Comfort Inn 2005 Annual Report Download - page 52

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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosures,” requires
companies to provide additional note disclosures about employee stock-based compensation plans based on a fair
value method of accounting.
For purposes of the pro forma disclosure included in the stock-based compensation section of Note 1,
compensation cost for the Company’s stock option plan was determined based on the fair value at the grant dates
for awards under those plans consistent with the method of SFAS No. 123.
The fair value of each option grant has been estimated on the date of grant using the Black-Scholes option-
pricing model with the following weighted average assumptions used for grants in 2005, 2004 and 2003:
2005 2004 2003
Risk-free interest rate .......................................... 3.70 % 3.03 % 2.57 %
Volatility .................................................... 36.07% 37.97% 39.69%
Expected Lives ............................................... 6 years 6 years 6 years
Dividend Yield ............................................... 1.50 % 1.93 % 0 %
Vesting Service Period ......................................... 5 years 5 years 4-5 years
Contractual Life .............................................. 10 years 10 years 5-10 years
Stock Repurchase Program.
The Company announced a stock repurchase program on June 25, 1998 to increase returns to its
shareholders. Treasury stock activity is recorded at cost in the accompanying consolidated financial statements.
Through December 31, 2005, the Company had repurchased 33.6 million shares of its common stock (including
33.0 million prior to the 2 for 1 stock split effected in October 2005) at a total cost of $712 million, including
1.1 million shares of common stock (including 0.5 million prior to the 2 for 1 stock split effected in October
2005) at a total cost of $49.2 million during the year ended December 31, 2005.
17. Comprehensive Income
The components of accumulated other comprehensive income are as follows:
December 31,
2005 2004 2003
(In thousands)
Unrealized gains (losses) on available-for-sale securities .............. $— $ 123 $ (18)
Foreign currency translation adjustments ........................... 703 1,054 866
Deferred gain on hedging activity ................................. 156 223 290
Total accumulated other comprehensive income ..................... $ 859 $1,400 $1,138
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