Comfort Inn 2005 Annual Report Download - page 21

other covenants that require the maintenance of certain ratios including maximum leverage and interest coverage.
As of December 31, 2005 the Company was in compliance with all covenants under the Revolver. The Revolver
restricts the Company’s ability to make certain investments, incur certain debt, and dispose of assets, among
other restrictions. As of December 31, 2005, the Company had $173.7 million of revolving loans outstanding
pursuant to the Revolver.
The proceeds from the Revolver are used for general corporate purposes, including working capital, debt
repayment, stock repurchases and investments.
In 1998, the Company completed a $100 million senior unsecured note offering (“the Notes”), bearing a
coupon rate of 7.13% with an effective rate of 7.22%. The Notes will mature on May 1, 2008, with interest on the
Notes to be paid semi-annually. The Company used the net proceeds from the offering of approximately
$99 million to repay amounts outstanding under the Company’s previous credit facility. The Notes contain a call
provision that would require the Company to pay a premium if the Notes were redeemed prior to their maturity.
At December 31, 2005, the call provision would have resulted in a premium of $6.0 million.
The Company has a line of credit with a bank providing up to an aggregate of $10 million of borrowings
which is due upon demand. The line of credit ranks pari-pasu (or equally) with the Revolver. Borrowings under
the line of credit bear interest at rates established at the time of the borrowings based on prime minus 175 basis
points. As of December 31, 2005, no amounts were outstanding pursuant to this line of credit.
As of December 31, 2005, the total long-term debt outstanding for the Company was $274.1 million, of
which $0.1 million was scheduled to mature in the twelve months ending December 31, 2006.
On September 14, 2005, the Company’s board of directors declared a two-for-one stock split effected in the
form of a stock dividend. The stock split shares were distributed on October 21, 2005 to shareholders of record
on October 7, 2005. Share data and earnings per share data referenced in MD&A reflect the stock split, applied
retroactively, to all periods presented.
Through December 31, 2005, the Company had purchased 33.6 million shares (including 33.0 million prior
to the 2 for 1 stock split effected in October 2005) of its common stock under its share repurchase program at a
total cost of $711.9 million, including 1.1 million shares (including 0.5 million prior to the 2 for 1 stock split) at a
cost of $49.2 million during the year ended December 31, 2005. At December 31, 2005, the Company had
approximately 65.2 million shares of common stock outstanding. As of December 31, 2005, the Company had
remaining authorization to purchase up to 5.1 million shares.
In the fourth quarter of 2003, the Company initiated a cash dividend on its common stock. In September
2004, the Company’s board of directors increased the quarterly dividend rate to $0.1125, a 12.5% increase from
the previous quarterly rate of $0.10. This increase raised the annual dividend rate on the Company’s common
stock from $0.40 to $0.45 per share. In September 2005, the Company’s board of directors again increased the
quarterly dividend rate to $0.13, a 15.6% increase from the previous quarter rate of $0.1125. This increase raised
the annual dividend rate on the Company’s common stock from $0.45 to $0.52 per share. Dividends paid in 2005
were approximately $30.2 million.
The Company expects to continue to return value to its shareholders through a combination of dividends and
share repurchases, subject to market conditions.
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