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CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In December 2003, the FASB revised FIN No. 46, “Consolidation of Variable Interest Entities—an Interpretation of “Accounting Research Bulletin” (“ARB”) No. 51.” This Interpretation, originally issued in
January 2002, clarifies the application of the majority voting interest requirement of ARB No. 51, “Consolidated Financial Statements,” to certain types of variable interest entities that do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The controlling financial interest may be achieved through arrangements that do not involve voting interests. Under FIN No. 46, if an entity is determined to be a variable interest entity, it must be consolidated by the enterprise that absorbs the majority of the entity’s expected losses if they occur, receives a majority of the entity’s expected residual returns if they occur, or both. The Company adopted the applicable provisions of FIN No. 46 on January 31, 2003. We were not required to consolidate any previously unconsolidated entities as a result of adopting FIN No. 46. The impact of adopting the provisions of FIN No. 46 was not material to the Company’s results of operations or financial position.
On May 31, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This standard addresses how certain financial instruments with characteristics of both liabilities and equity should be classified and measured. The provisions of SFAS No. 150 are effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, or our third quarter of 2003. The adoption of SFAS No. 150 did not have a material impact on the Company’s results of operations or financial position.
23. Selected Quarterly Financial Data – (Unaudited)
| |
|
First |
|
Second |
|
Third |
|
Fourth |
|
| |
|
Quarter |
Quarter |
Quarter |
Quarter |
2003 |
 |
|
|
|
|
|
|
| |
|
(In thousands, except per share data) |
| |
Revenues |
$ |
81,556 |
|
$ |
103,497 |
|
$ |
105,893 |
|
$ |
95,158 |
|
$ |
386,104 |
|
| |
Operating income |
$ |
17,232 |
|
$ |
28,667 |
|
$ |
39,772 |
|
$ |
28,312 |
|
$ |
113,983 |
|
| |
Income before income taxes |
$ |
15,562 |
|
$ |
27,487 |
|
$ |
38,554 |
|
$ |
30,804 |
|
$ |
112,407 |
|
| |
Net income |
$ |
9,687 |
|
$ |
17,111 |
|
$ |
24,345 |
|
$ |
20,720 |
|
$ |
71,863 |
|
| |
Per basic share: |
| |
Net income |
$ |
0.26 |
|
$ |
0.48 |
|
$ |
0.68 |
|
$ |
0.59 |
|
$ |
2.01 |
|
| |
Per diluted share: |
| |
Net income |
$ |
0.26 |
|
$ |
0.47 |
|
$ |
0.66 |
|
$ |
0.57 |
|
$ |
1.96 |
|
|
| |
|
First |
Second |
Third |
Fourth |
| |
|
Quarter |
Quarter |
Quarter |
Quarter |
2002 |
|
|
|
|
|
|
|
| |
|
(In thousands, except per share data) |
| |
Revenues |
$ |
75,330 |
|
$ |
100,469 |
|
$ |
105,030 |
|
$ |
84,733 |
|
$ |
365,562 |
|
| |
Operating income |
$ |
16,044 |
|
$ |
27,447 |
|
$ |
36,585 |
|
$ |
24,624 |
|
$ |
104,700 |
|
| |
Income before income taxes |
$ |
14,056 |
|
$ |
25,178 |
|
$ |
33,723 |
|
$ |
22,861 |
|
$ |
95,818 |
|
| |
Net income |
$ |
8,574 |
|
$ |
15,306 |
|
$ |
21,867 |
|
$ |
15,097 |
|
$ |
60,844 |
|
| |
Per basic share: |
| |
Net income |
$ |
0.21 |
|
$ |
0.38 |
|
$ |
0.55 |
|
$ |
0.41 |
|
$ |
1.55 |
|
| |
Per diluted share: |
| |
Net income |
$ |
0.20 |
|
$ |
0.38 |
|
$ |
0.54 |
|
$ |
0.40 |
|
$ |
1.52 |
|
The matters which effect the comparability of our quarterly results include seasonality, the acquisition of Flag in June 2002, charges related to our fourth quarter 2002 restructuring and the gain related to the fourth quarter 2003 note prepayment by Sunburst.
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