16,475 17,161
Other assets 6,598 5,906
-------- --------
Total assets 214,590 207,458
======== ========
Accounts payable and other 32,342 32,142
Long term debt 120,363 111,522
Other liabilities 4,993 4,422
-------- --------
Total liabilities 157,698 148,086
Net investment and advances
from Parent 56,892 59,372
-------- --------
Total liabilities and equity $214,590 $207,458
======== ========
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION
--------------------------------------------------------------------------
The Company recorded net income for the three-month period ended August 31, 1997
of $16.1 million, an increase of 5.9% over August 31, 1996 results of $15.2
million. The August 31, 1996 results are prepared as if the Company was a
separate subsidiary of Manor Care. Consequently, the August 31, 1996 results
do not reflect certain costs, specifically charges from the former parent, Manor
Care, and costs necessary to administer a public company, in the income
statement. These costs approximate $1.5 million pretax for the period ended
August 31, 1997. Exclusive of these costs, net income increased 12.4% over the
prior period. The increase in net income for the period is primarily
attributable to an increase in hotel revenue due to improved performance growth
in the number of rooms operated, continued maturation of owned hotels and an
increase in franchise revenue due to improved RevPAR of the franchised
properties and continued system growth.
Hotel Operations
- ----------------
The Company's continuing business, the hotel operations, consists primarily of
guest room revenue, meeting room revenue and food-and-beverage revenue from
owned and operated hotels. The Company's hotel operations revenues were $54.1
million for the three months ended August 31, 1997, up 8.9% from $49.7 million
for the three months ended August 31, 1996. The increases in revenue were
primarily the result of additional room capacity achieved through hotel
acquisitions and the construction of new hotels. Total number of rooms
increased 10.1% from 9,383 in the first quarter of 1997 to 10,330 in the first
quarter of 1998. Overall average daily room rates increased 6.0% for the three
months ended August 31, 1996 as compared to the three months ended August 31,
1997. For the same period, domestic RevPAR increased to $47.74 from $45.48, an
improvement of 5.0%. An increase in food-and-beverage sales of $437,000 for the
three months ended August 31, 1997 also contributed to revenue growth.
The Company's hotel operations expenses (which exclude depreciation and
amortization and corporate expenses) increased 2.6% for the three months ended
August 31, 1996 as compared to the three months ended August 31, 1997. Hotel
operating margins improved to 37.7% in the first quarter of fiscal 1998 compared
to 33.9% in the first quarter of 1997. The improvement relates to the growth in
the hotel operations and the improved RevPAR of the properties.
The increase in corporate expense reflects approximately $1.0 million of
separate company charges directly incurred by the Company since its separation
from Manor Care.
Discontinued Operations (Franchising)
- -------------------------------------
In operating the franchise business, the Company collects marketing and
reservation fees and assessments from its franchisees. The Company is
contractually obligated to disburse these fees for marketing and reservation
activities to be provided on behalf of its franchisees. The Company also
provides certain services to its franchisees, specifically a group purchasing
program, where the Company utilizes bulk purchasing power to obtain favorable
pricing from third-party vendors for franchisees. This program is provided to
the franchisees as a service and is not designed to be a major component of the
Company's profitability. Management therefore analyzes its franchise business
based on revenues net of marketing and reservation fees and product sales ("net
franchise revenues").
Net franchise revenues include base royalty fees, initial fees earned on
contracts signed and other revenues including strategic vendor fees. Net
franchise revenues are dependent upon additional franchise properties in the
system as well as the underlying performance of the hotels for continued growth.
The key industry standard for measuring operating performance is revenue per
available room, or RevPAR, which is calculated by multiplying the percentage of
occupied rooms by the average daily room rate realized.
The Company's net franchise revenues were $34.7 million for the three months
ended August 31, 1997 and $33.0 million for the three months ended August 31,
1996.
10
Total net franchise revenues are computed as follows:
(In millions)
August 31, 1997 August 31, 1996
---------------- ----------------
Total Franchise revenues $ 71.8 $ 70.2
Less: Marketing and reservation fees (31.3) (29.1)
Product sales (5.8) (8.1)
------ ------
Total net franchise revenues $ 34.7 $ 33.0
====== ======
Royalties increased $3.4 million to $30.7 million in 1997 from 27.3 million in
1996, an increase of 12.5%. The increase in royalties is attributable to a net
increase of 313 franchisees during the period representing an additional 25,061
rooms added to the system, an improvement in domestic RevPAR of 2.1% and an
increase in the effective royalty rate of the domestic hotel system to 3.46%
from 3.42%. Initial fee revenue generated from domestic franchise contracts
signed decreased to $2.1 million from $3.4 million in 1996. Total franchise
agreements signed in the first quarter of fiscal year 1998 were 135, as compared
to 181 for the first quarter of fiscal year 1997. The decline in initial fees is
partly a result of the Company's sales force reorganization effected during the
first quarter of fiscal year 1998 and the resulting temporary displacement of
the sales force. The reorganization of the regional marketing management sales
and support force was completed in September of 1997.
The cost to operate the franchising business is reflected in selling, general
and administrative costs. Total selling, general and administrative expenses of
the franchise business remained stable between years. As a percentage of total
net franchising revenues, total franchising selling, general and administrative
expenses declined to 30.3% for the first quarter of fiscal year 1998 as compared
to 32.1% for fiscal year 1997. Fiscal year 1998 costs also include
approximately $500,000 of expenses resulting from the Distribution from Manor
Care. Excluding these costs, as a percentage of net franchising revenues,
selling, general and administrative expenses declined to 28.8% in first quarter
of fiscal year 1998 from 32.1% in the first quarter of fiscal year 1997. The
improvement in the franchising margins primarily relates to the economies of
scale generated from operating a larger franchisee base.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash provided by operating activities was $26.0 million for the first
quarter of fiscal year 1998, an increase of $12.2 million from $13.8 million in
fiscal year 1997. At August 31, 1997, the Company had $384 million of long-term
debt outstanding.
Total investment in property plant and equipment was $18.5 million for the first
quarter of 1998. These expenditures primarily relate to the continued
development of the Sleep Inn and MainStay hotels to be operated by Sunburst
Hospitality.
During the period ended August 31, 1997, the Company repurchased 588,931 shares
of its outstanding common stock at a total cost of $10.6 million. Total shares
repurchased are 4,273,031 at a total cost of $63.9 million as of August 31,
1997.
In connection with the distribution, management has executed agreements with its
lenders that will provide adequate financing for both businesses post-
distribution. The total debt outstanding of $384 million will be allocated to
the two businesses. The Note Payable of approximately $115.7 million which is
payable to Manor Care will be satisfied and discharged and all outstanding bank
obligations, excluding capital leases and the $116 million collateralized
mortgage backed securities, will be refinanced. In addition, Franchising will
settle certain trade payables and payroll obligations incurred by Choice prior
to the Distribution date subject to the net equity of Franchising being no less
than $40 million. To provide a perspective on the financing of each business
post distribution, an analysis of each company's debt structure follows.
11
Sunburst Hospitality
- --------------------
At the time of Distribution, Sunburst will have approximately $250 million of
long-term indebtedness consisting of the following (i) approximately $116
million of collateralized mortgage backed securities; (ii) a Subordinated Term
Note payable to Choice Hotels International of $115 million; (iii) approximately
$17 million of senior bank borrowings drawn on a revolving credit facility to be
effective on the Distribution date; and, (iv) $2 million of lease obligations.
The Subordinated Term Note will have maturity of five years and will accrue
interest at a rate equal to 500 basis points above the interest rate on a five
year U.S. Treasury Note. The interest rate will be determined at the close of
business on October 15, 1997. The Subordinated Term Note and accrued interest
are payable at the end of five years. The Subordinated Term Note does not have
any prepayment penalties.
Sunburst has secured commitments from its lenders for a three year, $80 million
revolving credit facility (the "Credit Facility"). The Credit Facility includes
customary financial and other covenants that will require the maintenance of
certain ratios including maximum leverage, minimum net worth and interest
coverage and will restrict Sunburst's ability to make certain investments,
repurchase stock, incur debt, and dispose of assets. At the Company's option,
the interest rate may be based on LIBOR, a certificate of deposit rate or an
alternate base rate (as defined), plus a facility fee percentage. The rate is
determined based on the Company's consolidated leverage ratio at the time of
borrowing. Interest on the initial borrowings is expected to be approximately
225 basis points over the three-month LIBOR rate. The Credit Facility is
expected to close on the date hereof.
Sunburst believes that cash flows from operations and the new financing obtained
is adequate in the short-term to meet its immediate capital expenditure,
operating and debt service requirements. Sunburst's management is currently
considering options, including additional debt or equity financing to address
its capital development and debt service needs for calendar year 1999 and going
forward.
Choice Hotels International (formerly "Choice Hotels Franchising, Inc.")
- ------------------------------------------------------------------------
At the time of distribution, Franchising will have approximately $140 million of
existing indebtedness plus $115 million of additional borrowings to be used to
fund the $115 million Subordinated Term Note to Sunburst. The total
indebtedness of $255 million will consist of approximately i) $240 million of
senior bank borrowings and (ii) $15 million of capital lease obligations.
Franchising has secured a five year $300 million revolving credit facility (the
"Facility"). The Facility includes customary financial and other covenants that
will require the maintenance of certain ratios including maximum leverage,
minimum net worth and interest coverage and restrict Franchising's ability to
make certain investments, repurchase stock, incur debt, and dispose of assets.
At the Company's option, the interest rate may be based on LIBOR, a certificate
of deposit rate or an alternate base rate(as defined), plus a facility fee
percentage. The rate is determined based on the Company's consolidated
leverage ratio at time of borrowing. Interest on the initial borrowings is
expected to be approximately 57.5 basis points over the three-month LIBOR rate.
Franchising's Facility is expected to close on the date hereof.
Franchising believes that cash flows from operations and available financing
capacity is adequate to meet the expected operating and debt service
requirements for the business for the immediate future.
FORWARD-LOOKING STATEMENTS
- --------------------------
The statements contained in this document that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995.
A number of important factors could cause the Company's actual results for
future periods to differ materially from those expressed in any forward-looking
statements made by, or on behalf of the Company.
12
Certain statements contained in this Form 10-Q, including those in the section
entitled "Management's Discussion and Analysis of Operating Results and
Financial Condition," contain forward-looking information that involves risk and
uncertainties, including the Company's plans to monetize its capital investment
in owned hotels. Actual future results and trends may differ materially
depending on a variety of factors discussed in the "Risk Factors" section
included in the Company's Form 10 Registration Statement, including the
Information Statement, dated October 15, 1996 including (a) the Company's
success in implementing its business strategy, including its success in
arranging financing where required, (b) the nature and extent of future
competition, and (C) political, economic and demographic developments in
countries where the Company does business or in the future may do business.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to revise or update these forward-looking statements.
13
PART II OTHER INFORMATION
-------------------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
The Company is not party to any litigation, other than routine litigation
incidental to the business of the Company. None of such litigation, either
individually or in the aggregate, is expected to be material to the business,
financial condition or results of operations of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
Exhibit 27.01 - Financial Data Schedule - August 31, 1997
(b) The following reports were filed pertaining to the quarter ended August
31,1997.
Form 8-K dated June 26, 1997 - Discussion of Management's Strategic Plan.
Form 8-K dated August 8, 1997 - Reclassification of quarterly results for
fiscal year 1997.
Form 8-K dated October 1, 1997 - Announcement of both the Company and
Franchising's change in its fiscal year end. Also, an announcement of the
Board's acceptance of the spinoff.
14
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
CHOICE HOTELS INTERNATIONAL, INC.
Date: October 15, 1997 /s/ James A. MacCutcheon
---------------- -----------------------------
By: James A. MacCutcheon
Executive Vice President,
Chief Financial Officer and
Treasurer
15