 Investor Presentation
March 2011
Exhibit 99.1 |
 2
DISCLAIMER
Certain
matters
discussed
throughout
all
of
this
presentation
constitute
forward-looking
statements
within
the
meaning
of
the
federal
securities
laws.
Generally,
our
use
of
words
such
as
“expect,”
“estimate,”
“believe,”
“anticipate,”
“will,”
“forecast,”
“plan,”
“project,”
“assume”
or
similar
words
of
futurity
identify
statements
that
are
forward-looking
and
that
we
intend
to
be
included
within
the
Safe
Harbor
protections
provided
by
Section
27A
of
the
Securities
Act
and
Section
21E
of
the
Securities
Exchange
Act
of
1934.
Such
forward-looking
statements
are
based
on
management’s
current
beliefs,
assumptions
and
expectations
regarding
future
events,
which
in
turn
are
based
on
information
currently
available
to
management.
Such
statements
may
relate
to
projections
for
the
company’s
revenue,
earnings
and
other
financial
and
operational
measures,
company
debt
levels,
payment
of
stock
dividends,
and
future
operations.
We
caution
you
not
to
place
undue
reliance
on
any
forward-looking
statements,
which
are
made
as
of
the
date
of
this
presentation.
Forward-looking
statements
do
not
guarantee
future
performance
and
involve
known
and
unknown
risks,
uncertainties
and
other
factors.
Several
factors
could
cause
actual
results,
performance
or
achievements
of
the
company
to
differ
materially
from
those
expressed
in
or
contemplated
by
the
forward-looking
statements.
Such
risks
include,
but
are
not
limited
to,
changes
to
general,
domestic
and
foreign
economic
conditions;
operating
risks
common
in
the
lodging
and
franchising
industries;
changes
to
the
desirability
of
our
brands
as
viewed
by
hotel
operators
and
customers;
changes
to
the
terms
or
termination
of
our
contracts
with
franchisees;
our
ability
to
keep
pace
with
improvements
in
technology
utilized
for
reservations
systems
and
other
operating
systems;
fluctuations
in
the
supply
and
demand
for
hotel
rooms;
and
our
ability
to
manage
effectively
our
indebtedness.
These
and
other
risk
factors
are
discussed
in
detail
in
the
Risk
Factors
section
of
the
company’s
Form
10-K
for
the
year
ended
December
31,
2010,
filed
with
the
Securities
and
Exchange
Commission
on
March
1,
2011.
We
undertake
no
obligation
to
publicly
update
or
revise
any
forward-
looking
statement,
whether
as
a
result
of
new
information,
future
events
or
otherwise. |
 3
CHOICE HOTELS OVERVIEW
Leading gainer of US hotel market share*
–
9.5% share of branded US hotels (+120
basis points over trailing 5 years)*
–
2
nd
largest U.S. hotelier
70+ year-old hotel distribution company
with well-known, diversified brands
suitable for various stages of hotel life
cycle
Core competencies and services drive
demand for our brands and deliver
business for our franchisees
Global pipeline of 621 hotels under
construction, awaiting conversion or
approved for development
Source: Choice Internal Data, December 31, 2010
* Based on number of hotels as of December 31, 2010 (Smith Travel Research)
Fee-for-service business model
Predictable, profitable, long-term growth
in a variety of lodging and economic
environments
Cumulative free cash flows of more than
$1 billion since 1997
–
>90% returned to shareholders through
share repurchases and dividends
Capital “light”
model generates strong
after-tax returns on invested capital
Long-term franchise contracts and scale
represent barriers to entry
Strong, Growing, Global Hotel
Franchising Business
Highly Attractive Business Model
With Strong Financial Returns |
 4
Source: Smith Travel Research, December 31, 2010
0
2
4
6
8
10
12
14
Wyndham
Choice
Hilton
IHG
Marriott
Best Western
Accor
Carlson
Starwood
Hyatt
2005
2006
2007
2008
2009
2010
ONE OF THE LARGEST HOTELIERS
Market
Share %
11.2%
9.5%
6.1%
6.0%
5.7%
3.8%
1.8%
1.1%
0.9%
0.6%
5 yr. bps
(05-10)
-20
+120
+140
+70
+100
-70
-60
+10
+20
-60
Market Share (% of Hotels Open in U.S.) |
 5
Conversion
$45,000+
$105,000+
$50
$70
$100+
Targeted
Average Daily Rate
$85
FAMILY OF WELL-KNOWN
AND DIVERSIFIED BRANDS
New Construction
* Excludes cost of land; based on average domestic per-room investment.
Source: Choice Internal Data, April 2010
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 6
CHALLENGING NEAR-TERM ENVIRONMENT FOR
NEW CONSTRUCTION HOTEL DEVELOPMENT
0%
Source:
Lodging
Econometrics
(Q4
2010)
–
New
Construction
Pipeline
Source: 2011-2012 supply growth projections are based on January 2011 STR
forecast U.S. Lodging Industry Change
in Room Supply (YOY %)
New Construction
Pipeline Rooms (000's) |
 7
STRONG LIMITED SERVICE NEW
CONSTRUCTION BRANDS POSITIONED
WELL FOR LONG-TERM GROWTH
Source: Smith Travel Research, Choice Internal Data, December 31, 2010
|
 8
SIGNIFICANT GROWTH OPPORTUNITIES
REMAIN IN LARGE CONVERSION MARKET
Chart does not include
17,000+ independent hotels
in budget, economy and
mid-scale
segments
Domestic Hotels
Hampton Inn /
Hampton Inn
& Suites
Holiday Inn
Express
Days Inn
Motel 6
America’s
Best
Value Inn
Holiday
Inn /
Holiday
Inn Select
La Quinta
Inn / La Quinta
Inn & Suites
Fairfield
Inn
Ramada /
Ramada
Limited
Travelodge
Red Roof
Inn
Howard
Johnson
Knight’s
Inn
Microtel
Best
Western
Super 8
Source: Smith Travel Research, Choice Internal Data, December 31, 2010
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 9
DOMESTIC PIPELINE OF 516 HOTELS
Mid-scale
Extended Stay
Economy
Upscale
Source: Choice Internal Data, December 31, 2010
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 10
1,149 properties in 30 countries
and territories on five continents
Multi-year
investments in
IT and marketing
planned to enhance
value proposition for
international hotels
Significant long-term
growth opportunity
in underrepresented
regions/countries
STRONG PRESENCE IN MAJOR
TRAVEL MARKETS OUTSIDE OF THE U.S.
Source: Choice Internal Data, December 31, 2010
19 hotels
Mexico
294 hotels
Canada
247 hotels
Continental
Europe, UK
& Ireland
161 hotels
Scandinavia
57 hotels
Brazil
52 hotels
Japan
3 hotels
China
1 hotel
Malaysia
26 hotels
India
12 hotels
Central
America
1 hotel
Singapore
276 hotels
Australia, New Zealand
& Papua New Guinea |
  11
SERVICES LIFECYCLE IMPROVES
BRANDS AND PROPERTY PERFORMANCE
FRANCHISED
FRANCHISED
PROPERTIES
PROPERTIES
RETURN ON
RETURN ON
INVESTMENT
INVESTMENT
Brand Planning
and Management
•
Targeted, differentiated
programs, amenities and
services for each brand
Brand Performance
•
Revenue and guest service
consulting
•
Inventory and rate management
•
Local sales and marketing
•
Independent third-party quality
assurance
Training
•
On-site
•
Regional
•
Web-based
•
GM Certification
Opening Services
•
Ensure hotels open
successfully and meet or
exceed brand standards
Portfolio
Management
•
Repositioning
•
Relicensing
•
Termination
Procurement Services
•
Value-engineered prototypes
and design packages
•
Negotiated vendor
relationships |
 12
MARKETING AND CENTRAL
RESERVATION SYSTEM LEVERAGES
SIZE, SCALE AND DISTRIBUTION
$300-plus million in annual marketing and reservation system fees
Leverage expertise and innovation in on-line, targeted interactive
marketing to influence guest hotel stay decisions
Powerful advertising campaigns
Focus on driving guests to Choice central channels
Facilitate “one-stop”
shopping
Strong and growing global loyalty program
Increasing brand awareness
Source: Choice Internal Data, December 2010 |
 13
STRONG AND GROWING
AIDED BRAND AWARENESS
Source: Percentage of survey respondents. Millward Brown, December 2010.
*Econo Lodge, Rodeway Inn and Suburban Extended Stay measured among economy
hotel users. |
 14
STRONG, GROWING LOYALTY PROGRAM
Choice Privileges Revenue as Percent
of Domestic Gross Room Revenues*
Source: Choice Internal Data, December 31, 2010
* 2001-2008 Data Excludes Econo Lodge and Rodeway Inn brands
Comprehensive loyalty rewards program
12 million members worldwide –
contribute over ¼
of domestic
gross room revenues
2.5 million new members added in 2010
Delivers incremental business to all Choice brand hotels
Important selling point for franchise sales |
 15
CENTRAL RESERVATIONS SYSTEM (CRS)
DELIVERY PUTS “HEADS IN BEDS”
All Hotel
Direct
Reservation
Choice Central
Reservation
Contribution
1/3
1/3
Domestic Franchise System
Gross Room Revenue Source
Domestic Choice CRS
Net Room Revenue
Source: Choice Internal Data, December, 2010 |
 16
Central Channel ADR
“Premium”
Domestic Choice CRS
Net Channel Share
CENTRAL RESERVATIONS BOOKINGS
CREATE SIGNIFICANT VALUE
FOR FRANCHISEES
Source: Choice Internal Data, December, 2010
$66.11
$70.43
$71.59
$73.54
$73.35
$80.04
2005
2006
2007
2008
2009
2010
Systemwide
Call Center
choicehotels.com |
 17
CONVERSION BRAND FRANCHISE
SALES OPPORTUNITY IN SOFT NEW
CONSTRUCTION ENVIRONMENT
Source: Choice Internal Data, December, 2010 |
 18
STRONG, STEADY FRANCHISE
SYSTEM GROWTH
Domestic Hotels On-Line
Domestic Rooms On-Line
(in thousands)
Source: Choice Internal Data, December, 2010 |
 19
FRANCHISING REVENUE STREAM
LESS VOLATILE THAN REVPAR
$0
$50
$100
$150
$200
$250
$300
$350
-17%
-12%
-7%
-2%
3%
8%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
CHH RevPAR
STR Chain Scale (Supply Weighted)
Industry RevPAR
Franchising Revenue
($ in millions)
Source: Smith Travel Research, Choice Internal Data, December 2010
|
 20
ADJUSTED EBITDA LESS VOLATILE
THAN INDUSTRY PROFITABILITY
0
50
100
150
200
250
0
5
10
15
20
25
30
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Industry Profits
Adjusted EBITDA
Source: Smith Travel Research, Choice Internal Data, December 2010
($ in millions)
($ in billions) |
 21
CAPITAL “LIGHT”
MODEL GENERATES
STRONG RETURNS ON INVESTED CAPITAL
15.2%
16.1%
14.7%
19.5%
27.6%
36.7%
49.7%
62.9%
78.5%
68.8%
59.5%
48.1%
48.0%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
After-Tax Return On Invested Capital
Source: Choice Internal Data, December 2010 |
 22
TRACK RECORD OF STRONG EARNINGS
PER SHARE PERFORMANCE
$0.40
$0.51
$0.51
$0.58
$0.76
$0.93
$1.07
$1.25
$1.48
$1.73
$1.73
$1.68
$1.81
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Adjusted Diluted Earnings Per Share
Note: See appendix for reconciliation of adjusted diluted earnings per share to
diluted earnings per share. To improve comparability certain employee severance
amounts included in the determination of adjusted diluted earnings per share in
this presentation for 2007 through 2010 differ from amounts reported in
Exhibits 8 of our various earnings announcements.
Source: Choice Internal Data, December 2010. Per Share Amounts Retroactively
Adjusted For 2005 Stock Split. |
 23
Remaining authority on current authorization –
3.6 million shares as of December 31, 2010
OPPORTUNISTIC SHARE REPURCHASES KEY
PART OF CAPITAL ALLOCATION STRATEGY
Source: Capital IQ, December 2010, Choice Internal Data, December 30, 2010.
Share amounts for 2005 and prior years retroactively adjusted for 2005
two-for-one stock split. |
 24
1.9%
0.0%
0.0%
0.0%
3.3%
0.9%
0.0%
0.0%
0.5%
1.9%
HIGH CASH DIVIDEND YIELD COMPARED
TO OTHER LODGING C-CORPS
Choice
Great
Wolf
Wyndham
Gaylord
Hyatt
Orient-
Express
Starwood
Red Lion
Marriott
IHG
Source: Bloomberg Financial, March 10, 2011 |
 25
STRONG CREDIT POSITION
Investment grade credit rating
–
Moody’s Baa3
–
Standard & Poor’s BBB
Strong liquidity position
Substantial financial flexibility
Minimal contingent liability exposure
Source: Choice Internal Data, December 2010 |
 26
STRATEGY FOR CHOICE’S BRANDS,
GROWTH AND SHAREHOLDERS
Improve and Grow Brands
–
Increase portfolio profitability of the Comfort brand family
–
Refresh Sleep Inn to improve long-term brand growth potential
–
Invest
in
and
expand
emerging
brands/segments
–
Cambria,
Ascend,
International
Capture Greater Share of Reservations Via Central Channels
–
Grow
Choice
Privileges
loyalty
program
–
target
2.0
million
new
members
in
2011
–
Continue to enhance ChoiceHotels.com to increase traffic and conversion
Allocate Free Cash Flows To “Best And Highest”
Use
–
Continue shareholder-friendly capital allocation policies
–
Leverage financial capacity/strength to support expansion of emerging brands
–
Evaluate opportunities to enter new segments
–
Invest in IT infrastructure to shore up value proposition for international
properties |
 27
Appendix
Reconciliation of Non-GAAP
Financial Measurements to GAAP |
 28
DISCLAIMER
Adjusted franchising margins, adjusted earnings before interest,
taxes
depreciation and amortization (EBITDA), adjusted net income, adjusted diluted
earnings per share (EPS), franchising revenues, net operating profit after
tax (NOPAT),
return
on
average
invested
capital
(ROIC)
and
free
cash
flows
are
non-
GAAP financial measurements. These financial measurements are presented as
supplemental disclosures because they are used by management in reviewing
and analyzing the company’s performance. This information should not be
considered as an alternative to any measure of performance as promulgated
under accounting principles generally accepted in the United States (GAAP), such
as operating income, net income, diluted earnings per share, total revenues
or net cash
provided
by
operating
activities.
The
calculation
of
these
non-GAAP
measures may be different from the calculation by other companies and therefore
comparability may be limited. The company has included the following
appendix which reconcile these measures to the comparable GAAP
measurement. |
 29
FRANCHISING REVENUES AND ADJUSTED
FRANCHISING MARGINS
Note: To improve comparability certain employee severance amounts included in the
determination of adjusted franchising margins in this presentation for 2007
through 2010 differ from amounts reported in exhibit 8 of our year-end earnings
announcements for those years. Source: Choice Internal Data, December
2010 ($ amounts in thousands)
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
2010
2009
2008
2007
2006
2005
2004
Total Revenues
$ 596,076
$ 564,178
$ 641,680
$ 615,494
$ 539,903
$ 472,098
$ 428,208
Adjustments:
Marketing and Reservation
(329,246)
(305,379)
(336,477)
(316,827)
(273,267)
(237,822)
(220,732)
Product Sales
-
-
-
-
-
-
-
Hotel Operations
(4,031)
(4,140)
(4,936)
(4,692)
(4,505)
(4,293)
(3,729)
Franchising Revenues
$ 262,799
$ 254,659
$ 300,267
$ 293,975
$ 262,131
$ 229,983
$ 203,747
Operating Income
$ 160,762
$ 148,073
$ 174,596
$ 185,199
$ 166,625
$ 143,750
$ 124,983
Adjustments
Hotel Operations
(845)
(987)
(1,502)
(1,451)
(1,311)
(1,068)
(725)
Acceleration of Management Succession Plan
-
-
6,605
-
-
-
-
Executive Termination Benefits
1,217
3,321
-
3,690
-
-
-
Curtailment of SERP
-
1,209
-
-
-
-
-
Loss on Sublease of Office Space
-
1,503
-
-
-
-
-
Loan Reserves Related to Impaired Notes
Receivable
-
-
7,555
-
-
-
-
Product Sales
-
-
-
-
-
-
-
Impairment of Friendly Investment
-
-
-
-
-
-
-
Net
$ 161,134
$ 153,119
$ 187,254
$ 187,438
$ 165,314
$ 142,682
$ 124,258
Adjusted Franchising Margin
61.3%
60.1%
62.4%
63.8%
63.1%
62.0%
61.0% |
 30
FRANCHISING REVENUES AND ADJUSTED
FRANCHISING MARGINS (Continued)
($ amounts in thousands)
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
December 31,
2003
December 31,
2002
December 31,
2001
December 31,
2000
December 31,
1999
December 31,
1998
Total Revenues
$ 385,866
$ 365,562
$ 341,428
$ 352,841
$ 324,203
$ 165,474
Adjustments:
Marketing and Reservation
(195,219)
(190,145)
(168,170)
(185,367)
(162,603)
-
Product Sales
-
-
-
-
(3,871)
(20,748)
Hotel Operations
(3,565)
(3,331)
(3,215)
(1,249)
-
(1,098)
Franchising Revenues
$ 187,082
$ 172,086
$ 170,043
$ 166,225
$ 157,729
$ 143,628
Operating Income
$ 113,946
$ 104,700
$ 73,577
$ 92,427
$
94,170
$ 85,151
Adjustments
Hotel Operations
(842)
(385)
(714)
(640)
-
35
Acceleration of Management Succession Plan
-
-
-
-
-
-
Executive Termination Benefits
-
-
-
-
-
-
Curtailment of SERP
-
-
-
-
-
-
Loss on Sublease of Office Space
-
-
-
-
-
-
Loan Reserves Related to Impaired Notes Receivable
-
-
-
-
-
-
Product Sales
-
-
-
-
12
(1,216)
Impairment of Friendly Investment
-
-
22,713
-
-
-
Net
$ 113,104
$ 104,315
$ 95,576
$ 91,787
$ 94,182
$ 83,970
Adjusted Franchising Margin
60.5%
60.6%
56.2%
55.2%
59.7%
58.5%
Source: Choice Internal Data, December 2010 |
 31
RETURN ON INVESTED CAPITAL
($ in millions)
Year Ended
December 31,
2010
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Year Ended
December 31,
2007
Year Ended
December 31,
2006
Year Ended
December 31,
2005
Year Ended
December 31,
2004
Operating Income (a)
$160.8
$148.1
$174.6
$185.2
$166.6
$143.8
$125.0
Tax Rate(a)
32.1%
34.8%
36.3%
36.0%
27.4%
33.0%
35.1%
After-Tax Operating Income
109.2
96.6
111.2
118.5
121.0
96.3
81.1
+ Depreciation & Amortization
8.3
8.3
8.2
8.6
9.7
9.1
9.9
-
Maintenance CAPEX
8.3
8.3
8.2
8.6
9.7
9.1
9.9
Net Op. Profit After-tax (NOPAT)
$109.2
$96.6
$111.2
$118.5
$121.0
$96.3
$81.1
Total Assets
411.7
340.0
328.2
328.4
303.3
265.3
263.4
-
Current Liabilities
165.3
131.8
135.1
147.5
139.8
120.3
102.1
Invested Capital
246.4
208.2
193.1
180.9
163.5
145.0
161.3
Return on Average Invested Capital
48.0%
48.1%
59.5%
68.8%
78.5%
62.9%
49.7%
(a) Operating income and tax rate for the year ended December 31, 2001 have been
adjusted to exclude the effect of a $22.7 million impairment charge related
to the write-off of the company’s investment in Friendly Hotels.
Source: Choice Internal Data, December 2010 |
 32
RETURN ON INVESTED CAPITAL (Continued)
($ in millions)
Year Ended
December 31,
2003
Year Ended
December 31,
2002
Year Ended
December 31,
2001
Year Ended
December 31,
2000
Year Ended
December 31,
1999
Year Ended
December 31,
1998
Operating Income (a)
$113.9
$104.7
$96.3
$92.4
$94.2
$85.2
Tax Rate(a)
36.1%
36.5%
35.0%
39.0%
39.5%
41.7%
After-Tax Operating Income
72.8
66.5
62.6
56.4
57.0
49.7
+ Depreciation & Amortization
11.2
11.3
12.5
11.6
7.7
6.7
-
Maintenance CAPEX
11.2
11.3
12.5
11.6
7.7
6.7
Net Op. Profit After-tax (NOPAT)
$72.8
$66.5
$62.6
$56.4
$57.0
$49.7
Total Assets
267.3
316.8
321.2
484.1
464.7
398.2
-
Current Liabilities
102.2
84.3
71.2
93.8
88.7
64.7
Invested Capital
165.1
232.5
250.0
390.3
375.9
333.6
Return on Average Invested Capital
36.7%
27.6%
19.5%
14.7%
16.1%
15.2%
(a) Operating income and tax rate for the year ended December 31, 2001 have been
adjusted to exclude the effect of a $22.7 million impairment charge related
to the write-off of the company’s investment in Friendly Hotels.
Source: Choice Internal Data, December 2010 |
 33
FREE CASH FLOWS
($ in thousands)
Year Ended
December 31,
2010
Year Ended
December
31, 2009
Year Ended
December 31,
2008
Year Ended
December 31,
2007
Year Ended
December 31,
2006
Year Ended
December 31,
2005
Year Ended
December 31,
2004
Net Cash Provided by Operating Activities
$ 144,935
$ 112,216
$ 104,399
$ 145,666
$ 153,680
$ 133,588
$ 108,908
Net Cash Provided (Used) by Investing Activities
(32,155)
(3,349)
(20,265)
(21,284)
(17,244)
(24,531)
(14,544)
Free Cash Flows
$ 112,780
$ 108,867
$ 84,134
$ 124,382
$ 136,436
$ 109,057
$ 94,364
Source: Choice Internal Data, December 2010 |
 34
FREE CASH FLOWS (Continued)
($ in thousands)
Year Ended
December 31,
2003
Year Ended
December 31,
2002
Year Ended
December 31,
2001
Year Ended
December 31,
2000
Year Ended
December 31,
1999
Year Ended
December 31,
1998
Net Cash Provided by Operating Activities
$ 115,304
$ 99,018
$ 101,712
$ 53,879
$ 65,040
$ 38,952
Net Cash Provided (Used) by Investing Activities
27,784
(14,683)
87,738
(16,617)
(36,031)
(9,056)
Free Cash Flows
$ 143,088
$ 84,335
$ 189,450
$ 37,262
$ 29,009
$ 29,896
Source: Choice Internal Data, December 2010 |
 35
Note: To improve comparability certain employee severance amounts included in the
determination of adjusted EBITDA in this presentation for 2007 through 2010
differ from amounts reported in exhibits 8 of our various earnings announcements.
Source: Choice Internal Data, December 2010
ADJUSTED EBITDA
($ in thousands)
Year Ended
December 31,
2010
Year Ended
December 31,
2009
Year Ended
December 31,
2008
Year Ended
December 31,
2007
Year Ended
December 31,
2006
Year Ended
December 31,
2005
Year Ended
December 31,
2004
Operating Income
$ 160,762
$ 148,073
$ 174,596
$ 185,199
$ 166,625
$ 143,750
$ 124,983
Adjustments
Acceleration of Management
Succession Plan
-
-
6,605
-
-
-
-
Loss on Sublease of Office Space
-
1,503
-
-
-
-
-
Executive Termination Benefits
1,217
3,321
-
3,690
-
-
-
Curtailment of
SERP
-
1,209
-
-
-
-
-
Loan Reserves Related to Impaired Notes
Receivable
-
-
7,555
-
-
-
-
Product Sales
-
-
-
-
-
-
-
Impairment of Friendly investment
-
-
-
-
-
-
-
Depreciation and Amortization
8,342
8,336
8,184
8,637
9,705
9,051
9,947
Adjusted EBITDA
$ 170,321
$ 162,442
$ 196,940
$ 197,526
$ 176,330
$ 152,801
$ 134,930 |
 36
ADJUSTED EBITDA (Continued)
($ in thousands)
Year Ended
December 31,
2003
Year Ended
December 31,
2002
Year Ended
December 31,
2001
Year Ended
December 31,
2000
Year Ended
December 31,
1999
Year Ended
December 31,
1998
Operating Income
$ 113,946
$ 104,700
$ 73,577
$ 92,427
$ 94,170
$ 85,151
Adjustments
Acceleration of Management Succession Plan
-
-
-
-
-
-
Loss on Sublease of Office Space
-
-
-
-
-
-
Executive Termination Benefits
-
-
-
-
-
-
Curtailment of SERP
-
-
-
-
-
-
Loan Reserves Related to Impaired Notes
Receivable
-
-
-
-
-
-
Product Sales
-
-
-
-
12
(1,216)
Impairment of Friendly investment
-
-
22,713
-
-
-
Depreciation and Amortization
11,225
11,251
12,452
11,623
7,687
6,710
Adjusted EBITDA
$ 125,171
$ 115,951
$ 108,742
$ 104,050
$ 101,869
$ 90,645
Source: Choice Internal Data, December 2010 |
 37
ADJUSTED DILUTED EARNINGS PER SHARE
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
(In thousands, except per share amounts)
2010
2009
2008
2007
2006
2005
Net Income
107,441
$
98,250
$
100,211
$
111,301
$
112,787
$
87,565
$
Adjustments:
Loss(Gain) on Extinguishment of Debt, Net of Taxes
-
-
-
-
217
-
Acceleration of Management Sucession Plan, Net of Taxes
-
-
4,135
-
-
-
Executive Termination Benefits, Net of Taxes
762
2,079
-
2,310
-
-
Loss on Sublease of Office Space, Net of Taxes
-
941
-
-
-
-
Curtailment of SERP, Net of Taxes
-
757
-
-
-
-
Loan Reserves Related to Impaired Notes Receivable, Net of Taxes
-
-
4,729
-
-
-
Resolution of Provisions for Income Tax Contingencies
-
-
-
-
(12,791)
(4,855)
Income
Tax Expense Incurred Due to Foreign Earnings Repatriation -
-
-
-
-
1,192
Loss(Gain) on Sunburst Note Transactions, Net of Taxes
-
-
-
-
-
-
Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes
-
-
-
-
-
-
Adjusted Net Income
108,203
$
102,027
$
109,075
$
113,611
$
100,213
$
83,902
$
Weighted Average Shares
Outstanding-Diluted 59,656
60,224
62,994
65,766
67,490
66,759
Diluted
Earnings Per Share 1.80
$
1.63
$
1.59
$
1.69
$
1.67
$
1.31
$
Adjustments:
Loss(Gain) on Extinguishment of Debt, Net of Taxes
-
-
-
-
-
-
Acceleration of Management Sucession Plan, Net of Taxes
-
-
0.07
-
-
-
Executive Termination Benefits, Net of Taxes
0.01
0.02
-
0.04
-
-
Loss on Sublease of Office Space, Net of Taxes
-
0.02
-
-
-
-
Curtailment of SERP, Net of Taxes
-
0.01
-
-
-
-
Loan Reserves Related to Impaired Notes Receivable, Net of Taxes
-
-
0.07
-
-
-
Resolution of Provisions for Income Tax Contingencies
-
-
-
-
(0.19)
(0.08)
Income Tax Expense Incurred Due to Foreign Earnings Repatriation
-
-
-
-
-
0.02
Loss(Gain) on Sunburst Note Transactions, Net of Taxes
-
-
-
-
-
-
Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes
-
-
-
-
-
-
Adjusted Diluted Earnings Per Share (EPS)
1.81
$
1.68
$
1.73
$
1.73
$
1.48
$
1.25
$
Note: To improve comparability certain employee severance amounts included in the
determination of adjusted franchising margins in this presentation for 2007
through 2010 differ from amounts reported in exhibit 8 of our year-end earnings
announcements for those years. Source: Choice Internal Data, December
2010 |
 38
ADJUSTED DILUTED EARNINGS PER SHARE
(Continued)
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
Year Ended
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
December 31,
(In thousands, except per share amounts)
2004
2003
2002
2001
2000
1999
1998
Net Income
74,345
$
71,863
$
60,844
$
14,327
$
42,445
$
57,155
$
55,305
$
Adjustments:
Loss(Gain) on Extinguishment of Debt, Net of Taxes
433
-
-
-
-
-
(7,232)
Acceleration of Management Sucession Plan, Net of Taxes
-
-
-
-
-
-
-
Executive Termination Benefits, Net of Taxes
-
-
-
-
-
-
-
Loss on Sublease of Office Space, Net of Taxes
-
-
-
-
-
-
-
Curtailment of SERP, Net of Taxes
-
-
-
-
-
-
-
Loan Reserves Related to Impaired Notes Receivable, Net of Taxes
-
-
-
-
-
-
-
Resolution of Provisions for Income Tax Contingencies
(1,182)
-
-
-
-
-
-
Income Tax Expense Incurred Due to Foreign Earnings Repatriation
-
-
-
-
-
-
-
Loss(Gain) on Sunburst Note Transactions, Net of Taxes
-
(3,383)
-
-
4,721
-
-
Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes
-
-
-
37,166
7,532
-
-
Adjusted Net Income
73,596
$
68,480
$
60,844
$
51,493
$
54,698
$
57,155
$
48,073
$
Weighted Average Shares
Outstanding-Diluted 69,000
73,349
80,114
89,144
106,506
111,334
119,096
Diluted Earnings Per
Share 1.08
$
0.98
$
0.76
$
0.16
$
0.40
$
0.51
$
0.46
$
Adjustments:
Loss(Gain) on Extinguishment of Debt, Net of Taxes
0.01
-
-
-
-
-
(0.06)
Acceleration of Management Sucession Plan, Net of Taxes
-
-
-
-
-
-
-
Executive Termination Benefits, Net of Taxes
-
-
-
-
-
-
-
Loss on Sublease of Office Space, Net of Taxes
-
-
-
-
-
-
-
Curtailment of SERP, Net of Taxes
-
-
-
-
-
-
-
Loan Reserves Related to Impaired Notes Receivable, Net of Taxes
-
-
-
-
-
-
-
Resolution of Provisions for Income Tax Contingencies
(0.02)
-
-
-
-
-
-
Income Tax Expense Incurred Due to Foreign Earnings Repatriation
-
-
-
-
-
-
-
Loss(Gain) on Sunburst Note Transactions, Net of Taxes
-
(0.05)
-
-
0.04
-
-
Impairment of and Equity Losses in Friendly Hotels PLC Investment, Net of Taxes
-
-
-
0.42
0.07
-
-
Adjusted Diluted Earnings Per Share (EPS)
1.07
$
0.93
$
0.76
$
0.58
$
0.51
$
0.51
$
0.40
$
Source: Choice Internal Data, December 2010 |