Comfort Inn 2005 Annual Report Download - page 15

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Summarized financial results for the years ended December 31, 2005 and 2004 are as follows:
2005 2004
(In thousands)
REVENUES:
Royalty fees .............................................................. $187,340 $167,135
Initial franchise and relicensing fees ........................................... 25,388 20,112
Partner services ........................................................... 13,382 12,524
Marketing and reservation ................................................... 243,123 220,732
Hotel operations .......................................................... 4,293 3,729
Other ................................................................... 3,873 3,976
Totalrevenues ........................................................ 477,399 428,208
OPERATING EXPENSES:
Selling, general and administrative ............................................ 78,250 69,542
Depreciation and amortization ............................................... 9,051 9,947
Marketing and reservation ................................................... 243,123 220,732
Hotel operations .......................................................... 3,225 3,004
Total operating expenses ................................................ 333,649 303,225
Operating income ......................................................... 143,750 124,983
Interest expense ........................................................... 15,325 11,605
Interest and other investment income .......................................... (1,094) (1,110)
Equity in net income of affiliates ............................................. (803) (722)
Lossonextinguishmentofdebt .............................................. —696
Other ................................................................... (420) (10)
Other income and expenses, net .......................................... 13,008 10,459
Incomebeforeincometaxes ................................................. 130,742 114,524
Incometaxes ............................................................. 43,177 40,179
Netincome .............................................................. $ 87,565 $ 74,345
Weighted average shares outstanding-diluted .................................... 66,336 69,000
Diluted earnings per share ................................................... $1.32$1.08
Management analyzes its business based on franchising revenues, which is total revenues excluding
marketing and reservation revenues and hotel operations, and franchise operating expenses that are reflected as
selling, general and administrative expenses.
Franchising Revenues: Franchising revenues were $230.0 million for the year ended December 31, 2005
compared to $203.7 million for the year ended December 31, 2004. The growth in franchising revenues is
primarily due to increases in royalty revenues and initial and relicensing fees of approximately 12% and 26%,
respectively.
Royalty fees increased $20.2 million to $187.3 million from $167.1 million in 2004, an increase of 12.1%.
Excluding the franchises obtained in the acquisition of Suburban, the increase in royalties is attributable to a
combination of factors including a 3.6% increase in the number of domestic franchised hotel rooms, a 6.1%
increase in RevPAR and an increase in the effective royalty rate of the domestic hotel system to 4.08% from
4.04%. The acquisition of Suburban contributed approximately $0.7 million of royalty fees in 2005.
Including franchises acquired from Suburban, the number of domestic rooms on-line increased to 329,353
from 309,586, an increase of 6.4% for the year ended December 31, 2005. For 2005, the total number of
domestic hotels on-line grew 5.6% to 4,048 from 3,834 for 2004. International rooms on-line increased to 97,703
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