Choice Reports 1Q Earnings, Revises ’02 EPS Estimates Upward

SILVER SPRING, MD— Choice Hotels International reported first quarter 2002 net income of $8.6 million, or $0.20 diluted earnings per share (EPS), compared to the $7.4 million in net income and $0.16 diluted EPS reported for first quarter 2001. The 2001 results include an after-tax loss of $1.3 million related to a disposed investment and $0.5 million of goodwill amortization expense. Excluding the investment loss and impact of goodwill amortization, 2001 comparable net income and diluted EPS would have been $9.2 million and $0.20 per share, respectively. “Our business model continues to demonstrate the fundamental strength of our franchising company,” said Charles Ledsinger, Jr., president/CEO. “Focused cost containmentinitiatives, coupled with lower interest rates and strong unit growth, offset lower royalty revenues due to reduced RevPAR performance in a slower economy.” Overall, Choice signed 59 hotel franchise contracts representing 5,278 rooms in first quarter 2002, compared to 57 contracts representing 5,217 rooms for the same period a year ago. Of that total, 49 were for conversions and 10 for new construction, compared to 31 conversions and 26 new construction in first quarter 2001. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $18.8 million for first quarter 2002, compared to $20.3 million for first quarter 2001. Franchise EBITDA margins were 60.1% for first quarter 2002, compared to 61.6% for the same period a year ago. In addition, the company announced that 2002 EBITDA should approximate $115 million to $117 million, with 2002 diluted EPS reaching $1.41 to $1.43, up from the previous estimate of $1.37 to $1.40. The company expects second quarter 2002 diluted EPS to be $0.34 to $0.36.