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

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Exhibit 99.1

LOGO

For Immediate Release

CHOICE HOTELS INTERNATIONAL REPORTS SECOND QUARTER 2013 DILUTED

EPS OF $0.48 PER SHARE

ROCKVILLE, MD. (July 26, 2013) – Choice Hotels International, Inc., (NYSE:CHH) today reported the following highlights for the second quarter of 2013:

•

Franchising revenues increased 6% to $82.6 million for the three months ended June 30, 2013 from $77.8 million for the same period of 2012. Total revenues increased 6% to $183.6 million for the three months ended June 30, 2013 compared to the same period of 2012.

•

Domestic royalty fees for the three months ended June 30, 2013 increased 4% to $62.2 million from $59.8 million for the three months ended June 30, 2012.

•

Domestic system-wide revenue per available room (“RevPAR”) increased 3.5% for the three months ended June 30, 2013 compared to the same quarter of the prior year as occupancy and average daily rates increased 90 basis points and 1.8%, respectively.

•

Domestic unit and room growth increased 1.9% and 1.0% from June 30, 2012, respectively.

•

The effective domestic royalty rate increased 3 basis points to 4.35% for the three months ended June 30, 2013 compared to 4.32% for the same period of the prior year.

•

Initial and relicensing fees for the three months ended June 30, 2013 increased $1.2 million or 39% to $4.4 million from the same period of the prior year.

•

The company executed 104 new domestic hotel franchise contracts for the three months ended June 30, 2013 compared to 106 new domestic hotel franchise contracts in the same period of the prior year.

•

Domestic relicensing and contract renewal transactions increased from 47 contracts during the three months ended June 30, 2012 to 63 in the current period, a 34% increase.

•

The number of worldwide hotels under construction, awaiting conversion or approved for development as of June 30, 2013 was 448 hotels representing 36,487 rooms.

•

Selling, general and administrative (“SG&A”) expenses increased $5.6 million to $30.2 million for the three months ended June 30, 2013 compared to the same period of the prior year. SG&A expenses include expenses related to the company’s SkyTouch Technology division totaling $3.2 million and $0.8 million during the three months ended June 30, 2013 and 2012, respectively. In addition, SG&A for the second quarter of 2013 includes approximately $0.7 million of costs that are not expected to recur in

future periods related to the relocation of the company’s corporate headquarters during the second quarter as well as additional variable expenses totaling approximately $0.5 million related to an increase in initial fees and procurement services revenues.

•

The effective income tax rate for the three months ended June 30, 2013 was 29.6% compared to 33.5% for the same period of 2012.

•

Diluted earnings per share (“EPS”) for second quarter 2013 were $0.48 compared to $0.55 for the second quarter of 2012. EPS for the second quarter of 2013 reflect $7.3 million of additional interest expense compared to the prior year reflecting the financing transactions entered into during the second and third quarters of 2012 in conjunction with the payment of the $600 million special cash dividend on August 23, 2012.

“We are excited about the growth prospects for our core franchising business. We are seeing particularly strong RevPAR performance for our upscale Ascend Collection, Suburban Extended Stay Hotel brand and our Sleep Inn brand which delivered impressive results as more of our franchisees upgrade their hotels to our new Design to Dream proto-type,” said Stephen P. Joyce, president and chief executive officer. “On the development side of the business, conversion franchise sales for our flagship Comfort brand and our Ascend Collection continued to outpace last year’s results demonstrating that Choice remains a top option for hotel developers.”

“We are also excited to report that we debuted SkyTouch Technology’s cloud based technology products to the hospitality industry in June at the Hospitality Financial and Technology Professional’s HITEC conference and are pleased with the level of interest we received,” said Stephen P. Joyce, president and chief executive officer. “We have executed our first customer contracts for this division and are excited that our new customers will experience the benefits that our cloud based technology products will deliver to their hotels.”

Use of Free Cash Flow

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

Dividends

During the six months ended June 30, 2013, the company paid $11.3 million of cash dividends to shareholders. The company’s current quarterly dividend rate per common share is $0.185, subject to declaration by our board of directors. The company’s regular dividend for the first quarter was paid in December 2012.

Share Repurchases

The company did not repurchase any shares of common stock under the share repurchase program during the three and six months ended June 30, 2013 but has authorization to purchase up to an additional 1.4 million shares under this program. We expect we will make repurchases from time to time under our share repurchase program 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 45.3 million shares of its common stock for a total cost of $1.1 billion through June 30, 2013. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 78.3 million shares through June 30, 2013 under the share repurchase program at an average price of $13.89 per share.

Other

Our board of directors previously authorized us to enter into a program which permits 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 strategic markets. Over the next several years, we expect to continue to opportunistically deploy capital pursuant to this program to promote growth of our emerging brands. Our current expectation is that our annual investment in this program will range between $20 million and $40 million per year and we generally expect to recycle these investments over a 5 year period. However, the amount and timing of the investment in this program will be dependent on market and other conditions. Notwithstanding this program, 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.

Balance Sheet

At June 30, 2013, the company had gross debt of $866.5 million and cash and cash equivalents totaling $143.8 million resulting in net debt of $722.7 million. At December 31, 2012, the company had gross debt of $855.3 million and cash equivalents totaling $134.2 million resulting in net debt of $721.1 million.

At June 30, 2013 and December 31, 2012, the company had outstanding mezzanine financing, real estate investments and sliver equity investments totaling $69 million and $68 million, respectively pursuant to its program to offer financing and investment support to incent franchise development for the Cambria Suites brand in strategic markets. These investments are reported in other current assets and other assets on the company’s consolidated balance sheet.

Outlook

The company’s third quarter 2013 diluted EPS is expected to be $0.66. The company expects full-year 2013 diluted EPS to range between $1.84 and $1.87. Earnings before interest, taxes and depreciation (“EBITDA”) for full-year 2013 are expected to range between $203.5 million and $206.5 million. These estimates include the following assumptions:

•

The company expects net domestic unit growth to increase by approximately 2% in 2013;

•

RevPAR is expected to increase approximately 3% for the third quarter of 2013 and increase between 3.5% and 4.25% for full-year 2013; RevPAR growth is expected to moderate in the second half of the year and continue to grow at a moderate pace into 2014;

•

The effective royalty rate is expected to increase 2 basis points for full-year 2013;

•

All figures assume the existing share count;

•

The effective tax rate is expected to be 29.5% and 30.0% for the third quarter and full-year 2013, respectively; and

•

Our EBITDA outlook for the full year includes expenses related to the company’s SkyTouch Technology division ranging between $12 million and $14 million for investment in the infrastructure of this division including business development, sales and marketing and other costs as well as continued software development expenditures related to the division’s technology related products and services.

Conference Call

Choice will conduct a conference call on Friday, July 26, 2013 at 10:00 a.m. EDT to discuss the company’s second quarter 2013 results. The dial-in number to listen to the call is 1-877-280-4959, and the access code is 31314907. International callers should dial 1-857-244-7316 and enter the access code 31314907. 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 12:00 p.m. EDT on Friday July 26, 2013 through Friday, August 2, 2013 by calling 1-888-286-8010 and entering access code 26118362. The international dial-in number for the replay is 1-617-801-6888, access code 26118362. 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 6,200 hotels, representing more than 500,000 rooms, in the United States and more than 30 other countries and territories. As of June 30, 2013, 365 hotels, representing more than 29,000 rooms, were under construction, awaiting conversion or approved for development in the United States. Additionally, 83 hotels, representing approximately 7,200 rooms, were under construction, awaiting conversion or approved for development in more than 15 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, as well as its Ascend Hotel Collection membership program, serve guests worldwide.

SkyTouch Technology is an initiative of Choice Hotels International, Inc. that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability.

Additional corporate information can 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 Private Securities Litigation Reform Act of 1995. Generally, our use of words such as “expect,” “estimate,” “believe,” “anticipate,” “will,” “forecast,” “plan”,” project,” “assume” or similar words of futurity identify such forward-looking statements. These 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, ability to repay outstanding indebtedness, payment of 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, 2012, filed with the Securities and Exchange Commission on February 28, 2013 and our quarterly reports filed on Form 10-Q. 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 Presented in Exhibit 8

EBITDA, franchising revenues and franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under generally accepted accounting principles in the United States (“GAAP”), such as 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, interest income, provision for income taxes, depreciation and amortization, other (gains) and losses and equity in net income (loss) of unconsolidated affiliates. We consider EBITDA to be an indicator of operating performance because we use it to measure our ability to service debt, fund capital expenditures, and expand our business. We also use EBITDA, as do analysts, lenders, investors and others, to evaluate companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA also excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Franchising Revenues and Margins: The company reports franchising revenues and margins which exclude marketing and reservation revenues, SkyTouch Technology and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the company is required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing system fees not expended are recorded as a liability on the company’s financial statements and are carried over to the next year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of system 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 reflect the company’s ownership of three MainStay Suites hotels. SkyTouch Technology is a division of the company that develops and markets cloud-based technology products to help industry-wide hoteliers improve their efficiency and profitability. Hotel and SkyTouch Technology operations are excluded from franchising revenue and margins since they do not reflect the most accurate measure of the company’s core franchising business but are adjacent, complimentary lines of business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the company and its competitors.

Contacts

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

(301) 592-5117

Robin Pence, Vice President, Public Relations

(301) 592-5186

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, Ascend Hotel Collection and SkyTouch Technology are proprietary trademarks and service marks of Choice Hotels International.


Choice Hotels International, Inc.		Exhibit 1
Consolidated Statements of Income
(Unaudited)


	Three Months Ended June 30,											Six Months Ended June 30,
							Variance											Variance
	2013			2012			$			%		2013			2012			$			%
(In thousands, except per share amounts)

REVENUES:

Royalty fees	$	68,379		$	66,064		$	2,315			4%	$	118,115		$	113,917		$	4,198			4%
Initial franchise and relicensing fees		4,416			3,178			1,238			39%		8,193			5,706			2,487			44%
Procurement services		7,546			6,836			710			10%		11,496			10,151			1,345			13%
Marketing and reservation		99,645			94,633			5,012			5%		176,085			165,562			10,523			6%
Hotel operations		1,334			1,224			110			9%		2,290			2,202			88			4%
Other		2,258			1,686			572			34%		4,271			5,252			(981	)		(19%)

Total revenues		183,578			173,621			9,957			6%		320,450			302,790			17,660			6%

OPERATING EXPENSES:

Selling, general and administrative		30,180			24,554			5,626			23%		57,096			48,903			8,193			17%
Depreciation and amortization		2,520			1,977			543			27%		4,695			3,994			701			18%
Marketing and reservation		99,645			94,633			5,012			5%		176,085			165,562			10,523			6%
Hotel operations		911			867			44			5%		1,786			1,676			110			7%

Total operating expenses		133,256			122,031			11,225			9%		239,662			220,135			19,527			9%

Operating income		50,322			51,590			(1,268	)		(2%)		80,788			82,655			(1,867	)		(2%)

OTHER INCOME AND EXPENSES, NET:
Interest expense		10,807			3,540			7,267			205%		21,577			6,657			14,920			224%
Interest income		(659	)		(394	)		(265	)		67%		(1,303	)		(731	)		(572	)		78%
Other (gains) and losses		147			377			(230	)		(61%)		(563	)		(1,626	)		1,063			(65%)
Equity in net (income) loss of affiliates		(60	)		128			(188	)		(147%)		81			183			(102	)		(56%)

Total other income and expenses, net		10,235			3,651			6,584			180%		19,792			4,483			15,309			341%


Income before income taxes		40,087			47,939			(7,852	)		(16%)		60,996			78,172			(17,176	)		(22%)
Income taxes		11,853			16,077			(4,224	)		(26%)		17,239			26,313			(9,074	)		(34%)

Net income	$	28,234		$	31,862		$	(3,628	)		(11%)	$	43,757		$	51,859		$	(8,102	)		(16%)


Basic earnings per share	$	0.48		$	0.55		$	(0.07	)		(13%)	$	0.75		$	0.89		$	(0.14	)		(16%)


Diluted earnings per share	$	0.48		$	0.55		$	(0.07	)		(13%)	$	0.74		$	0.89		$	(0.15	)		(17%)


Choice Hotels International, Inc.		Exhibit 2
Consolidated Balance Sheets


(In thousands, except per share amounts)	June 30, 2013			December 31, 2012
	(Unaudited)

ASSETS

Cash and cash equivalents	$	143,790		$	134,177
Accounts receivable, net		70,951			52,270
Investments, employee benefit plans, at fair value		377			3,486
Other current assets		40,586			43,537

Total current assets		255,704			233,470

Fixed assets and intangibles, net		147,034			130,937
Receivable – marketing and reservation fees		54,786			42,179
Investments, employee benefit plans, at fair value		14,114			12,755
Other assets		91,074			91,431


Total assets	$	562,712		$	510,772


LIABILITIES AND SHAREHOLDERS’ DEFICIT

Accounts payable and accrued expenses	$	102,291		$	94,266
Deferred revenue		67,757			71,154
Deferred compensation & retirement plan obligations		2,393			2,522
Current portion of long-term debt		8,205			8,195

Total current liabilities		180,646			176,137

Long-term debt		858,273			847,150
Deferred compensation & retirement plan obligations		20,114			20,399
Other liabilities		23,700			15,990


Total liabilities		1,082,733			1,059,676


Common stock, $0.01 par value		585			582
Additional paid-in-capital		111,580			110,246
Accumulated other comprehensive loss		(6,097	)		(4,216	)
Treasury stock, at cost		(920,355	)		(927,776	)
Retained earnings		294,266			272,260

Total shareholders’ deficit		(520,021	)		(548,904	)


Total liabilities and shareholders’ deficit	$	562,712		$	510,772


Choice Hotels International, Inc.		Exhibit 3
Consolidated Statements of Cash Flows
(Unaudited)


(In thousands)	Six Months Ended June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES ⁽¹⁾:

Net income	$	43,757		$	51,859

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,695			3,994
Provision for bad debts, net		1,420			1,236
Non-cash stock compensation and other charges		5,581			4,868
Non-cash interest and other (income) loss		967			(820	)
Deferred income taxes		4,169			(194	)
Dividends received from equity method investments		535			399
Equity in net (income) loss of affiliates		81			183

Changes in assets and liabilities:
Receivables		(21,156	)		(12,258	)
Receivable – marketing and reservation fees, net		(2,945	)		(2,389	)
Accounts payable		9,893			6,330
Accrued expenses		(18,463	)		(17,659	)
Income taxes payable/receivable		1,729			11,808
Deferred revenue		(3,318	)		(4,404	)
Other assets		(1,664	)		(4,331	)
Other liabilities		7,271			(820	)


NET CASH PROVIDED BY OPERATING ACTIVITIES ⁽¹⁾		32,552			37,802


CASH FLOWS FROM INVESTING ACTIVITIES ⁽¹⁾:

Investment in property and equipment		(21,005	)		(6,236	)
Equity method investments		(1,851	)		(6,315	)
Purchases of investments, employee benefit plans		(1,580	)		(969	)
Proceeds from sales of investments, employee benefit plans		3,934			8,969
Issuance of notes receivable		(3,641	)		(5,820	)
Collections of notes receivable		247			210
Other items, net		(304	)		(226	)


NET CASH USED IN INVESTING ACTIVITIES ⁽¹⁾		(24,200	)		(10,387	)


CASH FLOWS FROM FINANCING ACTIVITIES:

Net borrowings pursuant to revolving credit facilities		15,200			—
Principal payments on long-term debt		(4,095	)		(333	)
Proceeds from the issuance of long-term debt		—			393,444
Purchase of treasury stock		(3,651	)		(22,173	)
Dividends paid		(11,261	)		(21,396	)
Excess tax benefits from stock-based compensation		1,146			641
Debt issuance costs		—			(153	)
Proceeds from exercise of stock options		5,973			445


NET CASH PROVIDED BY FINANCING ACTIVITIES		3,312			350,475


Net change in cash and cash equivalents		11,664			377,890
Effect of foreign exchange rate changes on cash and cash equivalents		(2,051	)		443
Cash and cash equivalents at beginning of period		134,177			107,057


CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	143,790		$	485,390

⁽¹⁾

The company is currently reviewing, in consultation with its independent registered public accounting firm, its accounting policies regarding the presentation of its cash flows related to certain of its development advances and collections presented under the captions “Issuance and Collection of Notes Receivable”. The company’s statements of cash flows contained in this press release have been prepared in accordance with the company’s existing accounting policy which is to present these items as cash flows from investing activities, which is consistent with prior audited periods. However, our independent registered public accounting firm has recently questioned the appropriateness of classifying these items as cash flows from investing activities rather than as cash flows from operating activities. If the company determines that it is required to move these items from cash flows from investing activities to cash flows from operating activities in the current statements contained in this press release, its net cash provided by operating activities for the six months ended June 30, 2013 and 2012 will be reduced by $3.6 million and $1.5 million, respectively, with a corresponding adjustment to net cash used in investing activities. Until this review is complete, the company cannot determine if it will reclassify, restate or make other changes to its historical consolidated statements of cash flows, including the information contained in this press release.


		CHOICE HOTELS INTERNATIONAL, INC.		Exhibit 4
		SUPPLEMENTAL OPERATING INFORMATION
		DOMESTIC HOTEL SYSTEM
		(UNAUDITED)


	For the Six Months Ended June 30, 2013*							For the Six Months Ended June 30, 2012*							Change
	Average Daily Rate		Occupancy			RevPAR		Average Daily Rate		Occupancy			RevPAR		Average Daily Rate			Occupancy		RevPAR

Comfort Inn	$	79.42		54.2	%	$	43.08	$	77.48		53.6	%	$	41.52		2.5	%		60 bps		3.8	%
Comfort Suites		85.00		58.3	%		50.01		83.15		57.6	%		47.92		2.2	%		70 bps		4.4	%
Sleep		72.06		54.5	%		39.29		69.90		52.0	%		36.32		3.1	%		250 bps		8.2	%
Quality		67.16		48.4	%		32.49		66.29		46.8	%		31.03		1.3	%		160 bps		4.7	%
Clarion		72.04		46.7	%		33.65		71.85		44.6	%		32.07		0.3	%		210 bps		4.9	%
Econo Lodge		53.60		44.1	%		23.64		52.48		44.0	%		23.09		2.1	%		10 bps		2.4	%
Rodeway		50.43		47.0	%		23.70		49.36		46.2	%		22.81		2.2	%		80 bps		3.9	%
MainStay		70.33		63.6	%		44.74		67.02		67.4	%		45.16		4.9	%		(380) bps		(0.9	%)
Suburban		42.15		68.8	%		29.01		40.48		67.3	%		27.24		4.1	%		150 bps		6.5	%
Ascend Collection		120.34		60.6	%		72.90		109.96		59.4	%		65.28		9.4	%		120 bps		11.7	%


Total	$	71.81		51.7	%	$	37.10	$	70.38		50.7	%	$	35.66		2.0	%		100 bps		4.0	%

*	Operating statistics represent hotel operations from December through May


	For the Three Months Ended June 30, 2013*							For the Three Months Ended June 30, 2012*							Change
	Average Daily Rate		Occupancy			RevPAR		Average Daily Rate		Occupancy			RevPAR		Average Daily Rate			Occupancy		RevPAR

Comfort Inn	$	81.77		60.8	%	$	49.67	$	79.87		60.2	%	$	48.05		2.4	%		60 bps		3.4	%
Comfort Suites		87.52		64.9	%		56.82		85.71		64.2	%		55.01		2.1	%		70 bps		3.3	%
Sleep		74.30		61.3	%		45.54		72.52		58.7	%		42.56		2.5	%		260 bps		7.0	%
Quality		69.35		54.2	%		37.61		68.43		52.5	%		35.95		1.3	%		170 bps		4.6	%
Clarion		74.43		52.0	%		38.68		74.71		50.2	%		37.53		(0.4	%)		180 bps		3.1	%
Econo Lodge		55.06		49.4	%		27.19		54.14		49.2	%		26.62		1.7	%		20 bps		2.1	%
Rodeway		52.32		51.5	%		26.93		51.10		50.4	%		25.76		2.4	%		110 bps		4.5	%
MainStay		71.71		70.0	%		50.23		69.06		72.9	%		50.32		3.8	%		(290) bps		(0.2	%)
Suburban		43.16		73.9	%		31.90		41.58		71.9	%		29.89		3.8	%		200 bps		6.7	%
Ascend Collection		124.77		64.1	%		79.99		114.40		66.4	%		75.94		9.1	%		(230) bps		5.3	%


Total	$	74.02		57.5	%	$	42.60	$	72.69		56.6	%	$	41.16		1.8	%		90 bps		3.5	%

*	Operating statistics represent hotel operations from March through May


	For the Quarter Ended						For the Six Months Ended
	6/30/2013			6/30/2012			6/30/2013			6/30/2012

System-wide effective royalty rate		4.35	%		4.32	%		4.36	%		4.33	%


		CHOICE HOTELS INTERNATIONAL, INC.		Exhibit 5
		SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
		(UNAUDITED)


	June 30, 2013				June 30, 2012				Variance
	Hotels		Rooms		Hotels		Rooms		Hotels			Rooms			%			%

Comfort Inn		1,311		102,882		1,379		107,895		(68	)		(5,013	)		(4.9	%)		(4.6	%)
Comfort Suites		587		45,339		608		46,903		(21	)		(1,564	)		(3.5	%)		(3.3	%)
Sleep		379		27,478		391		28,327		(12	)		(849	)		(3.1	%)		(3.0	%)
Quality		1,192		99,761		1,082		93,655		110			6,106			10.2	%		6.5	%
Clarion		191		27,184		189		27,534		2			(350	)		1.1	%		(1.3	%)
Econo Lodge		817		49,608		801		49,114		16			494			2.0	%		1.0	%
Rodeway		427		24,782		401		22,671		26			2,111			6.5	%		9.3	%
MainStay		43		3,332		40		3,083		3			249			7.5	%		8.1	%
Suburban		63		7,241		62		7,260		1			(19	)		1.6	%		(0.3	%)
Ascend Collection		90		7,521		52		4,652		38			2,869			73.1	%		61.7	%
Cambria Suites		18		2,094		19		2,221		(1	)		(127	)		(5.3	%)		(5.7	%)


Domestic Franchises		5,118		397,222		5,024		393,315		94			3,907			1.9	%		1.0	%

International Franchises		1,169		104,701		1,175		104,522		(6	)		179			(0.5	%)		0.2	%


Total Franchises		6,287		501,923		6,199		497,837		88			4,086			1.4	%		0.8	%

Exhibit 6

CHOICE HOTELS INTERNATIONAL, INC.

SUPPLEMENTAL INFORMATION BY BRAND

DEVELOPMENT RESULTS – DOMESTIC NEW HOTEL CONTRACTS

(UNAUDITED)


	For the Six Months Ended June 30, 2013						For the Six Months Ended June 30, 2012						% Change
	New Construction		Conversion		Total		New Construction		Conversion		Total		New Construction		Conversion		Total

Comfort Inn		5		18		23		6		12		18		(17%)		50%		28%
Comfort Suites		5		2		7		7		4		11		(29%)		(50%)		(36%)
Sleep		5		—		5		11		1		12		(55%)		(100%)		(58%)
Quality		1		44		45		—		63		63		NM		(30%)		(29%)
Clarion		—		7		7		—		7		7		NM		0%		0%
Econo Lodge		—		31		31		—		18		18		NM		72%		72%
Rodeway		—		24		24		—		31		31		NM		(23%)		(23%)
MainStay		4		—		4		1		1		2		300%		(100%)		100%
Suburban		—		1		1		—		1		1		NM		0%		0%
Ascend Collection		3		36		39		1		4		5		200%		800%		680%
Cambria Suites		1		—		1		2		—		2		(50%)		NM		(50%)


Total Domestic System		24		163		187		28		142		170		(14%)		15%		10%


	For the Three Months Ended June 30, 2013						For the Three Months Ended June 30, 2012						% Change
	New Construction		Conversion		Total		New Construction		Conversion		Total		New Construction		Conversion		Total

Comfort Inn		2		13		15		5		4		9		(60%)		225%		67%
Comfort Suites		3		—		3		6		2		8		(50%)		(100%)		(63%)
Sleep		4		—		4		8		1		9		(50%)		(100%)		(56%)
Quality		1		25		26		—		36		36		NM		(31%)		(28%)
Clarion		—		4		4		—		5		5		NM		(20%)		(20%)
Econo Lodge		—		23		23		—		14		14		NM		64%		64%
Rodeway		—		15		15		—		19		19		NM		(21%)		(21%)
MainStay		3		—		3		1		1		2		200%		(100%)		50%
Suburban		—		—		—		—		1		1		NM		(100%)		(100%)
Ascend Collection		1		10		11		—		2		2		NM		400%		450%
Cambria Suites		—		—		—		1		—		1		(100%)		NM		(100%)


Total Domestic System		14		90		104		21		85		106		(33%)		6%		(2%)

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
	June 30, 2013 Units						June 30, 2012 Units						Conversion						New Construction					Total
	Conversion		New Construction		Total		Conversion		New Construction		Total		Units			%			Units			%		Units			%

Comfort Inn		34		46		80		25		40		65		9			36	%		6			15%		15			23%
Comfort Suites		2		61		63		2		82		84		—			0	%		(21	)		(26%)		(21	)		(25%)
Sleep Inn		—		44		44		1		40		41		(1	)		(100	%)		4			10%		3			7%
Quality		34		3		37		39		3		42		(5	)		(13	%)		—			0%		(5	)		(12%)
Clarion		8		—		8		14		1		15		(6	)		(43	%)		(1	)		(100%)		(7	)		(47%)
Econo Lodge		26		—		26		20		1		21		6			30	%		(1	)		(100%)		5			24%
Rodeway		24		—		24		31		1		32		(7	)		(23	%)		(1	)		(100%)		(8	)		(25%)
MainStay		—		26		26		1		22		23		(1	)		(100	%)		4			18%		3			13%
Suburban		3		12		15		2		14		16		1			50	%		(2	)		(14%)		(1	)		(6%)
Ascend Collection		14		8		22		8		5		13		6			75	%		3			60%		9			69%
Cambria Suites		—		20		20		—		26		26		—			NM			(6	)		(23%)		(6	)		(23%)


		145		220		365		143		235		378		2			1	%		(15	)		(6%)		(13	)		(3%)


		CHOICE HOTELS INTERNATIONAL, INC.		Exhibit 8
		SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
		(UNAUDITED)

CALCULATION OF FRANCHISING REVENUES AND FRANCHISING MARGINS


(dollar amounts in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Franchising Revenues:

Total Revenues	$	183,578		$	173,621		$	320,450		$	302,790
Adjustments:
Marketing and reservation revenues		(99,645	)		(94,633	)		(176,085	)		(165,562	)
Hotel operations		(1,334	)		(1,224	)		(2,290	)		(2,202	)

Franchising Revenues	$	82,599		$	77,764		$	142,075		$	135,026


Franchising Margins:

Operating Margin:

Total Revenues	$	183,578		$	173,621		$	320,450		$	302,790
Operating Income	$	50,322		$	51,590		$	80,788		$	82,655

Operating Margin		27.4	%		29.7	%		25.2	%		27.3	%


Franchising Margin:

Franchising Revenues	$	82,599		$	77,764		$	142,075		$	135,026

Operating Income	$	50,322		$	51,590		$	80,788		$	82,655
SkyTouch Division		3,159			831			5,401			1,338
Hotel operations		(423	)		(357	)		(504	)		(526	)

	$	53,058		$	52,064		$	85,685		$	83,467



Franchising Margins		64.2	%		67.0	%		60.3	%		61.8	%

EBITDA Reconciliation


(in thousands)
	Q2 2013 Actuals		Q2 2012 Actuals		Six Months Ended June 30, 2013 Actuals		Six Months Ended June 30, 2012 Actuals		Full-Year 2013 Outlook Range

Operating Income (per GAAP)	$	50,322	$	51,590	$	80,788	$	82,655	$	193,900	$	196,900
Depreciation and amortization	$	2,520	$	1,977	$	4,695	$	3,994		9,600		9,600

Earnings before interest, taxes, depreciation & amortization (non-GAAP)	$	52,842	$	53,567	$	85,483	$	86,649	$	203,500	$	206,500

CHOICE HOTELS INTERNATIONAL INC /DE - FORM 8-K - EX-99.1 - July 26, 2013

Attached files

CHOICE HOTELS INTERNATIONAL INC /DE Reports