Comfort Inn 2011 Annual Report Download - page 39
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Table of Contents
Summarized financial results for the years ended December 31, 2011 and 2010 are as follows:
Royalty fees
$ 230,096
Initial franchise and relicensing fees
9,295
Procurement services
17,207
Marketing and reservation 329,246
Hotel operations
4,031
Other
6,201
Total revenues 596,076
Selling, general and administrative
94,540
Depreciation and amortization
8,342
Marketing and reservation
329,246
Hotel operations
3,186
Total operating expenses
435,314
Operating income
160,762
Interest expense
6,680
Interest income
(548)
Other (gains) and losses
(2,355)
Equity in net income of affiliates
(1,226)
Other income and expenses, net
2,551
Income before income taxes
158,211
Income taxes
50,770
Net income
$107,441
Diluted earnings per share
$1.80
The Company utilizes certain measures such as adjusted net income, adjusted diluted EPS, adjusted selling, general and administrative (“SG&A”),
adjusted operating income and franchising revenues which do not conform to generally accepted accounting principles accepted in the United States (“GAAP”)
when analyzing and discussing its results with the investment community. This information should not be considered as an alternative to any measure of
performance as promulgated under GAAP, such as net income, diluted EPS, SG&A, operating income and total revenues. The Company’s calculation of
these measurements may be different from the calculations used by other companies and therefore comparability may be limited. We have included a
reconciliation of these measures to the comparable GAAP measurement below as well as our reasons for reporting these non-GAAP measures.
Franchising Revenues: The Company utilizes franchising revenues, which exclude marketing and reservation system revenues, and hotel operations
rather than total revenues when analyzing the performance of the business. Revenues from marketing and reservation activities are excluded because the
Company is contractually required by its franchise agreements to use these revenues for marketing and reservation activities; as such, no income or loss to the
Company is generated. Cumulative marketing and reservation system 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. Revenues from hotel operations are
excluded because they do not reflect the most accurate measure of the Company’s core franchising business. This non-GAAP measure is a commonly used
measure of performance in our industry and facilitates comparisons between the Company and its competitors.
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