CHOICE HOTELS INTERNATIONAL INC /DE - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - CHOICE HOTELS INTERNATIONAL INC /DE	d8k.htm

Exhibit 99.1

LOGO

For Immediate Release

CHOICE HOTELS REPORTS FULL YEAR 2010 ADJUSTED DILUTED EPS OF $1.82,

FOURTH QUARTER DOMESTIC REVPAR GROWTH OF 9.7%

SILVER SPRING, MD. (February 21, 2011) – Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for fourth quarter and full year 2010:

Full Year Results

•

Adjusted diluted earnings per share (“EPS”) for full year 2010 were $1.82 compared to $1.71 for full year 2009. Diluted EPS were $1.80 for 2010 compared to $1.63 for 2009. Adjusted diluted EPS for full year 2010 and 2009 exclude certain special items, as described below, totaling $0.02 and $0.08, respectively.

•

Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased 4% to $170.8 million for the year ended December 31, 2010, compared to $163.7 million for the year ended December 31, 2009. Operating income for the year ended December 31, 2010 was $160.8 million compared to $148.1 million for the same period of 2009.

•

Franchising revenues increased 3% from $254.7 million for the year ended December 31, 2009 to $262.8 million for the same period of 2010. Total revenues increased $31.9 million or 6% to $596.1 million for the year ended December 31, 2010 compared to the same period of 2009.

•

Adjusted selling, general and administrative (“SG&A”) expense for full year 2010 totaled $92.8 million which represented a 1% increase from the same period of the prior year. Adjusted SG&A costs exclude special items totaling $1.7 million and $7.3 million for the years ended December 31, 2010 and 2009, respectively.

•

Interest and other investment income for the year ended December 31, 2010 declined by approximately $3.0 million from the same period of the prior year primarily due to less appreciation in the fair value of investments held in the company’s non-qualified employee benefit plans compared to the prior year.

•

The effective income tax rate for the year ended December 31, 2010 was 32.1% compared to 34.8% for the same period of the prior year. Excluding certain items, totaling $3.2 million (approximately $0.05 diluted earnings per share), recorded during the year ended December 31, 2010, the company’s effective income tax rate was approximately 34.1%.

•

Domestic unit and room growth increased 1.8% and 1.3%, respectively, from December 31, 2009.

•

Domestic system-wide revenue per available room (“RevPAR”) increased 2.8% for full year 2010 compared to the same period of 2009 primarily as a result of occupancy rates increasing 190 basis points.

•

The effective royalty rate increased 4 basis points to 4.29% for the year ended December 31, 2010 compared to 4.25% for the same period of the prior year.

•

The company executed 357 new domestic hotel franchise contracts representing 30,305 rooms for the year ended December 31, 2010 compared to 369 new domestic hotel franchise contracts representing 30,156 rooms in the prior year.

•

The number of domestic hotels under construction, awaiting conversion or approved for development declined 29% from December 31, 2009 to 516 hotels representing 41,682 rooms; the worldwide pipeline declined 26% from December 31, 2009 to 621 hotels representing 50,787 rooms.

Fourth Quarter Results

•

Adjusted diluted earnings per share (“EPS”) for fourth quarter 2010 were $0.42 compared to $0.43 for the same period of the prior year. Diluted EPS were $0.40 for both fourth quarter 2010 and 2009. Adjusted diluted EPS for fourth quarter 2010 and 2009 exclude certain special items, as described below, totaling $0.02 and $0.03, respectively.

•

Excluding special items, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $41.5 million for the three months ended December 31, 2010, compared to $39.7 million for the same period of 2009. Operating income for the three months ended December 31, 2010 and 2009 was $38.4 million and $34.1 million, respectively.

•

Franchising revenues increased 7% from $62.2 million for the three months ended December 31, 2009 to $66.9 million for the same period of 2010. Total revenues for the three months ended December 31, 2010 increased 10% compared to the same period of 2009.

•

Domestic system-wide revenue per available room (“RevPAR”) increased 9.7% for the fourth quarter of 2010 compared to the same period of 2009 as a result of occupancy rates increasing 420 basis points and average daily rates increasing 0.6%.

•

The effective royalty rate increased 3 basis points to 4.31% for the three months ended December 31, 2010 compared to 4.28% for the same period of the prior year.

•

The company executed 161 new domestic hotel franchise contracts for the three months ended December 31, 2010 an increase of 44% over the prior year period. The increase in franchise sales was primarily driven by our Quality, Clarion and Econo Lodge conversion brands.

•

Interest expense for the three months ended December 31, 2010 increased $2.8 million to $3.5 million from the same period of the prior year primarily as a result of the company’s issuance of $250 million in unsecured senior notes on August 25, 2010 which carry an effective interest rate of approximately 6.2%. The proceeds from these senior notes were utilized to repay other outstanding indebtedness under the company’s unsecured revolving credit facility.

“We are extremely pleased with our fourth quarter performance, with strong gains in domestic RevPAR and a significant year-over-year increase in new domestic hotel franchise agreements,” said Stephen P. Joyce, president and chief executive officer. “We fully anticipate that 2011 will be an even better year for our industry and our company. With a mix of well-segmented brands for both consumers and developers, powerful global distribution capabilities and a rapidly growing global loyalty program, we are poised to take advantage of a better operating environment.”

Special Items

During the three months and year ended December 31, 2010, the company recorded employee termination benefit charges of approximately $1.2 million and $1.7 million, respectively. These special items represent diluted EPS of $0.02 for both the three months and year ended December 31, 2010.

During the three months and year ended December 31, 2009, the company recorded employee termination benefits of approximately $2.3 million and $4.6 million, respectively. The company also incurred a curtailment loss related to freezing the benefits payable under its Supplemental Executive Retirement Plan totaling $1.2 million for the three months and year ended December 31, 2009. In addition, during the year ended December 31, 2009, the company recorded a $1.5 million charge related to the sublease of a portion of its office space. These special items represent diluted EPS of $0.03 and $0.08 for the three months and year ended December 31, 2009, respectively.

Outlook for 2011

The company’s first quarter 2011 diluted EPS is expected to be $0.25. The company expects full-year 2011 diluted EPS to range between $1.71 and $1.75. EBITDA for full-year 2011 are expected to range between $180 million and $183 million. These estimates include the following assumptions:

•

The company expects net domestic unit growth of approximately 1% in 2011;

•

RevPAR is expected to increase approximately 5% for first quarter of 2011 and increase approximately 4% for full-year 2011;

•

The effective royalty rate is expected to increase 3 basis points for full-year 2011;

•

All figures assume the existing share count and an effective tax rate of 35% for the first quarter and full-year 2011.

Use of Free Cash Flow

The company has historically used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.

For the year ended December 31, 2010 the company paid $43.8 million of cash dividends to shareholders. The current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors.

During the year ended December 31, 2010, the company purchased approximately 0.3 million shares of its common stock at an average price of $32.36 for a total cost of $8.7 million under the share repurchase program and has authorization to purchase up to an additional 3.6 million shares under this program. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 43.2 million shares of its common stock for a total cost of $1 billion through December 31, 2010. Considering the effect of a two-for-one stock split in October 2005, the company had repurchased 76.2 million shares through December 31, 2010 under the share repurchase program at an average price of $13.35 per share.

Our board of directors previously authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees as well as to acquire and resell real estate to incent franchise development for certain brands in top markets. Recent market conditions have resulted in an increase in opportunities to incent development under these programs. As a result, during the year ended December 31,

2010, the company has advanced approximately $21.7 million pursuant to these programs (of which $5 million has been repaid to the company).

Over the next several years, we expect to continue to opportunistically deploy capital pursuant to these programs to promote growth of our emerging brands. The amount and timing of the investment in these programs will be dependent on market and other conditions. Our current expectation is that our annual investment in these programs will range between $20 million to $40 million. Notwithstanding these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, subject to market and other conditions.

Conference Call

Choice will conduct a conference call on Tuesday, February 22, 2011 at 10:00 a.m. EST to discuss the company’s fourth quarter and full-year 2010 results. The dial-in number to listen to the call is 1-800-638-5495, and the access code is 25896514. International callers should dial 1-617-614-3946 and enter the access code 25896514. The conference call also will be Webcast simultaneously via the company’s Web site, www.choicehotels.com. Interested investors and other parties wishing to access the call via the Webcast should go to the Web site and click on the Investor Info link. The Investor Information page will feature a conference call microphone icon to access the call.

The call will be recorded and available for replay beginning at 1:00 p.m. EST on February 22, 2011 through March 22, 2011 by calling 1-888-286-8010 and entering access code 90493436. The international dial-in number for the replay is 617-801-6888, access code 90493436. In addition, the call will be archived and available on www.choicehotels.com via the Investor Info link.

About Choice Hotels

Choice Hotels International, Inc. franchises more than 6,000 hotels, representing more than 495,000 rooms, in the United States and more than 30 other countries and territories. As of December 31, 2010, more than 500 hotels were under construction, awaiting conversion or approved for development in the United States, representing more than 40,000 rooms, and more than 100 hotels, representing approximately 9,000 rooms, were under construction, awaiting conversion or approved for development in 18 other countries and territories. The company’s Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels.

Additional corporate information may be found on the Choice Hotels International, Inc. web site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law. 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 of 1933 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 of the company’s revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. 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 hotels 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, 2009, filed with the Securities and Exchange Commission on March 1, 2010. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements

Adjusted diluted EPS, adjusted EBITDA, adjusted SG&A, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. 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 diluted earnings per share, operating income, total revenues and operating margins. The company’s calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management’s reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry.

Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the company’s financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the company’s financial statements. In addition, 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 reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the company’s core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Adjusted Diluted EPS, Adjusted EBITDA, Adjusted SG&A and Adjusted Franchising Margins: The company’s management also uses adjusted diluted EPS, adjusted EBITDA, adjusted SG&A and adjusted franchising margins which exclude employee termination benefits for the periods ended December 31, 2010 and 2009 as well as a pension plan curtailment loss and a loss on the sublease of a portion of the company’s office space during the periods ended December 31, 2009. The company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.

Contacts

David White, Senior Vice President, Chief Financial Officer & Treasurer

(301) 592-5117

David Peikin, Senior Director, Corporate Communications

(301) 592-6361

Choice Hotels, Choice Hotels International, Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn and Ascend Collection are proprietary trademarks and service marks of Choice Hotels International.

Exhibit 1

Choice Hotels International, Inc.

Consolidated Statements of Income

(Unaudited)


	Three Months Ended December 31,												Year Ended December 31,
							Variance												Variance
	2010			2009			$			%			2010			2009			$			%
(In thousands, except per share amounts)

REVENUES:

Royalty fees	$	59,067		$	53,213		$	5,854			11	%	$	230,096		$	217,984		$	12,112			6	%
Initial franchise and relicensing fees		2,758			3,317			(559	)		(17	%)		9,295			12,916			(3,621	)		(28	%)
Procurement services		3,595			3,514			81			2	%		17,207			17,598			(391	)		(2	%)
Marketing and reservation		87,150			77,576			9,574			12	%		329,246			305,379			23,867			8	%
Hotel operations		987			909			78			9	%		4,031			4,140			(109	)		(3	%)
Other		1,449			2,172			(723	)		(33	%)		6,201			6,161			40			1	%

Total revenues		155,006			140,701			14,305			10	%		596,076			564,178			31,898			6	%

OPERATING EXPENSES:

Selling, general and administrative		26,744			26,183			561			2	%		94,540			99,237			(4,697	)		(5	%)
Depreciation and amortization		1,872			2,084			(212	)		(10	%)		8,342			8,336			6			0	%
Marketing and reservation		87,150			77,576			9,574			12	%		329,246			305,379			23,867			8	%
Hotel operations		799			775			24			3	%		3,186			3,153			33			1	%

Total operating expenses		116,565			106,618			9,947			9	%		435,314			416,105			19,209			5	%

Operating income		38,441			34,083			4,358			13	%		160,762			148,073			12,689			9	%

OTHER INCOME AND EXPENSES:
Interest expense		3,520			683			2,837			415	%		6,680			4,414			2,266			51	%
Interest and other investment income		(1,258	)		(560	)		(698	)		125	%		(2,903	)		(5,862	)		2,959			(50	%)
Equity in net income of affiliates		(336	)		(334	)		(2	)		1	%		(1,226	)		(1,113	)		(113	)		10	%

Total other income and expenses, net		1,926			(211	)		2,137			(1013	%)		2,551			(2,561	)		5,112			(200	%)


Income before income taxes		36,515			34,294			2,221			6	%		158,211			150,634			7,577			5	%
Income taxes		12,372			10,663			1,709			16	%		50,770			52,384			(1,614	)		(3	%)

Net income	$	24,143		$	23,631		$	512			2	%	$	107,441		$	98,250		$	9,191			9	%


Basic earnings per share	$	0.41		$	0.40		$	0.01			2	%	$	1.80		$	1.64		$	0.16			10	%


Diluted earnings per share	$	0.40		$	0.40		$	—			0	%	$	1.80		$	1.63		$	0.17			10	%

Exhibit 2

Choice Hotels International, Inc.

Consolidated Balance Sheets


(In thousands, except per share amounts)	December 31, 2010			December 31, 2009
	(Unaudited)

ASSETS

Cash and cash equivalents	$	91,259		$	67,870
Accounts receivable, net		47,638			41,898
Deferred income taxes		429			7,980
Other current assets		24,256			10,114

Total current assets		163,582			127,862

Fixed assets and intangibles, net		142,528			133,999
Receivable — marketing and reservation fees		42,507			33,872
Investments, employee benefit plans, at fair value		23,365			20,931
Other assets		39,740			23,373


Total assets	$	411,722		$	340,037


LIABILITIES AND SHAREHOLDERS’ DEFICIT

Accounts payable and accrued expenses	$	88,986		$	70,933
Deferred revenue		67,322			51,765
Revolving credit facility		200			—
Deferred compensation & retirement plan obligations		2,552			2,798
Current portion of long-term debt		420			—
Income taxes payable		5,778			6,310

Total current liabilities		165,258			131,806

Long-term debt		251,554			277,700
Deferred compensation & retirement plan obligations		35,707			34,956
Other liabilities		17,274			9,787


Total liabilities		469,793			454,249


Common stock, $0.01 par value		596			595
Additional paid-in-capital		92,774			90,731
Accumulated other comprehensive income (loss)		(7,192	)		333
Treasury stock, at cost		(872,306	)		(870,302	)
Retained earnings		728,057			664,431

Total shareholders’ deficit		(58,071	)		(114,212	)


Total liabilities and shareholders’ deficit	$	411,722		$	340,037

Exhibit 3

Choice Hotels International, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


(In thousands)	Year Ended December 31,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income	$	107,441		$	98,250

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,342			8,336
Provision for bad debts		3,547			2,578
Non-cash stock compensation and other charges		9,304			13,761
Non-cash interest and other income		(1,711	)		(5,403	)
Dividends received from equity method investments		1,155			1,337
Equity in net income of affiliates		(1,226	)		(1,113	)

Changes in assets and liabilities:
Receivables		(9,229	)		(796	)
Receivable - marketing and reservation fees, net		4,654			(12,232	)
Accounts payable		5,744			(8,279	)
Accrued expenses		10,630			(1,289	)
Income taxes payable/receivable		(1,417	)		8,163
Deferred income taxes		(2,381	)		5,553
Deferred revenue		15,413			4,650
Other assets		(12,705	)		3,041
Other liabilities		7,374			(4,341	)


NET CASH PROVIDED BY OPERATING ACTIVITIES		144,935			112,216


CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in property and equipment		(24,368	)		(11,135	)
Acquisitions, net of cash required		(466	)		—
Issuance of notes receivable		(11,786	)		(1,995	)
Collections of notes receivable		5,083			324
Purchases of investments, employee benefit plans		(1,948	)		(3,854	)
Proceeds from sales of investments, employee benefit plans		1,649			13,895
Other items, net		(319	)		(584	)


NET CASH USED IN INVESTING ACTIVITIES		(32,155	)		(3,349	)


CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the issuance of long-term debt		247,733			—
Net repayments pursuant to revolving credit facility		(277,500	)		(6,700	)
Principal payments on long-term debt		(25	)		—
Settlement of forward starting interest rate swap agreement		(8,663	)		—
Debt issuance costs		(800	)		—
Purchase of treasury stock		(11,212	)		(59,128	)
Excess tax benefits from stock-based compensation		625			5,834
Dividends paid		(43,808	)		(44,274	)
Proceeds from exercise of stock options		2,457			9,158


NET CASH USED IN FINANCING ACTIVITIES		(91,193	)		(95,110	)


Net change in cash and cash equivalents		21,587			13,757
Effect of foreign exchange rate changes on cash and cash equivalents		1,802			1,433
Cash and cash equivalents at beginning of period		67,870			52,680


CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	91,259		$	67,870

Exhibit 4

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL OPERATING INFORMATION

DOMESTIC HOTEL SYSTEM

(UNAUDITED)


	For the Year Ended December 31, 2010*						For the Year Ended December 31, 2009*						Change
	Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR		Average Daily Rate				RevPAR
	Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR
Comfort Inn	$	77.21		55.6%	$	42.93	$	77.10		54.1%	$	41.74		0.1%		150 bps		2.9%
Comfort Suites		82.48		55.2%		45.53		84.79		53.3%		45.17		(2.7%)		190 bps		0.8%
Sleep		68.82		51.6%		35.52		69.64		51.5%		35.86		(1.2%)		10 bps		(0.9%)

Midscale without Food & Beverage		77.37		54.9%		42.47		77.89		53.5%		41.69		(0.7%)		140 bps		1.9%

Quality		66.81		48.1%		32.11		68.00		46.0%		31.31		(1.8%)		210 bps		2.6%
Clarion		75.15		43.7%		32.86		77.79		42.2%		32.86		(3.4%)		150 bps		0.0%

Midscale with Food & Beverage		68.53		47.1%		32.28		69.92		45.2%		31.63		(2.0%)		190 bps		2.1%

Econo Lodge		54.10		45.8%		24.80		54.66		43.5%		23.78		(1.0%)		230 bps		4.3%
Rodeway		51.07		45.8%		23.38		52.48		43.0%		22.54		(2.7%)		280 bps		3.7%

Economy		53.17		45.8%		24.36		54.02		43.3%		23.41		(1.6%)		250 bps		4.1%

MainStay		65.60		63.6%		41.71		70.55		57.9%		40.82		(7.0%)		570 bps		2.2%
Suburban		39.23		63.8%		25.03		41.51		56.3%		23.35		(5.5%)		750 bps		7.2%

Extended Stay		46.65		63.7%		29.74		49.81		56.7%		28.24		(6.3%)		700 bps		5.3%

Ascend Collection		112.50		57.6%	$	64.81		115.97		49.4%	$	57.24		(3.0%)		820 bps		13.2%

Total	$	70.50		51.3%	$	36.18	$	71.24		49.4%	$	35.18		(1.0%)		190 bps		2.8%

*	Operating statistics represent hotel operations from December through November


	For the Three Months Ended December 31, 2010*						For the Three Months Ended December 31, 2009*						Change
	Average Daily Rate						Average Daily Rate						Average Daily Rate
	Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR		Average Daily Rate		Occupancy		RevPAR
Comfort Inn	$	77.36		56.3%	$	43.54	$	75.92		52.5%	$	39.86		1.9%		380 bps		9.2%
Comfort Suites		81.17		55.4%		44.96		81.94		50.5%		41.40		(0.9%)		490 bps		8.6%
Sleep		68.47		51.2%		35.04		68.03		48.7%		33.12		0.6%		250 bps		5.8%

Midscale without Food & Beverage		77.09		55.3%		42.61		76.27		51.4%		39.23		1.1%		390 bps		8.6%

Quality		65.35		48.2%		31.52		65.71		43.7%		28.68		(0.5%)		450 bps		9.9%
Clarion		74.05		44.9%		33.23		77.29		39.9%		30.84		(4.2%)		500 bps		7.7%

Midscale with Food & Beverage		67.21		47.5%		31.91		67.98		42.9%		29.14		(1.1%)		460 bps		9.5%

Econo Lodge		53.59		46.2%		24.77		53.67		42.1%		22.62		(0.1%)		410 bps		9.5%
Rodeway		50.00		45.2%		22.60		50.11		40.4%		20.24		(0.2%)		480 bps		11.7%

Economy		52.50		45.9%		24.10		52.62		41.6%		21.89		(0.2%)		430 bps		10.1%

MainStay		64.30		63.1%		40.56		67.07		57.2%		38.33		(4.1%)		590 bps		5.8%
Suburban		39.20		62.5%		24.50		38.91		57.1%		22.21		0.7%		540 bps		10.3%

Extended Stay		46.32		62.7%		29.03		46.92		57.1%		26.79		(1.3%)		560 bps		8.4%

Ascend Collection		127.73		60.4%	$	77.12		122.14		51.2%	$	62.58		4.6%		920 bps		23.2%

Total	$	70.09		51.6%	$	36.19	$	69.65		47.4%	$	32.99		0.6%		420 bps		9.7%

*	Operating statistics represent hotel operations from September through November

For the Quarter Ended

For the Year Ended

12/31/2010

12/31/2009

12/31/2010

12/31/2009

System-wide effective royalty rate

4.31%

4.28%

4.29%

4.25%

Exhibit 5

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA

(UNAUDITED)


	December 31, 2010				December 31, 2009				Variance
	Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		%		%

Comfort Inn		1,435		112,169		1,447		113,633		(12)		(1,464)		(0.8%)		(1.3%)
Comfort Suites		623		48,246		608		47,301		15		945		2.5%		2.0%
Sleep		398		28,957		392		28,599		6		358		1.5%		1.3%

Midscale without Food & Beverage		2,456		189,372		2,447		189,533		9		(161)		0.4%		(0.1%)

Quality		1,012		89,185		979		89,336		33		(151)		3.4%		(0.2%)
Clarion		192		28,711		172		24,636		20		4,075		11.6%		16.5%

Midscale with Food & Beverage		1,204		117,896		1,151		113,972		53		3,924		4.6%		3.4%

Econo Lodge		784		48,728		792		48,996		(8)		(268)		(1.0%)		(0.5%)
Rodeway		387		21,261		372		21,392		15		(131)		4.0%		(0.6%)

Economy		1,171		69,989		1,164		70,388		7		(399)		0.6%		(0.6%)

MainStay		37		2,868		37		2,866		—		2		0.0%		0.1%
Suburban		64		7,685		61		7,416		3		269		4.9%		3.6%

Extended Stay		101		10,553		98		10,282		3		271		3.1%		2.6%

Ascend Collection		38		3,025		28		2,346		10		679		35.7%		28.9%
Cambria Suites		23		2,700		18		2,073		5		627		27.8%		30.2%

Domestic Franchises		4,993		393,535		4,906		388,594		87		4,941		1.8%		1.3%

International Franchises		1,149		101,610		1,115		98,816		34		2,794		3.0%		2.8%

Total Franchises		6,142		495,145		6,021		487,410		121		7,735		2.0%		1.6%

Exhibit 6

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS — DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)


	For the Year Ended December 31, 2010						For the Year Ended December 31, 2009						% Change
	New Construction						New Construction						New Construction
	New Construction		Conversion		Total		New Construction		Conversion		Total		New Construction		Conversion		Total

Comfort Inn		7		32		39		9		39		48		(22%)		(18%)		(19%)
Comfort Suites		21		2		23		16		1		17		31%		100%		35%
Sleep		9		1		10		12		2		14		(25%)		(50%)		(29%)

Midscale without Food & Beverage		37		35		72		37		42		79		0%		(17%)		(9%)

Quality		1		104		105		4		111		115		(75%)		(6%)		(9%)
Clarion		—		37		37		1		31		32		(100%)		19%		16%

Midscale with Food & Beverage		1		141		142		5		142		147		(80%)		(1%)		(3%)

Econo Lodge		—		67		67		—		68		68		NM		(1%)		(1%)
Rodeway		1		39		40		1		48		49		0%		(19%)		(18%)

Economy		1		106		107		1		116		117		0%		(9%)		(9%)

MainStay		8		2		10		5		2		7		60%		0%		43%
Suburban		5		1		6		3		2		5		67%		(50%)		20%

Extended Stay		13		3		16		8		4		12		63%		(25%)		33%

Ascend Collection		1		13		14		3		9		12		(67%)		44%		17%
Cambria Suites		6		—		6		2		—		2		200%		NM		200%

Total Domestic System		59		298		357		56		313		369		5%		(5%)		(3%)


	For the Three Months Ended December 31, 2010						For the Three Months Ended December 31, 2009						% Change
	New Construction						New Construction						New Construction
	New Construction		Conversion		Total		New Construction		Conversion		Total		New Construction		Conversion		Total

Comfort Inn		3		10		13		5		17		22		(40%)		(41%)		(41%)
Comfort Suites		8		1		9		7		—		7		14%		NM		29%
Sleep		6		1		7		1		—		1		500%		NM		600%

Midscale without Food & Beverage		17		12		29		13		17		30		31%		(29%)		(3%)

Quality		—		50		50		1		24		25		(100%)		108%		100%
Clarion		—		20		20		—		8		8		NM		150%		150%

Midscale with Food & Beverage		—		70		70		1		32		33		(100%)		119%		112%

Econo Lodge		—		29		29		—		23		23		NM		26%		26%
Rodeway		—		13		13		—		12		12		NM		8%		8%

Economy		—		42		42		—		35		35		NM		20%		20%

MainStay		4		2		6		4		1		5		0%		100%		20%
Suburban		4		1		5		1		2		3		300%		(50%)		67%

Extended Stay		8		3		11		5		3		8		60%		0%		38%

Ascend Collection		—		8		8		2		4		6		(100%)		100%		33%
Cambria Suites		1		—		1		—		—		—		NM		NM		NM

Total Domestic System		26		135		161		21		91		112		24%		48%		44%

Exhibit 7

CHOICE HOTELS INTERNATIONAL, INC.

DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION, AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT

(UNAUDITED)

A hotel in the domestic pipeline does not always result in an open and operating hotel due to various factors.


													Variance
	December 31, 2010 Units						December 31, 2009 Units						Conversion				New Construction				Total
	Conversion		New Construction		Total		Conversion		New Construction		Total		Units		%		Units		%		Units		%
Comfort Inn		30		62		92		43		91		134		(13)		(30%)		(29)		(32%)		(42)		(31%)
Comfort Suites		1		122		123		—		181		181		1		NM		(59)		(33%)		(58)		(32%)
Sleep Inn		—		75		75		1		122		123		(1)		(100%)		(47)		(39%)		(48)		(39%)

Midscale without Food & Beverage		31		259		290		44		394		438		(13)		(30%)		(135)		(34%)		(148)		(34%)

Quality		33		8		41		48		15		63		(15)		(31%)		(7)		(47%)		(22)		(35%)
Clarion		18		2		20		19		6		25		(1)		(5%)		(4)		(67%)		(5)		(20%)

Midscale with Food & Beverage		51		10		61		67		21		88		(16)		(24%)		(11)		(52%)		(27)		(31%)

Econo Lodge		35		2		37		43		4		47		(8)		(19%)		(2)		(50%)		(10)		(21%)
Rodeway		12		2		14		36		2		38		(24)		(67%)		—		0%		(24)		(63%)

Economy		47		4		51		79		6		85		(32)		(41%)		(2)		(33%)		(34)		(40%)

MainStay		1		42		43		—		37		37		1		NM		5		14%		6		16%
Suburban		—		27		27		2		30		32		(2)		(100%)		(3)		(10%)		(5)		(16%)

Extended Stay		1		69		70		2		67		69		(1)		(50%)		2		3%		1		1%

Ascend Collection		6		4		10		2		4		6		4		200%		—		0%		4		67%
Cambria Suites		—		34		34		—		41		41		—		NM		(7)		(17%)		(7)		(17%)

		136		380		516		194		533		727		(58)		(30%)		(153)		(29%)		(211)		(29%)

Exhibit 8

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

(UNAUDITED)

CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS


(dollar amounts in thousands)	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009
Franchising Revenues:

Total Revenues	$	155,006		$	140,701		$	596,076		$	564,178
Adjustments:
Marketing and reservation revenues		(87,150	)		(77,576	)		(329,246	)		(305,379	)
Hotel operations		(987	)		(909	)		(4,031	)		(4,140	)

Franchising Revenues	$	66,869		$	62,216		$	262,799		$	254,659


Franchising Margins:

Operating Margin:

Total Revenues	$	155,006		$	140,701		$	596,076		$	564,178
Operating Income	$	38,441		$	34,083		$	160,762		$	148,073

Operating Margin		24.8	%		24.2	%		27.0	%		26.2	%


Adjusted Franchising Margin:

Franchising Revenues	$	66,869		$	62,216		$	262,799		$	254,659

Operating Income	$	38,441		$	34,083		$	160,762		$	148,073
Employee termination benefits		1,233			2,334			1,730			4,604
Curtailment loss related to the freezing of benefits under the Company’s Supplemental Executive Retirement Plan		—			1,209			—			1,209
Loss on sublease of office space		—			—			—			1,503
Hotel operations		(188	)		(134	)		(845	)		(987	)

	$	39,486		$	37,492		$	161,647		$	154,402

Adjusted Franchising Margins		59.0	%		60.3	%		61.5	%		60.6	%


CALCULATION OF ADJUSTED SELLING, GENERAL AND ADMINISTRATIVE COSTS

(dollar amounts in thousands)	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009

Selling, general and administrative expense	$	26,744		$	26,183		$	94,540		$	99,237
Employee termination benefits		(1,233	)		(2,334	)		(1,730	)		(4,604	)
Curtailment loss related to the freezing of benefits under the Company’s Supplemental Executive Retirement Plan		—			(1,209	)		—			(1,209	)
Loss on sublease of office space		—			—			—			(1,503	)

Adjusted Selling, General and Administrative Expense	$	25,511		$	22,640		$	92,810		$	91,921

CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE (EPS)

(In thousands, except per share amounts)	Three Months Ended December 31,						Year Ended December 31,
	2010			2009			2010			2009

Net Income	$	24,143		$	23,631		$	107,441		$	98,250
Adjustments:
Employee termination benefits		772			1,461			1,083			2,882
Curtailment loss related to the freezing of benefits under the Company’s Supplemental Executive Retirement Plan		—			757			—			757
Loss on sublease of office space		—			—			—			941

Adjusted Net Income	$	24,915		$	25,849		$	108,524		$	102,830


Weighted average shares outstanding-diluted		59,706			59,658			59,656			60,224

Diluted Earnings Per Share	$	0.40		$	0.40		$	1.80		$	1.63
Adjustments:
Employee termination benefits		0.02			0.02			0.02			0.05
Curtailment loss related to the freezing of benefits under the Company’s Supplemental Executive Retirement Plan		—			0.01			—			0.01
Loss on sublease of office space		—			—			—			0.02

Adjusted Diluted Earnings Per Share (EPS)	$	0.42		$	0.43		$	1.82		$	1.71

Adjusted EBITDA Reconciliation


(in millions)
	Q4 2010 Actuals		Q4 2009 Actuals		Year Ended December 31, 2010 Actuals		Year Ended December 31, 2009 Actuals		Full-Year 2011 Outlook

Operating Income (per GAAP)	$	38.4	$	34.1	$	160.8	$	148.1	$	171-$174
Employee termination benefits		1.2		2.3		1.7		4.6		—
Curtailment loss related to the freezing of benefits under the Company’s Supplemental Executive Retirement Plan		—		1.2		—		1.2		—
Loss on sublease of office space		—		—		—		1.5		—
Depreciation and amortization		1.9		2.1		8.3		8.3		9.0

Adjusted Earnings before interest, taxes, depreciation & amortization (non-GAAP)	$	41.5	$	39.7	$	170.8	$	163.7	$	180-$183

CHOICE HOTELS INTERNATIONAL INC /DE - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 22, 2011

Attached files

CHOICE HOTELS INTERNATIONAL INC /DE Reports