Comfort Inn 2002 Annual Report Download - page 16

Summarized financial results for the years ended December 31, 2001 and 2000 are as follows:
2001 2000
(In thousands)
As
Revised
REVENUES:
Royalty fees .......................................................... $140,185 $137,721
Initial franchise and relicensing fees ....................................... 12,887 12,154
Partner services ....................................................... 12,042 10,300
Marketing and reservation ............................................... 168,170 185,367
Hotel operations ...................................................... 3,215 1,249
Other ............................................................... 4,929 6,050
Total revenues ...................................................... 341,428 352,841
OPERATING EXPENSES:
Selling, general and administrative ........................................ 56,075 57,178
Restructuring charges .................................................. 5,940 5,637
Impairment of Friendly investment ........................................ 22,713 —
Depreciation and amortization ........................................... 12,452 11,623
Marketing and reservation expense ........................................ 168,170 185,367
Hotel operations ...................................................... 2,501 609
Total operating expenses .............................................. 267,851 260,414
Operating income ..................................................... 73,577 92,427
Interest expense ....................................................... 15,445 18,490
Interest and other investment income ...................................... (4,329) (15,534)
Equity loss on Friendly ................................................. 16,436 12,071
Loss on Sunburst note .................................................. — 7,565
Other ............................................................... 608 253
Income before income taxes ............................................. 45,417 69,582
Income taxes ......................................................... 31,090 27,137
Net income ........................................................ $ 14,327 $ 42,445
Franchise Revenues: Net franchise revenues were $170.0 million for the year ended December 31, 2001
and $166.2 million for the year ended December 31, 2000. Royalties increased $2.5 million to $140.2 million
from $137.7 million in 2000, an increase of 1.8%. The increase in royalties is attributable to a 1.7% increase in
the number of domestic franchised hotel rooms and an increase in the effective royalty rate of the domestic hotel
system to 3.95% from 3.85%. Domestic initial fee revenue generated from franchise contracts signed increased
20.3% to $7.7 million from $6.4 million for the year ended December 31, 2000. Total domestic franchise
agreements signed in 2001 were 300, compared to 298 total agreements executed in 2000. The number of rooms
added increased to 25,757 in 2001 from 24,582 in 2000. Revenues generated from partner service relationships
increased 16.5% to $12.0 million from $10.3 million in 2000, related primarily to revenues earned from
increased financial service programs and usage of construction material and service providers available to
franchisees. Under the partner services program, the Company generates revenue from hotel industry vendors
(who have been designated as preferred providers) based on the level of goods or services purchased from the
vendors by hotel owners and hotel guests who stay in the Company’s franchised hotels.
The number of domestic rooms on-line increased to 270,514 from 265,962, an increase of 1.7% for the year
ended December 31, 2001. For 2001, the total number of domestic hotels on-line grew 2.6% to 3,327 from 3,244
for 2000. International rooms on-line increased to 92,035 as of December 31, 2001 from 84,389, an increase of
9.1%. The total number of international hotels on-line increased to 1,218 from 1,148, an increase of 6.1% for the
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