CHOICE HOTELS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

12. Pension, Profit Sharing, and Incentive Plans

Bonuses accrued for key executives of the Company under incentive compensation plans were $1.1 million at both December 31, 2001 and 2000.

During 2001, 2000 and 1999, employees of the Company participated in 401(k) retirement plans sponsored by the Company. For the years ended December 31, 2001, 2000 and 1999, the Company recorded compensation expense of $1.7 million, $1.6 million and $1.3 million, respectively, related to the plans.

13. Income Taxes

Income before income taxes were derived from the following:

The provisions for income taxes are as follows: