2 Horizontal Analysis 12 Months Ended Consolidated Statements oi Income 1 USD 3 [.9 Dec. 31, 2018 Dec. 31, 2017 DEC. 31, 2015 $ Change 2017 to 2018 56 Change 2017 to 2018 $ Change 2015 to 2017 96 Change 2015 to 2017 4 REVENUES: 5 Royalty fees $375,575,000 $341,745,000 $317,599,000 $34,931,000.00 10% $24,045,000.00 8% 6 Initial franchise and relicensing fees $26,072,000 $23,038,000 $19,720,000 $3,034,000.00 13% $3,318,000.00 17% 7 Procurement services $52,088,000 $40,451,000 $35,844,000 $11,637,000.00 29% $4,607,000.00 13% 8 Marketing and reservation system $543,677,000 $499,625,000 $409,120,000 $44,052,000.00 9% $90,505,000.00 22% 9 other $42,791,000 $35,438,000 $25,525,000 $5,353,000.00 17% $10,912,000.00 43% 10 Total revenues $1,041,304000 $941,297,000 $807,909,000 $100,007,00000 11% $133,388,00000 17% 11 OPERATING EXPENSES: 12 Selling, general and administrative $170,027,000 $165,821,000 $154,720,000 $4,206,000.00 3% $11,101,000.00 7% 13 Depreciation and amortization $14,330,000 $6,680,000 $6,996,000 $7,650,000.00 115% -$316,000.00 -5% 14 Marketing and reservation system $534,266,000 $479,400,000 $459,765,000 $4,866,000.00 11% $19,635,000.00 4% 15 Total operating expenses $718,523,000 $551,901,000 $521,481,000 $55,722,00000 10% $30,420,00000 5% 16 Impairment of goodwill -$4, 289,000 $0 $0 -$4,289,000.00 0% -$4,289,000.00 0% 17 Gain on sale of assets, net $82,000 $257,000 $627,000 -$175,000.00 68% -$370,000.00 59% 18 Operating income $318,474,000 $289,653,000 $187,055,000 $28,821,000.00 10% $102,598,000.00 55% 19 OTHER INCOME AND EXPENSES, NET: 20 Interest expense $45,908,000 $45,039,000 $44,446,000 $869,000.00 2% $593,000.00 1% 21 Interest income $7,452,000 $5,920,000 $3,535,000 $1,532,000.00 25% $2,385,000.00 57% 22 other (gain) loss $1,437,000 $3,229,000 $1,504,000 $4,555,000.00 -145% $1,725,000.00 115% 23 Equity in net [income] loss of affiliates $5,323,000 $4,546,000 -$492,000 $777,000.00 17% $5,038,000.00 -1024% 24 Total other income and expenses, net $45,216,000 $40,436,000 $38,915,000 $4,780,000.00 12% $1,521,000.00 4% 25 Income before income taxes $273,258,000 $249,217,000 $148,140,000 $24,041,000.00 10% $101,077,000.00 68% 25 Income taxes $55,903,000 $125,890,000 $41,428,000 -$59,987,000.00 55% $85,452,00000 205% 27 Net income $215,355,000 $122,327,000 $105,712,000 $34,028,000.00 77% $5,515,000.00 15% 28 Basic earnings per share: Basic earnings pershare [in dollars per 29 share) $3.83 $2.15 $1.90 $1.57 77% $0.25 14% Diluted earnings per share [in dollars per 30 share) $3.80 $2.15 $1.89 $1.55 77% $0.25 14% 31