2003 Annual Report

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) AND COMPREHENSIVE INCOME
(In thousands, except share amounts)

	Common				Common								Accumulated
	Stock –			Stock –						Other
	Shares			Par			Additional			Comprehensive			Deferred			Treasury			Comprehensive			Retained
	Outstanding			Value			Paid-			in-Capital			Income (Loss)			Compensation			Stock Income			Earnings			Total
Balance as of December 31, 2000		52,561,568		$	526		$	55,245		$	(54	)	$	(1,300	)	$	(129,172	)				$	164,848		$	90,093
Comprehensive income
Net income		—			—			—			—			—			—			14,327			14,327			14,327
Other comprehensive income:
Foreign currency translation adjustments		—			—			—			—			—			—			(414	)		—			(414	)
Unrealized loss on available for sale
securities, net of taxes, net of
reclassification adjustment (Note 16)		—			—			—			—			—			—			(310	)		—			(310	)
Other comprehensive loss		—			—			—			(724	)		—			—			(724	)		—			—
Comprehensive income																			$	13,603
Deferred gain on hedge		—			—			—			424			—			—						—			424
Exercise of stock options/grants, net		1,287,454			13			14,885			—			—			1,503						—			16,401
Issuance of restricted stock		155,515			1			—			—			(2,304	)		2,303						—			—
Amortization of deferred compensation related to
restricted stock grants		—			—			—			—			747			—						—			747
Treasury purchases		(12,006,900	)		(120	)		—			—			—			(185,687	)					—			(185,807	)
Balance as of December 31, 2001		41,997,637		$	420		$	70,130		$	(354	)	$	(2,857	)	$	(311,053	)				$	179,175		$	(64,539	)
Comprehensive income
Net income		—			—			—			—			—			—			60,844			60,844			60,844
Other comprehensive income:
Foreign currency translation adjustments		—			—			—			—			—			—			341			—			341
Amortization of deferred gain on hedge, net
of taxes		—			—			—			—			—			—			(67	)		—			(67	)
Unrealized gain on available for sale
securities, net of taxes		—			—			—			—			—			—			122			—			122
Other comprehensive income		—			—			—			396			—			—			396			—			—
Comprehensive income																			$	61,240
Exercise of stock options		442,869			4			1,762			—			—			5,768						—			7,534
Issuance of restricted stock		109,894			1			—			—			(2,301	)		2,300						—			—
Stock compensation related to restructuring		—			—			1,208			—			—			—						—			1,208
Amortization of deferred compensation related to
restricted stock grants		—			—			—			—			1,666			—						—			1,666
Treasury purchases		(5,387,184	)		(54	)		—			—			—			(120,854	)					—			(120,908	)
Balance as of December 31, 2002		37,163,216		$	371		$	73,100		$	42		$	(3,492	)	$	(423,839	)				$	240,019		$	(113,799	)
Comprehensive income
Net income		—			—			—			—			—			—			71,863			71,863			71,863
Other comprehensive income:
Foreign currency translation
adjustments		—			—			—			—			—			—			1,101			—			1,101
Amortization of deferred gain on hedge,
net of taxes		—			—			—			—			—			—			(67	)		—			(67	)
Unrealized gain on available for sale
securities, net of taxes		—			—			—			—			—			—			62			—			62
Other comprehensive income		—			—			—			1,096			—			—			1,096			—			—
Comprehensive income																			$	72,959
Exercise of stock options		462,522			5			198			—			—			7,845						—			8,048
Issuance and cancellation of restricted stock		7,428			—			(108	)		—			(72	)		180						—			—
Stock compensation related to stock options		—			—			1,306			—			—			—						—			1,306
Amortization of deferred compensation
related to restricted stock grants		—			—			—			—			923			—						—			923
Dividends declared		—			—			—			—			—			—						(6,899	)		(6,899	)
Treasury purchases		(2,887,313	)		(29	)		—			—			—			(80,696	)					—			(80,725	)
Balance as of December 31, 2003		34,745,853		$	347		$	74,496		$	1,138		$	(2,641	)	$	(496,510	)				$	304,983		$	(118,187	)

The accompanying notes are an integral part of these consolidated financial statements.