-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DRu6TtO5TUoVuGywzAeHcE/vQekh1jz9Q0tFaKm/v4SJiFMPyHp8f6kdw8lX0nwu VNCJeFdYARnPjQ9wYY0wDw== 0000928385-99-001359.txt : 19990423 0000928385-99-001359.hdr.sgml : 19990423 ACCESSION NUMBER: 0000928385-99-001359 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990421 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHOICE HOTELS INTERNATIONAL INC /DE CENTRAL INDEX KEY: 0001046311 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 521209792 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13393 FILM NUMBER: 99598689 BUSINESS ADDRESS: STREET 1: 10750 COLUMBIA PIKE CITY: SILVER SPRING STATE: MD ZIP: 20901 BUSINESS PHONE: 3019795000 MAIL ADDRESS: STREET 1: 10750 COLUMBIA PIKE CITY: SILVER SPRING STATE: MD ZIP: 20901 FORMER COMPANY: FORMER CONFORMED NAME: CHOICE HOTELS FRANCHISING INC DATE OF NAME CHANGE: 19971118 FORMER COMPANY: FORMER CONFORMED NAME: CHOICE HOTELS INTERNATIONAL INC/ DATE OF NAME CHANGE: 19971022 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 21, 1999 Choice Hotels International, Inc. --------------------------------- (Exact name of registrant as specified in its charter) Delaware 52-1209792 -------- ---------- (State or other jurisdiction (IRS Employer Identification No.) of incorporation) 10770 Columbia Pike, Silver Spring, Maryland 60563 - -------------------------------------------- ----- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (301)592-5000 ------------- Item 5. - ------- The company announced in two press releases, attached as Exhibits 99.1 and 99.2, certain information concerning Choicebuys.com, its web-based hotel product purchasing system. The discussion in the press releases contains forward looking statements which represent management's current judgment. However, these statements are subject to risks and uncertainties. The following factors, among others, could cause actual results to differ materially: (1) The company may not be able to generate significant franchisee utilization of Choicebuys.com. Because the company receives a percentage of revenues generated through the system, failure of franchisees to use the system will decrease potential revenues to the company. (2) The company may not be able to sign up all of the vendors necessary to service franchisees. The purpose of Choicebuys.com is to offer franchisees an easy to use purchasing system for hotel supplies. However, if a significant number of a franchisee's vendors are not on the system, the franchisee will purchase those supplies outside of the system and the company will be deprived of its potential revenues. Also, lack of vendors may cause franchisees to become dissatisfied with the system and not utilize it. (3) The company's revenues from Choicebuys.com will be generated through commissions from product sales. If the company is unable to negotiate favorable commission rates from participating vendors, potential revenues will be reduced. (4) The company may not be able to negotiate competitive prices with the vendors who participate in Choicebuys.com. This may cause franchisees to purchase their supplies outside of the system and thereby deprive the company of its potential revenues. (5) The company may experience unforseen technological problems with the Choicebuys.com system or the technology may become outdated or incompatible with advances in web-based technology. 2 Investors are urged to read the Company's other documents filed with the Securities and Exchange Commission. Item 7. Financial Statements and Exhibits - - ------ --------------------------------- (c) Exhibits -------- 99.1 Press Release, dated April 21, 1999 announcing Choicebuys.com, the company's web-based ordering system. 99.2 Press Release, dated April 21, 1999 announcing the company's earnings for the first quarter of 1999. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CHOICE HOTELS INTERNATIONAL, INC. (Registrant) By: /s/ Joseph M. Squeri ------------------------ Name: Joseph M. Squeri Title: Vice President, Treasuer & Contoller Date: April 21, 1999 3 EX-99.1 2 PRESS RELEASE EXHIBIT 99.1 ------------ FOR IMMEDIATE RELEASE PRESS CONTACT: JOHN HAWKINS VICE PRESIDENT CORPORATE COMMUNICATIONS ANNE CURTIS DIRECTOR CORPORATE COMMUNICATIONS 301-592-5032 ANALYST CONTACT: JOE SQUERI 301-592-5006 CHOICEBUYS.COM CHOICE HOTELS' WEB-BASED ORDERING SYSTEM "LIGHT-YEARS" AHEAD OF INDUSTRY SILVER SPRING, MD. (APRIL 21, 1999) Choice Hotels International, Inc. (NYSE: CHH) today announced the launch of CHOICEBUYS.COM, an innovative web-based purchasing system and the company's initial foray into web-based technology as a significant revenue generator. The user-friendly Choicebuys.com, complete with detailed product descriptions, photos and itemized pricing, revolutionizes the way the franchisee owners of Comfort, Quality, Econo Lodge, Clarion, Sleep Inn, Rodeway Inn and MainStay Suites brand hotels order supplies needed to run their businesses. Franchisees may now place orders with endorsed vendors, pay for purchases and track delivery via the Internet. "Choicebuys.com is the first step for Choice in maximizing the value of the Internet to our hotels and our guests," said Charles A. Ledsinger, Jr., president and chief executive officer. "Its launch puts us light-years ahead of our competitors, and we are also exploring ways to bring technology to our guests through in-room Internet service." "Choicebuys.com has advanced hotel purchasing technology into the new millennium," said Daniel Rothfeld, vice president of partner services. "With a click of a mouse, franchisees can now stroll through a virtual shopping mall to check specifications and compare prices for every conceivable product needed to run a hotel." According to Rothfeld, by virtue of its ease of usage and its preferred pricing, the system may potentially drive annual expenditures of $1.5 billion in goods and services by 4 Choice franchisees. "Our objective in the development of Choicebuys.com was to provide franchisees with a system that is both cost-effective and easy to use," Rothfeld said. "Choicebuys.com is a prime example of our four-win philosophy at work," said Rothfeld. "By leveraging the size of the Choice system to craft partnerships with quality vendors and service providers, we create a winning environment that benefits the company, our preferred vendors, our franchisees and their guests." The company's analysis, based on research from its franchisees and from Smith Travel Research, a leading research firm tracking the lodging industry, estimates that more than $11 billion in goods and services are purchased annually throughout the industry. "We've created a turnkey system that is extremely attractive to other companies," Rothfeld said. "Choicebuys.com becomes even more of a potential revenue generator for us as we consider ways to make it available for license industry-wide." Choice Hotels International franchises almost 5,000 hotels open and under development in 36 countries marketed under the brand names Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites. For more information, visit www.choicehotels.com. ### Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites are registered trademarks and service marks of Choice Hotels International, Inc. Choicebuys.com is a pending trademark of Choice Hotels International. Certain matters discussed in this press release may constitute forward- looking statements within the meaning of federal securities laws. Such statements are based on management's beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice's ability to predict or control. For further information on factors which could impact Choice and the statements contained herein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its registration statement on form S-4 and report on form 8-K. 5 EX-99.2 3 PRESS RELEASE EXHIBIT 99.2 ------------ FOR IMMEDIATE RELEASE CONTACT: JOHN HAWKINS VICE PRESIDENT CORPORATE COMMUNICATIONS (301) 592-5075 JOHN_HAWKINS@CHOICEHOTELS.COM JOE SQUERI VICE PRESIDENT, TREASURER, CONTROLLER (301) 592-5006 CHOICE HOTELS REPORTS RECORD FIRST QUARTER EARNINGS; RECURRING NET INCOME UP 34%; RECURRING DILUTED EPS INCREASES 42% SILVER SPRING, MD. (APRIL 21, 1999) Choice Hotels International, Inc. (NYSE: CHH) today reported first quarter 1999 net income of $10.3 million, or $0.18 diluted earnings per share (EPS), increases of 26% and 36% respectively, over the $8.1 million in net income and $0.13 diluted EPS reported for first quarter 1998. Recurring net income for the first quarter of this year was $9.5 million, or $0.17 diluted EPS, representing a 34% increase in net income and a 42% increase in diluted EPS compared to recurring net income of $7.1 million, or $0.12 diluted EPS for the same period a year ago. "Choice Hotels continues to register very strong earnings because of solid unit growth and hotel performance," said Charles A. Ledsinger, Jr., president and chief executive officer. He continued, "We are very pleased that the fundamentals of the business continue to be strong, as we achieve a higher effective royalty rate through a shift in product mix that matches our overall brand strategy." The company reported franchise-related revenues of $28.8 million for first quarter 1999, compared to $26.7 million for first quarter 1998. 6 Franchise-related revenues exclude product sales and European hotel operations revenue, both of which are classified as non-strategic operations. The company sold its European hotel operations to Friendly Hotels PLC in January 1998. In the fourth quarter of 1998, the company discontinued the group purchasing program as previously operated. Royalty revenues for first quarter 1999 increased 15% to $23.8 million from $20.6 million for the same period a year ago, with the system-wide domestic effective royalty rate also increasing from 3.46% in first quarter 1998 to 3.61% for the first quarter of 1999. Domestic revenue per available room (RevPAR) increased 2.0% from $26.34 in first quarter 1998 to $26.87 in the quarter just ended. As of March 31, 1999, the total number of Choice hotels on-line worldwide grew 15% to 4,056 from 3,522 as of the same date a year ago. As of March 31, 1999, the total number of rooms worldwide increased 10% to 325,326 from 294,937 as of the same date a year ago. As of March 31, 1999, the company had 778 franchised hotels with 63,427 rooms either in design or under construction in its worldwide hotel system. During the first quarter of 1999, the company introduced its revolutionary Internet purchasing system Choicebuys.com. Choicebuys.com allows hotel owners to purchase goods and services for their hotels at discounted prices. By virtue of its ease of usage and its preferred pricing, the system may potentially drive annual expenditures of $1.5 billion in goods and services by Choice franchisees. "Choicebuys.com is just the first step for Choice in maximizing the value of the Internet to our hotels and our guests," said Ledsinger. "Choice is aggressively exploring ways to bring technology to our guests through in-room Internet service, a strategy that will bring significant value to our franchisees, guests and shareholders." Notable Events - -------------- Among the notable company events occurring since the first of the year: * Continuation of the stock repurchase program announced June 25, 1998. The company has purchased 5.9 million shares of common stock at a total cost of $80.6 million as of April 21, 1999, and has remaining authority to acquire up to 2.8 million additional shares. As of April 21, 1999, 54.9 million shares are outstanding. * Opening of the 200th Sleep Inn hotel in the Buckhead section of Atlanta by Summit Management Corporation. * Creation of new development incentives for: the MainStay Suites hotel brand to spur growth of the extended-stay brand in target markets; the Clarion brand to gain distribution in key gateway markets; and the Sleep Inn brand to assist franchisees with new hotel marketing. * Announcement of a new development plan for the Caribbean, with the goal 7 of adding 25 new hotels in the Comfort, Quality, Clarion and Sleep Inn brands within the next four years. * Signing of a development agreement for the Middle East and Africa with Windsor Hotels of Cairo, Egypt, that will add 17 properties in the Clarion and Quality brands within three years. * Revision of the basic franchise agreement to reflect a reduction in the cap on liquidated damages from 60 to 36 months for franchisees leaving the system. Choice Hotels International is the second-largest hotel franchisor in the world with 4,056 hotels open, representing 325,326 rooms, and another 778 hotels under development, representing 63,427 rooms, in 36 countries, as of March 31, 1999. Its Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Rodeway Inn and MainStay Suites brands serve guests worldwide. # # # Certain matters discussed in this press release may constitute forward- looking statements within the meaning of the federal securities law. Such statements are based on management's beliefs, assumptions and expectations, which in turn are based on information currently available to management. Actual performance and results could differ from those expressed in or contemplated by the forward-looking statements due to a number of risks, uncertainties and other factors, many of which are beyond Choice's ability to predict or control. For further information on factors that could impact Choice and the statements contained therein, we refer you to the filings made by Choice with the Securities and Exchange Commission, including its registration statement on Form S-4 and report on Form 8-K. Additional corporate information may be found on the Choice Hotels' Internet site, which may be accessed at www.choicehotels.com Comfort, Quality, Clarion, Sleep Inn, Econo Lodge, Roadway Inn and MainStay Suites are registered trademarks and service marks of Choice Hotels international Inc. Choicebuys.com is a pending trademark of Choice Hotels International. 8 Choice Hotels International, Inc. Consolidated Statements of Income (Unaudited)
(In thousands, except per share amounts) Three Months Ended March 31, March 31, Revenues 1999 1998 ------------ ----------- Royalty fees $23,798 $20,646 Initial franchise fees and relicensing fees 2,849 3,414 Partner service revenue 1,716 1,618 Other 410 1,040 ------------ ----------- Total revenues 28,773 26,718 Operating expenses Selling, general and administrative 10,979 11,216 Depreciation and amortization 1,762 1,824 ------------ ----------- Total operating expenses 12,741 13,040 Operating income 16,032 13,678 Non-strategic operations (a) Product sales 134 426 European operations - (48) ------------ ----------- Total non-strategic operating income 134 378 Other Gain on sale of stock (1,260) (1,766) Interest and dividend income (4,608) (2,720) Interest expense 4,762 4,581 ------------ ----------- Total other (1,106) 95 ------------ ----------- Income before income taxes 17,272 13,961 Income taxes 6,995 5,815 ------------ ----------- Net income $10,277 $ 8,146 ============ =========== Weighted average shares outstanding 55,886 59,742 ============ =========== Diluted shares outstanding 56,508 60,970 ============ =========== Diluted earnings per share $0.18 $0.13 ============ ===========
(a) The company sold its European hotel operations to Friendly Hotel PLC in January 1998. In the fourth quarter of 1998, the company discontinued the group purchasing program as previously operated. 9
Choice Hotels International, Inc. Consolidated Balance Sheets (In thousands) March 31, March 31, 1999 1998 ------------ ----------- (Unaudited) ASSETS Cash and cash equivalents $ 4,536 $ 1,692 Other current assets 27,729 33,969 ------------ ----------- Total current assets 32,265 35,661 Fixed assets and intangibles, net 147,955 144,575 Note receivable from Sunburst Hospitality 131,259 127,849 Investments and other 96,202 90,140 ------------ ----------- Total assets 407,681 398,225 ------------ ----------- LIABILITIES Current portion of long-term debt 17,646 22,646 Other current liabilities 29,514 35,822 ------------ ----------- Total current liabilities 47,160 58,468 Long-term debt 284,327 256,564 Deferred income taxes and other 30,885 26,683 ------------ ----------- Total liabilities 362,372 341,715 ------------ ----------- Total shareholders' equity 45,309 56,510 ------------ ----------- Total liabilities and shareholders' equity $407,681 $398,225 ============ ===========
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CHOICE HOTELS INTERNATIONAL SUPPLEMENTAL OPERATING INFORMATION BY BRAND Domestic Hotel System Three Months Ended March 31, March 31, 1999 1998 ------------ ----------- COMFORT INN Hotels 1,214 1,167 Rooms 95,397 94,005 Avg. Daily Rate $54.44 $52.59 (ADR) Occupancy % 52.3% 53.2% RevPAR $28.46 $27.96 Effective Royalty 4.10% 3.93% Rate COMFORT SUITES Hotels 192 157 Rooms 15,768 12,670 Avg. Daily Rate $67.24 $65.11 (ADR) Occupancy % 58.3% 59.1% RevPAR $39.18 $38.47 Effective Royalty 4.40% 4.24% Rate QUALITY Hotels 425 425 Rooms 49,312 50,584 Avg. Daily Rate $57.64 $54.80 (ADR) Occupancy % 47.3% 49.2% RevPAR $27.26 $26.95 Effective Royalty 3.23% 2.98% Rate CLARION Hotels 109 93 Rooms 18,784 15,689 Avg. Daily Rate $70.49 $71.16 (ADR) Occupancy % 51.0% 51.6% RevPAR $35.97 $36.73 Effective Royalty 2.03% 2.12% Rate SLEEP Hotels 205 164 Rooms 15,641 12,198 Avg. Daily Rate $50.47 $48.14 (ADR) Occupancy % 49.2% 50.6% RevPAR $24.83 $24.35 Effective Royalty 3.70% 3.38% Rate
11 CHOICE HOTELS INTERNATIONAL SUPPLEMENTAL OPERATING INFORMATION BY BRAND Domestic Hotel System
Three Months Ended March 31, March 31, 1999 1998 ------------ ----------- MAINSTAY Hotels 23 11 Rooms 2,142 1,018 Avg. Daily Rate $55.12 $56.91 (ADR) Occupancy % 52.0% 30.4% RevPAR $28.64 $17.30 Effective Royalty 2.96% 2.57% Rate ECONO LODGE Hotels 695 695 Rooms 44,266 45,123 Avg. Daily Rate $40.90 $39.35 (ADR) Occupancy % 43.0% 44.1% RevPAR $17.61 $17.34 Effective Royalty 3.59% 3.50% Rate RODEWAY Hotels 190 202 Rooms 11,796 12,621 Avg. Daily Rate $40.92 $39.64 (ADR) Occupancy % 42.4% 42.1% RevPAR $17.36 $16.69 Effective Royalty 2.37% 2.49% Rate TOTAL CHOICE - DOMESTIC Hotels 3,053 2,914 Rooms 253,106 243,908 Avg. Daily Rate $54.35 $52.35 (ADR) Occupancy % 49.4% 50.3% RevPAR $26.87 $26.34 Effective Royalty 3.61% 3.46% Rate ================================================================================
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