Comfort Inn 2003 Annual Report Download - page 44

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17. Earnings Per Share
The following table reconciles the number of shares used in the basic and diluted earnings per share
calculations.
Years Ended
December 31
2003 2002 2001
(In millions, except per
share amounts)
Computation of Basic Earnings Per Share:
Net income ............................................................ $71.9 $60.8 $14.3
Weighted average shares outstanding—basic ................................. 35.7 39.3 44.2
Basic earnings per share .................................................. $2.01 $1.55 $0.32
Computation of Diluted Earnings Per Share:
Net income for diluted earnings per share .................................... $71.9 $60.8 $14.3
Weighted average shares outstanding—basic ................................. 35.7 39.3 44.2
Effect of Dilutive Securities:
Employee stock option and restricted stock plan ............................... 1.0 0.8 0.4
Weighted average shares outstanding—diluted ................................ 36.7 40.1 44.6
Diluted earning per share ................................................. $1.96 $1.52 $0.32
The effect of dilutive securities is computed using the treasury stock method and average market prices
during the period. In 2002, the Company excluded 50,000 anti-dilutive options from the computation of diluted
earnings per share.
18. Leases
The Company enters into operating leases primarily for office space and computer equipment. Rental
expense under non-cancelable operating leases was approximately $15.2 million, $12.9 million and $12.0 million
for the years ended December 31, 2003, 2002 and 2001, respectively. The Company received sublease rental
income related to computer equipment leased to franchisees totaling $10.2 million, $9.1 million and $7.6 million
during the years ended December 31, 2003, 2002 and 2001, respectively. Future minimum lease payments are as
follows:
2004 2005 2006 2007 2008 Thereafter Total
(In thousands)
Minimum lease payments .......... $12,144 $ 9,358 $ 5,217 $3,943 $3,861 $14,326 $48,849
Minimum sublease rentals .......... (8,236) (5,595) (1,266) — — — (15,097)
$ 3,908 $ 3,763 $ 3,951 $3,943 $3,861 $14,326 $33,752
19. Reportable Segment Information
The Company has a single reportable segment encompassing its franchising business. Revenues from the
franchising business include royalty fees, initial franchise and relicensing fees, marketing and reservation fees,
partner services revenue and other revenue. The Company is obligated under its franchise agreements to provide
marketing and reservation services appropriate for the successful operation of its systems. These services do not
represent separate reportable segments as their operations are directly related to the Company’s franchising
business. The revenues received from franchisees that are used to pay for part of the Company’s central on-going
operations are included in franchising revenues and are offset by the related expenses paid for marketing and
reservation activities to calculate franchising operating income. Corporate and other revenue consists of hotel
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