Comfort Inn 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Comfort Inn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

  

Table of contents

  • Page 1
    2007 annual report

  • Page 2
    Table of contents  financial  highlights letter to shareholders  a choice year in review  financial review

  • Page 3
    ...; offer 24-hour desk service, in-room telephones, guaranteed reservations and 24-hour-a-day, toll-free reservations; segment brands; develop a global marketing and reservations system; and offer non-smoking rooms in every hotel. In 1990, in order to better reï¬,ect its growing number of brands and...

  • Page 4
    2007 Financial highlights $615.5 1,093 930 5,570 5,376 5,210 $1.08 $74.3 $71.9 $0.98 4,810 4,977 569 491...05 ,06 ,07 ,03 ,04 ,05 ,06 ,07 ,03 ,04 ,05 ,06 ,07 revenues (millions) net income (millions) diluted earnings per share hotels open worldwide hotels under development worldwide

  • Page 5
    ... rooms. 2007 was another year of growth for the hotel industry, and Choice owners were able to drive rate increases and offset industry-wide declines in occupancy, with a 4.0% increase in RevPAR, fueled by average daily rate gains of 4.9%. To continue to grow both our business and our market share...

  • Page 6
    ... incremental revenue through our central reservations system, including the ongoing global expansion of our Choice Privileges rewards program. We continue to explore opportunities in our direct franchise markets that will help us strengthen brand recognition and business development. The company is...

  • Page 7
    ... and powerful brands; a leadership position in a growing, high-barrier-to-entry industry; proven business model; franchise development expertise; and strong owner relations positions us extremely well for continued profitable growth. I thank you for your support of Choice Hotels International and...

  • Page 8
    ... Choice Privileges points or airline rewards for stays at any participating hotel. The first Cambria Suites hotel opens in Boise, Idaho. The 119-suite Cambria Suites Boise Airport hotel is owned and operated by The Summit Group, Inc. The company introduces a new promotion, "With Two Free Nights...

  • Page 9
    ... inquiries to the company's customer care and reservations centers. For its fall promotion, Choice returns to its popular "Stay Two Times, Earn a Free Night," campaign for its mid-market brands, where Choice Privileges rewards program members can earn a free night at over 1,000 hotels with just two...

  • Page 10
    ... standard hotel rooms. hotels open: 4 domestic comfort inn Choice's ï¬,agship brand, Comfort Inn is the mid-priced hotel brand with warm and welcoming service and amenities that make you feel at ease. hotels open: 1,434 domestic, 542 international comfort suites The mid-priced hotel that offers...

  • Page 11
    ...service hotel that offers a distinctive experience for the sensible traveler. hotels open: 167 domestic, 115 international mainstay suites A mid-priced extended stay brand, MainStay Suites hotels provide residential style amenities and affordable rates with both large rooms and studios. hotels open...

  • Page 12
    ... on 12⁄31⁄02 in stock or index - including reinvestment of dividends. Fiscal year ending December 31, 2007.. choice hotels international, inc. s & p hotels, resorts & cruise lines nyse composite 12 ⁄02 choice hotels international, inc. s & p hotels, resorts & cruise lines nyse composite...

  • Page 13
    11

  • Page 14
    ...®, Sleep Inn®, Econo Lodge®, Rodeway Inn® , MainStay Suites®, Suburban Extended Stay Hotel®, Cambria Suites® and Flag Hotels® (collectively, the "Choice brands"). We operate in a single reportable segment encompassing our franchising business. The Company conducts its international franchise...

  • Page 15
    ... to operate the hotel in accordance with the brand standards. Under a typical franchise agreement, the hotel pays the franchisor an initial fee, a percentage-of-revenue royalty fee and a marketing/reservation reimbursement. A franchisor' s revenues are dependent on the number of rooms in its system...

  • Page 16
    ... chart demonstrates these trends: US Lodging Industry Trends - 1997 - 2007 Average Daily Room Rates (ADR) Increase in ADR Versus Prior Year Increase in CPI Versus Prior Year Revenue Per Available Room (RevPAR) New Rooms Added (Gross) Year Occupancy Rates Profits (in billions) 1997 ...1998...

  • Page 17
    ... programs, property systems revenue enhancement services and relationships with vendors to streamline purchasing processes and make lower cost products available. We believe that national franchise chains with a large number of hotels enjoy greater brand awareness among potential guests than...

  • Page 18
    ...growth and new hotel construction. Our various brand offerings position us well within the lodging industry. Our Cambria Suites, Comfort Inn, Comfort Suites, Sleep Inn, Suburban Extended Stay Hotel and MainStay Suites are primarily new build brands which offer hotel developers an array of choices in...

  • Page 19
    ... Choice brand names: Comfort Inn, Comfort Suites, Cambria Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites and Suburban Extended Stay Hotel. The following table presents key statistics related to our domestic franchise system over the five years ended December 31, 2007...

  • Page 20
    ..., 24-hour business center, swimming pool or exercise room, guest laundry, room service and bell service. Principal competitor brands include Sheraton Four Points, Holiday Inn Select, Radisson and Doubletree. MainStay Suites: MainStay Suites hotels compete in the mid-scale extended stay category...

  • Page 21
    ...Number of rooms, end of period...Royalty fees ($000) ...Average occupancy percentage...Average daily room rate (ADR) ...RevPAR...ECONO LODGE DOMESTIC SYSTEM Number of properties, end of period...Number of rooms, end of period...Royalty fees ($000) ...Average occupancy percentage...Average daily room...

  • Page 22
    ... operators. We believe that chain affiliation will increase in certain international markets as local economies grow and hotel owners seek the economies of centralized reservations systems and marketing programs. As of December 31, 2007, we had 1,125 franchise hotels open and operating in over 30...

  • Page 23
    ...business in China, South America, India, Central America and Japan. In addition, the Company has direct franchise relationships with properties in Malaysia and Lebanon. The following table summarizes Choice' s non-domestic franchise system as of December 31, 2007: Comfort Quality Clarion Sleep Econo...

  • Page 24
    ... and for the year ended December 31, 2007. Open and Operational Hotels Rooms Under Development Hotels Rooms Additions Repositionings Terminations Comfort...Quality ...Clarion ...Sleep Inn ...MainStay Suites ...Econo Lodge ...Rodeway Inn ...Suburban ...Cambria Suites...Flag Hotels...Totals ... 2,467...

  • Page 25
    ... Room Revenues Initial Fee Per Room/Minimum Reservation Fees Combined Marketing and Reservation Fees Brand Royalty Fees Marketing Fees Cambria Suites ...Comfort Inn ...Comfort Suites...Quality Inn...Quality Suites ...Clarion...Sleep Inn...MainStay Suites...Econo Lodge...Rodeway Inn...Suburban...

  • Page 26
    ... our Econo Lodge and Rodeway Inn brands. The EA$Y CHOICE program is a stamp redemption program and has no membership requirement to participate. Choice Privileges and EA$Y CHOICE participants can earn points/stamps redeemable for free stays in Choice brand properties. The Company also offers guests...

  • Page 27
    ...United States using personal sales calls, telemarketing and other techniques to target specific customer groups, such as potential corporate clients in areas where our franchised hotels are located, the motor coach market, and meeting planners. All sales personnel sell business for all of our brands...

  • Page 28
    ... The service marks Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Cambria Suites, Suburban Extended Stay Hotel, Choice Privileges, Easy Choice and related marks and logos are material to our business. We, directly and...

  • Page 29
    reduction in room rates and fewer room reservations, negatively impacting our revenues. A weak economy could also reduce demand for new hotels, negatively impacting the franchise fees received by us. Among other unpredictable external factors, which may negatively impact us, are wars, acts of ...

  • Page 30
    ... States. Our brand names include Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn, MainStay Suites, Suburban Extended Stay Hotel, Cambria Suites and Flag Hotels. The Company conducts its international franchise operations through a combination of direct franchising...

  • Page 31
    ... costs and costs to maintain our central reservations system, help to enhance awareness and increase consumer preference for our brands. Greater awareness and preference promotes long-term growth in business delivery to our franchisees, which ultimately increases franchise fees earned by the Company...

  • Page 32
    ... million ($0.2 million, net of the related tax effect) related to the refinancing of the Company' s senior credit facility. Those items represent diluted EPS of $0.19, net for the year ended December 31, 2006. These measurements will continue to be a key management focus in 2008 and beyond. Refer...

  • Page 33
    ... termination of certain executive officers. Summarized financial results for the years ended December 31, 2007 and 2006 are as follows: 2006 2007 (In thousands, except per share amounts) REVENUES: Royalty fees ...Initial franchise and relicensing fees...Brand solutions ...Marketing and reservation...

  • Page 34
    ... of the Company' s domestic franchised hotels operating information for the years ending December 31 is as follows: 2007 Average Daily Rate Occupancy RevPAR Average Daily Rate 2006 Occupancy RevPAR Average Daily Rate Change Occupancy RevPAR Comfort Inn ...Comfort Suites...Sleep ...Midscale without...

  • Page 35
    ... 31, 2006. The number of new construction franchised hotels in the Company' s domestic pipeline increased 21% to 728 at December 31, 2007 from 602 at December 31, 2006. The Company had an additional 89 franchised hotels with 8,640 rooms under development in its international system as of December...

  • Page 36
    A summary of executed domestic franchise agreements by brand for 2007 and 2006 is as follows: 2007 New Construction Conversion Total New Construction 2006 Conversion Total New Construction % Change Conversion Total Comfort Inn ...Comfort Suites...Sleep ...Midscale without Food & Beverage .. ...

  • Page 37
    ...in the Company' s balance sheet within other long-term liabilities related to cumulative reservation fee revenues received in excess of reservation fee expenses incurred totaling $11.9 million and $8.4 million at December 31, 2007 and 2006, respectively. Cumulative reservation and marketing fees not...

  • Page 38
    ... of income tax expense in 2005 related to the Company' s repatriation of foreign earnings. Operating income increased as a result of a $32.1 million, or 14% increase in franchising revenues (total revenues excluding marketing and reservation revenues and hotel operations) primarily offset by an...

  • Page 39
    ...year ended December 31, 2005. A summary of the Company' s domestic franchised hotels operating information is as follows: 2006 Average Daily Rate Occupancy RevPAR Average Daily Rate 2005 Occupancy RevPAR Average Daily Rate Change Occupancy RevPAR Comfort Inn ...$ 73.08 Comfort Suites ...82.93 Sleep...

  • Page 40
    ... increased revenues primarily reflect increased sales of our new construction brands, most notably our Cambria Suites and Comfort Suites offerings, which carry a higher average initial fee than our other brands. New domestic franchise agreements executed in 2006 totaled 720 representing 57,365 rooms...

  • Page 41
    ... related to stock compensation, variable franchise sales compensation, the launch of the Company' s Cambria Suites brand and the acquisition of Suburban. Despite the increase in expenses, SG&A as a percentage of franchise revenues declined since our variable overhead costs associated with franchise...

  • Page 42
    ... fee revenues earned. These receivables are recorded as an asset in the financial statements as the Company has the contractual authority to require that the franchisees in the system at any given point repay the Company for any deficits related to marketing and reservations activities. The Company...

  • Page 43
    ...under its share repurchase program at a total cost of $895.9 million. Considering the effect of the two-for-one stock split in October 2005, the Company has repurchased 71.5 million shares at an average price of $12.52 per share. In September 2007, the board of directors authorized an increase under...

  • Page 44
    ..., subject to market and other conditions. During the first quarter of 2007, the Company recorded a $3.7 million charge in selling, general and administrative expenses for employee termination benefits relating to the termination of certain executive officers. Termination benefits include salary...

  • Page 45
    ... The Company accounts for initial, relicensing and continuing franchise fees in accordance with Statement of Financial Accounting Standards ("SFAS") No. 45, "Accounting for Franchise Fee Revenue." We recognize continuing franchise fees, including royalty, marketing and reservations fees, when earned...

  • Page 46
    ... in affiliated partners' programs, such as those offered by credit card companies. The points may be redeemed for free accommodations or other benefits. Points cannot be redeemed for cash. The Company collects a percentage of program members' room revenue from participating franchises. Revenues are...

  • Page 47
    ...provisions of SFAS No. 148 to all stock compensation for the year ended 2005 is set forth in Note 1 to our consolidated financial statements. Income Taxes. Our income tax expense and related balance sheet amounts involve significant management estimates and judgments. Judgments regarding realization...

  • Page 48
    ... in its statement of financial position an asset for a plan' s over funded status or a liability for a plan' s under funded status; (b) measure a plan' s assets and its obligations that determine its funded status as of the end of the employer' s fiscal year; and (c) recognize changes in the...

  • Page 49
    ... as of December 31, 2007. Management' s assessment of the effectiveness of the Company' s internal control over financial reporting as of December 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein...

  • Page 50
    ..., the financial position of Choice Hotels International, Inc. and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in...

  • Page 51
    CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Years Ended December 31, 2007 2006 (In thousands, except per share amounts) 2005 REVENUES: Royalty fees...Initial franchise and relicensing fees ...Brand solutions...Marketing and reservation...Hotel operations ......

  • Page 52
    ...-marketing fees ...Investments, employee benefit plans, at fair value ...Deferred income taxes ...Other assets ...Total assets ...LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Current portion of long-term debt ...Accounts payable ...Accrued expenses and other ...Deferred revenue...

  • Page 53
    ... long-term debt...Net borrowings (repayments) pursuant to revolving credit facility...Debt issuance costs...Excess tax benefits from stock-based compensation ...Purchase of treasury stock...Dividends paid...Proceeds from exercise of stock options...Net cash used in financing activities ...Net change...

  • Page 54
    ... for sale securities included in net income...Other comprehensive income...Comprehensive income...Exercise of stock options ...Issuance and cancellation of restricted stock...Stock compensation related to stock options...Amortization of deferred compensation related to restricted stock grants...

  • Page 55
    ...Company had franchise agreements representing 5,570 open hotels and 1,093 hotels under development in 49 states, the District of Columbia and 39 countries and territories outside the United States under the brand names: Comfort Inn®, Comfort Suites®, Quality® , Clarion®, Sleep Inn®, Econo Lodge...

  • Page 56
    ... members' behalf, may be redeemed for free accommodations, airline frequent flier program miles or other benefits. Points cannot be redeemed for cash. We provide Choice Privileges as a marketing program to participating hotels. The cost of operating the program, including the estimated cost of award...

  • Page 57
    ... in marketing and reservation expenses on the accompanying consolidated statements of income. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of purchase to be cash equivalents. As of December 31, 2007 and...

  • Page 58
    ... (India) Private Ltd ("CHN") in accordance with Accounting Principles Board Opinion ("APB") No. 18, "The Equity Method of Accounting for Investments in Common Stock." The Company accounted for its investment in the common stock of Choice Hotels Scandinavia ("CHS") in accordance with SFAS No. 115...

  • Page 59
    ...APB No. 25 and all such stock options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. Therefore, the cost related to stock-based employee compensation included in the determination of net income for the year ended December 31, 2005 is less...

  • Page 60
    CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued) The following table illustrates the effect on net income and earnings per share as if the fair value based method had been applied to all outstanding and unvested awards during the year ended ...

  • Page 61
    ... based on the weightedaverage number of common shares outstanding after consideration of the dilutive effect of stock options, unvested restricted stock and PVRSU. The effect of dilutive securities is computed using the treasury stock method and average market prices during the period. Dilutive...

  • Page 62
    ... in its statement of financial position an asset for a plan' s over funded status or a liability for a plan' s under funded status; (b) measure a plan' s assets and its obligations that determine its funded status as of the end of the employer' s fiscal year; and (c) recognize changes in the...

  • Page 63
    ... not split. Share data and earnings per share data in these consolidated financial statements reflect the stock split, applied retroactively, to all periods presented. Previously awarded stock options and restricted stock awards payable in the Company' s common stock have been adjusted to reflect...

  • Page 64
    ... purchase price assigned to acquire long-term franchise contracts. As of December 31, 2007 and 2006, the unamortized balance relates primarily to the Econo Lodge, Suburban Extended Stay Hotel and Flag franchise rights. The franchise rights are being amortized over lives ranging from 5 to 17 years...

  • Page 65
    .... Under the terms of these agreements, the Company has the legally enforceable right to assess and collect from its current franchisees fees sufficient to pay for the marketing and reservation services the Company has procured for the benefit of the franchise system, including fees to reimburse the...

  • Page 66
    ... of Choice branded Sunburst properties. The liquidated damage provisions extend through the life of existing Sunburst franchise agreements. As of December 31, 2007, Sunburst operates 26 hotels under franchise with the Company. Total franchise fees, including royalty, marketing and reservation fees...

  • Page 67
    CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued) 10. Deferred Revenue Deferred revenue consists of the following: December 31, 2007 2006 (In thousands) Loyalty programs...Initial, relicensing and franchise fees...Brand solution fees ...Total...

  • Page 68
    ...Consolidating Financial Statements Effective July 14, 2006, the Company' s Senior Notes are guaranteed jointly, severally, fully and unconditionally by 7 wholly-owned domestic subsidiaries. There are no legal or regulatory restrictions on the payment of dividends to Choice Hotels International, Inc...

  • Page 69
    ... Statement of Income For the Year Ended December 31, 2007 (In Thousands) Choice Hotels International, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated REVENUES: Royalty fees...Initial franchise and relicensing fees ...Brand solutions...Marketing and reservation...

  • Page 70
    ... Statement of Income For the Year Ended December 31, 2006 (In Thousands) Choice Hotels International, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated REVENUES: Royalty fees...Initial franchise and relicensing fees ...Brand solutions...Marketing and reservation...

  • Page 71
    ... Statement of Income For the Year Ended December 31, 2005 (In Thousands) Choice Hotels International, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated REVENUES: Royalty fees...Initial franchise and relicensing fees ...Brand solutions...Marketing and reservation...

  • Page 72
    ...current assets...Total current assets...Property and equipment, at cost, net ...Goodwill ...Franchise rights and other identifiable intangibles, net ...Investments, employee benefit plans, at fair value...Investment in and advances to affiliates ...Receivable, marketing fees ...Deferred income taxes...

  • Page 73
    ...current assets...Total current assets...Property and equipment, at cost, net ...Goodwill ...Franchise rights and other identifiable intangibles, net ...Investments, employee benefit plans, at fair value...Investment in and advances to affiliates ...Receivable, marketing fees ...Deferred income taxes...

  • Page 74
    ... payments of long-term debt ...Net borrowings pursuant to revolving credit facility ...Purchase of treasury stock ...Excess tax benefits from stock-based compensation ...Dividends paid ...Proceeds from exercise of stock options...Net Cash Provided (Used) from Financing Activities Net change in cash...

  • Page 75
    ... Activities Principal payments of long-term debt ...Net repayments pursuant to revolving credit facilities.. Purchase of treasury stock ...Excess tax benefits from stock-based compensation ...Debt issuance costs ...Dividends paid ...Proceeds from exercise of stock options...Net Cash Provided (Used...

  • Page 76
    ... countries was also terminated, and all of RHC' s employees and infrastructure involved in its franchising business were transferred to CHG. Choice purchased 100% of CHG' s stock for $0.9 million and began including the results of its operations in the Company' s financial statements as of October...

  • Page 77
    ...respectively, including royalty, marketing, reservation fees and other revenues from CHA. Choice Hotels Scandinavia The Company accounted for its investment, representing 1% of the outstanding common stock of Choice Hotels Scandinavia ("CHS") as an available for sale security in accordance with SFAS...

  • Page 78
    ... Stay Hotel, a 67-unit, 8,942 room (at the date of consolidation) lodging chain operating in the economy extended stay segment primarily in the southeastern United States. The acquisition of Suburban allowed the Company to enter, on an accelerated basis, the economy extended stay segment, a market...

  • Page 79
    ... benefit costs for the three years ended December 31, 2007. Years ended December 31, 2007 2006 (In thousands) 2005 Components of net periodic pension cost: Service cost...$ Interest cost...Amortization Prior service cost ...(Gain)/Loss...Curtailment ...Weighted average assumptions: Discount rate...

  • Page 80
    ... FINANCIAL STATEMENTS-(continued) The following is a reconciliation of the changes in the projected benefit obligation for the years ended December 31, 2007 and 2006: December 31, 2007 2006 (In thousands) Projected benefit obligation, beginning of year ...$ 7,223 $ 6,073 677 Service cost...

  • Page 81
    ...: 2007 Equity securities ...Debt securities...Cash and cash equivalents...Other(1) ... 70% 18% 4% 8% 100% At December 31, 2007 the non-qualified retirement and savings plans held 33,866 shares of the Company' s common stock with a market value of $1.1 million. (1) Other consists of guaranteed...

  • Page 82
    ... accompanying consolidated statements of income follows: Years ended December 31, 2007 2006 2005 (In thousands, except Federal income tax rate) Federal income tax rate...35% 35% 35% $ 54,347 $ 45,760 Federal taxes at statutory rate...$ 60,860 State income taxes, net of federal tax benefit...3,116...

  • Page 83
    ... 31, 2007. The Company' s policy allows the issuance of new or treasury shares to satisfy stock-based awards. Restricted stock, stock options, stock appreciation rights and performance share awards may be granted to officers, key employees and non-employee directors with contractual terms set by...

  • Page 84
    ... million employee stock options during the years ended December 31, 2007, 2006 and 2005, respectively. The following table summarizes information about stock options outstanding at December 31, 2007: Options Outstanding Number Outstanding at December 31, 2007 Weighted Average Remaining Contractual...

  • Page 85
    CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued) Restricted Stock The following table is a summary of activity related to restricted stock grants to non-employee directors and key employees for the year ended December 31: 2007 2006 2005 ...

  • Page 86
    CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued) A summary of stock-based award activity as of December 31, 2007, 2006 and 2005 and the changes during the years are presented below: 2007 Stock Options Weighted Average Exercise Price Weighted ...

  • Page 87
    CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued) The components of the Company' s pretax stock-based compensation expense and associated income tax benefits are as follows for the years ended December 31: (In millions) 2007 2006 2005 Stock ...

  • Page 88
    ... other comprehensive income for years ended 2007, 2006 and 2005 is as follows: Amount Before Taxes Income Tax (Expense)/Benefit Amount Net of Taxes 2007 Foreign currency translation adjustment, net ...Amortization of pension related costs Prior service costs...Actuarial loss...Actuarial pension...

  • Page 89
    ... 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...

  • Page 90
    CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued) The following table presents certain financial information for the Company' s franchising segment. Year Ended December 31, 2007 Franchising Corporate & Other Elimination Adjustments Consolidated...

  • Page 91
    ...year term with annual lease payments totaling approximately $70,000. During 2005, the Company purchased 0.1 million shares of its common stock at a total cost of $6.0 million from members of the family of the Company' s largest shareholder. No shares were repurchased from related parties during 2007...

  • Page 92
    ... marketing and reservation revenues. The reclassification of revenues had no effect on reported operating income, income before income taxes, net income or earnings per share. The matters which effect the comparability of our quarterly results include seasonality, executive termination benefits...

  • Page 93
    ...its common stock. On January 31, 2008, the Company finalized the agreement with RHC to transfer franchising operations in the United Kingdom from RHC to the Company for its Comfort, Quality, Sleep and Clarion brand hotels. The master franchise agreement between the Company and RHC was terminated and...

  • Page 94

  • Page 95
    ... limited-service to full-service hotels in the economy, mid-scale and upscale segments, Choice-branded properties provide business and leisure travelers with a range of high-quality, high-value lodging options. The company's ten brands include Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion...

  • Page 96