<PAGE>
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1998
------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _______________
Commission File Number 1-13393
-------
A. Full title of the plan and address of the plan, if different from that of
the issuer named below:
CHOICE HOTELS INTERNATIONAL, INC. RETIREMENT SAVINGS & INVESTMENT PLAN
- ----------------------------------------------------------------------
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principle executive office:
Choice Hotels International, Inc.
10750 Columbia Pike, Silver Spring, Maryland 20901
<PAGE>
Report of Independent Public Accountants
To Choice Hotels International, Inc.:
We have audited the accompanying statement of net assets available for benefits
of the Choice Hotels International, Inc. Retirement, Savings and Investment Plan
(the "Plan" - see Note 1) as of December 31, 1998, and the related statement of
changes in net assets available for benefits with fund information for the year
ended December 31, 1998. These financial statements and the schedules referred
to below are the responsibility of the Plan's management. Our responsibility is
to express an opinion on these financial statements and schedules based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998, and the changes in net assets available for benefits for the
year ended December 31, 1998, in conformity with generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and of reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the changes in its net
assets available for benefits of each fund. These supplemental schedules and
fund information have been subjected to the auditing procedures applied in our
audit of the basic financial statements and, in our opinion, are fairly stated,
in all material respects, in relation to the basic financial statements taken as
a whole.
ARTHUR ANDERSEN LLP
Washington, D.C.
June 2, 1999
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Statement of Net Assets Available for Benefits
As of December 31, 1998 1
Statement of Changes in Net Assets Available for Benefits, with Fund Information
For the Year Ended December 31, 1998 2
Notes to Financial Statements
As of December 31, 1998 4
Item 27(a) - Schedule of Assets Held for Investment Purposes
As of December 31, 1998 8
Item 27(d) - Schedule of Reportable (5%) Transactions
For the Year Ended December 31, 1998 9
Item 27(b) - Schedule of Loans or Fixed Income Obligations
As of December 31, 1998 *
Item 27(c) - Schedule of Leases in Default or Classified as Uncollectible
As of December 31, 1998 *
Item 27(e) - Schedule of Nonexempt Transactions
For the Year Ended December 31, 1998 *
</TABLE>
*Schedules omitted because there were no such transactions, obligations, or
leases in default.
<PAGE>
Choice Hotels International, Inc.
Retirement, Savings and Investment Plan
Statement of Net Assets Available for Benefits
As of December 31, 1998
<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Assets:
Participant directed investments held by
Merrill Lynch Trust Company Mutual Funds-
Alliance Premier Growth Fund $ 9,978,372
Merrill Lynch Capital Fund 6,419,617
Hotchkis and Wiley International Equity Fund 2,753,386
Merrill Lynch S&P 500 Index Fund 213,979
Pimco Total Return Fund 115,222
Pimco Small Cap Value Fund 108,491
Common/Collective Trusts-
Merrill Lynch Retirement Preservation Trust 2,980,870
Common Stock-
Choice Hotels Common Stock Fund 1,753,572
Sunburst Hospitality Common Stock Fund 519
-----------
Total investments 24,324,028
-----------
Participant loans 546,724
Contributions receivable-
Employer, paid subsequent to year-end 882,350
Employee, paid subsequent to year-end 68,569
-----------
Net assets available for benefits $25,821,671
-----------
</TABLE>
The accompanying notes are an integral part of this statement.
-1-
<PAGE>
Choice Hotels International, Inc.
Retirement, Savings and Investment Plan
Statement of Changes in Net Assets Available for Benefits, With Fund Information
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Participant Directed
-------------------------------------------------------------------------------
Vanguard
U.S.
Vanguard T. Rowe Treasury
Wellington Price Money T. Rowe
Balanced International Market Price Stable
Janus Fund Fund Fund Fund Value Fund
------------ ---------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ - $ - $ - $ -
Employee 438,544 315,758 155,276 94,012 58,357
----------- ------------ ------------ ------------ ------------
Total 438,544 315,758 155,276 94,012 58,357
Interest and dividends, including
interest on participant loan
transactions 27,228 97,767 294 45,214 29,070
Net (depreciation) appreciation in
market value 1,567,286 357,124 427,852 - -
Rollover contributions 8,100 7,302 3,445 6,253 281
----------- ------------ ------------ ------------ ------------
Total additions 2,041,158 777,951 586,867 145,479 87,708
----------- ------------ ------------ ------------ ------------
Transfers between investment
options, including principal
portions of participant loan
transactions (8,089,995) (6,069,976) (3,205,213) (1,545,240) (839,203)
----------- ------------ ------------ ------------ ------------
Deductions:
Benefit payments (824,853) (662,065) (208,901) (177,426) (30,474)
Transfers in from Sunburst Plan 6,873,690 5,954,090 2,827,247 1,577,187 781,969
----------- ------------ ------------ ------------ ------------
Net increase - - - - -
Net assets available for benefits,
beginning of year - - - - -
----------- ------------ ------------ ------------ ------------
Net assets available for benefits,
end of year $ - $ - $ - $ - $ -
=========== ============ ============ ============ ============
<CAPTION>
Alliance Merrill Hotchkis & Merrill
Premier Lynch Wiley Lynch S&P
Growth Growth International 500 Index
Fund Fund Equity Fund Fund
-------- ------- ------------- ---------
<S> <C> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ - $ - $ --
Employee 284,207 165,283 106,086 40,429
---------- ---------- ---------- --------
Total 284,207 165,283 106,086 40,429
Interest and dividends, including
interest on participant loan
transactions 201,500 157,014 66,771 7,699
Net (depreciation) appreciation in
market value 997,073 (62,004) (144,442) 7,210
Rollover contributions 1,833 - 323 979
---------- ---------- ---------- --------
Total additions 1,484,613 260,293 30,738 56,317
---------- ---------- ---------- --------
Transfers between investment
options, including principal
portions of participant loan
transactions 8,533,968 6,204,617 2,732,464 167,662
---------- ---------- ---------- --------
Deductions:
Benefit payments (40,209) (45,293) (9,816) -
Transfers in from Sunburst Plan - - - -
---------- ---------- ---------- --------
Net increase 9,978,372 6,419,617 2,753,386 $213,979
Net assets available for benefits,
beginning of year - - - -
---------- ---------- ---------- --------
Net assets available for benefits,
end of year $9,978,372 $6,419,617 $2,753,386 $213,979
========== ========== ========== ========
</TABLE>
The accompanying notes are an integral part of this statement.
-2-
<PAGE>
Choice Hotels International, Inc.
Retirement, Savings and Investment Plan
Statement of Changes in Net Assets Available for Benefits, With Fund Information
For the Year Ended December 31, 1998
(Continued)
<TABLE>
<CAPTION>
Participant Directed
------------------------------------------------------------------------------
Merrill
Lynch Choice Sunburst
Pimco Total Pimco Retirement Hotels Hospitality
Return Small Cap Preservation Common Common
Fund Value Fund Trust Stock Fund Stock Fund
----------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ - $ 1,547 $ 808,600 $ -
Employee 13,926 26,550 99,215 93,295 -
-------- --------- ----------- ---------- ---------
Total 13,926 26,550 100,762 901,895 -
Interest and dividends, including interest
on participant loan transactions 3,772 3,244 66,362 1,457 -
Net (depreciation) appreciation in market
value (2,844) 2,281 672 (615,704) 205
Rollover contributions 410 528 3,857 1,241 -
-------- --------- ----------- ---------- ---------
Total additions 15,264 32,603 171,653 288,889 205
-------- --------- ----------- ---------- ---------
Transfers between investment options,
including principal portions of
participant loan transactions 99,958 75,888 2,821,075 (160,745) (130,383)
-------- --------- ----------- ---------- ---------
Deductions:
Benefit payments - - (11,858) (184,281) -
Transfers in from Sunburst Plan - - - 1,809,709 130,697
-------- --------- ----------- ---------- ---------
Net increase 115,222 108,491 2,980,870 1,753,572 519
Net assets available for benefits,
beginning of year - - - - -
-------- --------- ----------- ---------- ---------
Net assets available for benefits,
end of year $115,222 $ 108,491 $2,980,870 $1,753,572 $ 519
======== ========= =========== ========== =========
<CAPTION>
Non-
Manor Care participant
Common Participant Directed
Stock Fund Loans Other 1998 Total
---------- ------- ---------- ----------
<S> <C> <C> <C> <C>
Additions:
Contributions-
Employer $ - $ - $ 72,203 $ 882,350
Employee - - 78,648 1,969,586
--------- -------- ---------- -----------
Total - - 150,851 2,851,936
Interest and dividends, including interest
on participant loan transactions 629 - - 770,021
Net (depreciation) appreciation in market
value 44,945 - - 2,579,654
Rollover contributions - - - 34,552
--------- -------- ---------- -----------
Total additions 45,574 - 150,851 6,176,163
--------- -------- ---------- -----------
Transfers between investment options,
including principal portions of
participant loan transactions (553,854) (31,023) - -
--------- -------- ---------- -----------
Deductions:
Benefit payments (25,375) - - (2,220,551)
Transfers in from Sunburst Plan 533,655 577,747 800,068 21,866,059
--------- -------- ---------- -----------
Net increase - 546,724 950,919 25,821,671
Net assets available for benefits,
beginning of year - - - -
--------- -------- ---------- -----------
Net assets available for benefits,
end of year $ _ $546,724 $ 950,919 $25,821,671
========= ======== ========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
Choice Hotels International, Inc.
Retirement, Savings and Investment Plan
Notes to Financial Statements
As of December 31, 1998
1. Nature of the Organization and Description of the Plan:
Prior to January 1, 1998, the employees of Choice Hotels International, Inc.
("Choice") were part of the Sunburst Hospitality Corporation Retirement, Savings
and Investment Plan ("Sunburst Plan"). The Sunburst Plan was a defined
contribution, salary deferral plan available to the employees of Choice and
Sunburst Hospitality Corporation ("Sunburst"). Sunburst is a leading national
hotel company that owns and operates approximately 75 hotels. Choice is of the
second largest franchiser of hotels in the world. Choice franchises
approximately 3,500 hotels operated under the following brand names: Quality
Inn, Comfort Inn, Clarion, Sleep Inn, Rodeway Inn, EconoLodge, and Mainstay
Suites.
Choice Hotels International, Inc. was formerly a subsidiary of Manor Care, Inc.
("Manor Care"). On November 1, 1996, Manor Care separated its lodging business
from its health care business by distributing to its shareholders all of the
outstanding common stock of Choice Hotels International, Inc. (the "Manor Care
Distribution"). On October 15, 1997, Choice Hotels International, Inc.
separated its franchising and European hotel business from its owned hotel
business by distributing to its shareholders the common stock of Choice Hotels
Franchising (the "Choice Distribution"). Subsequent to the Choice Distribution,
Choice Hotels International, Inc. changed its name to Sunburst Hospitality
Corporation and Choice Hotels Franchising changed its name to Choice Hotels
International, Inc. In connection with the Choice Distribution, the name of the
original Choice Hotels International, Inc. Retirement, Savings and Investment
Plan was changed to the Sunburst Hospitality Corporation Retirement, Savings and
Investment Plan.
On January 1, 1998, a new Choice Hotels International, Inc. Retirement, Savings
and Investment Plan (the "Plan") was formed in order to maintain a separate plan
for eligible Choice employees. The assets of both plans were initially co-
mingled as a master trust with transactions separately recorded. Effective
August 1, 1998, the Plan changed its trustee from Chase Manhattan Bank to
Merrill Lynch Trust Company ("Merrill Lynch") and the assets of the master plan
were split between the Sunburst Hospitality Corporation Retirement, Savings and
Investment Plan and the Plan.
The following description of the Plan provides general information only.
Participants should refer to the plan agreement for a more complete description
of the Plan's provisions.
General
The Plan is a participant directed, defined contribution, salary deferral plan
subject to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
Eligibility and Contributions
All employees of Choice are eligible to participate in the Plan if they are:
. Are at least 21 years of age
. Have completed one year of service
. Have worked at least 1,000 hours in the previous year
Participants may elect to contribute up to 15 percent of their annual
compensation to the Plan, subject to IRS limitations.
Choice matches an employee's contributions, up to a total match of 6 percent of
employee salary.
Length of Service Percentage Match
-------------------------------- ------------------------------------
1 - 5 years 25%
-4-
<PAGE>
6 - 9 years 75%
10 years or more 100%
Each participant's account is credited with the participant's contribution and
allocations of (a) Choice contributions and (b) Plan earnings, and charged with
an allocation of administrative expenses. Allocations are based on participant
earnings or account balances, as defined. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's vested
account.
Forfeitures
Choice has the right to apply amounts forfeited by employees to reduce employer
contributions. In 1998, forfeitures of $3,060 were used to reduce the employer
contribution and allocated to the plan funds in conjunction with Choice's
matching contributions.
Benefits and Vesting
Participants are immediately vested in all participant contributions and
earnings on such contributions. Participants vest in the Choice contributions
20 percent per year beginning at the end of their third year, resulting in full
vesting at the end of their seventh year.
On termination of service due to death, disability or retirement, a participant
may elect to receive either a lump sum amount equal to the value of the
participant's vested interest in his or her account, or annual installments over
a ten-year period. For termination of service due to other reasons, a
participant may receive the value of the vested interest in his or her account
as a lump-sum distribution only.
Participants who leave Choice with a balance of less than $5,000 are required to
roll the money over into another 401(k) or IRA account, or receive a direct
payment after withholding of applicable federal and state tax provisions. If
the participant's balance is greater than $5,000, the participant may retain
their investment in the Plan for as long as IRS regulations allow.
Investments
Participants may direct the investment of their contributions into their choice
of mutual funds, common collective trusts, or the common stock of Choice or
Sunburst. Effective August 1, 1998, the Plan changed trustees from Chase
Manhattan Bank to Merrill Lynch. Due to this change in trustee, the investment
options previously available to participants were changed to the equivalent
investment instruments provided by Merrill Lynch. These balances in the old
investments were transferred to the new investments as follows:
<TABLE>
<CAPTION>
Old Investment Funds New Investment Funds
- ----------------------------------------------- ---------------------------------------------------
<S> <C>
Vanguard U.S. Treasury Money Market Fund Merrill Lynch Retirement Preservation Trust
Vanguard Wellington Balanced Fund Merrill Lynch Capital Fund
T. Rowe Price Stable Value Fund Merrill Lynch Retirement Preservation Trust
T. Rowe Price International Stock Fund Hotchkis & Wiley International Equity Fund
Janus Fund Alliance Premier Growth Fund
Choice Hotels Common Stock Fund Choice Hotels Common Stock Fund
Sunburst Hospitality Common Stock Fund Sunburst Hospitality Common Stock Fund
</TABLE>
In addition, Merrill Lynch has added the following investment options that were
not previously offered by Chase Manhattan Bank:
Pimco Total Return Fund
Pimco Small Cap Value Fund
Merrill Lynch S&P 500 Index Fund
In order to effectively implement this transfer of investments held by
employees, the trustee and plan administrators implemented a transition period
from August 1, 1998 to October 20, 1998, where participants could not change
their investment elections, or receive any loans and distributions. As a
result, the old investments held by employees as of August 1, 1998 were
transferred to the new funds, as disclosed above, in the same percentages
previously elected.
-5-
<PAGE>
Additionally, the Choice's contribution is made in Choice common stock. This
Choice common stock and all other investments are reported at quoted market
values. Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded when
declared. All income earned is allocated daily.
Loans
Participant loans are made available to all participants who have a vested
account balance. The minimum loan amount is $750 and the maximum loan amount is
the lesser of $50,000 or 50 percent of a participant's vested account balance.
Additionally, interest rates are equal to 1 percent above the Prime Rate on the
date the loan is issued and there is a $35 loan-processing fee per loan.
Participants may not have more than one loan outstanding at any time. Loans
receivable are valued at cost, which approximates fair value.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
2. Summary of Significant Accounting Policies:
Basis of Accounting
The financial statements are presented on the accrual basis of accounting in
accordance with generally accepted accounting principles.
Trustee Fees
Investment management fees are netted against investment earnings in each fund.
Trustee fees and all administrative expenses of the Plan are currently paid by
Choice. Choice currently has no intention to seek reimbursement from the Plan
for prior or future expenses paid by Choice.
3. Federal Income Tax Status:
The Plan has not yet received a determination letter from the Internal Revenue
Service. However, management believes that the Plan, as designed, is in
compliance with the applicable requirements of Section 401(a) of the Internal
Revenue Code. Management believes that the Plan is operating as intended and,
as such, continues to comply with these requirements.
4. Plan Termination:
Although it has not expressed any intent to do so, Choice has the right under
the Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
5. Related Party Transactions:
Certain Plan investments are shares of mutual funds and common collective trusts
managed by Merrill Lynch. Merrill Lynch is the Trustee and, therefore, these
transactions qualify as party-in-interest.
6. Nonparticipant Directed Other:
Nonparticipant Directed Other balances included in the financial statements
represent receivables from Choice for contributions, which have not yet been
remitted to the trustee. All amounts were received by the Plan subsequent to
year-end.
7. Multi-Employer Status:
As discussed in Note 1, subsequent to the Choice Distribution, the original
Choice Hotels International, Inc. Retirement, Savings, and Investment Plan
changed its name to the Sunburst Hospitality Corporation Retirement, Savings and
Investment Plan and this plan was available to the employees of both Choice and
Sunburst. However, on January 1, 1998, the Plan was split into the Sunburst
Hospitality Corporation Retirement, Savings and Investment
-6-
<PAGE>
Plan and the Choice Hotels International, Inc. Retirement, Savings and
Investment Plan. These plans are now available to the respective employees of
Sunburst and Choice.
8. Reconciliation of Financial Statements to Form 5500:
The following is a reconciliation of net assets available for Plan benefits per
the financial statements to the Form 5500 for the year ended December 31, 1998:
<TABLE>
<S> <C>
Net assets available for Plan benefits per financial statements $25,821,672
-----------
Amounts allocated to withdrawing participants (152,293)
-----------
Net assets available for Plan benefits per the Form 5500 $25,669,379
===========
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1998:
<TABLE>
<S> <C>
Benefits paid to participants per the financial statements $ 2,220,551
-----------
Add: Amounts allocated to withdrawing participants at December 31, 1998
152,293
-----------
Less: Amounts allocated to withdrawing participants at December 31, 1997 -
-----------
Benefits paid to participants per the Form 5500 $ 2,372,844
===========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have occurred but have not been paid as of December 31.
-7-
<PAGE>
Choice Hotels International, Inc.
Retirement, Savings and Investment Plan
Item 27(a) - Schedule of Assets Held for Investment Purposes
As of December 31, 1998
<TABLE>
<CAPTION>
Description of Current
Identity of Issue Investment Cost Value
- ------------------------------------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Alliance Premier Growth Fund Mutual Fund $ 8,980,619 $ 9,978,372
Merrill Lynch Capital Fund* Mutual Fund 6,474,649 6,419,617
Hotchkis & Wiley International Equity Fund Mutual Fund 2,893,250 2,753,386
Merrill Lynch S&P 500 Index Fund* Mutual Fund 207,417 213,979
Pimco Total Return Fund Mutual Fund 117,955 115,222
Pimco Small Cap Value Fund Mutual Fund 106,228 108,491
Merrill Lynch Retirement Preservation Trust* Common/Collective Trust 2,980,870 2,980,870
Choice Hotels Common Stock Fund* Common Stock 1,788,698 1,753,572
Sunburst Hospitality Common Stock Fund Common Stock 984 519
----------- -----------
Total assets held for investment purposes $23,550,670 $24,324,028
=========== ===========
</TABLE>
*Represents party-in-interest to the Plan
-8-
<PAGE>
Choice Hotels International, Inc.
Retirement, Savings and Investment Plan
Item 27(d)-Schedule of Reportable(5%) Transactions
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Purchase Lease
Identity of Party Description of Asset Price Selling Price Rental
- --------------------------------------------- ----------------------- ---------- ------------- --------
<S> <C> <C> <C> <C>
Choice Hotels International, Inc. Common Stock $1,834,662 $ - $ -
Merrill Lynch Retirement Preservation Trust* Common/Collective Trust 3,211,262 - -
Alliance Premier Growth Fund Mutual Fund 9,202,129 - -
Merrill Lynch Capital Fund* Mutual Fund 6,824,214 - -
Hotchkis & Wiley International Equity Fund Mutual Fund 2,965,702 - -
Janus Fund Mutual Fund 1,302,375 - -
Janus Fund Mutual Fund - (9,890,510) -
T. Rowe Price International Fund Mutual Fund - (3,426,544) -
Vanguard U.S. Treasury Money Market Fund Mutual Fund - (1,744,089) -
Vanguard Wellington Balanced Fund Mutual Fund 1,157,428 - -
Vanguard Wellington Balanced Fund Mutual Fund - (6,742,535) -
<CAPTION>
Expense
Incurred with Current Value of Asset Net
Identity of Party Transaction Cost of Asset on Transaction Date Gain/(Loss)
- ---------------------------------------------- ------------------ ------------- ---------------------- -----------
<S> <C> <C> <C> <C>
Choice Hotels International, Inc. $ - $1,834,662 $ 1,834,662 $ -
Merrill Lynch Retirement Preservation Trust* - 3,211,262 3,211,262 -
Alliance Premier Growth Fund - 9,202,129 9,202,129 -
Merrill Lynch Capital Fund* - 6,824,214 6,824,214 -
Hotchkis & Wiley International Equity Fund - 2,965,702 2,965,702 -
Janus Fund - 1,302,375 1,302,375 -
Janus Fund - (9,890,510) (9,890,510) -
T. Rowe Price International Fund - (3,426,544) (3,426,544) -
Vanguard U.S. Treasury Money Market Fund - (1,744,089) (1,744,089) -
Vanguard Wellington Balanced Fund - 1,157,428 1,157,428 -
Vanguard Wellington Balanced Fund - (6,742,535) (6,742,535) -
</TABLE>
*These transactions qualify as party-in-interest transactions as described in
Note 5.
-9-
<PAGE>
EXHIBITS.
23 - Consent of Independent Public Accountants.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrative committee (or other persons who administer the employee benefit
plan) has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 15, 1999 CHOICE HOTELS INTERNATIONAL, INC.
RETIREMENT SAVINGS & INVESTMENT PLAN
By: /s/ Thomas Mirgan
----------------------------------
Thomas Mirgan, Senior Vice
President, Administration
Choice Hotels International, Inc.
-10-
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report, included in this Form 11-K, into the Company's previously filed
Registration Statement Form S-8, File No. 333-41357.
ARTHUR ANDERSEN LLP
Washington, D.C.,
July 15, 1999
-11-
