2003 Annual Report

CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Scheduled maturities of debt as of December 31, 2003 were as follows:

Year		(In thousands)
2004		$	23,829
2005			26,513
2006			96,167
2007			146
2008			99,866
Thereafter			131
Total		$	246,652

     On June 29, 2001, the Company refinanced its senior credit facility (the “New Credit Facility”) in the amount of $260 million with a new maturity date of June 29, 2006. The New Credit Facility originally provided for a term loan of $150 million and a revolving credit facility of $110 million. On September 29, 2001, the Company signed an amendment to the New Credit Facility, for an additional $5 million under the revolving credit facility, bringing the total amount of available commitments to $265 million. The amendment also transferred $35 million from the term loan to the revolving credit facility. As amended, the initial term loan amount was $115 million and the revolving credit facility is $150 million. The term loan ($81.5 million of which is outstanding at December 31, 2003) is payable over five years, $21 million of which is due in 2004. Borrowings under the New Credit Facility bear interest, at one of several rates, at the option of the Company, including LIBOR plus 0.60% to 2.0%, based upon the credit rating of the Company and the loan type. The New Credit Facility requires the Company to pay annual fees ranging, based upon the credit rating of the Company, between ¹ / ₁₅ of 1% to ¹ / ₂ of 1% of the aggregate available commitment under the revolving credit facility.

     The New Credit Facility includes customary financial and other covenants that require the maintenance of certain ratios including maximum leverage and interest coverage and restricts the Company’s ability to make certain investments, incur debt and dispose of assets, among other restrictions. As of December 31, 2003, the Company is in compliance with all covenants under the New Credit Facility.

     On May 1, 1998, the Company issued $100 million of senior unsecured notes (the “Notes”) at a discount of $0.6 million, bearing a coupon rate of 7.13% with an effective rate of 7.22%. The Notes will mature on May 1, 2008. Interest on the Notes is paid semi-annually.

     The Company has two subordinated lines of credit with banks providing up to an aggregate of $20 million of borrowings. In April 2003, the Company entered into a $10.0 million revolving line of credit with a maturity date of April 2004. In May 2003, the Company extended the maturity date of an existing $10.0 million revolving line of credit originally obtained in August 2002 to May 2004. The lines of credit include customary financial and other covenants that require the maintenance of certain ratios identical to those included in the Company’s New Credit Facility. Borrowings under the lines of credit bear interest at rates established at the time of borrowing based on prime minus 175 basis points. As of December 31, 2003, approximately $2.6 million was outstanding pursuant to one of these lines of credit.

11. Foreign Operations

     The Company accounts for foreign currency translation in accordance with SFAS No. 52, “Foreign Currency Translation.” Revenues generated by foreign operations, including royalty, marketing and reservations fees, for the years ended December 31, 2003, 2002 and 2001 were $19.1 million, $14.2 million and $12.4 million, respectively. Net income (loss), including equity in the income and (loss) of equity method investments, attributable to the Company’s foreign operations was $3.6 million, $2.4 million and $(35.2 million) for the years ended December 31, 2003, 2002 and 2001, respectively.